RICO CAUSE OF ACTION The manipulation of the assignment of cases to appoint Judge Erik Larsch to the case.

Examples of how RICO ENTERPRISE FACTUALLY PLEAD AGAINST WELLS FARGO

Predicate offenses committed the commission of which constitutes a pattern of racketeering (1) racketeering activity means (A) any act or threat **bribery,

which is chargeable under State law and punishable by imprisonment for more than one year; (B) any act which is indictable under any of the following provisions of **title 18, United States Code: Section 201 (relating to bribery), **section 1341 (relating to mail fraud), **section 1343 (relating to wire fraud), ** section 1503 (relating to obstruction of justice), **[FN1]section 1951 (relating to interference with commerce, robbery, or extortion), **section1952 (relating to racketeering), section 1956 (relating to the laundering of monetary instruments), **section 1957 (relating to engaging in monetary transactions in property derived from specified unlawful activity), **(D) any offense involving fraud connected with a case under title 11 (except a case under section 157 of this title), fraud in the sale of securities,

Congress intended liability under Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1962(c), to extend to situations where one entity directs formation of RICO enterprise, as defined in 18 USCS 1961(4), and then makes use of association to further pattern of unlawful activity, even where portions of unlawful activity do not issue directly from RICO enterprise. Young v Wells Fargo & Co. (2009, SD Iowa) 671 F Supp 2d 1006.

Formation of associated-in-fact enterprise for the use of the peversion and obstruction of justice, case authority from FRCP 60 fraud on the court. For the common purpose of engaging in and perpetrating crimes For the purpose of perpetrating criminal racketeering activities, fraud. For the common purpose of engaging in, the commission of, and perpetrating crimes

For the common purpose of and for the use of as a cover, vehicle in the engagement, commission and the perpetration of crimes. For the common purpose of and for the use of as a cover, vehicle in the engagement, commission, and perpetration of crimes. For the common purpose of engaging in, committing, and perpetrating criminal racketeering activities [frcp 9b details].
District court erred in granting fungicide manufacturer's Fed. R. Civ. P. 12(c) motion for judgment on pleadings in civil action under 18 USCS 1962(c), 1964(c), which was filed by commercial nurserymen who alleged that manufacturer fraudulently withheld evidence in underlying product liability litigation in order to induce settlement; nurserymen properly alleged "enterprise" within meaning of 18 USCS 1961(4), and enterprise formed by group of fungicide manufacturer, its law firms, and its expert witnesses was separate and distinct from fungicide manufacturer as RICO "person." Living Designs, Inc. v E.I. DuPont de Nemours & Co. (2005, CA9 Hawaii) 431 F3d 353, 35 ELR 20246, cert den (2006) 547 US 1192, 126 S Ct 2861, 165 L Ed 2d 895 and motions ruled upon (2006, DC Hawaii) 2006 US Dist LEXIS 68909. Association-in-fact enterprise may consist of both group of individuals who join together for common criminal purpose and otherwise legitimate entities, including governmental entities, that are controlled and used by those individuals to achieve that purpose. United States v Cianci (2002, DC RI) 210 F Supp 2d 71. Sufficient evidence supported finding of "enterprise" under 18 USCS 1961(4) for purposes of defendants' convictions under 18 USCS 1962(c), (d), part of RICO; evidence showed hierarchical decision-making structure and division of labor among various players who committed arson, bank fraud, mail fraud, and murder; there was also evidence of common purpose to make money, business relationship, and continuity. United States v Johnson (2006, CA6 Ky) 440 F3d 832, 69 Fed Rules Evid Serv 783, 2006 FED App 97A. Evidence is sufficient to permit jury to find that "enterprise" existed and that members of enterprise were all linked together by network of contracts, transactions, and payoffs where evidence showed enterprise consisted of defendants, other conspirators, partnerships and corporations which defendants and coconspirators controlled or used for purpose of obtaining unjust enrichment from government contracts for computer services and equipment. United States v Perholtz (1986, DC Dist Col) 657 F Supp 603. RICO action charging defendant's real estate business as enterprise which employed several persons and included partners and corporations sufficiently alleges "enterprise." United States v Weinberg (1987, ED NY) 656 F Supp 1020.

It futhered the scheme by gaining more illegal, illicit, fees, and ill-gotten gains that weren;t justifiably due.

Conspiracy counts as a predicate act under certain sections of 1961. And each defendant must agree to commit at least two predicate acts. See United States v Corrado (2002, CA6 Mich) 304 F3d 593, 2002 FED App 309P, reh, en banc, den (2002, CA6) 2002 US App LEXIS 23969 and cert den (2003) 537 US 1238, 155 L Ed 2d 207, 123 S Ct 1366.

ADORNO & YOSS placed items in the mail to further the scheme. Mail and wire communications must be sent interstate to constitute RICO predicate offense.

Mail and wire fraud, with interstate communications, during the superior court case of the state of California to pay the surplus from the trustee sale WELLS FARGO corresponded by mail with Wells Fargo Home in Arizona. During the same case WELLS FARGO, communicated between WELLS FARGO employees in Arizona with WELLS FARGO employees in Washington with WELLS FARGO employees in Tustin California Although manager claimed that employee failed to allege sufficient facts to establish that he was involved in Racketeer Influenced and Corrupt Organization Act (RICO), 18 USCS 1961 et seq., enterprise, employee sufficiently alleged that manager, State Compensation Insurance Fund, and attorney associated for common purpose of engaging in course of conduct, that manager was involved in formal, or informal, ongoing organization, and that facts, if proved, provided sufficient evidence that various associates functioned as continuing unit; employee also alleged predicate acts were not isolated activities because actions were part of ongoing pattern of similar acts, which were committed against other employees who they believed could have leaked damaging information and did not assist in cover up; therefore, manager's motion to dismiss on ground that employee had not alleged facts to establish RICO enterprise was denied. Vierria v Cal. Highway Patrol (2009, ED Cal) 644 F Supp 2d 1219. Unpublished Opinions Unpublished: There was no information in complaint, nor could any be inferred, as to any hierarchy, organization or activities of alleged enterprise, beyond single fraudulent loan transaction; such allegations were necessary to properly allege that enterprise functioned in ongoing manner as unit; conclusory pleading that defendants each played part in perpetrating fraud on lender was not enough to satisfy Racketeer Influenced and Corrupt Organizations Act's requirement of organized, separate enterprise. Ferri v Berkowitz (2009, ED NY) 2009 US Dist LEXIS 77620. 4.Person 84. Generally
18 U.S.C. Section 1962. Prohibited activities (a) It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity or through collection of an unlawful debt in which such person has participated as a principal within the meaning of section 2, title 18, United States Code, to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce. A purchase of securities on the open market for purposes of investment, and without the intention of controlling or participating in the control of the issuer, or of assisting another to do so, shall not be

unlawful under this subsection if the securities of the issuer held by the purchaser, the members of his immediate family, and his or their accomplices in any pattern or racketeering activity or the collection of an unlawful debt after such purchase do not amount in the aggregate to one percent of the outstanding securities of any one class, and do not confer, either in law or in fact, the power to elect one or more directors of the issuer. (b) It shall be unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce. (c) 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 or collection of unlawful debt. (d) It shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section.

Causes Of Action under 18 U.S.C. 1962 (a); (c); (d);

18 U.S.C. Section 1962. Prohibited activities

(a) It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity or through collection of an unlawful debt in which such person has participated as a principal within the meaning of section 2, title 18, United States Code, to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce. A purchase of securities on the open market for purposes of investment, and without the intention of controlling or participating in the control of the issuer, or of assisting another to do so, shall not be unlawful under this subsection if the securities of the issuer held by the purchaser, the members of his immediate family, and his or their accomplices in any pattern or racketeering activity or the collection of an unlawful debt after such purchase do not amount in the aggregate to one percent of the outstanding securities of any one class, and do not confer, either in law or in fact, the power to elect one or more directors of the issuer. (b) It shall be unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce. (c) 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 or collection of unlawful debt. (d) It shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section.

18 U.S.C. Section 1964. Civil remedies (a) The district courts of the United States shall have jurisdiction to prevent and restrain violations of section 1962 of this chapter by issuing appropriate orders, including, but not limited to: ordering any person to divest himself of any interest, direct or indirect, in any enterprise; imposing reasonable restrictions on the future activities or investments of any person, including, but not limited to, prohibiting any person from engaging in the same type of endeavor as the enterprise engaged in, the activities of which affect interstate or foreign commerce; or ordering dissolution or reorganization of any enterprise, making due provision for the rights of innocent persons. (b) The Attorney General may institute proceedings under this section. Pending final determination thereof, the court may at any time enter such restraining orders or prohibitions, or take such other actions, including the acceptance of satisfactory performance bonds, as it shall deem proper. (c) Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee, except that no person may rely upon any conduct that would have been actionable as fraud in the purchase or sale of securities to establish a violation of section 1962. The exception contained in the preceding sentence does not apply to an action against any person that is criminally convicted in connection with the fraud, in which case the statute of limitations shall start to run on the date on which the conviction becomes final. (d) A final judgment or decree rendered in favor of the United States in any criminal proceeding brought by the United States under this chapter shall estop the defendant from denying the essential allegations of the criminal offense in any subsequent civil proceeding brought by the United States.

Dimov v. EMC Mortgage Corp 2010 WL 2506717, at p.3 (E.D. Tenn. June 17, 2010) Plaintiff must allege he received any additional injury caused by the use or investment of the proceeds from this foreclosure,
1. Sections 1962(a) & (b) Under 1962(a), it is unlawful for any person to use income derived from a pattern of racketeering activity to acquire an interest in or establish operation of any enterprise engaged in, or the activities of which affect, interstate commerce. Riverview, 601 F.3d at 513. Under 1962(b), it is unlawful for any person, through a pattern of racketeering activity, [to] acquire or maintain an interest in or control of any enterprise engaged in, or the activities of which affect, interstate commerce. Riverview, 601 F.3d at 513. *4 To state a civil claim under 1962(a), a plaintiff must allege an injury to business or property stemming directly from the defendant's alleged use or investment of the racketeering proceeds; an injury caused by the alleged racketeering activities themselves is insufficient. Craighead v. E.F. Hutton & Co., 899 F.2d 485, 494

(6th Cir.1990). Similarly, to state a claim under 1962(b), a plaintiff must allege an injury caused by the acquisition of an interest in the targeted enterprise, not merely an injury caused by the alleged predicate acts. Advocacy Org. for Patients and Providers v. Auto Club Ins. Ass'n, 176 F.3d 315, 329 (6th Cir.1999). In this case, the only injury alleged by Plaintiff was the loss of his real property (Court File No. 3 at 2). Plaintiff alleges EMC illegally foreclosed on his real property and sold the property to a third party (Court File No. 8 at 2). Plaintiff alleges this foreclosure was conducted through racketeering activity (id.). However, Plaintiff does not allege he received any additional injury caused by the use or investment of the proceeds from this foreclosure, or by the acquisition of an enterprise, as required by 1962(a) & (b). Therefore, Plaintiff has failed to state a claim under either of these subsections.

See rico_fed_regulation_civil_remedies_proceedings_pleading_injury_causa tion_fed_all_digest.doc for sufficient allegation of injury from the use of income derived from a pattern of racketeering activity in the operation of the enterprise
Superior Bank, F.S.B. v. Tandem Nat. Mortg., Inc., 197 F.Supp.2d 298 (D.Md.,May 09, 2000) Mortgage repurchaser brought action under Racketeer Influenced and Corrupt Organizations (RICO) against **mortgage originator, **mortgage brokers, **title companies, and **appraisers alleging that originator engaged in scheme with mortgage brokers, title companies, and appraisers to induce repurchaser to purchase loans at greatly inflated prices. On defendants' motions to dismiss, the District Court, Garbis, J., held that: (1) economic loss rule did not bar repurchaser's fraud and negligent misrepresentation claims against originator; (2) repurchaser's fraud claim against appraisers was actionable; (3) fraud was plead with particularity by repurchaser; (4) defendants had duty not to make negligent misrepresentation to repurchaser; and (5) repurchaser stated RICO claim against defendants. Motions denied. [2] Federal Civil Procedure 170A 1773

170A Federal Civil Procedure 170AXI Dismissal 170AXI(B) Involuntary Dismissal 170AXI(B)3 Pleading, Defects In, in General 170Ak1773 k. Clear or Certain Nature of Insufficiency. Most Cited Cases A court must deny a motion to dismiss unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief; the question is whether in the light most favorable to the plaintiff, and with every doubt resolved in his behalf, the complaint states any valid claim for relief. Fed.Rules Civ.Proc.Rule 12(b)(6), 28 U.S.C.A. [3] Federal Civil Procedure 170A 1829

170A Federal Civil Procedure 170AXI Dismissal 170AXI(B) Involuntary Dismissal 170AXI(B)5 Proceedings 170Ak1827 Determination 170Ak1829 k. Construction of Pleadings. Most Cited Cases Federal Civil Procedure 170A 1835

170A Federal Civil Procedure 170AXI Dismissal 170AXI(B) Involuntary Dismissal 170AXI(B)5 Proceedings 170Ak1827 Determination 170Ak1835 k. Matters Deemed Admitted; Acceptance as True of Allegations in Complaint. Most Cited Cases A court, when deciding a motion to dismiss, must consider well pled allegations in a complaint as true and must construe those allegations in favor of the plaintiff; the court must further disregard the contrary allegations of the opposing party. Fed.Rules Civ.Proc.Rule 12(b)(6), 28 U.S.C.A. [4] Federal Courts 170B 409.1

170B Federal Courts 170BVI State Laws as Rules of Decision 170BVI(C) Application to Particular Matters 170Bk409 Conflict of Laws 170Bk409.1 k. In General. Most Cited Cases A federal court exercising diversity or pendent jurisdiction over state law claims must apply the choice of law rules of the forum state. [5] Contracts 95 206

95 Contracts 95II Construction and Operation 95II(C) Subject-Matter 95k206 k. Legal Remedies and Proceedings. Most Cited Cases Parties intended for New Jersey law to govern only contract claims, and not tort claims that are merely related to the contract, since choice of law provision contained in contract referred only to the rights and remedies of the parties hereunder. [6] Contracts 95 129(1)

95 Contracts 95I Requisites and Validity 95I(F) Legality of Object and of Consideration 95k129 Obstructing or Perverting Administration of Justice 95k129(1) k. Agreements Relating to Actions and Other Proceedings in General. Most Cited Cases Under Maryland law, the parties to a contract may agree as to the law which will govern their transaction, even as to issues going to the validity of the contract. [7] Contracts 95 206

95 Contracts 95II Construction and Operation 95II(C) Subject-Matter 95k206 k. Legal Remedies and Proceedings. Most Cited Cases Under Maryland law, the intent of the parties, as evidenced first by the plain language of the contract, governs the issue of whether the choice of law provision applies to contract related tort claims.

[8] Torts 379

103

379 Torts 379I In General 379k103 k. What Law Governs. Most Cited Cases (Formerly 379k2) When a cause of action arises in tort, Maryland's choice of law rules require application of the law of the state where the tortious conduct or injury occurred. [9] Conspiracy 91 1.1

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k1 Nature and Elements in General 91k1.1 k. In General. Most Cited Cases Fraud 184 1.5

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k1.5 k. What Law Governs. Most Cited Cases (Formerly 184k1) Viability of mortgage repurchaser's tort claims, including fraud, negligent misrepresentation, and conspiracy, against mortgage originator would be resolved according to Maryland law, since alleged tortious conduct occurred in Maryland. [10] Fraud 184 25

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k25 k. Injury and Causation. Most Cited Cases Economic loss rule did not bar mortgage repurchaser's fraud and negligent misrepresentation claims against mortgage originator relating to purchase agreements, although repurchaser's allegations under its fraud and negligent misrepresentation claim repeated, nearly word for word, allegations contained under breach of contract claim; contractual provision stated that rights created by purchase agreements were cumulative, consequently, there was ambiguity as to whether parties intended to define full scope of their duties in purchase agreements. [11] Action 13 27(1)

13 Action 13II Nature and Form 13k26 Contract or Tort 13k27 Nature of Action 13k27(1) k. In General. Most Cited Cases In general, when a controversy concerns purely economic losses allegedly caused by statements made during the course of a contractual relationship between businessmen, it is plainly contract law which should provide the rules and principles by which the case is to be governed. [12] Fraud 184 25

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k25 k. Injury and Causation. Most Cited Cases Under Maryland law, the economic loss rule does not apply to bar fraudulent inducement claims. [13] Fraud 184 11(2)

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k8 Fraudulent Representations 184k11 Matters of Fact or of Opinion 184k11(2) k. Value. Most Cited Cases Fraud 184 21

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k19 Reliance on Representations and Inducement to Act 184k21 k. Persons Who May Rely on Representations. Most Cited Cases Mortgage repurchaser's fraud claim against **appraisers, that was based on allegations that mortgage originator engaged in scheme with mortgage brokers, title companies, and appraisers to induce repurchaser to purchase loans at greatly inflated prices, was actionable, since appraisers contracted to provide appraisals with knowledge that those appraisals would be relied upon by purchasers of mortgage loans on secondary market. [14] Fraud 184 11(1)

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k8 Fraudulent Representations 184k11 Matters of Fact or of Opinion 184k11(1) k. In General. Most Cited Cases In Maryland, representations as to the quality or condition of property are not actionable where they are mere expressions of opinion, however, representations as to quality and condition may constitute fraud where they are asserted as statements of fact. [15] Pretrial Procedure 307A 21

307A Pretrial Procedure 307AII Depositions and Discovery 307AII(A) Discovery in General 307Ak21 k. Actions and Proceedings in Which Remedy Is Available. Most Cited Cases Court would allow mortgage repurchaser opportunity to conduct discovery before determining if corporation could be liable for appraiser's allegedly fraudulent conduct, although corporation did not exist when allegedly tortious actions were committed; depending on facts to be developed, successor liability could be established through application of mere continuation theory. [16] Federal Civil Procedure 170A 636

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity

170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases The word circumstances, in the rule requiring that allegations of fraud are to be pleaded with particularity, includes the time, place and contents of the false representation, as well as the identity of the person making the misrepresentation and what was obtained thereby. Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. [17] Federal Civil Procedure 170A 636

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases The rule requiring allegations of fraud to be pleaded with particularity must be read in conjunction with the general pleading rule that demands only a short and plain statement of the claim, and with the policy of the Federal Rules of Civil Procedure in favor of flexibility and simplicity in pleading; the central question which arises when a complaint is attacked under the pleading with particularity rule is how much detail is necessary to give adequate notice to the opposing party in order to enable that party to prepare adverse pleadings. Fed.Rules Civ.Proc.Rules 8(a), 9(b), 28 U.S.C.A. [18] Federal Civil Procedure 170A 636

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases Fraud was plead with particularity by mortgage repurchaser against mortgage brokers, title companies, and appraisers, **where complaint included description of general items for which repurchaser alleged that each particular defendant was responsible, alleged fraudulent representations made in connection with those activities that were communicated to repurchaser, and those representations were fleshed out in more detail in later portions of complaint. Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. [19] Fraud 184 29

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k29 k. Persons Entitled to Sue. Most Cited Cases In the context of a fraud claim, Maryland courts do not require that an allegedly false representation be made directly to the plaintiff. [20] Conspiracy 91 1.1

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k1 Nature and Elements in General 91k1.1 k. In General. Most Cited Cases Under Maryland law, a civil conspiracy is a combination of two or more persons by an agreement or understanding to accomplish an unlawful act or to use unlawful means to accomplish an act not in itself illegal, with the further requirement that the act or the means employed must result in damages to the plaintiff.

[21] Conspiracy 91

1.1

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k1 Nature and Elements in General 91k1.1 k. In General. Most Cited Cases Under Maryland law, civil conspiracy is not a separate tort capable of independently sustaining an award of damages in the absence of other tortious injury to the plaintiff. [22] Abstracts of Title 6 3

6 Abstracts of Title 6k3 k. Rights, Duties, and Liabilities of Examiners of Title. Most Cited Cases Brokers 65 102

65 Brokers 65VIII Rights, Powers, and Liabilities as to Third Persons 65k102 k. Misrepresentation or Fraud of Broker. Most Cited Cases Fraud 184 13(3)

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k8 Fraudulent Representations 184k13 Falsity and Knowledge Thereof 184k13(3) k. Statements Recklessly Made; Negligent Misrepresentation. Most Cited Cases Fraud 184 21

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k19 Reliance on Representations and Inducement to Act 184k21 k. Persons Who May Rely on Representations. Most Cited Cases Mortgage brokers, title companies, and appraisers had duty not to make negligent misrepresentation to mortgage repurchaser, although defendants did not communicate directly with repurchaser; defendants knew that information they were providing about particular mortgage could be used in connection with sale of loan to a buyer on secondary market and such universe of persons, who could be expected to rely on information provided by defendants, was not so large as to create the risk of imposing liability in indeterminate amount for indeterminate time to indeterminate class. [23] Fraud 184 13(3)

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k8 Fraudulent Representations 184k13 Falsity and Knowledge Thereof 184k13(3) k. Statements Recklessly Made; Negligent Misrepresentation. Most Cited Cases In Maryland, in order to state a claim of negligent misrepresentation, a plaintiff must allege that: (1) the defendant, owing a duty of care to the plaintiff, negligently asserts a false statement; (2) the defendant intends that his statement will be acted upon by the plaintiff; (3) the defendant has knowledge that the plaintiff will

probably rely on the statement, which, if erroneous, will cause loss or injury; (4) the plaintiff, justifiably, takes action in reliance on the statement; and (5) the plaintiff suffers damage proximately caused by the defendant's negligence. [24] Fraud 184 25

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k25 k. Injury and Causation. Most Cited Cases Fraud 184 29

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k29 k. Persons Entitled to Sue. Most Cited Cases In the context of a claim of negligent misrepresentation under Maryland law, where the failure to exercise due care creates a risk of economic loss only, an intimate nexus between the parties is a condition to the imposition of tort liability; such an intimate nexus requires contractual privity or its equivalent. [25] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk68 Pleading 319Hk69 k. In General. Most Cited Cases In order to allege a Racketeer Influenced and Corrupt Organizations (RICO) enterprise corruption claim, a plaintiff must plead the following elements: (1) conduct; (2) of an enterprise; (3) through a pattern; (4) of racketeering activity. 18 U.S.C.A. 1962(c). [26] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk4 Racketeering or Criminal Activity 319Hk10 k. Fraud in General. Most Cited Cases A Racketeer Influenced and Corrupt Organizations (RICO) enterprise corruption claim includes no requirement that mail or wire be used by each defendant. 18 U.S.C.A. 1962(c). [27] Racketeer Influenced and Corrupt Organizations 319H 70 10 69

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk68 Pleading 319Hk70 k. Racketeering or Criminal Activity; Predicate Acts. Most Cited Cases Predicate acts element of mortgage repurchaser's Racketeer Influenced and Corrupt Organizations (RICO) enterprise corruption claim was satisfied by **allegations that defendants delivered false and inflated appraisals, false loan applications, and settlement statements to repurchaser through mails or by facsimile; although repurchaser did not allege specific use of mail or wire by each defendant, repurchaser did allege specific instances of fraud and it was virtually certain that defendants would have used mails and wires themselves to

transmit appraisals and loan documents or at least would have foreseen that another person in chain of communication would use mails or wires. 18 U.S.C.A. 1962(c); Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. [28] Racketeer Influenced and Corrupt Organizations 319H 28

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk28 k. Continuity or Relatedness; Ongoing Activity. Most Cited Cases The **relationship criterion of a Racketeer Influenced and Corrupt Organizations (RICO) enterprise corruption claim may be satisfied by showing that **the criminal acts have the same or similar purposes, victims, or methods of commission, or are otherwise interrelated by distinguishing characteristics and are not isolated events. 18 U.S.C.A. 1962(c). [29] Racketeer Influenced and Corrupt Organizations 319H 28

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk28 k. Continuity or Relatedness; Ongoing Activity. Most Cited Cases **Relationship element of mortgage repurchaser's Racketeer Influenced and Corrupt Organizations (RICO) enterprise corruption claim was satisfied, **where repurchaser alleged that all of defendants' allegedly fraudulent representations were made for express purpose of inducing repurchaser, or another purchaser, to purchase loans from mortgage originator, scheme involved several discrete types of actions [and based

on criminal predicate acts and generating discrete, and separate injury[ies]to business or property, to establish continuity] which were repeated by individual defendants, and originator used group of several mortgage brokers [WELLS FARGO used group of several law firms ADORNO & YOSS, FLEWELLING AND RASMUSSEN], who in turn employed same title companies and appraisers on multiple loan transactions
which were involved in alleged scheme. 18 U.S.C.A. 1962(c); Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. [30] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk68 Pleading 319Hk72 k. Pattern. Most Cited Cases In order to plead a pattern of racketeering activity under the Racketeer Influenced and Corrupt Organizations Act (RICO), a plaintiff must allege that the defendant's acts pose a threat of continuing activity. 18 U.S.C.A. 1962(c). [31] Racketeer Influenced and Corrupt Organizations 319H 28 72

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk28 k. Continuity or Relatedness; Ongoing Activity. Most Cited Cases A closed ended pattern of racketeering activity under the Racketeer Influenced and Corrupt

Organizations Act (RICO) involves a course of related predicate acts during a substantial period of time which naturally comes to a close, and by contrast, an open ended pattern of racketeering activity is a course of conduct which lacks the duration and repetition which mark a closed ended pattern; the continuity requirement in an open ended case is met by showing conduct which by its nature projects into the future with a threat of repetition. 18 U.S.C.A. 1962(c). [32] Racketeer Influenced and Corrupt Organizations 319H 28

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk28 k. Continuity or Relatedness; Ongoing Activity. Most Cited Cases Continuity element of mortgage repurchaser's Racketeer Influenced and Corrupt Organizations (RICO) enterprise corruption claim was satisfied, although repurchaser did not allege that each defendant individually committed two predicate acts; alleged scheme to defraud repurchaser, and perhaps other purchasers of mortgage loans on secondary market, was open ended in that it had no limited goal and acts bore sufficient relationship to purpose of alleged scheme. 18 U.S.C.A. 1962(c); Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. [33] Racketeer Influenced and Corrupt Organizations 319H 35

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk35 k. What Constitutes Enterprise in General. Most Cited Cases Racketeer Influenced and Corrupt Organizations 319H 38

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk38 k. Separateness from Predicate Acts, Pattern, or Persons. Most Cited Cases The alleged enterprise of a Racketeer Influenced and Corrupt Organizations (RICO) enterprise corruption claim must be an entity whose members are associated together for a common purpose of engaging in a course of conduct and** must be separate and distinct from the RICO defendants; an enterprise may include an association of individuals and corporations. 18 U.S.C.A. 1962(c). [34] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk68 Pleading 319Hk73 k. Enterprise. Most Cited Cases Enterprise element of mortgage repurchaser's Racketeer Influenced and Corrupt Organizations (RICO) enterprise corruption claim was satisfied, where repurchaser stated each individual defendant's participation in scheme, their relationship to each other, and that interrelationship between defendants and use of same mortgage brokers, title companies and appraisers with respect to numerous loan transaction supported conclusion that enterprise was an ongoing organization, within which members functioned as a continuing unit. 18 U.S.C.A. 1961(4), 1962(c); Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. 73

[35] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk68 Pleading 319Hk73 k. Enterprise. Most Cited Cases

73

Language in mortgage repurchaser's Racketeer Influenced and Corrupt Organizations (RICO) enterprise corruption claim, that defendants, individually and collectively, constitute an enterprise did not bar RICO cause of action; although if any individual defendants were alleged themselves to constitute the enterprise, they could not remain as a party to the RICO action, repurchaser otherwise adequately alleged association in fact enterprise. 18 U.S.C.A. 1962(c). [36] Racketeer Influenced and Corrupt Organizations 319H 50

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases A Racketeer Influenced and Corrupt Organizations (RICO) enterprise corruption claim only imposes liability on those who conduct or participate, directly or indirectly in the conduct of an enterprise's affairs through a pattern of racketeering activity. 18 U.S.C.A. 1962(c). [37] Racketeer Influenced and Corrupt Organizations 319H 50

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases Although mere participation in the activities of the enterprise is insufficient to create liability on a Racketeer Influenced and Corrupt Organizations (RICO) enterprise corruption claim, liability is not limited to upper management and those under their direction; **further, an individual may be liable for enterprise corruption through the provision of professional services, as long as he has some role in conducting the enterprise activities. 18 U.S.C.A. 1962(c). [going beyond mere duty as a provider of

professional services by engaging in fraud]

[38] Racketeer Influenced and Corrupt Organizations 319H

50

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases Title company's limited role in alleged scheme to induce mortgage repurchaser to purchase loans at greatly inflated prices, i.e., it was involved in only one of 23 allegedly fraudulent loans, was no bar to repurchaser's Racketeer Influenced and Corrupt Organizations (RICO) enterprise corruption claim against it, **since title company allegedly knowingly made multiple misrepresentations related to that loan and allegedly knew of the scheme. 18 U.S.C.A. 1962(c). [going beyond mere duty as a title insurance

company by engaging in fraud]

[39] Federal Civil Procedure 170A 170A Federal Civil Procedure 636

170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases The pleading with particularity rule applies to claims under the Racketeer Influenced and Corrupt Organizations Act (RICO) where the alleged predicate acts involved fraud. 18 U.S.C.A. 1961 et seq. [40] Racketeer Influenced and Corrupt Organizations 319H 62

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk56 Persons Entitled to Sue or Recover 319Hk62 k. Causal Relationship; Direct or Indirect Injury. Most Cited Cases To establish violation of Racketeer Influenced and Corrupt Organizations Act (RICO) section prohibiting use or investment of racketeering income in an enterprise engaged in commerce, a plaintiff must allege: (1) a receipt of income from a pattern of racketeering activity, and (2) the use or investment of this income in an enterprise. 18 U.S.C.A. 1962(a). [41] Racketeer Influenced and Corrupt Organizations 319H 62

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk56 Persons Entitled to Sue or Recover 319Hk62 k. Causal Relationship; Direct or Indirect Injury. Most Cited Cases Like the enterprise corruption section, the section prohibiting use or investment of racketeering income in an enterprise engaged in commerce requires a pattern of racketeering activity and an enterprise, but unlike the enterprise corruption section, the interstate commerce section does not require that the Racketeer Influenced and Corrupt Organizations (RICO) defendant be distinct from the enterprise; the interstate commerce section requires an additional element, i.e., **that the income derived from the pattern of racketeering activity be **used or **invested in the enterprise. 18 U.S.C.A. 1962(a, c). [42] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk68 Pleading 319Hk75 k. Injury; Causation. Most Cited Cases **Mortgage repurchaser allegations, that defendants received income directly from the pattern of racketeering activity and used the income or its proceeds to operate themselves, sufficiently pleaded claim under Racketeer Influenced and Corrupt Organizations Act (RICO) prohibiting use or investment of racketeering income in an enterprise engaged in commerce, where repurchaser had already adequately pleaded pattern of racketeering activity under enterprise corruption section. 18 U.S.C.A. 1961(3), 1962(a, c). [43] Conspiracy 91 1.1 75

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k1 Nature and Elements in General

91k1.1 k. In General. Most Cited Cases A Racketeer Influenced and Corrupt Organizations (RICO) conspiracy may be proven by showing that **each defendant agreed that another co-conspirator would commit two or more acts of racketeering, consequently, a RICO conspiracy does not require that each coconspirator personally agree to commit two or more acts of racketeering; a plaintiff's allegations are sufficient if they support the conclusion the defendant agreed that another co-conspirator would commit two or more acts of racketeering. 18 U.S.C.A. 1962(d). [44] Conspiracy 91 19

91 Conspiracy 91I Civil Liability 91I(B) Actions 91k19 k. Evidence. Most Cited Cases **The existence of a Racketeer Influenced and Corrupt Organizations (RICO) conspiracy need not be proved by direct evidence, but may be inferred from the facts and circumstances of the case; knowledge and participation may also be proved by circumstantial evidence. 18 U.S.C.A. 1962(d). [45] Interest 219 39(2.15)

219 Interest 219III Time and Computation 219k39 Time from Which Interest Runs in General 219k39(2.5) Prejudgment Interest in General 219k39(2.15) k. Liquidated or Unliquidated Claims in General. Most Cited Cases Maryland law allows an award of prejudgment interest on a liquidated sum. [46] Federal Civil Procedure 170A 928

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(I) Motions in General 170Ak928 k. Determination. Most Cited Cases Federal Civil Procedure 170A 2651.1

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2651.1 k. In General. Most Cited Cases A motion for reconsideration, or to alter or amend judgment, may be made for one of three reasons: (1) an intervening change in the controlling law has occurred; (2) evidence not previously available has become available; or (3) it is necessary to correct a clear error of law or prevent manifest injustice. Fed.Rules Civ.Proc.Rule 59(e), 28 U.S.C.A. MEMORANDUM AND ORDER RE MOTIONS TO DISMISS COMPLAINT AND AMENDED COMPLAINT GARBIS, District Judge. The Court has before it a series of motions FN1 which seek dismissal of certain counts of Plaintiff's Complaint and the materials submitted by the parties relating thereto. FN2 The Court finds a hearing unnecessary to resolve the motions.

FN1. The motions are: Defendant Lorimar Title Corporation's Motion to Dismiss Counts II through VI [paper # 28], the Motion to Dismiss of Defendant George W. Johnson [paper # 32]; the Motion to Dismiss of Defendant Capital Mortgage Finance Corp. [paper # 46]; the Motion to Dismiss of Defendants JKV Real Estate Services and John K. Voyatzis [paper # 56]; Defendant Tandem National Mortgage, Inc.'s Motion to Dismiss Counts III, IV, V, VI, and VII [paper # 59]; Defendant Lorimar Title Corporation's Motion to Dismiss Counts II Through V of the First Amended Complaint [paper # 62]; the Motion to Dismiss of Defendant Golden Gate Appraisal Services, Inc. [paper # 73]; Defendant Consumers Title Company's Motion to Dismiss Counts II through VI of the First Amended Complaint [paper # 84]; and the Motion for Judgment on the Pleadings of Defendants CHS Management, Inc. and Ross C. Silver [paper # 90]. FN2. Several Defendants have joined in the motions filed by other Defendants. Defendants Accubanc Mortgage and Century Title joined in the Motion to Dismiss filed by Capital Mortgage Finance Corp.. See Paper # 67; Paper # 82. Defendants CHS Management, Inc. and Ross C. Silver joined in the Motions to Dismiss previously filed by Defendants JKV Real Estate Services, John K. Voyatzis and George W. Johnson. See Paper # 90. Defendants B & G Financial Services and Clint Baldeo joined in the Motion to Dismiss filed by Capital Mortgage Finance Corp. and the Motion for Judgment on the Pleadings filed by Defendant CHS Management, Inc. See Paper # 98. Defendants Terrapin Title, LLC and Joseph H. Pietropaoli joined in the Motions to Dismiss previously filed by Defendants Lorimar Title Corporation, JKV Real Estate Services and John K. Voyatzis, and Consumers Title Company. See Paper # 130. I. BACKGROUND This case arises out of a series of twenty-three mortgage loan transactions between **Plaintiff Superior Bank FSB (Superior) FN3 and **Defendant Tandem National Mortgage, Inc. (Tandem). Superior is a federal savings bank which is engaged in the business of purchasing mortgage loans on the secondary market. Am. Compl. at 5. Tandem is engaged in the business of originating, selling and buying mortgage loans. Id. at 4. FN3. Alliance Funding is a division of Superior that is engaged in the business of purchasing mortgage loans in the secondary market, and the entity that was principally involved in the loan transactions at issue. The Court shall refer to Superior Bank FSB and Alliance Funding collectively as Superior. Superior and Tandem entered into a Master Agreement for Purchase and Sale of Mortgage Loans (Purchase Agreement) on February 11, 1997. Id. at 37. The Purchase Agreement was renewed on September 15, 1998. Id. Between July 1998 and April 1999, pursuant to the Purchase Agreement, Superior purchased various*306 mortgage loans originated by Tandem, including the twenty-three loans at issue in the instant case. Id. at 38. Each of the twenty-three loans is secured by residential real property located in Baltimore City, Maryland. Id. Under the Purchase Agreement, each loan transaction was subject to Tandem's fulfillment of various conditions precedent, including a requirement that the representations and warranties made by Tandem in connection with the loan transaction were true and correct and that Tandem was not in default of any obligations it had undertaken in the Purchase Agreement. Id. at 39. With respect to each loan transaction, Tandem represented: that a written real estate appraisal was made by a disinterested appraiser and in accordance with industry standards; that no document prepared by Tandem or to be furnished to Superior contained any untrue statement of material fact or omitted a fact or circumstance necessary to make the statement not misleading; that the mortgage loan documents accurate and complete;
FN4

conformed to all applicable laws and were true, valid, genuine,

FN4. Including, but not limited to, the mortgage, mortgage note, and any insurance policy.

 that all legal requirements applicable to the solicitation of the mortgagor and the origination, holding, servicing and transfer of the mortgage had been complied with by Tandem; that there had been no violation of any state law relating to unfair competition in connection with the origination or servicing of the mortgage loan; that all parties to the mortgage note and all other documents in the mortgage file were the real parties in interest and had full legal capacity to execute the documents; that the mortgage loan was not selected by Tandem for sale to Superior on any basis intended to harm Superior and that all material facts had been disclosed to Superior; that the mortgage file contained an appraisal by a disinterested appraiser satisfactory to Superior; and that the origination and collection practices used by Tandem with respect to each mortgage were in all respects legal, proper, prudent and customary in the mortgage banking business. Id. at 40A-40I. Upon breach of any of the representations, warranties or obligations set forth in the Purchase Agreement, Tandem was obligated, upon Superior's request, to repurchase the mortgage loan to which the breach pertained. Id at 41. Superior claims that Tandem engaged in a scheme FN5 with various mortgage brokers,FN6 title companies,FN7 and appraisers FN8 to induce *307 Superior to purchase the twenty-three loans involved in this case at greatly inflated prices. Id. at 45-60. In furtherance of the scheme, the Mortgage Broker Defendants allegedly **submitted false and inaccurate loan documents that falsely inflated the value of the mortgage property, **falsely stated the borrower's income and assets, and/or **falsely indicated that the borrowers had made down payments. Id. at 49. In connection with the preparation of the loan documents, the Mortgage Broker Defendants secured the services of the Appraiser Defendants, who prepared appraisals for false and inflated values. Id. at 50-51. The Mortgage Broker Defendants also allegedly included in the loan packages terms to make up the difference between the first purchase money deed of trust and the sale price by providing for a large down payment or cash settlement from the borrower. Id. at 54. The Mortgage Broker Defendants included these terms with knowledge that the borrowers could not afford to pay the down payment or cash settlement. Id. FN5. In the interest of brevity, the Court will discuss Superior's specific allegations pertaining to a single Defendant only where the parties have raised an issue with respect to the sufficiency of those specific allegations. FN6. The mortgage brokers involved in this case are: B & G Financial Services, Inc. and its employee Clint Baldeo (collectively B & G); Provident Funding Group and its employee Jock McClees (collectively Provident); Universal Lending Group, Inc. (Universal); Capital Mortgage Finance Corp. (Capital); Home Funding Corporation (Home Funding) and Accubanc Mortgage Corporation (Accubanc). The Court shall refer to the aforementioned mortgage brokers collectively as the **Mortgage Broker Defendants. FN7. The title companies involved in this case are: JKV Real Estate Services and its employee John K. Voyatzis (collectively JKV); Terrapin Title, LLC and its employee Joseph F. Pietropaoli (collectively Terrapin); Lorimar Title Corp. (Lorimar); Century Title and Escrow Corp. (Century) and Consumers Title Company, Inc. (Consumers). The Court shall refer to the aforementioned title companies collectively as the **Title Company Defendants. FN8. The appraisers involved in this case are: **CHS Management, Inc. and its employee Ross C. Silver (collectively CHS); **Central Maryland Appraisers, Inc. and its employee JoAnn DiMartino (collectively CMA); George W. Johnson (Johnson); Erdolph Shiver (Shiver); D.P. Appraisal,

Inc. (D.P.); Narade Pramuan (Pramuan); Maureen O'Prey (O'Prey); Golden Gate Appraisal Services, Inc. (Golden Gate); Colonial Appraisers (Colonial); Stuart H. Dickman & Associates, Inc. and its employee Stuart Harvey Dickman (collectively Dickman & Associates); Value Appraisals (Value) and William Braunschweiger (Braunschweiger). The Court shall refer to the aforementioned appraisers collectively as the **Appraiser Defendants. The Appraiser Defendants allegedly submitted false and inflated appraisals to the Mortgage Broker Defendants which were, in turn, provided to Tandem and ultimately to Superior. In each transaction, the appraised value was identical to the contract price of the property. Id. at 51. In several of the transactions, the appraisal failed to reflect that the property had been subject to a **flip. FN9 Id. In other transactions, the appraisal failed to reflect the true condition of the property. Id. FN9. That is, that the property had been bought and sold immediately prior to the appraisal. Id. at 51. After receiving the loan packages from Tandem, Superior agreed to purchase the mortgage loans in an amount between 60% and 80% of the contract price or appraised value, subject to the condition that the balance be made up by the down payment. Id. at 55. Following this conditional approval, Tandem notified the Mortgage Broker Defendants of loan approval. Id. at 57. The Mortgage Broker Defendants arranged loan closings with the Title Company Defendant with which they were affiliated. Id. Prior to loan closing, the Mortgage Broker Defendants advised the Title Company Defendants of the documents that were needed to settle the loan and the terms that would have to appear on the HUD-1 settlement sheet to make the settlement sheet reflect a bona fide transaction. Id. at 58. This was accomplished by listing the inflated appraised value of the property and a false down payment amount on the settlement sheet. Id. at 58-59. Contrary to the HUD-1 settlement sheet, the only funds available at settlement were those provided by the lender under the first lien purchase money loan. Id. at 60. The vast majority of the twenty-three loans are in default or have been or are *308 delinquent. Id. at 47. At least one borrower has filed for bankruptcy. Id. **Superior alleges that Tandem breached its obligations under the Purchase Agreement by, inter alia, submitting to Superior **falsely inflated appraisals on the mortgaged property serving as security for the mortgage loans purchased by Superior, and **by failing to confirm the source of down payments made by borrowers where such down payments were excessive in light of the borrower's income and assets. Id. at 43. Superior claims that Tandem is responsible for its own breach, as well as the actions of the Mortgage Broker Defendants, Appraiser Defendants and Title Company Defendants because Tandem retained or appointed those defendants as its agents. Id. at 48. Superior has made a demand upon Tandem to repurchase the twenty-three loans, but Tandem has not done so to date. Id. at 42. On August 4, 1999, Superior filed the instant lawsuit against Tandem and various mortgage brokers, appraisers and title companies. The Amended Complaint was filed on September 24, 1999, naming additional defendants and bringing the total to thirty-one. The Amended Complaint includes the following claims:

**COUNT I **COUNT II **COUNT III **COUNT IV **COUNT V **COUNT VI **COUNT VII

Breach of Contract (against Tandem only) Civil Racketeer Influenced and Corrupt Organizations Act Fraud (in connection with appraisals) Fraud (in connection with down payments) Fraud-Civil Conspiracy Negligent Misrepresentation (in connection with appraisals) Negligent Misrepresentation (in connection with down payments)

The Defendants have also filed numerous cross-claims against each other. FN10 Numerous Defendants have now filed Motions to Dismiss various counts of the Complaint and/or Amended Complaint.FN11 FN10. With respect to Tandem's cross-claims, several Defendants have filed motions to dismiss. The

Court will resolve the motions which relate to Tandem's cross-claims by separate Order. FN11. Although many of these motions were filed prior to the filing of the Amended Complaint, the Defendants were not required to file new motions to dismiss. See 6 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and procedure: Civil 2d 1476 (1990) (stating that [i]f some of the defects raised in the original motion remain in the new pleading, the court simply may consider the motion as being addressed to the amended pleading.). III. DISCUSSION Various Defendants have challenged the sufficiency of Plaintiff's claims for Fraud, *309 Negligent Misrepresentation and RICO violations. The Court will address each claim in turn. B. Tort Claims-Preliminary Issues 1. Choice of Law a. Tandem [4][5] Tandem raises an issue with respect to which state's law governs Superior's tort claims. FN13 A federal court exercising diversity or pendent jurisdiction over state law claims must apply the choice of law rules of the forum state, here Maryland. ITCO Corp. v. Michelin Tire Corp., 722 F.2d 42, 49 n. 11 (4th Cir.1983); see Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 491, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). FN13. Tandem relies primarily on New Jersey decisions to support its argument that Superior's tort claims fail as a matter of law. Superior argues that Maryland law applies to its tort claims. [6] The contract between Tandem and Superior contains a choice of law provision which states that [the] Agreement shall be construed in accordance with the laws of the State of New Jersey without regard to internal conflicts of law, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. FN14 Maryland acknowledges that the parties to a contract may agree as to the law which will govern their transaction, even as to issues going to the validity of the contract. Kronovet v. Lipchin, 288 Md. 30, 415 A.2d 1096, 1104 (1980). FN14. Tandem Mot. Ex. A., September 15, 1998 Master Agreement for the Purchase and Sale of Mortgage Loans; Tandem Mot. Ex. B., February 11, 1997 Master Agreement for the Purchase and Sale of Mortgage Loans. The Purchase Agreements are identical, and the Court shall therefore cite to them collectively as Purchase Agreements. The Court's reference to the Agreements does not require conversion of Tandem's Motion to Dismiss into a Motion for Summary Judgment, because the Agreements are an integral part of Plaintiff's Complaint. [7] Under Maryland law, the intent of the parties, as evidenced first by the plain language of the contract, governs the issue of whether the choice of law provision applies to contract-related tort claims. See id., 415 A.2d at 1106-07 (considering intent of parties in determining which state's law governed interest and usury issues pertaining to loan transactions). The choice of law provision contained in the Purchase Agreement refers only to the rights and remedies of the parties hereunder. FN15 Based on the plain meaning of these terms, the Court concludes that Tandem and Superior intended for New Jersey law to govern only contract claims, and not tort claims that are merely related to the contract. FN15. Purchase Agreements at 16(D) (emphasis added). [8][9] When a cause of action arises in tort, Maryland's choice of law rules require application of the law of the state where the tortious conduct or injury occurred. In the case at Bar, the tortious conduct is alleged to have occurred in Maryland. Accordingly, the viability Superior's tort claims against Tandem will be resolved according to Maryland law.FN16 FN16. In any event, Tandem effectively acknowledges that the choice of law issue is immaterial, by

stating that there is no material difference between the relevant Maryland and New Jersey law. b. Remaining Defendants Terrapin FN17 raises the choice of law issue in its reply brief, and correctly states that *310 Maryland law applies to Superior's tort claims against all Defendants who were not parties to the Purchase Agreement. See Barnes Group, Inc. v. C & C Products, Inc., 716 F.2d 1023, 1032 n. 25 (4th Cir.1983) (stating that a contractual choice-of-law provision, of course, can have no bearing on the law controlling a tort action brought against a third person not a party to the contract.). Accordingly, the viability of Superior's tort claims against the Mortgage Broker Defendants, the Appraiser Defendants and the Title Company Defendants will be resolved according to Maryland law. FN17. No other Defendant, aside from Tandem, addresses the choice of law issue. 2. The Economic Loss Rule [10] Tandem FN18 argues that Superior's state law tort claims for fraud (Counts III and IV) and negligent misrepresentation (Counts VI and VII) are barred by the economic loss rule. Plaintiff points to Maryland cases allowing contract and tort actions to be brought in the same case in support of its argument that its tort actions should survive Tandem's Motion. See, e.g. Martens Chevrolet, Inc. v. Seney, 292 Md. 328, 439 A.2d 534 (1982); Aeropesca Ltd. v. Butler Aviation Int'l, Inc., 44 Md.App. 610, 411 A.2d 1055 (Spec.App.1980). FN18. The Court acknowledges that Capital (joined by Accubanc, B & G, and Century) and Terrapin have made arguments with respect to the economic loss rule as well. For purposes of analysis, a distinction must be drawn between those Defendants with which Superior had contractual privity, and those Defendants with which Superior did not. Flow Industries, Inc. v. Fields Construction Co., 683 F.Supp. 527, 529 (D.Md.1988). The arguments of Capital and Terrapin are focused on the issue of whether Superior can establish that they had a duty to Superior, which is required to prove the negligent misrepresentation claims. Because this duty is itself an element of the negligent misrepresentation claim, and because the majority of the other Defendants who have raised this issue have discussed the duty requirement in their discussions of the negligent misrepresentation counts, the Court will address the arguments of Capital and Terrapin regarding the economic loss rule fully in section III.E.1. [11] In general, when a controversy concerns purely economic losses allegedly caused by statements made during the course of a contractual relationship between businessmen, it is plainly contract law which should provide the rules and principles by which the case is to be governed. Flow Industries, Inc., v. Fields Construction Co., 683 F.Supp. 527, 530 (D.Md.1988); see Martin Marietta Corp. v. International Telecommunications Satellite Organization, 991 F.2d 94 (4th Cir.1993) (citing 763 F.Supp. 1327 (D.Md.1991)). The Purchase Agreement imposed numerous duties on Tandem, including, as Superior points out, an express duty to warrant that the representations were true and correct and that all information contained in the loan files was complete, accurate, and correct. FN19 The Purchase Agreement also contains the following provision regarding remedies: FN19. Purchase Agreements at 3(b)(i), (4)(b)(i)-(ii), 4(b)(xxxv). All remedies and rights in favor of [Superior] as against [Tandem] provided in this Agreement are cumulative and are in addition to and not in limitation of all other rights and remedies which [Superior] may at any time have in law or at equity against [Tandem] for or on account of any breach or violation by [Tandem] of the terms, provisions, agreements, covenants, representations, warranties and undertakings of [Tandem] made or provided for in this agreement. FN20 FN20. Purchase Agreements at 14(I); see id. at 12 (The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law.) *311 [12] The allegations contained under the headings of fraud and negligent misrepresentation repeat,

nearly word for word, the allegations contained under the breach of contract claim. Tandem relies heavily on this parallelism in arguing that the contract provides Superior's exclusive remedy, an argument that would have great weight in a typical case. This case presents a somewhat unique situation,FN21 however, due to the contractual provision stating that the rights created by the Purchase Agreements are cumulative. As a result, there is, at a minimum, an ambiguity as to whether the parties intended to define the full scope of their duties in the Purchase Agreements.FN22 Accordingly, Tandem is not entitled to dismissal of Superior's tort claims based on the economic loss rule. FN21. In that none of the contracts involved in all of the cases cited by counsel, and discovered by the Court, involved the imposition of a duty regarding the making of representations, or a provision stating that the remedies supplied by the contract were cumulative. Compare Martin Marietta, 991 F.2d at 96; Flow Indus., 683 F.Supp. at 531-32. Tandem argues that these distinctions are irrelevant. However, in the instant context of a motion to dismiss, and drawing all inferences in favor of Superior, the Court cannot say that Plaintiff could prove no set of facts which would entitle it to relief. FN22. In addition, Tandem acknowledges that the economic loss rule does not apply to bar fraudulent inducement claims. See Martin Marietta, 991 F.2d at 98-99. In the context of Superior's claim against it, Tandem attempts to argue that the allegations in this case could not support a claim for fraudulent inducement, and that Superior has failed to draw a critical distinction. It appears, however, that Tandem is trying to have its cake and eat it too. Tandem has filed crossclaims for fraud against all of the Defendants, conditionally adopting Superior's fraud allegations and adding no new facts of its own. As discussed in the Court's Memorandum and Order Re Motions to Dismiss Tandem's Cross-Claims, Capital makes the same arguments in support of dismissal of the cross-claim which Tandem made with respect to the economic loss rule in the context of Superior's claim against Tandem. In opposition, Tandem argues that the Broker Agreements between itself and Capital were agreements to contract, and that Tandem's fraud claim, which is identical to Superior's fraud claim, could be characterized as fraud in the inducement. Tandem has failed, however, to explain why its agreement with Superior could not be similarly characterized as an agreement to contract. 3. Appraisals as Mere Statements of Opinion [13] Several Defendants FN23 argue that Superior's state law tort claims for fraud and negligent misrepresentation based on allegedly inflated appraisals (Counts III and VI) fail to state a claim because appraisals, as mere statements of opinion, are not actionable as a matter of law. CHS also argues that Superior could not have reasonably relied on the appraisals. Superior contends that appraisals are more than mere statements of opinion, but rather professional evaluations of value, and that its reliance was reasonable. FN23. Capital (joined by Accubanc, B & G and Century) and CHS have advanced this argument. [14] On a general level, Capital and CHS correctly maintain that in Maryland, representations as to the quality or condition of property are not actionable where they are mere expressions of opinion. Fowler v. Benton, 229 Md. 571, 185 A.2d 344, 349 (1962) ; see Appel v. Hupfield, 198 Md. 374, 84 A.2d 94 (1951) ; Johnson v. Maryland Trust Co., 176 Md. 557, 6 A.2d 383 (1939) . Maryland does acknowledge, however, that representations as to quality and condition may constitute fraud where they are asserted as statements of fact. Fowler, 185 A.2d at 349. Moreover, the essence of the transactions at *312 issue are those in which an honest appraisal, a best professional estimate of value, would be provided and not, as alleged, a fraudulent or negligent statement. Superior has pointed to several decisions which suggest circumstances under which an appraisal may be actionable. Although these decisions do not apply Maryland law, the Court finds them persuasive. FN24 In Costa v. Neimon, 123 Wis.2d 410, 366 N.W.2d 896 (App.1985), for example, purchasers of real property sued the lender's real estate appraiser for negligent misrepresentation as to the fair market value of the property, and a jury found for the plaintiffs. Id. The jury had heard testimony regarding the items that are considered in making

an appraisal, including square footage, improvements, etc. Id. at 416, 366 N.W.2d 896. The Wisconsin Court of Appeals found that the jury could reasonably have concluded that the appraisal was a statement of opinion which carried an implied assertion that facts existed to support his opinion, and thus that there had been an actionable misrepresentation of fact.FN25 Id. FN24. It does not appear that there are any reported Maryland decisions dealing with the precise issue at hand. FN25. The Wisconsin Court of Appeals further held that expert testimony that the property was worth roughly $8,500 less than the appraised value was sufficient to support the jury's conclusion that the appraisal constituted a false statement. Id. at 416-17, 366 N.W.2d 896. In Larsen v. United Federal Savings and Loan Ass'n of Des Moines, 300 N.W.2d 281 (Iowa 1981), a negligence action, the appraiser admitted that he would sometimes hurry through an appraisal and was told to be more careful. Id. at 284. Further, there were indications of serious defects in the property which a jury could have concluded a competent appraiser would have noticed. Id. at 288.FN26 FN26. See also First Federal Savings and Loan Ass'n of Rochester v. Charter Appraisal Co., Inc., 247 Conn. 597, 724 A.2d 497 (1999) (approving award of tort damages based on a negligent appraisal); James v. Nationsbank Trust Co. Nat'l Assoc., 639 So.2d 1031, 1034 (Fla.Ct.App.1994) (stating that [a]n appraisal, while opinion, may support a claim of fraud where the appraisal is an expression of a false opinion.). Compare McCollum v. P/S Investments Ltd., 764 S.W.2d 252, 254-55 (Tex.App.1988) (granting summary judgment to defendant appraiser because plaintiff real estate broker failed to establish a genuine issue of fact with respect to whether the appraiser had knowledge superior to that of the real estate broker, and record reflected that the plaintiff suffered from studied ignorance). Superior alleges that each of the appraisals involved in the case at Bar contained falsely inflated prices and that it reasonably relied on the appraisals.FN27 It may very well be that, at a later stage of the case, Superior will be unable to prove that the appraisals constitute false representations of fact as opposed to mere opinions and/or that its reliance was reasonable. For purposes of the instant motion, however, the Court must accept all well pleaded allegations as true. Applying that standard, the Court cannot conclude beyond doubt that Superior can prove no set of facts which would entitle it to relief based on the allegedly false appraisals. FN27. **The Court notes that Superior also alleges that numerous appraisals failed to reflect that the property was the subject of a flip, an apparently significant fact. 4. Successor Liability [15] Golden Gate has moved to dismiss because it was not incorporated until after the actions alleged by Superior took place. Superior alleges that Johnson, as Golden Gate's employee, conducted appraisals of three properties. Am. Compl. at 108-*313 112; id. at 123-24. Golden Gate, however, was not incorporated until August 20, 1999, after the filing of this lawsuit. Accordingly, Golden Gate had no corporate existence when the allegedly tortious actions were committed. It would appear that the only way that Golden Gate could be held liable for Johnson's actions which occurred prior to the incorporation is on a theory of successor liability. Under Maryland law, the general rule regarding successor liability is one of non-liability, **subject to four exceptions. The Maryland Court of Appeals has stated that: a corporation which acquires all or part of the assets of another corporation does not acquire the liabilities and debts of the predecessor unless: **(1) there is an express or implied agreement to assume the liabilities; **(2) the transaction amounts to a consolidation or merger; **(3) the successor entity is a mere continuation or reincarnation of the predecessor entity; or **(4) the transaction was fraudulent, not made in good faith, or made without sufficient consideration. Nissen Corp. v. Miller, 323 Md. 613, 594 A.2d 564, 565-66 (1991) (citations omitted). The Court concludes that dismissal of its claims against Golden Gate at the current stage of this litigation would be premature, because one or more of the exceptions to the general rule might apply.

In particular, Superior argues that Golden Gate could be considered a mere continuation of the business previously operated by Johnson, or alternatively, that Golden Gate might have been incorporated for the purpose of shielding Johnson's assets from tort claims. Superior will be allotted time to conduct expedited discovery relating to the possible successor liability of Golden Gate for Johnson's actions. Golden Gate will then have the opportunity to move for summary judgment, also on an expedited basis, on the successor liability issue. C. Fraud **In Count III, Superior alleges that the Defendants committed fraud in connection with the appraisals of twenty-one properties that secured mortgages which were the subject of its purchases from Tandem. Am. Compl. 150-53. **In Count IV, Superior alleges that the Defendants committed fraud, with respect to each of the twenty-three loans that are the subject of this lawsuit, in connection with the down payments listed on the HUD-1 settlement sheets and the income and assets listed on the borrowers' loan applications. Id. at 155-57. Various Defendants argue that Superior has failed to plead fraud with particularity. Other Defendants argue that certain counts should be dismissed against them because Superior has failed to allege that they were involved in the allegedly false representations. 1. Failure to Plead with Particularity [16][17][18] Capital, JKV, CHS, Lorimar and Consumers FN28 argue that Superior has failed to satisfy the requirements of Federal Rule of Civil Procedure 9(b). Rule 9(b) provides that [i]n all averments of fraud[,] the circumstances constituting fraud ... shall be stated with particularity. Fed.R.Civ.P. 9(b). The word circumstances is interpreted to include the time, place and contents of the false representation, as well as the identity of the person making the misrepresentation and what [was] obtained thereby. *314Windsor Assocs. v. Greenfeld, 564 F.Supp. 273, 280 (D.Md.1983). Rule 9(b) must be read in conjunction with Federal Rule of Civil Procedure 8(a), which demands only a short and plain statement of the claim, and with the Federal Rules' policy in favor of flexibility and simplicity in pleading. See All Risks, Ltd. v. The Equitable Life Assurance Soc'y, 931 F.Supp. 409, 418 (D.Md.1996); PPM Am., Inc. v. Marriott Corp., 820 F.Supp. 970, 973 (D.Md.1993). The central question which arises when a complaint is attacked under 9(b) is how much detail is necessary to give adequate notice to the opposing party in order to enable that party to prepare adverse pleadings. PPM, 820 F.Supp. at 973. FN28. In addition, Accubanc, B & G, Century, and Terrapin have adopted the motions of some of the Defendants who have advanced this argument. The Fraud Counts incorporate by reference all preceding paragraphs of the Amended Complaint. Accordingly, an examination of the entire Amended Complaint is necessary. The Court concludes that although Superior's pleading is far from artful, a full reading of the allegations contained in the Amended Complaint provides sufficient detail to enable the Defendants to respond to Superior's allegations.FN29 FN29. The Court has undertaken the somewhat painful task of sorting out which allegations pertain to which particular Defendants, leading to the conclusion that the Fraud Claims have been pleaded with sufficient particularity. The Defendants themselves could certainly have saved themselves, and the Court, a considerable amount of time and effort had they read Superior's Complaint (or Amended Complaint) in its entirety. [19] With respect to each Defendant, the Amended Complaint includes a description of the general items (i.e., preparation of appraisals, preparation of documents, collection of payments) which Superior alleges that each particular Defendant was responsible for.FN30 In addition, the Amended Complaint alleges that the representations made in connection with these activities were communicated to Superior.FN31 These descriptions provide a background understanding of Superior's fraud allegations against the various Defendants, which are fleshed out in more detail in later portions of the Amended Complaint. The Court will specifically discuss the sufficiency of the allegations with respect to the Mortgage Broker Defendants, the Title Company Defendants, and the Appraiser Defendants below. FN30. Superior alleges that the Mortgage Broker Defendants acted as mortgage broker[s] and

mortgage banker[s]. Am. Compl. at 6-7(B & G); id. at 21 (Capital); id at 29 (Accubanc). Superior alleges that the Title Company Defendants were responsible for the preparation of the documents of conveyance, including deeds, leasehold assignments and deeds of trust; conducted settlements of the sale and financing transactions; collected payments from the buyers and sellers; and disbursed purchase money, including down payments, and loan proceeds and that their employees participated in the preparation of ... settlement documents, conducted settlements, and acted as a disbursement agent. Id. at 8-9(JKV); id. at 14-15 (Terrapin); 18 (Lorimar); 23 (Century); 25 (Consumers). Superior alleges that the appraisers prepared appraisals. Id. at 10-11(CHS). FN31. To the extent that any of the Defendants argue that Superior's fraud claim fails because there is no allegation that the communication was made directly to Superior, that argument has no merit. In Sempione v. Provident Bank of Maryland, 75 F.3d 951 (4th Cir.1996), the Fourth Circuit stated that, in the context of a fraud claim, the Maryland courts would not require that the allegedly false representation be made directly to the plaintiff. Id. at 962-63 (citing L & P Converters, Inc. v. Alling & Cory Co., 100 Md.App. 563, 642 A.2d 264, 268-69 (Spec.App.1994) and quoting Restatement (Second) of Torts 532-33 (1977)). a. Mortgage Broker Defendants With respect to the Mortgage Broker Defendants in particular, Superior first alleges, in general terms, that they *315 submitted false and inaccurate loan documents that falsely inflated the value of the mortgage property, that falsely stated the borrower's income and assets, and/or that falsely indicated that the borrowers had made the down payments reflected in the HUD-1 settlement sheets; and includ[ed] in the loan packages false terms to make up the difference between the first purchase money deed of trust and the sale price by including terms for a large down payment, which they knew would not be made, or cash at settlement from the borrower, which they knew was unavailable. Am. Compl. at 49, 54. Standing on their own, these allegations would not appear to meet Rule 9(b)'s requirements. The Amended Complaint, however, contains a separate section pertaining to each Mortgage Broker. Am. Compl. at 61-87(B & G); id. at 88-98 (Capital); id. at 125-133 (Accubanc). Within each section, the Amended Complaint lists the particular borrowers and particular loans which Superior alleges each Mortgage Broker was involved in, and the dates on which each loan was made. Id. at 65-87 (B & G involved in Calamita, Pinkett, Mavris, Vogtman and Hines transactions); id. at 92-98 (Capital involved in Cobb transactions); id. at 129-33 (Accubanc involved in Brown loans). Furthermore, as will be discussed in more detail below, the Amended Complaint alleges, with respect to each particular loan transaction, **the precise false statements that were contained in the loan documents that, according to Paragraph 49, the Mortgage Broker Defendants submitted to Tandem for eventual transmittal to Superior. **Following a full analysis of the Amended Complaint, the Court concludes that Superior has made more than conclusory allegations of fraud with respect to the Mortgage Broker Defendants, including B & G, Capital and Accubanc. b. Title Company Defendants With respect to the Title Company Defendants, Superior alleges generally that: They were advised by the mortgage brokers of the documents needed to settle the loan and the terms that would have to appear on the HUD-1 settlement sheet, to make the settlement sheet appear as if a bona fide transaction was conducted based on the inflated appraised value of the properties, including, upon information and belief, a false down payment amount; and Their closing agents prepar[ed] and submitt[ed] HUD-1 settlement statements **that in many instances reflected down payments made by borrowers when, in fact, such down payments were not made. Contrary to the settlement sheet prepared for each loan, the only funds actually available at settlement were

those provided by the lender under the first lien purchase money loan. Id. at 58-60. Superior alleges that it purchased the subject loans (at least in part) in reliance upon the borrower's ability to make the required down payment. E.g., id. at 66, 78, 93, 106, 109, 123. With respect to JKV in particular, Superior alleges that JKV acted as the Title Company on the Calamita, Pinkett, Vogtman, and Hines loans. Id. at 65, 72, 84, and 86. JKV allegedly performed the following acts: Prepared HUD-1 settlement statements signed by the borrowers on the date of closing indicating down payments on multiple pieces of property typically purchased on the same day, and in total amounts in excess of the *316 liquid assets identified on the borrowers' loan applications; Prepared settlements indicating seller concessions or contributions toward closing ranging from $2000 to $3000 per mortgaged property; Included in the loan files estimated or stricken through settlement statements in addition to the final settlement statement, indicating a lower down payment from the borrower, a second mortgage to be taken by the seller and credits from the seller toward the purchase price; and Failed to include in the loan file certified checks from the borrowers confirming their payment of the down payment. Id. at 64. In connection with the three Calamita loans in particular, Superior alleges that JKV prepared an extra settlement statement which provided for lower down payments, seller second mortgages and seller contributions toward the contract price. Id. at 65. These concessions were not included in the final settlement statement signed by Calamita, and the final settlement was not faxed by JKV until weeks after the settlement. Id. In connection with the two Pinkett loans, Superior alleges that JKV prepared settlement statements which provided for down payments in excess of $27,500, notwithstanding a monthly salary of $6,500 and unverified bank account balances of $20,578, and purported seller contributions toward the contract price of over $3000. Id. at 72. In connection with the Vogtman loan, Superior alleges that JKV prepared a settlement statement which indicated a down payment of $23,087, notwithstanding a monthly salary of $1437 and bank account balances of $4101. Id. at 84. In connection with the Hines loan, Superior alleges that JKV prepared a settlement statement which indicated that Hines made a down payment of $15,421.84, notwithstanding a monthly salary of $1721.21 and bank account balances of $4160, when in fact Hines made no such payment. Id. at 86. With respect to Terrapin in particular, Superior alleges that Terrapin acted as the Title Company on the Mavris, Jones, and Purnell loans. Id. at 77, 103, 117. In connection with the three Mavris loans, Superior makes the same general allegations that it did against JKV. Id. at 64. Superior further alleges that Terrapin prepared settlement statements indicating down payments of over $40,000, notwithstanding a stated yearly salary of $42,000 and unverified bank account balances of $10,455. Id. at 77. In connection with the two Jones loans, Superior alleges generally that Terrapin prepared HUD-1 settlement statements signed by the borrower on the date of closing indicating down payments on multiple pieces of property being purchased by borrower on the same day or within days of the other two settlements, and **in total amounts in excess of the liquid assets identified on the borrower's loan

application, **when in fact no such payments were made. Id. at 102. More specifically, Superior claims that the settlement statements indicated that Jones made total down payments of over $13,800, FN32 **when in fact no *317 such down payments were made. Id. at 103. FN32. The settlement statements indicated this down payment amount, notwithstanding the fact that one loan application listed a monthly salary of $5267 and other monthly income of $400, and the other listed a monthly salary of $5174 and other monthly income of $200, plus bank account balances of $6600. Am. Compl. at 103. In connection with the three Purnell loans, Superior alleges generally that Terrapin prepared HUD-1 settlement statements signed by the borrower indicating down payments on multiple pieces of property being purchased by borrower[s] on the same day in excess of the liquid assets identified on the borrower's loan applications. Id. at 116. In particular, Terrapin allegedly prepared settlement statements indicating total down payments of over $32,400 FN33 on the same day **which were not made. Id. at 117. FN33. The settlement statements indicated this amount, notwithstanding the fact that one loan application listed a monthly salary of $2182 and the other two a monthly salary of $5069. Superior alleges that Century acted as the Title Company on the three Cobb loans. Id. at 92. Superior alleges that Century prepared HUD-1 settlement statements signed by the borrower on the date of closing indicating down payments on multiple pieces of property being purchased by the borrower on the same day or within days of the other two settlements, and in total amounts in excess of the liquid assets identified on the borrower's loan applications, **when in fact no such down payments were made. Id. at 91. In particular, Century prepared a settlement statement requiring down payments of over $44,000, notwithstanding a monthly salary of $2500, no bank accounts, and other income of about $1000. Id. at 92. **These down payments were not made. Id.[How did Superior know that these downpayments were not made?] Superior alleges that Lorimar acted as the Title Company on the King and Brown loans. Id. at 108, 129. In general, Superior claims that Lorimar prepared HUD-1 settlement statements signed by the borrower on the date of closing indicating down payments on multiple pieces of property being purchased by borrower[s] on the same day or within days of the other ... settlements, and in total amounts in excess of the liquid assets identified on the borrower's loan applications, **when in fact no such payments were made. Id. at 102. With respect to the two King loans, Superior claims that Lorimar prepared settlement statements indicating that King made total down payments of over $17,486 on the same day, notwithstanding a monthly salary of $2583, other monthly income of $684, and inconsistencies as to bank account balances.FN34 Id. at 108. **No such payments were made. Id. FN34. One loan application indicated a balance of $12,750 and the other a balance of $6500. Am. Compl. at 108. Superior alleges that Consumers acted as the Title Company on the Ekanem loan. Id. at 123. Superior claims that Consumers prepared a settlement statement which indicated a down payment of $16,454.36, notwithstanding a monthly salary of $3935 and no listed bank account balances. Id. **In view of the above allegations, the Court concludes that Superior has sufficiently alleged the circumstances surrounding its fraud claims against the Title Company Defendants, including JKV, Terrapin, Lorimar, Century and Consumers.

c. Appraiser Defendants With respect to the Appraiser Defendants, Superior alleges generally that Each one prepared appraisals of the property at issue for false and extremely inflated values; *318 In every single case the appraised value was identical to the contract price of the property; In other instances, the appraisal failed to reflect that the subject [property] was the subject of a flip in that the property had been bought and sold just prior to the appraisal; and there were other instances in which the condition of the property (i.e., boarded up) was not reflected in the appraisal. Id. at 51. With respect to CHS in particular, the Amended Complaint alleges its involvement in the Calamita and Pinkett loans. Id. at 66-71; id. at 73-76. Superior alleges that CHS knew that the appraisal was to be used in connection with a mortgage transaction, prepared and submitted an appraisal report stating a falsely inflated value substantially in excess of the fair market value of the property, and prepared an appraisal indicating an appraised value identical to the contract price for the property. Id. at 63. With respect to each of the three loans made to Calamita, and each of the two loans made to Pinkett, Superior alleges the date of the loan and the amount of the appraisal. Id. at 66, 68, 70, 73, 75. Superior claims that it purchased each loan (at least in part) in reliance upon the appraisal. Id. at 66, 68, 70, 73, 75. The Amended Complaint further alleges that Superior later had a second appraisal performed, revealing that the initial appraisal conducted by CHS (and/or Silver) was inflated. Id. at 67, 69, 71, 74, 76. Moreover, in Count III, the Complaint again discusses each of the Calamita and Pinkett loans, and alleges the false misrepresentation specifically. Id. at 151A-E. **An analysis of the Amended Complaint leads the Court to conclude that Superior has adequately alleged its fraud claim against CHS. **In sum, the Court concludes that Superior has pleaded its fraud claims with enough specificity to survive the challenges advanced by the various Motions to Dismiss. Accordingly, the Court will not dismiss the fraud claims on the basis of a failure to plead fraud with particularity as required by Rule 9(b). 2. Inapplicability of Count IV to Certain Defendants Johnson (joined by CHS) argues that Count IV fails to state a claim against the Appraiser Defendants because it alleges only that the lender, mortgage brokers, and title companies misrepresented down payments and borrowers' assets. Count IV incorporates by reference the allegations contained in Paragraphs 1-153, and alleges that: The Defendants falsely and fraudulently and with intent to defraud Superior represented to Superior that each borrower made the down payments set forth in the HUD-1 settlement statements and had the income and assets set forth in their loan applications; Superior relied upon the representations set forth in the settlement statements submitted by Defendants and was thereby induced to purchase the mortgage loans from Tandem; As a result, Superior paid an amount to purchase the mortgage loans generally in excess of 100% of the fair market value of the property, and now many of the loans are delinquent or in default. Id. at 155-57. The Amended Complaint contains no allegations that Johnson or CHS, or any of the Appraiser Defendants for that matter, were involved in any of the allegedly false *319 statements regarding borrowers' down payments, income or assets. FN35 Moreover, the Court notes that Count IV demands judgment against only

Tandem, the mortgage broker, and the title company/closing agent Defendants. Id. Accordingly, the Court concludes that, to the extent that Superior intended to include them in Count IV, Count IV fails to state a claim for fraud against any of the Appraiser Defendants. FN35. Superior failed to respond to this argument in its Consolidated Opposition. Further, the Court notes that when Superior amended its complaint, it cured this type of problem with respect to the negligent misrepresentation counts, but did not do so with respect to its fraud claim. D. Conspiracy [20] In Count V, Superior attempts to state a claim for conspiracy under Maryland law. Under Maryland law, a civil conspiracy is a combination of two or more persons by an agreement or understanding to accomplish an unlawful act or to use unlawful means to accomplish an act not in itself illegal, with the further requirement that the act or the means employed must result in damages to the plaintiff. Green v. Washington Suburban Sanitary Comm'n, 259 Md. 206, 269 A.2d 815, 824 (1970); Robb v. Wancowicz, 119 Md.App. 531, 705 A.2d 125, 132 (Spec.App.1998). [21] Civil conspiracy is not a separate tort capable of independently sustaining an award of damages in the absence of other tortious injury to the Plaintiff. Alexander & Alexander Inc. v. B. Dixon Evander & Assocs., Inc., 336 Md. 635, 645 n. 8, 650 A.2d 260 (1994) . Accordingly, the Court will dismiss Count V; however, the Court is not foreclosing Plaintiff from seeking to hold Defendants liable for the actions of others on a conspiracy theory. FN36 The Court simply holds that there is no separate free standing tort of conspiracy. FN36. In light of this conclusion, the Court need not address the argument advanced by JKV, (joined by CHS and Terrapin), CHS (joined by B & G), Lorimar (joined by Terrapin) and Consumers (joined by Terrapin) that Superior has failed to allege a civil conspiracy with particularity. Furthermore, the Court notes that the argument advanced by Lorimar and Consumers (both joined by Terrapin) that the Title Companies cannot be held liable because they entered any conspiracy after the consummation of the sale of the mortgage loans to Superior would not provide a basis for dismissal. Both parties rely on Yousef v. Trustbank Savings, F.S.B., 81 Md.App. 527, 568 A.2d 1134 (Spec.App.1990). In Yousef, it was not alleged that the Defendant was involved in any conspiracy until after the allegedly fraudulent sale was consummated; here, by contrast, Superior alleges that the Mortgage Broker Defendants made specific misrepresentations prior to the sale of mortgages to Superior. E. Negligent Misrepresentation [22] In Count VI, Superior alleges that Tandem, the Appraiser Defendants and the Mortgage Broker Defendants committed negligent misrepresentation in connection with the appraisals of twenty-one properties that secured mortgages which were the subject of its purchases from Tandem. Am. Compl. 161-67. In Count VII, Superior alleges that Tandem, the Mortgage Broker Defendants and the Title Company Defendants committed negligent misrepresentation, with respect to each of the twenty-three loans that are the subject of this lawsuit, in connection with the down payments listed on the HUD-1 settlement sheets and the income and assets listed on the borrowers' loan applications. Id. at 168-74. [23] In Maryland, in order to state a claim of negligent misrepresentation, a plaintiff must allege that: *320 (1) the defendant, owing a duty of care to the plaintiff, negligently asserts a false statement; (2) the defendant intends that his statement will be acted upon by the plaintiff; (3) the defendant has knowledge that the plaintiff will probably rely on the statement, which, if erroneous, will cause loss or injury; (4) the plaintiff, justifiably, takes action in reliance on the statement; and (5) the plaintiff suffers damage proximately caused by the defendant's negligence. Gross v. Sussex, 332 Md. 247, 630 A.2d 1156, 1162 (1993). Several Defendants argue that Superior cannot establish the existence of a duty of care, or that Superior has inadequately alleged the damages element of the

tort. Other Defendants argue that certain counts should be dismissed against them because Superior has failed to allege that they were involved in the allegedly false representations. 1. Duty of Care [24] Several Defendants FN37 argue that Superior cannot, as a matter of law, establish the necessary duty to succeed on its negligent misrepresentation claim. In the context of negligent misrepresentation, the Maryland Courts hold that where the failure to exercise due care creates a risk of economic loss only, an intimate nexus between the parties [i]s a condition to the imposition of tort liability. Weisman v. Connors, 312 Md. 428, 540 A.2d 783, 791 (1988) (quoting Jacques v. First Nat'l Bank, 307 Md. 527, 515 A.2d 756 (1986)). Such an intimate nexus requires contractual privity or **its equivalent. Id. FN37. Capital (joined by Accubanc, B & G and Century), Johnson (joined by CHS), JKV (joined by CHS and Terrapin), CHS (joined by B & G), Lorimar (joined by Terrapin) and Terrapin advance this argument. Superior does not contend that it had a contractual relationship with any Defendant aside from Tandem. As to the Mortgage Broker Defendants, the Title Company Defendants, and the Appraiser Defendants, the question, therefore, becomes whether Superior can allege an intimate nexus. As this Court has stated, an intimate nexus' cannot exist unless a defendant is aware of a specific party or class of parties which intend to rely upon he defendant's statement. Tischler v. Baltimore Bancorp, 801 F.Supp. 1493, 1504 (D.Md.1992) (quoting Brickman v. Tyco Toys, Inc., 722 F.Supp. 1054, 1062 (S.D.N.Y.1989)). This requirement addresses the concern, often echoed by the Maryland Court of Appeals, that liability not be extended to unknown or unforeseen third parties. In support of its negligent misrepresentation claims, Superior alleges that **the Defendants knew or should have known that the 23 mortgage loans at issue in this case could have been sold and/or assigned on the secondary market to a subsequent purchaser such as Superior. Pl. Opp. at 24-25; see Am. Compl. at 10, 11, 19, 45-60, 63, 89, 101, 164, 171-72. Although the Mortgage Broker Defendants, Title Company Defendants and Appraiser Defendants are not alleged to have communicated directly with Superior, **Superior alleges that they knew that the information that they were providing about a particular mortgage could be used in connection with a sale of the loan to a buyer on the secondary market. **In the dismissal context, necessarily drawing all inferences in favor of Superior, the Court concludes that Superior has sufficiently pleaded the duty element *321 of its negligent misrepresentation claim. FN38 FN38. See Village of Cross Keys, Inc. v. United States Gypsum Co., 315 Md. 741, 556 A.2d 1126 (1989). In Cross Keys, the Maryland Court of Appeals found that a company which had distributed information containing misrepresentations to architects and structural engineers might owe a duty of care to a developer whose architect used the information so distributed. Id., 556 A.2d at 1134-35. The Maryland Court of Appeals, after finding that the information had been disseminated for a pecuniary purpose, stated that [a]lthough the group of persons who may be expected to rely upon information of this kind may be large, they are identifiable .... That their names cannot be known in advance is of no consequence. Id. at 1134. Similarly, Superior may be able to establish that the universe of persons who could be expected to rely on the information provided by the Defendants in this action is not so large as to create the risk of imposing liability in an indeterminate amount for an indeterminate time to an indeterminate class. Id. at 1127. 2. Allegation of Damages Several Defendants FN39 argue that Superior's allegation of damages is insufficient, as it does not allege how it suffered any damages in reliance on those Defendants' actions. See Am. Compl. at 174. No case law has been cited for the proposition that the failure to allege exactly how damages were suffered is grounds for dismissing an otherwise adequately pleaded claim. Moreover, each count of the Amended Complaint incorporates by reference all preceding paragraphs. Numerous times in the preceding paragraphs Superior alleges that the damages were suffered because it was induced to purchase loans in excess of 100% of their fair market value. Superior may very well be unable to prove that it suffered damages proximately caused by these Defendants' misrepresentations. Nonetheless, reading Superior's allegations in the light most favorable to the Plaintiff, the Court concludes that the damages element of the negligent misrepresentation claim has been

pleaded adequately. FN39. JKV (joined by CHS and Terrapin) and CHS (joined by B & G) advance this argument. 3. Inapplicability of Counts VI and VII to Certain Defendants Lorimar and Consumers (both joined by Terrapin) argue that Count VI fails to state a claim against the Title Company Defendants.FN40 Count VI alleges conduct on the part of Tandem, the Appraiser Defendants, and the Mortgage Broker Defendants. Count VI therefore does not even purport to state a claim against the Title Company Defendants.FN41 FN40. JKV appears to assume (correctly) that Count VI does not state a claim against the Title Company Defendants. To the extent that CHS, an appraiser, has joined in JKV's motion, this discussion of Count VI does not apply to it. FN41. Lorimar filed its motion to dismiss prior to Superior's filing of its Amended Complaint. Consumers' Motion was filed after, and is directed at, the Amended Complaint. Although Consumers claims that Count VI uses the term Defendants, the first sentence of Paragraph 162 makes clear that Count VI is not stated against the Title Company Defendants. The Amended Complaint cures any ambiguity with respect to which Defendants are alleged to be liable under the negligent misrepresentation counts. Johnson (joined by CHS) similarly argues that Count VII fails to state a claim against the Appraiser Defendants. Count VII alleges conduct on the part of Tandem, the Mortgage Broker Defendants and the Title Company Defendants. Count VII therefore does not even purport to state a claim against the Appraiser Defendants. F. RICO Claims The Racketeer Influenced and Corrupt *322 Organizations Act (RICO) FN42 was enacted in 1970 with the goal of eliminating the infiltration of organized crime into legitimate organizations. See Benard v. Hoff, 727 F.Supp. 211, 213 (D.Md.1989); see also International Data Bank, Ltd. v. Zepkin, 812 F.2d 149, 155 (4th Cir.1987) (stating that Congress intended that RICO serve as a weapon against ongoing unlawful activities whose scope and persistence pose a special threat to social well-being.). FN42. 18 U.S.C. 1961 et seq. Superior alleges that Defendants violated subsections (a), (c), and (d) of RICO. See Am. Compl. at 14249. Several Defendants FN43 allege that Superior has failed to allege the required elements of a claim under the aforementioned subsections. FN43. The following Defendants have challenged the sufficiency of Superior's RICO claims: Capital (joined by Accubanc, B & G and Century); JKV (joined by CHS and Terrapin); CHS (joined by B & G); and Consumers (joined by Terrapin). 1. 18 U.S.C. 1962(c) [25] Subsection (c) is aimed at the use of an enterprise to carry out racketeering activities. Benard, 727 F.Supp. at 214. It provides in pertinent part: It shall be unlawful for any person employed by or associated with [the use of any person, here, and within this context, refers to outsiders to the enterprise] any enterprise ... to conduct or participate ... in the conduct of such enterprise's affairs through a pattern of racketeering activity. 18 U.S.C. 1962(c). In order to allege a violation of 18 U.S.C. 1962(c), a Plaintiff must plead the following elements: (1) conduct (2) of an enterprise (3) through a pattern (4) of [criminal] racketeering activity. Sedima S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985) (footnote omitted). Several Defendants argue that Superior has failed to allege sufficient facts to prove the

following: (1) a pattern of racketeering activity; (2) the existence of a RICO enterprise; (3) the existence of a RICO enterprise separate and apart from the Defendants; (4) that the defendants conducted or participated in the operation or management of the enterprise. [this applies if any person is an outsider, as opposed to a member of , the enterprise] In addition, several Defendants argue that Superior has failed to allege the required predicate acts with sufficient particularity. a. Pattern of Racketeering Activity To state a claim for a violation of 1962(c), a plaintiff must allege a pattern of racketeering activity. The term racketeering activity includes mail fraud and wire fraud. See 18 U.S.C. 1961(1)(B). The pattern element requires at least two acts of racketeering activity to be pleaded. See 18 U.S.C. 1961(5). The Fourth Circuit has explained the purposes of this requirement as follows: [It] ensure[s] that RICO's extraordinary remedy does not threaten the ordinary run of commercial transactions; that treble damage suits are not brought against isolated offenders for their harassment and settlement value; and that the multiple state and federal laws bearing on transactions ... are not eclipsed or preempted. Menasco, Inc. v. Wasserman, 886 F.2d 681, 683 (4th Cir.1989). The Supreme Court has developed a **two-part test to define a pattern of racketeering activity: **(1) whether the predicate acts (for example, mail or wire fraud) are related, and **(2) whether they pose a threat of continued criminal activity. *323H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989). i. Failure to Plead Commission of Predicate Acts by Each Defendant [26][27] Several Defendants FN44 argue that Superior has failed to allege a pattern of racketeering activity against them because the Amended Complaint does not allege that each Defendant committed separate specific acts of mail or wire fraud. This argument is completely without merit, as section 1962(c) includes no requirement that mail or wire be used by each defendant. Kerby v. Mortgage Funding Corp., 992 F.Supp. 787, 801 (D.Md.1998); see Pereira v. United States, 347 U.S. 1, 8-9, 74 S.Ct. 358, 98 L.Ed. 435 (1954) (stating that [w]here one does an act with knowledge that the use of the mails will follow in the ordinary course of business, even though not actually intended, then he causes' the mails to be used.). FN44. JKV (joined by CHS and Terrapin), Consumers (joined by Terrapin), Lorimar (joined by Terrapin) and CHS (joined by B & G) advance this argument. As discussed herein, Superior alleges specific instances of fraud which were committed by each Defendant. Initially, the Court notes that Superior alleges that Defendants mailed and delivered the false and inflated appraisals, and false loan applications and settlement statements to Superior through the ... [mails] ... and/or by facsimile over the telephone wires. Am. Compl. at 144. Superior also alleges that Defendants caused matters to be mailed and caused writings to be transmitted by means of wire communications in interstate commerce. Id. at 147. Second, it is virtually certain that the Defendants, if they did any of the allegedly fraudulent acts alleged by Superior at all, would at some point have used the mails and wires themselves to transmit appraisals and loan documents, or at least would have foreseen that another person in the chain of communication would use the mails or wires. Kerby, 992 F.Supp. at 801. Accordingly, the fact that Superior does not allege specific use of mail or wire by each Defendant does not provide a basis for dismissal of the RICO claims.

ii. Relationship [28][29] In the Fourth Circuit, [t]he relationship criterion may be satisfied by showing that the criminal acts have the same or similar purposes, victims, or methods of commission, or are otherwise interrelated by distinguishing characteristics and are not isolated events. Anderson v. Foundation for Advancement, Education and Employment of American Indians, 155 F.3d 500, 505-06 (4th Cir.1998) (citation omitted). Capital argues that Superior has failed to allege facts supporting the relationship criterion. Superior alleges that all of the Defendants actions had a single victim, all of the representations were made for the express purpose of inducing Superior, or another purchaser, to purchase loans from Tandem, and that the scheme involved several discrete types of actions which were repeated by individual Defendants. Furthermore, Superior alleges that Tandem used a group of several mortgage brokers, [WELLS FARGO used a group of law firms, employed a group of law firms] who in turn employed the same title companies and appraisers on multiple loan transactions which are involved in the alleged scheme.FN45 In the dismissal context, *324 the Court finds these allegations sufficient to satisfy the relationship requirement. FN45. Davis v. Hudgins, 896 F.Supp. 561 (E.D.Va.1995), upon which Capital relies, is factually distinguishable. There, the Plaintiff filed a RICO suit against eleven defendants. The allegations in plaintiff's complaint involved things as unrelated as lying in a deposition to threatening to sue the plaintiff for discrimination to filing a chapter 13 bankruptcy petition to defraud plaintiff. Id. at 565-66. The allegations involved in the case at Bar are not nearly as unrelated as those involved in Davis. iii. Continuity [30][31][32] In order to plead a pattern of racketeering activity, the Plaintiff must also allege that Defendants' acts pose a threat of continuing activity. There are two types of continuity: **closed-ended and **open-ended. H.J., Inc., 492 U.S. at 241, 109 S.Ct. 2893. A **closed-ended pattern of racketeering activity involves a course of related predicate acts during a substantial period of time which naturally comes to a close. Id. An **open-ended pattern of racketeering activity, by contrast, is a course of conduct which lacks the duration and repetition which mark a closed-ended pattern. Midwest Grinding Co. v. Spitz, 976 F.2d 1016, 1022 (7th Cir.1992). The pattern alleged in this case appears to be open-ended. The continuity requirement in an open-ended case is met by showing conduct which by its nature projects into the future with a threat of repetition. H.J., Inc., 492 U.S. at 242, 109 S.Ct. 2893. Capital and CHS argue that Superior has failed to plead sufficient facts in support of the continuity element. Drawing all inferences in favor of Superior, as it must for purposes of the instant motion, **the Court concludes that the Amended Complaint contains sufficient facts supporting the continuity element of a pattern of racketeering activity. The scheme to defraud Superior, and perhaps other purchasers of mortgage loans on the secondary market, [other People of the United States] has no limited goal. The acts alleged bear a sufficient relationship to the purpose of the alleged scheme to support the continuity element, and there is no reason to believe that the Defendants would not have continued to engage in the same types of acts with respect to Superior or other purchasers. See Thomas v. Ross & Hardies, 9 F.Supp.2d 547, 554 (D.Md.1998). Furthermore, the mere fact that the alleged actions took place over a one year period is not conclusive. See id. at 555. In sum, the Court concludes that Superior need not have alleged that each Defendant individually committed two predicate acts and that the relationship and continuity elements have been adequately pleaded. Accordingly, Superior's RICO claim does not fail for failure to allege a pattern of racketeering activity. b. Enterprise [33] Under Section 1962(c), the alleged enterprise FN46 must be an entity whose members are associated together for a common purpose of engaging in a course of conduct, and must be separate and distinct from the RICO defendants. United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981); see United States v. Computer Sciences Corp., 689 F.2d 1181, 1190 (4th Cir.1982). An enterprise may include an association of individuals and corporations. Nunes v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 609 F.Supp. 1055, 1064 (D.Md.1985).

FN46. RICO defines an enterprise to include any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity. 18 U.S.C. 1961(4). [34] In the RICO count, Superior alleges that Defendants, individually and collectively, constitute an enterprise within the meaning of 18 U.S.C. 1961(4). Am. *325 Compl. at 149. Various Defendants FN47 argue that Superior's allegation of an enterprise is insufficient to support its RICO claim. FN47. At least Capital (joined by Accubanc, B & G and Century) and Lorimar (joined by Terrapin) advance this argument. Although Superior's allegation that the Defendants constitute an enterprise, standing on its own, might be insufficient to plead a RICO enterprise, the RICO count incorporates by reference all preceding paragraphs of the Amended Complaint. **The Amended Complaint alleges that the Defendants associated with each other in an effort to induce Superior to purchase mortgage loans in amounts in excess of the fair market value of the mortgaged property. Am. Compl. at 45-60. The Amended Complaint further alleges, although in a somewhat disjointed fashion, each individual Defendant's participation in the scheme, and their relationship to each other. Id. at 61-133. **Finally, the allegations in the Amended Complaint regarding the interrelationship between the Defendants and the use of the same Mortgage Brokers, Title Companies and Appraisers with respect to numerous loan transaction support a conclusion that the enterprise was an ongoing organization, within which the members function[ed] as a continuing unit. Turkette, 452 U.S. at 583, 101 S.Ct. 2524. Drawing all inferences in favor of Superior, the Court finds that Superior's allegations that the Defendants associated together sufficiently alleges the existence of an enterprise under RICO. See Nunes, 609 F.Supp. at 1064. [35] Capital (joined by Accubanc, B & G, Baldeo, and Century) argues that Superior has failed to allege the existence of an enterprise distinct from the Defendants, because the Amended Complaint states that Defendants, individually and collectively, constitute an enterprise within the meaning of 18 U.S.C. 1961(4). Am. Compl. at 149. Obviously, if any of the individual Defendants were alleged themselves to constitute the enterprise, they could not remain as a party to the RICO action. See Nunes, 609 F.Supp. at 1064 (stating that a defendant itself cannot be the enterprise in a RICO action under section 1962(c)). However, construing the Amended Complaint liberally in favor of Superior, the Court finds that the use of the word individually does not bar the RICO cause of action. Superior has adequately alleged an association in fact enterprise. c. Participation in Operation or Management [36][37] Section 1962(c) only imposes liability on those who conduct or participate, directly or indirectly in the conduct of an enterprise's affairs through a pattern of racketeering activity. Thomas v. Ross & Hardies, 9 F.Supp.2d 547, 554 (D.Md.1998). The Supreme Court has authorized use of the operation or management test, which requires that a defendants must have some part in directing the affairs of the enterprise in order to be held liable under RICO. Reves v. Ernst & Young, 507 U.S. 170, 179, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993). Although [m]ere participation in the activities of the enterprise is insufficient, liability is not limited to upper management and those under their direction. Thomas, 9 F.Supp.2d at 554. Further, an individual may violate section 1962 through the provision of professional services, as long as he has some role in conducting the enterprise activities. Id. at 554-55. *326 [38] Consumers (joined by Terrapin) argues that Superior's section 1962(c) claim should be dismissed because Superior fails to adequately allege participation in the operation or management of the enterprise. Consumers argues that because it was involved in closing only one of the twenty-three loans involved in the case, and because it merely relied upon information provided to it prior to settlement, it could not have participated in the operation or management of the enterprise. Superior alleges that Consumers knowingly made multiple misrepresentations related to the closing of the Ekanem loan. Am. Compl. at 123, 148(J). Furthermore, although Consumers states that it was merely relying upon information provided by others, Superior alleges knowledge on the part of Consumers, and Consumers' contrary allegations must be disregarded. Finally, that Consumers and the other Title Companies may have acted at the direction of Tandem and the Mortgage Brokers does not entitle them to dismissal of the section 1962(c) claim.FN48 Although Consumers' role was apparently limited, drawing all inferences in favor of Superior, the Court cannot say that Superior can prove no set of facts which would entitle it to relief against Consumers under RICO. FN49

FN48. **See Toucheque v. Price Brothers Co., 5 F.Supp.2d 341, 348 n. 3 (D.Md.1998) (stating that [o]bviously, lower level operatives in the enterprise who act with tacit or explicit approval of the enterprise's upper management engage in sufficient conduct or participation to be liable under RICO.). FN49. See Clark v. Milam, 847 F.Supp. 409, 416 (S.D.W.Va.1994) (defendants who knowingly concealed the activity of other defendants who exercised day-to-day control over the RICO enterprise not entitled to dismissal, although this conduct was certainly less active than the conduct they were concealing); see also Thomas, 9 F.Supp.2d at 555 (denying motion to dismiss although Plaintiff was far from establishing that the alleged acts were the core activities of the enterprise.). d. Adequacy of Fraud Allegations [39] Various Defendants argue that Superior's RICO claim must be dismissed because Superior has failed to allege mail and wire fraud FN50 with particularity as required by Rule 9(b). It is well established that Rule 9(b) applies to RICO claims where the alleged predicate acts involved fraud. Kerby, 992 F.Supp. at 799; Windsor Assoc., 564 F.Supp. at 279-80. The Court has concluded herein that Superior has alleged fraud with sufficient particularity. See infra, section III.C.1. Furthermore, the Court concludes that Superior has sufficiently alleged the use of the mails and wires in connection with the allegedly fraudulent scheme. See Am. Compl. at 144, 147; see also infra, section III.F.1.a.i. As the Fourth Circuit has explained, FN50. No Defendant has challenged the sufficiency of Superior's bank fraud allegations. a civil RICO suit may be maintained, not only in mail fraud cases where the deceitful mailing is the blade rushing down toward the guillotine victim, but also in cases involving more grandiose schemes to cheat, where the mailing is but part of the frame that holds the blade. Chisolm v. TranSouth Financial Corp., 95 F.3d 331, 336 (4th Cir.1996). The Amended Complaint alleges a scheme to defraud Superior by use of the mails and wires in violation of civil RICO (as well as state common law) with sufficient particularity. See Windsor Assocs., 564 F.Supp. at 280. Accordingly, Defendants are not entitled to dismissal of Superior's civil RICO claims due to a failure to meet the requirements of Rule 9(b). *327 3. 18 U.S.C. 1962(a) [40][41] Section 1962(a) is aimed at the use of racketeering proceeds to infiltrate an enterprise, Benard, 727 F.Supp. at 214, and provides in pertinent part: It shall be unlawful for any person who has received any income derived ... from a pattern of racketeering activity ... to use or invest ... any part of such income ... in acquisition of any interest in, or the establishment or operation of, any enterprise. 18 U.S.C. 1962(a). To plead a violation of 1962(a), a plaintiff must allege (a) receipt of income from a pattern of racketeering activity, and (b) the use or investment of this income in an enterprise. Busby v. Crown Supply, Inc., 896 F.2d 833, 836 (4th Cir.1990). Like section 1962(c), section 1962(a) requires a pattern of racketeering activity and an enterprise. Unlike section 1962(c), section 1962(a) does not require that the RICO Defendant be distinct from the enterprise. Id. at 841. Section 1962(a) requires an additional element-that the income derived from the pattern of racketeering activity be used or invested in the enterprise. [42] The Court has concluded herein that Superior has adequately pleaded a pattern of racketeering activity. See infra, section III.F.1.a. Superior alleges that Defendants received income directly from the pattern of racketeering activity and used the income or its proceeds to operate themselves in violation of 18 U.S.C. 1961(3). Am. Compl. at 149. Drawing all inferences in favor of Superior, the Court concludes that Superior has pleaded both elements of a cause of action under section 1962(a).FN51 FN51. Capital argues that Superior's allegation that the Defendants used the income or proceeds to operate themselves rather than to operate the enterprise is fatal to the Amended Complaint. Reading

the Amended Complaint liberally in favor of Superior, the Court concludes that this choice of words does not bar Superior's RICO claim. 4. 18 U.S.C. 1962(d) [43] Several Defendants FN52 argue that Superior has failed to sufficiently allege a conspiracy to violate RICO. Subsection (d) prohibits a conspiracy to violate any of the provisions of subsections (a), (b) or (c). 18 U.S.C. 1962(d). Under United States v. Pryba, 900 F.2d 748 (4th Cir.1990), a RICO conspiracy may be proven by showing that each defendant agreed that another coconspirator would commit two or more acts of racketeering ... RICO conspiracy does not require that each coconspirator personally agree to commit two or more acts of racketeering. Id. at 760. Superior's allegations must be held sufficient if they support the conclusion the Defendants agreed that another coconspirator would commit two or more acts of racketeering. Id. FN52. JKV (joined by CHS and Terrapin), CHS (joined by B & G) and Consumers (joined by Terrapin) advance this argument. [44] JKV, CHS and Consumers argue that Superior has not alleged any explicit agreement on their part. However, [t]he existence of a conspiracy need not be proved by direct evidence, but may be inferred from the facts and circumstances of the case. United States v. Norris, 749 F.2d 1116, 1121 (4th Cir.1984). Knowledge and participation may also be proved by circumstantial evidence. Id. Superior alleges that the Title Company Defendants participated in the scheme to defraud by including terms in settlement documents that they either knew were false, or should have known were false. Am. Compl. at 58-60. The Amended Complaint need not allege that Defendants knew that the *328 mails or wire would be used where, as here, the alleged acts were performed with knowledge that the use of mails [or wires] will follow in the ordinary course of business. Pereira, 347 U.S. at 8-9, 74 S.Ct. 358. Finally, the fact that Consumers was involved in the closing of only one loan is not dispositive, as Superior alleges that several misrepresentations were made in connection with that loan, and the Amended Complaint supports an inference that Consumers agreed to participate in the scheme to defraud Superior.FN53 Reading the Amended Complaint liberally and drawing all inferences in favor of Superior, one may reasonably infer that the Defendants participated in a conspiracy to violate RICO. See Clark, 847 F.Supp. at 418. FN53. See United States v. Tillett, 763 F.2d 628, 632-33 (4th Cir.1985) (based on evidence that defendants agreed to captain their boats for the leader or a drug smuggling ring on two occasions, jury could reasonably have concluded that defendants understood that they were part of a RICO conspiracy, understood the scope of the conspiracy, and knowingly agreed to further the criminal objectives of the conspiracy). G. Pre-Judgment Interest and Attorney's Fees Lorimar and Consumers (both joined by Terrapin) argue that Superior has failed to adequately plead its claims for prejudgment interest and attorney's fees. Initially, the Court notes that neither Lorimar nor Consumers have cited any authority in support of their argument. Nor have they explained the standard that they believe supports dismissal of Superior's claims for these items, which are merely elements of damages. [45] As for Superior's claim for prejudgment interest, Maryland law allows an award of prejudgment interest on a liquidated sum, and in other circumstances. Maryland State Hwy. Admin. v. Kim, 353 Md. 313, 726 A.2d 238, 245 (1999). Superior has pled a liquidated sum, and any award of prejudgment interest will be left to the discretion of the Court or the jury to be determined at trial. As for attorney's fees, Superior has agreed to voluntarily dismiss its claims for attorney's fees in Counts III through VII. Pl. Consol. Opp. at 43 n. 15. As for Superior's remaining claims for attorney's fees, only Count II (RICO) is stated against Lorimar and Consumers. Because RICO authorizes an award of attorney's fees, 18 U.S.C. 1964(c), the Court will not dismiss Superior's claim under RICO for attorney's fees. IV. CONCLUSION For the foregoing reasons:

1. Defendant Lorimar Title Corporation's Motion to Dismiss Counts II through VI [paper # 28] and Defendant Lorimar Title Corporation's Motion to Dismiss Counts II Through V of the First Amended Complaint [paper # 62] are GRANTED in part and DENIED in part; FN54 FN54. Lorimar's Motions (which were joined by Terrapin and Pietropaoli) are GRANTED only as to Counts V and VI. 2. The Motion to Dismiss of Defendant George W. Johnson [paper # 32] is GRANTED in part and DENIED in part; FN55 FN55. Johnson's Motion (which was joined by CHS and Silver) is GRANTED only as to Count IV. 3. The Motion to Dismiss of Defendant Capital Mortgage Finance Corp. *329 [paper # 46] is GRANTED in part and DENIED in part; FN56 FN56. Capital's Motion (which was joined by Accubanc, B & G, Baldeo and Century) is GRANTED only as to Count V of the First Amended Complaint. 4. The Motion to Dismiss of Defendants JKV Real Estate Services and John K. Voyatzis [paper # 56] is GRANTED in part and DENIED in part; FN57 FN57. JKV's Motion (which was joined by CHS, Silver, Terrapin and Pietropaoli) is GRANTED only as to Count V of the First Amended Complaint. 5. Defendant Tandem National Mortgage, Inc.'s Motion to Dismiss Counts III, IV, V, VI, and VII [paper # 59] is GRANTED in part and DENIED in part; FN58 FN58. Tandem's Motion is GRANTED only as to Count V of the First Amended Complaint. 6. The Motion to Dismiss of Defendant Golden Gate Appraisal Services, Inc. [paper # 73] is DENIED; 7. Defendant Consumers Title Company's Motion to Dismiss Counts II through VI of the First Amended Complaint [paper # 84] is GRANTED in part and DENIED in part; FN59 and FN59. Consumers' Motion (which was joined by Terrapin and Pietropaoli) is GRANTED only as to Counts V and VI of the First Amended Complaint. 8. The Motion for Judgment on the Pleadings of Defendants CHS Management, Inc. and Ross C. Silver [paper # 90] is GRANTED in part and DENIED in part. FN60 FN60. CHS and Silver's Motion (which was joined by B & G and Baldeo) is GRANTED only as to Counts IV, V, and VII of the First Amended Complaint. 9. In sum, the following counts of the First Amended Complaint are dismissed: a. Count IV is DISMISSED against the Appraiser Defendants, comprising CHS Management, Inc., Ross C. Silver, Central Maryland Appraisers, Inc., JoAnn DiMartino, George W. Johnson, Erdolph Shiver, D.P. Appraisal, Inc., Narade Pramuan, Maureen O'Prey, Golden Gate Appraisal Services, Inc., Colonial Appraisers, Stuart Dickman & Associates, Inc., Stuart Harvey Dickman, Value Appraisals, and William Braunschweiger; b. Count V is DISMISSED against all Defendants; c. Count VI is DISMISSED against the Title Company Defendants, comprising JKV Real Estate Services, John K. Voyatzis, Terrapin Title LLC, Joseph Pietropaoli, Lorimar Title Corp., Century Title and Escrow Corp., and Consumers Title Company, Inc.; and

d. Count VII is DISMISSED against the Appraiser Defendants, comprising CHS Management, Inc., Ross C. Silver, Central Maryland Appraisers, Inc., JoAnn DiMartino, George W. Johnson, Erdolph Shiver, D.P. Appraisal, Inc., Narade Pramuan, Maureen O'Prey, Golden Gate Appraisal Services, Inc., Colonial Appraisers, Stuart Dickman & Associates, Inc., Stuart Harvey Dickman, Value Appraisals, and William Braunschweiger; 10. With respect to Superior's remaining claims against Golden Gate Appraisal Services: *330 a. Superior shall have until June 9, 2000, to conducted expedited discovery on the issue of successor liability; b. Golden Gate shall file any motion for summary judgment relating to the issue of successor liability by July 7, 2000. 11. With respect to all other remaining claims and Defendants, this case shall proceed pursuant to existing scheduling. Cook v. Easy Money of Kentucky, Inc., 196 F.Supp.2d 508, RICO Bus.Disp.Guide 10,308 (W.D.Ky. Jun 05, 2001) Customers of check cashing business brought action against the business and its majority owners, alleging that fees and interest charged by the business violated various federal and state laws, including the Truth in Lending Act and Racketeer Influenced and Corrupt Organizations Act (RICO). Defendants moved to dismiss. The District Court, Simpson, Chief Judge, held that: (1) Truth in Lending Act did not apply to certain transactions in which business deferred presentment of check for an additional fee; (2) customers had private cause of action under the Kentucky Disclosure of Financing Charges on Installment Credit Transactions Act; and (3) allegations that business owners received income from prior unlawful debt collections, and used that income to operate the business, stated RICO claim. Motion granted in part and denied in part. [4] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk68 Pleading 319Hk75 k. Injury; causation. Most Cited Cases Allegations by customers of check cashing business that owners of such business received income from prior unlawful debt collections, and used that income to operate the business, stated claim for violation of Racketeer Influenced and Corrupt Organizations Act (RICO), under provision prohibiting use of income received through collection of unlawful debt in operation of any enterprise engaged in interstate commerce. 18 U.S.C.A. 1962(a). [7] Racketeer Influenced and Corrupt Organizations 319H 70 75

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk68 Pleading 319Hk70 k. Racketeering or criminal activity; predicate acts. Most Cited Cases Allegations by customers of check cashing business that majority owners and managing officers of business collected unlawful debts and**used them to operate the business were sufficient to state violation of

Racketeer Influenced and Corrupt Organizations Act (RICO), under provision prohibiting individuals employed or associated with an enterprise engaged in interstate commerce from participating in the conduct of such enterprise's affairs through the collection of unlawful debts. 18 U.S.C.A. 1962(c). A. 18 U.S.C. 1962(a) [4] 1962(a) prohibits the use of income received through the collection of an unlawful debt in the establishment, operation, or expansion of any enterprise engaged in interstate commerce. In order to state a claim under 1962(a), the plaintiffs must sufficiently allege, inter alia, that the defendants financed Easy Money with proceeds from the previous collection of unlawful debts. See Newmyer v. Philatelic Leasing, Ltd., 888 F.2d 385, 396 (6th Cir.1989). See also Vemco, Inc. v. Camardella, 23 F.3d 129, 133 (6th Cir.1994) (holding that the plaintiffs could have been injured by the investment itself if the investment plan into which they put their money (i.e., the enterprise) was itself funded with monies from prior racketeering against prior victims). Here, the plaintiffs have sufficiently alleged such an injury. See Compl. 73 ([The individual defendants] received income from prior unlawful debt collections ... and used or invested the income ... to establish, operate, and expand the unlawful lending business of [Easy Money] which was or is engaged in ... interstate commerce in violation of 18 U.S.C.1962(a). As a result, Plaintiff was injured.) (emphasis supplied). Therefore, the defendants' motion to dismiss that part of the plaintiffs' RICO claim which is based on the defendants' violation of 18 U.S.C. 1962(a) will be denied. Nugget Hydroelectric, L.P. v. Pacific Gas and Elec. Co., 981 F.2d 429, 1992-2 Trade Cases P 70,068, 24 Fed.R.Serv.3d 485, Util. L. Rep. P 13,914, RICO Bus.Disp.Guide 8160 (9th Cir.(Cal.),Dec 07, 1992) Private power producer brought suit against a California public utility alleging violations of antitrust law, Racketeer Influenced and Corrupt Organizations Act (RICO), and fraud. The United States District Court for the Northern District of California, John P. Vukasin, Jr., J., dismissed antitrust claim, denied leave to amend RICO and state law claims, and imposed sanctions on producer. Appeal was taken. The Court of Appeals, Wallace, Chief Judge, held that: (1) utility was immune from antitrust liability under state action doctrine; (2) provider failed to state either valid monopolization claim or attempted monopolization claim; (3) provider was not entitled to leave to amend RICO claim; (4) asserted diversity jurisdiction in amended state law claims should have been considered; and (5) imposing sanctions of $10,000 for filing duplicative motions to compel was not excessive. Affirmed in part, vacated in part, and remanded. [16] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk68 Pleading 319Hk75 k. Injury; Causation. Most Cited Cases Plaintiff seeking civil damages for alleged violation of Racketeer Influenced and Corrupt Organizations Act (RICO) must allege facts tending to show that he or she was injured by use or investment of racketeering income. 18 U.S.C.A. 1962(a), 1964(a, c). [16] We next consider whether, under section 1962(a), Nugget's proposed amended complaint must allege that Nugget was injured by PG & E's investment of its alleged racketeering income. The Ninth Circuit has not yet decided this question. See Reddy v. Litton Indus., 912 F.2d 291, 295-96 (9th Cir.1990), cert. denied, 502 U.S. 921, 112 S.Ct. 332, 116 L.Ed.2d 272 (1991). However, three of the four circuits to consider this question have determined that the plain language of sections 1964(c) and 1962(a) read together require that a RICO plaintiff make such a showing. See Ouaknine v. MacFarlane, 897 F.2d 75, 83 (2d Cir.1990) (Ouaknine ); Rose v. Bartle, 871 F.2d 331, 356-58 (3d Cir.1989) (Rose ); Grider v. Texas Oil & Gas Corp., 868 F.2d 1147, 114951 (10th Cir.) (Grider ), cert. denied, 493 U.S. 820, 110 S.Ct. 76, 107 L.Ed.2d 43 (1989); but see Busby v. Crown Supply, Inc., 896 F.2d 833, 837-38 (4th Cir.1990). 75

In determining the elements of a RICO claim, we first examine the language of the statute. See Russello v. United States, 464 U.S. 16, 20, 104 S.Ct. 296, 299, 78 L.Ed.2d 17 (1983). Section 1964(c) provides a civil damage remedy only to those persons who are injured by reason of a violation of section 1962. Section 1962(a) provides that [i]t shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity ... to use or invest ... any part of such income ... in ... operation of ... any enterprise. **The plain language of these two provisions leads us to conclude that a plaintiff seeking civil damages for a violation of section 1962(a) must allege facts tending to show that he or she was injured by the use or investment of racketeering income. Thus, we agree with the Second, Third, and Tenth Circuits. See Ouaknine, 897 F.2d at 82-83; Rose, 871 F.2d at 358; Grider, 868 F.2d at 1149. Nugget urges us to follow the Fourth Circuit's decision in Busby, which held that a RICO plaintiff bringing an action for a violation of section 1962(a) need only allege facts showing an injury from the racketeering acts that generated income that was subsequently used in violation of the section. See 896 F.2d at 837-38. Busby reasoned that this reading of RICO is compelled in part by the expansiveness of the phrase by reason of in section 1964(a), which allows recovery, despite the fact that one element of the violation, the use of the proceeds, may not have contributed to or caused the injury. Id. at 838. We conclude that section 1964(c) does not support such a reading, for it would allow an individual to recover for injuries caused by an action that does not constitute a violation of section 1962(a) even though section 1964(c) speaks not of an element of a violation but rather only of a violation. To allow recovery for an injury arising from a mere element of a violation, rather than an actual violation, of section 1962(c), we would have to have before us a statute worded differently from the one Congress passed. Separation of powers principles and the value of democratic rule prohibit us from interpreting the statute such that we are, in fact, amending section 1964. Nugget alternatively contends that it has complied with our adopted standard because it alleged the elements of a civil claim under section 1962(a) by alleging that PG & E received racketeering income and used it in a way that injured Nugget. Nugget made some allegations to this effect, but they are general, conclusory, and vague. Thus, Nugget's proposed amended complaint fails to state a claim under *438section 1962(a). See McGlinchy v. Shell Chemical Co., 845 F.2d 802, 810 (9th Cir.1988); North Star Int'l v. Arizona Corp. Comm'n, 720 F.2d 578, 583 (9th Cir.1983); Benson v. Arizona State Bd. of Dental Examiners, 673 F.2d 272, 275-76 (9th Cir.1982). In re U.S. Grant Hotel Associates, Ltd. Securities Litigation, 740 F.Supp. 1460, Fed. Sec. L. Rep. P 95,838 (S.D.Cal.,Feb 01, 1990) In proposed class action for damages, injunctive relief, rescission, attorney fees and other relief arising out of investment program for hotel partnership, plaintiffs moved for class certification and defendants moved for dismissal and summary judgment. The District Court, Enright, J., held that: (1) investors in hotel partnership failed to state aiding and abetting claim under federal securities fraud laws against a corporate surety which reviewed drafts of allegedly fraudulent private placement memorandum; (2) plaintiffs adequately alleged facts against appraiser showing that it provided an offering document upon which investors relied so as to state cause of action under California law; (3) allegations that securities brokerage provided investment advice through written materials and oral representations which allegedly induced investors to purchase securities were sufficient to plead a fiduciary duty by securities brokerage; and (4) unfamiliarity of class representative with outlines of suit did not warrant summary judgment. Motions granted in part and denied in part. [12] Racketeer Influenced and Corrupt Organizations 319H 74

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk68 Pleading 319Hk74 k. Association or Participation. Most Cited Cases

Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk68 Pleading 319Hk75 k. Injury; Causation. Most Cited Cases

75

Investors in hotel partnership who did not specifically allege type of income received by defendant or manner in which income was received but merely stated that they were injured by underlying predicate acts or fraudulent scheme, failed to sufficiently allege defendant received income or proceeds from racketeering activity and that plaintiffs were injured by use or investment of that income or proceeds to state a Racketeer Influenced and Corrupt Organizations Act (RICO) action. 18 U.S.C.A. 1962(a). 1. Sybedon [12] The RICO allegations against Sybedon are based upon 18 U.S.C. 1962(a) which provides in relevant part: (a) It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity ... to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce. Sybedon moves to dismiss on the grounds that plaintiffs failed to show that defendants derived income from alleged racketeering activity, and failed to show that plaintiffs were damaged by the use or investment of such income. In order to plead a cause of action under section 1962(a), plaintiffs must show both that defendants have received income or proceeds from the racketeering activity and that plaintiffs have been injured by the use or investment of that income or proceeds. See In re Rexplore, Inc. Securities Litigation, 685 F.Supp. 1132, 1141 (N.D.Cal.1988). The only statement pleaded in the Second Amended Complaint which alleges that Sybedon received income from the pattern of racketeering activity is a general statement that simply alleges that Sybedon directly or indirectly derived income from the pattern of racketeering activity. (Complaint 349). This allegation is simply a recitation of the general requirements for pleading a 1962(a) action. There are no specific allegations in the Second Amended Complaint as to the type of income received by Sybedon or the manner in which Sybedon received such income. Plaintiffs' pleadings in the Second Amended Complaint allege simply that they have been injured by the underlying predicate acts of the fraudulent scheme. This is insufficient to show that Sybedon received income or proceeds from the racketeering activity and that plaintiffs have been injured by the use or investment of that income or proceeds. In re Rexplore, Inc. Securities Litigation, 685 F.Supp. 1132, 1141, Blue Sky L. Rep. P 72,778, Fed. Sec. L. Rep. P 93,968 (N.D.Cal.,Feb 26, 1988) K. RICO; the Nineteenth Cause of Action Plaintiffs have alleged violations of the Racketeer Influenced and Corrupt Organizations*1469 Act (RICO), 18 U.S.C. 1961-1968, against defendants Sybedon, Glickman, Lewis and Davis. 1. Sybedon [12] The RICO allegations against Sybedon are based upon 18 U.S.C. 1962(a) which provides in relevant part: (a) It shall be unlawful for any person who has received any income derived, directly or indirectly, from a

pattern of racketeering activity ... to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce. Sybedon moves to dismiss on the grounds that plaintiffs failed to show that defendants derived income from alleged racketeering activity, and failed to show that plaintiffs were damaged by the use or investment of such income. In order to plead a cause of action under section 1962(a), plaintiffs must show both that defendants have received income or proceeds from the racketeering activity and that plaintiffs have been injured by the use or investment of that income or proceeds. See In re Rexplore, Inc. Securities Litigation, 685 F.Supp. 1132, 1141 (N.D.Cal.1988). The only statement pleaded in the Second Amended Complaint which alleges that Sybedon received income from the pattern of racketeering activity is a general statement that simply alleges that Sybedon directly or indirectly derived income from the pattern of racketeering activity. (Complaint 349). This allegation is simply a recitation of the general requirements for pleading a 1962(a) action. There are no specific allegations in the Second Amended Complaint as to the type of income received by Sybedon or the manner in which Sybedon received such income. Plaintiffs' pleadings in the Second Amended Complaint allege simply that they have been injured by the underlying predicate acts of the fraudulent scheme. This is insufficient to show that Sybedon received income or proceeds from the racketeering activity and that plaintiffs have been injured by the use or investment of that income or proceeds. In re National Mortg. Equity Corp. Mortg. Pool Certificates Securities Litigation, 682 F.Supp. 1073, Blue Sky L. Rep. P 72,680, Fed. Sec. L. Rep. P 93,529, RICO Bus.Disp.Guide 6784 (C.D.Cal.,Sep 25, 1987) *1080 II. RICO CLAIMS The Savings Banks have cured the defects in their original RICO claims under 18 U.S.C. 1962(a)-(d). See NMEC, 636 F.Supp. at 1170-71. However, defendants raise several additional arguments against the RICO claims on this new round. A. Sufficiency of 1962(a) and (b) Allegations [3] Defendants Michael and Feldman challenge the sufficiency of the 1962(a) and (b) allegations. Section 1962(a) provides that It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity ... to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise.... The Savings Banks' 1962(a) claims allege that defendants Feldman and Michael received income from the above mentioned pattern of racketeering activity and used this income in the operation of NMEC, an enterprise.... First Federal, Missouri Amend.Comps. 85; Riverhead Amend.Comp. 74. Defendants contend that these allegations are insufficient in that they fail to describe specific facts concerning the use of the racketeering income. **This argument is meritless. Plaintiffs are not required to plead additional facts in support of their 1962(a) claims.FN11 See Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1396-98 (9th Cir.1987) (allegations in complaint tracking statutory language of 1962(a) and (b) upheld).FN12 FN11. Michael cites Haynes v. Anderson & Strudwick, Inc., 508 F.Supp. 1303, 1317 (E.D.Va.1981), in support of his contention that more particularity is required than simply tracking the statutory language. That case is wholly inapposite in that it concerned 10(b) and Rule 10b-5; it is wellestablished that these securities fraud claims must meet the particularity requirements of F.R.Civ.P. 9(b). FN12. Moreover, even if such particularity were required, these complaints taken as a whole, plead

such additional facts. The Amended Complaints allege overall that Feldman and Michael initially took a small scheme and built it up into a huge fraudulent operation. Given defendants' concession that the complaints read liberally allege that defendants received income from racketeering activity, it is also reasonable to read the complaints as alleging that defendants used some or all of that income to operate and escalate the enterprise, i.e., NMEC. [4] Section 1962(b) states that: It shall be unlawful for any person through a pattern of racketeering activity ... to acquire or maintain, directly or indirectly, any interest in or control of any enterprise.... The Savings Banks allege that defendants Feldman and Michael acquired or maintained their interest or control of the enterprise NMEC through this pattern of racketeering activity. First Federal, Missouri Amend.Comps. 86; Riverhead Amend.Comp. 75. These allegations are sufficient to state a 1962(b) claim. Id. Michael and Feldman argue that the requirement that a 1962(b) defendant engage in a pattern of racketeering activity to maintain an interest in an enterprise means that plaintiffs must allege some threat to the enterprise to which defendants responded by engaging in racketeering activity, citing von Bulow by Auersperg v. von Bulow, 634 F.Supp. 1284 (S.D.N.Y.1986), and Hunt v. Weatherbee, 626 F.Supp. 1097 (D.Mass.1986). Neither von Bulow nor Hunt imposes such a requirement. And the statute itself contains no such element.FN13 Plaintiffs allegations are *1081 sufficient to state a claim under 1962(b).FN14 FN13. Even if allegations of a threat were required, Advance's letter to Wells Fargo, expressing concern about the irregularities in the mortgage pools, could be read as a threat to which Feldman and Michael responded by engaging in a further pattern of racketeering to cover up the fraud. First Federal, Missouri Amend. Comps. 53; Riverhead Amend.Comp. 40. FN14. Because claims under 1962(a) and (b) are sufficiently pleaded, defendants' argument that no conspiracy claim is stated under 1962(d) must also fail. Plaintiffs have remedied the defect in their original claim under 1962(d) by adding allegations of overt acts by the defendants in furtherance of the conspiracy. See NMEC, 636 F.Supp. at 1170-71; First Federal, Missouri Amend.Comps. 82, 87; Riverhead Amend.Comp. 71, 76. B. Standing Under 1962(a) and (b) [5] Michael and Feldman contend that plaintiffs lack standing to bring claims under 1962(a), (b) and (d) (conspiracy predicated on a 1962(a) or (b) claim) because they allege that they have been injured only by the underlying predicate acts, which violate 1962(c). Defendants cite several cases that hold that to state a claim under 1962(a) or (b), a plaintiff must allege that its injury was caused, not just by the predicate acts of racketeering, but also by the investment and use of funds in the enterprise ( 1962(a)) or the acquisition or maintenance of defendants' interest in or control of the enterprise ( 1962(b)). See Prodex v. Legg Mason Wood Walker, No. 86-1950, slip op. (E.D.Pa., Feb. 5, 1987) [Available on WESTLAW, 1987 WL 6329] (available on LEXIS); Donohoe v. Consol. Operating & Prod. Corp., No. 86-C-7543, slip op. (N.D.Ill., Jan. 8, 1987) [Available on WESTLAW, 1987 WL 5226] (available on LEXIS); Gilbert v. Prudential-Bache Sec., 643 F.Supp. 107 (E.D.Pa.1986); Heritage Ins. Co. v. First Nat'l Bank, 629 F.Supp. 1412 (N.D.Ill.1986). The Court declines to follow these cases in imposing a separate standing requirement for 1962(a), (b) and (d). To impose such a requirement would be to revive the concept of a distinct racketeering injury rejected by the Supreme Court in Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985). As one court recently noted in refusing to require an allegation of a separate injury to state a 1962(a) claim: In Sedima the Supreme Court rejected the notion that in order to have standing under RICO a plaintiff must suffer a racketeering injury separate and apart from any injuries he or she has sustained as a result of the predicate acts. While Sedima involved an alleged violation of subsection (c), the same arguments defendants advance here were urged upon the Court there-namely that a plaintiff injured only by the underlying predicate racketeering acts lacked standing to bring a civil action. The Court rejected those arguments in no uncertain terms as to subsection (c), and in so doing did not in any way limit its reasoning to that subsection. King v. E.F. Hutton & Co., [current] RICO Bus. Disputes Guide (CCH) 6578, at 6840 (D.D.C.1987) [Available on WESTLAW, 1987 WL 8733].

The Ninth Circuit has also implicitly rejected a separate injury requirement for 1962(a) and (d). In Wilcox v. First Interstate Bank, 815 F.2d 522 (9th Cir.1987), the court reversed summary judgment in defendant's favor on 1962(a), (b) and (d) claims. In doing so, the court stated: The Supreme Court recently expressly rejected the racketeering enterprise injury rule relied on by the district court.... The Court emphasized that a plaintiff must still allege each element prescribed in the statute to state a claim. The statute, however, requires no more. The compensable injury is the harm caused by the predicate act relied upon. Id. at 529. **The court drew no distinction between the plaintiff's claims under 1962(a), (c) and (d). See also Virden v. Graphics One, 623 F.Supp. 1417, 1420-21, 1430 (C.D.Cal.1985) (post-Sedima case denying defendants' motion for summary judgment on 1962(a), (b), (c) and (d) claims; rejecting defendants' argument that plaintiffs failed to state claims under those subsections because of their failure to allege that they suffered racketeering-type injuries distinct from and in addition to their injuries suffered as a result of the ... predicate acts). *1082 The Court declines to imply an additional standing requirement into 1962(a), (b) and (c). Accord Snider v. Lone Star Art Trading Co., 659 F.Supp. 1249 (E.D.Mich., 1987); Haroco Inc. v. American Nat'l Bank & Trust Co., 647 F.Supp. 1026, 1032-33 (N.D.Ill.1986); Louisiana Power & Light v. United Gas Pipe Line, 642 F.Supp. 781, 805-07 (E.D.La.1986). Wilcox v. First Interstate Bank of Oregon, N.A., 815 F.2d 522, 55 USLW 2594, 1987-1 Trade Cases P 67,530, RICO Bus.Disp.Guide 6603 (9th Cir.(Or.),Apr 17, 1987) Commercial borrowers brought actions against their bank, alleging violations of Sherman Act and RICO. The United States District Court for the District of Oregon, James A. Redden, J., granted bank's motion for summary judgment on RICO claim, 590 F.Supp. 445, and granted bank's motion for JNOV after jury entered verdict in favor of borrowers on Sherman Act claims, 605 F.Supp. 592. Borrowers appealed. The Court of Appeals, Skopil, Circuit Judge, held that: (1) evidence was insufficient to establish that bank violated Sherman Act by following other banks' prime rates, but (2) borrowers were not collaterally estopped from pursuing RICO claims against bank based on predicate act of mail fraud after jury rendered adverse verdicts on borrowers' common-law fraud claims. Affirmed in part, reversed in part and remanded. Boochever, Circuit Judge, filed dissenting opinion. [11] Racketeer Influenced and Corrupt Organizations 319H 63

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk56 Persons Entitled to Sue or Recover 319Hk63 k. Separate or Distinct Racketeering or Criminal Enterprise Injury. Most Cited Cases (Formerly 83k82.71) Borrowers were not required to suffer racketeering enterprise injury in order to recover from bank for alleged RICO violation arising when bank allegedly concealed subprime lending rates and imposed excessive interest rates. 18 U.S.C.A. 1962. [12] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 43

319HI(A) In General 319Hk33 Enterprise 319Hk43 k. Banks or Other Financial Institutions. Most Cited Cases (Formerly 83k82.71) Bank could be both person and enterprise under section of RICO prohibiting person from investing racketeering income into enterprise engaged in interstate commerce. 18 U.S.C.A. 1962(a). [16] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk76 Evidence 319Hk79 k. Weight and Sufficiency. Most Cited Cases (Formerly 83k82.72) Preponderance of evidence standard applies to proof of predicate acts in civil RICO litigation. 18 U.S.C.A. 1961-1968. 79

(a) Racketeering enterprise injury [11] The Supreme Court recently expressly rejected the racketeering enterprise injury rule relied on by the district court. Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 495, 105 S.Ct. 3275, 3285, 87 L.Ed.2d 346 (1985). Unless manifest injustice results, we apply the law as it exists at the time of our decision. In Re Rubin, 769 F.2d 611, 614 (9th Cir.1985) (citing Bradley v. School Board of Richmond, 416 U.S. 696, 711, 94 S.Ct. 2006, 2016, 40 L.Ed.2d 476 (1974)). In Sedima the Supreme Court concluded that racketeering activity consists of no more and no less than commission of a predicate act, 1961(1).... 105 S.Ct. at 3285. The Court emphasized that a plaintiff still must allege each element prescribed in the statute to state a claim. The statute, however, requires no more. **The compensable injury is the harm caused by the predicate act relied upon. Id. at 3286. Further, a plaintiff can recover for both the direct harm flowing from a defendant's conduct and the indirect harm such as competitive injury. Id. at n. 15. See also American National Bank & Trust Co. v. Haroco, Inc., 473 U.S. 606, 105 S.Ct. 3291, 3292, 87 L.Ed.2d 437 (1985) (per curiam) (reaching same conclusions); Simon Oil Co., Ltd. v. Norman, 789 F.2d 780, 781 (9th Cir.1986) (Sedima clearly rejected the requirement of racketeering injury and an injury distinct from that caused by the predicate act). (b) Person/enterprise distinction [12] In Rae v. Union Bank, 725 F.2d 478, 481 (9th Cir.1984), we rejected the argument that a corporate defendant could be both the RICO person and the RICO enterprise under 18 U.S.C. 1962(c). We reasoned that a RICO enterprise refers to a being different from, not the same as or part of, the person whose behavior the Act was designed to prohibit.... Id. (quoting United States v. Computer Sciences Corp., 689 F.2d 1181, 1190 (4th Cir.1982), cert. denied, 459 U.S. 1105, 103 S.Ct. 729, 74 L.Ed.2d 953 (1983)). Accord Haroco, Inc. v. American National Bank & Trust Co., 747 F.2d 384 (7th Cir.1984), aff'd on other grounds, 473 U.S. 606, 105 S.Ct. 3291, 87 L.Ed.2d 437 (1985). [this principle of law has been subsequently limited in River City Markets, Inc. v. Fleming Foods West, Inc. 960 F.2d 1458, 1461, (9th Cir. (Cal.) April 3, 1992) [3] The district court dismissed the RICO counts under the mistaken belief that Rae v. Union Bank, 725 F. 2d 478 ( 9th Cir. 1984), requires that a RICO enterprise must be an entity separate and distinct from the defendants. Memorandum of Decision and Order at 7. Rae does not so hold, and we find nothing in our RICO case law which instructs that two contracting business entities cannot form an enterprise for RICO purposes and still be named as individual RICO defendants, provided the enterprise otherwise falls within the statutory proscriptions. [4][5] Rae does not control the case at bar. **Rather, it stands for

the proposition that a single individual or entity cannot be both the RICO enterprise and an individual RICO defendant. **Rae simply embodies the maxim that an individual cannot associate or conspire with himself, and in subsequent decisions we have adhered to this narrow reading of Rae. See United States v. Feldman, 853 F.2d 648, 656 (9th Cir.1988) (characterizing the Rae rule as providing that a defendant cannot be convicted of associating with himself); United States v. Benny, 786 F.2d 1410, 1415-16 (9th Cir.) (holding that although an individual defendant could not associate with himself for RICO purposes, **he could associate with his own sole proprietorship), cert. denied, 479 U.S. 1017, 107 S.Ct. 668, 93 L.Ed.2d 720 (1986). Contrary to the district court's analysis, plaintiffs do not allege that either Alpha Beta or Fleming is simultaneously a RICO enterprise and a RICO defendant. Each of plaintiffs' complaints pleads the existence of a RICO enterprise as follows:] Following our decision in Rae, the borrowers sought to amend their enterprise allegations to add that (1) Bancorp, as FIOR's parent corporation, and (2) an association fact of all officers and employees of FIOR and Bancorp who participate in lending activities, constitute the RICO enterprise. The district court denied the amendments. We recently decided that unlike section 1962(c), sections 1962(a) and (b) do not necessarily require that the person be distinct from the enterprise. Schreiber Distributing Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1398 (9th Cir.1986). [W]here the corporation is the direct or indirect beneficiary of the pattern of racketeering activity, it can be both the person and the enterprise.... Id.; see also Schofield v. First Commodity Corp., 793 F.2d 28, 31 (1st Cir.1986) (section 1962(a) does not require a relationship between the *530 person and the enterprise as does section 1962(c), and so it does not require the involvement of two separate entities); Masi v. Ford City Bank & Trust Co., 779 F.2d 397, 402 (7th Cir.1985) (under section 1962(a) a bank may be both person and enterprise). The borrowers argued below in opposition to summary judgment that a corporation, such as FIOR, could simultaneously be named as a RICO defendant and also provide the RICO enterprise element under section 1962. Such a possibility is evidenced by our decision in Schreiber. The borrowers further argued below that even if they were required to plead a RICO enterprise separate from the RICO defendant, that fact could be discerned from their pleadings and materials supplied in opposing the motion for summary judgment. Finally, the borrowers assert that their proposed amended pleadings clearly allege separate RICO persons and enterprises and thus conform with Rae. We conclude that, instead of sorting out the various possible interpretations attributable to the pleadings, the borrowers should be given the opportunity to amend their pleadings to conform with our recent decisions in Schreiber and Rae. See Fed.R.Civ.P. 15 (allowing amendment of pleadings when justice so requires); Fed.R.Civ.P. 16(e) (allowing amendment of pretrial order to prevent manifest injustice). We do not agree with the district court that the borrowers' arguable deficiencies in pleading cannot be overcome by amendment. See Kempe v. Monitor Intermediaries, Inc., 785 F.2d 1443, 1444 (9th Cir.1986) (deficiency in RICO pleading readily correctable by amendment). Changes in the law since the district court's decision prompt us to allow the borrowers the opportunity to amend on remand. Midwest Grinding Co., Inc. v. Spitz, 716 F.Supp. 1087, RICO Bus.Disp.Guide 7285 (N.D.Ill.,May 11, 1989) From the plain language of these provisions, a plaintiff seeking civil damages for a violation of section 1962(a) must plead facts tending to show that he was injured by the use or investment of racketeering income. Injury from the racketeering acts themselves is not sufficient because section 1962(a) does not prohibit those acts. Likewise, under section 1962(b), the plaintiff must plead facts tending to show that the acquisition or control of an interest injured the plaintiff.

A minority of courts have held that a RICO claim based on a violation of section 1962(a) is sufficient where the plaintiff alleges he sustained injury solely by reason of the underlying racketeering acts. See, e.g., Mid-State Fertilizer Co. v. The Exchange National Bank of Chicago, 693 F.Supp. 666, 671-72 (N.D.Ill.1988) (Hart, J.); Avirgan v. Hull, 691 F.Supp. 1357, 1362 ( S.D.Fla. 1988); Continental Grain Co. v. Pullman Standard, Inc., 690 F.Supp. 628 (N.D.Ill.1988) (Leinenweber, J.);** In re National Mortgage Equity Corporation Pool Certificates Securities Litigation, 682 F.Supp. 1073, 1081-82 (C.D.Cal.1987); Smith v. MCI Telecommunications Corp., 678 F.Supp. 823, 828-29 (D.Kan.1987); Louisiana Power & Light Co. v. United Gas Pipe Line Co., 642 F.Supp. 781, 805-07 (E.D.La.1986); Haroco, Inc. v. American National Bank, 647 F.Supp. 1026, 1032-33 (N.D.Ill.1986) (Decker, J.). The majority, however, have held that in order to state a claim for violation of section 1962(a), the plaintiff must allege injury suffered by reason of the use or investment of the funds derived from the racketeering activity. See e.g., Grider v. Texas Oil & Gas Corp., 868 F.2d 1147, 1149 (10th Cir.1989) (citing cases); Palumbo v. I.M. Simon & Co., 701 F.Supp. 1407, 1409-10 (N.D.Ill.1988) (Bua, J.); *1091P.M.F. Services, Inc. v. Grady, 681 F.Supp. 549, 555 (N.D.Ill.1988) (Shadur, J.); Heritage Insurance Co. v. First National Bank of Cicero, 629 F.Supp. 1412, 1417 (N.D.Ill.1986) (Getzendanner, J.). Some courts in the minority position rely on the Supreme Court's opinion in Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985), which held that a plaintiff has standing to assert a section 1962(c) claim upon showing an injury from racketeering activity itself. Id. 473 U.S. at 496, 105 S.Ct. at 3286. See National Mortgage Equity, 682 F.Supp. at 1081-82; Smith, 678 F.Supp. at 828-29. However, this Court agrees with the majority position that Sedima does not justify the conclusion that injury from racketeering activity alone is enough to create standing under section 1962(a) or (b). See Grider, 868 F.2d at 1150. Section 1962(c) differs significantly from either section 1962(a) or (b) in that it specifically prohibits the conduct of an enterprise's affairs through a pattern of racketeering activity, 18 U.S.C. 1962(c), thus making unlawful the racketeering activity itself. See Grider, 868 F.2d at 1150. Some courts, as a matter of policy, argue that a civil action for violation of section 1962(a) and (b) would be rendered almost meaningless by the majority view, particularly in light of the principle that RICO is generally interpreted broadly. See, e.g., Smith, 678 F.Supp. at 828. See also Sedima, 473 U.S. at 498, 105 S.Ct. at 3286 (RICO is to be liberally construed to effectuate its remedial purposes). The general principle that RICO is to be accorded a liberal interpretation cannot, however, justify expanding section 1962(a) beyond the limits of that subsection's own language. See Grider, 868 F.2d at 1150; Schofield v. First Commodity Corp., 793 F.2d 28, 30 (1st Cir.1986); Haroco v. American Nat'l. Bank & Trust Co., 747 F.2d 384, 400 (7th Cir.1984), aff'd, 473 U.S. 606, 105 S.Ct. 3291, 87 L.Ed.2d 437 (1985); P.M.F. Services, 681 F.Supp. at 555. As Judge Shadur noted in P.M.F. Services, the civil liability provision of RICO was essentially spot-welded to a criminal statute. 681 F.Supp. at 555. The criminal sanctions of RICO, unlike the civil sanctions, do not require identification of a victim; the crimes are complete in themselves. In this context, the possibility that the addition of a civil remedy will not occasion many successful claims for violations of section 1962(a) or (b), and thus not produce a totally seamless result, is not surprising. Id. at 555-56. The nature of the civil claim depends on the nature of the violation which is defined by section 1964(c), and the specific subsection of section 1962 makes the violation not the conduct of racketeering activity alone, but rather the use of that racketeering activity in the particular way the subsection declares unlawful. Id. at 556. [1] The Court thus agrees with the majority position. In order to allege injury by reason of section 1962(a), a RICO plaintiff must demonstrate that he was injured by reason of the use or investment of the income derived from racketeering. Similarly, in order to allege injury by reason of section 1962(b), a RICO plaintiff must demonstrate that the defendants' acquisition or control of an interstate enterprise injured the plaintiff. See Shearson Lehman v. American Express, Inc., 687 F.Supp. 177, 181 (E.D.Pa.1988); Airlines Reporting Corp. v. Barry, 666 F.Supp. 1311, 1314-15 (D.Minn.1987), aff'd on other grounds, 825 F.2d 1220 (8th Cir.1987). In the present case, Midwest's RICO claim does not meet the proximate cause requirements outlined above. Essentially, Midwest claims that it was injured by defendants' acts of racketeering. The complaint contains conclusory allegations which parrot each of the four parts of section 1962. With respect to section 1962(a), for example, the complaint alleges that Spitz, Grunfeld and U.S. Grinding have received income derived from a pattern of racketeering activity and have used or invested part of such income, or the proceeds of such income, in acquisition of an interest in, and the establishment or operation of, Cardinal and U.S. Grinding, enterprises

which are engaged in, or the activities of which affect, interstate or foreign commerce. (Second Amended Complaint, 42.) Paragraph 45 of the complaint*1092 contains a broad injury allegation which encompasses each of the four RICO allegations: Pursuant to 18 U.S.C. 1964(c), Midwest has been injured in its business and property by reason of defendants' violations of 1962.... The complaint does not include a specific allegation that Midwest has been injured by defendants' use or investment of income derived from mail or wire fraud or by defendants' acquisition or control of U.S. Grinding. Although such allegations could perhaps have been made, they are not contained in this version of the complaint, and the Court is not willing to subject defendants to yet another opportunity for Midwest to revise its claims. The proximate cause of Midwest's injury as alleged in the complaint is defendants' alleged acts of racketeering themselves. Therefore, Midwest's RICO claims brought under section 1962(a) and (b) do not satisfy the requirement that the injury be by reason of the use or investment, or the acquisition or control of an interest. Accordingly, Midwest's RICO claims based on section 1962(a) and (b) are dismissed. American Nat. Bank and Trust Co. of Chicago v. Haroco, Inc., 473 U.S. 606, 105 S.Ct. 3291, 87 L.Ed.2d 437, 53 USLW 5067, Fed. Sec. L. Rep. P 92,087, 1985-2 Trade Cases P 66,667, RICO Bus.Disp.Guide 6100 (U.S.Ill.,Jul 01, 1985) Plaintiff brought private civil action under Racketeer Influenced and Corrupt Organizations Act, alleging that bank and several of its officers had fraudulently charged excessive interest rates on loans. The United States District Court for the Northern District of Illinois, 577 F.Supp. 111, dismissed on ground that complaint did not state a claim, and plaintiff appealed. The United States Court of Appeals for the Seventh Circuit, 747 F.2d 384, reversed in relevant part, rejecting various formulations of a requirement of distinct RICO injury, and certiorari was granted. The Supreme Court held that civil claim for treble damages under RICO does not require that plaintiff have suffered damages by reason of defendant's violation through prescribed predicate offenses, rather, injury from those offenses alone is sufficient. Affirmed. Justice Marshall dissented and filed opinion, 105 S.Ct. 3292. Racketeer Influenced and Corrupt Organizations 319H 63

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk56 Persons Entitled to Sue or Recover 319Hk63 k. Separate or Distinct Racketeering or Criminal Enterprise Injury. Most Cited Cases (Formerly 83k82.71) Civil claim for treble damages under Racketeer Influenced and Corrupt Organizations Act does not require that plaintiff have suffered damages by reason of defendant's violation through prescribed predicate offenses, rather, injury from those offenses alone is sufficient. 18 U.S.C.A. 1962, 1964(c). *607 **3291 PER CURIAM. This is a private civil action brought under the Racketeer Influenced and Corrupt Organizations Act (RICO), Pub.L. 91-452, Title IX, 84 Stat. 941, as amended, 18 U.S.C. 1961-1968. Respondents' complaint alleged that petitioner bank and several of its officers had fraudulently charged excessive interest rates on loans. The gist of the claim was that the bank had lied with regard to its prime rate and that the rate charged to respondents, which was pegged to the prime, was therefore too high. The complaint alleged that this scheme to defraud, which was carried on through the mails, violated 18 U.S.C. 1962(c), in that the mailings constituted a pattern of racketeering activity by means of which petitioners conducted, or participated in the conduct *608 of, the bank. The only injuries alleged were the excessive interest charges themselves. The District Court dismissed on the ground that the complaint did not state a claim. 577 F.Supp. 111 (ND Ill.1983). In its view, to be cognizable under RICO [the injury] must be caused by a RICO violation and not

simply by the commission of predicate offenses, such as acts of mail fraud. Id., at 114. The Court of Appeals for the Seventh Circuit reversed in relevant part, 747 F.2d 384 (1984), rejecting various formulations of a requirement of a distinct RICO injury. We granted certiorari, 469 U.S. 1157, 105 S.Ct. 902, 83 L.Ed.2d 917 (1984), to consider the question whether a claim under 1964(c) requires that the plaintiff have suffered damages by reason of the defendant's violation of 1962 through the prescribed predicate offenses, or whether injury from those offenses alone is sufficient.FN* FN* The question presented was: Whether a civil claim for treble damages under the Racketeer Influenced And Corrupt Organizations Act (RICO) requires that the plaintiff suffer damages by reason of the defendant acquiring, maintaining control or an interest in, or conducting the affairs of an enterprise through the commission of statutorily prescribed offenses as opposed to being damaged solely by reason of the defendant's commission of such offenses. Pet. for Cert. i. **3292 In their brief, and at oral argument, petitioners have argued primarily that respondents' complaint does not adequately allege a violation of 1962(c). In particular, they assert that respondents have not shown that the enterprise was conducted through a pattern of racketeering activity. Petitioners do not appear to have made this precise argument below, it was not addressed by the Court of Appeals, and it quite clearly is not included in the question presented by their petition for certiorari. Although we have the authority to waive it, this Court's Rule 21.1(a) provides that only the question set forth in the petition for certiorari or fairly included therein will be considered, and we therefore do not consider petitioners' late-blooming argument that the complaint failed to allege a violation of 1962(c). *609 To the extent petitioners' argument is a variation on the racketeering injury concept at issue in Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S.Ct. 3275, 87 L.Ed.2d 346, it is inconsistent with that decision. The submission that the injury must flow not from the predicate acts themselves but from the fact that they were performed as part of the conduct of an enterprise suffers from the same defects as the amorphous and unfounded restrictions on the RICO private action we rejected in that case. With regard to the question presented, we view the decision of the court below as consistent with today's opinion in Sedima, and it is accordingly Affirmed. Snider v. Lone Star Art Trading Co., Inc., 659 F.Supp. 1249, RICO Bus.Disp.Guide 6684 (E.D.Mich.,Apr 09, 1987) IV Defendants allege that Plaintiff has not shown any injury from their alleged investment of funds which were obtained by racketeering. Thus, they argue that Plaintiff's claim under 18 U.S.C. 1962(a) must be dismissed because causation is a requirement for that section. See e.g. *1256Heritage Insurance Company of America v. First National Bank of Cicero, 629 F.Supp. 1412 (N.D.Ill.1986); Econo-Car International, Inc. v. Agency Rent-A-Car, Inc., 589 F.Supp. 1368, 1372 (D.Mass.1984); DeMyro v. E.F. Hutton, 662 F.Supp. 308, (S.D.N.Y.1986). 18 U.S.C. 1962(a) states that: It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity ... to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which, affect, interstate or foreign commerce. Contrary to the cases which have been cited by Defendants, the statute does not require Plaintiff to allege that he was harmed by the investment. Instead, it only requires allegations that (1) there is an enterprise, (2) Defendants derived income from a pattern of racketeering activity, and (3) at least some part of that income was

used to acquire an interest in or to operate an enterprise. See e.g. United States v. Cauble, 706 F.2d 1322, 1331 (5th Cir.1983). [6] However, this Court need not choose between Cauble and those cases which have been cited by Defendants as to which is correct. Even assuming that Defendants are correct, Plaintiff has clearly alleged an adequate causation of injury by the investment. His injury from the investment is specifically alleged in Paragraphs 38 and 40 where Plaintiff contends that the money, which was derived from the fraud, was used to continue the enterprise. Defendants believe that such an allegation is inadequate because (i)f Plaintiff has been injured, he has only been injured by reason of the alleged fraud. FN9 Their argument fails because there is no real difference between the alleged injuries which were caused by the fraud and by the investment. On the basis of Plaintiff's allegations, the enterprise in the instant cause appears to exist only for the purpose of committing the fraud. It is not a separate legal entity. Any money, which was used to commit fraud in this case, represents an investment in the enterprise. Thus, even if this Court adopted Defendants' standard, Plaintiff's claim under 18 U.S.C. 1962(a) would survive. [Cited 71 times for this legal issue] Nugget Hydroelectric, L.P. v. Pacific Gas and Elec. Co., 981 F.2d 429 C.A.9.Cal.,1992 Plaintiff seeking civil damages for alleged violation of Racketeer Influenced and Corrupt Organizations Act (RICO) must allege facts tending to show that he or she was injured by use or investment of racketeering income. 18 U.S.C.A. 1962(a) , 1964(a, c) . ** [Cited 5 times for this legal issue] Snider v. Lone Star Art Trading Co., Inc., 659 F.Supp. 1249 v E.D.Mich.S.Div.,1987 Buyer alleged adequate causation of injury by investment and stated Racketeer Influenced and Corrupt Organizations Act claim based on assertion that defendants committed fraud by offering him certain art plates and screens for investment while at same time misrepresenting their value; buyer alleged injury by contending that his money, which was derived from the fraud, was used to continue the enterprise. 18 U.S.C.A. 1962(a) . [Cited 2 times for this legal issue] In re U.S. Grant Hotel Associates, Ltd. Securities Litigation, 740 F.Supp. 1460 S.D.Cal.,1990 Investors in hotel partnership who did not specifically allege type of income received by defendant or manner in which income was received but merely stated that they were injured by underlying predicate acts or fraudulent scheme, failed to sufficiently allege defendant received income or proceeds from racketeering activity and that plaintiffs were injured by use or investment of that income or proceeds to state a Racketeer Influenced and Corrupt Organizations Act (RICO) action. 18 U.S.C.A. 1962(a) . [Cited 1 times for this legal issue] Sebastian Intern., Inc. v. Russolillo, 186 F.Supp.2d 1055 C.D.Cal.,2000 Allegation of designer of hair care products that it suffered injury from defendants' ill-gotten income from distribution of allegedly counterfeit products was inadequate to state a claim under section of the Racketeer Influenced and Corrupt Organizations Act (RICO) prohibiting the use of income derived from a pattern of racketeering activity to invest in, establish, or operate an enterprise which is engaged in or affects interstate commerce, and thus claim would be dismissed with leave to amend. 18 U.S.C.A. 1962(a) .

[Cited 1 times for this legal issue] In re Teledyne Defense Contracting Derivative Litigation, 849 F.Supp. 1369 C.D.Cal.,1993 Corporation's shareholders failed to sufficiently plead proximate causation/statutory standing with regard to their RICO claims for use or investment of racketeering income and acquisition of control or interest in RICO enterprise, against corporation's board of directors and present or former officers; they failed to explain how damages were caused by reason of either use of investment or of racketeering income or acquisition or

control of interest in RICO enterprise. 18 U.S.C.A. 1962(a, b) . [Cited 1 times for this legal issue] **Kempe v. Monitor Intermediaries, Inc., 785 F.2d 1443 C.A.9.Cal.,1986 Failure to allege any racketeering enterprise injury distinct from predicate mail and wire fraud acts did not provide basis for dismissing action under the Racketeer Influenced & Corrupt Organizations Act [18 U.S.C.A. 1961 -1968] for failure to state a claim.

**Demaria v. Sykora, 13 Fed.Appx. 677

C.A.9.Cal.,2001 Successor in interest of original mine owner sufficiently alleged Racketeer Influenced and Corrupt Organizations (RICO) Act standing requirement of injury proximately caused by claimed predicate acts of mail and wire fraud so as to preclude dismissal for failure to state claim, where successor in interest alleged that entire fraudulent scheme of marketing and distributing gold by individuals who leased mining claims and eventually purchased them and dealers who distributed gold mined from those claims was advanced by use of mail and wires that deprived successor in interest of royalties. 18 U.S.C.A. 1961 et seq. ; Fed.Rules Civ.Proc.Rule 12(b)(6), 28 U.S.C.A . [Cited 0 times for this legal issue]

**Cook v. Easy Money of Kentucky, Inc., 196 F.Supp.2d 508

W.D.Ky.,2001 Allegations by customers of check cashing business that owners of such business received income from prior unlawful debt collections, and used that income to operate the business, stated claim for violation of Racketeer Influenced and Corrupt Organizations Act (RICO), under provision prohibiting use of income received through collection of unlawful debt in operation of any enterprise engaged in interstate commerce. 18 U.S.C.A. 1962(a) . [Cited 0 times for this legal issue] Eagle Investment Systems Corp. v. Tamm, 146 F.Supp.2d 105 D.Mass.,2001 Employer's claim that former employee intended to either force employer to relinquish its legal right to defend itself from fraudulent claims or incur excessive costs in vindicating this right sufficiently alleged that litigation costs were an intended consequence of the former employee's predicate acts that allegedly amounted to extortion, the injury element of employer's claim under Racketeer Influenced and Corrupt Organizations Act (RICO) was satisfied. 18 U.S.C.A. 1961 -1968 . [Cited 95 times for this legal issue] Haroco, Inc. v. American Nat. Bank and Trust Co. of Chicago, 747 F.2d 384 C.A.7.Ill.,1984 Allegations that defendants in civil action under Racketeer Influenced and Corrupt Organizations Act defrauded plaintiff in calculation of prime rate which determined their own variable interest payments were sufficient to satisfy requirement of alleging injury to plaintiff's business or property. 18 U.S.C.A. 1964(c) .

Example of fair debt collection practices factual allegations stated cognizable cause of action against mortgage servicer. Gumbs v. Litton Loan Serviceing 2010 wl 1992199 18 U.S.C. 1962 (continued) (c) It shall be unlawful for any person **employed by or **associated with [this refers to outsiders, who may assist the enterprises affairs, not members of the enterprise, Gio v. U.S. 969 F.Supp.512, at p. 514]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 or collection of unlawful debt. Under pleading and proof of the elements of a complaint under 18 U.S.C. 1962(c), ninth circuit controlling case law,
Virden v. Graphics One, 623 F.Supp. 1417, 54 USLW 2263, RICO Bus.Disp.Guide 6128, RICO Bus.Disp.Guide 6137 (C.D.Cal.,Dec 02, 1985)

Overruled by Reves v. Ernst. Virden v. Graphics One 623 F.Supp. 1417 (1985) the court states, that a RICO plaintiff pursuing a private cause of action under section 1962(c) need only prove that the predicate acts are related to the affairs of the RICO enterprise. In other words, there must be some nexus between the pattern of racketeering activity and the enterprises affairs. This liberal standard follows from section 1962(c)s language requiring that the defendant conduct merely conduct or participate directly or indirectly in the affairs of the enterprise through a pattern of racketeering activity. Unlike the stringent standard, such an interpretation of section 1962(c) better supports the remedial purposes of RICO discussed above This principle has been decided by U.S. Supreme Court in Reves v. Ernst (1993) 507 U.S. 170 to be operation and direction of management.

Reves v. Ernst & Young, 507 U.S. 170, 113 S.Ct. 1163, 122 L.Ed.2d 525, 61 USLW 4207, Fed. Sec. L. Rep. P 97,357, RICO Bus.Disp.Guide 8227 (U.S.Ark. Mar 03, 1993)

Distinguishing point, the rule stated, applies to outsiders who may assist the enterprises affairs, not those who are members, and part of the enterprise. See Gio v. U.S. 969 F.Supp. 512, 514 (N.D. Ill. Jul 16, 1997)
Purchasers of demand notes from farmer's cooperative brought securities fraud and RICO (Racketeer Influenced and Corrupt Organizations) action against cooperative's accountants. The United States District Court for the Western District of Arkansas, H. Franklin Waters, Chief Judge, entered judgment in favor of purchasers, and accountants appealed. The Court of Appeals, 856 F.2d 52, reversed. On certiorari, the Supreme Court, 494 U.S. 56, 110 S.Ct. 945, 108 L.Ed.2d 47, vacated and remanded. On remand, the Court of Appeals, Magill, Circuit Judge, 937 F.2d 1310, affirmed in part, reversed in part and remanded. Again on certiorari, the Supreme Court, Justice Blackmun, held that accountants hired to perform audit of cooperative's records did not participate in operation or management of cooperative's affairs, as required to impose liability on accountants under RICO for failing to inform cooperative's Board of Directors that cooperative was arguably insolvent. Affirmed. Justice Souter dissented and filed opinion, in which Justice White joined. [3] Racketeer Influenced and Corrupt Organizations 319H 50

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases Term conduct, as used in statute prohibiting any person associated with enterprise from conducting or participating in conduct of such enterprise's affairs through pattern of racketeering activity, necessarily implies some degree of direction over enterprise's affairs. 18 U.S.C.A. 1962(c). [4] Racketeer Influenced and Corrupt Organizations 319H 50

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases In order to participate, directly or indirectly, in conduct of enterprise's affairs, within meaning of federal RICO statute, one must have some part in directing enterprise's affairs. 18 U.S.C.A. 1962(c). [5] Racketeer Influenced and Corrupt Organizations 319H 64

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk64 k. Persons Liable. Most Cited Cases RICO liability is not limited to those with primary responsibility for enterprise's affairs, with formal positions in enterprise, or with significant control over or within enterprise. 18 U.S.C.A. 1962(c). [6] Racketeer Influenced and Corrupt Organizations 319H 50

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases One is not liable under RICO statute prohibiting the conduct of enterprise's affairs through pattern of racketeering activity, unless he or she has participated in operation or management of enterprise itself. 18 U.S.C.A. 1962(c). [7] Racketeer Influenced and Corrupt Organizations 319H 1

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk1 k. In General. Most Cited Cases RICO's liberal construction clause is designed to ensure that Congress's intent is not frustrated by overly narrow reading of RICO, but it is not invitation to apply RICO to new purposes that Congress never intended. 18 U.S.C.A. 1961. [8] Racketeer Influenced and Corrupt Organizations 319H 1

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk1 k. In General. Most Cited Cases RICO's liberal construction clause serves only as an aid for resolving ambiguities; it is not to be used to beget one. 18 U.S.C.A. 1961.

[9] Racketeer Influenced and Corrupt Organizations 319H

64

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk64 k. Persons Liable. Most Cited Cases Liability under RICO statute prohibiting the conduct of enterprise's affairs through pattern of racketeering activity is not limited to **upper management, but may extend to lower-rung participants in enterprise who are under direction of upper management. 18 U.S.C.A. 1962(c). [10] Racketeer Influenced and Corrupt Organizations 319H 50

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases Enterprise may be operated or managed, within meaning of federal RICO statute, by those not employed by enterprise, who exert control over it as, for example, by bribery. 18 U.S.C.A. 1962(c). [11] Racketeer Influenced and Corrupt Organizations 319H 1

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk1 k. In General. Most Cited Cases RICO's major purpose is to attack infiltration of organized crime and racketeering into legitimate organizations. 18 U.S.C.A. 1962-1968. [12] Racketeer Influenced and Corrupt Organizations 319H 50

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases Although professional standards adopted by accounting profession may be relevant, they do not define what constitutes management of enterprise within meaning of federal RICO provision. 18 U.S.C.A. 1962(c). [13] Racketeer Influenced and Corrupt Organizations 319H 50

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases Accounting firm which was hired to perform audit of cooperative's records, and which reviewed a series of completed transactions and certified that cooperative's records fairly portrayed its financial status as of date three or four months proceeding the meetings at which it presented its reports, did not thereby participate in management or operation of cooperative, and could not be held liable under federal RICO provision for failing to tell cooperative's board that it was insolvent if one of cooperative's assets was given its fair market value and not valued based on cooperative's investment therein. 18 U.S.C.A. 1962(c). A provision of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(c), makes it unlawful for any person employed by or associated with [an interstate] enterprise ... to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity.... After respondent's predecessor, the accounting firm of Arthur Young and Company, engaged in certain activities relating to valuation of a gasohol plant on the yearly audits and financial statements of a farming cooperative, the cooperative filed for bankruptcy, and the bankruptcy trustee brought suit, alleging, inter alia,

that the activities in question rendered Arthur Young civilly liable under 1962(c) to petitioner holders of certain of the cooperative's notes. Among other things, the District Court applied Circuit precedent requiring, in order for such liability to attach, some participation in the operation or management of the enterprise itself; ruled that Arthur Young's activities failed to satisfy this test; and granted summary judgment in its favor on the RICO claim. Agreeing with the lower court's analysis, the Court of Appeals affirmed in this regard. Held: One must participate in the operation or management of the enterprise itself in order to be subject to 1962(c) liability. Pp. 1169-1174. (a) Examination of the statutory language in the light of pertinent dictionary definitions and the context of 1962(c) brings the section's meaning unambiguously into focus. Once it is understood that the word conduct requires some degree of direction, and that the word participate requires some part in that direction, it is clear that one must have some part in directing an enterprise's affairs in order to participate, directly or indirectly, in the conduct of such ... affairs. The operation or management test expresses this requirement in a formulation that is easy to apply. Pp. 1169-1170. **1166 (b) The operation or management test finds further support in 1962's legislative history. Pp. 11701172. (d) The operation or management test is consistent with the proposition that liability under 1962(c) is not limited to upper management. Outsiders having no official position with the enterprise may be liable under 1962(c) if they are associated with the enterprise and participate in the operation or management of the enterprise. Pp. 1172-1173. (e) This Court will not overturn the lower courts' findings that respondent was entitled to summary judgment upon application of the operation or management test to the facts of this case. The failure to tell the cooperative's board that the gasohol plant should have been valued in a particular way is an insufficient basis for concluding that Arthur Young participated in the operation or management of the cooperative itself. Pp. 1173-1174. 937 F.2d 1310, affirmed. This case requires us once again to interpret the provisions of the Racketeer Influenced and Corrupt Organizations (RICO) chapter of the Organized Crime Control Act of 1970, Pub.L. 91-452, Title IX, 84 Stat. 941, as amended, 18 U.S.C. 1961-1968 (1988 ed. and Supp.II). Section 1962(c) makes it 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.... The question presented is whether one must participate in the operation or management of the enterprise itself to be subject to liability under this provision. I The Farmer's Cooperative of Arkansas and Oklahoma, Inc. (Co-op), began operating in western Arkansas and eastern Oklahoma in 1946. To raise money for operating expenses, the Co-op sold promissory notes payable to the holder on demand. Each year, Co-op members were elected to serve on its board. The board met monthly but delegated actual management of the Co-op to a general manager. In 1952, the board appointed Jack White as general manager. In January 1980, White began taking loans from the Co-op to finance the construction of a gasohol plant by his company, *173 White **1167 Flame Fuels, Inc. By the end of 1980, White's debts to the Co-op totaled approximately $4 million. In September of that year, White and Gene Kuykendall, who served as the accountant for both the Co-op and White Flame, were indicted for federal tax fraud. At a board meeting on November 12, 1980, White proposed that the Co-op purchase White Flame. The board agreed. One month later, however, the Co-op filed a declaratory action against White and White Flame in Arkansas state court alleging that White actually had sold White Flame to the Co-op in February 1980. The complaint was drafted by White's attorneys and led to a consent decree relieving White of his debts and providing that the Co-op had owned White Flame

since February 15, 1980. White and Kuykendall were convicted of tax fraud in January 1981. See United States v. White, 671 F.2d 1126 (CA8 1982) (affirming their convictions). Harry Erwin, the managing partner of Russell Brown and Company, an Arkansas accounting firm, testified for White, and shortly thereafter the Co-op retained Russell Brown to perform its 1981 financial audit. Joe Drozal, a partner in the Brown firm, was put in charge of the audit and Joe Cabaniss was selected to assist him. On January 2, 1982, Russell Brown and Company merged with Arthur Young and Company, which later became respondent Ernst & Young.FN2 FN2. In order to be consistent with the terminology employed in earlier judicial writings in this case, we hereinafter refer to the respondent firm as Arthur Young. One of Drozal's first tasks in the audit was to determine White Flame's fixed-asset value. After consulting with White and reviewing White Flame's books (which Kuykendall had prepared), Drozal concluded that the plant's value at the end of 1980 was $4,393,242.66, the figure Kuykendall had employed. Using this figure as a base, Drozal factored in the 1981 construction costs and capitalized expenses and concluded that White Flame's 1981 fixed-asset value was approximately*174 $4.5 million. Drozal then had to determine how that value should be treated for accounting purposes. **If the Co-op had owned White Flame from the beginning of construction in 1979, White Flame's value for accounting purposes would be its fixed-asset value of $4.5 million. **If, however, the Co-op had purchased White Flame from White, White Flame would have to be given its fair market value at the time of purchase, which was somewhere between $444,000 and $1.5 million. If White Flame were valued at less than $1.5 million, the Co-op was insolvent. Drozal concluded that the Co-op had owned White Flame from the start and that the plant should be valued at $4.5 million on its books. On April 22, 1982, Arthur Young presented its 1981 audit report to the Co-op's board. In that audit's Note 9, Arthur Young expressed doubt whether the investment in White Flame could ever be recovered. Note 9 also observed that White Flame was sustaining operating losses averaging $100,000 per month. See Arthur Young & Co. v. Reves, 937 F.2d 1310, 1318 (CA8 1991). Arthur Young did not tell the board of its conclusion that the Co-op always had owned White Flame or that without that conclusion the Co-op was insolvent. On May 27, the Co-op held its 1982 annual meeting. At that meeting, the Co-op, through Harry C. Erwin, a partner in Arthur Young, distributed to the members condensed financial statements. These included White Flame's $4.5 million asset value among its total assets but omitted the information contained in the audit's Note 9. See 937 F.2d, at 1318-1319. Cabaniss was also present. Erwin saw the condensed financial statement for the first time when he arrived at the meeting. In a 5-minute presentation, he told his audience that the statements were condensed and that copies of the full audit were available at the Co-op's office. In response to questions, Erwin explained that the Co-op owned White Flame and that the plant had incurred approximately *175 $1.2 million**1168 in losses but he revealed no other information relevant to the Co-op's true financial health. The Co-op hired Arthur Young also to perform its 1982 audit. The 1982 report, presented to the board on March 7, 1983, was similar to the 1981 report and restated (this time in its Note 8) Arthur Young's doubt whether the investment in White Flame was recoverable. See 937 F.2d, at 1320. The gasohol plant again was valued at approximately $4.5 million and was responsible for the Co-op's showing a positive net worth. The condensed financial statement distributed at the annual meeting on March 24, 1983, omitted the information in Note 8. This time, Arthur Young reviewed the condensed statement in advance but did not act to remove its name from the statement. Cabaniss, in a 3-minute presentation at the meeting, gave the financial report. He informed the members that the full audit was available at the Co-op's office but did not tell them about Note 8 or that the Coop was in financial difficulty if White Flame were written down to its fair market value. Ibid. In February 1984, the Co-op experienced a slight run on its demand notes. On February 23, when it was unable to secure further financing, the Co-op filed for bankruptcy. As a result, the demand notes were frozen in the bankruptcy estate and were no longer redeemable at will by the noteholders. II On February 14, 1985, the trustee in bankruptcy filed suit against 40 individuals and entities, including Arthur

Young, on behalf of the Co-op and certain noteholders. The District Court certified a class of noteholders, petitioners here, consisting of persons who had purchased demand notes between February 15, 1980, and February 23, 1984. Petitioners settled with all defendants except Arthur Young. The District Court determined before trial that the demand notes were securities under both federal and state law. See Robertson v. White, 635 F.Supp. 851, 865 (WD Ark., 1986). *176 **The court then granted summary judgment in favor of Arthur Young on the RICO claim. See Robertson v. White, Nos. 85-2044, 85-2096, 85-2155, and 85-2259 (WD Ark. Oct. 15, 1986), App. 198-200. The District Court applied the test established by the Eighth Circuit in Bennett v. Berg, 710 F.2d 1361, 1364 (en banc), cert. denied sub nom. Prudential Ins. Co. of America v. Bennett, 464 U.S. 1008, 104 S.Ct. 527, 78 L.Ed.2d 710 (1983), that 1962(c) requires some participation in the operation or management of the enterprise itself. App. 198. The court ruled: Plaintiffs have failed to show anything more than that the accountants reviewed a series of completed transactions, and certified the Co-op's records as fairly portraying its financial status as of a date three or four months preceding the meetings of the directors and the shareholders at which they presented their reports. We do not hesitate to declare that such activities fail to satisfy the degree of management required by Bennett v. Berg. Id., at 199-200. The case went to trial on the state and federal securities fraud claims. The jury found that Arthur Young had committed both state and federal securities fraud and awarded approximately $6.1 million in damages. The Court of Appeals reversed, concluding that the demand notes were not securities under federal or state law. See Arthur Young & Co. v. Reves, 856 F.2d 52, 55 (CA8 1988). On writ of certiorari, this Court ruled that the notes were securities within the meaning of 3(a)(10) of the Securities Exchange Act of 1934, 48 Stat. 882, as amended, 15 U.S.C. 78c(a)(10). Reves v. Ernst & Young, 494 U.S. 56, 70, 110 S.Ct. 945, 953, 108 L.Ed.2d 47 (1990). On remand, the Court of Appeals affirmed the judgment of the District Court in all major respects except the damages award, which it reversed and remanded for a new trial. See 937 F.2d, at 1339-1340. The only part of the Court of Appeals' decision that is at issue here is its affirmance of summary **1169 judgment in favor of Arthur Young on the RICO claim. Like the District Court, the Court of Appeals applied the operation or management test articulated in *177Bennett v. Berg and held that Arthur Young's conduct did not rise to the level of participation in the management or operation of the Co-op. See 937 F.2d, at 1324. The Court of Appeals for the District of Columbia Circuit also has adopted an operation or management test. See Yellow Bus Lines, Inc. v. Drivers, Chauffeurs & Helpers Local Union 639, 286 U.S.App.D.C. 182, 188, 913 F.2d 948, 954 (1990) (en banc), cert. denied, 501 U.S. 1222, 111 S.Ct. 2839, 115 L.Ed.2d 1007 (1991). We granted certiorari, 502 U.S. 1090, 112 S.Ct. 1159, 117 L.Ed.2d 407 (1992), to resolve the conflict between these cases and Bank of America National Trust & Savings Assn. v. Touche Ross & Co., 782 F. 2d 966, 970 ( CA11 1986) (rejecting requirement that a defendant participate in the operation or management of an enterprise).

At p. 177, Section 1962(c) makes it unlawful for any person employed by or associated with any enterprise ... to
conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity.... [3] The narrow question in this case is the meaning of the phrase to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs. The word conduct is used twice, and it seems reasonable to give each use a similar construction. See Sorenson v. Secretary of Treasury, 475 U.S. 851, 860, 106 S.Ct. 1600, 1606-1607, 89 L.Ed.2d 855 (1986). As a verb, conduct means to lead, run, manage, or direct. Webster's Third New International Dictionary 474 (1976). Petitioners urge us to read conduct as carry on, Brief for Petitioners 23, so that almost*178 any involvement in the affairs of an enterprise would satisfy the conduct or participate requirement. But context is important, and in the context of the phrase to conduct ... [an] enterprise's affairs, the word indicates some degree of direction.FN3 FN3. The United States calls our attention to the use of the word conduct in 18 U.S.C. 1955(a), which penalizes anyone who conducts, finances, manages, supervises, directs, or owns all or part of an illegal gambling business. See Brief for United States as Amicus Curiae 13, n. 11; Tr. of Oral Arg. 24-25. This Court previously has noted that the Courts of Appeals have interpreted this statute to proscribe any degree of participation in an illegal gambling business, except participation as a mere

bettor. Sanabria v. United States, 437 U.S. 54, 70-71, n. 26, 98 S.Ct. 2170, 2182, n. 26, 57 L.Ed.2d 43 (1978). We may assume, however, that conducts has been given a broad reading in this context to distinguish it from manages, supervises, [or] directs. The dissent agrees that, when conduct is used as a verb, it is plausible to find in it a suggestion of control. Post, at 1174. The dissent prefers to focus on conduct as a noun, as in the phrase participate, directly or indirectly, in the conduct of [an] enterprise's affairs. But unless one reads conduct to include an element of direction when used as a noun in this phrase, the word becomes superfluous. Congress could easily have written participate, directly or indirectly, in [an] enterprise's affairs, but it chose to repeat the word conduct. We conclude, therefore, that as both a noun and a verb in this subsection conduct requires an element of direction.

**1170 The more difficult question is what to make of the word participate. This Court previously has characterized this word as a ter [m] ... of breadth. Russello, 464 U.S., at 21-22, 104 S.Ct., at 299-300.
Petitioners argue that Congress used participate as a synonym for aid and abet. Brief for Petitioners 26. That would be a term of breadth indeed, for aid and abet comprehends all assistance rendered by words, acts, encouragement, support, or presence. Black's Law Dictionary 68 (6th ed. 1990). But within the context of 1962(c), participate appears to have a narrower meaning. We may mark *179 the limits of what the term might mean by looking again at what Congress did not say. On the one hand, to participate ... in the conduct of ... affairs must be broader than to conduct affairs or the participate phrase would be superfluous. On the other hand, as we already have noted, to participate ... in the conduct of ... affairs must be narrower than to participate in affairs or Congress' repetition of the word conduct would serve no purpose. It seems that Congress chose a middle ground, consistent with a common understanding of the word participate-to take part in. Webster's Third New International Dictionary 1646 (1976). [4][5] **Once we understand the word conduct to require some degree of direction and the word **participate to require some part in that direction, the meaning of 1962(c) comes into focus. In order to participate, directly or indirectly, in the conduct of such enterprise's affairs, **one must have some part in directing those affairs. Of course, the word participate makes clear that RICO liability is not limited to those with primary responsibility for the enterprise's affairs, just as the phrase directly or indirectly makes clear that RICO liability is not limited to those with a formal position in the enterprise,FN4 **but some part in directing the enterprise's affairs is required. The operation or management test expresses this requirement in a formulation that is easy to apply. FN4. For these reasons, we disagree with the suggestion of the Court of Appeals for the District of Columbia Circuit that 1962(c) requires significant control over or within an enterprise. Yellow Bus Lines, Inc. v. Drivers, Chauffeurs & Helpers Local Union 639, 286 U.S.App.D.C. 182, 188, 913 F.2d 948, 954 (1990) (en banc) (emphasis added), cert. denied, 501 U.S. 1222, 111 S.Ct. 2839, 115 L.Ed.2d 1007 (1991).

At p. 184,
[9][10] Petitioners argue that the operation or management test is flawed because liability under 1962(c) is not limited to upper management but may extend to any **1173 person employed by or associated with [the] enterprise. Brief for Petitioners 37-40. We agree that liability under 1962(c) is not limited to upper management, but we disagree that the operation or management test is inconsistent with this proposition. **An enterprise is operated not just by upper management but also by lower rung participants in the enterprise who are under the direction of upper management. FN9 **An enterprise also might be operated or managed by others associated with the enterprise who exert control over it as, for example, by bribery. FN9. At oral argument, there was some discussion about whether low-level employees could be considered to have participated in the conduct of an enterprise's affairs. See Tr. of Oral Arg. 12, 25-27. We need not decide in this case how far 1962(c) extends down the ladder of operation because it is clear that Arthur Young was not acting under the direction of the Co-op's officers or board. [11] The United States also argues that the operation or management test is not consistent with 1962(c)

because it limits*185 the liability of outsiders who have no official position within the enterprise. Brief for United States as Amicus Curiae 12 and 15. The United States correctly points out that RICO's major purpose was to attack the infiltration of organized crime and racketeering into legitimate organizations, S.Rep. No. 91617, at 76, but its argument fails on several counts. First, it ignores the fact that 1962 has four subsections. Infiltration of legitimate organizations by outsiders is clearly addressed in subsections (a) and (b), and **the operation or management test that applies under subsection (c) in no way limits the application of subsections (a) and (b) to outsiders. FN10 **Second, 1962(c) is limited to persons employed by or associated with an enterprise, suggesting a more limited reach than subsections (a) and (b), which do not contain such a restriction. Third, 1962(c) cannot be interpreted to reach complete outsiders because liability depends on showing that the defendants conducted or participated in the conduct of the enterprise's affairs, not just their own affairs. **Of course, outsiders may be liable under 1962(c) if they are associated with an enterprise and participate in the conduct of its affairs-that is, participate in the operation or management of the enterprise itselfbut it would be consistent with neither the language nor the legislative history of 1962(c) to interpret it as broadly as petitioners and the United States urge. FN10. Subsection (d) makes it unlawful to conspire to violate any of the other three subsections. In sum, we hold that to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs, 1962(c), one must participate in the operation or management of the enterprise itself. VI [12] Both the District Court and the Court of Appeals applied the standard we adopt today to the facts of this case, and both found that respondent was entitled to summary judgment.*186 Neither petitioners nor the United States have argued that these courts misapplied the operation or management test. The dissent argues that by creating the Co-op's financial statements Arthur Young participated in the management of the Co-op because financial statements are management's responsibility. Post, at 1176, quoting 1 CCH AICPA Professional Standards, SAS No. 1, 110.02 (1982). Although the professional standards adopted by the accounting profession may be relevant, they do not define what constitutes management of an enterprise for the purposes of 1962(c). [13] In this case, it is undisputed that Arthur Young relied upon existing Co-op records in preparing the 1981 and 1982 audit reports. The AICPA's professional standards state that an auditor may draft financial statements in whole or in part based on information from management's accounting system. See 1 CCH AICPA Professional **1174 Standards, SAS No. 1, 110.02 (1982). It is also undisputed that Arthur Young's audit reports revealed to the Co-op's board that the value of the gasohol plant had been calculated based on the Coop's investment in the plant. See ibid. Thus, we only could conclude that Arthur Young participated in the operation or management of the Co-op itself if Arthur Young's failure to tell the Co-op's board that the plant should have been given its fair market value constituted such participation. We think that Arthur Young's failure in this respect is not sufficient to give rise to liability under 1962(c). The judgment of the Court of Appeals is affirmed. It is so ordered. JSC Foreign Economic Ass'n Technostroyexport v. Weiss, 2007 WL 1159637, RICO Bus.Disp.Guide 11,334 (S.D.N.Y.,Apr 18, 2007)

Law firm and or lawyer, employed by or associated with the enterprise conducts or participates directly or indirectly, in the conduct of such enterprises affairs through a pattern of racketeering activity. Case also discusses the RICO predicates of money laundering in violation of 18 U.S.C. 1956, monetary transactions greater than $10,000 in property derived from specific unlawful activity in violation of 18 U.S.C. 1957,

OPINION AND ORDER JOHN G. KOELTL, District Judge. *1 The plaintiff, JSC Foreign Economic Association Technostroyexport (Techno), is a Russian Open Joint Stock Corporation that has been involved in litigation for over ten years to obtain and enforce a judgment for more than $200 million against the former New York corporation **International Development and Trade Services, Inc. (IDTS) and its alter egos Edith Reich and Brigitte R. Jossem. The judgment, which confirmed two international arbitration awards and was entered in 1997, arose from a series of contracts Techno entered into in the early 1990s to supply Russian bulk metals to IDTS. IDTS received the metals and resold them through its sales agent Newco AG (Newco), a Swiss corporation, but IDTS failed to pay approximately $200 million that it owed Techno pursuant to these contracts. In a separate 2003 action, this Court granted summary judgment to Techno on its claim that Reich and Jossem diverted millions of dollars from IDTS for their personal use and found that Reich and Jossem were themselves liable for the full amount of the judgment. JSC Foreign Econ. Assoc. Technostroyexport v. Int'l Dev. & Trade Servs., Inc., 386 F.Supp.2d 461, 471-76 (S.D.N.Y.2005). That decision contains an extensive discussion of the facts pertaining to Reich and Jossem's diversion of IDTS funds which need not be repeated here.FN1 FN1. The history of Techno's efforts to enforce its judgment against IDTS, Reich, and Jossem is further detailed in the decision of the Court of Appeals for the Second Circuit affirming the judgment entered against IDTS, AOOT Foreign Econ. Assoc. (VO) Technostroyexport v. Int'l Dev. & Trade Servs., Inc., 139 F.3d 980 (2d Cir.1998), and in other decisions of this Court denying a motion to dismiss a complaint alleging corporate veil-piercing against Reich and Jossem, JSC, 295 F.Supp.2d 366 (S.D.N.Y.2003), and holding Reich and Jossem in civil contempt for violating orders of attachment in connection with that complaint, JSC, 03 Civ. 5562, 2006 WL 1206372 (S.D.N.Y. May 1, 2006) (Reich); JSC, 03 Civ. 5562, 2006 WL 1148110 (S.D.N.Y. Apr. 28, 2006) (Jossem). Techno is also litigating in the New York State Supreme Court to enforce the judgments against additional alter egos of Reich and Jossem. (Compl. 11.) To date, Techno has collected only $7 million of the funds it is owed. (Id. 10.) Techno brings this civil action against **a certified public accountant, Abraham Weiss, and his accounting firm, Weiss & Co., who Techno alleges were members along with Reich, Jossem, and others in a criminal enterprise whose aim was to hide, conceal, and launder the money that Reich and Jossem stole from Techno in the early 1990s, in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-1968. Techno asserts two claims against Weiss and Weiss & Co.: (1) violation of the substantive RICO statute 18 U.S.C. 1962(c), and (2) conspiracy to violate the RICO statute in violation of 18 U.S.C. 1962(d). Jurisdiction is proper pursuant to 18 U.S.C. 1964. The defendants have moved to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. In connection with that motion, the defendants submitted an affidavit attaching as exhibits fifty-seven documents which the defendants contend Techno had received by late 1998 when it deposed Weiss during its earlier attempts to enforce the judgment entered against IDTS. (Aff. of Sheldon H. Elsen, Oct. 23, 2006.) The defendants argue that Techno relied on these documents in bringing this action and thus that the documents should be considered to determine whether this action is untimely under the four-year statute of limitations for civil RICO actions. Techno has moved to strike this affidavit and the attached exhibits, as well as factual assertions the defendants made in reference to those exhibits. For the reasons stated below, the motion to dismiss is denied and the motion to strike is denied as moot. I. A. *2 For the purpose of deciding this motion to dismiss, the following facts alleged in the Complaint are accepted as true. Between 1991 and 1993, pursuant to contracts, Techno shipped metals to IDTS with a total value of over $400 million. Reich and Jossem caused IDTS to fail to pay Techo approximately $175 million of the amount owed, and they converted these proceeds to their personal use. (Compl. 49-50.)

Reich and Jossem were introduced to Weiss in late 1992 and retained him and his accounting firm Weiss & Co. in January 1993. (Id. 51.) Weiss learned about the IDTS contracts and knew that IDTS failed to remit the proceeds of its metal sales to Techno. Weiss represented IDTS in negotiations with Techno and Newco concerning the IDTS metals contracts. Weiss made several trips to Switzerland to meet with representatives of Newco. (Id.) In maintaining IDTS's books, Weiss and Weiss & Co. failed to account for its revenue and expenditures or record its income accurately. Weiss & Co. prepared false tax returns for IDTS that concealed its revenues and income and exaggerated its expenses. (Id. 52.) Weiss directed the preparation of these tax returns with knowledge that Reich and Jossem would file them with the IRS without changes. (Id.) In a letter dated December 9, 1993, Weiss wrote that IDTS sold the metals it received from Techno through its agent for $389 million. Newco retained some commission and expenses, but it transferred at least $303 million to IDTS. (Id. 53.) However, IDTS's tax returns for the years 1992-94 when these payments were received show gross receipts totaling less than $5 .5 million. The majority of IDTS's proceeds from metal sales were never entered on its books or reported on its corporate tax returns. (Id. 54-55.) With Weiss's knowledge, Reich and Jossem concealed millions of dollars that they stole through IDTS in an IDTS bank account at the United Mizrahi Bank in Switzerland. (Id. 56.) At the request of Reich and Jossem, Weiss reclassified IDTS revenue as loans to Reich and Jossem to conceal these proceeds further. Weiss and Weiss & Co. referred to the loans as Swiss loans. (Id. 57.) **Weiss knew that the Swiss loan funds were revenues of metal sales that should have been remitted to Techno, and he knew that reclassifying them as loans was a means for transferring the funds from Switzerland to Reich and Jossem's accounts in the United States and of avoiding any income tax payments. **Weiss further knew that Reich and Jossem used some of the Swiss loan funds to purchase and renovate four apartments on East 72nd Street in Manhattan, which they have used as their residence since 1994. (Id. 57-58, 68.) Techno alleges on information and belief that at the time when Weiss & Co. prepared tax returns for Reich and Jossem, Weiss knew that Reich had been convicted of wire fraud in connection with a scheme to generate fraudulent orders for auto parts manufactured by Dayco Corp. (Id. 60-61.) Reich filed for personal bankruptcy in September 1984, and the bankruptcy was discharged on February 18, 1995. Weiss knew that Reich was in bankruptcy proceedings. During those proceedings, Weiss knew that Reich received millions of dollars, including at least $14.8 million transferred by Newco to her personal account in Switzerland, yet the 1992 tax return Weiss & Co. prepared for Reich did not reflect this income. (Id. 62-65.) Because Reich never disclosed these payments to the bankruptcy court or that she had received millions of additional dollars that she stole from IDTS, Techno alleges that the funds were proceeds of bankruptcy fraud. Techno alleges that Weiss and Weiss & Co. knew that these funds were not only stolen through IDTS, but also represented proceeds from bankruptcy fraud. (Id. 65-67.) *3 Weiss caused M & B Oxford 41, Inc. (M & B) to be incorporated in 1993 knowing that's its sole purpose was to hold title to the 72nd Street properties of Reich and Jossem. At first Jossem was the sole shareholder of M & B, until she conveyed all of her stock through a chain of companies that are all alter egos of Reich and Jossem. When Techno intensified its efforts to recover its stolen money in 1997, Weiss together with an Israeli attorney Michael Shine devised a stock purchase agreement to transfer shares of the alter ego company holding the 72nd Street properties to another alter ego of Reich and Jossem in exchange for the repayment of various fictitious loans. (Id. 69-70.) Weiss also devised a scheme to create dummy corporations with no business activities that paid consulting fees to Jossem as a way to launder the money stolen through IDTS. Weiss formed Mabro Trading International, Ltd. (Mabro) in 1993, and Weiss caused Weiss & Co. to prepare fraudulent federal and state tax returns for Mabro which showed millions of dollars in gross receipts or sales but offset this income with fraudulent deductions for rent payments associated with the 72nd Street properties and for Jossem's personal expenses. Jossem received over $1 million in consulting fees from Mabro, but these fees were actually transfers of stolen fees from IDTS back to Jossem. (Id. 71-76.)

Techno alleges, on information and belief, that Mabro filed its last federal tax return in 1998. Techno further alleges that around this time Weiss and Shine created the company Hasnaco Trading Ltd. (Hasnaco) under the laws of Cyprus to replace Mabro and to simplify tax preparation work because Hasnaco was a foreign company and thus not required to file United States tax returns. (Id. 77.) Jossem received over $6 million in payments from Hasnaco between 1999 and 2001, which her tax returns describe as consulting income. (Id. 78-80.) Weiss knew that the payments were not compensation for consulting services or any legitimate business, but rather were transfers of the funds stolen by Reich and Jossem. (Id.) Weiss caused Weiss & Co. to deduct rent as a business expense on Jossem's tax returns, knowing that Jossem never paid rent to another entity and did not use her residence in the 72nd Street properties for business purposes. (Id. 81.) Weiss also devised a means for Reich and Jossem to take part in a variety of real estate developments in the Hamptons using the proceeds they had stolen through IDTS. In 1997, Reich, Jossem, and Weiss began purchasing property for future development in the name of Atrium Square, Inc., which was an alter ego of Reich and Jossem. (Id. 24, 83.) Weiss then advocated the approach of using a series of single-purpose entities, rather than Atrium Square alone, to conduct real estate transactions to avoid adverse tax consequences and to make it more difficult to trace the source of the money used to purchase the real estate projects. (Id. 83-84.) Techno alleges on information and belief that funds were funneled through Hasnaco to finance the real estate projects of these entities. Weiss directed Jossem to open an account with Sterling Bank and controlled payments that flowed through this account via wire transfer, with the advice and consent of Reich and Jossem. (Id. 86.) *4 Techno's Complaint includes detailed allegations of various real estate transactions involving Reich and Jossem in which Weiss and Weiss & Co. participated and from which Weiss directly profited. **In summary, these allegations include a series of transactions between various single-purpose entities controlled by Reich and Jossem involving the purchase, development, and sale during the period from 1998 to 2003 of properties in the Hamptons. (Id. 87-103.) **Techno alleges that Weiss or Weiss & Co. received significant payments in connection with many of these transactions. (Id. 87, 90, 93, 99, 102.) **Weiss is alleged to have directed the transfer of funds between the accounts of various entities in connection with these sales. (See id. 96, 99, 102.) After Techno filed its federal action in 2003 to enforce its original IDTS judgment against Reich and Jossem, several additional properties on Red Dirt Road in Amagansett were sold with Weiss's knowledge and participation with the proceeds distributed to alter egos of Reich and Jossem and to third parties allegedly holding mortgage liens on other Reich and Jossem properties. (Id. 104-05.) Two additional properties that were purchased using Reich and Jossem's stolen funds are still held by the entities Lopers/Noyack Path, L.L.C. and Roses Grove, L.L.C., both which Techno alleges to be alter egos of Reich and Jossem. (Id. 34-35, 106.) Lopers/Noyack is currently a debtor in a bankruptcy case filed by Weiss in the United States Bankruptcy Court for this district. Weiss claims to be both an equity participant and a creditor of Lopers/Noyack. (Id. 35, 107.) Both properties are burdened by substantial mortgages. (Id. 106.) Lopers/Noyack purchased its property on February 18, 2000, while Roses Grove acquired its property on January 26, 2000. (Id. 107-08.) Roses Grove was at the time of filing the Complaint subject to at least three foreclosure actions, including one by mortgagee Dothlyn Investments Limited. (Id. 40, 108.) Techno is seeking to invalidate the Dothlyn mortgage as a fraudulent conveyance in its state court action. (Id. 108.) The Complaint includes allegations that Reich and Jossem used the auction houses Christie's and Sotheby's to launder funds, but those allegations do not address the defendants' role directly and are not addressed further. (See id. 42, 109-18.) In sum, Techno alleges that Weiss and Weiss & Co., together with Reich, Jossem, Shine, and other participants, participated in the conduct of the affairs of a criminal enterprise within the meaning of the RICO statute, through a pattern of racketeering activity, in violation of 18 U.S.C. 1962(c). **Techno alleges that the defendants engaged in a pattern of racketeering activity including the predicate acts detailed above, which it alleges constituted money laundering in violation of 18 U.S.C. 1956, **monetary transactions greater than $10,000 in property derived from specific unlawful activity in violation of 18 U.S.C. 1957, transportation of stolen property in violation of 18 U.S.C. 2314, and the sale and receipt of stolen property in violation of 18

U.S.C. 2315. (Id. 121-23.)

At p. 8,

B. The defendants next argue that the Complaint does not adequately allege that they conduct[ed] or participate[d] in the conduct of the RICO enterprise's affairs within the meaning of 18 U.S.C. 1962(c). See Reves v. Ernst & Young, 507 U.S. 170, 179 ( 1993) ([ T]he word participate makes clear that RICO liability is not limited to those with primary responsibility for the enterprise's affairs ... but some part in directing that enterprise's affairs is required.). This element of a 1962(c) RICO claim is often referred to as the operation or management requirement. See Reves, 507 U.S. at 185. The defendants assert that Reves and subsequent cases applying its holding show that those who provide outside professional services to a criminal enterprise, such as lawyers and accountants, do not operate or manage the enterprise, even where those professionals knowingly conceal the enterprise's crimes. See, e.g., Madanes v. Madanes, 981 F.Supp. 241, 256-57 (S.D.N.Y.1997); Dep't of Econ. Dev. v. Arthur Andersen & Co., 924 F.Supp. 449, 465-69 (S.D.N.Y.1996); Biofeedtrac Inc. v. Kolinor Optical Enters. & Consultants, S.R.L., 832 F.Supp. 585, 590-92 (E.D.N.Y.1993). **However, Reves provides no blanket immunity for professionals regardless of their involvement in a criminal enterprise, and other cases suggest that, where professionals are alleged to have exceeded the mere rendering of legitimate professional services, the operation or management requirement will be pleaded adequately. E.g., Cadle Co. v. Flanagan, 01 Civ. 531, 2006 WL 860063, at *9 (D.Conn. Mar. 31, 2006) (law firm's conduct far exceeded the rendering of legal advice and constituted participation in fraudulent conduct in violation of RICO); **Tribune Co. v. Purcigliotti, 869 F.Supp. 1076, 1098 (S.D.N.Y.1994) (participation requirement met where law firm helped devise and manage a fraudulent scheme), aff'd sub nom. on other grounds, Tribune Co. v. Abiola, 66 F.3d 12 (2d Cir.1995). Moreover, many of the cases the defendants rely upon were decided on summary judgment, not as here on a Rule 12(b)(6) motion. *9 The Complaint alleges that Weiss and Weiss & Co. did more than prepare tax returns or provide outside accounting services. In particular, it alleges that Weiss was an architect of some of the money laundering activities, that he devised and managed the scheme to use a chain of single-use entities to carry out real estate transactions, that he received more than $2 million in profits from the real estate transactions (exceeding a reasonable fee for mere outside professional services), and that he was an equity investor in at least one of the real estate projects. These allegations are sufficient at the pleading stage to satisfy Techno's burden to allege that the defendants' conduct meets the operation or management requirement of Reves.

U.S. v. Triumph Capital 260 F.Supp.2d 444 Definition of state penal code offense of bribery and how it is applied as a RICO predicate offense 18 U.S.C. 1961 definitions 18 U.S.C. 1961(3) person includes any individual or entity capable of holding a legal or beneficial interest in property; 18 U.S.C. 1961(4) enterprise includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity; 18 U.S.C. 1961(5) pattern of racketeering activity requires at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity; ENTERPRISE

A. Separateness from predicate acts

Odom v. Microsoft Corp., 486 F.3d 541, RICO Bus.Disp.Guide 11,290, 07 Cal. Daily Op. Serv. 4895, 2007 Daily Journal D.A.R. 6307 (9th Cir.(Wash.),May 04, 2007)

At p. 549, The enterprise is the actor, and the pattern of racketeering activity is an activity in which that actor engages. At p. 551, We take this opportunity to join the circuits that hold that an associated-in-fact enterprise under RICO does not require any particular organizational structure, separate or otherwise. See Patrick, 248 F.3d at 19 (1st Cir.2001); Perholtz, 842 F.2d at 355 (D.C.Cir.1988); Cagnina, 697 F.2d at 921 (11th Cir.1983); Bagaric, 706 F.2d at 55-56 (2d Cir.1983). To the extent that our past precedent suggests the contrary, it is hereby overruled. See, e.g., Wagh v. Metris Direct, Inc., 348 F.3d 1102, 1112 (9th Cir.2003); Simon v. Value Behavioral Health, Inc., 208 F.3d 1073, 1083-84 (9th Cir.2000); Chang, 80 F.3d at 1298-99, 1301. Pleading to sufficiently allege the elements of an associated-infact enterprise, in the Ninth Circuit to are instructed in Odom v. Microsoft Corp., 486 F.3d 541, RICO Bus.Disp.Guide 11,290, 07 Cal. Daily Op. Serv. 4895, 2007 Daily Journal D.A.R. 6307 (9th Cir. (Wash.),May 04, 2007): 1. Common purpose. 2. Ongoing organization. 3. Continuing unit.
Odom v. Microsoft Corp., 486 F.3d 541, RICO Bus.Disp.Guide 11,290, 07 Cal. Daily Op. Serv. 4895, 2007 Daily Journal D.A.R. 6307 (9th Cir.(Wash.),May 04, 2007)

At p. 552,

d. Criteria for an Associated-in-Fact Enterprise [5][6] The Supreme Court in Turkette articulated the criteria for an associated-in-fact enterprise under RICO. According to the Court, an associated-in-fact enterprise is a group of persons associated together for a common purpose of engaging in a course of conduct. 452 U.S. at 583, 101 S.Ct. 2524. To establish the existence of such an enterprise, a plaintiff must provide both **evidence of an ongoing organization, formal or informal, and **evidence that the various associates function as a continuing unit. Id. We consider these criteria in turn.
i. Common Purpose We first conclude that plaintiffs have sufficiently alleged that defendants Best Buy and Microsoft have associated for **a common purpose of engaging in a course of conduct. Id. According to the complaint, defendants had the common purpose of increasing the number of people using Microsoft's Internet Service, and doing so by fraudulent means. Best Buy furthered this common purpose by distributing Microsoft Internet Trial

CD's and conveying its customers' debit and credit card information to Microsoft. Microsoft then used the information to activate customer accounts. These allegations are more than adequate to establish, if true, that Microsoft and Best Buy had a **common purpose of increasing the number of people using Microsoft's Internet service through fraudulent means. ii. Ongoing Organization We next conclude that plaintiffs sufficiently alleged an ongoing organization, either formal or informal. Turkette, 452 U.S. at 583, 101 S.Ct. 2524. An ongoing organization is a vehicle for the commission of two or more predicate crimes. Cagnina, 697 F.2d at 921-22 (internal quotation marks omitted) (quoting United States v. Elliott, 571 F.2d 880, 898 (5th Cir.1978)).**According to plaintiffs, Microsoft and Best Buy formed a vehicle for the commission of at least two predicate acts of fraud. Microsoft and Best Buy established mechanisms for transferring plaintiffs' personal and financial information from Best Buy to Microsoft. That information then allowed Microsoft to activate plaintiffs' Internet accounts without their knowledge or permission. These mechanisms enabled Microsoft to bill plaintiffs improperly for MSN services in 2001, 2002 and 2003. See United States v. Qaoud, 777 F.2d 1105, 1117 (6th Cir.1985) (stating that coordinated nature of defendant's activity supported finding of RICO enterprise). The alleged cross-marketing contract between Microsoft and Best Buy provides additional evidence of an ongoing organization. Plaintiffs allege that, in addition to the transfer of customers' information from Best Buy to Microsoft, Best Buy agreed to promote MSN and other Microsoft products in its stores and advertising. In exchange, plaintiffs allege, Microsoft invested $200 million in Best Buy and agreed to promote Best Buy's online store through its MSN service. iii. Continuing Unit Finally, we conclude that plaintiffs have alleged facts that, if proved, provide sufficient evidence that the various associates function as a continuing unit. Turkette, 452 U.S. at 583, 101 S.Ct. 2524. The continuity requirement does **not, in itself, require that every member be involved in each of the underlying acts of racketeering, or that the predicate acts be interrelated in any way. *553Qaoud, 777 F.2d at 1116. **Instead, the continuity requirement focuses on whether the associates' behavior was ongoing rather than isolated activity. Patrick, 248 F.3d at 19. The allegations of plaintiffs Odom and Moureaux-Maloney **describe similar methods of fraudulently charging Best Buy customers for MSN Internet accounts. **Plaintiffs' allegations cover almost two years of conduct by Best Buy and Microsoft. An almost two-year time span is far more than adequate to establish that Best Buy and Microsoft functioned as a continuing unit. That several employees engaged in the activity at different times does not defeat the continuity requirement. Cagnina, 697 F.2d at 921 (holding that a growing membership and diversity of activities do not preclude a finding of continuity). Background: The United States District Court for the Western District of Washington, Marsha J. Pechman, J., dismissed customers' class action Racketeer Influenced and Corrupt Organizations Act (RICO) suit against software manufacturer and retailer for failure to allege an associated in fact enterprise and for failure to plead wire fraud with particularity, and customers appealed. Holdings: The Court of Appeals en banc, William A. Fletcher, Circuit Judge, held that:

(1) an associated-in-fact enterprise under RICO does not require any particular organizational structure, separate or otherwise; overruling Wagh v. Metris Direct, Inc., 348 F.3d 1102, Simon v. Value Behavioral Health, Inc., 208 F.3d 1073 and Chang v. Chen, 80 F.3d 1293; (2) Retailer's customers sufficiently alleged that manufacturer and retailer formed an associated-in-fact enterprise; and (3) employee of retailer's store did not need to be named in order to plead predicate act of wire fraud. Reversed and remanded. Silverman, Circuit Judge, filed opinion concurring in the result in which Rymer, Tallman, Rawlinson, and Bea, Circuit Judges, joined. [1] Racketeer Influenced and Corrupt Organizations 319H 2

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk2 k. Constitutional and Statutory Provisions. Most Cited Cases Racketeer Influenced and Corrupt Organizations Act (RICO) should be liberally construed to effectuate its remedial purposes. 18 U.S.C.A. 1961-1968. [2] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk39 k. Particular Enterprises. Most Cited Cases Racketeer Influenced and Corrupt Organizations 319H 47 39

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk47 k. Professional, Business, or Trade Associations. Most Cited Cases A single individual is an enterprise under Racketeer Influenced and Corrupt Organizations Act (RICO); similarly, a single partnership, a single corporation, a single association, and a single other legal entity are all enterprises. 18 U.S.C.A. 1961(4). [3] Racketeer Influenced and Corrupt Organizations 319H 47

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk47 k. Professional, Business, or Trade Associations. Most Cited Cases Under Racketeer Influenced and Corrupt Organizations Act (RICO), a corporation can be an individual for purposes of an associated-in-fact enterprise. 18 U.S.C.A. 1961(4). [4] Racketeer Influenced and Corrupt Organizations 319H 36

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk36 k. Informal Entities; Associations-In-Fact. Most Cited Cases An associated-in-fact enterprise under Racketeer Influenced and Corrupt Organizations Act (RICO) does not require any particular organizational structure, separate or otherwise; overruling Wagh v. Metris Direct, Inc., 348 F.3d 1102, Simon v. Value Behavioral Health, Inc., 208 F.3d 1073 and Chang v. Chen, 80 F.3d 1293. 18 U.S.C.A. 1961(4) [5] Racketeer Influenced and Corrupt Organizations 319H 36

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk36 k. Informal Entities; Associations-In-Fact. Most Cited Cases To establish the existence of an associated-in-fact enterprise under Racketeer Influenced and Corrupt Organizations Act (RICO), a plaintiff must provide both evidence of an ongoing organization, formal or informal, and evidence that the various associates function as a continuing unit. 18 U.S.C.A. 1961(4). [6] Racketeer Influenced and Corrupt Organizations 319H 47

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk47 k. Professional, Business, or Trade Associations. Most Cited Cases Retailer's customers sufficiently alleged that defendant software manufacturer and codefendant retailer formed an associated-in-fact enterprise under Racketeer Influenced and Corrupt Organizations Act (RICO); customers alleged that defendants had the common purpose of increasing the number of people using manufacturer's internet service and doing so by fraudulent means, that defendants formed a vehicle for the commission of at least two predicate acts of fraud by establishing mechanisms for transferring customers' personal and financial information from retailer to manufacturer, thus allowing manufacturer to activate and charge customers' internet accounts without their knowledge or permission, and that defendants functioned as a continuing unit. 18 U.S.C.A. 1961(4), 1962(c). [7] Federal Civil Procedure 170A 636

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases The only aspects of wire fraud that require particularized allegations are the factual circumstances of the fraud itself. 18 U.S.C.A. 1343; Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. [8] Federal Civil Procedure 170A 636

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General

170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases In the circumstances of a retail transaction whose full consequences are realized only months later, employee of the store need not be named in order to plead predicate act of wire fraud with requisite particularity in civil Racketeer Influenced and Corrupt Organizations Act (RICO) suit. 18 U.S.C.A. 1343, 1962(c); Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. Before: MARY M. SCHROEDER, Chief Circuit Judge, STEPHEN REINHARDT, DIARMUID F. O'SCANNLAIN, PAMELA ANN RYMER, HAWKINS, SIDNEY R. THOMAS, BARRY G. SILVERMAN, W. FLETCHER, RAYMOND C. FISHER, RICHARD A. PAEZ, MARSHA S. BERZON, RICHARD C. TALLMAN, JOHNNIE B. RAWLINSON, JAY S. BYBEE, and CARLOS T. BEA, Circuit Judges. *543 Opinion by Judge WILLIAM A. FLETCHER; Concurrence by Judge SILVERMAN; Concurrence by Judge BYBEE. WILLIAM A. FLETCHER, Circuit Judge: Putative class action plaintiffs appeal from the dismissal of their suit under Federal Rule of Civil Procedure 12(b)(6) for failure to allege an associated in fact enterprise under RICO and, in the alternative, under Federal Rule of Civil Procedure 9(b) for failure to plead wire fraud with particularity. The district court dismissed with prejudice and without leave to amend. We reverse and remand. I. Background Named plaintiff James Odom-then the only plaintiff-filed the first complaint in this action in the Northern District of California, alleging that defendants Microsoft and Best Buy had violated the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(c) and (d). Odom alleged that in April 2000 defendants entered into an agreement under which Microsoft invested $200 million in Best Buy and agreed to promote Best Buy's online store through its MSN service. MSN is a division of Microsoft offering Internet access services. In return, Best Buy agreed to promote MSN service and other Microsoft products in its stores and advertising. Odom alleged that pursuant to their agreement, Best Buy employees distributed different Microsoft compact discs (Trial CDs) depending on what the customer purchased. For example, a customer who purchased a computer would receive a Trial CD providing a free six-month subscription to MSN. A customer who purchased a cell phone would receive a Trial CD providing a free thirty-day subscription. Odom alleged that if the customer was paying by debit or credit card the Best Buy employee would scan the Trial CD. If asked why the Trial CD had been scanned, the Best Buy employee would claim it was for inventory control or otherwise misrepresent[ ] the purpose of the scanning. Odom alleged that what this scanning actually did was send the information to Microsoft. Microsoft would then, without the customer's knowledge or permission, activate an MSN account in the customer's name. If the customer did not cancel the account before the expiration of the free trial period, Microsoft would start billing the debit or credit card number. Odom further alleged that when customers called to dispute these charges, Microsoft directed some of them to seek relief from their debit or credit card issuers. Odom alleged that the policies and practices by Best Buy and its employees relating to distribution of the Trial CDs-including but not limited to the deliberate failure to make disclosures and making of misrepresentations-have been formulated and implemented by Best Buy jointly with Microsoft, by agreement with Microsoft, and/or with Microsoft's knowledge and approval for the benefit of both Best Buy and Microsoft. Odom alleged that no affected customer had been fully compensated for his or her losses, defined as (1) a full refund of the unauthorized charges; (2) a full refund of the accrued finance charges; (3) payment of interest on the money during the time it was held by Microsoft; and (4) compensation for the time, effort, and expense incurred in cancelling MSN accounts and seeking refunds. Odom alleged that these losses resulted from defendants' actions taken pursuant to their agreement. Odom alleged that he purchased a laptop computer by credit card from a Best *544 Buy store in Contra

Costa County, California, in May 2002. He alleged that he told the Best Buy employee that he did not need the Trial CD because he already had another Internet service, and that the Best Buy employee did not tell him that an MSN account with Microsoft was being established in his name or that any financial obligation was being imposed on him. He further alleged that he never used the free six-month service that came with his computer purchase. After the six-month period, Microsoft began charging his account. Odom alleged that when he noticed the charges he called Microsoft and cancelled the service. Odom alleged that defendants' acts constituted violations of civil RICO, 18 U.S.C. 1962(c) and (d). Odom alleged that Best Buy and Microsoft, acting together pursuant to their agreement, constituted an associated-in-fact enterprise under RICO; that their actions, involving thousands of consumers, constituted a pattern of racketeering activity under RICO; and that they committed the RICO racketeering activity predicate act of wire fraud in violation of 18 U.S.C. 1343. Microsoft, joined by Best Buy, moved to dismiss under Rule 12(b)(6) for failure to allege an associated-infact enterprise, and under Rule 9(b) for failure to plead wire fraud with particularity. Microsoft also moved to transfer the case from California to the Western District of Washington based on a forum selection clause contained in the MSN subscriber agreement. The California district court transferred the case to Washington without ruling on the motion to dismiss. After transfer, Microsoft withdrew its motion to dismiss based on Odom's indication that he intended to amend the complaint. An amended complaint was filed on November 19, 2003. Odom continues as a plaintiff. He adds slightly more detail to the allegations made in the first complaint. He now specifies that the Best Buy store was in Pleasant Hill, California, rather than merely in Contra Costa County. He further alleges that Microsoft billed his credit card account for two months after the expiration of the six-month period, that he has paid these credit card charges, and that he has not received any refund or credit for these charges. Katherine Moureaux-Maloney was added as a second plaintiff. Moureaux-Maloney alleges that in September 2001 she purchased a cell phone and a cell phone service plan at a Best Buy store in Reno, Nevada, using a debit card. She alleges that a Best Buy employee scanned a Trial CD and swiped her debit card, thereby sending the information to Microsoft and establishing a thirty-day trial subscription in her name. The employee did not tell Moureaux-Maloney that this was being done. Moureaux-Maloney did not know she had this service and never used it. After the thirty days elapsed, Microsoft withdrew monthly MSN charges from MoureauxMaloney's debit card account for seventeen months without her knowledge or authorization. In November 2003, Moureaux-Maloney received a bill from Microsoft for monthly MSN charges for April, May, and June 2003 after Microsoft was unable to continue withdrawing the charges from her debit card account. Upon receiving this bill, Moureaux-Maloney and her husband immediately contacted Microsoft and discovered that the MSN account had been established in her name through Best Buy. Upon reviewing her bank statements, she discovered the withdrawals Microsoft had made for seventeen months. Finally, Moureaux-Maloney alleges that she has not received any refund for any of the MSN charges that Microsoft withdrew from her debit card account, and Microsoft continues to seek *545 payment from her of MSN charges for April, May, and June 2003. Plaintiffs expanded the enterprise-related allegations in the first complaint by further describing the agreement between Microsoft and Best Buy. The amended complaint contains the following addition: In Defendants' own words (in a joint press release), this agreement is a comprehensive strategic alliance that encompasses broadband, narrowband, in-store and online efforts; provides for significant joint marketing in Best Buy's retail stores, online and through print/broadcast vehicles, profit sharing, the promotion of BestBuy.com to the 40 million users throughout Microsoft's properties, and technology assistance; and pursuant to which MSN Internet access and Microsoft's full range of connectivity solutions will be demonstrated and sold at the more than 350 Best Buy stores in the U.S. and through BestBuy.com, and Best Buy and BestBuy.com will receive prominent and preferred placement across Microsoft Properties, including MSNBC, and the Expedia.com travel service, Hotmail Web-based e-mail service, WebTV Network, and the newly launched MSN eShop online shopping service. Microsoft and Best Buy again moved to dismiss the RICO claims under Rule 12(b)(6) and Rule 9(b). The district court dismissed the amended complaint on both grounds without leave to amend. It held that an

associated-in-fact enterprise had not been alleged within the meaning of RICO under Rule 12(b)(6), and that wire fraud had not been pled with particularity under Rule 9(b). Plaintiffs then voluntarily dismissed their nonRICO claims in order to allow entry of final judgment. Plaintiffs appeal the dismissal of their RICO claims.

At p. 547,
B. Plaintiffs' Suit Plaintiffs allege that defendants have violated two provisions of RICO. **First, they allege violation of 18 U.S.C. 1962(c), which provides: 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 or collection of unlawful debt. Second, they allege violation of 18 U.S.C. 1962(d), which provides: It shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section. In the posture of this appeal, the survival of plaintiffs' claim under 1962(c) will ensure the survival of their claim under 1962(d). See Howard v. Am. Online Inc., 208 F.3d 741, 751 (9th Cir.2000). We therefore address, in the remainder of this opinion, only plaintiffs' claim under 1962(c). To state a claim under 1962(c), a plaintiff must allege (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. Sedima, 473 U.S. at 496, 105 S.Ct. 3275 (footnote omitted). The only questions presented in this appeal concern requirements (2) and (4). First, Microsoft and Best Buy contend that plaintiffs have not alleged an associated*548 in fact enterprise under RICO. Second, Microsoft and Best Buy contend that while plaintiffs have properly identified wire fraud as a predicate act of racketeering activity, they have not pled fraud with particularity. We address these two contentions in turn. 1. Associated-in-Fact Enterprise [2][3] The definition of enterprise in the text of RICO is fairly straightforward. In its entirety, the definition is as follows: enterprise includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity. 18 U.S.C. 1961(4). As is evident from the text, this definition is not very demanding. A single individual is an enterprise under RICO. Similarly, a single partnership, a single corporation, a single association, and a single other legal entity are all enterprises. At issue in this case is the last kind of enterprise listed in the definition-a group of individuals associated in fact. It is undisputed that a corporation can be an individual for purposes of an associated-in-fact enterprise. What is disputed is the manner in which a group must be associated. a. United States v. Turkette In United States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981), the only Supreme Court case directly on point, defendants were alleged to have been an associated-in-fact enterprise within the meaning of 1961(4) and 1962(c). In the words of the statute, they were alleged to have been a group of individuals associated in fact for the purpose of engaging in acts constituting a pattern of racketeering activity. The First Circuit had agreed with defendants that RICO was designed solely to protect legitimate business enterprises from infiltration by racketeers and that RICO does not make criminal the participation in an association which performs only illegal acts and which has not infiltrated or attempted to infiltrate a legitimate enterprise. Id. at 579-80, 101 S.Ct. 2524. The Supreme Court reversed, holding that a group of individuals associated in fact was an enterprise under RICO even if the purpose of the enterprise was exclusively criminal. Id. at 593, 101 S.Ct. 2524. In the course of its analysis, the Court refuted various analytic mistakes by the court of appeals. The First Circuit's conclusion that RICO did not apply to wholly illegal enterprises depended in part on its reasoning that a contrary holding would render portions of the statute superfluous. The court of appeals had stated, If a pattern of racketeering can itself be an enterprise for purposes of section 1962(c), then the two

phrases employed by or associated with any enterprise and the conduct of such enterprise's affairs through [a pattern of racketeering activity] add nothing to the meaning of the section. The words of the statute are coherent and logical only if they are read as applying to legitimate enterprises. Turkette, 452 U.S. at 582, 101 S.Ct. 2524 (quoting United States v. Turkette, 632 F.2d 896, 899 (1st Cir.1980) (alteration in original)). The Supreme Court was at pains to correct the court of appeals' reading of the statute. It wrote: [The court of appeals' conclusion] is based on a faulty premise. That a wholly criminal enterprise comes within the ambit of the statute does not mean that a pattern of racketeering activity is an enterprise. In order to secure a conviction under RICO, the Government must prove both the existence of an *549 enterprise and the connected pattern of racketeering activity. The enterprise is an entity, for present purposes a group of persons associated together for a common purpose of engaging in a course of conduct. The pattern of racketeering activity is, on the other hand, a series of criminal acts as defined by the statute. The former is proved by evidence of **an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit. The latter is proved by evidence of the requisite number of acts of racketeering committed by the participants in the enterprise. While the proof used to establish these separate elements may in particular cases coalesce, proof of one does not necessarily establish the other. The enterprise is not the pattern of racketeering activity; it is an entity separate and apart from the pattern of activity in which it engages. Id. at 583, 101 S.Ct. 2524 (citation omitted; emphasis added). In context, this passage from Turkette is easy to understand. The court of appeals had mistakenly equated the term enterprise with the term pattern of racketeering activity. The Supreme Court pointed out that the terms refer to two concepts that are separate and apart from one another: The enterprise is the actor, and the pattern of racketeering activity is an activity in which that actor engages. See id. These separate concepts can be expressed grammatically: As used in the italicized passage in Turkette, enterprise is the subject, and pattern of racketeering activity is part of the predicate. Actions that form the pattern of racketeering activity are often referred to as predicate acts, though likely not in the grammatical sense. See, e.g., Mendoza v. Zirkle Fruit Co., 301 F.3d 1163, 1168 (9th Cir.2002); Howard, 208 F.3d at 746. In the words of the Court, italicized above, The enterprise is not the pattern of racketeering activity; it is an entity separate and apart from the pattern of activity in which it engages. Turkette, 452 U.S. at 583, 101 S.Ct. 2524. Turkette further explained that proof of a pattern of racketeering activity is not, by itself, proof of an enterprise. Id. Enterprise and pattern of racketeering activity are separate elements that require separate proof. In the words of the Court, [t]he existence of an enterprise at all times remains a separate element which must be proved by the Government. Id. (stating that [w]hile the proof used to establish these separate elements [of enterprise and pattern of racketeering activity] may in particular cases coalesce, proof of one does not necessarily establish the other).

At p. 551,
**We take this opportunity to join the circuits that hold that an associated-in-fact enterprise under RICO does not require any particular organizational structure, separate or otherwise. See Patrick, 248 F.3d at 19 (1st Cir.2001); Perholtz, 842 F.2d at 355 (D.C.Cir.1988); Cagnina, 697 F.2d at 921 (11th Cir.1983); Bagaric, 706 F.2d at 55-56 (2d Cir.1983). To the extent that our past precedent suggests the contrary, it is hereby overruled. See, e.g., Wagh v. Metris Direct, Inc., 348 F.3d 1102, 1112 (9th Cir.2003); Simon v. Value Behavioral Health, Inc., 208 F.3d 1073, 1083-84 (9th Cir.2000); Chang, 80 F.3d at 1298-99, 1301. c. No Requirement of Separate or Ascertainable Structure As we explain above, the Supreme Court's statement in Turkette that an enterprise is an entity separate and apart from the pattern of activity in which it engages **is not a statement that an associated-in-fact enterprise must have some kind of separate structure. 452 U.S. at 583, 101 S.Ct. 2524. Rather, it is merely a statement of the obvious: The enterprise and its activity are two separate things. **One is the enterprise. **The

other is its activity. To read the Court's statement in Turkette as requiring that an associated-in-fact enterprise have a structure beyond that necessary to carry out its pattern of illegal racketeering activities is not only to misread the particular passage of Turkette. It is also fundamentally to misunderstand Turkette's holding. The First Circuit in Turkette had read RICO to impose liability only when a legitimate business was infiltrated by a criminal enterprise. In the view of the court of appeals, RICO did not impose liability on purely criminal enterprises. The Supreme Court reversed. To require that an associated-in-fact enterprise have a structure beyond that necessary to carry out its racketeering activities would be to require precisely what the Court in Turkette held that RICO does not require. Such a requirement would necessitate that the enterprise have a structure to serve both illegal racketeering activities as well as legitimate activities. In other words, it would require-as the First Circuit sought to require in Turkette-that the enterprise have a structure serving both illegitimate and legitimate purposes. But the Court in Turkette held precisely the opposite. It held that a purely criminal enterprise can be an associated-in-fact enterprise within the meaning of RICO. See also Cedric Kushner Promotions, 533 U.S. at 164-65, 121 S.Ct. 2087 (stating that RICO protects the public from those who would unlawfully use an enterprise (whether legitimate or illegitimate) as a vehicle through which unlawful ... activity is committed ) (ellipsis in original; citations omitted). Further, to require that an associated-in-fact enterprise have an ascertainable structure-whether that structure serves both legitimate and illegitimate activities, or only illegitimate activities-**is also to misread Turkette. As the First Circuit stated in Patrick, such a requirement improperly narrows the definition of an associated-in-fact enterprise **because criminal enterprises may not observe the niceties of legitimate organizational structures. 248 F.3d at 19. There must, of course, be an associated-in-fact enterprise, as required by the statute and as explained in Turkette. But there is no additional requirement*552 that the enterprise have an ascertainable structure. d. Criteria for an Associated-in-Fact Enterprise [5][6] The Supreme Court in Turkette articulated the criteria for an associated-in-fact enterprise under RICO. According to the Court, an associated-in-fact enterprise is a group of persons associated together for a common purpose of engaging in a course of conduct. 452 U.S. at 583, 101 S.Ct. 2524. To establish the existence of such an enterprise, a plaintiff must provide both **evidence of an ongoing organization, formal or informal, and **evidence that the various associates function as a continuing unit. Id. We consider these criteria in turn. i. Common Purpose We first conclude that plaintiffs have sufficiently alleged that defendants Best Buy and Microsoft have associated for **a common purpose of engaging in a course of conduct. Id. According to the complaint, defendants had the common purpose of increasing the number of people using Microsoft's Internet Service, and doing so by fraudulent means. Best Buy furthered this common purpose by distributing Microsoft Internet Trial CD's and conveying its customers' debit and credit card information to Microsoft. Microsoft then used the information to activate customer accounts. These allegations are more than adequate to establish, if true, that Microsoft and Best Buy had a **common purpose of increasing the number of people using Microsoft's Internet service through fraudulent means. ii. Ongoing Organization We next conclude that plaintiffs sufficiently alleged an ongoing organization, either formal or informal. Turkette, 452 U.S. at 583, 101 S.Ct. 2524. An ongoing organization is a vehicle for the commission of two or more predicate crimes. Cagnina, 697 F.2d at 921-22 (internal quotation marks omitted) (quoting United States v. Elliott, 571 F.2d 880, 898 (5th Cir.1978)).**According to plaintiffs, Microsoft and Best Buy formed a vehicle for the commission of at least two predicate acts of fraud. Microsoft and Best Buy established mechanisms for transferring plaintiffs' personal and financial information from Best Buy to Microsoft. That information then allowed Microsoft to activate plaintiffs' Internet accounts without their knowledge or permission. These mechanisms enabled Microsoft to bill plaintiffs improperly for MSN services in 2001, 2002 and 2003. See United States v. Qaoud, 777 F.2d 1105, 1117 (6th Cir.1985) (stating that coordinated nature of defendant's activity supported finding of RICO enterprise). The alleged cross-marketing contract between

Microsoft and Best Buy provides additional evidence of an ongoing organization. Plaintiffs allege that, in addition to the transfer of customers' information from Best Buy to Microsoft, Best Buy agreed to promote MSN and other Microsoft products in its stores and advertising. In exchange, plaintiffs allege, Microsoft invested $200 million in Best Buy and agreed to promote Best Buy's online store through its MSN service. iii. Continuing Unit Finally, we conclude that plaintiffs have alleged facts that, if proved, provide sufficient evidence that the various associates function as a continuing unit. Turkette, 452 U.S. at 583, 101 S.Ct. 2524. The continuity requirement does **not, in itself, require that every member be involved in each of the underlying acts of racketeering, or that the predicate acts be interrelated in any way. *553Qaoud, 777 F.2d at 1116. **Instead, the continuity requirement focuses on whether the associates' behavior was ongoing rather than isolated activity. Patrick, 248 F.3d at 19. The allegations of plaintiffs Odom and Moureaux-Maloney **describe similar methods of fraudulently charging Best Buy customers for MSN Internet accounts. **Plaintiffs' allegations cover almost two years of conduct by Best Buy and Microsoft. An almost two-year time span is far more than adequate to establish that Best Buy and Microsoft functioned as a continuing unit. That several employees engaged in the activity at different times does not defeat the continuity requirement. Cagnina, 697 F.2d at 921 (holding that a growing membership and diversity of activities do not preclude a finding of continuity). iv. Conclusion Several courts of appeals have concluded that a broad definition of an associated-in-fact enterprise would produce undesirably expansive RICO liability. For example, when the Third Circuit in Riccobene required that an enterprise have a structure beyond that necessary merely to commit each of the acts charged as predicate racketeering offenses, 709 F.2d at 224, it did so to avoid what it called the dangers of a broad definition. Id. at 221. The Third Circuit stated that it was concerned that RICO liability would extend to situations far removed from those actually contemplated by Congress, and that federal prosecutors could use the law to invoke an additional penalty whenever they had a case involving the commission of two offenses that, coincidentally, were among those listed as racketeering activities. Id. The answer to concerns like those expressed by the Third Circuit in Riccobene was given by the Supreme Court in Sedima, when it rebuked the Second Circuit for having interpreted RICO to avoid what the court of appeals had called the extraordinary, if not outrageous, uses to which civil RICO had been put. 473 U.S. at 499, 105 S.Ct. 3275. The Court's response was to point to the text of the statute: It is true that private civil actions under the statute are being brought almost solely against [legitimate] defendants, rather than against the archetypal, intimidating mobster. Yet this defect-if defect it is-is inherent in the statute as written, and its correction must lie with Congress. Id. (footnote omitted). In Turkette, the Supreme Court carefully articulated the criteria for an associated-in-fact enterprise under RICO. We do not believe that we are at liberty to add to them. Applying the criteria articulated in Turkette, we conclude that plaintiffs have sufficiently alleged an associated-in-fact enterprise. 2. Pleading Fraud with Particularity Federal Rule of Civil Procedure 9(b) requires that fraud be pled with particularity. It provides: In all averments of fraud ..., the circumstances constituting fraud ... shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally. Rule 9(b) requires the identification of the circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegations. Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1400 (9th Cir.1986) (internal quotation marks omitted) (quoting Bosse v. Crowell Collier & Macmillan, 565 F.2d 602, 611 (9th Cir.1977)). [T]he pleader must state **the time, **place, and **specific content of the false representations as well as **the identities of the parties to the misrepresentation. Id. at 1401; see also *554Moore v. Kayport Package Express, Inc., 885 F.2d 531, 541 (9th Cir.1989). While the factual circumstances of the fraud itself must be alleged with particularity, the state of mind-or scienter-of the defendants may be alleged generally. See In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1547 (9th Cir.1994) (en banc) (We conclude that plaintiffs may aver scienter generally, just as the rule states-that is, simply by saying that scienter existed.). [7] [A] wire fraud violation consists of **(1) the formation of a scheme or artifice to defraud; (2) use of

the United States wires or causing a use of the United States wires in furtherance of the scheme; and (3) specific intent to deceive or defraud. Schreiber, 806 F.2d at 1400 (citation omitted); see also United States v. McNeil, 320 F.3d 1034, 1040 (9th Cir.2003). To the degree that the first requirement-the formation of a scheme or artifice to defraud-requires a showing of the defendants' state of mind, general rather than particularized allegations are sufficient. Similarly, the third requirement-specific intent to deceive or defraud-requires only a showing of the defendants' state of mind, for which general allegations are sufficient. The only aspects of wire fraud that require particularized allegations are the factual circumstances of the fraud itself. [8] Plaintiff Odom specifically alleges that he bought a laptop computer from a Best Buy store in Pleasant Hill, California, in May 2002; that he told the Best Buy employee when he purchased the computer that he did not need the Trial CD and the MSN service because he already had an Internet service provider; that the employee nevertheless scanned the Trial CD and swiped Odom's credit card, thereby sending the information to Microsoft by wire and establishing an account for Microsoft's MSN service without his knowledge or permission; that Microsoft billed him for two months of the MSN service that had been provided without his knowledge or permission; and that he has not been compensated for his losses. Odom does not allege the name of the Best Buy employee who sold him the computer and established his MSN account. Plaintiff Moureaux-Maloney specifically alleges that she bought a cell phone and a cell phone plan from a Best Buy store in Reno, Nevada, in September 2001; that the Best Buy employee scanned a Trial CD and swiped her debit card, thereby sending the information to Microsoft by wire and establishing an account for Microsoft's MSN service without her knowledge or permission; that Microsoft withdrew monthly MSN payments from her debit card account for seventeen months without her knowledge or permission; that Microsoft sent her a bill for monthly MSN services for April, May, and June 2003 after Microsoft was unable to withdraw money from her debit card account; and that Microsoft has not compensated her for losses attributable to the seventeen months of withdrawals from her account, and has continued to bill her for the three-month period in 2003. Like Odom, Moureaux-Maloney does not allege the name of the Best Buy employee who sold her the cell phone and established her MSN account. The only arguable deficiency in Odom and Moureaux-Maloney's allegations of wire fraud is that the names of the individual Best Buy employee who established their MSN accounts are not alleged. We hold for two reasons that, in the circumstances of a retail transaction whose full consequences are realized only months later, the employee of the store need not be named. First, it is unrealistic to expect that the retail customer would remember the name of the cash register employee. A requirement that the employee be named as a precondition of bringing suit *555 and commencing discovery would, as a practical matter, defeat almost any suit based on such a fraud. Second, as we noted above, Rule 9(b) requires the identification of the circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegations. Schreiber, 806 F.2d at 1400. In the circumstances of this case, we have been given no reason to believe that defendants will be hampered in their defense by Odom and Moureaux-Maloney's inability to name the particular employees. We therefore hold that plaintiffs' allegations of the circumstances of wire fraud are sufficiently particularized to satisfy the pleading requirements of Rule 9(b). IV. Conclusion For the foregoing reasons, we hold that plaintiffs have sufficiently alleged the existence of an associated-infact enterprise within the meaning of 18 U.S.C. 1961(4) and 1962(c). We also hold that plaintiffs have alleged wire fraud with sufficient particularity to satisfy Rule 9(b). We therefore reverse the decision of the district court and remand for further proceedings consistent with this opinion. REVERSED AND REMANDED. [Cited 25 times for this legal issue] Living Designs, Inc. v. E.I. Dupont de Nemours and Co., 431 F.3d 353 C.A.9.Haw.,2005 To establish liability under Racketeer Influenced and Corrupt Organizations Act (RICO), one must allege and prove the existence of two distinct entities: (1) a person, and (2) an enterprise that is not simply the same person referred to by a different name. 18 U.S.C.A. 1962(c) .

CONTINUITY Constitutes the commission of the public offense of Case stands for principle that a single victim can establish the existence of a pattern of racketeering activity. Loans on terms unavailable to the public, could be considered as transfers of the share or division of the total proceeds stolen, share payments, or shares of the total proceeds stolen by the the public office holder for the racketeering of their office. Are the extensive holdings of stocks gifts from parties having had matters before Kwan for favorable determination of cases, that are before him. Asian lawyer who appeared at the hearing when Miguel Duarte abandoned the case, appeared to have had a prior relationship with Kwan. Robert N. Kwan, wife Grace Kwan, sister Deputy Public Defender Susan Ten Kwan, three daughters, Elizabeth, Margaret, and Catherine; friend Lavar Taylor, attorney at law, LA County Bar president Charles E. Michaels, Robert Kwan stated to the United States Bankruptcy Court, Santa Ana, newsletter, story behind his swearing in as a bankruptcy judge that he has many uncles that practice law. Any bribing attempt could be done by hiring his uncles who practice law. Kwan is a former U.S. Attorney prosecuting tax fraud. He is likely to be very knowledgable about the evidence needed to establish probable cause to prosecute tax evasion. If he does so he is likely to employ the method that are uncommon and are difficult investigate. A large percentage of diversion of funds, under case law are utilized by the perpetrators into purchasing, renovating, repairing, upgrading the personal residence. Does Adorno & Yoss have a lawyer who attends the judges bankruptcy conferences to discuss the predetermination of cases. Bankruptcy Judge, Robert N. Kwan member of the National Bankruptcy Institute Adorno & Yoss donates to the NBI Kwan hid his wifes description of employment and income. Is Kwans wife the recipient of the things of value in return for an

official action or lack of official action. Many times bribe payments are made and are attempt to be hidden as consulting fees. Soon Chey, David Chey, William Stewart, Christopher Summers victims. Distinct economic injury Extortion. Acts to cloud title. Wells Fargo engaging in the criminal offense of filing of a false deed. Mail and wire fraud. Injury slander of title. Furtherance of scheme: slandered title so that it could not be sold. Acts to engage in the theft of possession, Acts to pervert and obstruct justice, in the federal jurisdiction bankruptcy case, 18 U.S.C. 1503 perversion obstruction of justice, in the state law jurisdiction unlawful detainer action, however case law states that this does not constitute federal 18 U.S.C. 1503 perversion obstruction of justice. Injury to the right of possession. Injury loss of rental income. Mail and wire fraud; Bankruptcy fraud; Acts behind the issuance of a writ of execution without a judgment. Injury Trespass. Theft / Conversion of possessions. Futherance of scheme: theft / conversion of possessions. Acts to engage in the theft of title. Sale of the residence. Illegal money laundering, the criminal offense of money laundering. Under the principles established in
U.S. v. Eisen, 974 F.2d 246, 36 Fed. R. Evid. Serv. 580 (2nd Cir.(N.Y.),Aug 17, 1992) **(1) that he committed **mail fraud for the purpose of executing a scheme to prepare and cause Patti Kibel to testify falsely at trial, and (2) that he caused another person to bribe a New York City Police Officer who was about to be called as a witness in connection with the case.

That the RICO person ADORNO & YOSS, Alvarado And Associates of the Associated-In-Fact Enterprise [And note that under 18 U.S.C. 1962 (c) Adorno & Yoss is factually alleged to be a member of the Associated-In-Fact Enterprise and not, any person **employed by or **associated with-18 U.S.C. 1962(c), this refers to outsiders, who may assist the enterprises affairs, not members of the enterprise, Gio v. U.S. 969 F.Supp.512, at p. 514) so that the rule of Reves v. Ernst (1993) 507 U.S. 170,179, that, In order to participate, directly or indirectly, in the conduct of
such enterprise's affairs, **one must have some part in directing those affairs. Of course, the word participate makes clear that RICO liability is not limited to those with primary responsibility for the enterprise's affairs, just as the phrase directly or indirectly makes clear that RICO

liability is not limited to those with a formal position in the enterprise,FN4 **but some part in directing the enterprise's affairs is required. And, to conduct or participate, directly or

indirectly, in the conduct of such enterprise's affairs, 1962(c), one must participate in the operation or management of the enterprise itself. (Reves v. Ernst, supra, 507 U.S. at p. 185), doesnt apply] ADORNO & YOSS; presented false evidence [false declarations of service; that they were the title holder on the basis of a trustee sale on a deed that was void because of they had actual and constructive notice that the deed was void because of forgery and incompetency and that any nonjudicial/ trustee sale based on a void deed renders all proceedings thereafter void. false oral testimony that the Equity One Lenders Loan and transferred by assignment to Impac Funding Loan and Trust Deed that WELLS FARGO owned.]
Uniroyal Goodrich Tire Co. v. Mutual Trading Corp., 63 F.3d 516, RICO Bus.Disp.Guide 8863 (7th Cir.(Ill.),Aug 03, 1995) Tire manufacturer brought action against tire distributor, alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) and related state law claims. Distributor counterclaimed alleging, inter alia, breach of contract. The United States District Court for the Northern District of Illinois, Elaine E. Bucklo, J., entered judgment for manufacturer and awarded attorney fees and costs, 1994 WL 605719. Distributor appealed. The Court of Appeals, Bauer, Circuit Judge, held that: (1) evidence sustained findings that tire distributor engaged in various schemes to defraud tire manufacturer, including bribing employee of manufacturer; (2) distributor's several schemes to defraud tire manufacturer established pattern of racketeering activity for purposes of manufacturer's RICO claims, even though tire manufacturer was only victim of distributor's schemes; and (3) manufacturer was not liable on distributor's counterclaims for breach of contract and breach of duties of good faith and fair dealing; and (4) manufacturer was entitled to attorney fees and costs. Affirmed. [6] Evidence 157 355(1)

157 Evidence 157X Documentary Evidence 157X(C) Private Writings and Publications 157k355 Private Memoranda and Statements in General 157k355(1) k. In General. Most Cited Cases Exhibits containing list of prices quoted by advertising agencies for billboards were records compiled in regular course of business and, thus, were admissible in fraud trial under business records exception to hearsay rule. Fed.Rules Evid.Rule 803(6), 28 U.S.C.A.

[7] Racketeer Influenced and Corrupt Organizations 319H

26

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk26 k. Number of Predicate Acts. Most Cited Cases Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 29

319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk29 k. Time and Duration. Most Cited Cases Racketeer Influenced and Corrupt Organizations 319H 63

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk56 Persons Entitled to Sue or Recover 319Hk63 k. Separate or Distinct Racketeering or Criminal Enterprise Injury. Most Cited Cases Tire distributor's several schemes to defraud tire manufacturer established pattern of racketeering activity, **even though tire manufacturer was only victim of distributor's schemes and, thus, distributor was liable to manufacturer under Racketeer Influenced and Corrupt Organizations Act (RICO); predicate acts were numerous and spread out over period of years, distributor used several different schemes to bleed money from manufacturer, and each scheme caused harm distinct from that caused by other schemes. 18 U.S.C.A. 1964. [7] We proceed next to consider MTC's challenge to the finding of RICO liability. Section 1964 of RICO imposes civil liability on those found liable for deriving money through a pattern of racketeering activity. The remedies available to a successful plaintiff are plentiful: they include provisions for treble damages, costs, and attorneys' fees. 18 U.S.C. 1964(c). The murkiness of RICO's parameters coupled with its alluring remedies have led many plaintiffs to take garden variety business disputes and dress them up as elaborate racketeering schemes. At issue in this case is whether this dispute truly presents a pattern of racketeering. The vagaries of the statute itself make the task of defining this requirement formidable, to say the least. In two decisions, the Supreme Court has ruled out interpretations at either extreme. In its decision in Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985), the Court noted that the requirement of two or more predicate*523 acts was a necessary but not sufficient condition to a finding of a pattern. Id. at 496 n. 14, 105 S.Ct. at 3285 n. 14. In so doing, the Court implicitly repudiated the interpretation in some circuits which simply equated a finding of two or more predicate acts with a pattern. Instead, the Court reasoned that in order to establish a pattern, a plaintiff must show a relationship between the predicate acts and the threat of continued criminal activity. Id. A few years later in H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 230, 109 S.Ct. 2893, 2896, 106 L.Ed.2d 195 (1989), the Court rejected the Eighth Circuit's construction of the pattern requirement. Under the rejected interpretation, a single ongoing scheme to defraud could not sustain a RICO finding; a plaintiff had to show at least two separate fraudulent schemes to prevail. After looking at the statute's legislative history, the Court concluded that Congress' preoccupation in enacting RICO was to curb the incidence of long-term criminal conduct. Id. at 240, 109 S.Ct. at 2901. In light of this purpose, the Eighth Circuit's requirement was counterproductive because it is not a necessary precondition to prolonged criminal activity that the perpetrators defraud their victims in more ways than one. The Court held, therefore, that a single scheme could support a finding of RICO liability. Id. at 241, 109 S.Ct. at 2901-02. The Court's outright rejection of bright-line tests in Sedima and H.J. Inc. ensured that the outcome of each particular case would rest on a fact-intensive analysis. Lee and Olive Can notwithstanding, the existence of a single victim does not preclude the existence of a pattern of racketeering activity. In Liquid Air Corp. v. Rogers, 834 F.2d 1297, 1300 (7th Cir.1987), cert. denied, 492 U.S. 917, 109 S.Ct. 3241, 106 L.Ed.2d 588 (1989), the plaintiff, Liquid Air, had leased compressed gas cylinders to the defendant, D & R. After D & R terminated operations, it was slow to return the rented equipment. Id. When Liquid Air began charging D & R a higher rate for the remaining 3,000 cylinders, D & R obtained the services of a Liquid Air employee, who, over the course of seven months, generated nineteen separate false invoices making it appear as if the cylinders were being returned. Id. We were consequently faced with deciding whether a single scheme which lasted seven months and defrauded one victim established a pattern of *524 racketeering activity. **We held that it did. Crucial to our conclusion was the fact that each instance of false billing inflicted an injury separate and independent of the previous and succeeding instances of false billing. [T]he repeated infliction of economic injury upon a single victim of a single scheme is sufficient

to establish a pattern of racketeering activity for purposes of civil RICO. Id. at 1305. In this circuit, we have looked to several factors in ascertaining the existence of a pattern:**the number and **variety of predicate acts, **the length of time over which they were committed, **the number of victims, **the presence of separate schemes, and the occurrence of distinct injuries. Olive Can, 906 F.2d at 1151. Neither the presence or absence of any one of these factors is determinative, and though these factors may be helpful, the touchstones of the inquiry remain the elements of relationship and continuity. Of these factors, all but one weigh in Uniroyal's favor. The predicate acts were numerous and spread out over a period of years. Uniroyal offered proof of several different schemes, all intended to bleed money from Uniroyal. And each scheme caused a harm distinct from that caused by the others. Only the existence of a single victim, Uniroyal, favors MTC. By itself, that is not enough. The distinctions between Liquid Air and Lee and Liquid Air and Olive Can command the outcome in this case. The potential expansiveness of RICO stems largely from the capacious definitions of mail and wire fraud. It is therefore hard to formulate a bright-line test for the pattern of racketeering activity based solely on the number of predicate acts. But from these three single-victim cases, we begin to see what distinguishes a pattern. In Lee and Olive Can, there was an interdependence amongst the predicate acts, and each act was not responsible for a discrete injury. The various fraudulent representations made in Lee did not inflict separate harms; rather they were all necessary to perpetrate one large fraud. Similarly, the predicate acts in Olive Can were all related to the perpetration of one scam which would have ended on its own. On the other hand, in Liquid Air, each false invoice on its own deprived the plaintiffs of a specific amount of revenue. Each invoice represented a discrete attempt to defraud Liquid Air and had little to do with the previous or subsequent false invoices. If this case is in any way distinguishable from Liquid Air, it is that it presents a stronger case for liability; the facts of this case put it squarely within RICO's ambit. Taken in a light most favorable to Uniroyal, proven at trial were the existence of at least four separate schemes all of which were designed to swindle money from Uniroyal and all of which utilized the mails and wires to further their ends. The existence of several schemes strengthens the support for the jury's verdict and satisfies the dictates in Sedima and H.J. Inc. The various predicates of mail and wire fraud occurred repeatedly over a period as long as three years and each scheme, though inflicted upon the same victim, caused separate and distinct injuries like those caused in Liquid Air.

2 Legal Malpractice 12:5 (2009 ed.) Legal Malpractice Database updated December 2009 Ronald E. Mallena0, Jeffrey M. Smitha1 Part III. The Theory Of Liability Chapter 12. Racketeer Influenced And Corrupt Organizations Act (RICO) 12:5. Attorneys' exposure under RICO RICO actions have been brought against attorneys for mail fraud based on activities in representing the plaintiffs' adversary.90 Except where the attorney also acted as a principal or actually conducted the enterprise through illegal services, such claims have been dismissed at the pleading stage.91 An attorney, however, could be liable for counseling a client to commit fraud to conceal assets in a bankruptcy estate from creditors.92 **Bankruptcy-Related RICO Claims. Bankruptcy litigation as well as alleged contemplation of bankruptcy has generated RICO claims. In some cases, plaintiffs have alleged that attorneys made or assisted in making misrepresentations in bankruptcy court.93 92 Handeen v. Lemaire, 112 F.3d 1339, R.I.C.O. Bus. Disp. Guide (CCH) P 9271 (8th Cir. 1997). 93 In re Bennett Funding Group, Inc., 367 B.R. 302 (Bankr. N.D. N.Y. 2007) (third-party complaint filed against the trustees' lawyers

failed to satisfy the standing requirement, based on a lack of proximate causation); Garrett v. Selby Connor Maddux & Janer, 425 F.3d 836, 62 Fed. R. Serv. 3d 1019 (10th Cir. 2005) (pro se plaintiff asserted aiding and abetting and conspiracy claims in connection with bankruptcy litigation); Joyce v. JJF Associates, LLC, 8 A.D.3d 190, 781 N.Y.S.2d 62 (1st Dep't 2004); Ateser v. Bopp, 29 F.3d 630, R.I.C.O. Bus. Disp. Guide (CCH) P 8616 (9th Cir. 1994) (actions taken in good faith by bankruptcy counsel were not predicate acts); Crocker Nat. Bank v. Rockwell Intern. Corp., 555 F. Supp. 47, Fed. Sec. L. Rep. (CCH) P 99006 (N.D. Cal. 1982) Search for honest services fraud of public officials
18 U.S.C Section 1341. Frauds and swindles Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation occurs in relation to, or involving any benefit authorized, transported, transmitted, transferred, disbursed, or paid in connection with, a presidentially declared major disaster or emergency (as those terms are defined in section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122)), or affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both. American Jurisprudence, Second Edition Database updated November 2010 Post Office John Bourdeau, J.D. XV. Sending or Receiving Nonmailable or Prohibited Matter By Post C. Mail Fraud; Matter in Furtherance of Scheme or Artifice to Defraud 2. Elements of Offense Topic Summary Correlation Table References 122. Generally West's Key Number Digest West's Key Number Digest, Postal Service Treatises and Practice Aids Prosecution of postal offensesMail fraud. Federal Procedure, LED, Postal Service 63:384 to 63:397 The essential elements of the offense of using the mails in furtherance of a scheme or artifice to defraud are:[1] 35(4) to 35(15)

(1) a scheme devised, or intended to be devised, to defraud or to obtain money or property by means of false pretenses; (2) the placing, or causing to be placed, of any letter or other mail matter in any post office of the United States; and (3) for the purpose of executing or attempting to execute the scheme. Materiality of the misrepresentation is also an element of the offense.[2] Under an alternate statement of requirements, a mail fraud claim under both federal and state law requires: [3] (1) a representation or failure to disclose a material fact; (2) a falsity; (3) knowledge of the falsity; (4) the intent to deceive; (5) reliance; (6) damage arising from the reliance; and (7) the existence of a scheme which was reasonably calculated to deceive persons of ordinary prudence and comprehension. A conviction for honest services mail fraud does not require proof of the violation of state law, given that the duty of honest services owed by government officials derives from their fiduciary duties at common law as well as from statute.[4] CUMULATIVE SUPPLEMENT Cases: Unpaid taxes which were unlawfully disguised and retained by means of filing of false tax returns through U.S. mail constituted "proceeds" of mail fraud for purposes of supporting charge of federal money laundering. U.S. v. Yusuf, 536 F.3d 178 (3d Cir. 2008), petition for cert. filed, 77 U.S.L.W. 3449 (U.S. Jan. 30, 2009). Evidence was sufficient to prove that defendant intended to defraud, as required to support mail fraud conviction; FBI contacted defendant after he first attempted to use bills of exchange to purchase cars and real estate and informed him that the bills were fictitious and the United States Treasury accounts he purportedly believed existed in fact did not, and despite such warning, the defendant again attempted to purchase real estate using the fictitious bills of exchange. U.S. v. Gibbs, 132 Fed. Appx. 502 (4th Cir. 2005) [END OF SUPPLEMENT]

[FN1] U.S. v. Young, 232 U.S. 155, 34 S. Ct. 303, 58 L. Ed. 548 (1914); U.S. v. Autuori, 212 F.3d 105 (2d Cir. 2000); U.S. v. Caldwell, 302 F.3d 399 (5th Cir. 2002); U.S. v. Lack, 129 F.3d 403 (7th Cir. 1997); U.S. v. Hawkey, 148 F.3d 920 (8th Cir. 1998); Sikes v. Teleline, Inc., 281 F.3d 1350, 52 Fed. R. Serv. 3d 621 (11th Cir. 2002). As to each of the individual requirements, see 122 to 133.

[FN2] 127. [FN3] Globe Internat., Inc. v. Superior Court, 9 Cal. App. 4th 393, 12 Cal. Rptr. 2d 109 (2d Dist. 1992), opinion modified, (Sept. 9, 1992). As to reliance as an element, see 127. [FN4] U.S. v. Sawyer, 239 F.3d 31 (1st Cir. 2001). 123. Scheme to defraud West's Key Number Digest West's Key Number Digest, Postal Service 35(10)

Mail fraud requires the existence of a scheme which was reasonably calculated to deceive persons of ordinary prudence and comprehension.[1] All aspects of the scheme need not be illegal when considered separately; rather, it is sufficient that the scheme as a whole involves fraudulent conduct.[2] Those who act with reckless indifference to whether a representation is true or false are deemed to know of the falsity.[3] A scheme to defraud need not succeed to violate the mail fraud statute.[4] CUMULATIVE SUPPLEMENT Cases: In criminal proceedings for conspiracy to commit mail fraud and money laundering, although the better practice would have been to include a jury instruction requiring that the mail fraud scheme be credible enough to deceive persons of ordinary prudence and comprehension, district court's refusal to instruct the jury on reasonable reliance did not warrant a reversal because the omission, when taken in the context of the entire jury instruction, was not confusing, misleading, or prejudicial; by explaining that the scheme must have had the potential to cause reliance, the trial court substantially covered the purpose of the "prudence and comprehension" requirement. U.S. v. Jamieson, 427 F.3d 394, 68 Fed. R. Evid. Serv. 825, 2005 FED App. 0430P (6th Cir. 2005), cert. denied, 126 S. Ct. 2909, 165 L. Ed. 2d 937 (U.S. 2006). Mail fraud convictions were properly based upon mailings sent by defendants to opposing counsel in foreclosure action on one defendant's home; reasonable jury could find that the notice of acceptance and motion to dismiss were mailed in furtherance of scheme to defraud designed to obfuscate defendant's actual obligation on the mortgage loan, and thus allow defendant to keep the home without payment. 18 U.S.C.A. 1341. U.S. v. Lee, 427 F.3d 881 (11th Cir. 2005), cert. denied, 126 S. Ct. 1447, 164 L. Ed. 2d 145 (U.S. 2006). For purposes of mail fraud, the term "scheme to defraud" connotes some degree of planning by the perpetrator, and it is essential that the evidence show the defendant entertained an intent to defraud. 18 U.S.C.A. 1341. Young v. Wells Fargo & Co., 671 F. Supp. 2d 1006 (S.D. Iowa 2009). Evidence was sufficient to establish that two mailings defendant made to victims furthered scheme to defraud, as element of mail fraud; although money victims invested with defendant may have already been lost by the time defendant sent letter to one pair of victims telling them their loan was non-performing, and letter to another pair of victims providing them with his new address and telling them that his attorney would be contacting them, defendant used the letters to cover up his fraudulent scheme by lulling victims into believing their money had been lost in legitimate business ventures. U.S. v. Hevener, 382 F. Supp. 2d 719 (E.D. Pa. 2005). [END OF SUPPLEMENT]

[FN1] Globe Internat., Inc. v. Superior Court, 9 Cal. App. 4th 393, 12 Cal. Rptr. 2d 109 (2d Dist. 1992), opinion modified, (Sept. 9, 1992). [FN2] U.S. v. Feldman, 711 F.2d 758, 13 Fed. R. Evid. Serv. 1223 (7th Cir. 1983). [FN3] U.S. v. Hathaway, 798 F.2d 902, 21 Fed. R. Evid. Serv. 436 (6th Cir. 1986). [FN4] U.S. v. Walker, 191 F.3d 326, 52 Fed. R. Evid. Serv. 1502 (2d Cir. 1999); U.S. v. Bach, 172 F.3d 520 (7th Cir. 1999); U.S. v. Bailey, 123 F.3d 1381 (11th Cir. 1997). 124. Scheme to defraudRelationship of scheme to use of mail West's Key Number Digest West's Key Number Digest, Postal Service A.L.R. Library What constitutes "causing" mail to be delivered for purpose of executing scheme prohibited by mail fraud statute (18 USC sec. 1341), 9 A.L.R. Fed. 893 It is not necessary that the mails be the essential or pivotal aspect of a scheme to defraud;[1] it is sufficient if the use of the mails be incident or related to an essential element of the scheme.[2] The mailings must, however, be "for the purpose of executing" a scheme or artifice to defraud; the mail fraud statute is not applicable merely because the mails are used as a result of a fraudulent scheme.[3] In other words, the nexus between the scheme and the mailings must be shown in order to invoke the statute.[4] The false or fraudulent representations themselves need not be transmitted by mail;[5] routine business mailings which are closely bound with the scheme will satisfy the element of mailing.[6] CUMULATIVE SUPPLEMENT Cases: Mailing was used in furtherance of scheme to defraud, as required to support mail fraud conviction of defendant, a labor union official; labor union promotional materials sent by mail were used to recruit new members, whose dues, often sent by mail, were misappropriated by defendant, union members authorized that dues be deducted from their salaries via forms sent by mail, and defendant sent letters to the members' employers instructing that members' fees be deducted from their salaries. U.S. v. Morales-Rodriguez, 448 F.3d 50 (1st Cir. 2006), withdrawn from bound volume and opinion withdrawn and superseded, 467 F.3d 1 (1st Cir. 2006), cert. denied, 2006 WL 3065471 (U.S. 2006). In mail fraud and interstate transportation of a security taken by fraud prosecution, scheme did not have to begin on date alleged in indictment, but jury had to find that a scheme was in existence at the time of the mailing at issue. U.S. v. Danford, 69 Fed. R. Evid. Serv. 7 (7th Cir. 2005), withdrawn at request of court, (Dec. 29, 2005) and opinion amended and superseded, 435 F.3d 682 (7th Cir. 2006). [END OF SUPPLEMENT] 35(6)

[FN1] U.S. v. Pimental, 380 F.3d 575 (1st Cir. 2004), petition for cert. filed (U.S. Jan. 13, 2005); U.S. v. Hasner, 340 F.3d 1261, 62 Fed. R. Evid. Serv. 213 (11th Cir. 2003), cert. denied, 125 S. Ct. 38, 160 L. Ed. 2d 12 (U.S. 2004). [FN2] U.S. v. Pimental, 380 F.3d 575 (1st Cir. 2004), petition for cert. filed (U.S. Jan. 13, 2005); U.S. v. Laljie, 184 F.3d 180 (2d Cir. 1999); U.S. v. Tiller, 302 F.3d 98 (3d Cir. 2002); U.S. v. Floyd, 343

F.3d 363 (5th Cir. 2003), cert. denied, 124 S. Ct. 2190, 158 L. Ed. 2d 752 (U.S. 2004); U.S. v. Crossley, 224 F.3d 847, 2000 FED App. 0289P (6th Cir. 2000); U.S. v. Shipsey, 363 F.3d 962 (9th Cir. 2004), as amended, (May 12, 2004) and cert. denied, 125 S. Ct. 634 (U.S. 2004). [FN3] U. S. v. Maze, 414 U.S. 395, 94 S. Ct. 645, 38 L. Ed. 2d 603 (1974). [FN4] U.S. v. Hartsel, 199 F.3d 812, 1999 FED App. 0417P (6th Cir. 1999); U.S. v. Lea, 618 F.2d 426 (7th Cir. 1980). [FN5] U.S. v. Talbott, 590 F.2d 192 (6th Cir. 1978). [FN6] U.S. v. Ziperstein, 601 F.2d 281, 4 Fed. R. Evid. Serv. 838 (7th Cir. 1979); U.S. v. Moss, 591 F.2d 428, 4 Fed. R. Evid. Serv. 365 (8th Cir. 1979). 125. Scheme to defraudEffect of legality of individual actions West's Key Number Digest West's Key Number Digest, Postal Service 35(4)

Regardless of how seemingly fair and honest a scheme may be, if its purpose is to defraud and the mails are used in furtherance of the scheme, it falls within the proscription of the mail fraud statute.[1] It is not necessary that the scheme or artifice be in itself unlawful; it need not be a fraud at common law or by statute,[2] and it is also irrelevant that the mailings done in furtherance of the scheme are legally required or compelled[3] or are innocent in themselves.[4] Essentially, the offense of mail fraud consists of the use of the mails in executing, or attempting to execute, the scheme to defraud; it is not the scheme itself.[5]

[FN1] Durland v. U S, 161 U.S. 306, 16 S. Ct. 508, 40 L. Ed. 709 (1896).

[FN2] Streep v. U.S., 160 U.S. 128, 16 S. Ct. 244, 40 L. Ed. 365 (1895); U.S. v. Foshee, 606 F.2d 111 (5th Cir. 1979); John C. Holland Enterprises, Inc. v. J.P. Mascaro & Sons, Inc., 653 F. Supp. 1242 (E.D. Va. 1987), judgment aff'd, 829 F.2d 1120 (4th Cir. 1987); Virden v. Graphics One, 623 F. Supp. 1417 (C.D. Cal. 1985) (stating that state law is irrelevant in determining whether a course of conduct violates the mail fraud statutes). [FN3] U.S. v. Frost, 125 F.3d 346, 1997 FED App. 0274P (6th Cir. 1997); U.S. v. Green, 786 F.2d 247 (7th Cir. 1986). [FN4] Parr v. U.S., 363 U.S. 370, 80 S. Ct. 1171, 4 L. Ed. 2d 1277 (1960); U.S. v. Frost, 125 F.3d 346, 1997 FED App. 0274P (6th Cir. 1997). [FN5] U.S. v. Draiman, 784 F.2d 248, 20 Fed. R. Evid. Serv. 380 (7th Cir. 1986); U.S. v. Blankenship, 746 F.2d 233, 17 Fed. R. Evid. Serv. 284 (5th Cir. 1984) (that material sent by mail is integral to execution of scheme is sufficient). As to the particular elements constituting a mail fraud offense, see 122 to 124. 126. Scheme to defraudRelation to other laws West's Key Number Digest West's Key Number Digest, Postal Service 35(10)

The particular conduct which constitutes the scheme to defraud may be determined in relation to other laws.[1] However, other statutes do not preempt or preclude the application of the mail fraud statutes.[2] Thus, once the government has proven beyond a reasonable doubt each element of the offense of mail fraud, it is not required to also prove that the defendant's conduct violated state law.[3] CUMULATIVE SUPPLEMENT Cases: In context of anthrax scare, defendant's mailing of envelope containing cornstarch meant to resemble anthrax, but containing no written message, constituted "communication," as required to support conviction for mailing threatening communication; defendant intended to convey message of fear, fright and alarm, and, ultimately, wanted to frame boys whose addresses were typed on the envelopes. U.S. v. Zavrel, 384 F.3d 130 (3d Cir. 2004), cert. denied, 125 S. Ct. 1828 (U.S. 2005). In context of anthrax scare, defendant's mailing of envelopes containing cornstarch meant to resemble anthrax constituted "threat to injure" recipient, within meaning of statute proscribing mailing of threatening communication; recipient of envelope would have feared imminent harm and perhaps death upon seeing the white powder, and, even if statute proscribed only prospective threats to injure, it would have been natural for any person in such a circumstance to be fearful of future harm. U.S. v. Zavrel, 384 F.3d 130 (3d Cir. 2004), cert. denied, 125 S. Ct. 1828 (U.S. 2005). Letter salutation "Hey Asshole" was addressed to the United States Attorney, a person within the meaning of statute proscribing the use of the postal service to mail threatening communications, as required to sustain conviction for mailing threatening communications, given that the envelope was addressed to the United States District Attorney's Office. U.S. v. Williams, 376 F.3d 1048 (10th Cir. 2004). [END OF SUPPLEMENT]

[FN1] Parr v. U.S., 363 U.S. 370, 80 S. Ct. 1171, 4 L. Ed. 2d 1277 (1960).

[FN2] U.S. v. Brien, 617 F.2d 299 (1st Cir. 1980); U.S. v. Margala, 662 F.2d 622 (9th Cir. 1981); U.S. v. Simon, 510 F. Supp. 232 (E.D. Pa. 1981). [FN3] U.S. v. Frost, 321 F.3d 738 (8th Cir. 2003). 127. Materiality of misrepresentation; reliance upon misrepresentation West's Key Number Digest West's Key Number Digest, Postal Service 35(11) to 35(15)

The materiality of a falsehood is an element of the federal mail fraud statute.[1] Otherwise stated, the defendant must make a material misrepresentation of fact or knowingly omit a material fact to sustain a conviction for mail fraud.[2] Observation In construing the federal mail fraud statute, under the rule that Congress intends to incorporate the well-settled meaning of any common-law terms it uses, it cannot be inferred from the absence of an express reference to "materiality" that Congress intended to drop that element from the federal mail fraud statute; on the contrary, it must be presumed that Congress intended to incorporate materiality unless the statute otherwise dictates.[3] An omission may be material where the person has a duty to disclose the fact.[4] The definition of the materiality of nondisclosed information, in the context of an employment relationship,

is correctly stated as occurring where an employee breaches a duty to his or her employer by concealing material information which he or she has a duty to disclose and where such nondisclosure may harm the employer.[5] Observation: A false or fraudulent statement, representation or promise can be "material" even if the decision maker did not actually rely on the statement or even if the decision maker actually knew or should have known that the statement was false.[6] The common-law fraud requirement of justifiable reliance has no place in the federal mail fraud statute.[7] Nevertheless, the evidence may demonstrate reasonable reliance on such misrepresentations.[8] And, under some state law statutes governing mail fraud, a mail fraud claim may require reliance and damage arising from the reliance.[9] CUMULATIVE SUPPLEMENT Cases: Unlike common-law fraud, mail and wire fraud does not require first-party reliance. 18 U.S.C.A. 1341, 1343. Mendez Internet Management Services, Inc. v. Banco Santander de Puerto Rico, 621 F.3d 10 (1st Cir. 2010). [END OF SUPPLEMENT]

[FN1] Neder v. U.S., 527 U.S. 1, 119 S. Ct. 1827, 144 L. Ed. 2d 35 (1999); U.S. v. Caldwell, 302 F.3d 399 (5th Cir. 2002); U.S. v. Cochran, 109 F.3d 660 (10th Cir. 1997). [FN2] U.S. v. Rybicki, 354 F.3d 124 (2d Cir. 2003), cert. denied, 125 S. Ct. 32, 160 L. Ed. 2d 10 (U.S. 2004); U.S. v. DeSantis, 134 F.3d 760, 48 Fed. R. Evid. Serv. 807, 1998 FED App. 0018P (6th Cir. 1998); U.S. v. Neder, 197 F.3d 1122 (11th Cir. 1999). [FN3] Neder v. U.S., 527 U.S. 1, 119 S. Ct. 1827, 144 L. Ed. 2d 35 (1999). [FN4] U.S. v. Woodward, 149 F.3d 46, 49 Fed. R. Evid. Serv. 800 (1st Cir. 1998) (the obligation to disclose material information inheres in the legislator's general fiduciary duty to the public); U.S. v. Murphy, 323 F.3d 102 (3d Cir. 2003), as amended, (June 4, 2003) (but finding no duty under facts presented). [FN5] U.S. v. Gray, 96 F.3d 769, 112 Ed. Law Rep. 637 (5th Cir. 1996). [FN6] U.S. v. Gray, 367 F.3d 1263 (11th Cir. 2004). [FN7] Neder v. U.S., 527 U.S. 1, 119 S. Ct. 1827, 144 L. Ed. 2d 35 (1999); U.S. v. Pimental, 380 F.3d 575 (1st Cir. 2004), petition for cert. filed (U.S. Jan. 13, 2005); American Chiropractic Ass'n v. Trigon Healthcare, Inc., 367 F.3d 212 (4th Cir. 2004), cert. denied, 125 S. Ct. 479 (U.S. 2004); U.S. v. Yeager, 331 F.3d 1216 (11th Cir. 2003). [FN8] U.S. v. Yeager, 331 F.3d 1216 (11th Cir. 2003) (conceding that even if reliance was an element, it was proven under the facts presented). [FN9] Globe Internat., Inc. v. Superior Court, 9 Cal. App. 4th 393, 12 Cal. Rptr. 2d 109 (2d Dist. 1992), opinion modified, (Sept. 9, 1992).

 128. Causing use of mails West's Key Number Digest West's Key Number Digest, Postal Service A.L.R. Library What constitutes "causing" mail to be delivered for purpose of executing scheme prohibited by mail fraud statute (18 USC sec. 1341), 9 A.L.R. Fed. 893 Persons charged with a mail fraud violation need not have sent anything through the mails themselves; it is only necessary that they cause the mails to be used.[1] A person causes the mails to be used by doing an act with the knowledge that the use of the mails will follow in the ordinary course of business or where such use can reasonably be foreseen.[2] It is simply the "use of the mails" in the course of the scheme to defraud rather than the particular mailing at issue that must be reasonably foreseeable for the causation element of a mail fraud offense to be satisfied.[3] Foreseeability may be based on the sophistication and ongoing relationship of the persons involved in the scheme, as well as the location of the defendants and victims involved.[4] It is foreseeable that a request to invest in a business will result in the mailing of a check to accomplish the investment.[5] In frauds involving insurance or compensation, the use of the mails is foreseeable, as the payment and submission of insurance claims typically involves mailings between the insurance company's agents and the insured.[6] Also, where part of the scheme involves invoicing the victim, it is foreseeable that the invoices and payments will be mailed.[7] As long as one participant in a fraudulent scheme causes the mails to be used, all other knowing participants in the scheme are liable for that use of the mails, particularly where the defendant should have known that use of the mails would follow.[8] The mailing requirement is not satisfied where nothing is mailed by the defendant or persons working for or with the defendant, any mailings made by other persons have little to do with the scheme's success and use of the mail is not foreseeable.[9] CUMULATIVE SUPPLEMENT Cases: A conviction for mail fraud must be supported by evidence that a defendant participated in a scheme to defraud and caused the mails to be used in furtherance of that scheme. U.S. v. Useni, 516 F.3d 634 (7th Cir. 2008). To be convicted of mail fraud, a defendant need not actually have used the mails himself; instead evidence is sufficient to support a conviction for mail fraud if the defendant acted with the knowledge that the use of the mails would follow in the ordinary course of business, or where such use could reasonably have been foreseen. U.S. v. Useni, 516 F.3d 634 (7th Cir. 2008). [END OF SUPPLEMENT] 35(6)

[FN1] U.S. v. Kenofskey, 243 U.S. 440, 37 S. Ct. 438, 61 L. Ed. 836 (1917); U.S. v. Bermes, 9 Fed. Appx. 207 (4th Cir. 2001); U.S. v. Cantrell, 278 F.3d 543, 2002 FED App. 0032P (6th Cir. 2001); U.S. v. Swan, 250 F.3d 495, 57 Fed. R. Evid. Serv. 80 (7th Cir. 2001); General Cigar Co., Inc. v. CR Carriers, Inc., 948 F. Supp. 1030 (M.D. Ala. 1996). [FN2] U.S. v. Serafino, 281 F.3d 327 (1st Cir. 2002); U.S. v. Tocco, 135 F.3d 116, 48 Fed. R. Evid. Serv. 790 (2d Cir. 1998); U.S. v. Cohen, 171 F.3d 796, 51 Fed. R. Evid. Serv. 735 (3d Cir. 1999); U.S.

v. Godwin, 272 F.3d 659 (4th Cir. 2001); U.S. v. Floyd, 343 F.3d 363 (5th Cir. 2003), cert. denied, 124 S. Ct. 2190, 158 L. Ed. 2d 752 (U.S. 2004); U.S. v. Turner, 22 Fed. Appx. 404 (6th Cir. 2001); American Automotive Accessories, Inc. v. Fishman, 175 F.3d 534, 51 Fed. R. Evid. Serv. 727 (7th Cir. 1999); U.S. v. Jolivet, 224 F.3d 902, 55 Fed. R. Evid. Serv. 670 (8th Cir. 2000); U.S. v. Grice, 319 F.3d 1174 (9th Cir. 2003), cert. denied, 539 U.S. 950, 123 S. Ct. 2625, 156 L. Ed. 2d 641 (2003); U.S. v. Rhodes, 177 F.3d 963 (11th Cir. 1999). [FN3] U.S. v. Pimental, 380 F.3d 575 (1st Cir. 2004), petition for cert. filed (U.S. Jan. 13, 2005). [FN4] U.S. v. Hubbard, 96 F.3d 1223 (9th Cir. 1996) (out of state victims). [FN5] U.S. v. Loayza, 107 F.3d 257, 46 Fed. R. Evid. Serv. 745 (4th Cir. 1997). [FN6] U.S. v. Pimental, 380 F.3d 575 (1st Cir. 2004), petition for cert. filed (U.S. Jan. 13, 2005). [FN7] U.S. v. Serafino, 281 F.3d 327 (1st Cir. 2002). [FN8] U.S. v. Godwin, 272 F.3d 659 (4th Cir. 2001). [FN9] U.S. v. Penass, 997 F.2d 1227 (7th Cir. 1993) (in a sports agent's plot to secretly sign up college athletes while still in college, the athletes' eligibility verifications, mailed by colleges to their conferences, did not satisfy the mailing requirement, since the sports agent neither mailed anything nor caused anyone else to do so, mailings had little to do with plot's success, and mailings were not foreseeable, especially where sports law counsel advised agent that his plan would violate no law). 129. Causing use of mailsTime of mailings West's Key Number Digest West's Key Number Digest, Postal Service 35(6)

There is no requirement that the mailings precede the fraud.[1] The element of causing use of the mails is met even though the mailing occurs after the occurrence of the events constituting the fraud where the use of the mails is necessary to the continued commission of an ongoing fraud.[2] Similarly, causing use of the mails may be proven where it is proven that documents were mailed in order to keep the fraudulent scheme afloat by providing information to victims to sustain the life of the scheme.[3] Mailings which serve to assure an investor that his or her money has been properly invested lend an air of legitimacy to a scheme, postponing any investigation of the scheme; thus, such mailings performed after the success of the scheme are sufficient to support a conviction for mail fraud.[4] Conversely, the general rule is that the use of the mails cannot be deemed to play an essential role in an alleged fraudulent scheme if the use occurs after the scheme has reached fruition.[5] However, a fraudulent scheme may not come to fruition when the scheme is detected or when the defendant receives the last payment from the victim, where the scheme is a continuing scheme in which the defendant repeatedly submitted fraudulent invoices to and received payments from the victim.[6] Observation: Applying the mail fraud statute to a psychiatrist engaged in fraudulent drug research does not violate the ex post facto clause, where the doctor was charged with a scheme to deprive the university of its right to the doctor's honest services and a drug company of money and property, even though the letter serving as the basis for the doctor's conviction was mailed on the date the statute was signed into law, since mail fraud does not necessarily come to fruition on the date of the mailing and the scheme continued after the statute's effective date.[7] The use of the mails after the technical conclusion of a fraudulent scheme and actual receipt by the perpetrator of the gain sought, for the purpose of lulling the victim into a sense of security, forestalling action

which might otherwise be taken, concealing or delaying discovery of the fact or effects of the fraud, or retaining the fruits of the scheme, constitutes a mail fraud violation.[8]

[FN1] U.S. v. Laljie, 184 F.3d 180 (2d Cir. 1999).

[FN2] U.S. v. Mills, 138 F.3d 928, 49 Fed. R. Evid. Serv. 237, 50 Fed. R. Evid. Serv. 59 (11th Cir. 1998), opinion modified on reh'g on other grounds, 152 F.3d 1324 (11th Cir. 1998) (although mailings of installment payments to jet's financier were made after fraudulent use of jet was completed, they were necessary to defendant's continued use of the plane for personal purposes). [FN3] U.S. v. Strang, 80 F.3d 1214 (7th Cir. 1996). [FN4] U.S. v. Masten, 170 F.3d 790 (7th Cir. 1999). [FN5] Parr v. U.S., 363 U.S. 370, 80 S. Ct. 1171, 4 L. Ed. 2d 1277 (1960); U.S. v. Viertel, 98 Fed. Appx. 68 (2d Cir. 2004); Corley v. Rosewood Care Center, Inc., 142 F.3d 1041, 40 Fed. R. Serv. 3d 1101 (7th Cir. 1998); U.S. v. Hasner, 340 F.3d 1261, 62 Fed. R. Evid. Serv. 213 (11th Cir. 2003), cert. denied, 125 S. Ct. 38, 160 L. Ed. 2d 12 (U.S. 2004). [FN6] U.S. v. Viertel, 98 Fed. Appx. 68 (2d Cir. 2004). [FN7] U.S. v. Garfinkel, 29 F.3d 1253 (8th Cir. 1994). [FN8] U.S. v. Strang, 80 F.3d 1214 (7th Cir. 1996); U.S. v. Tackett, 646 F.2d 1240 (8th Cir. 1981); U.S. v. Feldman, 853 F.2d 648 (9th Cir. 1988). 130. Deprivation of property or services West's Key Number Digest West's Key Number Digest, Postal Service 35(9)

The federal mail fraud statute is limited in scope to the protection of property rights.[1] It does not suffice for a conviction under the mail fraud statute that the object of the fraud may become property in the recipient's hands; the thing obtained must be property in the hands of the victim.[2] The mail fraud statute applies to any scheme or artifice in which the purpose is to defraud or obtain money or property from another by means of false or fraudulent pretenses through the use of the mails.[3] Actual deprivation of the property is not required; rather, only the intent to deprive the victim of the property right or interest is necessary.[4] Tangible as well as intangible property is protected under the mail fraud statute.[5] The "money or property" element can be satisfied when the defendant's fraudulent scheme is intended to deprive its victims of the intangible right to control their own assets.[6] Breach of a consent agreement with the state is a sufficient deprivation.[7] Confidential business information is considered "property" within the federal mail fraud statute.[8] State and municipal licenses in general do not rank as "property," for the purposes of the mail fraud statute, in the hands of the official licensor.[9] Thus, government-issued outfitter-sponsored hunting licenses are not property for the purposes of the mail fraud statute.[10] Similarly, a scheme to fraudulently obtain a state permit to operate a dump site does not constitute mail fraud, since a permit is not property, even though a permit may arguably be the object of a bargained-for exchange.[11]

Taxes owed to a state, federal, or foreign government, even if not yet collected, are "property" in the hands of that government, for the purposes of the mail fraud statute's requirement that "money or property" be the object of the scheme.[12] An educational testing service's administration and scoring services for its English skills exam are not traditional property interests subject to the protection of the mail fraud statute.[13] The right of union members to compete for jobs is not "property," as required to support the prosecution of union officials who deprived members of such right by securing jobs for third parties, allegedly in exchange for discontinuing a strike, for conspiracy to commit mail fraud.[14] Only a scheme to obtain money or other property from the victim by fraud violates the mail fraud statute; thus, a scheme whereby a sports agent circumvented the NCAA's rules by secretly signing up players still in college is not mail fraud where the players are not the intended victims.[15] CUMULATIVE SUPPLEMENT Cases: The simple act of fraudulently obtaining a license from a government agency does not deprive that agency of property for purposes of the wire fraud and mail fraud statutes. 18 U.S.C.A. 1341, 1343. U.S. v. Redzic, 627 F.3d 683 (8th Cir. 2010). [END OF SUPPLEMENT]

[FN1] Cleveland v. U.S., 531 U.S. 12, 121 S. Ct. 365, 148 L. Ed. 2d 221 (2000). [FN2] Cleveland v. U.S., 531 U.S. 12, 121 S. Ct. 365, 148 L. Ed. 2d 221 (2000). [FN3] U.S. v. Young, 232 U.S. 155, 34 S. Ct. 303, 58 L. Ed. 548 (1914); U.S. v. Cooper, 132 F.3d 1400 (11th Cir. 1998). [FN4] 133. [FN5] Carpenter v. U.S., 484 U.S. 19, 108 S. Ct. 316, 98 L. Ed. 2d 275 (1987); U.S. v. Rosen, 130 F.3d 5 (1st Cir. 1997); U.S. v. Hawkey, 148 F.3d 920 (8th Cir. 1998); U.S. v. Cochran, 109 F.3d 660 (10th Cir. 1997). [FN6] U.S. v. Walker, 191 F.3d 326, 52 Fed. R. Evid. Serv. 1502 (2d Cir. 1999). [FN7] U.S. v. Cooper, 132 F.3d 1400 (11th Cir. 1998). [FN8] U.S. v. O'Hagan, 139 F.3d 641 (8th Cir. 1998). [FN9] Cleveland v. U.S., 531 U.S. 12, 121 S. Ct. 365, 148 L. Ed. 2d 221 (2000) (license to operate video poker machines); U.S. v. LeVeque, 283 F.3d 1098 (9th Cir. 2002); U.S. v. Shotts, 145 F.3d 1289 (11th Cir. 1998). [FN10] U.S. v. LeVeque, 283 F.3d 1098 (9th Cir. 2002). [FN11] U.S. v. Novod, 923 F.2d 970, 32 Fed. R. Evid. Serv. 188 (2d Cir. 1991), on reh'g, 927 F.2d 726, 32 Fed. R. Evid. Serv. 194 (2d Cir. 1991). [FN12] Fountain v. U.S., 357 F.3d 250 (2d Cir. 2004), petition for cert. filed, 73 U.S.L.W. 3146 (U.S.

Aug. 25, 2004). [FN13] U.S. v. Alsugair, 256 F. Supp. 2d 306 (D.N.J. 2003). [FN14] U.S. v. Campbell, 291 F. Supp. 2d 547 (E.D. Mich. 2003). [FN15] U.S. v. Penass, 997 F.2d 1227 (7th Cir. 1993). 131. Deprivation of property or servicesHonest services West's Key Number Digest West's Key Number Digest, Postal Service 35(9)

In addition to the deprivation of money or property,[1] the deprivation of the intangible right of honest services also falls within the purview of the statute,[2] which statutory provision was enacted to address a contrary holding by the Supreme Court,[3] which holding was effectively legislatively "overruled" by Congress. [4] Thus, the mail fraud statute extends to protect intangible rights to honest services.[5] The mail fraud statute protects the intangible right to honest government through allowing prosecution for defrauding citizens of their right to the honest and faithful services of a public official.[6] In contrast, by one view, private sector mail fraud based on a scheme or artifice to deprive another of the intangible right of honest services involves a breach of fiduciary duty and reasonably foreseeable economic harm.[7] By the opposing view, such fraud does not require the breach of a fiduciary duty.[8] Observation: The honest services amendment to the mail fraud statute is not unconstitutionally vague, as applied to public employees and consultants who are found to have specifically intended to deprive the public of the public employee's honest services.[9] An employee deprives his or her employer of the intangible right of the employee's honest services, thus permitting a mail fraud prosecution, only if the employee misuses his or her position or the information obtained in it for personal gain.[10] Proof that an employer simply suffered only the loss of the loyalty and fidelity of the defendant is insufficient to convict under the honest services provision.[11] Rather, a defendant's fiduciary breach deprives his or her employer of honest services under the mail fraud statute when the defendant might reasonably have contemplated some concrete business harm to the employer stemming from the employee's failure to disclose a conflict along with any other information relevant to the transaction.[12] CUMULATIVE SUPPLEMENT Cases: Honest services statute could not support criminal prosecutions involving conflicts of interest. 18 U.S.C.A. 1346. Skilling v. U.S., 130 S. Ct. 2896 (2010). The honest services statute covers only bribery and kickback schemes. 18 U.S.C.A. 1346. Skilling v. U.S., 130 S. Ct. 2896 (2010). Interpreted to encompass only bribery and kickback schemes, the honest services statute is not unconstitutionally vague. U.S.C.A. Const.Amend. 5;18 U.S.C.A. 1346. Skilling v. U.S., 130 S. Ct. 2896 (2010). Defendant, the former chief executive officer of a bankrupt corporation, did not commit honest services fraud by allegedly conspiring to defraud corporation's shareholders by misrepresenting the company's fiscal health, thereby artificially inflating its stock price, where there was no allegation that defendant solicited or accepted side payments from a third party in exchange for making those misrepresentations. 18 U.S.C.A. 1346. Skilling v. U.S., 130 S. Ct. 2896 (2010).

State senator's misuse of his official power over legislation to coerce insurers into settlements with hospital that employed senator, along with communications between hospital official and senator regarding that issue, could qualify as deprivation of "honest services" owed to public, and thus could form basis for conspiracy by hospital official to commit "honest services" mail fraud. U.S. v. Urciuoli, 513 F.3d 290 (1st Cir. 2008). Evidence was sufficient to establish that defendant engaged in scheme to deprive public of honest services, as would support mail fraud convictions; evidence presented showed that defendant used his position as county executive's liaison to county board to steer board into awarding county waste and demolition contracts to particular business in order to further his undisclosed ownership interest in that business and to ensure that the business continued to pay him interest on secret loan he made, and that defendant was able to control the board. U.S. v. Parkin, 319 Fed. Appx. 101 (3d Cir. 2009). Under rule that conviction for honest services mail fraud requires finding of intent to reap private gain, "private gain" simply means illegitimate gain, which does not necessarily have to go to defendant or even fellow participant in fraud scheme, but may instead go to another party. U.S. v. Sorich, 523 F.3d 702 (7th Cir. 2008), petition for cert. filed, 77 U.S.L.W. 3228 (U.S. Sept. 26, 2008). Honest services mail fraud statute was not unconstitutionally vague as applied to former city employees who had participated in political patronage hiring scheme; defendants had notice of illegality of their behavior, especially considering that scheme had involved providing thousands of lucrative city jobs to political cronies, falsification of documents, and lying repeatedly about defendants' conduct. U.S. v. Sorich, 523 F.3d 702 (7th Cir. 2008), petition for cert. filed, 77 U.S.L.W. 3228 (U.S. Sept. 26, 2008). Federal consent decree that forbade city from basing its hiring decisions for civil servants on political factors could serve as one source of city employees' fiduciary duty, breach of which, via political patronage hiring scheme, formed basis for prosecution of employees under honest services mail fraud statute. U.S. v. Sorich, 523 F.3d 702 (7th Cir. 2008), petition for cert. filed, 77 U.S.L.W. 3228 (U.S. Sept. 26, 2008). Salaries fraudulently obtained by political cronies who were awarded civil service jobs in political patronage hiring scheme, and job opportunities fraudulently denied to others, qualified as "property," false obtaining of which could serve as basis for mail fraud prosecution of former city employees who had participated in scheme. U.S. v. Sorich, 523 F.3d 702 (7th Cir. 2008), petition for cert. filed, 77 U.S.L.W. 3228 (U.S. Sept. 26, 2008). Evidence that former city employee had falsified hundreds or thousands of interview forms during his employment, that some interview forms had been completed only after hiring sequence was finished, and that employee had complained that his own political workers were not getting choice enough jobs, was sufficient to support finding that employee had participated in political patronage hiring scheme that formed basis for mail fraud prosecutions of participants. U.S. v. Sorich, 523 F.3d 702 (7th Cir. 2008), petition for cert. filed, 77 U.S.L.W. 3228 (U.S. Sept. 26, 2008). Statute which extended the coverage of the wire and mail fraud statutes, to include deprivation of the intangible right of honest services, could apply to private individuals as well as to public figures. U.S. v. Williams, 441 F.3d 716 (9th Cir. 2006), cert. denied, 127 S. Ct. 295, 166 L. Ed. 2d 225 (U.S. 2006). Statute which extended the coverage of the wire and mail fraud statutes, to include deprivation of the intangible right of honest services, applied to financial planner who induced client to sign durable power of attorney naming planner as agent and then used the mails and wires to transfer client's funds into his own bank accounts. U.S. v. Williams, 441 F.3d 716 (9th Cir. 2006), cert. denied, 127 S. Ct. 295, 166 L. Ed. 2d 225 (U.S. 2006). Statute which extended the coverage of the wire and mail fraud statutes, to include deprivation of the intangible right of honest services, was not unconstitutionally vague as applied to financial planner who induced client to sign durable power of attorney naming planner as agent and then used the mails and wires to transfer client's funds into his own bank accounts, since a person of ordinary intelligence would reasonably understand that those actions were proscribed by statutes which criminalized use of mails and wires to perpetrate fraud. U.S. v. Williams, 441 F.3d 716 (9th Cir. 2006), cert. denied, 127 S. Ct. 295, 166 L. Ed. 2d 225 (U.S. 2006). Evidence was not sufficient to establish that defendant, a state governor, knew that codefendant whom defendant had appointed to state Certificate of Need Review Board intended to deprive the state of his honest services while on the board, and that defendant personally intended to participate in that fraud by codefendant, as required to support defendant's conviction for honest services mail fraud based on codefendant's use of his seat on board to further the interests of corporation of which he was an officer; although evidence was sufficient to establish that defendant and codefendant agreed to exchange money for codefendant's appointment to board, there was no evidence that defendant participated in codefendant's alleged self-dealing while on the board. U.S. v. Siegelman, 561 F.3d 1215, 48 A.L.R.6th 571 (11th Cir. 2009), petition for cert. filed, 78 U.S.L.W. 3083 (U.S. Aug. 10, 2009) and petition for cert. filed, 78 U.S.L.W. 3090 (U.S. Aug. 10, 2009). Corporation did not owe duty of honest services to pharmaceutical sellers by virtue of signing own-use

contract to join group purchasing organization (GPO) or because of its certifications to blood foundation that blood products it purchased would be used only for its own patients, and thus corporation's owners did not engage in mail or wire fraud based on scheme or artifice to deprive another of intangible right of honest services, where victims were sophisticated business, contracts were negotiated at arm's length, corporation was not employee or agent of victims and performed no services for victims, and corporation did not occupy position of dominance over victims. U.S. v. Bradley, 428 F. Supp. 2d 1365 (S.D. Ga. 2006). Test for economic loss by employer supporting conviction for "honest services" mail fraud neither requires an actual economic loss nor an intent to economically harm the employer; rather, employee need only intend to breach his fiduciary duty to employer and reasonably foresee that the breach would create an identifiable economic risk for employer. 18 U.S.C.A. 1341, 1346. U.S. v. Souder, 666 F. Supp. 2d 534 (M.D. N.C. 2009). [END OF SUPPLEMENT]

[FN1] 130, 131. [FN2] 18 U.S.C.A. 1346.

[FN3] McNally v. U.S., 483 U.S. 350, 107 S. Ct. 2875, 97 L. Ed. 2d 292 (1987). [FN4] U.S. v. Stoneman, 870 F.2d 102 (3d Cir. 1989). [FN5] U.S. v. Rybicki, 354 F.3d 124 (2d Cir. 2003), cert. denied, 125 S. Ct. 32, 160 L. Ed. 2d 10 (U.S. 2004); U.S. v. Frost, 125 F.3d 346, 1997 FED App. 0274P (6th Cir. 1997); U.S. v. Bloom, 149 F.3d 649 (7th Cir. 1998); U.S. v. Frega, 179 F. 3d 793 ( 9th Cir. 1999).

**[FN6] U.S. v. Blumeyer, 114 F.3d 758 (8th Cir. 1997).

[FN7] U.S. v. deVegter, 198 F.3d 1324 (11th Cir. 1999). [FN8] U.S. v. Rybicki, 38 Fed. Appx. 626 (2d Cir. 2002); U.S. v. Ervasti, 201 F.3d 1029 (8th Cir. 2000). [FN9] U.S. v. Hasner, 340 F.3d 1261, 62 Fed. R. Evid. Serv. 213 (11th Cir. 2003), cert. denied, 125 S. Ct. 38, 160 L. Ed. 2d 12 (U.S. 2004). [FN10] U.S. v. Bloom, 149 F.3d 649 (7th Cir. 1998). [FN11] U.S. v. Frost, 125 F.3d 346, 1997 FED App. 0274P (6th Cir. 1997); U.S. v. Sun-Diamond Growers of California, 138 F.3d 961 (D.C. Cir. 1998), judgment aff'd, 526 U.S. 398, 119 S. Ct. 1402, 143 L. Ed. 2d 576 (1999). [FN12] U.S. v. Frost, 125 F.3d 346, 1997 FED App. 0274P (6th Cir. 1997). 132. Intent West's Key Number Digest West's Key Number Digest, Postal Service 35(5), 35(6)

The intent to defraud another person of property or services is an essential element of the offense of mail fraud.[1] The intent to defraud may be inferred from a person's conduct and statements,[2] from the fact that the

victim suffered actual harm,[3] or from surrounding circumstances.[4] **The intentional use of a legal contract or transaction for the purpose of defrauding another may constitute a scheme or artifice to defraud although the use of the same contract or transaction with an honest intent to accomplish a laudable objective would be lawful and innocent.[5] However, the intent must be that the intended recipient would not receive in return a necessary service, performed adequately and for a fair price.[6] Observation: Generally, intent is proven by evidence that the defendant in a mail fraud prosecution knowingly misled his or her victims.[7] **However, rather than showing that the defendant acted knowingly, a prosecutor may alternatively prove that the defendant was reckless; recklessness is shown by proof that the defendant made an extreme departure from the standards of ordinary care by omitting information which presents a danger of misleading his or her victims that is either known to the defendant or is so obvious that he or she must have been aware of it.[8] Conversely, where the alleged victim is aware of the defendant's motivations for taking an action, then those motivations cannot form the basis of the scheme to defraud under the mail fraud statute.[9] Observation: **The Government may meet its burden in mail fraud prosecution of proving the defendant's knowledge of the falsity of his or her statements if it establishes beyond a reasonable doubt that the defendant acted with deliberate disregard of the truth, or with the conscious purpose of avoiding learning the truth; however, the element of knowledge is satisfied if the defendant actually believed the statements to be true, and guilty knowledge cannot be established by demonstrating that the defendant was merely negligent or foolish or acting out of inadvertence or accident.[10] CUMULATIVE SUPPLEMENT Cases: To support a conviction for conspiracy to commit mail fraud, government was not required to show an intent to use the mail to effect the scheme. U.S. v. Morales-Rodriguez, 448 F.3d 50 (1st Cir. 2006), withdrawn from bound volume and opinion withdrawn and superseded, 467 F.3d 1 (1st Cir. 2006), cert. denied, 2006 WL 3065471 (U.S. 2006). Evidence was sufficient to establish that defendant had intent to defraud victims, as element of mail fraud; although there was evidence that defendant invested some of victims' money in manner he had promised them, defendant's financial statements and records depicted investment activities that were inconsistent with statements he made about nature and status of investments to the victims and to the State Securities Commission. U.S. v. Hevener, 382 F. Supp. 2d 719 (E.D. Pa. 2005). [END OF SUPPLEMENT]

[FN1] U.S. v. Comyns, 248 U.S. 349, 39 S. Ct. 98, 63 L. Ed. 287 (1919); U.S. v. Sawyer, 239 F.3d 31 (1st Cir. 2001); U.S. v. Gabriel, 125 F.3d 89, 47 Fed. R. Evid. Serv. 1307 (2d Cir. 1997); U.S. v. Reyes, 239 F.3d 722, 56 Fed. R. Evid. Serv. 400 (5th Cir. 2001); U.S. v. Pennington, 168 F.3d 1060 (8th Cir. 1999); U.S. v. Tarallo, 380 F.3d 1174 (9th Cir. 2004); U.S. v. Cooper, 132 F.3d 1400 (11th Cir. 1998). [FN2] U.S. v. Beecroft, 608 F.2d 753, 5 Fed. R. Evid. Serv. 539 (9th Cir. 1979). [FN3] 133.

[FN4] U.S. v. Brewer, 807 F.2d 895 (11th Cir. 1987). [FN5] Durland v. U S, 161 U.S. 306, 16 S. Ct. 508, 40 L. Ed. 709 (1896). [FN6] U.S. v. Frost, 125 F.3d 346, 1997 FED App. 0274P (6th Cir. 1997) (finding inadequate proof that government would not receive its intended benefit). [FN7] U.S. v. DeSantis, 134 F.3d 760, 48 Fed. R. Evid. Serv. 807, 1998 FED App. 0018P (6th Cir. 1998). As to what "knowingly" means in criminal mail violation statutes, generally, see 107, 113. [FN8] U.S. v. DeSantis, 134 F.3d 760, 48 Fed. R. Evid. Serv. 807, 1998 FED App. 0018P (6th Cir. 1998). [FN9] Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494 (3d Cir. 1998) (health maintenance organization's (HMO's) retaliatory actions against pharmacy and the HMO's failure to disclose its retaliatory motivations could not form the basis of a mail fraud action where the pharmacy was aware of the actual motivations of the HMO and took action accordingly).

**[FN10] U.S. v. Titchell, 261 F.3d 348 (3d Cir. 2001).

133. Harm or damage, generally West's Key Number Digest West's Key Number Digest, Postal Service 35(9)

Only a scheme to defraud, not actual fraud, need be shown for a mail fraud conviction.[1] Thus, it is not essential that the victims of the scheme actually be defrauded or suffer any pecuniary or actual loss,[2] or that the scheme be profitable or successful for the accused.[3] Stated otherwise, the common-law fraud requirements of damages have no place in the federal mail fraud statute.[4] Observation: The distinction to be remembered is that the scheme must intend actual harm; otherwise stated, fraudulent intent is established when some actual harm or injury is contemplated by the schemer.[5] Whether the scheme is successful in causing actual harm is immaterial to the offense.[6] Nevertheless, actual harm may be proof of, or permit an inference of, intent.[7] CUMULATIVE SUPPLEMENT Cases: Defendant, as town mayor, could be convicted of mail fraud, involving the deprivation of the government of her honest services, even though the only remuneration she received for her role in the fraud scheme was reimbursement of 100 percent of her and her family's medical expenses, and it was town's practice to reimburse 100 percent of mayor's medical expenses, where the town's health insurer only provided 80 percent coverage for defendant's and her family's medical expenses. U.S. v. Spano, 421 F.3d 599, 68 Fed. R. Evid. Serv. 156 (7th Cir. 2005), cert. denied, 126 S. Ct. 1098 (U.S. 2006) and cert. denied, 126 S. Ct. 1084 (U.S. 2006) [END OF SUPPLEMENT]

[FN1] 122 to 126. [FN2] U.S. v. Naiman, 211 F.3d 40, 54 Fed. R. Evid. Serv. 711 (2d Cir. 2000); U.S. v. Hathaway, 798 F.2d 902, 21 Fed. R. Evid. Serv. 436 (6th Cir. 1986); U.S. v. Dick, 744 F.2d 546 (7th Cir. 1984); U.S. v. Mack, 159 F.3d 208, 50 Fed. R. Evid. Serv. 281, 1998 FED App. 0311P (6th Cir. 1998). [FN3] U.S. v. Bassler, 651 F.2d 600, 8 Fed. R. Evid. Serv. 819 (8th Cir. 1981). [FN4] Neder v. U.S., 527 U.S. 1, 119 S. Ct. 1827, 144 L. Ed. 2d 35 (1999). [FN5] U.S. v. Gole, 158 F.3d 166 (2d Cir. 1998). As to intent, see 132. [FN6] 123.

**[FN7] U.S. v. Easton, 54 Fed. Appx. 242 (8th Cir. 2002); U.S. v. Welch, 327 F.3d 1081 (10th Cir.
2003).

** Because of Skilling v. U.S. saying that honest services fraud prohibits only bribery and kickbacks, does a judge rendering a judgment while profiting from the outcome because of holding WELLS FARGO stock (having a personal financial interest in this case in the decisions that he was making as a public official, See Ryan v. U.S. 2010 WL 5495015, p.14 **I have always assumed [ ] the theme of the government's case

[was] the hidden flow of benefits between people who benefitted from George Ryan's activities. George Ryan doesn't have a personal financial interest in this case in the decisions that he was making as a public official. The allegation is that he was receiving things of value paid to influence him from people who were benefitting from his decisions. Ryan, at p. 17, that Ryan devised and intended to devise, and participated in, a scheme and artifice to defraud the people of the State of Illinois, and the State of Illinois, **of money, **property and the intangible right to honest services of defendant Ryan and other official and employees of the State of Illinois) constitute self-dealing or conduct in

violation of bribery or kickbacks, or does it constitute a failure to disclose conflict of interest? If holding WELLS FARGO by a judge stock does constitute a failure to disclose a conflict of interest (it does) then do not charge the judge with 18 U.S.C. 1346 mail /wire fraud scheme, to defraud the public the intangible right of honest services of a public official, instead charge the RICO associated-in-fact members including the judge with charge of 18 U.S.C. 1341/ 1343 straight property, as opposed to intangible right to honest services, mail and wire fraud 18 U.S.C. 1346. Or to charge 18 U.S.C. 1346 mail/wire fraud scheme, to defraud the public the intangible right of honest services of a public official that involves Skilling v. U.S.,130 S.Ct. 2896 (U.S.,Jun 24, 2010), bribery and or kickback schemes. Or charge that the WELLS FARGO stock is a gift that constitutes a bribe. In the alternative charge for 18 U.S.C. 201 bribery; 18 U.S.C. 371 conspiracy to defraud the United States. (See U.S. v. Saladino, 2010 WL 3221427, at p. 3, (D.Or.,Aug 11, 2010)). Or in the

alternative just charge judge with 18 U.S.C. 1341/ 1343 straight property, as opposed to honest services, mail and wire fraud. Judicial immunity does not apply when a judge acts in absence of all subject matter jurisdiction. Or find case law, in force and effect that the facts constitute a kickback of money of the judge back to himself because of the value of the stock increase. The state of California holding of WELLS FARGO MBS in the Public Employee Retirement System gave the judges a stream of benefits Judge has expenses that do not match income stated under the Form 700 Statement of Economic Interests. An investigation into WELLS FARGO and or through intermediaries, payments to Judge and family members, any companies that the judge controls etc
59. ---- Specific intent, elements of offense Pinkerton instruction given at trial of defendants charged with committing single conspiracy with two unlawful objects, namely, using the mails to defraud city and its citizens of money and property, as well as defendant's honest services, which instructed the jury that if they found a defendant guilty of conspiracy, then they could find that defendant guilty of the substantive mailfraud offenses based on the acts of a co-conspirator, when combined with the district court's disjunctive conspiracy instruction did not remove the intent element from the substantive mailfraud offenses; indictment described substantive counts of mailfraud as using the mail to defraud city and its citizens of money and property and defendant's honest services, and so the intent necessary to commit mailfraud to achieve either object was not plainly insufficient to sustain defendants' convictions for the substantive acts. U.S. v. Woodard, C.A.11 (Ga.) 2006, 459 F.3d 1078. Conspiracy 48.2(2) 68. ---- Intangibles, money or property, elements of offense Mailfraud defendants' conviction for their participation in scheme to fix judge's cases with bribes would be vacated where it was clear that government had proceeded on intangible rights theory; indictment charged defendants with scheming to defraud citizens of honest services of judge, and jury was told that it need not find that defendants had defrauded anyone of money or property. Callanan v. U.S., C.A.6 (Mich.) 1989, 881 F.2d 229, rehearing denied, certiorari denied 110 S.Ct. 1816, 494 U.S. 1083, 108 L.Ed.2d 946. Postal Service 35(9) Mailfraud conviction based on indictment which charged county sheriff's deputy with defrauding victims of both intangible rights and money and property in enforcing seizure warrants and writs of execution against delinquent taxpayers and judgment debtors was valid even though intangible rights theory had subsequently been invalidated by Supreme Court in McNally v. United States ; indictment charged single scheme to defraud in which defendants made their own arrangements for disposing of debtor's property rather than holding public auction and remitting the proceeds, which had dual effect of depriving public of something tangible, namely money and property, and intangible, namely honest and faithful service. U.S. v. Folak, C.A.7 (Ill.) 1988, 865 F.2d 110. Postal Service 48(4.1) U.S. v. Genova, 167 F.Supp.2d 1021 (N.D.Ill.,Oct 22, 2001) Mayor and city prosecutor were charged with numerous offenses arising from an attorney fees kickback scheme. Following trial, the District Court, Castillo, J., held that: (1) attorney fees kickback scheme, which consisted of an effort by prosecutor to bribe mayor with money in return for influencing the continued selection of prosecutor as city's prosecutor and as an attorney who received payment for non-existent legal work purportedly done on city's behalf, repeatedly violated federal mail fraud statute; (2) scheme violated Illinois official misconduct laws and bribery statute; (3) scheme violated Racketeer Influenced and Corrupt Organizations Act (RICO); and (4) scheme constituted a theft by deception of city municipal funds obtained

from the federal government. Judgment of guilty entered against defendants. [1] Postal Service 306 35(2) 306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(2) k. Nature and elements of offense in general. Most Cited Cases To establish the crime of mail fraud, the Government must prove: (1) the defendant's participation in a scheme to defraud; (2) the defendant's intent to defraud; and (3) the defendant's use of the mail in furtherance of the fraudulent scheme. 18 U.S.C.A. 1341. [2] Postal Service 306 35(9)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(9) k. Injury from fraud. Most Cited Cases Postal Service 306 35(10)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(10) k. Nature of scheme or device in general. Most Cited Cases Mayor and city prosecutor's attorney fees kickback scheme, which consisted of an effort by prosecutor to bribe mayor with money in return for influencing the continued selection of prosecutor as city's prosecutor and as an attorney who received payment for non-existent legal work purportedly done on city's behalf, repeatedly violated federal mail fraud statute; key aspect of the scheme involved the deceitful non-disclosure of mayor's financial interests in prosecutor's law firm, and scheme deprived city and its citizens of public servants' honest services by misusing their positions for their personal gain. 18 U.S.C.A. 1341, 1346. [5] Municipal Corporations 268 174

268 Municipal Corporations 268V Officers, Agents, and Employees 268V(A) Municipal Officers in General 268k174 k. Criminal responsibility. Most Cited Cases Mayor and city prosecutor's attorney fees kickback scheme, which consisted of an effort by prosecutor to bribe mayor with money in return for influencing the continued selection of prosecutor as city's prosecutor and as an attorney who received payment for non-existent legal work purportedly done on city's behalf, repeatedly violated Illinois official misconduct laws; neither mayor nor city prosecutor could take official action or give official advice which was free from the conflict created by their secret and illegal economic partnership. 720 ILCS 5/33-3 (b, d). [6] Officers and Public Employees 283 120.1

283 Officers and Public Employees 283III Rights, Powers, Duties, and Liabilities 283k120 Criminal Responsibility of Officers or Employees and of Persons Dealing with Them 283k120.1 k. In general. Most Cited Cases Purpose of Illinois' official misconduct laws is to compel public officials and employees to act in a lawful manner and to maintain the public trust. 720 ILCS 5/33-3 (b, d).

[9] Racketeer Influenced and Corrupt Organizations 319H

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk3 k. Elements of violation in general. Most Cited Cases To establish a Racketeer Influenced and Corrupt Organizations Act (RICO) violation, the Government needed to establish that a defendant engaged in (1) conduct (2) of an enterprise (3) through a pattern of racketeering activity. 18 U.S.C.A. 1961 et. seq. 16Validity, Construction, and Application of 18 U.S.C.A. s1346, Providing that, for Purposes of Some Federal Criminal Statutes, Term "Scheme or Artifice to Defraud" Includes Scheme or Artifice to Deprive Another of Intangible Right to Honest Services, 172 A.L.R. Fed. 109 (2001) HN: 4,11,14,15,17 (F.Supp.)

18 U.S.C. Section 1346. Definition of scheme or artifice to defraud For the purposes of this chapter, the term scheme or artifice to defraud includes a scheme or artifice to deprive another of the intangible right of honest services. 3. Honest services Evidence that bank officers made loans to city treasurer, as well as to his church and relatives, that were not advanced in the usual course of business, in exchange for actions which included treasurer's rigging of a bidding procedure, was sufficient to support convictions for honest services wire fraud under a bribery theory; officers approved an unsecured loan to a relative of treasurer without seeing an application or even speaking to the borrower, and treasurer's mortgage loans were approved before treasurer filed an application and despite fact that bank's computer program and underwriter rejected them. U.S. v. Kemp, C.A.3 (Pa.) 2007, 500 F.3d 257, certiorari denied 128 S.Ct. 1329, 170 L.Ed.2d 138. Telecommunications 1014(10) Private citizen, acting in conjunction with a public official, may be adjudged guilty of conspiracy to commit honest services mail fraud if the official colluded with the citizen to use his public office to serve the citizen's interests at the public's expense. U.S. v. Woodard, C.A.11 (Ga.) 2006, 459 F.3d 1078. Conspiracy 32 Statute which extended the coverage of the wire and mail fraud statutes, to include deprivation of the intangible right of honest services, could apply to private individuals as well as to public figures. U.S. v. Williams, C.A.9 (Or.) 2006, 441 F.3d 716, certiorari denied 127 S.Ct. 295, 166 L.Ed.2d 225. Postal Service 35(9); Telecommunications 1014(10) Conviction for honest services mail fraud does not require proof of violation of state law, given that duty of honest services owed by government officials derives from fiduciary duties at common law as well as from statute. U.S. v. Sawyer, C.A.1 (Mass.) 2001, 239 F.3d 31. Postal Service 35(9) Under statute defining scheme or artifice to defraud as including scheme to deprive another of intangible right of honest services, for purpose of wire fraud statute, honest services can include honest and impartial government. U.S. v. Brumley, C.A.5 (Tex.) 1997, 116 F.3d 728, rehearing denied, certiorari denied 118 S.Ct. 625, 522 U.S. 1028, 139 L.Ed.2d 606. Telecommunications 1014(10) Term honest services in mail fraud statute was not unconstitutionally vague as applied to defendants, who were attorneys and who paid kickbacks to judge to receive appointments as special assistant public defenders, with compensation from

cases paid by the county. U.S. v. Castro, C.A.11 (Fla.) 1996, 89 F.3d 1443, rehearing and suggestion for rehearing en banc denied 99 F.3d 1157, certiorari denied 117 S.Ct. 965, 519 U.S. 1118, 136 L.Ed.2d 850, rehearing denied 117 S.Ct. 1462, 520 U.S. 1182, 137 L.Ed.2d 566, rehearing denied 117 S.Ct. 1462, 520 U.S. 1183, 137 L.Ed.2d 566, post-conviction relief denied 248 F.Supp.2d 1170. Postal Service 35(1) 4. Another's rights Under rule that conviction for honest services mail fraud requires finding of intent to reap private gain, private gain simply means illegitimate gain, which does not necessarily have to go to defendant or even fellow participant in fraud scheme, but may instead go to another party. U.S. v. Sorich, C.A.7 (Ill.) 2008, 523 F.3d 702. Postal Service 35(9) 5. Elements of offense Indictment charging sitting member of United States House of Representatives with violations of honest services wire fraud statute adequately alleged honest services fraud predicated on conflict of interest, where indictment alleged that defendant devised scheme to defraud citizens of his honest services, transmitted wire communication in furtherance of that scheme, and failed to disclose fact that he had solicited and received bribes when performing official acts. U.S. v. Jefferson, E.D.Va.2008, 562 F.Supp.2d 719. Telecommunications 1017 **Indictment adequately alleged that public official had conflict of interest that should have been disclosed under Delaware law, for purpose of charge of honest services fraud, as part of wire fraud and mail fraud charges, under federal law, on allegations that loans made by developer to official were payable on demand and official had administrative authority over those who were reviewing and approving developer's applications; reasonable jury could conclude that possibility that loan could have been called at any time affected official's exercise of her official discretion and that official had every reason to do whatever she could to please developer so that loan would never be called and would therefore actually become gift. U.S. v. Gordon, C.A.3 (Del.) 2006, 183 Fed.Appx. 202, 2006 WL 1558952, Unreported. Postal Service 48(4.1); Telecommunications 1017 8. Deceit Public official's alleged intentional violation of duty to disclose under Delaware law provided requisite deceit, for purpose of indictment charging official with honest services fraud as part of wire fraud and mail fraud charges under federal law. U.S. v. Gordon, C.A.3 (Del.) 2006, 183 Fed.Appx. 202, 2006 WL 1558952, Unreported. Postal Service 35(9); Telecommunications 1014(10) 9. Activities prohibited It was reasonably foreseeable to city prosecutor that mayor would use the mails to file required annual statements of economic interest that failed to report funds which mayor had received from kickback scheme in which city prosecutor kicked back to mayor portion of payments received from city by his law firm, supporting city prosecutor's convictions for mail fraud and violation of Racketeer Influenced and Corrupt Organizations Act (RICO) based upon his participation in scheme. U.S. v. Genova, C.A.7 (Ill.) 2003, 333 F.3d 750, rehearing denied. Postal Service 35(20); Racketeer Influenced And Corrupt Organizations 7 Conduct of county executive in giving tip to car dealership regarding detailed specifications for car which county was to purchase for county executive with intent to rig bidding caused county to pay more for car so as to show deprivation of money within meaning of mail fraud statutes, where county accepted dealership's bid even though it was $788 higher than lower bid because lower bid did not meet rigged specifications for car. U.S. v. Coyne, C.A.2 (N.Y.) 1993, 4 F.3d 100, certiorari denied 114 S.Ct. 929, 510 U.S. 1095, 127 L.Ed.2d 221. Postal Service 35(9) Secretary of Agriculture's alleged failure to disclose gifts from entities and

persons regulated by the United States Department of Agriculture (USDA) and his misrepresentation of facts to federal investigators concerning the gifts breached his fiduciary duty and deprived the United States and its citizens of the right to honest services in violation of mail and wire fraud statutes. U.S. v. Espy, D.D.C.1998, 23 F.Supp.2d 1. Postal Service 35(9); Postal Service 35(11.1); Telecommunications 1014(10) **Federal mail fraud statute reached intangible right of honest public services and thus, it applied to prosecution of California Superior Court judges and attorney, alleging that attorney gave gifts, which judges accepted, with intent to influence judges in cases that they presided over and in which attorney was counsel of record, and that various mailings were used to further scheme. U.S. v. Frega, S.D.Cal.1996, 933 F.Supp. 1536. Postal Service 35(9) Lottery attorney had duty under West Virginia Governmental Ethics Act to refrain from disclosing confidentialities of which he became aware by virtue of his position, and alleged violation of duty by misappropriating nonpublic information regarding proposed expansion of video lottery and award of single-source contract for gaming equipment could serve as basis for federal wire fraud charge. U.S. v. ReBrook, S.D.W.Va.1993, 837 F.Supp. 162, affirmed in part , reversed in part 58 F.3d 961, certiorari denied 116 S.Ct. 431, 516 U.S. 970, 133 L.Ed.2d 346. Attorney And Client 32(13); Telecommunications 1014(8) Conduct of defendant employee with purchasing authority constituted mail fraud under amended definition of fraud for mail fraud purposes to include scheme or artifice to defraud another of intangible right to honest services; employee intentionally deceived employer by concealing his financial interest in supply accounts and by engaging in elaborate undercover kickback scheme in which employee bartered contracts with employer in exchange for unlawful commission payments from supply brokers and suppliers in violation of conflict of interest policy. U.S. v. Johns, E.D.Pa.1990, 742 F.Supp. 196, affirmed 972 F.2d 1333. Postal Service 35(9); Postal Service 35(10) 12. Indictment Indictment sufficiently alleged that defendant engaged in honest services mail fraud; indictment tracked the language of the mail fraud statute, it stated that defendant and his personnel corporation engaged in a scheme to misuse his position as a state legislator for private gain by receiving business favors, including a lucrative contract for hospital to hire workers from his personnel corporation in return for defendant's help with legislation affecting a hospital, and it also alleged that defendant failed to properly disclose his financial dealings with the hospital in his annual financial disclosure statements as a legislator. U.S. v. Walker, C.A.11 (Ga.) 2007, 490 F.3d 1282, rehearing and rehearing en banc denied 255 Fed.Appx. 501, 2007 WL 4258793, certiorari denied 128 S.Ct. 1649, 170 L.Ed.2d 354, rehearing denied 2008 WL 2002104. Indictment And Information 110(15); Postal Service 48(4.2) Counts of indictment alleging that sitting member of United States House of Representatives transmitted or caused to be transmitted specific wire communications in furtherance of scheme to deprive others of his honest services by soliciting or receiving bribes were sufficient to allege violations of honest services wire fraud statute predicated on bribery. U.S. v. Jefferson, E.D.Va.2008, 562 F.Supp.2d 719. Telecommunications 1017 Indictment alleged scheme by defendant, who was the county prosecutor, to violate mail fraud statute, based on scheme to deprive citizens of county of honest services of chief law enforcement officer, where indictment enumerated several statutory sources of prosecutor's duties and charged mailings that furthered alleged unlawful activities, including maintaining undisclosed business relationships with adversary of office of county prosecutor, abusing position to threaten owner of distribution company and gain business advantage to which he was

not entitled, fraudulently operating gas stations, criminal solicitation to assist in financial aid fraud, and obstruction of justice. U.S. v. Bissell, D.N.J.1996, 954 F.Supp. 841, affirmed 142 F.3d 429. Postal Service 48(4.2) I.IN GENERAL 1. Generally Scope of 18 USCS 1346 included prosecution of state and local officials and public employees for depriving citizens they served of right to their honest services. United States v Antico (2001, CA3 Pa) 275 F3d 245, cert den (2002) 537 US 821, 123 S Ct 100, 154 L Ed 2d 30 and (superseded by statute as stated in United States v Murphy (2003, CA3 NJ) 323 F3d 102) and (criticized in United States v Carbo (2007, ED Pa) 2007 US Dist LEXIS 58593). 2. Constitutionality **In proscribing fraudulent deprivations of intangible right of honest services, 18 USCS 1346, Congress intended at least to reach schemes to defraud involving bribes and kickbacks; construing honest-services statute to extend beyond that core meaning would encounter vagueness shoal; therefore, 1346 covers only bribery and kickback schemes. Skilling v United States (2010, US) 130 S Ct 2896, 177 L Ed 2d 619, 22 FLW Fed S 550. Congress fully intended 18 USCS 1346 to reach schemes that seek to deprive people of state of their intangible right to honest services; 1346 was not unconstitutionally vague as applied to defendant who accepted bribes while sitting as judge. United States v Frega (1999, CA9 Cal) 179 F3d 793, 99 CDOS 4392, 99 Daily Journal DAR 5643, cert den (2000) 528 US 1191, 146 L Ed 2d 105, 120 S Ct 1247 and cert den (2000) 528 US 1191, 146 L Ed 2d 105, 120 S Ct 1247 and cert den (2000) 529 US 1029, 146 L Ed 2d 331, 120 S Ct 1443. Where commonwealth court official pled guilty to conspiracy to commit wire fraud, in violation of 18 USCS 1343, after he gave blank search warrants to private citizen, 18 USCS 1346 was not unconstitutionally vague as applied to him because he failed to demonstrate that ordinary people would not understand that 1346 encompassed his offense. United States v George (2006, DC Mass) 436 F Supp 2d 274. Clerk issuing search warrants to private actor who had not met the legal qualifications for such search warrants. Defendant's challenge to constitutionality of honest services fraud statute, 18 USCS 1346, as applied to facts of indictment failed because indictment adequately described sort of conduct that gave rise to honest services fraud because indictment sufficiently alleged official acts giving rise to bribery offense and conflict of interest of sort that could have given rise to liability under honest services fraud statute. United States v Jefferson (2008, ED Va) 562 F Supp 2d 719. Defendant had fair notice that 18 USCS 1346 prohibited his alleged conduct, and thus statute was not unconstitutionally vague as applied to defendant; offense of honest services fraud encompassed conduct alleged in Count 14 and 22 of indictment; indictment alleged, inter alia, that defendant, as sheriff of county, owed fiduciary duty to sheriff's office and citizens of county, and that defendant knowingly violated that duty and state law by using county inmates to work on property on which he had personal interest, and by arranging for particular inmates to remain in custody of county jail solely for that purpose; indictment also alleged that defendant concealed and withheld from county treasurer over $ 86,000.00 that sheriff's office had received from United States Customs Service and company. United States v Presgraves (2009, WD Va) 658 F Supp 2d 770. II.ELEMENTS OF CRIME 4. Generally U.S. v. Saathoff (2010) 708 F.Supp.2d 1020 (S.D. Cal.)

Element of honest services fraud by bribery; and by failure to disclose conflict of interest. Ninth Circuit agrees that limiting principle needs to be identified for 18 USCS 1346 honest service fraud prosecutions, and Ninth Circuit agrees that quid pro quo requirement may be useful limiting principle for some theories of honest services fraud prosecution; however, Ninth Circuit does not believe that quid pro quo should be required in all 1346 prosecutions--in fact, imposing quid pro quo requirement on all 1346 cases risks being under-inclusive, because some honest services fraud, such as failure to disclose conflict of interest where required, may not confer direct or easily demonstrated benefit. United States v KincaidChauncey (2009, CA9 Nev) 556 F3d 923. 6. Intent to defraud and/or deceive Evidence was sufficient to prove that legislator accepted gratuities from insurance company's lobbyist with intent to defraud public of its right to honest services and specific intent to deceive, where jury could distinguish between gifts given based on friendship and gifts given with expectation of favorable official action. United States v Woodward (1998, CA1 Mass) 149 F3d 46, 49 Fed Rules Evid Serv 800, cert den (1999) 525 US 1138, 119 S Ct 1026, 143 L Ed 2d 37 and (criticized in United States v Kott (2007, DC Alaska) 2007 US Dist LEXIS 66125).

DEFINITION OF KICKBACK

PL 111-350, 2011 HR 1107 PL 111-350, January 4, 2011, 124 Stat 3677 (Cite as: 124 Stat 3677)
<< 41 USCA 8701 >> 8701. Definitions In this chapter: (1) CONTRACTING AGENCY.--The term "contracting agency", when used with respect to a prime contractor, means a department, agency, or establishment of the Federal Government that enters into a prime contract with a prime contractor. (2) KICKBACK.--The term "kickback" means any money, fee, commission, credit, gift, gratuity, thing of value, or compensation of any kind that is provided to a prime contractor, prime contractor employee, subcontractor, or subcontractor employee to improperly obtain or reward favorable treatment in connection with a prime contract or a subcontract relating to a prime contract. (3) PERSON.--The term "person" means a corporation, partnership, association of any kind, trust, joint-stock company, or individual. business

(4) PRIME CONTRACT.--The term "prime contract" means a contract or contractual action entered into by the Federal Government to obtain supplies, materials, equipment, or services of any kind. (5) PRIME CONTRACTOR.--The term "prime contractor" means a person that has entered into a prime contract with the Federal Government. (6) PRIME CONTRACTOR EMPLOYEE.--The term "prime contractor employee" means an officer, partner, employee, or agent of a prime contractor. (7) SUBCONTRACT.--The term "subcontract" means a contract or contractual action

entered into by a prime contractor or subcontractor to obtain supplies, materials, equipment, or services of any kind under a prime contract. (8) SUBCONTRACTOR.--The term "subcontractor"-*3839 (A) means a person, other than the prime contractor, that offers to furnish or furnishes supplies, materials, equipment, or services of any kind under a prime contract or a subcontract entered into in connection with the prime contract; and (B) includes a person that offers to furnish or furnishes general supplies to the prime contractor or a higher tier subcontractor. (9) SUBCONTRACTOR EMPLOYEE.--The term "subcontractor employee" means an officer, partner, employee, or agent of a subcontractor.

Skilling v. U.S., 130 S.Ct. 2896, 177 L.Ed.2d 619, 78 USLW 4735, Fed. Sec. L. Rep. P 95,808, RICO Bus.Disp.Guide 11,875, 10 Cal. Daily Op. Serv. 7948, 2010 Daily Journal D.A.R. 9609, 22 Fla. L. Weekly Fed. S 550 (U.S.,Jun 24, 2010) 18 U.S.C. 1346, the criminal offense of mail or wire fraud, honest services fraud proscribes bribery and kickbacks, self-dealing by public official, and failure nondisclosure of a material conflict of interest is not subsumed under mail and wire fraud honest services fraud criminal statute 18 U.S.C. 1346. Opinion cites three model cases of mail (and or wire) fraud, honest services fraud due to bribery of a judge. U.S. v. Ganim, Whitfield, and Kemp. Background: Defendant, the former chief executive officer of a bankrupt corporation, was convicted in the United States District Court for the Southern District of Texas, Sim Lake, J., of conspiracy, securities fraud, making false representations to auditors, and insider trading, and he appealed. The United States Court of Appeals for the Fifth Circuit, Prado, Circuit Judge, 554 F.3d 529, affirmed defendant's convictions. Certiorari was granted. Holdings: The Supreme Court, Justice Ginsburg, held that: (1) negative pretrial publicity involving the bankruptcy did not raise presumption of prejudice that required defendant's securities fraud trial to be moved to another venue; (2) actual prejudice did not infect defendant's jury; (3) the honest services statute covers only bribery and kickback schemes; and (4) defendant did not commit honest services fraud. Affirmed in part, vacated in part, and remanded. Justice Scalia filed opinion concurring in part and concurring in the judgment in which Justice Thomas joined and Justice Kennedy joined in part. Justice Alito filed opinion concurring in part and concurring in the judgment. Justice Sotomayor filed opinion concurring in part and dissenting in part in which Justices Stevens and Breyer joined. [26] Constitutional Law 92 4505

92 Constitutional Law 92XXVII Due Process 92XXVII(H) Criminal Law 92XXVII(H)2 Nature and Elements of Crime 92k4502 Creation and Definition of Offense 92k4505 k. Certainty and definiteness in general. Most Cited Cases To satisfy due process, a penal statute must define the criminal offense (1) with sufficient definiteness that ordinary people can understand what conduct is prohibited and (2) in a manner that does not encourage arbitrary and discriminatory enforcement. U.S.C.A. Const.Amend. 5. [27] Criminal Law 110 13.1

110 Criminal Law 110I Nature and Elements of Crime 110k12 Statutory Provisions 110k13.1 k. Certainty and definiteness. Most Cited Cases Before striking a federal statute as impermissibly vague, Supreme Court will consider whether the prescription is amenable to a limiting construction. [28] Postal Service 306 35(9)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(9) k. Injury from fraud. Most Cited Cases Telecommunications 372 1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(10) k. Honest services fraud. Most Cited Cases (Formerly 372k1014(10)) The honest services statute covers only bribery and kickback schemes. 18 U.S.C.A. 1346. [29] Postal Service 306 35(9)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(9) k. Injury from fraud. Most Cited Cases Telecommunications 372 1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(10) k. Honest services fraud. Most Cited Cases Congress intended the honest services fraud statute to reach at least bribes and kickbacks. 18 U.S.C.A. 1346. [30] Postal Service 306 35(9)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(9) k. Injury from fraud. Most Cited Cases Telecommunications 372 1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(10) k. Honest services fraud. Most Cited Cases Honest services statute did not proscribe undisclosed self-dealing by a public official or private employee, i.e., the taking of official action by the employee that furthers his own undisclosed financial interests while purporting to act in the interests of those to whom he owes a fiduciary duty. 18 U.S.C.A. 1346. [31] Postal Service 306 35(9)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(9) k. Injury from fraud. Most Cited Cases Telecommunications 372 1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(10) k. Honest services fraud. Most Cited Cases Honest services statute could not support criminal prosecutions involving conflicts of interest. 18 U.S.C.A. 1346. [32] Statutes 361 241(1)

361 Statutes 361VI Construction and Operation 361VI(B) Particular Classes of Statutes 361k241 Penal Statutes 361k241(1) k. In general. Most Cited Cases Ambiguity concerning the ambit of criminal statutes should be resolved in favor of lenity. [33] Constitutional Law 92 4509(12)

92 Constitutional Law 92XXVII Due Process 92XXVII(H) Criminal Law 92XXVII(H)2 Nature and Elements of Crime 92k4502 Creation and Definition of Offense 92k4509 Particular Offenses 92k4509(12) k. False pretenses and fraud. Most Cited Cases

Postal Service 306

35(9)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(9) k. Injury from fraud. Most Cited Cases Telecommunications 372 730

372 Telecommunications 372III Telephones 372III(A) In General 372k727 Constitutional and Statutory Provisions 372k730 k. Validity. Most Cited Cases Interpreted to encompass only bribery and kickback schemes, the honest services statute is not unconstitutionally vague. U.S.C.A. Const.Amend. 5;18 U.S.C.A. 1346. [34] Criminal Law 110 13.1

110 Criminal Law 110I Nature and Elements of Crime 110k12 Statutory Provisions 110k13.1 k. Certainty and definiteness. Most Cited Cases The void-for-vagueness doctrine addresses concerns about (1) fair notice and (2) arbitrary and discriminatory prosecutions. U.S.C.A. Const.Amend. 5. [35] Conspiracy 91 32

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k32 k. Conspiracy to defraud in general. Most Cited Cases Defendant, the former chief executive officer of a bankrupt corporation, did not commit honest services fraud by allegedly conspiring to defraud corporation's shareholders by misrepresenting the company's fiscal health, thereby artificially inflating its stock price, **where there was no allegation that defendant solicited or accepted side payments from a third party in exchange for making those misrepresentations. 18 U.S.C.A. 1346. [36] Criminal Law 110 1162

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1162 k. Prejudice to rights of party as ground of review. Most Cited Cases Harmless-error analysis applies equally to cases on direct appeal and on collateral review. Founded in 1985, Enron Corporation grew from its headquarters in Houston, Texas, into the seventh highestrevenue-grossing company in America. Petitioner Jeffrey Skilling, a longtime Enron officer, was Enron's chief executive officer from February until August 2001, when he resigned. Less than four months later, Enron crashed into bankruptcy, and its stock *2900 plummeted in value. After an investigation uncovered an elaborate conspiracy to prop up Enron's stock prices by overstating the company's financial well-being, the Government prosecuted dozens of Enron employees who participated in the scheme. In time, the Government worked its way up the chain of command, indicting Skilling and two other top Enron executives. These three defendants, the indictment charged, engaged in a scheme to deceive investors about Enron's true financial performance by manipulating its publicly reported financial results and making false and misleading statements. Count 1 of the indictment charged Skilling with, inter alia, conspiracy to commit honest-services wire fraud, 18 U.S.C. 371, 1343, 1346, by depriving Enron and its shareholders of the intangible right of his honest services. Skilling

was also charged with over 25 substantive counts of securities fraud, wire fraud, making false representations to Enron's auditors, and insider trading.

At p. 2901,
After a 4-month trial, the jury found Skilling guilty of 19 counts, including the honest-services-fraud conspiracy charge, and not guilty of 9 insider-trading counts. On appeal, Skilling raised two arguments relevant here. First, he contended that pretrial publicity and community prejudice prevented him from obtaining a fair trial. Second, he alleged that the jury improperly convicted him of conspiracy to commit honest-services wire fraud. As to the former, the Fifth Circuit initially determined that the volume and negative tone of media coverage generated by Enron's collapse created a presumption of juror prejudice. Stating, however, that the presumption is rebuttable, the court examined the voir dire, found it proper and thorough, and held that the District Court had empaneled an impartial jury. The Court of Appeals also rejected Skilling's claim that his conduct did not indicate any conspiracy to commit honest-services fraud. It did not address Skilling's argument that the honest-services statute, if not interpreted to exclude his actions, should be invalidated as unconstitutionally vague. Held : 1. Pretrial publicity and community prejudice did not prevent Skilling from obtaining a fair trial. He did not establish that a presumption of juror prejudice arose or that actual bias infected the jury that tried him. Pp. 2912 - 2925. (a) The District Court did not err in denying Skilling's requests for a venue transfer. Pp. 2912 - 2917.

At p. 2904,
*2904 2. Section 1346, which proscribes fraudulent deprivations of the intangible right of honest services, is properly confined to cover only bribery and kickback schemes. Because Skilling's alleged misconduct entailed no bribe or kickback, it does not fall within the Court's confinement of 1346's proscription. Pp. 2925 - 2935. (a) To place Skilling's claim that 1346 is unconstitutionally vague in context, the Court reviews the origin and subsequent application of the honest-services doctrine. Pp. 2925 - 2928. (1) In a series of decisions beginning in the 1940s, the Courts of Appeals, one after another, interpreted the mail-fraud statute's prohibition of any scheme or artifice to defraud to include deprivations not only of money or property, but also of intangible rights. See, e.g., Shushan v. United States, 117 F.2d 110, which stimulated the development of the honest-services doctrine. Unlike traditional fraud, in which the victim's loss of money or property supplied the defendant's gain, with one the mirror image of the other, the honest-services doctrine targeted corruption that lacked similar symmetry. While the offender profited, the betrayed party suffered no deprivation of money or property; instead, a third party, who had not been deceived, provided the enrichment. Even if the scheme occasioned a money or property gain for the betrayed party, courts reasoned, actionable harm lay in the denial of that party's right to the offender's honest services. Most often these cases involved bribery of public officials, but over time, the courts increasingly recognized that the doctrine applied to a private employee who breached his allegiance to his employer, often by accepting bribes or kickbacks. By 1982, all Courts of Appeals had embraced the honest-services theory of fraud. Pp. 2925 - 2927. (2) In 1987, this Court halted the development of the intangible-rights doctrine in McNally v. United States, 483 U.S. 350, 360, 107 S.Ct. 2875, 97 L.Ed.2d 292, which held that the mail-fraud statute was limited in scope to the protection of property rights. If Congress desires to go further, the Court stated, it must speak more clearly. Ibid. P. 2927. (3) Congress responded the next year by enacting 1346, which provides: For the purposes of th[e] chapter [of the U.S.Code that prohibits, inter alia, mail fraud, 1341, and wire fraud, 1343], the term scheme or artifice to defraud includes a scheme or artifice to deprive another of the intangible right of honest services. Pp. 2927

- 2928. (b) Section 1346, properly confined to core cases, is not unconstitutionally vague. Pp. 2927 - 2935. (1) To satisfy due process, a penal statute [must] define the criminal offense [1] with sufficient definiteness that ordinary people can understand what conduct is prohibited and [2] in a manner that does not encourage arbitrary and discriminatory enforcement. Kolender v. Lawson, 461 U.S. 352, 357, 103 S.Ct. 1855, 75 L.Ed.2d 903. The void-for-vagueness doctrine embraces these requirements. Skilling contends that 1346 meets neither of the two due-process essentials. But this Court must, if possible, construe, not condemn, Congress' enactments. See, e.g., Civil Service Comm'n v. Letter Carriers, 413 U.S. 548, 571, 93 S.Ct. 2880, 37 L.Ed.2d 796. Alert to 1346's potential breadth, the Courts of Appeals have divided on how best to interpret the statute. Uniformly, however, they have declined to throw out the statute as irremediably vague. This Court agrees that 1346 should be construed rather than invalidated. P. 2927 - 2928. *2905 (2) The Court looks to the doctrine developed in pre- McNally cases in an endeavor to ascertain the meaning of the phrase the intangible right of honest services. There is no doubt that Congress intended 1346 to refer to and incorporate the honest-services doctrine recognized in Courts of Appeals' decisions before McNally derailed the intangible-rights theory of fraud. Congress, it bears emphasis, enacted 1346 on the heels of McNally and drafted the statute using that decision's terminology. See 483 U.S., at 355, 362, 107 S.Ct. 2875. Pp. 2928 - 2929. (3) To preserve what Congress certainly intended 1346 to cover, the Court pares the pre- McNally body of precedent down to its core: In the main, the pre- McNally cases involved fraudulent schemes to deprive another of honest services through bribes or kickbacks supplied by a third party who had not been deceived. In parsing the various pre- McNally decisions, the Court acknowledges that Skilling's vagueness challenge has force, for honest-services decisions were not models of clarity or consistency. It has long been the Court's practice, however, before striking a federal statute as impermissibly vague, to consider whether the prescription is amenable to a limiting construction. See, e.g., Hooper v. California, 155 U.S. 648, 657, 15 S.Ct. 207, 39 L.Ed. 297. Arguing against any limiting construction, Skilling contends that it is impossible to identify a salvageable honest-services core because the pre- McNally cases are inconsistent and hopelessly unclear. This Court rejected an argument of the same tenor in Letter Carriers, 413 U.S., at 571-572, 93 S.Ct. 2880. Although some applications of the pre- McNally honest-services doctrine occasioned disagreement among the Courts of Appeals, these decisions do not cloud the fact that the vast majority of cases involved offenders who, in violation of a fiduciary duty, participated in bribery or kickback schemes. Indeed, McNally itself presented a paradigmatic kickback fact pattern. 483 U.S., at 352-353, 360, 107 S.Ct. 2875. In view of this history, there is no doubt that Congress intended 1346 to reach at least bribes and kickbacks. Because reading the statute to proscribe a wider range of offensive conduct would raise vagueness concerns, the Court holds that 1346 criminalizes only the bribe-and-kickback core of the pre- McNally case law. Pp. 2929 - 2931. (4) The Government urges the Court to go further by reading 1346 to proscribe another category of conduct: undisclosed self-dealing by a public official or private employee. Neither of the Government's arguments in support of this position withstands close inspection. Contrary to the first, McNally itself did not center on nondisclosure of a conflicting financial interest, but rather involved a classic kickback scheme. See 483 U.S., at 352-353, 360, 107 S.Ct. 2875. Reading 1346 to proscribe bribes and kickbacks-and nothing more-satisfies Congress' undoubted aim to reverse McNally on its facts. Nor is the Court persuaded by the Government's argument that the pre- McNally conflict-of-interest cases constitute core applications of the honest-services doctrine. Although the Courts of Appeals upheld honest-services convictions for some conflict-of-interest schemes, they reached no consensus on which schemes qualified. Given the relative infrequency of those prosecutions and the intercircuit inconsistencies they produced, the Court concludes that a reasonable limiting construction of 1346 must exclude this amorphous category of cases. Further dispelling doubt on this point is the principle that ambiguity concerning the ambit of criminal statutes should be resolved in *2906 favor of lenity. Cleveland v. United States, 531 U.S. 12, 25, 121 S.Ct. 365, 148 L.Ed.2d 221. The Court therefore resists the Government's less constrained construction of 1346 absent Congress' clear instruction otherwise. If Congress desires to go further, the Court reiterates, it must speak more clearly than it has. McNally, 483 U.S., at 360, 107 S.Ct. 2875. Pp. 2931 - 2933. (5) Interpreted to encompass only bribery and kickback schemes, 1346 is not unconstitutionally vague. A

prohibition on fraudulently depriving another of one's honest services by accepting bribes or kickbacks presents neither a fair-notice nor an arbitrary-prosecution problem. See Kolender, 461 U.S., at 357, 103 S.Ct. 1855. As to fair notice, it has always been clear that bribes and kickbacks constitute honest-services fraud, Williams v. United States, 341 U.S. 97, 101, 71 S.Ct. 576, 95 L.Ed. 774, and the statute's mens rea requirement further blunts any notice concern, see, e.g., Screws v. United States, 325 U.S. 91, 101-104, 65 S.Ct. 1031, 89 L.Ed. 1495. As to arbitrary prosecutions, the Court perceives no significant risk that the honest-services statute, as here interpreted, will be stretched out of shape. Its prohibition on bribes and kickbacks draws content not only from the pre- McNally case law, but also from federal statutes proscribing and defining similar crimes. Pp. 2933 - 2934. (c) Skilling did not violate 1346, as the Court interprets the statute. The Government charged Skilling with conspiring to defraud Enron's shareholders by misrepresenting the company's fiscal health to his own profit, but the Government never alleged that he solicited or accepted side payments from a third party in exchange for making these misrepresentations. Because the indictment alleged three objects of the conspiracy-honest-services wire fraud, money-or-property wire fraud, and securities fraud-Skilling's conviction is flawed. See Yates v. United States, 354 U.S. 298, 77 S.Ct. 1064, 1 L.Ed.2d 1356. This determination, however, does not necessarily require reversal of the conspiracy conviction, for errors of the Yates variety are subject to harmless-error analysis. The Court leaves the parties' dispute about whether the error here was harmless for resolution on remand, along with the question whether reversal on the conspiracy count would touch any of Skilling's other convictions. Pp. 2934 - 2935. 554 F.3d 529, affirmed in part, vacated in part, and remanded.

At p. 2907,
Justice GINSBURG delivered the opinion of the Court. In 2001, Enron Corporation, then the seventh highest-revenue-grossing company in America, crashed into bankruptcy. We consider in this opinion two questions arising from the prosecution of Jeffrey Skilling, a longtime Enron executive, for crimes committed before the corporation's collapse. First, did pretrial publicity and community prejudice prevent Skilling from obtaining a fair trial? Second, did the jury improperly convict Skilling of conspiracy to commit honest-services wire fraud, 18 U.S.C. 371, 1343, 1346? Answering no to both questions, the Fifth Circuit affirmed Skilling's convictions. We conclude, in common with the Court of Appeals, that Skilling's fair-trial argument fails; Skilling, we hold, did not establish that a presumption of juror prejudice arose or that actual bias infected the jury that tried him. But we disagree with the Fifth Circuit's honest-services ruling. In proscribing fraudulent deprivations of the intangible right of honest services, 1346, Congress intended at least to reach schemes to defraud involving bribes and kickbacks. Construing the honest-services statute to extend beyond that core meaning, we conclude, would encounter a vagueness shoal. We therefore hold that 1346 covers only bribery and kickback schemes. Because Skilling's alleged misconduct entailed no bribe or kickback, it does not fall within 1346's proscription. We therefore affirm in part and vacate in part. I Founded in 1985, Enron Corporation grew from its headquarters in Houston, Texas, into one of the world's leading energy companies. Skilling launched his career there in 1990 when Kenneth Lay, the company's founder, hired him to head an Enron subsidiary. Skilling steadily rose through the corporation's ranks, serving as president and chief operating officer, and then, beginning in February 2001, as chief executive officer. Six months later, on August 14, 2001, Skilling resigned from Enron. Less than four months after Skilling's departure, Enron spiraled into bankruptcy. The company's stock, which had traded at $90 per share in August 2000, plummeted to pennies per share in late 2001. Attempting to comprehend what caused the corporation's collapse, the U.S. Department of Justice formed an Enron Task Force, comprising prosecutors and FBI agents from around the Nation. The Government's investigation uncovered an elaborate conspiracy to prop up Enron's short-run stock prices by overstating the company's

financial well-being. In the years following Enron's bankruptcy, the Government prosecuted dozens of Enron employees who participated in the scheme. In time, the Government worked its way up the corporation's chain of command: On July 7, 2004, a grand jury indicted Skilling, Lay, and Richard Causey, Enron's former chief accounting officer. *2908 These three defendants, the indictment alleged, engaged in a wide-ranging scheme to deceive the investing public, including Enron's shareholders, ... about the true performance of Enron's businesses by: (a) manipulating Enron's publicly reported financial results; and (b) making public statements and representations about Enron's financial performance and results that were false and misleading. App. 5, p. 277a. Skilling and his co-conspirators, the indictment continued, enriched themselves as a result of the scheme through salary, bonuses, grants of stock and stock options, other profits, and prestige. Id., 14, at 280a. Count 1 of the indictment charged Skilling with conspiracy to commit securities and wire fraud; in particular, it alleged that Skilling had sought to depriv[e] Enron and its shareholders of the intangible right of [his] honest services. Id., 87, at 318a.FN1 The indictment further charged Skilling with more than 25 substantive counts of securities fraud, wire fraud, making false representations to Enron's auditors, and insider trading. FN1. The mail- and wire-fraud statutes criminalize the use of the mails or wires in furtherance of any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises. 18 U.S.C. 1341 (mail fraud); 1343 (wire fraud). The honest-services statute, 1346, defines the term scheme or artifice to defraud in these provisions to include a scheme or artifice to deprive another of the intangible right of honest services.

At p. 2925,
III We next consider whether Skilling's conspiracy conviction was premised on an improper theory of honestservices wire fraud. The honest-services statute, 1346, Skilling maintains, is unconstitutionally vague. Alternatively, he contends *2926 that his conduct does not fall within the statute's compass. A To place Skilling's constitutional challenge in context, we first review the origin and subsequent application of the honest-services doctrine. 1 Enacted in 1872, the original mail-fraud provision, the predecessor of the modern-day mail- and wire-fraud laws, proscribed, without further elaboration, use of the mails to advance any scheme or artifice to defraud. See McNally v. United States, 483 U.S. 350, 356, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). In 1909, Congress amended the statute to prohibit, as it does today, any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises. 1341 (emphasis added); see id., at 357-358, 107 S.Ct. 2875. Emphasizing Congress' disjunctive phrasing, the Courts of Appeals, one after the other, interpreted the term scheme or artifice to defraud to include deprivations not only of money or property, but also of intangible rights. In an opinion credited with first presenting the intangible-rights theory, Shushan v. United States, 117 F.2d 110 (1941), the Fifth Circuit reviewed the mail-fraud prosecution of a public official who allegedly accepted bribes from entrepreneurs in exchange for urging city action beneficial to the bribe payers. It is not true that because the [city] was to make and did make a saving by the operations there could not have been an intent to defraud, the Court of Appeals maintained. Id., at 119. A scheme to get a public contract on more favorable terms than would likely be got otherwise by bribing a public official, the court observed, would not only be a plan to

commit the crime of bribery, but would also be a scheme to defraud the public. Id., at 115. The Fifth Circuit's opinion in Shushan stimulated the development of an honest-services doctrine. Unlike fraud in which the victim's loss of money or property supplied the defendant's gain, with one the mirror image of the other, see, e.g., United States v. Starr, 816 F.2d 94, 101 (C.A.2 1987), the honest-services theory targeted corruption that lacked similar symmetry. While the offender profited, the betrayed party suffered no deprivation of money or property; instead, a third party, who had not been deceived, provided the enrichment. For example, if a city mayor (the offender) accepted a bribe from a third party in exchange for awarding that party a city contract, yet the contract terms were the same as any that could have been negotiated at arm's length, the city (the betrayed party) would suffer no tangible loss. Cf. McNally, 483 U.S., at 360, 107 S.Ct. 2875. Even if the scheme occasioned a money or property gain for the betrayed party, courts reasoned, actionable harm lay in the denial of that party's right to the offender's honest services. See, e.g., United States v. Dixon, 536 F.2d 1388, 1400 (C.A.2 1976). Most often these cases ... involved bribery of public officials, United States v. Bohonus, 628 F.2d 1167, 1171 (C.A.9 1980), but courts also recognized private-sector honest-services fraud. In perhaps the earliest application of the theory to private actors, a District Court, reviewing a bribery scheme, explained: When one tampers with [the employer-employee] relationship for the purpose of causing the employee to breach his duty [to his employer,] he in effect is defrauding the employer of a lawful right. The actual deception that is practised is in the continued representation *2927 of the employee to the employer that he is honest and loyal to the employer's interests. United States v. Procter & Gamble Co., 47 F.Supp. 676, 678 (D.Mass.1942). Over time, [a]n increasing number of courts recognized that a recreant employee-public or private-c[ould] be prosecuted under [the mail-fraud statute] if he breache[d] his allegiance to his employer by accepting bribes or kickbacks in the course of his employment, United States v. McNeive, 536 F.2d 1245, 1249 (C.A.8 1976); by 1982, all Courts of Appeals had embraced the honest-services theory of fraud, Hurson, Limiting the Federal Mail Fraud Statute-A Legislative Approach, 20 Am.Crim. L.Rev. 423, 456 (1983). FN35 FN35. In addition to upholding honest-services prosecutions, courts also increasingly approved use of the mail-fraud statute to attack corruption that deprived victims of other kinds of intangible rights, including election fraud and privacy violations. See, e.g., Cleveland v. United States, 531 U.S. 12, 18, n. 2, 121 S.Ct. 365, 148 L.Ed.2d 221 (2000); McNally v. United States, 483 U.S. 350, 362-364, 107 S.Ct. 2875, 97 L.Ed.2d 292, and nn. 1-4 (1987) (STEVENS, J., dissenting). 2 In 1987, this Court, in McNally v. United States, stopped the development of the intangible-rights doctrine in its tracks. McNally involved a state officer who, in selecting Kentucky's insurance agent, arranged to procure a share of the agent's commissions via kickbacks paid to companies the official partially controlled. 483 U.S., at 360, 107 S.Ct. 2875. The prosecutor did not charge that, in the absence of the alleged scheme[,] the Commonwealth would have paid a lower premium or secured better insurance. Ibid. Instead, the prosecutor maintained that the kickback scheme defraud [ed] the citizens and government of Kentucky of their right to have the Commonwealth's affairs conducted honestly. Id., at 353, 107 S.Ct. 2875. We held that the scheme did not qualify as mail fraud. Rather than constru [ing] the statute in a manner that leaves its outer boundaries ambiguous and involves the Federal Government in setting standards of disclosure and good government for local and state officials, we read the statute as limited in scope to the protection of property rights. Id., at 360, 107 S.Ct. 2875. If Congress desires to go further, we stated, it must speak more clearly. Ibid. 3 Congress responded swiftly. The following year, it enacted a new statute specifically to cover one of the intangible rights' that lower courts had protected ... prior to McNally: the intangible right of honest services.

Cleveland v. United States, 531 U.S. 12, 19-20, 121 S.Ct. 365, 148 L.Ed.2d 221 (2000). In full, the honestservices statute stated: For the purposes of th[e] chapter [of the United States Code that prohibits, inter alia, mail fraud, 1341, and wire fraud, 1343], the term scheme or artifice to defraud includes a scheme or artifice to deprive another of the intangible right of honest services. 1346. B [26] Congress, Skilling charges, reacted quickly but not clearly: He asserts that 1346 is unconstitutionally vague. To satisfy due process, a penal statute [must] define the criminal offense [1] with sufficient definiteness that ordinary people can understand what conduct is prohibited and [2] in a manner that does not encourage*2928 arbitrary and discriminatory enforcement. Kolender v. Lawson, 461 U.S. 352, 357, 103 S.Ct. 1855, 75 L.Ed.2d 903 (1983). The void-for-vagueness doctrine embraces these requirements. According to Skilling, 1346 meets neither of the two due process essentials. First, the phrase the intangible right of honest services, he contends, does not adequately define what behavior it bars. Brief for Petitioner 3839. Second, he alleges, 1346's standardless sweep allows policemen, prosecutors, and juries to pursue their personal predilections, thereby facilitat[ing] opportunistic and arbitrary prosecutions. Id., at 44 (quoting Kolender, 461 U.S., at 358, 103 S.Ct. 1855). In urging invalidation of 1346, Skilling swims against our case law's current, which requires us, if we can, to construe, not condemn, Congress' enactments. See, e.g., Civil Service Comm'n v. Letter Carriers, 413 U.S. 548, 571, 93 S.Ct. 2880, 37 L.Ed.2d 796 (1973). See also United States v. National Dairy Products Corp., 372 U.S. 29, 32, 83 S.Ct. 594, 9 L.Ed.2d 561 (1963) (stressing, in response to a vagueness challenge, [t]he strong presumptive validity that attaches to an Act of Congress). Alert to 1346's potential breadth, the Courts of Appeals have divided on how best to interpret the statute.FN36 Uniformly, however, they have declined to throw out the statute as irremediably vague.FN37 FN36. Courts have disagreed about whether 1346 prosecutions must be based on a violation of state law, compare, e.g., United States v. Brumley, 116 F.3d 728, 734-735 (C.A.5 1997) (en banc), with, e.g., United States v. Weyhrauch, 548 F.3d 1237, 1245-1246 (C.A.9 2008), vacated and remanded, post, p. ___; whether a defendant must contemplate that the victim suffer economic harm, compare, e.g., United States v. Sun-Diamond Growers of Cal., 138 F.3d 961, 973 (C.A.D.C.1998), with, e.g., United States v. Black, 530 F.3d 596, 600-602 (C.A.7 2008), vacated and remanded, post, p. ___; and whether the defendant must act in pursuit of private gain, compare, e.g., United States v. Bloom, 149 F.3d 649, 655 (C.A.7 1998), with, e.g., United States v. Panarella, 277 F.3d 678, 692 (C.A.3 2002). FN37. See, e.g., United States v. Rybicki, 354 F.3d 124, 132 (C.A.2 2003) (en banc); United States v. Hausmann, 345 F.3d 952, 958 (C.A.7 2003); United States v. Welch, 327 F.3d 1081, 1109, n. 29 (C.A.10 2003); United States v. Frega, 179 F.3d 793, 803 (C.A.9 1999); Brumley, 116 F.3d, at 732733; United States v. Frost, 125 F.3d 346, 370-372 (C.A.6 1997); United States v. Waymer, 55 F.3d 564, 568-569 (C.A.11 1995); United States v. Bryan, 58 F.3d 933, 941 (C.A.4 1995). We agree that 1346 should be construed rather than invalidated. First, we look to the doctrine developed in pre- McNally cases in an endeavor to ascertain the meaning of the phrase the intangible right of honest services. Second, to preserve what Congress certainly intended the statute to cover, we pare that body of precedent down to its core: In the main, the pre- McNally cases involved fraudulent schemes to deprive another of honest services through bribes or kickbacks supplied by a third party who had not been deceived. Confined to these paramount applications, 1346 presents no vagueness problem. 1 There is no doubt that Congress intended 1346 to refer to and incorporate the honest-services doctrine recognized in Court of Appeals' decisions before McNally derailed the intangible-rights theory of fraud. See Brief for Petitioner 39; Brief for United States 37-38; post, at 2935-2936, 2938-2939 (SCALIA, J., concurring

in part and concurring in judgment). Congress enacted 1346 on the heels of McNally and drafted the statute using that decision's terminology. See *2929483 U.S., at 355, 107 S.Ct. 2875 (intangible righ[t]); id., at 362, 107 S.Ct. 2875 (STEVENS, J., dissenting) (right to ... honest services).FN38 As the Second Circuit observed in its leading analysis of 1346: FN38. Although verbal formulations varied slightly, the words employed by the Courts of Appeals prior to McNally described the same concept: honest services, e.g., United States v. Bruno, 809 F.2d 1097, 1105 (C.A.5 1987); honest and faithful services, e.g., United States v. Brown, 540 F.2d 364, 374 (C.A.8 1976); and faithful and honest services, e.g., United States v. Diggs, 613 F.2d 988, 998 (C.A.D.C.1979). The definite article the suggests that intangible right of honest services' had a specific meaning to Congress when it enacted the statute-Congress was recriminalizing mail- and wire-fraud schemes to deprive others of that intangible right of honest services, which had been protected before McNally, not all intangible rights of honest services whatever they might be thought to be. United States v. Rybicki, 354 F.3d 124, 137-138 (2003) (en banc).FN39 FN39. We considered a similar Court-Congress interplay in McDermott Int'l, Inc. v. Wilander, 498 U.S. 337, 111 S.Ct. 807, 112 L.Ed.2d 866 (1991), which involved the interpretation of the term seaman in the Jones Act, 46 U.S.C.App. 688 (2000 ed.). The Act, we recognized, respond[ed] directly to our decision in The Osceola, 189 U.S. 158, 23 S.Ct. 483, 47 L.Ed. 760 (1903) , and adopt[ed] without further elaboration the term used in that case, so we assume[d] that the Jones Act use[d] seaman in the same way. 498 U.S., at 342, 111 S.Ct. 807. 2 Satisfied that Congress, by enacting 1346, meant to reinstate the body of pre- McNally honest-services law, post, at 2938-2939 (opinion of SCALIA, J.), we have surveyed that case law. See infra, at 2930-2931, 2932. In parsing the Courts of Appeals decisions, we acknowledge that Skilling's vagueness challenge has force, for honest-services decisions preceding McNally were not models of clarity or consistency. See Brief for Petitioner 39-42 (describing divisions of opinions). See also post, at 2935-2939 (opinion of SCALIA, J.). While the honest-services cases preceding McNally dominantly and consistently applied the fraud statute to bribery and kickback schemes-schemes that were the basis of most honest-services prosecutions-there was considerable disarray over the statute's application to conduct outside that core category. In light of this disarray, Skilling urges us, as he urged the Fifth Circuit, to invalidate the statute in toto. Brief for Petitioner 48 (Section 1346 is intolerably and unconstitutionally vague.); Brief of Defendant-Appellant Jeffrey K. Skilling in No. 0620885(CA5), p. 65, n. 21 ([S]ection 1346 should be invalidated as unlawfully vague on its face.). [27] It has long been our practice, however, before striking a federal statute as impermissibly vague, to consider whether the prescription is amenable to a limiting construction. See, e.g., Hooper v. California, 155 U.S. 648, 657, 15 S.Ct. 207, 39 L.Ed. 297 (1895) (The elementary rule is that every reasonable construction must be resorted to, in order to save a statute from unconstitutionality. (emphasis added)). See also Boos v. Barry, 485 U.S. 312, 330-331, 108 S.Ct. 1157, 99 L.Ed.2d 333 (1988); Schneider v. Smith, 390 U.S. 17, 26, 88 S.Ct. 682, 19 L.Ed.2d 799 (1968).FN40 We have accordingly instructed *2930 the federal courts ... to avoid constitutional difficulties by [adopting a limiting interpretation] if such a construction is fairly possible. Boos, 485 U.S., at 331, 108 S.Ct. 1157; see United States v. Harriss, 347 U.S. 612, 618, 74 S.Ct. 808, 98 L.Ed. 989 (1954) ([I]f the general class of offenses to which the statute is directed is plainly within its terms, the statute will not be struck down as vague .... And if this general class of offenses can be made constitutionally definite by a reasonable construction of the statute, this Court is under a duty to give the statute that construction.). FN40. This cardinal principle has its roots in Chief Justice Marshall's opinion for the Court in Murray v. The Charming Betsy, 2 Cranch 64, 118, 2 L.Ed. 208 (1804), and has for so long been applied by this Court that it is beyond debate. Edward J. DeBartolo Corp. v. Florida Gulf Coast Building & Constr. Trades Council, 485 U.S. 568, 575, 108 S.Ct. 1392, 99 L.Ed.2d 645 (1988) . See, e.g., New York v. Ferber, 458 U.S. 747, 769, n. 24, 102 S.Ct. 3348, 73 L.Ed.2d 1113 (1982); NLRB v. Catholic Bishop of Chicago, 440 U.S. 490, 500-501, 99 S.Ct. 1313, 59 L.Ed.2d 533 (1979); United States v. ThirtySeven Photographs, 402 U.S. 363, 368-370, 91 S.Ct. 1400, 28 L.Ed.2d 822 (1971) ; Machinists v.

Street, 367 U.S. 740, 749-750, 81 S.Ct. 1784, 6 L.Ed.2d 1141 (1961) ; United States v. Rumely, 345 U.S. 41, 45, 73 S.Ct. 543, 97 L.Ed. 770 (1953); Winters v. New York, 333 U.S. 507, 517, 68 S.Ct. 665, 92 L.Ed. 840 (1948); Crowell v. Benson, 285 U.S. 22, 62, 52 S.Ct. 285, 76 L.Ed. 598 (1932); Lucas v. Alexander, 279 U.S. 573, 577, 49 S.Ct. 426, 73 L.Ed. 851 (1929); Richmond Screw Anchor Co. v. United States, 275 U.S. 331, 346, 48 S.Ct. 194, 72 L.Ed. 303 (1928) ; Panama R. Co. v. Johnson, 264 U.S. 375, 390, 44 S.Ct. 391, 68 L.Ed. 748 (1924); United States ex rel. Attorney General v. Delaware & Hudson Co., 213 U.S. 366, 407-408, 29 S.Ct. 527, 53 L.Ed. 836 (1909); United States v. Coombs, 12 Pet. 72, 76, 9 L.Ed. 1004 (1838) (Story, J.); Parsons v. Bedford, 3 Pet. 433, 448-449, 7 L.Ed. 732 (1830) (Story, J.). Cf. Chaplinsky v. New Hampshire, 315 U.S. 568, 573, 62 S.Ct. 766, 86 L.Ed. 1031 (1942) (statute made it criminal to address any offensive, derisive, or annoying word to any person in a public place; vagueness obviated by state-court construction of the statute to cover only words having a direct tendency to cause acts of violence by the addressee (internal quotation marks omitted)). Arguing against any limiting construction, Skilling contends that it is impossible to identify a salvageable honest-services core; the pre- McNally caselaw, he asserts, is a hodgepodge of oft-conflicting holdings that are hopelessly unclear. Brief for Petitioner 39 (some capitalization and italics omitted). We have rejected an argument of the same tenor before. In Civil Service Comm'n v. Letter Carriers, federal employees challenged a provision of the Hatch Act that incorporated earlier decisions of the United States Civil Service Commission enforcing a similar law. [T]he several thousand adjudications of the Civil Service Commission, the employees maintained, were an impenetrable jungle-undiscoverable, inconsistent, [and] incapable of yielding any meaningful rules to govern present or future conduct. 413 U.S., at 571, 93 S.Ct. 2880. Mindful that our task [wa]s not to destroy the Act if we c[ould], but to construe it, we held that the rules that had evolved over the years from repeated adjudications were subject to sufficiently clear and summary statement. Id., at 571-572, 93 S.Ct. 2880. A similar observation may be made here. Although some applications of the pre- McNally honest-services doctrine occasioned disagreement among the Courts of Appeals, these cases do not cloud the doctrine's solid core: The vast majority of the honest-services cases involved offenders who, in violation of a fiduciary duty, participated in bribery or kickback schemes. United States v. Runnels, 833 F.2d 1183, 1187 (C.A.6 1987); see Brief for United States 42, and n. 4 (citing dozens of examples).FN41 Indeed, the McNally case *2931 itself, which spurred Congress to enact 1346, presented a paradigmatic kickback fact pattern. 483 U.S., at 352-353, 360, 107 S.Ct. 2875. Congress' reversal of McNally and reinstatement of the honest-services doctrine, we conclude, can and should be salvaged by confining its scope to the core pre- McNally applications. FN41. Justice SCALIA emphasizes divisions in the Courts of Appeals regarding the source and scope of fiduciary duties. Post, at 2936-2937. But these debates were rare in bribe and kickback cases. The existence of a fiduciary relationship, under any definition of that term, was usually beyond dispute; examples include public official-public, see, e.g., United States v. Mandel, 591 F.2d 1347 (C.A.4 1979); employee-employer, see, e.g., United States v. Bohonus, 628 F.2d 1167 (C.A.9 1980); and union official-union members, see, e.g., United States v. Price, 788 F.2d 234 (C.A.4 1986). See generally Chiarella v. United States, 445 U.S. 222, 233, 100 S.Ct. 1108, 63 L.Ed.2d 348 (1980) (noting the established doctrine that [a fiduciary] duty arises from a specific relationship between two parties). As already noted, supra, at 2926-2927, the honest-services doctrine had its genesis in prosecutions involving bribery allegations. See Shushan, 117 F.2d, at 115 (public sector); Procter & Gamble Co., 47 F.Supp., at 678 (private sector). See also United States v. Orsburn, 525 F.3d 543, 546 (C.A.7 2008). Both before McNally and after 1346's enactment, Courts of Appeals described schemes involving bribes or kickbacks as core ... honest services fraud precedents, United States v. Czubinski, 106 F.3d 1069, 1077 (C.A.1 1997); paradigm case[s], United States v. deVegter, 198 F.3d 1324, 1327-1328 (C.A.11 1999); [t]he most obvious form of honest services fraud, United States v. Carbo, 572 F.3d 112, 115 (C.A.3 2009); core misconduct covered by the statute, United States v. Urciuoli, 513 F.3d 290, 294 (C.A.1 2008); most [of the] honest services cases, United States v. Sorich, 523 F.3d 702, 707 (C.A.7 2008); typical, United States v. Brown, 540 F.2d 364, 374 (C.A.8 1976); clear-cut, United States v. Mandel, 591 F.2d 1347, 1363 (C.A.4 1979); and uniformly ... cover[ed], United States v. Paradies, 98 F.3d 1266, 1283, n. 30 (C.A.11 1996). See also Tr. of Oral Arg. 43 (counsel for the Government) ([T]he bulk of pre- McNally honest services cases entailed bribes or kickbacks);

Brief for Petitioner 49 (Bribes and kickbacks were the paradigm [pre- McNally ] cases, constituting [t]he overwhelming majority of prosecutions for honest services fraud.). [28][29] In view of this history, there is no doubt that Congress intended 1346 to reach at least bribes and kickbacks. Reading the statute to proscribe a wider range of offensive conduct, we acknowledge, would raise the due process concerns underlying the vagueness doctrine.FN42 To preserve the statute without transgressing constitutional limitations, we now hold that 1346 criminalizes only the bribe-and-kickback core of the preMcNally case law.FN43 FN42. Apprised that a broader reading of 1346 could render the statute impermissibly vague, Congress, we believe, would have drawn the honest-services line, as we do now, at bribery and kickback schemes. Cf. Levin v. Commerce Energy, Inc., 560 U.S. ----, ----, 130 S.Ct. 2323, ----, 176 L.Ed.2d 1131 (2010) (slip op., at 11) ([C]ourts may attempt ... to implement what the legislature would have willed had it been apprised of the constitutional infirmity.); United States v. Booker, 543 U.S. 220, 246, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005) (We seek to determine what Congress would have intended in light of the Court's constitutional holding.). FN43. Justice SCALIA charges that our construction of 1346 is not interpretation but invention. Post, at 2939. Stating that he know [s] of no precedent for ... paring down the pre- McNally case law to its core, ibid., he contends that the Court today wield[s] a power we long ago abjured: the power to define new federal crimes, post, at 2935. See also, e.g., post, at 2939, 2940, 2940-2941. As noted supra, at 2929-2930, and n. 40, cases paring down federal statutes to avoid constitutional shoals are legion. These cases recognize that the Court does not legislate, but instead respects the legislature, by preserving a statute through a limiting interpretation. See United States v. Lanier, 520 U.S. 259, 267-268, n. 6, 117 S.Ct. 1219, 137 L.Ed.2d 432 (1997) (This Court does not create a common law crime by adopting a narrow[ing] constru[ction]. (internal quotation marks omitted)); supra, at 2931, n. 42. Given that the Courts of Appeals uniformly recognized bribery and kickback schemes as honest-services fraud before McNally, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292, and that these schemes composed the lion's share of honest-services cases, limiting 1346 to these heartland applications is surely fairly possible. Boos v. Barry, 485 U.S. 312, 331, 108 S.Ct. 1157, 99 L.Ed.2d 333 (1988); cf. Clark v. Martinez, 543 U.S. 371, 380, 125 S.Ct. 716, 160 L.Ed.2d 734 (2005) (opinion of the Court by SCALIA, J.) (when adopting a limiting construction, [t]he lowest common denominator, as it were, must govern). So construed, the statute is not unconstitutionally vague. See infra, at 2933-2934; post, at 2938. Only by taking a wrecking ball to a statute that can be salvaged through a reasonable narrowing interpretation would we act out of step with precedent. *2932 3 [30] The Government urges us to go further by locating within 1346's compass another category of proscribed conduct: undisclosed self-dealing by a public official or private employee-i.e., the taking of official action by the employee that furthers his own undisclosed financial interests while purporting to act in the interests of those to whom he owes a fiduciary duty. Id., at 2930-2931. [T]he theory of liability in McNally itself was nondisclosure of a conflicting financial interest, the Government observes, and Congress clearly intended to revive th[at] nondisclosure theory. Id., at 2931. Moreover, [a]lthough not as numerous as the bribery and kickback cases, the Government asserts, the pre- McNally cases involving undisclosed self-dealing were abundant. Ibid. Neither of these contentions withstands close inspection. McNally, as we have already observed, supra, at 2927, 2930, involved a classic kickback scheme: A public official, in exchange for routing Kentucky's insurance business through a middleman company, arranged for that company to share its commissions with entities in which the official held an interest. 483 U.S., at 352-353, 360, 107 S.Ct. 2875. This was no mere failure to disclose a conflict of interest; rather, the official conspired with a third party so that both would profit from wealth generated by public contracts. See id., at 352-353, 107 S.Ct. 2875. Reading 1346 to proscribe bribes and kickbacks-and nothing more-satisfies Congress' undoubted aim to reverse McNally on its facts. [31] Nor are we persuaded that the pre- McNally conflict-of-interest cases constitute core applications of the honest-services doctrine. Although the Courts of Appeals upheld honest-services convictions for some

schemes of non-disclosure and concealment of material information, Mandel, 591 F.2d, at 1361, they reached no consensus on which schemes qualified. In light of the relative infrequency of conflict-of-interest prosecutions in comparison to bribery and kickback charges, and the intercircuit inconsistencies they produced, **we conclude that a reasonable limiting construction of 1346 must exclude this amorphous category of cases. [32] Further dispelling doubt on this point is the familiar principle that ambiguity concerning the ambit of criminal statutes should be resolved in favor of lenity. Cleveland, 531 U.S., at 25, 121 S.Ct. 365 (quoting Rewis v. United States, 401 U.S. 808, 812, 91 S.Ct. 1056, 28 L.Ed.2d 493 (1971) ). **This interpretive guide is especially appropriate in construing [ 1346] because ... mail [and wire] fraud [are] predicate offense[s] under [the Racketeer Influenced and Corrupt Organizations Act], 18 U.S.C. 1961(1) (1994 ed., Supp. IV), and the money laundering statute, 1956(c)(7)(A). *2933Cleveland, 531 U.S., at 25, 121 S.Ct. 365. Holding that honest-services fraud does not encompass conduct more wide-ranging than the paradigmatic cases of bribes and kickbacks, we resist the Government's less constrained construction absent Congress' clear instruction otherwise. E.g., United States v. Universal C.I.T. Credit Corp., 344 U.S. 218, 221-222, 73 S.Ct. 227, 97 L.Ed. 260 (1952). In sum, our construction of 1346 establish[es] a uniform national standard, define[s] honest services with clarity, reach[es] only seriously culpable conduct, and accomplish[es] Congress's goal of overruling McNally. Brief for Albert W. Alschuler as Amicus Curiae in Weyhrauch v. United States, O.T.2009, No. 08-1196, pp. 2829. If Congress desires to go further, we reiterate, it must speak more clearly than it has. McNally, 483 U.S., at 360, 107 S.Ct. 2875.FN44 FN44. If Congress were to take up the enterprise of criminalizing undisclosed self-dealing by a public official or private employee, Brief for United States 43, it would have to employ standards of sufficient definiteness and specificity to overcome due process concerns. The Government proposes a standard that prohibits the taking of official action by the employee that furthers his own undisclosed financial interests while purporting to act in the interests of those to whom he owes a fiduciary duty, so long as the employee acts with a specific intent to deceive and the undisclosed conduct could influence the victim to change its behavior. Id., at 43-44. See also id., at 40-41. That formulation, however, leaves many questions unanswered. How direct or significant does the conflicting financial interest have to be? To what extent does the official action have to further that interest in order to amount to fraud? To whom should the disclosure be made and what information should it convey? These questions and others call for particular care in attempting to formulate an adequate criminal prohibition in this context. 4 [33][34] Interpreted to encompass only bribery and kickback schemes, 1346 is not unconstitutionally vague. Recall that the void-for-vagueness doctrine addresses concerns about (1) fair notice and (2) arbitrary and discriminatory prosecutions. See Kolender, 461 U.S., at 357, 103 S.Ct. 1855. A prohibition on fraudulently depriving another of one's honest services by accepting bribes or kickbacks does not present a problem on either score. As to fair notice, whatever the school of thought concerning the scope and meaning of 1346, it has always been as plain as a pikestaff that bribes and kickbacks constitute honest-services fraud, Williams v. United States, 341 U.S. 97, 101, 71 S.Ct. 576, 95 L.Ed. 774 (1951) , and the statute's mens rea requirement further blunts any notice concern, see, e.g., Screws v. United States, 325 U.S. 91, 101-104, 65 S.Ct. 1031, 89 L.Ed. 1495 (1945) (plurality opinion). See also Broadrick v. Oklahoma, 413 U.S. 601, 608, 93 S.Ct. 2908, 37 L.Ed.2d 830 (1973) ([E]ven if the outermost boundaries of [a statute are] imprecise, any such uncertainty has little relevance ... where appellants' conduct falls squarely within the hard core of the statute's proscriptions.). Today's decision clarifies that no other misconduct falls within 1346's province. See United States v. Lanier, 520 U.S. 259, 266, 117 S.Ct. 1219, 137 L.Ed.2d 432 (1997) ([C]larity at the requisite level may be supplied by judicial gloss on an otherwise uncertain statute.). As to arbitrary prosecutions, we perceive no significant risk that the honest-services statute, as we interpret it today, will be stretched out of shape. Its prohibition on bribes and kickbacks draws content not only from the

pre- McNally case law, but also from federal statutes proscribing-and defining-similar crimes. See, e.g., 18 U.S.C. 201(b), 666(a)(2); 41 U.S.C. 52(2) (The term kickback *2934 means any money, fee, commission, credit, gift, gratuity, thing of value, or compensation of any kind which is provided, directly or indirectly, to [enumerated persons] for the purpose of improperly obtaining or rewarding favorable treatment in connection with [enumerated circumstances].).FN45 See also, e.g., United States v. Ganim, 510 F.3d 134, 147149 (C.A.2 2007) (Sotomayor, J.) (reviewing honest-services conviction involving bribery in light of elements of bribery under other federal statutes); United States v. Whitfield, 590 F.3d 325, 352-353 (C.A.5 2009); United States v. Kemp, 500 F.3d 257, 281-286 (C.A.3 2007). A criminal defendant who participated in a bribery or kickback scheme, in short, cannot tenably complain about prosecution under 1346 on vagueness grounds. FN45. Overlap with other federal statutes does not render 1346 superfluous. The principal federal bribery statute, 201, for example, generally applies only to federal public officials, so 1346's application to state and local corruption and to private-sector fraud reaches misconduct that might otherwise go unpunished. C [35] It remains to determine whether Skilling's conduct violated 1346. Skilling's honest-services prosecution, the Government concedes, was not prototypical. Brief for United States 49. The Government charged Skilling with conspiring to defraud Enron's shareholders by misrepresenting the company's fiscal health, thereby artificially inflating its stock price. It was the Government's theory at trial that Skilling profited from the fraudulent scheme ... through the receipt of salary and bonuses, ... and through the sale of approximately $200 million in Enron stock, which netted him $89 million. Id., at 51. **The Government did not, at any time, allege that Skilling solicited or accepted side payments from a third party in exchange for making these misrepresentations. See Record 41328 (May 11, 2006 Letter from the Government to the District Court) ([T]he indictment does not allege, and the government's evidence did not show, that [Skilling] engaged in bribery.). It is therefore clear that, as we read 1346, Skilling did not commit honest-services fraud. [36] Because the indictment alleged three objects of the conspiracy-**honest-services wire fraud, **money-orproperty wire fraud, and **securities fraud-Skilling's conviction is flawed. See Yates v. United States, 354 U.S. 298, 77 S.Ct. 1064, 1 L.Ed.2d 1356 (1957) (constitutional error occurs when a jury is instructed on alternative theories of guilt and returns a general verdict that may rest on a legally invalid theory). This determination, however, does not necessarily require reversal of the conspiracy conviction; we recently confirmed, in Hedgpeth v. Pulido, 555 U.S. ----, 129 S.Ct. 530, 172 L.Ed.2d 388 (2008) (per curiam), that errors of the Yates variety are subject to harmless-error analysis. The parties vigorously dispute whether the error was harmless. Compare Brief for United States 52 ([A]ny juror who voted for conviction based on [the honest-services theory] also would have found [Skilling] guilty of conspiring to commit securities fraud.) with Reply Brief 30 (The Government cannot show that the conspiracy conviction rested only on the securities-fraud theory, rather than the distinct, legally-flawed honest-services theory.). We leave this dispute for resolution on remand.FN46 FN46. The Fifth Circuit appeared to prejudge this issue, noting that, if any of the three objects of Skilling's conspiracy offers a legally insufficient theory, it must set aside his conviction. 554 F.3d, at 543. That reasoning relied on the mistaken premise that Hedgpeth v. Pulido, 555 U.S. ----, 129 S.Ct. 530, 172 L.Ed.2d 388 (2008) (per curiam), governs only cases on collateral review. See 554 F.3d, at 543, n. 10. Harmless-error analysis, we clarify, applies equally to cases on direct appeal. Accordingly, the Fifth Circuit, on remand, should take a fresh look at the parties' harmless-error arguments. *2935 Whether potential reversal on the conspiracy count touches any of Skilling's other convictions is also an open question. All of his convictions, Skilling contends, hinged on the conspiracy count and, like dominoes, must fall if it falls. The District Court, deciding Skilling's motion for bail pending appeal, found this argument dubious, App. 1141a-1142a, but the Fifth Circuit had no occasion to rule on it. That court may do so on remand. ***

For the foregoing reasons, we affirm the Fifth Circuit's ruling on Skilling's fair-trial argument, vacate its ruling on his conspiracy conviction, and remand the case for proceedings consistent with this opinion. It is so ordered. Justice SCALIA, with whom Justice THOMAS joins, and with whom Justice KENNEDY joins except as to Part III, concurring in part and concurring in the judgment. U.S. v. Gorman, 807 F.2d 1299, 1301, (6th Cir.(Ohio),Dec 23, 1986) If others, including banks, are convicted of participating in criminal activity which harmed the creditors, creditors could seek recovery from such parties. In civil suits, a bank's criminal conviction could be introduced under the doctrine of collateral estoppel, thus making the only remaining issue that of damages. Thus, threats of criminal action against a bank are an effective lever in forcing a settlement in a civil bankruptcy suit, as a bank may choose to settle in order to avoid a measure of culpability, or just in an attempt to avoid the adverse publicity associated with a criminal investigation.

Judge Robinson, Judge Gannon, Judge Larsch received money and loans in return for fixing cases Need to discover updated title records of Robinson, Gannon, Larsch to see if they have more loans, do asset search to see if they have stocks from WELLS FARGO, or given money from WELLS FARGO or intermediaries both individuals and/or companies The citizens of California were defrauded of Gannons honest and faithful services as judge. Gannon defrauded the citizens of the State of California of their intangible right to Gannons honest and faithful services as judge. Whoevever promises offers or gives or causes or procures to be promised offered or given any money or thing of value, or makes or tenders any contract, undertaking, obligation, credit, or security for the payment of money or for the delivery or conveyance of anything of value to any judge, with intent to influence the decision of any such person on any question, cause or proceeding or with intent to influence him to commit or aid in committing or to collude in or allow any fraud or make any opportunity for the commission of fraud shall be fined Siegel v. U.S. 61 F.2d 923, 923(App.D.C. Nov 07, 1932)
..improper personal financial gain. The indictment refers to the benefits that HOLCK and UMBRELL extended to Kemp with the intent to influence KEMP's official actions (App. at 491), and charges that defendants GLENN K. HOLCK and STEPHEN M. UMBRELL, on behalf of their employer, Commerce Bank, provided benefits to Kemp in the form of otherwise unavailable loans in exchange for favorable decisions by KEMP as Treasurer of Philadelphia (App. at 554). These allegations were sufficient to charge Holck and Umbrell with honest services fraud under a bribery theory, plainly alleged honest services fraud, *398 charging Holck and Umbrell with engaging in a scheme to defraud the City of Philadelphia and its citizens of the right to defendant COREY KEMP'S honest services in the affairs

of the City of Philadelphia. **The citizens of Illinois were defrauded of Kerner's honest and faithful services as governor. From Ryan v. U.S.

Stocks are something of value that he received in return for an official action or lack of official action on part of a public official.
The word corruptly imports a wrongful design to acquire or cause some pecuniary or other advantage to the person guilty of the act or omission referred to, or to some other person. Cal.Penal Code 7(3).

In order to cause a pecuniary advantage to be given to the payor To deprive of money and property Performing official actions to benefit the financial interests of WELLS FARGO Accepted bribes in exchange for his intervention. (Ryan at p. 21.)
The instructions, too, explained that the phrase intent to defraud means that the acts charged were done knowingly with the intent to deceive or cheat the people of the State of Illinois in order to cause a gain of money or property to the defendants or others, or the potential loss of money or property to another. (Id at p. 27.)

Sold his position in breach of his duty of honest services to the public in violation, not on the basis of merit, not on the basis on the rule of law, but to benefit the payor, but to the gain of the payor, in violation of state and federal law. In return for giving them property that they are not entitled to, taking actions favorable to the payor. That they are not entitled to, not on the basis of merit, not on the basis of rule of law, but to the illegal profit of the payor. To turn the office of the courts into an illicit relationship of a criminal enterprise, to the private gain of WELLS FARGO Into one that does not serve public justice, but to pervert and obstruct justice, and to turn the relationship between payor and payee into one of private gain, into an scheme to defraud that included conduct that violated California Penal law. the office of a judge, the holder of the office of a judge, Scheme to deprive the citizens and people of the state of California, the right to honest public services To turn the office of the courts into an illicit relationship of a criminal enterprise that perverts and obstructs justice in a scheme to defraud the people of the State of California the right of honest public services To defraud the people of the State of California by depriving them

of their right to honest services of Judges of the State Superior Court in Orange County, in several counties of California. To defraud the People of the State of California by depriving them of their right to honest services of a judge of the State Superior Court in Orange County, in several counties in California free from bribery, corruption, bias, dishonesty, deceit, official misconduct and fraud. Based on the lawful authority of the Constitution In violation of the lawful authority of the Constitution or Laws of the United States and in violation of the Penal Code of the State of California in violation of the lawful authority of the Constitution or Laws of the State of California including the Penal Code of the State of California. And acts that constitute criminal offenses under both Title 18 of the United States Code and the Penal Code of the State of California. In violation of federal criminal statutes, and state criminal statutes. mail fraud scheme 18 U.S.C. 1341 to pervert and obstruct justice in the state court, to file and mail false Form 700 Economic Disclosure. How would this fraud cause damage to business or property?
they devised scheme or artifice to defraud another of money or property or obtain money or property by means of false pretenses, representations or promises [ U.S. v. Dischner, 974 F.2d 1502 (9th Cir.(Alaska) Apr 03, 1992)] Moreover, even the scope of coverage by 1346 detailed by Senator Biden indicates that the activities alleged in the indictment are sufficiently covered: bribes, kickbacks, and conflicts of interest. The indictment charges the defendants with scheming to defraud the public through bribery, undue influence, and deceit. The pattern of undue influence and deceit is one of severe conflicts of interest. As used in Sections 1341 and 1343, the term defraud includes the defrauding of the citizens of a body politic (2) of their right to have the public business conducted honestly, impartially, free from bribery, corruption, bias, dishonesty, deceit, official misconduct and fraud. Under the amendment, those statutes will protect any person's intangible right to the honest services of another, including the right of the public to the honest services of public officials The intent is to reinstate all of the pre-McNally case law pertaining to the mail and wire fraud statutes without change. [on 18 U.S.C. 1346, U.S. v. Frega, 933 F.Supp. 1536, 1544 (S.D.Cal.,Jul 09, 1996)] The mail fraud counts are based on an alleged scheme to defraud the people of the State of California by depriving them of their right to the honest services of Judges of the State Superior Court in San Diego County performed free from bribery, undue influence, and deceit Official acts of a judge are those that are done by the judge in his official capacity under color and by virtue of his office or which properly belong to the office and are intended by the officer to be official schemed to deprive the citizens of the city of his honest services

Federal mail fraud statute reached intangible right of honest public services and thus, it applied to prosecution of California Superior Court judges and attorney, alleging that attorney gave gifts, which judges accepted, with intent to influence judges in cases that they presided over and in which attorney was counsel of record, and that various mailings were used to further scheme U.S. v. Brumley, 116 F.3d 728, 735, (5th Cir.(Tex.),Jun 18, 1997) Instead, the district court found a scheme to defraud that included conduct that *736 violated Texas penal law. Ryan v. U.S., 2010 WL 5495015, RICO Bus.Disp.Guide 11,987 (N.D.Ill.,Dec 21, 2010) Background: Defendant, a former Illinois governor, was convicted in the United States District Court for the Northern District of Illinois, Rebecca R. Pallmeyer, J., 2006 WL 2583722, of honest services mail fraud and violations of Racketeer Influenced and Corrupt Organizations Act (RICO), and he appealed. The Court of Appeals, Wood, Circuit Judge, 498 F.3d 666, entered order affirming convictions, and defendant moved to vacate, set aside, or correct his sentence. Holdings: The District Court, Rebecca R. Pallmeyer, J., held that: (1) jury instruction improperly asserted that scheme of self-dealing by itself violated honest services mail fraud statute; (2) district court's errors in instructing jury on honest services mail fraud were harmless; and (3) evidence was sufficient to sustain mail fraud conviction. Motion denied. [1] Criminal Law 110 1172.1(3)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1172 Instructions 110k1172.1 In General 110k1172.1(2) Particular Instructions 110k1172.1(3) k. Elements and incidents of offense; definitions. Most Cited Cases Even if an instructional error has occurred as to some element of the charged crime, reversal of a conviction is required only if the instructions, viewed as a whole, misguide the jury to the defendant's prejudice. [2] Postal Service 306 50

306 Postal Service 306III Offenses Against Postal Laws 306k50 k. Trial and review. Most Cited Cases Jury instruction in prosecution for honest services mail fraud, declaring that public official defrauds public of his honest services by misusing his official position for private gain, improperly asserted that scheme of selfdealing by itself violated statute of offense. 18 U.S.C.A. 1346. [3] Postal Service 306 50

306 Postal Service 306III Offenses Against Postal Laws 306k50 k. Trial and review. Most Cited Cases Jury instruction in prosecution for honest services mail fraud, declaring that public official has duty to not accept personal and financial benefits with understanding that he would perform or not perform acts in his

official capacity in return, did not improperly assert that duty to not accept bribes and kickbacks was only one of duties the violation of which could lead to conviction. 18 U.S.C.A. 1346. [4] Postal Service 306 50

306 Postal Service 306III Offenses Against Postal Laws 306k50 k. Trial and review. Most Cited Cases Jury instruction in prosecution for honest services mail fraud, declaring that public official commits the offense by accepting personal and financial benefits with understanding that he would perform or not perform acts in his official capacity in return, did not improperly eliminate offense's quid pro quo requirement. 18 U.S.C.A. 1346. [5] Postal Service 306 50

306 Postal Service 306III Offenses Against Postal Laws 306k50 k. Trial and review. Most Cited Cases Jury instruction in prosecution for honest services mail fraud, declaring that providing of personal or financial benefits by private citizen for benefit of public official did not, standing alone, violate statute of offense so long as benefits were not intended to influence official's exercise of office, did not improperly assert that gratuities might serve to violate statute as well as bribes. 18 U.S.C.A. 1346. [6] Postal Service 306 50

306 Postal Service 306III Offenses Against Postal Laws 306k50 k. Trial and review. Most Cited Cases Jury instruction in prosecution for honest services mail fraud, declaring that public official defrauds public of his honest services by concealing or failing to disclose material personal or financial interests, improperly asserted that conflict of interest by itself violated statute of offense. 18 U.S.C.A. 1346. [7] Criminal Law 110 1172.1(3)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1172 Instructions 110k1172.1 In General 110k1172.1(2) Particular Instructions 110k1172.1(3) k. Elements and incidents of offense; definitions. Most Cited Cases **District court's errors in instructing jury that self-dealing and conflict of interest by public official alone constituted honest services mail fraud were harmless; government presented direct evidence of stream of benefits flowing between defendant, a former Illinois governor, and private citizen, and court instructed jury that no offense occurred if defendant received those benefits without intent to be influenced. 18 U.S.C.A. 1346. [8] Postal Service 306 35(2)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud

306k35(2) k. Nature and elements of offense in general. Most Cited Cases The elements of mail fraud are: (1) a scheme to defraud entailing a material misrepresentation, (2) an intent to defraud, and (3) the use of the mails. 18 U.S.C.A. 1341. [9] Postal Service 306 49(11)

306 Postal Service 306III Offenses Against Postal Laws 306k49 Evidence 306k49(8) Weight and Sufficiency 306k49(11) k. Use of mails to defraud. Most Cited Cases **Evidence was sufficient to sustain conviction for mail fraud under pecuniary loss theory; defendant, a former Illinois governor, took official actions favorable to private citizen, including the awarding of state contracts that were not in State's best interest, and citizen reciprocated with stream of benefits to defendant. 18 U.S.C.A. 1341. [10] Postal Service 306 35(9)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(9) k. Injury from fraud. Most Cited Cases The mail fraud statute does not require the government to prove either contemplated harm to the victim or any loss. 18 U.S.C.A. 1341. [11] Criminal Law 110 1144.13(3)

110 Criminal Law 110XXIV Review 110XXIV(M) Presumptions 110k1144 Facts or Proceedings Not Shown by Record 110k1144.13 Sufficiency of Evidence 110k1144.13(2) Construction of Evidence 110k1144.13(3) k. Construction in favor of government, state, or prosecution. Most Cited Cases Criminal Law 110 1144.13(5)

110 Criminal Law 110XXIV Review 110XXIV(M) Presumptions 110k1144 Facts or Proceedings Not Shown by Record 110k1144.13 Sufficiency of Evidence 110k1144.13(5) k. Inferences or deductions from evidence. Most Cited Cases Criminal Law 110 1159.2(2)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(2) k. Verdict unsupported by evidence or contrary to evidence. Most Cited Cases

Criminal Law 110

1159.4(2)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.4 Credibility of Witnesses 110k1159.4(2) k. Province of jury or trial court. Most Cited Cases To determine whether the evidence is sufficient to support a conviction, the Court of Appeals views the evidence and all reasonable inferences derived therefrom in the light most favorable to the government, defers to the jury's credibility determinations, and overturns a verdict only when the record contains no evidence, regardless of how it is weighed, from which the jury could find guilt beyond a reasonable doubt. [12] Postal Service 306 49(11)

306 Postal Service 306III Offenses Against Postal Laws 306k49 Evidence 306k49(8) Weight and Sufficiency 306k49(11) k. Use of mails to defraud. Most Cited Cases Evidence was sufficient to sustain conviction for honest services mail fraud; defendant, a former Illinois governor, took official actions favorable to private citizen, including the awarding of state contracts, and **citizen reciprocated with stream of benefits to defendant, including fundraisers. 18 U.S.C.A. 1346. [13] Postal Service 306 49(5)

306 Postal Service 306III Offenses Against Postal Laws 306k49 Evidence 306k49(2) Admissibility 306k49(5) k. Use of mails to defraud. Most Cited Cases **Evidence that defendant, a former Illinois governor, accepted gifts in excess of $50 limit established by State regulations was admissible in prosecution for honest services mail fraud; **evidence was relevant to defendant's intent to defraud. 18 U.S.C.A. 1346. [14] Postal Service 306 49(5)

306 Postal Service 306III Offenses Against Postal Laws 306k49 Evidence 306k49(2) Admissibility 306k49(5) k. Use of mails to defraud. Most Cited Cases Evidence that defendant, a former Illinois governor, allowed private citizen to assign low-digit license plates to his friends was admissible in prosecution for honest services mail fraud; evidence was relevant to stream of benefits that flowed between defendant and citizen. 18 U.S.C.A. 1346. [15] Criminal Law 110 1169.1(7)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error

110k1169 Admission of Evidence 110k1169.1 In General 110k1169.1(7) k. Immaterial or incompetent evidence in general. Most Cited Cases In prosecution for honest services mail fraud, trial court's error in admitting evidence that defendant, a former Illinois governor, allowed government employees to work on his campaign staff was harmless; prosecution's case would not have been significantly less persuasive if evidence had been excluded in light of evidence of stream of benefits following between defendant and private citizen. 18 U.S.C.A. 1346. MEMORANDUM OPINION AND ORDER REBECCA R. PALLMEYER, District Judge. *1 In April 2006, George H. Ryan, Sr., once Governor of Illinois, was convicted of **racketeering, **mail fraud, **making false statements to the FBI, and **tax violations. This court sentenced him to a prison term of 78 months, a sentence he is now serving. Ryan's conviction was affirmed by a divided Seventh Circuit and, after that court denied rehearing en banc, the Supreme Court denied certiorari. Earlier this year, however, the Supreme Court decided Skilling v. United States, --- U.S. ----, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010) , which imposed limits on the scope of the honest services mail fraud theory under which Ryan was convicted. In the wake of Skilling, Mr. Ryan has filed a petition pursuant to 28 U.S.C. 2255. He urges that his mail fraud and RICO convictions must be overturned, and has asked the court to vacate, set aside, or correct his sentence to reflect the interpretation of the mail fraud statute articulated in Skilling. Ryan also asks the court to release him on bail pending the ultimate resolution of this motion. For the reasons described herein, the court denies Ryan's motion to vacate, set aside, or correct his sentence, and denies Ryan's motion to set bail. BACKGROUND On April 17, 2006, following a six-month trial, a jury convicted George Ryan of conspiring to use the resources of the State of Illinois for his personal and financial benefit in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(d); devising a scheme to defraud the people of the State of Illinois and the State of Illinois of money, property, and the right to his honest services, in violation of the federal mail fraud statute, 18 U.S.C. 1341, 1346; **making false statements to the FBI, 18 U.S.C. 1001(a)(2); **obstructing the Internal Revenue Service, 26 U.S.C. 7212(a); and **filing materially false tax returns, 26 U.S.C. 7206(1). See United States v. Warner, No. 02-cr-506, 2006 WL 2583722, at *1 (N.D.Ill. Sept. 7, 2006). The court set aside that verdict with respect to two mail fraud counts, id. at *12, but otherwise upheld the jury's determinations. Ryan's co-Defendant, Lawrence Warner, was convicted on related counts. On September 11, 2006, the court sentenced Ryan to 78 months on the racketeering count, 60 months on the mail fraud and false statement counts, and 36 months on the tax fraud counts, all to run concurrently. (Order [888] at 2.) FN1 The court also sentenced Ryan to one year of supervised release. (Id.) The Seventh Circuit upheld Ryan's conviction on appeal. United States v. Warner, 507 F.3d 508 (7th Cir.2007), cert. denied, 553 U.S. 1064, 128 S.Ct. 2500, 171 L.Ed.2d 786 (2008). Ryan began serving his sentence in November 2007, and has served approximately 36 months. (Order [984].) Because the facts of this case have been discussed at length in the court's previous opinions and in the Seventh Circuit,FN2 the court will not repeat them here. In June 2010, the Supreme Court decided Skilling v. United States, ---U.S. ----, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010). Vacating the conviction of Jeffrey Skilling on charges that grew out of the Enron collapse, the Supreme Court held there that honest services mail fraud encompasses only paradigmatic cases of bribes and kickbacks. 130 S.Ct. at 2933. Ryan brought this petition on August 31, 2010, pursuant to 28 U.S.C. 2255, which allows a federal prisoner to move the court which imposed the sentence to vacate, set aside or correct the sentence if his sentence was imposed in violation of the Constitution or laws of the United States. 28 U.S.C. 2255(a). A 2255 petition must be filed within one year of the date on which the right asserted was initially recognized by the Supreme Court, if that right has been newly recognized and made retroactively applicable to cases on collateral review. 28 U.S.C. 2255(f)(3). The Government agrees that the decision in Skilling re-sets the clock for filing of Ryan's post-conviction petition because it narrow[s] the scope of a criminal statute by interpreting its terms, and therefore announces a new substantive rule of criminal law. (Response Br. at 11 n. 5, quoting Schriro v. Summerlin, 542 U.S. 348, 351-52, 124 S.Ct. 2519, 159 L.Ed.2d 442 (2004)). DISCUSSION

*2 Ryan advances two grounds in support for his motion to vacate or set aside his mail fraud and RICO convictions. First, he urges that Skilling undermines the jury instructions: Because the court's jury instructions were erroneous under Skilling and the error was not harmless, Ryan's conviction and Sentence are unlawful. (Mot. to Vacate 14.) Second, Ryan urges that under the standard established in Skilling, the evidence is insufficient to support Ryan's mail fraud and RICO convictions .... (Id.) Because his conviction should be vacated, Ryan urges, he should be released immediately and admitted to bail. (Mot. to Set Bail 2.) Skilling is unquestionably relevant here and warrants examination of Ryan's conviction. That said, it is important to note that Skilling's appeal to the Supreme Court presented substantially different circumstances from those in Ryan's case. Skilling had been charged with conspiring to defraud Enron's shareholders by misrepresenting the company's fiscal health, thereby artificially inflating its stock price. Skilling, 130 S.Ct. at 2934. Skilling was prosecuted for these acts, characterized as depriving his private employer and its shareholders of the intangible right to his honest services, and the Supreme Court acknowledge[d] that Skilling's vagueness challenge has force. Id. at 2929. George Ryan, on the other hand, held statewide elected office, and as more fully described below, the conduct for which he was convicted-steering contracts, leases, and other governmental benefits in exchange for private gain-was well-recognized before his conviction as conduct that falls into the solid core of honest services fraud. Such conduct was identified by the Court in Skilling as the proper target of 1346. Id. at 2930-31. In response to Skilling's argument that the statute is void for vagueness, the Supreme Court acknowledged that due process requires any penal statute [to] define the criminal offense [1] with sufficient definiteness that ordinary people can understand what conduct is prohibited and [2] in a manner that does not encourage arbitrary and discriminatory enforcement. Id. at 2927-28 (quoting Kolender v. Lawson, 461 U.S. 352, 357, 103 S.Ct. 1855, 75 L.Ed.2d 903 (1983)). Ryan's current challenge does not rest on vagueness grounds, and the court believes that, in the language of Skilling, Ryan clearly understood what conduct was prohibited and could not have been surprised that he was subject to prosecution. Ryan's efforts to conceal his conduct from public scrutiny themselves demonstrate he knew it was improper. Indeed, long before George Ryan and his associates wrote this chapter in Illinois's distressing history of public corruption, one of Ryan's predecessors as Governor, Otto Kerner, was prosecuted under this same theory by an earlier United States Attorney.FN3 On direct appeal in this case, the Seventh Circuit acknowledged that the statute could be challenged if Defendants Ryan and Warner could not have known that the conduct underlying their convictions could be considered depriv[ing] another of the intangible right of honest services. United States v. Warner, 498 F.3d 666, 697 (7th Cir.2007) (quoting 18 U.S.C. 1346). As applied in this case, the Court of Appeals concluded, the statute is not unconstitutionally vague-a conclusion that drew no comment from the dissenting judge. *3 Four years ago, in writing about Ryan's prosecution, Professor Alschuler (who was not then one of Ryan's lawyers) asserted that the mail fraud and RICO statutes unfairly stack the deck in large part because the Government was allowed to present every allegation of criminal and non-criminal misconduct by Ryan and Warner that prosecutors have collected, and if some of the dirt they have thrown at the wall has stuck, [the jury] is likely to find the defendants guilty of the principal charges against them. 9 GREEN BAG 2D at 113. At oral argument on the motions before this court, Alschuler argued again that [a]ll of this evidence went into one churning cauldron. (Oral Arg. at 5.) Skilling, however, did not invalidate the honest services mail fraud statute, nor did it invalidate RICO. Skilling limited prosecutions under these statutes to bribery and kickback schemes-the very theory of prosecution under which Ryan was convicted. Skilling emphasized that when Congress reinstated the honest services mail fraud statute after it was invalidated by McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), the focus was on core or paradigmatic cases involving kickback or bribery schemes. The Skilling Court made several references to Shushan v. United States, 117 F.2d 110 (5th Cir.1941), as an example of the paradigmatic case that would survive its ruling. Skilling, 130 S.Ct. at 2926, 2931. Notably, our own Court of Appeals FN4 relied on Shushan when it upheld Otto Kerner's conviction, quoting this language: No trustee has more sacred duties than a public official and any scheme to obtain an advantage by corrupting such an one must in the federal law be considered a scheme to defraud.... A scheme to get a public contract on more favorable terms than would likely be got otherwise by bribing a public official would not only be a plan to commit the crime of bribery, but would also be a scheme to defraud the public.

United States v. Isaacs, 493 F.2d 1124, 1150 (7th Cir.1974) (quoting Shushan v. United States, 117 F.2d 110 (5th Cir.1941)). The Seventh Circuit then observed that this is precisely what occurred here. The citizens of Illinois were defrauded of Kerner's honest and faithful services as governor. 493 F.2d at 1151. Ryan's prosecution, like Kerner's before it, targeted conduct that remains at the core of honest services fraud. While Skilling did not comment directly on Ryan's case, it came close. In a particularly relevant section, the Court noted that the honest-services doctrine had its genesis in prosecutions involving bribery allegations. 130 S.Ct. at 2931 (citations omitted). That section cites United States v. Sorich, 523 F.3d 702, 707 (7th Cir.2008), for its language that these prosecutions constitute most [of the] honest services cases.... Sorich itself, in the section cited in Skilling states: Broadly speaking, honest services fraud cases come in two types. **In the first, an employer is defrauded of its employee's honest services by the employee or another.... **In the second and more common type of case, the citizenry is defrauded of its right to the honest services of a public servant, again, by that servant or by someone else. For instance, in United States v. Warner, 498 F.3d 666 (7th Cir.2007), the Illinois Secretary of State [Ryan] channeled state contracts and leases to a friend in return for paid vacations. In both examples above, and in most honest services cases, the defendant violates a fiduciary duty in return for cash-kickbacks, bribes, or other payments [payment in stocks]. *4 523 F.3d at 707. The Seventh Circuit and the Supreme Court have, thus, acknowledged that this case presents the paradigmatic type of case undisturbed by Skilling. This does not end our inquiry, of course, because neither court grappled with the details presented here. It does, however, suggest that in many cases, FN5 and in Ryan's case, Skilling was not the sea change that Ryan urges. Ryan's case warrants more examination because, rather than relying solely on a bribery theory, the Government chose also to present Ryan's mail fraud and RICO charges under a conflict-of-interest theory-the very same theory invalidated in Skilling. The result of this course of action is addressed below; for now, what matters is whether, in returning its verdict, the jury must have found those elements that would support a conviction under the still-valid honest services bribery theory. Further, the court must determine whether the instructions it gave the jury on the conflict-of-interest and related theories could have violated Ryan's substantial rights. As Ryan's attorneys argued repeatedly at trial, the conduct for which he and Warner were convicted does not fall into a plain-vanilla bribery fact pattern in which a suitcase of cash is exchanged for an official action. But Skilling does not say that it must. The method by which Ryan's co-schemers compensated him for official action requires a searching examination after Skilling, but as explained here, the conclusion that his conduct violates the law survives Skilling. This court's analysis begins by considering the jury instructions to determine whether they are incorrect, based on the holding in Skilling. If so, the court next examines whether the error was nevertheless harmless. The court proceeds to address the Government's contention that, even if the honest services charge in this case exceeds what is permissible after Skilling, the jury would nevertheless necessarily have convicted Ryan of pecuniary fraud. The court briefly examines Ryan's challenge to the sufficiency of the evidence; an in-depth examination is unnecessary because the harmless error standard requires more than the sufficiency-of-theevidence test. Finally, the court determines whether evidence introduced at trial would be barred in a postSkilling honest services prosecution, and whether the introduction of that evidence prejudiced Ryan and requires that his conviction be vacated. I. Harmless Error Review of Honest Services Mail Fraud Charges As noted, Ryan challenges the instructions given to the jury in this case. He argues that they improperly presented a theory of honest services fraud that is no longer valid after Skilling. He contends, further, that error in the instructions was not harmless and that the court must accordingly vacate Ryan's conviction on the mail fraud and RICO counts. A. Standard of Review Error in jury instructions does not automatically require that a conviction be vacated. As the Skilling Court explained, where a jury returns a general verdict that may rest on a legally invalid theory, the conviction may be upheld under a harmless-error analysis. 130 S.Ct. at 2934. Harmless error review means that [a]ny error,

defect, irregularity, or variance that does not affect substantial rights must be disregarded. FED.R.CRIM.P. 52(a). Skilling cited Hedgpeth v. Pulido, 555 U.S. 57, 129 S.Ct. 530, 531, 172 L.Ed.2d 388 (2008) , where the Court instructed that a reviewing court finding such error should ask whether the flaw in the instructions had substantial and injurious effect or influence in determining the jury's verdict. Hedgpeth, 555 U.S. 57, 129 S.Ct. 530 (quoting Brecht v. Abrahamson, 507 U.S. 619, 623, 113 S.Ct. 1710, 123 L.Ed.2d 353 (1993) ), cited in Skilling, 130 S.Ct. at 2934 n. 46. That standard, the Court made clear, applies on direct review of a conviction as well as on collateral review. Id. at 2934 n. 46. *5 Ryan draws a further distinction; he argues that the Brecht harmless error standard does not apply because this case does not involve collateral review of a state-court proceeding, but rather post-conviction review of a federal proceeding. He contends that [t]he federalism concerns that prompted Brecht are absent in Section 2255 proceedings brought by federal prisoners. (Pet.'s Br. at 26.) Ryan argues for application of the standard articulated by the Seventh Circuit in Lanier v. United States, 220 F.3d 833, 839 (7th Cir.2000): that the conviction should be overturned unless it is clear beyond a reasonable doubt that a rational jury would have found the defendant guilty absent the error. Id. at 839. The Government argues that Lanier applied the heightened standard without analysis and notes that no Circuit has applied a less deferential standard for Section 2255 motions after specifically considering the standard of review issue. (Response Br. at 13-14 n. 7.) This court notes that Lanier cited Neder v. United States, 527 U.S. 1, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999), where the Court explained that when an element of the offense was omitted from the jury instructions, the reviewing court asks whether the record contains evidence that could rationally lead to a contrary finding with respect to the omitted element, and if the answer is no, the error is harmless. 527 U.S. at 19, 119 S.Ct. 1827. In two recent cases, the Seventh Circuit has used a harmless error test to uphold convictions challenged as inconsistent with Skilling. Black v. United States, --- U.S. ----, 130 S.Ct. 2963, 177 L.Ed.2d 695 (2010) , a companion case to Skilling, was remanded for a determination of whether the convictions of Conrad Black and his co-defendants for honest-services fraud could be upheld under an alternative theory of money-property fraud. On remand, the Seventh Circuit noted that a bribery or kickback scheme was not proved here, but observed that the defendants' convictions could nevertheless be upheld if it is not open to reasonable doubt that a reasonable jury would have convicted [Black] of pecuniary fraud.... United States v. Black, 625 F.3d 386, 388 (7th Cir.2010), reh'g en banc denied, No. 08 CR 727[117] (7th Cir. Dec. 17, 2010). In United States v. Cantrell, 617 F.3d 919 (7th Cir.2010), the Seventh Circuit upheld an honest services conviction on direct appeal without articulating a standard of review because the charged conduct was clearly a kickback scheme, so the honest services statute applied, even as narrowed by Skilling. Id. at 921. Black is directly on point. This court reviews the conviction under a harmless error standard and asks whether it is beyond a reasonable doubt that a reasonable jury FN6 would have convicted Ryan of a legally valid theory on which it was properly instructed. B. Skilling Standard Before addressing the propriety of the instructions in this case, the court pauses to review the theory of honest services fraud post- Skilling. The defendant in Skilling was charged with conspiring to defraud Enron's shareholders by misrepresenting the company's fiscal health, thereby artificially inflating its stock price. 130 S.Ct. at 2934. As a result, the Government alleged, Skilling profited from the sale of Enron stock to the tune of $89 million. No allegation of any bribery or side payments was made, however, and the Court concluded that Skilling's conduct could not constitute honest services fraud. Because the indictment alleged not only honest services fraud, but also pecuniary fraud and securities fraud, the Court remanded the case for a determination of whether the verdict would survive harmless error analysis. Id. at n. 46. *6 Skilling asked the Supreme Court to strike down 1346 on vagueness grounds, but the Court chose instead to limit its scope. Interpreted to encompass only bribery and kickback schemes, 1346 is not unconstitutionally vague. Id. at 2933. The Court did not offer a specific definition of the types of bribery and kickback schemes prohibited by the honest services statute, but instead noted that the prohibition on bribes and kickbacks draws content not only from the pre- McNally case law, but also from federal statutes proscribing-and defining-similar crimes. Id. The court pointed to several federal statutes defining bribery and kickback schemes (18 U.S.C. 201(b), 666(a)(2); and 41 U.S.C. 52(2)) and identified several cases that define bribery in the context of honest services fraud. This court relies on these sources for a definition of

honest services bribery that survives post- Skilling. First, one of the cited statutes, 18 U.S.C. 201(b), explains in part that the elements of bribery are satisfied when an individual directly or indirectly, corruptly gives, offers or promises anything of value to any public official ... with intent ... to influence any official act; or ... to induce such public official ... to do or omit to do any act in violation of the lawful duty of such official.... The elements are also satisfied when a public official directly or indirectly, corruptly demands, seeks, receives, accepts, or agrees to receive or accept anything of value personally or for any other person or entity, in return for ... being influenced in the performance of any official act ... [or] being induced to do or omit to do any act in violation of the official duty of such official or person.... 18 U.S.C. 201(b)(1)(A)-(C), (2)(A)-(C). Likewise, 18 U.S.C. 666, explains that bribery occurs whenever an individual corruptly gives, offers, or agrees to give anything of value to any person, with intent to influence or reward an agent ... of a State ... in connection with any business, transaction, or series of transactions of such organization, government, or agency.... 18 U.S.C. 666(a)(2). As the case law cited by the Supreme Court reflects, a showing of bribery need not include direct quid pro quo exchange; **two of the three cases cited by the Court as examples of honest services bribery rest on a stream of benefits bribery theory. In a Third Circuit decision upholding a conviction for public corruption, the court approved jury instructions that explained, where there is a stream of benefits given by a person to favor a public official, ... it need not be shown that any specific benefit was given in exchange for a specific official act. **If you find beyond a reasonable doubt that a person gave an official a stream of benefits in implicit exchange for one or more official acts, you may conclude that a bribery has occurred. United States v. Kemp, 500 F.3d 257, 281 (3d Cir.2007), cited in Skilling, 130 S.Ct. at 2934. The Kemp court re-stated this theory to explain that, [w]hile the form and number of gifts may vary, the gifts still constitute a bribe as long as the essential intent-a specific intent to give or receive something of value in exchange for an official act-exists. Kemp, 500 F.3d at 282 (emphasis omitted). *7 Similarly, in United States v. Whitfield, 590 F.3d 325 (5th Cir.2009), cited in Skilling, 130 S.Ct. at 2934, the Fifth Circuit upheld an honest services bribery conviction under a stream of benefits theory. **The jury charge required that jurors find a corrupt agreement for [defendant] to provide the particular judge with things of value specifically with the intent to influence the action or judgment of the judge on any question, matter, cause or proceeding which may be then or thereafter pending subject to the judge's action or judgment. 590 F.3d at 353. The court noted that the government did not need to prove the parties had a specific case in mind when the exchange took place, and specifically dismissed the contention that the instruction should have required the jurors to find a quid pro quo: Despite the district court's failure to include the actual phrase quid pro quo in the jury charge, in the instant context the instructions sufficiently conveyed the essential idea of give-and-take. Id. (citing United States v. Kincaid-Chauncey, 556 F.3d 923, 943 (9th Cir.2009)). The stream of benefits theory has been a viable basis for convictions on bribery and extortion charges for some time, and has sometimes been referred to as supporting such charges under a course of conduct or retainer theory. See, e.g., United States v. Jennings, 160 F.3d 1006, 1014 (4th Cir.1998) ( The quid pro quo requirement is satisfied so long as the evidence shows a course of conduct of favors and gifts flowing to a public official in exchange for a pattern of official actions favorable to the donor.) (internal quotation and citation omitted); United States v. Kincaid-Chauncey, 556 F.3d 923, 943 (9th Cir.2009) (honest services bribery can be established if the government official has been put on retainer-that is, that the government official has received payments or other items of value with the understanding that when the payor comes calling, the government official will do whatever is asked.).

C. The Jury Instructions Ryan contends that the jury instructions in this case were flawed in five different respects: (1) He asserts the instructions are flawed by their reliance on the Bloom standard, see United States v. Bloom, 149 F.3d 649 (7th Cir.1998), which was rejected in Black; (2) he claims the jury was instructed that the prohibition on accepting bribes or kickbacks was just one violation that could support an honest services conviction, while Skilling established that it is the only violation that can support such a conviction; (3) he urges that the instructions do not adequately express the requirement of a showing of quid pro quo exchange; (4) Ryan asserts that the instructions permitted a conviction on the basis of a conflict of interest, a showing insufficient after Skilling; and (5) he argues that the instructions permitted a conviction on the basis of state-law violations, also not sufficient after Skilling. (Pet.'s Br. at 21.) The Government urges that there was no error because the instructions, read as a whole, did require the jury to find that Ryan took bribes or kickbacks in order to convict him. *8 [1] An instructional error can occur in a variety of ways-including, for example, an instruction on an invalid alternative theory of guilt, or an instruction that omits or erroneously describes an element of the offense. United States v. Marcus, --- U.S. ----, 130 S.Ct. 2159, 2165, 176 L.Ed.2d 1012 (2010). Even if an instructional error has occurred as to some element of the charge, reversal is required only if the instructions, viewed as a whole, misguide the jury to the litigant's prejudice. United States v. Palivos, 486 F.3d 250, 257 (7th Cir.2007) (describing harmless error analysis, and citing United States v. Souffront, 338 F.3d 809, 834 (7th Cir.2003)). 1. The Bloom Standard [2] Ryan's first challenge to the instructions is their incorporation of what he refers to as the Bloom standard.FN7 The instruction at issue stated: Where a public official misuses his official position or material nonpublic information he obtained in it for private gain for himself or another, then that official or employee has defrauded the public of his honest services if the other elements of the mail fraud offense have been met. (Tr. 23911.) The trial judge gave a similar instruction in Black: she instructed the jury that a person commits honestservices fraud if he misuse[s] his position for private gain for himself and/or a co-schemer and knowingly and intentionally breache[s] his duty of loyalty. Black, 130 S.Ct. at 2967. The Supreme Court concluded that these instructions were flawed because the scheme to defraud alleged [in Black ] did not involve any bribes or kickbacks, id. at 2968 n. 7, and accordingly remanded for a determination of whether the instructional error was harmless. The Black Court did not consider or address what instruction would have been appropriate if the scheme to defraud had rested on a bribery or kickback theory. On direct appeal in this case, the Seventh Circuit noted that the conflict-of-interest instruction challenged by Ryan included language requiring the jury to find not only a conflict of interest but also to find that the other elements of the mail fraud statute are met. United States v. Warner, 498 F.3d 666, 698 (7th Cir.2007). The Seventh Circuit was satisfied that the addition of this requirement meant that the government was required to prove that the public official allowed or accepted the conflict of interest with the understanding or intent that she would perform acts within her official capacity in return. Id. That same language is included as part of the Bloom instruction that Ryan challenges in the pending motion. The instruction did not limit the prohibited conduct to bribery or kickback schemes, however, and could also be interpreted as an instruction that a scheme of self-dealing itself violates the law-no longer a valid theory of honest services fraud post- Skilling. The court concludes the instruction was in error. No self-dealing offense was actually charged, however, and whether this error is harmless or not will be considered below. 2. Duty Not to Accept Bribes or Kickbacks Was Non-Exclusive *9 [3] Ryan next argues that the instructions were flawed because they explained that the duty not to accept bribes or kickbacks was only one of the duties whose violation could lead to an honest services conviction, while Skilling makes clear that a bribery or kickback scheme is the only scheme sufficient to support an honest services fraud conviction. (Pet.'s Br. at 21.) The instruction at issue explained that a public official has a duty

not to accept personal and financial benefits with the understanding that the public official would perform or not perform acts in his official capacity in return. (Instructions at 85; Tr. 23906.) Ryan also urges that the structure of the instructions was flawed because they made the acceptance of a bribe or kickback only one path to conviction rather than the only one. (Pet.'s Br. at 22.) Ryan is correct that, post- Skilling, an honest services fraud conviction does require a bribery or kickback scheme. As the court reads the challenged instruction, however, nothing in it suggests such a scheme is not a required path to conviction. In fact, this instruction taken alone suggests that a bribe is required for conviction. The instruction requires that the government prove [ ] beyond a reasonable doubt that the public official accepted the personal and financial benefits with the understanding that the public official would perform or not perform acts in his official capacity in return (Instructions at 85; Tr. 23906)-an instruction indistinguishable from a bribery instruction. The court finds no error in the language of this instruction; whether a flaw in the overall structure of the instructions requires reversal will be addressed as part of the harmless error analysis. 3. The Failure to Require a Quid Pro Quo FN8 [4] Ryan's next objection challenges the instruction examined above (Instructions at 85; Tr. 23906), as well as the instruction on campaign contributions. Ryan argues that the personal and financial benefits instruction is flawed in two respects: first, that it does not require jurors find an exchange sufficient to meet the quid pro quo requirement; and second, that the latter half of the instruction might encompass gratuities as well as bribes. Ryan next argues that the campaign contribution instruction is in error because it does not require an explicit quid pro quo. In its entirety, the instruction on personal and financial benefits reads: The law does not require that the government identify a specific official act given in exchange for personal and financial benefits received by the public official so long as the government proves beyond a reasonable doubt that the public official accepted the personal and financial benefits with the understanding that the public official would perform or not perform acts in his official capacity in return. Likewise, the law does not require that the government identify a specific official act given in exchange for personal and financial benefits received by the public official so long as the government proves beyond a reasonable doubt that the personal and financial benefits were given with the understanding that the public official would perform or not perform acts in his official capacity in return. *10 (Instructions at 85; Tr. 23905-06.) Ryan argues that this instruction improperly eliminated any quid pro quo requirement because it turned on the understanding of one person-the public official-rather than on whether the two parties had agreed to an exchange. (Pet.'s Br. at 23.) The court finds this argument unpersuasive. The instruction required the public official to accept a benefit with the understanding he will perform an action in return. Such an understanding necessarily requires a second party to the exchange. The language requiring that the act be performed in return underscores the instruction's requirement that there be an agreed exchange. **Further, the predicate language does include the term in exchange, and notes that while the exchange need not involve a specific official act it must include acts ... in return. This language adequately articulates the quid pro quo requirement. [5] Next, Ryan contends that the instruction explaining what provision of benefits does not violate the mail fraud statute incorrectly suggests that a gratuity might serve to violate the statute as well as a bribe. The instruction reads: [T]he providing of personal or financial benefits by a private citizen to and for the benefit of a public official, or to and for the benefit of a public official's family, friends, employees, or associates, does not, standing alone, violate the mail fraud statute, even if the private citizen does business with the state, so long as the personal or financial benefits were not intended to influence or reward the public official's exercise of office. (Instructions at 87; Tr. 23907.) The Supreme Court has explained that the difference between a bribe and a gratuity is its intent element. United States v. Sun-Diamond Growers of California, 526 U.S. 398, 404, 119 S.Ct. 1402, 143 L.Ed.2d 576 (1999) (interpreting 18 U.S.C. 201). While **a bribe requires an intent to influence, or to be influenced, **a gratuity requires only that the gratuity be given or accepted for or because of an official act.' Id. at 405, 119 S.Ct. 1402. The instruction's language limiting illegal benefits to those

intended to influence or reward the public official's exercise of office is the language of bribery. Inclusion of the term reward in addition to influence is necessary to capture instances where the benefit arrives after the act. Ryan appears to urge that a reward must be understood to be a gratuity, but the word reward itself is used in one of the federal bribery statutes, 18 U.S.C. 666, which explains that bribery occurs whenever an individual corruptly gives, offers, or agrees to give anything of value to any person, with intent to influence or reward an agent ... in connection with any business, transaction, or series of transactions of such organization, government, or agency.... 18 U.S.C. 666(a)(2) (emphasis added). This language is virtually identical to that contained in the instruction, and the court finds no error in the instruction. *11 Next, Ryan challenges the instruction that permitted the jury to find the intent necessary for a conviction of honest services fraud from evidence of a benefit or benefits received by a defendant or given by a defendant with the intent that such benefit or benefits would ensure favorable official action when necessary.... (Instructions at 86; Tr. 23906; Pet.'s Br. at 24 n. 15.) Ryan insists such a showing is insufficient to establish intent. Instead, he argues, the benefit must be conferred or received in exchange for something. An intent to ensure favorable action when necessary is not enough. (Pet.'s Br. at 24 n. 15.) The case law, however, defeats Ryan's interpretation. In United States v. Gorny, 732 F.2d 597 (7th Cir.1984), for example, the jury instructions included an instruction similar to this one, based on the Illinois bribery statute. The instruction stated: [B]ribery occurs when property or personal advantage is accepted by a public employee with knowledge that it is offered with intent to influence the performance of any act related to his public position. No particular act need be contemplated by the person offering the property or personal advantage, or by the public official to whom the offer is made. The crime is completed when the property or personal advantage is accepted by the public employee knowing it was offered with the intent that he act favorably to the person offering the property or personal advantage when necessary. 732 F.2d at 600. Gorny affirmed the conviction of a deputy commissioner on a county board of tax appeals who received payments in cash and other advantages from attorneys who practiced before the board. Although Gorny did not receive payments based on the outcome of any specific case, the Seventh Circuit confirmed his conviction of mail fraud and racketeering, noting that there was evidence from which the jury could find that these payments and other favors were conferred upon Gorny with intent to influence him and that Gorny received these favors with a similar intent. Id. at 600, 601. See also United States v. Kincaid-Chauncey, 556 F.3d at 944 n. 15 (when the payor comes calling, the government official will do whatever is asked.). This instruction is clearly consistent with the stream of benefits or retainer theory, and, together with the other benefits instructions, adequately expresses the quid pro quo requirement. Finally, Ryan argues that the campaign contribution instruction does not adequately explain the type of quid pro quo required for campaign contributions to constitute bribes. For purposes of campaign contributions, Ryan urges, the jury must find more than an implied exchange; there must be an explicit quid pro quo. (Pet.'s Br. at 23.) The instruction at issue states: When a person gives and a public official receives a campaign contribution knowing that it is given in exchange for a specific official act, that conduct violates the mail fraud statute, if the other elements of the mail fraud offense are met. The intent of each party can be implied from their words and ongoing conduct. *12 (Instructions at 88; Tr. 23908.) Ryan is correct that a campaign contribution can be deemed a bribe only if the money is given in return for a commitment to take (or not take) a specific action. In McCormick v. United States, 500 U.S. 257, 273, 111 S.Ct. 1807, 114 L.Ed.2d 307 (1991), the Supreme Court held that a campaign contribution could constitute extortion in a Hobbs Act case, but only if the payments are made in return for an explicit promise or undertaking by the official to perform or not to perform an official act. Id. A year later, the Court confirmed the quid pro quo requirement, but explained that [t]he official and the payor need not state the quid pro quo in express terms, for otherwise the law's effect could be frustrated by knowing winks and nods. The inducement from the official is criminal if it is express or if it is implied from his words and actions, so long as he intends it to be so and the payor so interprets it. Evans v. United States, 504 U.S. 255, 274, 112 S.Ct. 1881, 119 L.Ed.2d

57 (1992) (Kennedy, J., concurring). The final sentence of the campaign contribution instruction in this case tracks Justice Kennedy's language in Evans, and therefore accurately articulates the standard for finding a quid pro quo based on campaign contributions. Moreover, as the Government noted in oral argument, Evans and McCormick were both settled law at the time this case went to the jury, and nothing in Skilling has unsettled them. 4. Conflict-of-Interest Instruction [6] Ryan next challenges the conflict-of-interest instruction given to the jury: **A public official or employee has a duty to disclose material information to a public employer. If an official or employee conceals or knowingly fails to disclose a material personal or financial interest, also known as a conflict of interest, in a matter over which he has decision-making power, then that official or employee deprives the public of its right to the official's or employee's honest services if the other elements of the mail fraud offense are met. (Instructions at 84; Tr. 23905.) On direct appeal in this case, the Seventh Circuit examined this instruction to determine whether it comported with the private gain requirement imposed by this circuit's jurisprudence (but not by some other circuits). See Skilling, 130 S.Ct. at 2928 n. 36. The Seventh Circuit was satisfied that the instruction at issue properly required the jury to find that the defendant public official had allowed or accepted a conflict of interest for his own private gain, with the intent to perform acts in his official capacity in return. Warner, 498 F.3d at 698. The objection Ryan now presents is a different one: he notes that this instruction would permit the jury to convict him for self-dealing and other conflicted transactions that fall short of a bribery or kickback scheme. Skilling's core holding precludes such a result. In light of the relative infrequency of conflict-of-interest prosecutions in comparison to bribery and kickback charges, and the intercircuit inconsistencies they produced, we conclude that a reasonable limiting construction of 1346 must exclude this amorphous category of cases. 130 S.Ct. at 2932. The court concludes that the conflict-of-interest instruction was in error. 5. State Law Violations *13 Ryan contends that the instructions allowed the jury to find he committed honest services fraud based on a violation of state law that did not involve a bribery or kickback scheme. The court's instructions did identify a number of state laws that govern the conduct of public officials, including the following: Public funds, property or credit shall be used only for public purposes. Misconduct occurs when an official performs an act in excess of his lawful authority to obtain a personal advantage for himself or knowingly accepts for the performance of any act a fee or reward which he knows is not authorized by law. A public official is required to file an annual financial disclosure statement with the State of Illinois. [A] public officer was prohibited from soliciting or accepting any gifts from any prohibited source or in violation of any federal or state statute, rule or regulation. (Instructions at 89-90; Tr. 23908-23910.) The court then explained that [N]ot every instance of misconduct or violation of a state statute by a public official or employee constitutes a mail fraud violation. Where a public official or employee misuses his official position (or material, nonpublic information he obtained in it) for private gain for himself or another, then that official or employee has defrauded the public of his honest services, if the other elements of the mail fraud offense have been met. (Instructions at 93; Tr. 23911.) The Seventh Circuit also examined this instruction on direct appeal, again focusing on the requirement of a showing of personal gain. The court noted that the cited provisions of Illinois law identified for the jury various ways in which a public official could misuse his fiduciary relationship, but the instructions as a whole unambiguously required the prosecution to prove that misuse of the office was

intended for personal gain. Warner, 498 F.3d at 698. See also United States v. Segal, 495 F.3d 826, 834 (7th Cir.2007) (rejecting challenge to state-law instruction in honest services prosecution because state laws are useful for defining the scope of fiduciary duties, and ... what distinguishes a mere violation of fiduciary duty from a federal fraud case is the misuse of one's position for private gain.). Determining the duties of office can indeed be relevant to a bribery prosecution; for example, 18 U.S.C. 201(b) requires that one of the elements of bribery is that an official do or omit to do any act in violation of the lawful duty of such official. State laws are directly relevant in determining the scope of an official's lawful duty. This court was and is satisfied that the state law instruction did not permit the jury to convict Mr. Ryan of a federal defense solely for the violations of state law. Still, one can misuse his office for private gain without engaging in a bribery or kickback scheme. The court thus concludes that this instruction, too, is error in the light of Skilling. D. Harmless Error Analysis *14 [7] Having determined that the Bloom instruction, the conflict-of-interest instruction, and the state law instructions should not have been given, the court turns to the question of whether these instructional errors were harmless. As explained previously, the relevant inquiry is whether a reasonable jury, properly instructed, must necessarily have convicted based on a proper theory. Put another way, the court asks whether the jury necessarily found the elements of the valid theory satisfied when it chose to convict on a now-invalid theory. The court notes that this analysis would be significantly more straightforward had the Government argued solely a bribery theory at trial. The vast majority of post- 1346 and pre- Skilling honest services cases stem from one of two theories-**bribery or **self-dealing (usually in the form of an undisclosed conflict-of-interest for personal gain). The latter theory is the one on which Mr. Skilling himself was convicted. At first cut, this case appears to present a straightforward bribery theory-Ryan accepted benefits with the intent to be influenced in his official actions. Yet the Government insisted on arguing not only a bribery theory but also an undisclosed conflict-of-interest theory. During the jury instruction conference, Ryan's attorneys challenged the propriety of a conflict-of-interest instruction. Attorney Bradley Lerman argued: [T]he failure to disclose financial interest [doctrine] in the Seventh Circuit, that relates to the direct interest that the public official has and fails to disclose. If George Ryan was an owner, for example, of the Joliet property and he failed to disclose his ownership.... The fact pattern in this case is closer, much more analogous to the bribery fact pattern.... **I have always assumed [ ] the theme of the government's case [was] the hidden flow of benefits between people who benefitted from George Ryan's activities. George Ryan doesn't have a personal financial interest in this case in the decisions that he was making as a public official. The allegation is that he was receiving things of value paid to influence him from people who were benefitting from his decisions. (Tr. 22070, 22073.) The Government insisted that the conflict-of-interest instruction was appropriate in this case; such an instruction was relevant, for example, to Ryan's concealment on his economic interest forms of the benefits he received from Harry Klein at the same time that he is making official decisions that confer public benefits on Mr. Klein. (Tr. 22068.) The Government's conflict-of-interest theory did go to the jury-had it not, Skilling would have provided little upon which Ryan could base the instant petition. But, as Ryan's attorney himself emphasized, the acts underlying either theory were the same-in one instance, a jury was invited to convict based on Ryan's failure to disclose the stream of benefits, and in another it was invited to convict based on the stream of benefits themselves. The court declines, at this stage, to discuss whether the conflict-of-interest instruction was clear enough or necessary at all. **The question for now is whether, in order to find Ryan guilty on one theory, the jury must have found him guilty on the other, as well. The legal characterization of the charge is irrelevant so long as the jury found beyond a reasonable doubt that Ryan had engaged in the conduct charged. *15 Ryan's main defense to the mail fraud charges was that, while he may have done political favors for his friends, including co-Defendant Warner, such activity does not amount to a crime. Thus, Ryan's attorney argued in closing,

It's a crime if George Ryan accepted benefits to perform official acts. But it's not a crime if all George Ryan did is try to do things that sometimes benefited political supporters. That happens.... No witness testified that George Ryan accepted personal or financial benefits to perform official acts. That is so critical.... Everyone wants this to be some evil thing. Okay. Maybe the world should work different. Okay. Maybe public officials should never be able to do anything to favor their supporters. Maybe we ought to change the whole way the whole political system in America works. Maybe we should do that. But that's not the way it is. And it's not a crime to help your friends. (Tr. 23159-60, 23177, 23343.) Ryan requested, and the jury received, numerous instructions tailored to this theory of defense. The jury was instructed that [a] public official's receipt of personal or financial benefits ... does not, standing alone, violate the mail fraud statute, even if the individual providing the personal or financial benefit has business with the state. (Instructions at 87; Tr. 23906-07.) The jury was also told that, [g]ood faith on the part of the defendant is inconsistent with intent to defraud, an element of the mail fraud charges. (Instructions at 81; Tr. 23905.) Another instruction explained that a public official may receive campaign contributions from those who might seek to influence the candidate's performance as long as no promise for or performance of a specific official act is given in exchange, and that campaign contributions from those who [have] or expect[ ] to have business pending before the public official do not necessarily violate the mail fraud statute. (Instructions at 88; Tr. 23907.) Further, the court identified a number of items that a public official could properly receive without violating the law, including anything provided on the basis of personal friendship, unless the officer had reason to believe the gift was provided because of the official position of the officer, and not because of friendship. (Instructions at 90; Tr. 23909-10.) As discussed below, the court is satisfied that these instructions required the jury to find that Ryan did not act in good faith, that he acted for private gain FN9, and that the stream of benefits flowing between Warner and Ryan were not simply the proceeds of a friendship, as Ryan argued, but were intended to influence him in his official duties. United States v. Ochoa-Zarate, 540 F.3d 613, 620 (7th Cir.2008) (We presume that the jury followed the court's instructions.). Because such findings are sufficient to establish a bribery scheme, the court is further satisfied that the instructional errors identified above were harmless. These conclusions are explained in greater detail below. 1. Single Scheme to Defraud *16 In McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), the Supreme Court held the honest services theory of mail fraud unconstitutional. In the wake of McNally, the Seventh Circuit reexamined a number of convictions to determine whether they remained valid. These cases provide a useful framework for examining Ryan's conviction in light of the Skilling decision. In one particularly instructive case, Messinger v. United States, 872 F.2d 217 (7th Cir.1989), the court recognized that the honest services theory under which Messinger had been convicted was no longer valid, **but examined whether Messinger might also have been convicted on a pecuniary fraud theory. The court explained that it would examine the indictment, the evidence, and the jury instructions to see if the jury necessarily had to convict Messinger for defrauding Cook County of its property right ... notwithstanding any intangible rights theory employed. Id. at 221. See also United States v. Bonansinga, 855 F.2d 476, 479 (7th Cir.1988) ([R]egardless of the language employed in his indictment, the fact remains that the evidence adduced by the government at trial unequivocally demonstrated Bonansinga's participation in conduct clearly proscribed by the mail fraud statute as construed in McNally.); United States v. Wellman, 830 F.2d 1453, 1463 (7th Cir.1987) ([E]ven assuming these allegations were (in form at least) separate, the government could not logically prove one scheme without proving the other since the elements of the two were identical.). The Messinger court undertook this analysis because in that case the jury found the existence of a single scheme to defraud, and convicted Messinger based on acts in furtherance of that scheme. This case presents a similar situation. In order to convict Ryan, the jury **must have found the existence of a scheme to defraud, and must have found, on each of the mail fraud counts of conviction, a mailing in furtherance of that scheme. **The first question is whether the jury's finding that this scheme existed necessitated a finding that it was a bribery or kickback scheme. If so, the court can end its inquiry because the jury, as in Messinger, would necessarily have

found a violation that falls within the narrowed definition of mail fraud approved by the Supreme Court. a. Did the jury necessarily find a bribery or kickback scheme? The fact that the indictment and instructions did not exclusively track Skilling's limited definition of honest services fraud is not fatal to this analysis. In the post- McNally era, courts in this circuit routinely found that indictments that included broad intangible rights language did not necessarily exclude an alternative, valid theory. Messinger, 872 F.2d at 221 (In examining the indictment, we must look at the substance of the actions alleged, not at the language used.); United States v. Folak, 865 F.2d 110, 113 (7th Cir.1988) (The presence of some language referring to an intangible rights theory is not always fatal to the indictment.); United States v. Gottlieb, 738 F.Supp. 1174, 1181 (N.D.Ill.1990) (A court must look past the indictment's legal characterization of a scheme and determine whether the specific conduct alleged in the indictment is clearly proscribed by the mail fraud statute. ... In fact, the substantive allegations in an indictment may be cognizable under McNally even if the indictment is couched in intangible rights' language.) (quoting United States v. Wellman, 830 F.2d 1453, 1463 (7th Cir.1987)). *17 The summary indictment provided to the jury in this case FN10 alleged that Ryan devised and intended to devise, and participated in, a scheme and artifice to defraud the people of the State of Illinois, and the State of Illinois, **of money, **property and the intangible right to honest services of defendant Ryan and other official and employees of the State of Illinois, by means of materially false and fraudulent pretenses, representations, promises and material omissions, and in furtherance thereof used the United States mails and other interstate carriers. The indictment went on to further describe the scheme in three additional paragraphs labeled Overview of Scheme, which, in addition to the language below, included specific examples of actions illustrating the components of the scheme: 3. It was part of the scheme that defendant Ryan performed and authorized official actions to benefit the financial interests of Ryan, defendant Warner, Arthur Ronald Swanson, Harry Klein and Donald Udstuen and designated third parties including Ryan family members and Citizens for Ryan. ... 4. It was further part of the scheme that defendant Ryan and certain third parties affiliated with Ryan received personal and financial benefits from defendant Warner, Arthur Ronald Swanson and Donald Udstuen, while defendant Ryan knew that such benefits were provided with intent to influence and reward Ryan in the performance of official acts. ... 5. It was further part of the scheme that ... defendants Ryan, Warner, Arthur Ronald Swanson, and Donald Udstuen concealed their financial relationships ... As this court reads the indictment's language, Paragraph 5 presents a conflict-of-interest theory that, standing alone, would not satisfy Skilling. **Paragraph 3 alleges a theory consistent with bribery, although one that does not necessarily constitute bribery in every instance. **Paragraph 4, however, does contains a description that necessarily includes the stream of benefits theory of bribery discussed above. Thus, the indictment did present at least one theory of honest services fraud that remains valid post- Skilling.FN11 [8] The elements of mail or wire fraud are (1) a scheme to defraud (entailing a material misrepresentation), (2) an intent to defraud, and (3) the use of the mails. United States v. Sorich, 523 F.3d 702, 708 (7th Cir.2008). In addition, for an honest services mail fraud charge in the Seventh Circuit, the Government was also required to show the misuse of position for private gain. Id. These requirements correspond to the outline of the scheme charged in the Ryan indictment: the first paragraph speaks of the acts involved in the scheme and the object of the frauds; the second paragraph refers to the private gain reaped from the scheme; and the third paragraph describes the material misrepresentations upon which the scheme relied. Each additional mail fraud count in the indictment then detailed the mailing requirement

*18 Does the fact that the jury found that a fraud scheme existed mean, therefore, that the scheme involved bribery or kickbacks? With respect to the mail fraud charges, the jury was instructed that they were required to find that the defendant knowingly devised or participated in the scheme to defraud or to obtain **money or property by means of materially false pretenses, representations, or promises, as charged. (Instructions at 75; Tr. 23902) (emphasis added). **The instructions further explained that [a] scheme to defraud is a scheme that is intended to deceive or cheat another and to obtain **money or property or cause the potential loss of money or property to another or to deprive the people of the State of Illinois of their intangible right to the honest services of their public officials or employees. (Instructions at 76; Tr. 23903.) As the court reads this language, it did not on its face require the jurors to find that the charged scheme was one involving bribery. In addition, the jury was instructed that the mail fraud counts charge that the defendants participated in a single scheme to defraud and that to find the defendant guilty of a particular count, the jury must find beyond a reasonable doubt that the proved scheme to defraud was included within the charged scheme to defraud ... provided that all other elements of the mail fraud charge have been proved. (Instructions at 77; Tr. 23903.) Thus, although the jury was required to find that a charged scheme to defraud existed, no language within either the indictment or the jury instructions explicitly required the jurors to find that every part of the scheme described in the indictment necessarily existed. Case law supports the conclusion that, unless instructed otherwise, a jury need not have found that every part of an alleged scheme existed in order to find that the scheme as a whole existed. See United States v. Reicin, 497 F.2d 563, 568 (7th Cir.1974) (The issue is whether lack of [proof of one part of a mail fraud scheme], despite the presence of the other elements of the scheme as alleged in the indictment, vitiates the conviction on [one count]. We hold that it does not. [I]n most mail fraud prosecutions, there are numerous instances of allegedly illicit conduct, all of which need not be proved to sustain a conviction. ) (quoting Anderson v. United States, 369 F.2d 11, 15 (8th Cir.1966)); United States v. Toney, 598 F.2d 1349, 1355-56 (5th Cir.1979) (In mail fraud cases the government need not prove every allegation of fraudulent activities appearing in the indictment. It need only prove a sufficient number of fraudulent activities to support a jury inference that there was a fraudulent scheme.). It might be possible to read the jury instructions in this case as requiring that the jury find the scheme to involve accepting gifts with intent to influence official acts. The court declines to construe the instructions this way, however, because there was no explicit instruction to this effect and because the Government, in its closing rebuttal argument,FN12 suggested such a finding was not necessary. See, e.g., Tr. 23771 ([T]his is the heart of the matter. For the first ten counts of the indictment, it is the heart of the matter. It's about trust. Mr. Ryan's honest services. That's what it's about.... So, folks, on this honest services, on this scheme, this first element, it can be met with a conflict of interest.). b. Does the conviction rest on a still-viable theory? *19 Because the jury need not have found every aspect of the charged scheme, **the next question is whether the findings they did make support a still-viable theory of honest services fraud. In reviewing mail fraud convictions after McNally, courts in this circuit looked to whether one charged theory was easily separable from the other. See, e.g., United States v. Eckhardt, 843 F.2d 989, 997 (7th Cir.1988) (Where a fraud scheme involves multiple objectives, some of which are insufficient to state an offense under McNally, the remaining charge or charges will be deemed sufficient to state the offense if they are easily separable from the charges deemed insufficient. In such a case, those allegations which are insufficient to state an offense are mere surplusage, and do not taint the remainder of the indictment.) (citations omitted); United States v. Folak, 865 F.2d 110, 113 (7th Cir.1988) ([W]here an indictment alleges multiple schemes, some of which serve to defraud victims of property and others that deprive them of some intangible right, we have treated as surplusage any intangible rights theory of fraud that was easily separable from allegations of a scheme to defraud of money or property. We have also held that where a single set of facts establishes both a scheme to defraud a victim of money or property, as well as a deprivation of some intangible right, McNally does not require setting aside the conviction.) (citations omitted). The Seventh Circuit undertook a similar inquiry in Black, when it determined that a money-property theory could be disentangled from an honest services theory, and determined that a reasonable jury would necessarily have upheld one count of conviction on a money-property theory. Black, 625 F.3d at 393. The difficulty in this case arises because Skilling did not invalidate an entire theory of mail fraud, as

McNally did, but rather eliminated all sub-theories of honest services fraud that do not require bribes or kickbacks. Thus, the court must separate the bribery theory on which Ryan was charged, and the jury instructed, from the invalid theories described above-including the Bloom theory, the conflict-of-interest theory, and the state law theories. In order to do this, the court will examine the evidence presented at trial on each mail fraud count for which Ryan was convicted, and determine whether that set of facts could have supported a scheme in the indictment other than the bribery scheme. In each case, if it could have, the court must determine whether a reasonable jury could have convicted based on the alternate theory but not on the bribery theory. **The evidence essentially established two streams of benefits, **one from Warner to Ryan (and his family members), and **one from Harry Klein to Ryan. Because in the case of Warner, each stream of benefits quid is allegedly tied to multiple quos, the court will first examine the benefits alleged to have been received by Ryan from Warner as a whole, and then examine the acts alleged to have been performed in return. 2. Warner-related Mail Fraud Counts a. Stream of Benefits from Warner to Ryan *20 In ruling on Ryan's post-trial motion, this court observed that [t]he government introduced a great deal of evidence of Ryan's acceptance of gifts and benefits. Warner, 2006 WL 2583722, at *6. Specifically, the benefits flowing from Warner to Ryan included favorable construction and insurance benefits to Ryan's family members; investments in Ryan's son's business; and favorable financial treatment of Comguard, a business involving Ryan's brother. Id. As Ryan himself notes, Warner wrote a $3,185 check to pay for the band that played at Ryan's daughter's wedding and held two major fund-raisers for Ryan, raising a total of $250,000.FN13 (Pet.'s Br. at 19.) The government also provided circumstantial evidence that Ryan received cash from Warner and others. Warner, 2006 WL 2583722, at *6. The jury need not have believed every one of these incidents occurred or that every incident had a corrupt purpose. As explained below, however, the jury must have believed that in several instances Warner did provide benefits to Ryan in exchange for acts. Moreover, Ryan's convictions on the false statement and tax charges mean that the jury must have believed he substantially understated his income and that he had a personal financial relationship with Warner. b. Count Two Count Two of the indictment charged that the mailing of a check from the State of Illinois to American Detail & Manufacturing Co. (ADM) was in furtherance of the scheme to defraud. The evidence at trial showed that Ryan intervened on Warner's behalf in order to get James Covert, head of the Secretary of State's vehicle-services division, to withdraw contract specifications that might have caused ADM to lose a valuable vehicle registration stickers contract. At the time, ADM was Warner's client, and prior to Ryan's direct intervention, Warner represented to Covert that he had authority to speak for Secretary Ryan and wanted ADM to retain the contract. In ruling on the sufficiency of the evidence in support of this count, the court noted that jurors had been instructed that if Ryan had acted in good faith-he claimed that his instructions to Covert were motivated by legitimate law-enforcement concerns-they should not convict him on this count. The jurors convicted Ryan despite this instruction, and the court observed that Ryan's direct intervention on Warner's behalf, and his attempt to conceal his intervention by directing Covert to withdraw the specifications quietly, amply support the jury's verdict with respect to Count Two. Warner, 2006 WL 2583722, at *6. Paragraph 3 of the summary indictment describes the Warner transaction, charging that it was part of the scheme that Ryan performed and authorized official actions to benefit the financial interests of ... Warner.... The official actions Ryan performed and authorized included: **Awarding, and authorizing the award of, contracts and leases, and **intervening in governmental processes related thereto and causing contractual payments to be made to benefit the financial interests of defendant Warner. Paragraph 4 describes the receipt of benefits by Ryan, explaining that [i]t was further part of the scheme that defendant Ryan and certain third parties affiliated with Ryan received personal and financial benefits from defendant Warner ... while defendant Ryan knew that such benefits were provided with intent to influence and reward Ryan in the performance of official acts. *21 In order to convict Ryan on Count Two, the jurors had to believe one of three theories: either **(1) Ryan concealed a conflict-of-interest related to the ADM contract; **(2) Ryan misused his office for private gain in discussing the contract with Covert; or **(3) Ryan accepted benefits (bribes) from Warner in exchange

for his intervention. The first theory does not stand on its own. The only conflict of interest presented to the jury relating to ADM was Ryan's relationship with Warner and Warner's involvement in this contract. Therefore, if the jury found that Ryan concealed a conflict of interest (theory (1)), it necessarily had to find that he had misused his office for private gain (theory (2)), or that he had accepted benefits from Warner in exchange for favors relating to ADM (theory (3)). The misuse of office theory (2) might stand alone if the jury believed that Ryan decided for some illegitimate reason-unrelated to the benefits Warner provided to Ryan-to coerce Covert into withdrawing the specifications. But the only motivations Ryan had to interfere with this contract were for legitimate law-enforcement reasons, as the defense suggested, or to compensate Warner for the stream of benefits he provided, as the Government urged. The jury rejected the good faith motive. Accordingly, the jury could only have convicted him on this count if it believed that his conduct was a response to the stream of benefits. Ryan suggests that the only private gain he received for his intervention in this transaction was the approval of his friend. As explained earlier, however, the jurors must have rejected this argument; they were specifically instructed that if the benefits Ryan received from Warner were merely the proceeds of a friendship, they could not be the basis for a conviction. See I.D supra. The court concludes that the jury must have found Ryan accepted gifts from Warner with the intent to influence his actions. The Government did present the awarding of contracts and leases in these terms. In closing, the Government urged: George Ryan, as a public official, had a duty to provide honest services to the people of the state of Illinois who had elected him. And the evidence in this case has shown that he repeatedly violated that duty. He violated that duty by giving state benefits, like contracts and leases, to his friends-Warner, Swanson, Kleinwhile at the same time they were providing various undisclosed financial benefits to him and his family and to his friends. **The benefits included free vacations, loans, gifts, campaign contributions, as well as lobbying money that Ryan assigned or directed to his buddies. In short, Ryan sold his office. He might as well have put up a for sale sign on the office. Tr. 22836. Further, the Government presented a valid stream of benefits, retainer, or course of conduct bribery theory when it explained that this is not a case in which a public official had a specific price for each official act that he did, like a menu in a restaurant where you pick an item and it has a particular price. The type of corruption here-that type of corruption where you give me this, I will give you that, is often referred to as a quid pro quo. The corruption here was more like a meal plan in which you don't pay for each item on the menu. Rather, there is a cost that you pay, an ongoing cost, and you get your meals. And for Warner, Swanson, and Klein it was not a cash bar. This was an open bar during Ryan's terms as secretary of state and as governor. *22 Tr. 22852. While Ryan is correct that the Government also suggested Ryan could be convicted based on a conflict of interest, as explained earlier, that was not a tenable independent theory that would have supported conviction of Ryan on Count Two. c. Counts Three and Eight Counts Three and Eight both involve the steering of leases to Warner. In Count Three, the government charged that a mailing related to the State's lease of a Warner-owned building was in furtherance of the scheme. In evaluating the sufficiency of the evidence on this count, the court found that three witnesses testified as to Ryan's (and Warner's) direct involvement. Ryan put Sherman in contact with Warner to look for a new site, and the jury could reasonably infer from Borisy's testimony that Ryan knew Warner owned the Joliet building at the time. Warner, 2006 WL 2583722, at *8. Count Eight similarly charged Ryan with mail fraud based on a mailing from the state to a company controlled by Warner, for the lease of a building in Bellwood by the office of the Secretary of State. In evaluating the evidence on this count, this court pointed to evidence from which the jury could have concluded that Ryan steered the lease to Warner, in a top-down fashion, and that the approval of his subordinate was a mere formality. Moreover, the layers of deception surrounding the transaction support the jury's finding that the Defendants acted with the requisite intent. Id. at *12.

The same analysis applied to Count Two applies here, and leads to the conclusion that absent good faith, the jury must have convicted Ryan on this count because he steered these leases to Warner in exchange for Warner's provision of benefits to Ryan. In other words, the lease was steered to Warner because he participated in a stream of benefits bribery scheme with Ryan. Ryan argues that the jury might have believed that Ryan favored Warner in awarding leases and other business, but [that] did not indicate that Warner ever gave Ryan a bribe or a kickback. (Pet.'s Br. at 19.) The court disagrees. No reasonable jury would have believed that Ryan committed mail fraud by awarding these leases to Warner, but not believed that the lease was awarded in exchange for the benefits provided by Warner to Ryan. The jury believed that Ryan acted with the intent to defraud, and that Ryan performed and authorized official actions to benefit Warner's financial interests. As noted earlier, it rejected the argument that the benefits flowing from Warner to Ryan were innocent gifts from one friend to another. The evidence of benefits flowing from Warner to Ryan, and Ryan's significant involvement in the steering of these leases lead to one conclusion: that Ryan accepted the gifts from Warner with the intent to be influenced, and that these leases are the manifestation of that influence. d. Count Four Count Four charged that a check from IBM to a consulting company controlled by Ryan was mailed in furtherance of the scheme. The Government contended that Warner took advantage of information gleaned from his association with Ryan to profit through a consulting contract with IBM. The court found sufficient evidence for a jury to find that Warner's IBM proceeds were a direct result of the access to the SOS Office that Ryan gave Warner. Warner, 2006 WL 2583722, at *9. *23 This charge differs from those discussed earlier in that there is no suggestion that Ryan took any specific action related to the IBM contract-and the standard definition of bribery requires some sort of official action in exchange for the benefits received. A question left unanswered in Skilling is whether each act taken in furtherance of a bribery scheme must itself be an official act of the type that could support conviction of a bribery offense. Skilling spoke in terms of a bribery scheme, not in terms of specific acts of bribery. Skilling, 130 S.Ct. at 2931 (The vast majority of the [core] honest-services cases involved offenders who, in violation of a fiduciary duty, participated in bribery or kickback schemes.); id. at 2931 n. 42 (Apprised that a broader reading of 1346 could render the statute impermissibly vague, Congress, we believe, would have drawn the honest-services line, as we do now, at bribery and kickback schemes.). In a case decided one month after the Skilling decision, the First Circuit found (in a decision in which Justice Souter joined the panel) that a state legislator who took payments in order to arrange meetings between health insurers and his client could constitute honest services fraud on a bribery theory, even absent payment for a vote or other explicit action . The court explained that [l]egislators can and do convene meetings of constituents and seek to settle quarrels among them; but taking a bribe for the use of one's governmental power is a different matter and within the ambit of honest services fraud.... What distinguishes this aspect of the case from some others is that the bribe was not for Celona to press or oppose legislation directly through his votes; rather, the purchased use of official power was the implied threat of such action-and also the potential use of influence over legislation in committee-that Celona conveyed largely by implication through the orchestrated meetings. But the distance between this and paying outright for legislative votes is not great: both involve the misuse of office. United States v. Urciuoli, 613 F.3d 11, 16-17 (1st Cir.2010), cert. denied, --- U.S. ----, 131 S.Ct. 612, 178 L.Ed.2d 436 (2010). See also United States v. Seminerio, No. S1 08 Cr. 1238(NRB), 2010 WL 3341887, at *6 n. 9 (S.D.N.Y. Aug. 20, 2010) ([T]he Second Circuit rejects the notion that the quo in a quid pro quo must be a narrowly defined official act.) (citing United States v. Middlemiss, 217 F.3d 112, 120 (2d Cir.2000)); 18 U.S.C. 201(b) (defining bribery as accepting a thing of value to induce an official to do or omit to do any act in violation of the official duty of such official.). Though the specific act alleged here-the provision of access to material nonpublic information in return for benefits-may not have involved an official act of the type that commonly constitutes a plain-vanilla bribery charge, it is certainly misuse of office within the context of an honest services bribery scheme. Seminerio explained that Skilling was charged with failing to disclose a personal economic interest unrelated to the receipt of any payments, **whereas the conflict of interest that Seminerio was charged with failing to disclose was his

receipt of a stream of corrupt payments'-i.e., bribes-in connection with, and with the intent to be influenced in, his actions as an Assemblyman. Seminerio, 2010 WL 3341887, at *6. The same reasoning applies here-the only conflict-of-interest Ryan failed to disclose was the receipt of benefits from Warner. e. Count Five *24 Count Five charged that a check related to the ADM and IBM contracts was mailed in furtherance of the scheme. Specifically, Warner caused a company he controlled, Omega Consulting Group, to issue a check to a company controlled by Alan Drazek, American Management Resources. The check was sent to Udstuen, who sent the check to Drazek. Drazek cashed the check, kept a portion, and sent the rest to Warner. The court noted in examining this evidence that [t]his arrangement served no purpose other than to disguise the provenance of the proceeds. Warner, 2006 WL 2583722, at *9. This count, like Count Four, did not identify a specific official action, but the mailing of the check was incident to the bribery scheme, and specifically to the ADM and IBM contracts. A reasonable jury must have found that if this mailing was in furtherance of the scheme, any conflict of interest being concealed was Ryan's role in interfering with the ADM contract, and misusing his office with the IBM contract, in exchange for benefits from Warner and others. f. Count Seven The Government charged in Count Seven that the mailing of a check from Viisage to a consulting firm controlled by Warner was in furtherance of the scheme to defraud. As more fully explained in the court's ruling on Ryan's post-trial motions, regarding this count the jury could reasonably have found that, by virtue of his relationship with Ryan, Warner obtained access to information about the digital licensing contract and secured a share of the profits for himself, and that Warner attempted to conceal his role. Id. at *11. This count, like some others, rests on the disclosure of material nonpublic information. Even post- Skilling, this court is comfortable in concluding that not every action in furtherance of an honest services bribery scheme must itself adhere to the elements of a paradigmatic bribery charge. In this instance, as part of the flow of benefits running between Ryan and Warner, Ryan allowed Warner access to information from which he was allowed to profit. Ryan's only interest in this was his financial relationship with Warner. No reasonable jury would have found Ryan provided Warner with access to this information and blessed his attempts to benefit from it, without also believing that Ryan did so as part of his exchange of benefits with Warner, and the jury's findings that such benefits were not merely incident to friendship supports this finding. g. Ryan's Convictions on the Warner Mail Fraud Counts Survive Harmless Error For the reasons described above, the court finds that the instructional errors regarding the mail fraud counts related to the relationship between Ryan and Warner were harmless. The Government demonstrated both circumstantial and direct evidence of a stream of benefits flowing between Ryan and Warner. The jury received instructions that if Ryan received these benefits without the intent to be influenced, there was no criminal act. Ryan's defense argued forcefully for this proposition, and the jury rejected it. The jury was also instructed that if Ryan engaged in these activities in good faith, that would defeat the intent necessary for a scheme to defraud. **The jury rejected this defense as well. *25 Even proceeding under a bribery theory, the Government was not required to prove that Ryan and Warner agreed on specific actions to be taken in exchange for specific benefits. The Government only needed to prove what it argued in most instances-that Ryan and Warner were engaged in an exchange of benefits in which Warner provided Ryan with gifts and cash, and Ryan provided Warner with opportunities to profit from the State's business in the form of leases, contracts, or inside information. Had some of the counts of conviction rested solely on the concealment of a conflict of interest, they might fail under the Skilling holding; but in this case, the only conflict of interest that Ryan could have concealed was the benefits he was receiving from Warner. On this record, it is not credible that the jury believed Ryan engaged in a pattern of concealment simply because he was doing favors for some friends, and, as discussed above, the jury affirmatively rejected this argument. Further, the jury found Ryan guilty on numerous false statement and tax charges, suggesting it believed that he had accepted financial benefits and lied to the IRS and FBI about them, and lied about his personal financial relationship with Warner. While Ryan could well have had independent reasons for lying, in the context of the evidence presented, no reasonable jury that believed he concealed benefits and believed he played a role in these transactions could have believed one was not in exchange for the other.

3. Harry Klein-related Mail Fraud Count Count Six is the sole count of mail fraud related to Harry Klein. That count charged that the mailing of a check from the State of Illinois to a company controlled by Klein was in furtherance of the mail fraud scheme. Each year from 1993 to 2002, Ryan vacationed at Klein's home in Jamaica. The government demonstrated that Ryan engaged in sham transactions in which he would write a check to Klein for $1,000-purportedly in return for his accommodations in Jamaica-and then accept that same amount in a cash payment back from Klein. (Pet.'s Br. at 17; Tr. 2838-42; 2844; 9432-44.) In 1997, Ryan proposed that the Secretary of State lease a building owned by Klein for a commercial drivers' license facility. Warner, 2006 WL 2583722, at *10. This court found ample evidence in the record to support the government's position that this lease was foisted on SOS staff because Ryan wanted to do his friend a favor. Ryan's personal intervention on Klein's behalf initiated the transaction, and Ryan remained involved thereafter. Id. Ryan now argues that this mailing was not in furtherance of a bribery scheme. He points to a separate count on which he was convicted for concealing this cash-back arrangement, and argues that he might have concealed these benefits solely because receiving gifts for more than $50 violated state law. (Pet.'s Br. at 17.) True enough, but merely concealing the cash-back arrangement would not be sufficient evidence on which the jury would have convicted Ryan for this mailing, which involved a payment from the State to Klein for the South Holland lease. *26 Ryan also argues, as the court noted, and as argued with the Warner counts, that Ryan must simply have been doing his friend a favor. The indictment, however, required the jury to find, if it believed that the receipt of money from Klein was in furtherance of the scheme, that the money must have been received with the intent to influence Ryan in the performance of his official duties-in other words, for the jury to believe that Ryan received the money in furtherance of the scheme, they must have believed he received a bribe. Further, on this count specifically, the Government and Ryan both argued on the same terms. In its closing argument, the Government explained, Those $100 bills, those cash payments were corrupt payments. You see, those cash payments that Ryan received from Klein made that lodging a free gift. And during the period that George Ryan took that gift, he took official action that benefitted Harry Klein, both in the 1995 currency exchange increase and also in the 1997 South Holland lease. And he was doing this all while he was hiding that gift behind a sham paper trail. And Ryan knew that those payments were corrupt payments, because he never reported them. He never disclosed the free lodging that those payments accomplished. **He never disclosed that free lodging on his Statement of Economic Interests. [showing intent to defraud] And he lied about them to the FBI, as you have heard. And he also lied about them to the public through his press spokesman. (Tr. 23085.) Ryan argued, then as he does now, that any favor done for Klein was just that-a favor, nothing more. It's a crime if George Ryan accepted benefits to perform official acts. But it's not a crime if all George Ryan did is try to do things that sometimes benefitted political supporters. (Tr. 23159-23160.) Ryan pointed the jury to the instruction that explained that good faith is a defense, and argued that Ryan had arranged the lease because it was in the best interests of the State. Further, Ryan reminded the jury that the receipt of personal benefits is a crime only if the benefits were received with the understanding they were given with the intent to influence official action. (Tr. 23148.) In short, the jury was presented with two different versions of these payments, and adopted the Government's view. No reasonable jury would have believed that Ryan concealed the benefits he received from Klein, steered a lease to Klein, and accepted illegal benefits from Klein, without also believing those benefits were given with the intent to influence his official action, and that he accepted those benefits with the intent to be influenced. 4. Count One (RICO) Ryan argues that [b]ecause his RICO conviction was predicated on the mail fraud charges, it is invalid as well. (Pet.'s Br. at 21.) Having determined that Ryan's conviction on Counts Two through Eight stand after harmless error review, the court finds that Ryan's conviction on the RICO count also stands. II. Pecuniary Fraud

*27 [9] The Government argues that even if Ryan's conviction cannot be sustained based on an honest services bribery theory, it can be sustained on a pecuniary fraud theory. The vast majority of the post- McNally cases found support for convictions based on this alternate theory.FN14 In several of these cases, the conduct at issue was similar to the conduct that Ryan was convicted of-the awarding of contracts by public officials because of bribes or kickbacks, often without any proof of a monetary loss. For example, in Borre v. United States, 940 F.2d 215 (7th Cir.1991), the court upheld the conviction of an individual who helped the mayor of Fox Lake and one of its trustees award a cable franchise in exchange for an ownership stake in that franchise. The court found that the franchise was property, and that a victim is defrauded of property when the victim loses control over the disposition of that property. Id. at 222. In United States v. Keane, 852 F.2d 199 (7th Cir.1988), the defendant, a city councilman, had participated in a partnership that bought property from the city at below-market value using inside information and sold it at higher prices to other municipal bodies. The fact that the scheme may not have been profitable, or may not have victimized his employer, did not undermine his conviction; the mail fraud statute proscribes fraudulent schemes; it does not confine penalties to those whose schemes succeed in raking off cash. Id. at 205 (emphasis in original). These holdings are directly relevant in this case because in McNally, the Supreme Court struck down entirely the theory of honest services mail fraud, leaving only pecuniary fraud to support a conviction. Thus, in each case decided in the interim between McNally and the date on which Congress reinstated the honest services fraud theory, the court asked whether the honest services fraud conviction required the conclusion that the defendant had committed pecuniary fraud as well. Asking that same question post- Skilling, the Seventh Circuit recently upheld one of the fraud counts against Conrad Black based on a $600,000 payment that the court found had no plausible explanation, and therefore must have constituted pecuniary fraud. United States v. Black, 625 F.3d at 393. Though the court has concluded that the instructional error was harmless, a finding that Ryan's mail fraud conviction necessarily constitutes pecuniary fraud would be an alternate basis for upholding the conviction. Ryan argues that this pecuniary fraud theory was never presented to the jury, and thus may not be a basis for upholding the verdict. (Reply Br. at 27.) The indictment itself, however, did state that the scheme charged was one to defraud the people of the State of Illinois, and the State of Illinois, of money, property, and the intangible right to honest services (emphasis added). The instructions also referred to a pecuniary fraud theory, explaining that the first element of the mail fraud charge was that the defendant knowingly devised or participated in the scheme to defraud or to obtain money or property.... (Instructions at 75; Tr. 23902.) The instructions, too, explained that the phrase intent to defraud means that the acts charged were done knowingly with the intent to deceive or cheat the people of the State of Illinois in order to cause a gain of money or property to the defendants or others, or the potential loss of money or property to another. (Instructions at 80; Tr. 23904-05.) Finally, the record defeats Ryan's assertion that the Government failed to present the pecuniary fraud theory to the jury. See, e.g. (Tr. 23771 (So, folks, there is two different types of schemes. There is one that's for money or property. That is when you are given state business for leases and you are lying about it. You are giving away property. When you are given-when you are stealing from the state, people's resources, that's property. That's money. You can't do that and lie about it, and there is a mailing in furtherance of it. That's money or property.)). This theory was indeed presented to the jury. *28 Ryan points to two post- Skilling cases that, he says, bar the Government from arguing that Ryan would have been convicted of pecuniary fraud. The first case cited by Ryan involved an honest services conviction based on a scheme wherein former Newark Mayor Sharpe James assisted Tamika Riley, a woman with whom he had an intimate relationship, in acquiring city-owned properties at prices significantly below their market value. United States v. Riley, 621 F.3d 312, 318 (3d Cir.2010). The court explained that, [i]n the context of this case, where the fraudulent act is the non-disclosure of a conflict of interest, it would demean the judicial process to attempt to put the genie back in the bottle by essentially rewriting the charge to the jury on Count 5 and assuming the jury made distinctions the Government did not bring out in its summation. Id. at 324 (emphasis added). Ryan omits the emphasized portion in his brief, but it demonstrates why the reasoning of this case is inapplicable. The other case Ryan emphasizes is also inapposite. The scheme to defraud there involved a state employee who set up a dummy company with another individual to which he arranged payments to be made for work completed by others and sold to the state at an inflated price. Br. in Opp'n to Writ of Cert., United States v.

Hereimi, No. 09-1035, at *2 (U.S. filed May 17, 2010). The Ninth Circuit found the case was clearly tried only under a conflict-of-interest theory not involving bribery, and a pecuniary fraud theory was never presented. United States v. Hereimi, No. 08-30468, 2010 WL 3735898 (9th Cir. Sept. 23, 2010). A. Loss Standard Much of Ryan's argument against a finding of pecuniary fraud is based on the Government's failure to present evidence of a provable loss as a result of the scheme. (Reply Br. at 30-31.) Seventh Circuit precedent, however, does not require that there be a provable loss in such cases.FN15 [10] The wire and mail fraud statutes do not require the government to prove either contemplated harm to the victim or any loss. In United States v. Leahy, 464 F.3d 773 (7th Cir.2006), the defendants postured as minority businesses in order to obtain city contracts they would otherwise not have won. The court rejected their argument that their scheme could not constitute pecuniary fraud because the city paid no more for the services defendants provided than it would have paid a legitimate contractor. The scheme at issue, the Seventh Circuit observed, precisely and directly targeted Chicago's coffers and its position as a contracting party.... [The] object was money, plain and simple, taken under false pretenses from the city in its role as a purchaser of services. See also United States v. Sorich, 523 F.3d 702, 705 (7th Cir.2008) (finding a scheme that doled out thousands of city civil service jobs based on political patronage and nepotism could constitute pecuniary fraud). Numerous recent cases have upheld this theory, finding that no proof of actual or contemplated loss is necessary. See, e.g., United States v. Azteca Supply Co., No. 10 CR 80, 2010 WL 3940717, at *3-4 (N.D.Ill. Oct. 6, 2010) (finding pecuniary fraud in circumstances similar to Leahy despite the fact that the lowest bidder received the contracts, observing that a jury is entitled to find that by depriving a governmental entity of a fundamental basis of [its] bargain, a defendant can deprive that entity of a property right) (citation omitted); United States v. Fenzl, 731 F.Supp.2d 796, 800 (N.D.Ill.2010) (As the law stands, the government does not need to establish pecuniary harm or economic loss as an element of the alleged offenses.); United States v. Villazan, No. 05 CR 792, 2007 WL 541950, at *5 (N.D.Ill. Feb. 15, 2007) (Cook County's right to control its own spending is not a regulatory interest but a property right.). *29 Ryan cites United States v. Walters, 997 F.2d 1219 (7th Cir.1993), in which the court reversed the conviction of a sports agent for mail fraud based on his signing contracts with college athletes in violation of NCAA rules. The Government there alleged that the mailings of scholarship checks to these athletes were in furtherance of the scheme, but the court found they could not be because the universities were not out of pocket to Walters. Id. at 1224 (emphasis omitted). As the Seventh Circuit explained in Sorich, this holding was not a requirement that the defendant receive the money or property, but rather a way of illustrating a deeper problem with the case. The scholarship money that the university sent the athletes was incidental, rather than the target of the scheme. 523 F.3d at 713. In this case, in contrast, the awarding of contracts and leases was the subject of the mailings and the object of the scheme. The Supreme Court reversed a mail fraud conviction in Cleveland v. United States, 531 U.S. 12, 121 S.Ct. 365, 148 L.Ed.2d 221 (2000), based on the fraudulent receipt of a video poker license, finding that interest to be regulatory, and holding that 1341 does not reach fraud in obtaining a state or municipal license of the kind here involved, for such a license is not property in the government regulator's hands. FN16 Id. at 20, 121 S.Ct. 365. In the case before this court, in contrast, Ryan and Warner were convicted of a scheme that deprived the state of the power to control how its money was spent-the type of deprivation deemed sufficient to support a pecuniary fraud prosecution by other courts that have distinguished Cleveland. See, e.g., United States v. Sorich, 427 F.Supp.2d 820, 828 (N.D.Ill.2006), aff'd 523 F.3d 702, reh'g en banc denied, 531 F.3d 501 (7th Cir.2008), cert. denied, --- U.S. ----, 129 S.Ct. 1308, 173 L.Ed.2d 645 (2009). Several of the charges against Ryan also involved the misappropriation or disclosure of nonpublic information. In a case decided shortly after McNally, the Supreme Court decided that the Wall Street Journal had a property interest in the content of one of its columns, which was kept confidential prior to publication. Confidential business information has long been recognized as property, the Court observed. Carpenter v. United States, 484 U.S. 19, 26, 108 S.Ct. 316, 98 L.Ed.2d 275 (1987). See also United States v. Cherif, 943 F.2d 692, 695 (7th Cir.1991) (holding that a scheme involving receipt of confidential business information held by bank, for purpose of trading stocks on such information, resulted in deprivation of a property right). B. Count Two

Count Two involved Ryan's interference with proposed changes to specifications for vehicle registration stickers that might have resulted in Warner's client, ADM, losing its contract to manufacture those stickers for the Secretary of State. The Government argues that Ryan caused the state to continue to pay ADM for a contract based on specifications that the relevant state official no longer believed were in the state's best interest. (Response Br. at 38.) Ryan argues that the only false representation made by Ryan regarding this contract was that the security mark was necessary for public safety, and that the Government presented no evidence that Ryan did not believe what he said. (Reply Br. at 32.) *30 The jury was instructed that good faith was a defense to every count-that [g]ood faith on the part of the defendant is inconsistent with intent to defraud. (Instructions at 81; Tr. 23905.) Had the jury believed that Ryan made representations about the ADM contract in good faith-in other words, that he genuinely believed the specifications needed to be changed-it would not have convicted him under either a pecuniary fraud or an honest services theory. The court concludes that the jury must have believed that these statements were made with the intent to defraud, and in that case, no reasonable jury that convicted Ryan on this count of honest services fraud would have failed to convict him of pecuniary fraud. C. Counts Three and Eight Count Three involves the State's lease of a building in Joliet owned by Warner, and Count Eight involves the State's lease of a building in Bellwood owned by Warner. At trial, the Government presented ample evidence that Ryan steered the leases to Warner, and, again, the jury necessarily rejected any good faith defense. Ryan argues that the only misrepresentation or nondisclosure involved in these leases was Warner's, and that Ryan bore no responsibility for Warner's nondisclosures. (Reply Br. at 33.) The jury, however, convicted Ryan on Count Twelve, which Ryan does not now challenge, of making false statements to the FBI concerning the Joliet lease. The jury found that Ryan lied when he said he never had any discussions with Warner about the lease and did not know that Warner would have profited from the lease. This suggests, at least as to the Joliet lease, that at a minimum, Ryan failed to disclose Warner's interest in the property. Further, the jury could not have convicted Ryan on either of these counts without believing that Ryan and Warner intended to defraud the State of either property or honest services. To convict Ryan of honest services fraud, the jury must have found that, at the least, that Ryan failed to disclose his conflict of interest-i.e., that Warner stood to profit from the leases and that Ryan had a personal financial relationship with Warner (as the jury also concluded in Count Twelve). This requires the conclusion that the jury must have believed Ryan made material misrepresentations or nondisclosures regarding these leases, and that Ryan was guilty of pecuniary fraud on these counts. Ryan further argues that he cannot be responsible for Warner's nondisclosures under a theory of conspiracy because [t]he only conspiracy in which Ryan and Warner allegedly participated ... was a conspiracy to conduct the affairs of an enterprise through a pattern of pre- Skilling honest services fraud. (Reply Br. at 33.) Ryan's responsibility for his own nondisclosures suffices to satisfy that element of the mail fraud charge here, for reasons explained earlier, the conspiracy conclusion that the jury reached is not undermined by Skilling. D. Counts Four and Five *31 Counts Four and Five grow out of the award of a mainframe computer to contract to IBM, which at the time was a client of Warner's. The evidence at trial established that Ryan allowed Warner and Udstuen to choose the individual who would serve as director of the SOS department that bid on the mainframe, essentially allowing them to fix the contract. Again, at a minimum, the jury found that Ryan failed to disclose a conflict of interest concerning this episode when they determined that he had deprived the State of its right to honest services. The only conflict of interest that Ryan could have failed to disclose, based on the evidence at trial, was that he was engaged in an exchange of benefits with Warner. Ryan argues that the only material nondisclosure related to the IBM contract was the receipt of gifts from Warner that were unrelated to any specific action on this contract. Ryan asks whether an official [could] be convicted of money/property fraud if he approved a contract without revealing that a beneficiary of this contract once took his aunt to dinner? (Reply Br. at 34.) The answer, of course, is that if the jury found that the official

acted in good faith in awarding the contract, then the incidental receipt of a gift to or from a relative would be immaterial. In this case, however, the jury found Ryan did not act in good faith, and it must have found, at least, that Ryan concealed a conflict related to this transaction, a finding necessary either for either for honest services fraud or pecuniary fraud. The jury must have found Ryan guilty of pecuniary fraud. Ryan urges that the contract may well have been awarded to IBM regardless of his or Warner's conduct; as explained earlier, however, the lack of actual or contemplated loss does not defeat a verdict of pecuniary fraud. Ryan and Warner perverted the bidding process by concealing their conflicts of interest and therefore denied the State of its power to control how its money is spent-and that is sufficient for a conviction of pecuniary fraud. E. Count Six In Count Six, the Government charged Ryan with mail fraud related to the award of a lease in South Holland to Harry Klein. As described earlier, the evidence supported a finding that Ryan steered the lease to Klein in exchange for free stays at Klein's home in Jamaica. These stays involved a sham cash-back transaction wherein Ryan would write a check to Klein, and Klein would pay Ryan back in cash. Ryan's only argument regarding this transaction is that the award of a contract or lease to the provider of a gift should not be sufficient in itself to establish a fraudulent deprivation of property. (Reply Br. at 35.) Ryan is correct that if that is all that the evidence shows, it is insufficient. Again, however, the jury found at the least that Ryan concealed a conflict of interest; and the only such conflict of interest that Ryan would have concealed was the stream of benefits that he had received from Klein before the lease was awarded. Such a finding establishes the intent to defraud under either an honest services theory or a pecuniary fraud theory. In addition, the jury found in Count Eleven that Ryan made false statements to the FBI when he said he paid his own expenses in Jamaica, and that he did not take part in, or know the details of, the South Holland lease. Based on these findings, the jury must have convicted Ryan of pecuniary fraud on this count. F. Count Seven *32 Analysis of Ryan's conviction on Count Seven follows much the same pattern. Count Seven related to the awarding of a state contract to Viisage, a company that Warner worked for as an unregistered lobbyist. Ryan's alleged nondisclosure in the awarding of this contract was the stream of benefits Warner had provided to him, and Warner's failure to register as a lobbyist for Viisage. At a minimum, the jury found that Ryan failed to disclose a conflict of interest related to that contract, a conflict that must have consisted of the exchange of benefits with Warner. Though this contract also might have been awarded regardless of Warner and Ryan's interference, these nondisclosures and the absence of good faith suffice to establish pecuniary fraud, and because the jurors believed that Ryan concealed his interest in this transaction, they also must have believed that Ryan was guilty of pecuniary fraud. Finally, the State's interest in the confidential information related to this contract could also be considered a property interest. III. Sufficiency of the Evidence Ryan argues that the evidence produced at trial was insufficient to support his convictions under the Skilling standard, which requires that the honest services scheme involve bribes or kickbacks. No rational jury could have found Ryan guilty of mail fraud or racketeering in light of the holding in Skilling .... None of [the] evidence remotely suggested a scheme to obtain bribes or kickbacks. (Pet.'s Br. at 15-16.) A. Standard of Review [11] In reviewing a 2255 petition for sufficiency of the evidence, the court review[s] evidence and draw[s] all reasonable inferences from it in a light most favorable to the government.... Carnine v. United States, 974 F.2d 924, 928 (7th Cir.1992). To determine whether the evidence is sufficient to support the conviction, we view the evidence and all reasonable inferences derived therefrom in the light most favorable to the government, defer to the jury's credibility determinations, and overturn a verdict only when the record contains no evidence, regardless of how it is weighed, from which the jury could find guilt beyond a reasonable doubt. United States v. Blanchard, 542 F.3d 1133, 1154 (7th Cir.2008) (quotation omitted). Because the court has already engaged in harmless-error analysis, much of Ryan's argument regarding the sufficiency of the evidence has been addressed. [D]etermining whether an evidentiary error is harmless necessarily requires some weighing of the sufficiency of the evidence. Fuesting v. Zimmer, Inc., 448 F.3d 936,

939 (7th Cir.2006). The court's brief consideration of the sufficiency argument follows. B. The Evidence Was Sufficient to Establish A Bribery Scheme [12] Ryan's main argument relating to the sufficiency of the evidence is that his activities, even taken in the light most favorable to the government, fail to establish a bribery scheme of the type required for conviction by Skilling. As discussed above, Skilling imposed limits on the theory of honest services mail fraud, but it did not impose a requirement that the government prove an explicit quid pro quo. A bribery scheme can rest on a stream of benefits, course of conduct, or retainer theory of bribery. As the jury was instructed in this case, whether benefits or gifts were given with the intent to influence Ryan's exercise of office can be inferred from the evidence presented. In evaluating Ryan's post-trial sufficiency argument, this court observed that [t]he government introduced a great deal of evidence of Ryan's acceptance of gifts and benefits. Warner, 2006 WL 2583722, at *6. The court need not repeat every charge examined in the harmless-error analysis it has just engaged in, for the evidence that Ryan took official actions favorable to Warner and Warner reciprocated with a stream of benefits is sufficient to establish bribery under Skilling. The evidence that Harry Klein paid for Ryan's stays at his home in Jamaica, and that Ryan performed acts favorable to Klein, was also sufficient to establish a bribery scheme that included the award of the South Holland lease charged in Count Six. *33 Because the standard for harmless-error review is more demanding than the standard in a sufficiencyof-the-evidence inquiry, Ryan's challenge to the sufficiency of the evidence of a bribery scheme necessarily fails. And, as explained earlier, the evidence is sufficient for a finding of pecuniary fraud, as well. IV. Ryan Was Not Prejudiced By Non-Bribery-Related Evidence Finally, Ryan argues that he was prejudiced by the admission of evidence that would not have been admissible in a post- Skilling honest services fraud prosecution. (Pet.'s Br. at 15; Reply Br. at 36-37.) The Government charged Ryan with a wide-ranging scheme to defraud that extended over twelve years and with a RICO conspiracy predicated upon the alleged mail fraud scheme. Most of the conduct alleged to be part of the scheme cannot remotely be characterized as bribes or kickbacks. Evidence of this conduct would be inadmissible in a post- Skilling mail fraud trial and would be highly prejudicial in a trial of legitimate mail fraud charges. (Pet.'s Br. at 15.) Ryan does not suggest a standard that should govern the court's review on this issue, although he appears to agree that United States v. Owens, 424 F.3d 649 (7th Cir.2005) applies. Owens states that [t]he test for harmless error is whether, in the mind of the average juror, the prosecution's case would have been significantly less persuasive had the improper evidence been excluded. Id. at 656 (citing United States v. Eskridge, 164 F.3d 1042, 1044 (7th Cir.1988)). Ryan identifies six specific pieces of evidence that, he claims, are inadmissible post- Skilling. The court addresses this evidence in turn. A. Gifts in Excess of $50 [13] Ryan contends that evidence he accepted gifts in excess of the $50 limit established by State regulations and Ryan's own personal policy would now be inadmissible. (Pet.'s Br. at 15.) The Government argues this evidence would be admissible to show his intent to defraud, and was therefore relevant to the mail fraud counts as well as to the false statement counts. (Response Br. at 42.) **The state law and personal reporting requirements are clearly relevant to Ryan's intent to defraud, and would therefore be admissible under either a bribery or pecuniary fraud theory. In each case, the evidence that Ryan failed to disclose gifts when required to do so is probative of whether he intended to conceal or misrepresent his relationships with those receiving state business. Whether this evidence would have been admissible solely on the false statement charges is a closer case, but since the evidence would have been admissible regardless, the court declines to reach that question. B. Consulting Fee from Phil Gramm Ryan next argues that evidence he accepted a consulting fee from the presidential campaign of Senator Phil Gramm and did not report that fee should not have been admitted. The Government noted that this conduct was specifically at issue in one of the tax counts: Count Eighteen charged Ryan with concealing payments from the

Gramm campaign and failing to report them on his tax returns. Ryan responds that if these payments were admissible only on the tax charge, he could have sought a severance of the trial on those charges or, absent severance, could have asked for a limiting instruction with respect to this evidence. (Reply Br. at 36.) Nothing in Skilling alters the analysis with respect to the evidence of the Gramm campaign payments. Had Ryan believed the Gramm matter supported a severance or a limiting instruction, he could have asked for such rulings at trial. This issue is not appropriate for 2255 review. C. Discharge and Reassignment of SOS Employees *34 Ryan argues that evidence of the discharge and reassignment of SOS Inspector General employees in order to stifle an investigation into wrongdoing was inadmissible. (Pet.'s Br. at 15.) The Government argues that this evidence was relevant to establishing his intent to use money from the Citizens for Ryan campaign for his personal use, and his failure to pay taxes on that money. (Response Br. at 42.) In fact, Count Eighteen does include a charge that Ryan used Citizens for Ryan money for personal purposes and failed to disclose it. Ryan makes the same severance and instruction arguments here, and for the reasons already stated, those arguments are unavailing. D. Low-Number License Plates [14] Ryan contends that evidence he allowed Warner to assign low-digit license plates to friends should not have been admitted. (Pet.'s Br. at 15.) The Government responds that this evidence was relevant as it was part of the alleged scheme to defraud, and would be part of that scheme under either an honest services bribery theory or a pecuniary fraud theory. (Response Br. at 42.) This evidence, the Government contends, made it more believable that SOS employees recognized Warner's clout and acceded to his demands about state contracts and leases. (Id.) Ryan cites FED.R.EVID. 404(b) in reply, which explains that [e]vidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show action in conformity therewith. **Rule 404(b) does, however, permit the introduction of such acts for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident. FED.R.EVID. 404(b). Warner's access to and sway within the Secretary of State's office is clearly admissible and relevant to the charged conduct under this standard. In any event, the court believes the license plate evidence remains relevant to honest services and pecuniary fraud, as well as to the RICO charge. The awarding of low-digit license plates was part of the charged scheme outlined in the summary indictment, and as the court noted earlier, low-digit license plates appear to have a cachet in Illinois. In the court's view, awarding such items of value to specific campaign contributors is not comparable to generally supporting legislation favored by them. Warner, 2005 WL 2367769, at *3. To the extent that low-digit license plates have value, that value belongs to the State, not to Warner and Ryan or their friends. This objection is overruled. E. Revealing Information About Grayville Prison Ryan argues that in a post- Skilling prosecution, evidence that he leaked information to Swanson concerning the location of the Grayville prison would not have been admitted. (Pet.'s Br. at 15.) The Government responds that this information was admissible to prove the flow of benefits between Ryan and Swanson and that this conduct was directly charged in Count Ten. (Response Br. at 42-43.) Ryan again replies with a 404(b) objection. *35 The evidence at issue related directly to a charged count and certainly would have been admitted; Skilling does not require the conclusion that this count would have been dismissed pretrial. In any event, the evidence at issue related only to a discrete occurrence, and although it did not portray Ryan in a positive light, the court is confident the Grayville Prison evidence was not unfairly prejudicial. This objection, too, is overruled. F. Use of Government Employees and Supplies for Campaign Purposes [15] Finally, Ryan argues that evidence he allowed government employees to work on his campaign and allowed property belonging to the Secretary of State's office to be used for his campaign should not have been admitted. (Pet.'s Br. at 15-16.) The Government argues that this evidence was relevant to show how Ryan used false pretenses, including false time sheets, to obtain state money and property. (Response Br. at 43.)

The court agrees with Ryan that this evidence would not be admissible, post- Skilling, to prove honest services fraud, as it alleges the very type of self-dealing that Skilling found could no longer supports a conviction under this theory. The evidence might have been relevant to a pecuniary fraud theory, but Ryan accurately points out there was no mailing in furtherance of this alleged misconduct. (Pet.'s Br. at 16 n. 11.) Nonetheless, in a trial involving a complex scheme to defraud, dozens of witnesses, multiple counts, and spanning many months, the court is not persuaded that the prosecution's case would have been significantly less persuasive if this evidence were excluded. Nothing in the record of Ryan's petition suggests this evidence constituted a significant or particularly persuasive part of the Government's case. Therefore, the court concludes the admission of this evidence constituted harmless error. V. Motion to Set Bail Ryan has also moved to set bail pending the resolution of his 2255 motion. (Mot. to Set Bail [8].) Ryan submits a number of factors for the court's consideration on this motion, including, most recently, the sad news that his wife of more than fifty years is suffering from a terminal illness. The Ryans' advanced years and their obvious devotion to one another were significant to the court at sentencing and remain so, and the court recognizes that Mr. Ryan poses no risk of recidivism nor danger, were he to be released. In deciding a motion for release of an individual who has been convicted and sentenced, however, the most relevant factor must not be his or her personal circumstances, but instead the likelihood his 2255 motion will succeed. Although 2255 itself does not explicitly provide for setting bail pending the resolution of a petition, the Seventh Circuit has explained that there is abundant authority that federal district judges in habeas corpus and section 2255 proceedings have inherent power to admit applicants to bail pending the decision of their cases, but a power to be exercised very sparingly. Cherek v. United States, 767 F.2d 335, 337 (7th Cir.1985). The Government and Ryan disagree on the standard for setting bail, and Ryan admits that [t]he standard for granting bail in this case is unclear. (Mem. in Supp. of Mot. to Set Bail at 2.) *36 This court takes no pleasure in depriving any defendant of his or her liberty. The court has had the painful duty to take such action in circumstances more compelling than these-where a young defendant with little education or resources is the sole support of small children, or is the only caregiver for a disabled relative, for example. Any sensitive judge realizes that a lengthy prison term effectively robs the convicted person of what we all value most: months and years with loved ones, some of whom will no longer be there when the sentence has been served. Mr. Ryan, like other convicted persons, undoubtedly wishes it were otherwise. His conduct has exacted a stiff penalty not only for himself but also for his family. The court need not dwell on the appropriate standard for release of a convicted prisoner. In today's ruling, Ryan's 2255 petition is dismissed on the merits and his conviction is upheld on all counts. Under any legitimate standard, this context is not appropriate for the very sparing exercise of the court's power to set bail. Ryan's motion for release is denied. CONCLUSION For the reasons stated herein, Ryan's motion to vacate, set aside, or correct his sentence [1] is denied. Ryan's motion to set bail [8] is also denied. Aliucci v. U.S., 2011 WL 635264, at p.9, (W.D.Pa.,Feb 11, 2011) Skilling does not apply to charges of traditional fraud pursuant to the mail and wire fraud statutes. See, e.g., Conti, 2010 U.S. Dist. LEXIS 118111, at *14. Within this framework, Petitioner attempts to establish that his conviction under 1341 was predicated on a scheme to defraud his employer of honest-services, as compared to money or property, believing that if he does so, his conviction will be vacated under Skilling and Black because he received no kickbacks or bribes. To accomplish this task, Petitioner begins by alleging that he provided a service to his employer. (Docket No. 57 at 2). Specifically, Petitioner states:

*10 The charge was based on the facts [sic] that [Petitioner] was a senior executive who abused his position to scheme or ... defraud his employer of their [sic] intangible right of honest services, since [Petitioner] provided ... services ... to his employer and breached his fiduciary duty of honesty and loyalty involving a violation of the duty to disclose, for purpose [sic] of the honest fraud definition under [ 1341]. (Id. at 6). Petitioner then argues that this conclusion is supported by the fact that the Government sought a two level adjustment at the time of sentencing under Guideline 3B1.3 for abuse of position of trust. (Id. at 7). In this regard, Petitioner states, due to the Government's application of the two level enhancement to Petitioner's sentencing calculations, it is obvious that the Government was claiming that [Petitioner] abused his fiduciary responsibilities to the victim. (Id. at 8). Petitioner concludes his argument by contending that the Government's allegations in Count One of the indictment that Petitioner falsely represented to the victim that there were legitimate business expenses and that the victim discovered the [Petitioner's] scheme further establishes that the Government's charges were based on the definition of honest-services. (Id. at 8). In this Court's estimation, neither Skilling nor Black has any application here. Although Petitioner might wish it were otherwise, he was not charged with, nor did he plead guilty to, honest-services fraud under 1346. See Skilling, 130 S.Ct. at 2928. Moreover, in this case, the Government did not advance alternative theories of money-or-property fraud or honest-services fraud. See Black, 130 S.Ct at 2966. Instead, the indictment, which enumerated the acts attributable to Petitioner, as well as the Court's questioning, the Assistant United States Attorney's description of the scheme, and the presentence investigation report's offense conduct section, make it clear that Petitioner's conduct represented conventional mirror image mail fraud pursuant to 1341. See Shilling, 130 S.Ct. at 2926. He intentionally misrepresented to Global that NNI had provided services to Global and thereby fraudulently induced Global to send money that it would not otherwise have sent. (See Docket Nos. 1, 46). This money was credited to Petitioner in connection with his own business. (Id.). Hence, this is precisely the type of fraud where the victim's loss of money or property supplied the defendant's gain. Stalling, 130 S.Ct. at 2926. In addition, the Court does not find the arguments advanced by Petitioner to establish that his conviction was predicated on a scheme to defraud his employer of honest-services, as compared to money or property, persuasive. Initially, the allegation that Petitioner provided a service to his employer does not change the fact that he knowingly defrauded Global out of more than $100,000.00. Similarly, the allegations in Count One of the indictment that Petitioner represented to Global that [NNI] had provided various services to Global, when in truth and fact, and as [Petitioner] well knew, such representations were false and fraudulent is consistent with the elements of the offense of money fraud pursuant to 1341. Finally, the Court disagrees with Petitioner's apparent argument that, in cases brought pursuant to 1341, a two level adjustment under Guideline 3B1.3 is only appropriate in prosecutions for honest-services fraud. Instead, as recognized in the Court's Tentative Findings and Rulings, Guideline 3BI.3 provides a two level increase if the defendant abused a position of public or private trust in a manner that significantly facilitated the commission or concealment of the offense. (Docket No. 51 at 5). Applying the two-step inquiry provided by the United States Court of Appeals for the Third Circuit in United States v. Hart, 273 F.3d 363, 375-76 (3d Cir.2001), this Court concluded that this enhancement was correctly applied, comparing Petitioner's offense to a bank executive's embezzlement of bank funds, (Id. at 5-6), which could be described as money fraud.FN9 FN9. In Hart, the Third Circuit held that the two level enhancement under Guideline 3B1.3 applies to positions where the defendant has control over transactions essential to the crime and where the victims of the crime relied upon the defendant's integrity associated with his or her position of trust. 273 F.3d at 375-76. A court must apply the fact intensive two-step inquiry of (1) whether the defendant occupied a position of trust and (2) whether he used that position in a way that significantly facilitated the crime. Id. *11 Significantly, consistent with the Court's decision, several courts have already concluded that Skilling does not apply to charges of traditional fraud pursuant to the mail and wire fraud statutes. See, e.g., Conti, 2010 U.S. Dist. LEXIS 118111, at *14. In United States v. Conti, the defendant, similarly to Petitioner, argued that his convictions under 18 U.S.C. 371 and 1341 should be vacated based on the Supreme Court's decision in Skilling because the defendant received no kickbacks or bribes. Id. at *12. The district court rejected this argument and found that the honest services' provision of the mail fraud statute addressed by the Supreme

Court in Skilling played no role in [the defendant's] indictment and guilty plea. The Court holds the same here today. U.S. v. Conti, 2010 WL 4613798 (W.D.Pa.,Nov 05, 2010) MEMORANDUM OPINION AND ORDER McLAUGHLIN, SEAN J., District Judge. *1 This matter is before the Court upon Defendant Francis R. Conti's Motion to Vacate Judgment pursuant to 28 U.S.C. 2255. In his motion, Conti alleges that his conviction and sentence should be vacated based on the United States Supreme Court's decision in United States v. Skilling, --- U.S. ----, 130 S.Ct. 2896, 177 L.Ed. 2d 619 ( 2010). For the reasons which follow, the motion will be dismissed. I. BACKGROUND On February 12, 2008, Conti was indicted by a grand jury on charges of **participating in a mail, wire and bank fraud conspiracy between January 2003 and March 2006, in violation of 18 U.S.C. 371 .FN1 Conti was also charged with nine substantive counts of mail fraud in violation of 18 U.S.C. 1341.FN2 FN1. In relevant part, 18 U.S.C. 371 provides: If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both. FN2. In relevant part, 18 U.S.C. 1341 provides: Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises ... places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service ... shall be fined under this title or imprisoned not more than 20 years, or both. In brief, Conti and his co-conspirators were accused of purchasing distressed homes in the city of Erie, performing superficial repairs and sham restorations to make the homes appear to be in significantly better shape than they were, and then selling the homes at drastically inflated prices to unsuspecting buyers. The indictment further alleged that the conspirators prepared loan applications on behalf of their buyers that overstated the financial health and assets of those buyers in order to secure mortgage loans. The indictment sets forth the following overt acts which Conti committed in furtherance of the conspiracy: 20. In and around November 2003, the defendant, FRANCIS R. CONTI, completed a mortgage loan application for T.Z. who was purchasing the property at 343 East 33rd Street, Erie, Pennsylvania. **The defendant, FRANCIS R. CONTI, then submitted the loan application to Meritage Mortgage, in Lake Oswego, Oregen. The defendant, FRANCIS R. CONTI, indicated within T.Z.'s loan application that T.Z. maintained a checking account balance of $8,700, when the actual balance when the application was submitted was approximately $120.66. 23. On or about January 30, 2004, the defendant, FRANCIS R. CONTI, completed a mortgage loan application for C.A. who was purchasing the property at 1550 West 25th Street, Erie, Pennsylvania. The defendant, FRANCIS R. CONTI, then submitted the loan application to Principal Residential Mortgage, Inc. in Cincinnati, Ohio. Within the loan application, the defendant, FRANCIS R. CONTI, indicated that the down payment C.A. was providing was not borrowed when, in fact, the defendant, FRANCIS R. CONTI, knew that C.A. had borrowed the money for the down payment from the defendant, GREGORY M. FINNEY. 29. On or about September 27, 2004, the defendant, FRANCIS R. CONTI, accompanied by another unnamed co-conspirator, visited the St. Martin Center, 1701 Parade Street, Erie, Pennsylvania, an organization dedicated to assisting low income individuals, in furtherance of the defendant, FRANCIS R. CONTI's, effort

to find and recruit potential home buyers. (See Indictment, pp. 6-9). On March 13, 2009, Conti entered a plea of guilt to the conspiracy charge (Count One) and to one of the substantive mail fraud charges (Count Three) pursuant to a written plea agreement. At the plea hearing, the Assistant United States Attorney summarized the nature of the scheme and Conti's involvement in it as follows: *2 [I]n general terms, this conspiracy really was about two different things. The first thing was the purchase of homes in relatively distressed areas of the city of Erie. Those home [sic] were then essentially flipped at dramatically increased values, which were not commensurate with their actual value. That was essentially accomplished by telling the borrowers, the home purchasers, that items had been improved or fixed up on these homes, which were not actually fixed up. And all that was actually done was some minor cosmetic changes made to the homes, many of which were actually falling apart, to look like that they were homes that were much nicer. Such that a borrower would want to take out a mortgage to purchase those homes. So what ended up happening with almost all of these properties where the values of the homes were dramatically increased in ways that were not-in that they did not reflect the home's true value. The second part of the conspiracy was that those people who purchased those homes, their ability to get a mortgage was increased by the drafting of fraudulent mortgage loan applications, which did not reflect their true assets in any reasonable fashion. Oftentimes in this case what amounted to happening was the borrower's bank account balance and other assets were dramatically inflated to make it appear to the lending institution that they had assets which they did not have. This second part of the conspiracy is really the part that involves Mr. Conti. And Mr. Conti did not havehad little to no involvement at all in the actual purchase and the flipping of the homes. His involvement was much more on the other end, the completion of fraudulent mortgage loan applications. Change of Plea Hearing Transcript, March 13, 2009, pp. 17-18. In his plea agreement, Conti waive[d] the right to take a direct appeal from his conviction or sentence and waive[d] the right to file a motion to vacate sentence, under 28 U.S.C. 2255, attacking his conviction or sentence, and the right to file any other collateral proceeding attacking his conviction or sentence. (Plea Agreement, p. 3). The agreement also contained a paragraph wherein Conti averred that he had read and discussed the plea agreement with his attorney. (Id. at p. 5). During the plea hearing, an extensive plea colloquy took place wherein Conti admitted his guilt relative to the mail fraud violations and conspiracy charges contained in Counts One and Three of the indictment. (Plea Transcript, pp. 2-12). Conti indicated several times during the hearing that he had read and understood the terms and conditions of his plea agreement and that he agreed with all of the terms therein. (Id. at 13-15). The Court specifically examined Conti concerning the waiver provisions contained in the plea agreement:

At p. 3,
On July 19, 2010, Conti filed the instant motion to vacate judgment. The government filed a response in opposition on August 18, 2010. This matter is ripe for review. II. STANDARD OF REVIEW Pursuant to 28 U.S.C. 2255, a federal prisoner may move the sentencing court to vacate, set aside or correct a sentence upon the ground that the sentence was imposed in violation of the Constitution or laws of the United States, or that the court was without jurisdiction to impose such sentence, or that the sentence was in excess of the maximum authorized by law, or is otherwise subject to collateral attack. 28 U.S.C. 2255. When a motion is made under 28 U.S.C. 2255, the question of whether to order a hearing is committed to the sound discretion of the district court. In exercising that discretion, the court must accept the truth of the petitioner's factual allegations unless they are clearly frivolous on the basis of the existing record. United States v. Day, 969 F.2d 39, 41-42 (3d Cir.1992). Further, the court must order an evidentiary hearing to determine the facts unless

the motion and files and records of the case show conclusively that the petitioner is not entitled to relief. Id. Upon consideration of Conti's motion for relief, the government's response thereto, and the pleadings and documents of record, I conclude that no hearing is necessary because Conti has waived his right to file a collateral attack of his sentence. III. DISCUSSION It is well-settled that an appellate and habeas corpus waiver provision in a plea agreement must be enforced, if entered into voluntarily and knowingly, unless to do so would work a miscarriage of justice. United States v. Khattak, 273 F.3d 557, 558 (3rd Cir.2001). In determining whether a miscarriage of justice would occur if an otherwise valid waiver were enforced, the Third Circuit has suggested the following flexible factors for consideration: [T]he clarity of the error, its gravity, its character (e.g., whether it concerns a fact issue, a sentencing guideline, or a statutory maximum), the impact of the error on the defendant, the impact of correcting the error on the government, and the extent to which the defendant acquiesced in the result. *4 Khattak, 273 F.3d at 563 (quoting United States v. Teeter, 257 F.3d 14, 25-26 (1st Cir.2001)). Fundamentally, Conti argues that, based upon the United States Supreme Court's decision in United States v. Skilling, the enforcement of the waiver provision in his plea agreement would work a miscarriage of justice. In Skilling, the United States Supreme Court addressed the scope of 18 U.S.C. 1346 FN3 in the context of a defendant who was accused of conspiring to defraud shareholders by misrepresenting his employer's financial health in order to artificially inflate the company's stock price. In response to Skilling's argument that 18 U.S.C. 1346 was unconstitutionally vague because it did not adequately define the phrase intangible right of honest services, the Court reviewed the historical development of the doctrine and concluded that the vast majority of the honest-services cases involved offenders who, in violation of a fiduciary duty, participated in bribery or kickback schemes. Id. at 2930. Rather than strike down the statute entirely, the Court held that the statute could be salvaged by confining its scope ... [ to] encompass only bribery and kickback schemes. Skilling, 130 S.Ct. at 2926, 2930. The Court concluded that Skilling's financial selfdealing did not constitute honest-services fraud because it did not entail a bribery or a kickback. Id. at 2934. In the course of the opinion, the Court also contrasted the difference between conventional fraud and honest services fraud as follows: FN3. 18 U.S.C. 1341 [sic; 1346] provides: For the purposes of this chapter, the term scheme or artifice to defraud includes a scheme or artifice to deprive another of the intangible right of honest services. Unlike fraud in which the victim's loss of money or property supplied the defendant's gain, with one the mirror image of the other, **the honest-services theory targeted corruption that lacked similar symmetry. While the offender profited, the betrayed party suffered no deprivation of money or property; instead, a third party, who had not been deceived, provided the enrichment. For example, if a city mayor (the offender) accepted a bribe from a third party in exchange for awarding that party a city contract, yet the contract terms were the same as any that could have been negotiated at arm's length, the city (the betrayed party) would suffer no tangible loss. Even if the scheme occasioned a money or property gain for the betrayed party[in this analogy the city] , courts reasoned, actionable harm lay in the denial of that party's right to the offender's honest services. Skilling, 130 S.Ct. at 2926. Here, Conti contends that since he received no kickbacks or bribes, his conviction, like that of Skilling's, should be vacated. Specifically, Conti argues: Mr. Trabold conceded that Conti had little to no involvement in the initial purchase of the properties in distressed areas of the City or the flipping of the same. Rather his involvement in the scheme concerned his preparation and submission of erroneous mortgage loan applications on behalf of buyers/borrowers sent to

him; and, then submitted such applications to various lenders for their consideration securing loans for various individuals noted in the indictment in this matter. At such time, Conti performed such activities while in the employ of an entity known as Regal Financial Services which processed and secured mortgage loans for buyers/borrowers from various lenders. The essence of the actions, errors or omissions charged against Conti was that the submission of less than truthfully [sic] mortgage loan applications was in fact a failure of honest services to be rendered by Conti to his employer; the buyer/borrowers for whom he prepared the mortgage loan applications; and, the lenders to who he submitted the same for their consideration all of whom he had in essence a fiduciary relationship with. There was however no indication in the guilty plea colloquy that Conti, who was acting in such a fiduciary capacity in the preparation and submission of the subject mortgage loan applications, ever received any kickbacks or bribes for the actions he performed. Therefore, it is submitted that the decision rendered in Skilling is applicable to the Conti case and warrants the vacating of his conviction and judgment of sentence. *5 See Defendant's Brief in Support, pp. 15-16. Skilling, however, has no application here. Although Conti might wish it were otherwise, he was not charged with, nor did he plead guilty to, honest services fraud under 18 U.S.C. 1346.FN4 The indictment, which enumerated those overt acts attributable to Conti, as well as the Assistant U.S. Attorney's description of the nature of Conti's involvement in the conspiracy make it clear that Conti's conduct represented **conventional mirror image mail fraud. He falsified mortgage application papers and thereby fraudulently induced lending institutions to lend money that they would not otherwise have lent. This is precisely the type of fraud where the victim's loss of money or property supplied the defendant's gain. Skilling, 130 S.Ct. at 2926. FN4. Conti, citing United States v. Pennington, 168 F.3d 1060 (8th Cir.1999), argues that the indictment's failure to reference 18 U.S.C. 1346 is of no significance. (Defendant's Brief in Support, Dkt. 82, p. 14). In Pennington, the Eighth Circuit held that an indictment which clearly alleged actions constituting honest services fraud but failed to include a citation to 18 U.S.C. 1346 was nevertheless legally sufficient to apprise the accused of the nature of the charges against him. Id. at 1065. Pennington, however, is inapposite. Pennington involved the question of whether the defendant, by virtue of the language of the indictment, had received adequate notice of the nature of the charges. Here, notice is not an issue. Conti was both charged with and pled guilty to violating 18 U.S.C. 1341. **Several courts have already concluded that Skilling does not apply to charges of traditional fraud pursuant to the mail and wire fraud statutes. In United States v. Saladino, for example, defendants argued that the Skilling decision provided a basis for the court to overturn an indictment charging them with mail fraud in violation of 18 U.S.C. 371. Saladino, 2010 WL 3221427, *4 (D.Or.2010). The court disagreed, ruling that the Supreme Court in Skilling limited its holding to the scope of 1346 ... [and] did not suggest its interpretation of 1346 had broader application to other statutes. Id. at *4. **Similarly, in United States v. Harkonen, the court addressed a defendant's motion for leave to file a brief regarding the impact of Skilling on his indictment for wire fraud in violation of 18 U.S .C. 1343. Harkonen, 2010 WL 2985257, *16 n. 5 (N.D.Cal.2010). Rejecting the motion, the court held: Skilling involved a defendant's challenge to the honest services provision of the wire fraud statute, which provides that one type of a scheme or artifice to defraud punishable as wire fraud is a scheme or artifice to deprive another of the intangible right of honest services. 18 U.S.C. 1346. In Skilling, the Supreme Court narrowed the reach of the honest services provision to encompass only bribery and kickback schemes in order to avoid construing the statute in a manner that would give rise to fair notice and vagueness challenges. Skilling, 130 S.Ct. at 30. While Skilling addresses the issue of fair notice in a general manner, the decision has absolutely no bearing on Harkonen's case. Harkonen was charged with and convicted of violating 18 U.S.C. section 1343, the wire fraud statute. As discussed above, Harkonen was on notice that if he sent a misrepresentation using the wires as part of a scheme to defraud, he could be prosecuted under section 1343. The honest services provision, narrowed by the Supreme Court in Skilling, played no role in this prosecution. Id. at *16, n. 5.

Here, as in Harkenon and Saladino, the honest services provision of the mail fraud statute addressed by the Supreme Court in Skilling played no role in Conti's indictment and guilty plea. Given Skilling's inapplicability, Conti has failed to demonstrate a miscarriage of justice. Consequently, I find that the collateral attack waiver in his plea agreement is enforceable and Conti has waived his right to file the instant motion. IV. CONCLUSION *6 For the reasons stated herein, Conti's Motion to Vacate Judgment pursuant to 28 U.S.C. 2255 is dismissed. An appropriate order follows. U.S. v. Harkonen, 2010 WL 2985257 (N.D.Cal. Jul 27, 2010) MEMORANDUM & ORDER Re: Defendant's Post-Trial Motion to Dismiss the Indictment, for Acquittal or for a New Trial MARILYN HALL PATEL, District Judge. *1 On September 29, 2009, a federal jury found defendant W. Scott Harkonen (Harkonen) guilty of one count of wire fraud, 18 U.S.C. 1343, and not guilty of one count of felony misbranding, 21 U.S.C. 331(k), 333(a) (2) & 352(a). Before the court is Harkonen's post-trial motion to dismiss the indictment, for acquittal under Federal Rule of Criminal Procedure 29, or for a new trial under Federal Rule of Criminal Procedure 33. Having considered the parties' arguments and submissions and for the reasons stated below, the court enters the following memorandum and order. BACKGROUND Because the evidence relevant to Harkonen's motion is discussed in greater detail below, the court provides only a brief summary of the allegations and proceedings. The evidence at trial showed that from 1998 until at least June 3, 2003, Harkonen was the Chief Executive Officer of **InterMune, Inc. (InterMune). InterMune, a California-based pharmaceutical company, developed, marketed and sold drugs for lung and liver diseases. One of the drugs that InterMune sold was called interferon gamma-1b and was marketed under the brand name of Actimmune. By 2000, when InterMune fully purchased the rights to Actimmune from the company that had developed the drug, Actimmune had only been approved by **the Food and Drug Administration (FDA) for the treatment of two very rare conditions: chronic granulomatous disease and severe, malignant osteopetrosis. In 1999, a small Austrian clinical trial showed that Actimmune might be a promising treatment for another rare and fatal disease, **idiopathic pulmonary fibrosis (IPF). IPF is characterized by progressive scarring, or fibrosis, of the lungs which leads to the lung's deterioration and destruction. The cause of IPF is unknown, and once afflicted, IPF sufferers generally die within two to three years. There are approximately 200,000 individuals in the United States who suffer from the disease, and 50,000 new cases are diagnosed each year. In response to the Austrian study, InterMune launched its own, much more ambitious study of Actimmune's efficacy in treating IPF. The study, known as the GIPF-001 Phase III trial (the GIPF-001), was designed primarily to test whether patients being treated with Actimmune were more or less likely to experience progression-free survival time-delayed or prevented the worsening of patients' IPF. The GIPF-001 also collected data relevant to a number of other hypotheses regarding Actimmune's effect on IPF. In mid-August 2002, InterMune was provided with the results from the GIPF-001. On August 28, 2002, InterMune issued a press release, claiming, among other things, that the data from the study [d]emonstrat[ed a] survival benefit of Actimmune in IPF and that Actimmune Reduces Mortality by 70% in Patients with Mild to Moderate Disease. Gov't Exh. 1 (Press Release), attached to this order as appendix 1. The press release, as well as other conduct engaged in by Harkonen and InterMune, formed the basis for the indictment in this case, which was filed on March 18, 2008. The ten-page, two count indictment charged Harkonen with wire fraud in violation of 18 U.S.C. section 1343 (Count One) and felony misbranding of a drug

in violation of 21 U.S.C. sections 331(k), 333(a)(2) and 352(a) (Count Two). The wire fraud count alleged that the press release contained materially false and misleading information regarding Actimmune and falsely portrayed the results of a GIPF-001 Phase III trial as establishing that Actimmune reduces mortality in patients with IPF. Docket No. 1 (Indictment) 26. *2 After significant pretrial motion practice, Harkonen's trial began on August 12, 2009. The case went to the jury on September 23, 2009. The jury deliberated for four days, finding Harkonen guilty of wire fraud and notguilty of felony misbranding. Harkonen filed his post-trial motion on December 4, 2009, and the court conducted a hearing on February 19, 2009. LEGAL STANDARD I. Rule 29 Upon a defendant's motion under Federal Rule of Criminal Procedure 29, a court must enter a judgment of acquittal of any offense for which the evidence is insufficient to sustain a conviction. Fed.R.Crim.P. 29. The evidence is sufficient to support a conviction if, viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. United States v. Magallon-Jimenez, 219 F.3d 1109, 1112 (9th Cir.2000) (citing Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979)). [A]ll reasonable inferences are to be drawn in favor of the government, and any conflicts in the evidence are to be resolved in favor of the jury's verdict. United States v. Alvarez-Valenzuela, 231 F.3d 1198, 1201-02 (9th Cir.2000) II. Rule 33 Federal Rule of Criminal Procedure 33 provides that the court may vacate any judgment and grant a new trial if the interest of justice so requires. Fed.R.Crim.P. 33. In considering a Rule 33 motion, [t]he district court need not view the evidence in the light most favorable to the verdict; it may weigh the evidence and in so doing evaluate for itself the credibility of the witnesses . United States v. A. Lanoy Alston, D.M.D., P.C., 974 F.2d 1206, 1211 (9th Cir.1991) (quoting United States v. Lincoln, 630 F.2d 1313, 1319 (8th Cir.1980)). If the court concludes that, despite the abstract sufficiency of the evidence to sustain the verdict, the evidence preponderates sufficiently heavily against the verdict that a serious miscarriage of justice may have occurred, it may set aside the verdict, grant a new trial, and submit the issues for determination by another jury. Id. at 1212 (quoting Lincoln, 630 F.2d at 1319). Such a motion should be granted, however, only in exceptional circumstances in which the evidence weighs heavily against the verdict. United States v. Hsieh Hui Mei Chen, 754 F.2d 817, 821 (9th Cir.1985) (citing United States v. Primentel, 654 F.2d 538, 545 (9th Cir.1981)).. DISCUSSION Harkonen presents three arguments for why he is entitled to the dismissal of the indictment, a judgment of acquittal or, in the alternative, a new trial. **First, Harkonen asserts that his Due Process rights under the Fifth Amendment were violated because the wire fraud statute did not provide him with sufficient notice that he could face criminal sanctions for the conduct at issue in this case, and thus, the court should dismiss the indictment. **Second, Harkonen contends that he is entitled to a judgment of acquittal or a new trial under, Federal Rules of Criminal Procedure 29 and 33, because, at trial, the government failed to produce sufficient evidence that he violated the wire fraud statute. **Finally, Harkonen argues that he is entitled to the dismissal of the indictment or a judgment of acquittal because the conviction violates the First Amendment. Because Harkonen's sufficiency of the evidence claim forms the core of his post-trial motion, the court assesses it first. I. Sufficiency of the Evidence *3 Harkonen asserts that the government failed to present sufficient evidence such that the jury could find, beyond a reasonable doubt, that he knowingly made a false or fraudulent statement with the intent to defraud. The wire fraud statute provides that:

Whoever, having devised or intending to devise any scheme or artifice to defraud ... by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of a wire ... communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice ... shall be guilty of an offense against the United States. 18 U.S.C. 1343. The jury instructions required, in part, that the jury find beyond a reasonable doubt that Harkonen **(1) made at least one false or fraudulent statement; **(2) knew the statement(s) were false or fraudulent at the time they were made; and **(3) acted with an intent to defraud. Docket No. 256 (Gov't's Opp'n), Exh. A (Jury Instructions) at 16. Harkonen contends the evidence at trial was insufficient for the jury to find that each of these elements had been proven beyond a reasonable doubt. The court addresses each element in turn. A. False or Fraudulent Statement As discussed above, the indictment against Harkonen required that the government prove beyond a reasonable doubt that the August 28, 2002 press release contained materially false and misleading information regarding Actimmune and falsely portrayed the results of the GIPF-001 Phase III trial as establishing that Actimmune reduced mortality in patients with IPF. Indictment 26. The jury instructions reflected that burden, requiring that the jury unanimously find beyond a reasonable doubt that the defendant made up a scheme or plan to defraud by making false or fraudulent statements, with all of you agreeing on at least one false or fraudulent statement that was made. Jury Instructions at 16. The jury instructions explained that [f]alse or fraudulent statements may include deceitful statements, half-truths, or statements which omit material facts. **A statement is false or fraudulent if known to be untrue or made with wanton or reckless disregard for its truth or falsity and made with the intent to deceive. Id.; see United States v. Woods, 335 F.3d 993, 998 (9th Cir.2003); Lustiger v. United States, 386 F.2d 132, 138 (9th Cir.1967). Harkonen asserts the evidence introduced at trial, even when viewed in the light most favorable to the government, is insufficient to establish that the statements in the press release were false or fraudulent. To place this argument in context, it is necessary to provide significant detail about the GIPF-001 Phase III trial, the results of which the August 28, 2002 press release purported to summarize and interpret. The jury heard considerable testimony regarding how pharmaceutical trials are generally conducted and how the drug study at issue in this case was actually conducted. The GIPF-001, which sought to test Actimmune's efficacy as a treatment for IPF, was a randomized, double-blind, placebo-controlled trial. Randomized, double-blind, placebo-controlled studies represent the gold standard for determining the relationship between a drug and a health outcome. In re Neurontin Mktg., Sales Practices, and Prods. Liab. Litig., 612 F.Supp.2d 116, 125 (D.Mass.2009) (citing Michael D. Green et al., Reference Guide on Epidemiology, in Reference Manual on Scientific Evidence 333, 335 (Fed. Judicial Ctr.2d ed.2000)). *4 In such a trial, subjects are assigned randomly to one of two groups: one receives the drug and the other does not, often receiving a placebo instead. The study is also double-blind, meaning that neither the participants nor those conducting the study knows which group is receiving the actual drug and which group is receiving the placebo. Id.; see also Trial Transcript (TT) at 361-62 (Dr. Marc Walton (Walton), Associate Director at the FDA, testifying about randomized, double-blind, placebo-controlled trials). The GIPF-001 involved 330 patients at 58 separate locations throughout the United States. Gov't Exh. 288 (GIPF-001 Clinical Study Report) at 74. 162 patients were treated with Actimmune, while 168 received a placebo. Id. The jury heard testimony that, before undertaking a Phase III trial, like the GIPF-001, researchers set forth detailed study protocol, which includes, among other things, the objectives of the study (i.e., what causal relationships the study is attempting to measure), the inclusion and exclusion criteria for determining who will be allowed to participate in the trial, the procedures for administering the treatment and recording results, and specifications for how the data from the study will be analyzed. TT at 359, 370-71 (Walton testimony); Gov't Exh. 281 (Final Protocol for GIPF001). After a study begins, it is not uncommon for the protocol to be changed; however, a final protocol must be in place before the study's data is unblinded (i.e., made available) to the

study's researchers. Id. at 360-61 (Walton testimony). The predetermination of the study's objectives (or endpoints as they are typically called) as well as the criteria for how the data will be analyzed (known as a statistical analysis plan) is crucial for maintaining the integrity of the study. By prespecifying what the study is intended to measure and how it will be measured, researchers preclude themselves from manipulating the data after it is unblinded in order to identify a favorable result. Id. at 371 (Walton testifying that [i]t's wellunderstood if one can look at the data and then pick out which parts of the data we would like to analyze and in which way, we can always find something in the data that will look positive); Id. at 2187 **(Michael Crager (Crager), former InterMune Senior Director of Biostatistics, testifying that a statistical analysis plan is crucial to show that the methods were not determined by the data. That is, you set the methods in advance, didn't analyze several different ways and pick the one that looks best); Id. at 673 **(Thomas Fleming (Fleming), a professor of Biostatistics at the University of Washington and a supervisor of the GIPF-001, testifying that a statistical analysis plan recognizes that there are a large number of ways you can analyze the data. And you need to structure what is the principal analysis and what the secondary and follow-up analyses are to understand these statistical analyses). *5 InterMune created a protocol for the GIPF-001 in 2000, prior to the start of the trial, and made several amendments to the protocol prior to the unblinding of the data on June 26, 2002. See Gov't Exhs. 274-81. Throughout the various iterations of the protocol, the GIPF-001 had one primary endpoint, progression-free survival time; progression of IPF was defined as either a specific, measurable decrease in **Forced Vital Capacity (FVC), a measure of lung function, an increase in the A-a gradient of 5 mmHg, another measure of lung function, or the death of the patient. Gov't Exh. 274 (Original Protocol) at 10; Gov't Exh. 281 (Final Protocol) at CDER003-1147. In its final form, the protocol also identified ten secondary endpoints, listed in order of clinical relevance, along with eight exploratory endpoints. Final Protocol at CDER003-1147-48. The seventh secondary endpoint, which (as will be seen below) ultimately became crucial to the August 28, 2002 press release, was survival time. Id. at CDER003-1147. In addition, the investigators created a detailed statistical analysis plan. Gov't Exh. 282. To establish the falsity of statements made in the August 28, 2002 press release, the government called **Thomas Fleming (Fleming), a Professor of Biostatistics at the University of Washington, and **Michael Crager (Crager), the former Senior Director of Biostatistics at InterMune who was the principal biostatistician working on the GIPF-001. Both witnesses had substantial and impressive experience in biostatistics. Fleming testified to his distinguished thirty-year record as a biostatistician, overseeing more than 200 clinical trials, publishing more than 200 articles and several books about biostatistics, and working as a special government employee, advising the FDA regarding the effectiveness of drugs in clinical trials. TT at 644-50; see Gov't Exh. 256 (Fleming's Curriculum Vitae). Relevant to the instant case, Fleming served as one of three members of the Data Monitoring Committee (DMC) for the GIPF-001, which was a group of outside, independent scientists responsible for protecting the safety of the patients involved in the study. Crager received a Ph.D. in biostatistics from Stanford University, and worked in industry as a biostatistician for twenty-seven years. TT at 2175-77. He testified that, during his employment with InterMune and elsewhere, he had worked on approximately 80 to 100 clinical trials in his career. Id. at 2178. The jury heard substantial testimony from Crager and Fleming regarding how investigators analyze and interpret the data from clinical trials. The significance of a trial's results is primarily expressed through what is known as a p-value, which is a number between 1 and 0. Id. at 2185-86 (Crager testimony); id. at 674 (Fleming testimony). The p-value is a measure of how likely the result you saw would have been to occur by chance alone .... Id. at 2186 (Crager testimony); see also id. at 674 (Fleming testifying that [a] p-value is an analytical tool that we use to present how unlikely the events would be by chance alone). The lower a p-value is, the greater probability that the result perceived in the data is not due to chance. Both Crager and Fleming testified that in the world of biostatistics, a p-value of 0 .05 is somewhat of a magic number. Id. at 2186 (Crager testifying that 0.05 is a standard cutoff); id. at 674 (Fleming testifying that by tradition, [statisticians] define success' to be a two-sided p-value of .05). A p-value of 0.05 indicates that the data obtained in the trial would occur by chance less than 5 percent of the time. Id. **As a general matter, if the p-value is less than 0.05, a study's results are considered statistically significant; **if greater, than 0.05, the results are generally considered unreliable and not statistically significant. Id. *6 Crager and Fleming provided other testimony, however, that emphasized that in order to properly interpret a p-value, it is necessary to know the context in which that p-value was generated. Id. at 703 (Fleming testifying

that I always say that you can only interpret [p-values] when you understand the sampling context in which they were derived); id. at 676 (Fleming testifying that the significance of a p-value all depends on your sampling context). A p-value of 0.05 or lower for a primary endpoint, a study's primary objective, generally indicates statistically significant relationship. However, for a variety of reasons, researchers must apply different statistical methodology when analyzing secondary endpoints or any data not prespecified in the protocol and statistical analysis plan. First, Fleming and Crager testified that even in a study where there is a statistically significant finding with respect to the primary endpoint, researchers must adjust their analysis of the p-values of secondary endpoints in order to account for the multiplicity effect. Id. at 676-78, 685 (Fleming testimony); see also id. at 2326 (Crager testifying that if you were trying to do a rigorous test of a secondary endpoint, then, yes, you have to put a procedure in place that accounts for multiple testing). Fleming described this multiplicity effect using an analogy: [I]f you give yourself one chance to win, if you're looking at the prespecified primary analysis of the prespecified primary endpoint, then it is true, [that if you have a p-value of 0.05] you have only a five percent chance of a false positive, only a five percent chance of declaring that you're effective when you're not. But that's not at all true if you give yourself many analyses, many chances to win. .... It's a multiplicity issue.... Suppose you were looking at somebody who is ... a good marksman.... If you set up a target that any one of us if we took a shot would have one in twenty chance to hit, then you took a single shot, it would be impressive if you hit it. Only one in twenty people could .... But if you gave that person twenty, forty, sixty, eighty shots, and they hit it once, most of us could do that. So when you're understanding a p-value it's really important to know how many different analyses were done. Id. at 677. Accordingly, Fleming testified that if you have more than one analysis, the measure of success no longer is 0.05, but a lower threshold. Fleming suggested that industry practice was to divide 0.05 by the number of endpoints to ensure that you are accounting for having multiple chances to win. Id. at 678. Second, Fleming and Crager testified that if a study misses its primary endpoint-that is, if the p-value for the primary endpoint is greater than 0.05-that all other analyses arising out of that study, including analysis of secondary endpoints, from there on [are] exploratory. Id. at 2188. (Crager testimony); see id . (Crager testifying that if the primary endpoint misses, [y]ou cannot make any definitive conclusions about any [secondary endpoints], and you're just trying to look at the data to generate new hypotheses to test hopefully in the future); TT at 678 (Fleming testifying that in a rigorous sense, one has to be incredibly cautious about that, because the p-values that we're giving can no longer really be interpreted the way that we've been discussing.... [Y]ou clearly cannot interpret the p-values on those secondary measures the way you would interpret the p-value on the primary endpoint). According to Fleming, this caution is necessary for the following reason: In designing a study, investigators hypothesize that a drug will act through certain mechanisms to effect the targeted biological condition. The primary endpoint is selected as the best available measure of that mechanism of effect. Secondary endpoints typically are selected as less precise measures of the same mechanism. When the primary endpoint fails, it throws the entire hypothesis regarding the mechanism of effect of the drug into doubt. It therefore casts even greater doubt upon secondary endpoints, which were predicated upon the same mechanism, but were even less precise measures of that mechanism. Therefore, once the primary endpoint fails, investigators must be very cautious about drawing any conclusions from secondary endpoints. See id. at 278-79 (Fleming testimony); see id. at 2326 (Crager testimony). *7 Third, the jury heard testimony from Crager and Fleming regarding the pitfalls of drawing conclusions from exploratory subgroup analyses of the data, especially when such analyses were not prespecified in the statistical analysis plan. A subgroup analysis examines the effect of the drug on a subset of trial participants who share certain characteristics, for example only men or only older individuals. Id. at 682 (Fleming testimony). Fleming explained that the data from subgroup analyses is of use for exploring future hypotheses to test as a primary or secondary endpoint, but has limited if any conclusive power. As Fleming stated, subgroup analyses are widelyrecognized to be, at best, what are called hypothesis generating, meaning if you see evidence that treatment effect may differ across subgroups, that in most instances it's really critical that they be independently

confirmed by a future trial. Id. at 683; see also Gov't Exh. 3 (September 5, 2002, letter from Fleming to InterMune) at INR544-9768 (It is recognized that conducting exploratory subgroup analyses can be a useful exercise, but the results are notoriously unreliable.... [W]hen one allows multiplicity of testing by multiple analyses over time, by multiple study endpoints, and particularly by multiple trial subgroups, [a p-value lower than 0.05] would be obtained in almost any trial even when treatment truly has no effect on outcomes.); TT at 2240 (Crager explaining that even a very low p-value on a subgroup analysis is very hard to interpret). Fleming and Crager testified that when such analyses are conducted on a post-hoc basis-that is, any analysis that was not prespecified in the statistical analysis plan-researchers must exercise even greater caution. Id. at 682-83 (Fleming explaining that post-hoc analyses are typically very unreliable); id. at 2240 (Fleming stating that post-hoc p-values are very hard to interpret and that, at best, a low p-value in a post-hoc analysis means that there's a suggestion that there may be something here). With these biostatistics principles in mind, the jury also heard substantial testimony and received evidence regarding how Harkonen and InterMune analyzed, interpreted and ultimately publicized the data from the GIPF-001 trial. Pursuant to the study's protocol, the data was kept confidential until August 16, 2002, when three of the four members of InterMune's **Sponsor Management Committee (SMC), including Harkonen, **Dr. Jim Pennington (Pennington), InterMune's Executive Vice President of Medical and Scientific Affairs, and Crager were unblinded. Id. at 2195-98; see Gov't Exh. 283 (Plan for Sponsor Management Committee Assessment of Study GIPF-001) .FN1 FN1. Marianne Armstrong, InterMune's Vice-President of Regulatory Affairs, the fourth member of the SMC, was not unblinded at the time; pursuant to the protocol, she would only be unblinded on an ad-hoc basis. See Plan for Sponsor Management Committee Assessment of Study GIPF-001. On August 16, 2002, Crager was the first to examine the results of the trial. TT at 2198 (Crager testimony). He received the analysis, which had been outsourced to a company named Pharmanet, by email. Id. To Crager, it was immediately apparent that the study had missed its primary endpoint as well as all ten of the secondary endpoints. **The p-value for the primary endpoint, progression-free survival time, was 0.52, far too high to demonstrate any statistically significant correlation. Def. Exh. 524 (GIPF-001 Study Results) at 3UW 021625; TT at 2201 (Crager testifying that he interpreted the data as showing [n]o apparent effect at all on the primary efficacy endpoint. The indices didn't show any difference whatsoever, and the p-values were very high showing no evidence whatsoever). Crager did notice a trend toward a survival benefit, one of the secondary endpoints, which had a p-value of 0.084, slightly above the traditional 0.05 threshold of statistical significance. GIPF-001 Study Results at 3UW 021700; TT at 2201-02 (Crager testimony). 16 of the 162 patients (9.9%) being treated with Actimmune died during the duration of the study, compared to 28 of 168 patients (16.7%), representing a more than 40% decrease in mortality. GIPF-001 Study Results at 3UW 021700. After his initial review of the results, Crager reported this information to Harkonen and Pennington. TT at 2202 (Crager testimony). He told them we had no evidence of an effect on the primary efficacy endpoint, but that there was a trend in the survival data, and that we might want to follow-up and do another trial .... to make survival the primary endpoint. Id. at 2204 (Crager testimony). *8 The next day, August 17, 2002, of his own accord, Crager contacted Pharmanet and requested that it run a statistical analysis of survival time for subgroups of trial participants with FVCs greater and less than 60%. Id. at 2205-07 (Crager testimony). As is mentioned above, FVC is a measure of lung function, in which the higher the percentage, the better the function. Crager received the subgroup results on the afternoon of August 21, 2002. Id. at 2210 (Crager testimony). The data indicated that only 3 of 90 patients treated with Actimmune who had a FVC greater than 60% died during the study, while 12 of 92 with a FVC lower than 60% died, yielding a p-value of 0.024. GIPF-001 Study Results at 3UW 021702. Upon receiving the results, Crager shared them with Harkonen and Pennington. Id. at 2210 (Crager testimony). Harkonen then directed Crager to request that Pharmanet run a different subgroup analysis, dividing the patients into severe, moderate and mild IPF sufferers on the basis of their FVC. Id. at 2210 (Crager testimony). Harkonen suggested looking at three subgroups: those with severe IPF (FVC 0-55%), moderate IPF (FVC 56-70%) and mild IPF (FVC 71-100%), but asked Crager to verify that those FVC parameters represented appropriate definitions for severe, moderate and mild IPF. Id. at 2210-11 (Crager testimony). Crager conferred with pulmonologists inside and outside of InterMune, but was unable to confirm whether the categories suggested by Harkonen were well-established. Id. at 2211 (Crager testimony). Crager ultimately requested that Pharmanet conduct the subgroup analysis using the parameters selected by Harkonen. Id. at 2211-12.

Crager received the results from this second subgroup analysis the next day, on August 22, 2002. Id. at 2212 (Crager testimony). He delivered them to Harkonen, who then asked Crager to run the data for two subgroups, those with FVC greater than and less than 55%, essentially combining the moderate and mild IPF sufferers into one group. Id. at 2212-13. Crager did so, and he shared the somewhat optimistic results with Harkonen . Only 6 of the 126 (4 .8%) participants treated with Actimmune in the mild to moderate group died during the study, while 21 of 128 (16.4%) in the corresponding placebo group died, representing a greater than 70% reduction in mortality. GIPF-001 Study Results at 3UW 021707. This data yielded a p-value of 0.004. Id. The 55% FVC subgroup analysis represented the last new piece of information regarding the GIPF-001 trial received by InterMune and Harkonen prior to the issuance of the August 28, 2002 press release. Thus, in sum, the jury heard competent evidence that (1) the GIPF-001 study showed no efficacy with respect to its primary endpoint, progression-free survival time (p=0.52); (2) none of the secondary endpoints produced a p-value below 0.05; (3) the closest secondary endpoint, survival time, yielded a p-value of 0.084 as a result of 40% decrease in mortality among those treated with Actimmune; (4) a post-hoc subgroup analysis of study participants with an FVC greater than 60% yielded a p-value of 0.02; and (5) a post-hoc, subgroup analysis of study participants with an FVC greater than 55% yielded a p-value of 0.004 as a result of a 70% decrease in mortality among those treated with Actimmune. *9 On August 28, 2002, InterMune issued a press release purporting to publicize the results of the GIPF-001 trial. See Press Release. As will be discussed in more detail below, Harkonen was the controlling force behind the content of the press release. At trial, the government contended that a number of the statements in the press release, as well as the press release as a whole, could be found to be false or fraudulent, including: -The headline: InterMune announces Phase III data demonstrating survival benefit of Actimmune in IPF -The subheadline: Reduces Mortality by 70% in Patients with Mild to Moderate Disease -InterMune, Inc. (Nasdaq:ITMN) announced today that preliminary data from its phase III clinical trial of Actimmune (Interferon gamma-1b) injection for treatment of idiopathic pulmonary fibrosis (IPF) ... demonstrates a significant survival benefit in patients with mild to moderate disease randomly assigned to Actimmune versus control treatment (p = 0.004). - We are extremely pleased with these results, which indicate Actimmune may extend the lives of patients suffering from this debilitating disease, said W. Scott Harkonen, M.D., President and CEO of InterMune. -Importantly, Actimmune also demonstrated a strong positive trend in increased survival in the overall patient population, and a statistically significant survival benefit in patients with mild to moderate IPF. In the overall population, there were 16/162 deaths in the Actimmune-treated group (9.9%) compared to 28/168 deaths in the placebo group (16.7%), representing a 40% decrease in mortality in favor of Actimmune vs. placebo (p = 0.084)). Further, of the 254 patients with mild to moderate disease ( [Forced Vital Capacity] (FVC) >= 55 percent), there were 6/126 deaths in the Actimmune-treated group (4.8%) and 21/128 deaths in the placebo group (16.4%), representing a 70% decrease in mortality in favor of Actimmune versus placebo (p = 0.004). Press Release. Given the above-discussed evidence and testimony introduced at trial, there was sufficient evidence for the jury to conclude beyond a reasonable doubt that multiple statements contained in the press release were false or fraudulent. First, the jury could have found that the headline of the press release was objectively untrue. The jury heard uncontroverted testimony from Crager and Fleming that any p-value greater than 0.05 indicates that the results of a study are not statistically significant. Throughout the trial, the jury also heard testimony and received evidence that the data for the secondary endpoint of survival time yielded a p-value of 0.084. Accordingly, the jury could have concluded beyond a reasonable doubt that the GIPF-001 study failed to demonstrat[e] a survival benefit and thus, that the statement-Phase III data demonstrat[es] survival benefit of Actimmune in IPF-was false or fraudulent.

Second, the jury could have found that Harkonen's choice of words in the press release implied causation between Actimmune and the survival of IPF patients, when the data from the study objectively did not establish any such certain and/or verifiable relationship. The jury heard credible testimony that in clinical trials with multiple endpoints, where the primary endpoint is missed, and where researchers conduct post-hoc, subgroup analyses, p-values are unreliable. Thus, depending on the context, sub-0.05 p-values do not demonstrate, prove, establish or indicate anything. Under such circumstances, secondary endpoint and post-hoc, subgroup analyses can only be used in an exploratory manner, providing researchers with some indication about additional relationships between a drug and a condition that might warrant further investigation. The press release, however, equates a p-value of less than 0.05 with statistical significance, causation and efficacy without any adjustment for context, including for secondary endpoints and post-hoc analyses. See Press Release (Phase III data demonstrat[es] survival benefit of Actimmune in IPF); id. (Actimmune Reduces Mortality by 70% in Patients with Mild to Moderate Disease); see also id. ( Actimmune is the only available treatment demonstrated to have clinical benefit in IPF. ). *10 Magnifying this component of the press release's falsity is the complete omission of any mention that the only results with a p-value less than 0.05-the subgroup analysis of patients with mild to moderate IPF-were observed only after InterMune engaged in retrospective analysis. As the testimony of Crager and Fleming made clear, the import of such a finding cannot possibly be understood unless readers are provided with sampling context. Yet the press release never explains the context in which InterMune arrived at the 0.004 p-value for the mild to moderate IPF subgroup. Further, the press release does not explain that the study protocol set out ten secondary endpoints-of which survival time was ranked as only the seventh most clinically relevant-and that all ten failed to produce statistically meaningful results. These omissions of critical information-especially given that at the time of the press release there was no publically available data for the GIPF-001 such that interested individuals could verify the results-could have formed the basis for the jury's finding of falsity. **The court instructed the jury that a statement is false or fraudulent if it include[s] deceitful statements, half-truths, or statements which omit material facts. Jury Instructions at 16 (emphasis added). In light of Crager and Fleming's testimony, the jury could have found beyond a reasonable doubt that the sampling context-the use of multiple endpoints and post-hoc, subgroup analysis-was a material fact that was omitted from the press release, and thus, that the press release was false or fraudulent. Finally, the jury could have concluded that the press release, as a whole, was false or fraudulent. The overwhelming, undisputed evidence at trial was that the GIPF-001 study was a failure. It missed its primary endpoint as well as all ten secondary endpoints. The press release, however, describes the study as a successdemonstrating a survival benefit and reducing mortality for those who were treated with Actimmune. To be certain, pharmaceutical companies are permitted to put a positive spin on the results of a clinical trial. They must do so, however, with candor and disclosure. In the instant case, the jury could have found that the press release was so optimistic, in the face of the trial's objective failure, that it constituted fraud. Harkonen's primary argument against these interpretations of the evidence is that none of the witnesses were properly qualified as experts to testify regarding the truth or falsity of the press release. At the June 24, 2009, hearing on the parties in limine motions, the court granted Harkonen's motion to limit the testimony of certain percipient witnesses-namely Dr. Marc Walton (Walton), an Associate Director at the FDA who communicated extensively with InterMune about the GIPF-001 and the related press release, and Marianne Armstrong (Armstrong), InterMune's Vice President of Regulatory Affairs-who lacked professional and educational backgrounds in pulmonology or biostatistics. Under the Federal Rules of Evidence 701 and 702, the court held that such witnesses would not be permitted to opine regarding the truth or falsity of the statements in the press release, but would be allowed to testify about their conversations or interactions with Harkonen, as such testimony went not to the truth of the matter asserted, but to Harkonen's notice of the alleged infirmities in the press release. Because these witnesses were limited to providing testimony that went to Harkonen's notice, Harkonen asserts that the jury possessed insufficient evidence to conclude that the press release did, in fact, contain at least one false or fraudulent statement. *11 In so arguing, Harkonen entirely overlooks that the testimony from Crager and Fleming regarding how to interpret statistical results was properly before the jury. Harkonen's motion in limine did not seek to exclude opinion testimony from Fleming, despite the fact that Harkonen was on notice that the government might proffer Fleming as an expert witness. See Docket No. 127 (Def.'s Mot. In Limine ) (no mention of Fleming);

Docket No. 116 (Gov't's Notice of Expert Testimony) at 5-6 (identifying Fleming as a potential expert witness and laying out his qualifications). Although Harkonen did move to exclude testimony from Crager regarding the truth or falsity of the press release, see Def.'s Mot. In Limine at 17-18, the above-discussed portions of his testimony regarding the proper method for interpreting clinical data did not speak directly to the press release's truth or falsity. Rather, he discussed general biostatistics methodology and conventions, about which he was qualified to testify. This testimony was therefore properly admitted. Further, although the government did not officially proffer either Crager or Fleming as an expert, in its expert witness disclosure, the government did list Crager and Fleming as potential expert witnesses. See Gov't's Notice of Expert Testimony; Docket No. 132 (Gov't's Am. Notice of Expert Testimony). At trial, the government entered Fleming's curriculum vitae into evidence, and questioned both Fleming and Crager extensively about their knowledge, skill, experience, training, or education. Fed.R.Evid. 702. On cross-examination, Harkonen had the opportunity to ask questions that might undermine the jury's confidence in the witnesses' expertise or knowledge of biostatistics methods. To the contrary, however, Harkonen asked both Crager and Fleming numerous questions about statistical methodology. Perhaps most damningly, at no point during the trial did Harkonen ever object to any of Crager or Fleming's testimony about general principles of biostatistics; specifically, no objection was raised to their testimony regarding the inherent problems of interpreting secondary endpoint and post-hoc, subgroup analyses.FN2 Such testimony was properly before the jury; and the jury could have relied upon it to conclude that the statements in the press release were false or fraudulent. FN2. Although it does not factor in the court's analysis, the court has little doubt that if the government had formally proffered Fleming or Crager as expert witnesses, the court would have so qualified them. Harkonen conceded as much, at least with respect to Crager, during the in limine motion hearing. Harkonen's counsel explained that Crager is a biostatistician. He can say whatever he wants, you know. What I'm saying: he can say whatever is appropriate as an expert if he's duly qualified. It's hard for us to argue that he's not qualified as a biostatistician, since he's working for the company. And I think it's fair to say that he will be qualified. Docket No. 152 (In Limine Hearing Transcript) at 38 (emphasis added). Harkonen also suggests that his motion should be granted because that there was sufficient evidence introduced at trial from which the jury could have concluded that the statements in the press release were true. For this argument, Harkonen relies on the testimony of other individuals involved in conducting GIPF-001 and publicizing its results, and upon exhibits admitted at trial. In particular, Harkonen points to statements made by Crager in a patent application filed by InterMune regarding Actimmune.FN3 To be certain, a number of witnesses who testified, including Crager, Armstrong and Stephen Rosenfield (Rosenfield), InterMune's general counsel, agreed, either contemporaneous with the issuance of the press release or at trial, with some of the statements in the press release, including the statement that the data demonstrated a survival benefit. Such information may be probative of whether Harkonen possessed an intent to deceive when issuing the press release. However, simply because numerous individuals may have repeated a fraudulent characterization of the data from the GIPF-001 does not make that characterization less false or fraudulent. FN3. The patent application, on which Crager was identified as a co-inventor, included the statements that [a] statistically significant improvement in probability or survival was apparent in certain subpopulations of the treatment and placebo groups and that [t]here is strong statistical evidence the [Actimmune] has a positive survival effect in [patients with mild to moderate FVC]. Def. Exh. 718 (Patent Application) at ITM_CBNY19106, ITM_CBNY19107. The statements sworn to by Crager in the patent application are irrelevant, however. Whether Crager believed that the statements in the press release were false or fraudulent speaks not at all to whether the statements were objectively false or fraudulent. *12 Accordingly, the court holds that there was sufficient evidence for the jury to conclude beyond a reasonable doubt that statements in the press release and/or the press release as a whole were false or fraudulent. B. Knowledge of Falsity At Harkonen's trial, there was also sufficient evidence for the jury to find that Harkonen knew that the statements in the press release were false-the second element of wire fraud. The government did not introduce

any evidence at trial regarding Harkonen's own understanding of biostatistics such that the jury could have inferred that Harkonen knew that the press release's characterization of the data for the survival secondary endpoint and the post-hoc, subgroup analysis were false or fraudulent. Accordingly, the government was required to introduce other evidence that Harkonen was somehow on notice that the manner in which the press release interpreted the data was false or fraudulent. The evidence showed that Harkonen received the requisite notice on a number of occasions prior to August 28, 2002, the date that the press release was issued. To begin with, the evidence overwhelmingly established that prior to August 28, 2002, Harkonen had been told by multiple sources that the GIPF-001 missed its primary endpoint, progression-free survival time, as well as all ten secondary endpoints, including survival time. See, e.g., TT at 2204 (Crager testifying about informing Harkonen on August 16, 2002, that the study had missed the primary and all secondary endpoints); id. at 684-86 (Fleming informing Harkonen at an August 19, 2002, meeting of the Steering Committee that the study had missed the primary and all secondary endpoints and that the trial had not provided evidence that Actimmune provides a clinically-meaningful effect.); Gov't Exh. 61 (Draft Minutes of August 27, 2002, conference call with FDA, on which Harkonen was copied in which Dr. Marc Walton reemphasized that the study missed its primary and all secondary endpoints). More importantly, at least two individuals informed Dr. Harkonen that the survival trend in the secondary survival endpoint and the 0.004 p-value for the post-hoc, subgroup analysis of the mild to moderate IPF sufferers were interesting findings, but unreliable and inconclusive. On August 26, 2002, at a meeting at InterMune's headquarters, Dr. Steven Porter, InterMune's Senior VP of Clinical Affairs and Chief Medical Officer, informed Harkonen that [i]t was impossible to know if these findings [the secondary endpoint of survival and the subgroup analysis] were real or not. TT at 1366; see id. at 1364 (Porter indicating to Harkonen that around the observations on survival that it was impossible to tell whether they were chance or real). On August 27, 2002, InterMune, including Harkonen, Crager, Pennington, Porter and others, initiated a conference call with Drs. Jim Kaiser, Dwayne Rieves, and Marc Walton from the FDA. Armstrong recorded minutes of the meeting which were then circulated among the InterMune employees who were on the call so that they could make any edits they deemed appropriate. The final version of the minutes indicates that Walton stated that because the physiologic measurements did not show any apparent treatment effect, the decrease in mortality in his opinion could be considered almost an anomalous finding in the face of no effect on pulmonary function and so warrants extra caution. Furthermore, he stated [t]here was no way to give it [the survival data] a meaningful p-value in the face of the failed primary endpoint. Def. Exh. 671 (Minutes from August 27, 2002, conference call with FDA). *13 Accordingly, the government introduced sufficient evidence from which the jury could conclude that Harkonen was on notice (1) that the study failed to meet its primary endpoint and any of its secondary endpoints, and (2) that no conclusions could be drawn from the data regarding a survival benefit (both regarding the secondary endpoint and the post-hoc subgroup). From these inferences, the jury could have found beyond a reasonable doubt that Harkonen knew the statements in the press release trumpeting the success of the study were false. C. Intent to Defraud The jury also could infer from evidence introduced at trial that Harkonen issued the document with an intent to defraud. The press release itself indicates Harkonen's financial motivation; the release states in its third paragraph InterMune expected that the results of the GIPF-001 study would lead to peak sales in the range of $400-$500 million per year, enabling [InterMune] to achieve profitability in 2004 as planned. Press Release. Stephen Rosenfield, InterMune's general counsel at the time, testified that the press release was the most important in the company's history. TT at 2560, 3285-86, 3366. Further, given the testimony about Harkonen's role in the company as the CEO, the jury could have concluded that he and the company stood to benefit substantially if Actimmune sales increased. **Finally, the efforts engaged in by Harkonen to prevent certain individuals, both outside and inside InterMune, from reviewing the press release serves as powerful circumstantial evidence of his intent to defraud, as well as his knowledge of falsity. To draft the release, Harkonen worked with **James Weiss (Weiss), the head of Weiscomm, a communications firm that helps companies in drafting press releases. Weiss and Harkonen began trading drafts on August 25, 2002, and continued to refine the press release until it was finalized on August 27,

2002. Gov't Exhs. 13-14 (Email with attachment from Weiss to Harkonen dated August 25, 2002). Prior to the August 27, 2002 offsite meeting of the steering committee for the GIPF-001 study, no one other than Harkonen or Weiss viewed any of the drafts of the press release. TT at 2562-81 (Weiss testimony). During that meeting, Armstrong, Porter and Crager were able to briefly view a draft of the release by looking over Weiss' shoulder, but were not provided with an opportunity to comment on its contents. TT at 2584 (Weiss testimony). None of them was provided with a full version of the press release at that time or any time before its issuance. Id. Toward the end of the meeting, Armstrong, Porter and Crager had gathered around Weiss to attempt to examine the press release; Harkonen ordered Weiss out of the conference room and sent him back to InterMune's headquarters so that he would not be bothered. Id. at 2588 (Weiss testimony).**Although some InterMune employees, including James Donovan from InterMune's investor relations and Rosenfield did review the entire press release before it was issued the following morning, no one with a medical or statistical background or who had reviewed the data from the GIPF-001, ever reviewed the press release prior to its issuance. Id. at 2577 (Weiss testimony). This lack of review occurred despite testimony from Weiss that on other occasions when he worked with InterMune on pharmaceutical related press releases, he had access to the raw data as well as InterMune's medical staff. Id. at 2581 (Weiss testimony). Although this testimony about Harkonen's departure from normal press release procedures and his desire to prevent his technical staff from reviewing the press release, standing alone, would likely have been insufficient to satisfy the intent to defraud element of wire fraud, in conjunction with the other evidence in the record and discussed above, it could have bolstered the jury's finding with respect to intent. *14 Accordingly, the court holds that the government introduced sufficient evidence for the jury to find beyond a reasonable doubt that Harkonen acted with the intent to defraud. **** Having found that the government introduced sufficient evidence to satisfy each of the elements of wire fraud beyond a reasonable doubt, defendant Harkonen's motion for a judgment of acquittal under Federal Rule of Criminal Procedure 29 is DENIED.

At p. 16,
FN5. On July 7, 2010, Harkonen filed a motion for leave to file a supplemental brief regarding the impact of a recent Supreme Court case, Skilling v. United States, --- U.S. ----, 130 S.Ct. 2896, ---L.Ed. 2d ---- ( 2010), on his Fifth Amendment notice claims. Docket No. 264 (Mot. for Leave to File Supp. Br.). Skilling involved a defendant's challenge to the honest services provision of the wire fraud statute, which provides that one type of a scheme or artifice to defraud punishable as wire fraud is a scheme or artifice to deprive another of the intangible right of honest services. 18 U.S.C. 1346. In Skilling, the Supreme Court narrowed the reach of the honest services provision to encompass only bribery and kickback schemes in order to avoid construing the statute in a manner that would give rise to fair notice and vagueness challenges. Skilling, 130 S.Ct. at 30. While Skilling addresses the issue of fair notice in a general manner, the decision has absolutely no bearing on Harkonen's case. Harkonen was charged with and convicted of violating 18 U.S.C. section 1343, the wire fraud statute. As discussed above, Harkonen was on notice that if he sent a misrepresentation using the wires as part of a scheme to defraud, he could be prosecuted under section 1343. **The honest services provision, narrowed by the Supreme Court in Skilling, played no role in this prosecution. Therefore, Harkonen's motion for supplemental briefing is DENIED. U.S. v. Saladino, 2010 WL 3221427 (D.Or.,Aug 11, 2010) OPINION AND ORDER BROWN, Judge. *1 This matter comes before the Court on the Motions to Arrest Judgment of Defendants Marcel Roy Bendshadler (# 414), Joseph Oquendo Saladino (# 425), and Michael Sean Mungovan (# 423). The Court concludes the record is sufficient for the Court to resolve these Motions without oral argument. For the reasons that follow, the Court DENIES Defendants' Motions.

BACKGROUND On December 20, 2007, a grand jury indicted Defendants Joseph Oquendo Saladino, Richard Allen Fuselier, Marcel Roy Bendshadler, Michael Sean Mungovan, and Richard J. Ortt on one count of Conspiracy to Defraud in violation of 18 U.S.C. 371. On November 23, 2009, the jury found Bendshadler, Saladino, and Mungovan guilty of the charge. On July 16, 2010, Bendshadler filed a Motion to Arrest Judgment. On July 23, 2010, Defendants Saladino and Mungovan joined Bendshadler's Motion to Arrest Judgment.FN1 FN1. Although the Court has already sentenced Defendants Saladino and Mungovan and entered Judgments of Conviction in both of their cases, these Defendants agreed at their sentencings that the Court should do so subject to the Court's decision on these Motions to Arrest Judgment. Although the Court denies the Motions as to all three Defendants, and does so for Defendants Saladino and Mungovan after entry of Judgment in their cases, the Court concludes these Defendants have preserved this issue for their appeals. DISCUSSION Defendant Bendshadler moves to arrest judgment on the ground that Skilling[ v. United States, --- U.S. ----, 130 S.Ct. 2896, 177 L.Ed. 2d 619 ( 2010),] demonstrates ... over the years courts have erred in broadening 18 USC 371; the statute prohibits fraud, and to interpret it to capture the conduct at issue in this case violates the due process right to notice and the rule against vague penal statutes. Accordingly, when 18 USC 371 is interpreted correctly, the indictment does not allege a crime and thus, this court should order the judgment arrested and the case dismissed. As noted, Defendants Saladino and Mungovan join Bendshadler's Motion. All three Defendants assert the Supreme Court's decision in Skilling reflects a change in how the Court views the expansion of penal statutes to include conduct beyond the statutory text, and courts have erred over the years when interpreting 371 to include the conduct alleged in the Indictment in this case. According to these Defendants, the conduct alleged in the Indictment in this matter does not constitute fraud against the United States in light of the Supreme Court's reasoning in Skilling. I. Summary of Skilling In Skilling the defendant was charged with, among other things , conspiracy to commit honest-services wire fraud in violation of 18 U.S.C. 371, 1343, and 1346. The jury found Skilling guilty of 19 of the charges in the indictment, including honest-services wire fraud. Skilling appealed, and the Fifth Circuit affirmed. The Supreme Court accepted certiorari to consider, among other things, whether Skilling's conspiracy conviction was premised on an improper theory of honest-services wire fraud; i.e., specifically, whether the honestservices statute ( 1346) is unconstitutionally vague or, in the alternative, whether Skilling's conduct fell within the statute's compass. 130 S.Ct. at 2925-56. The Court declined to find 1346 is unconstitutionally vague and instead found it amenable to a limited construction. Accordingly, the Court focused its analysis on the history of the honest-services mail-fraud doctrine. *2 The Court noted the judicial development of the honest-services doctrine as early as 1941 and described the doctrine as follows: Unlike fraud in which the victim's loss of money or property supplied the defendant's gain, with one the mirror image of the other, see, e.g., United States v. Starr, 816 F.2d 94, 101 (C.A.2 1987), the honest-services theory targeted corruption that lacked similar symmetry. While the offender profited, the betrayed party suffered no deprivation of money or property; instead, a third party, who had not been deceived, provided the enrichment. For example, if a city mayor (the offender) accepted a bribe from a third party in exchange for awarding that party a city contract, yet the contract terms were the same as any that could have been negotiated at arm's length, the city (the betrayed party) would suffer no tangible loss. Cf. McNally, 483 U.S., at 360, 107 S.Ct. 2875, 97 L.Ed.2d 292. Even if the scheme occasioned a money or property gain for the betrayed party, courts reasoned, actionable harm lay in the denial of that party's right to the offender's honest

services. See, e.g., United States v. Dixon, 536 F.2d 1388, 1400 (C.A.2 1976). Id. at 2926. The Court noted: Over time, [a]n increasing number of courts recognized that a recreant employee-public or private-c[ould] be prosecuted under [the mail-fraud statute] if he breache[d] his allegiance to his employer by accepting bribes or kickbacks in the course of his employment, United States v. McNeive, 536 F.2d 1245, 1249 (C.A.8 1976); by 1982, all Courts of Appeals had embraced the honest-services theory of fraud. Id. at 2927 (citation omitted). In 1987, however, the Supreme Court stopped the development of the intangible-rights doctrine in its tracks in McNally v. United States, 383 U.S. 350 (1987). Id. The Court held in McNally that a scheme was not honest-services mail fraud when a state officer who, in selecting Kentucky's insurance agent, arranged to procure a share of the agent's commissions via kickbacks paid to companies the official partially controlled and in which [t]he prosecutor did not charge that, in the absence of the alleged scheme [,] the Commonwealth would have paid a lower premium or secured better insurance but instead maintained that the kickback scheme defraud[ed] the citizens and government of Kentucky of their right to have the Commonwealth's affairs conducted honestly . McNally, 383 U.S. at 353. In response to the Court's ruling in McNally, Congress enacted 1346 specifically to cover one of the intangible rights' that lower courts had protected ... prior to McNally: the intangible right of honest services. Skilling, 130 S.Ct. at 2927 (quoting Cleveland v. United States, 531 U.S. 12, 19-20, 121 S.Ct. 365, 148 L.Ed.2d 221 (2000)). The Court concluded Congress intended to reinstate the body of pre-McNally honestservices law when it enacted 1346. Id. at 2929 (quotation omitted). Accordingly, the Court examined preMcNally cases and noted [i]n the main [they] involved fraudulent schemes to deprive another of honest services through bribes or kickbacks supplied by a third party who had not been deceived. Id. at 2928. The Court noted outside that core category of honest-services cases, there was considerable disarray over the statute's application. Id. at 2929. Ultimately, the Court concluded: *3 In view of this history, there is no doubt that Congress intended 1346 to reach at least bribes and kickbacks. Reading the statute to proscribe a wider range of offensive conduct, we acknowledge, would raise the due process concerns underlying the vagueness doctrine. To preserve the statute without transgressing constitutional limitations, we now hold that 1346 criminalizes only the bribe-and-kickback core of the preMcNally case law. Id. at 2931. II. Application of Skilling As the government notes in its Response, the Supreme Court in Skilling limited its holding to the scope of 1346. The Court did not suggest its interpretation of 1346 had broader application to other statutes. Moreover, the Court's analysis consisted of an in-depth historical analysis of honest-services mail fraud and 1346, which also suggests the Court's interpretation of 1346 does not have broader implications. In addition, as noted, the Skilling Court brought the interpretation of 1346 in line with the pre-McNally interpretation of honest-services mail fraud. In McNally the Court specifically contrasted the broad definition of honest-services fraud in the context of mail fraud with the construction of 371 and noted: Hammerschmidt[ v. United States, 265 U.S. 182, 44 S.Ct. 511, 68 L.Ed. 968 (1924) ,] concerned the scope of the predecessor of 18 U.S.C. 371, which makes criminal any conspiracy to defraud the United States, or any agency thereof in any manner or for any purpose. Hammerschmidt indicates, in regard to that statute, that while [t]o conspire to defraud the United States means primarily to cheat the Government out of property or money, ... **it also means to interfere with or obstruct one of its lawful governmental functions by deceit, craft or trickery, or at least by means that are dishonest. 265 U.S., at 188, 44 S.Ct., at 512. Other cases have held that 371 reaches conspiracies other than those directed at property interests. See, e.g., Haas v. Henkel, 216 U.S. 462, 480, 30 S.Ct. 249, 254, 54 L.Ed. 569 (1910) (predecessor of 371 reaches

conspiracy to defraud the Government by bribing a Government official to make an advance disclosure of a cotton crop report); Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680(1942)(predecessor of 371 reaches conspiracy to defraud the United States by bribing a United States attorney). However, we believe that this broad construction of 371 is based on a consideration not applicable to the mail fraud statute. In Curley v. United States, 130 F. 1 (C.A.1 1904), cited with approval in Haas v. Henkel, supra, the court stated: Quite likely the word defraud, as ordinarily used in the common law, and as used in English statutes and in the statutes of our states, enacted with the object of protecting property and property rights of communities and individuals, as well as of municipal governments, which exist largely for the purpose of administering local financial affairs, has reference to frauds relating to money and property. 130 F. 1 at 6-7. The court concluded, however, that [a] statute which ... has for its object the protection of the individual property rights of the members of the civic body, is one thing; a statute which has for its object the protection and welfare of the government alone, which exists for the purpose of administering itself in the interests of the public, [is] quite another. Id., at 7. Section 371 is a statute aimed at protecting the Federal Government alone; however, the mail fraud statute, as we have indicated, had its origin in the desire to protect individual property rights, and any benefit which the Government derives from the statute must be limited to the Government's interests as property holder. *4 McNally, 483 U.S. at 359 n. 8 (emphasis added). Thus, when restricting the core categories of mail fraud in McNally, the Court specifically noted its reasoning did not apply to 371. Moreover, the Court in Skilling did not take issue with that portion of the analysis in McNally. Accordingly, it appears unlikely that the Supreme Court would conclude its decision in Skilling requires a limitation or reevaluation of the definition of fraud under 371. In addition, unlike the defendant in Skilling, Defendants here have failed to specify how 371 as applied in this case represents an overreach by the government or a misinterpretation of the statute by the courts. Hammerschmidt, therefore, remains controlling for purposes of this prosecution under 371. See United States v. Caldwell, 989 F.2d 1056, 1058 (1993). Accordingly, the Court denies Defendants' Motions to Arrest Judgment. CONCLUSION For these reasons, the Court DENIES the Motions to Arrest Judgment filed by Defendants Bendshadler (# 414), Joseph Oquendo Saladino (# 425), and Michael Sean Mungovan (# 423). U.S. v. Dadanian, 818 F.2d 1443, 23 Fed. R. Evid. Serv. 141 (9th Cir.(Cal.),Jun 04, 1987)

Defendants were convicted in the United States District Court for the Central District of California, Terry J. Hatter, Jr., J., of mail fraud and running an illegal gambling business, and one of the defendants was also convicted of interstate travel in aid of a racketeering enterprise and racketeering, and defendants appealed. The Court of Appeals, Chambers, Circuit Judge, held that: (1) plea agreement and testimony concerning it did not constitute impermissible vouching for witness; (2) defendants were not denied effective assistance of counsel; (3) evidence was sufficient to support mail fraud convictions; (4) indictment sufficiently alleged Travel Act violation; (5) statute proscribing running of illegal gambling business reached defendants' activity; and (6) defendants' right of confrontation was not violated by district court's failure to allow cross-examination of government witness about his maximum jail time exposure. Affirmed. [4] Postal Service 306 35(2)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud

306k35(2) k. Nature and Elements of Offense in General. Most Cited Cases Elements of mail fraud are: scheme or artifice to defraud; and use of the mails in furtherance of the scheme. 18 U.S.C.A. 1341. [5] Postal Service 306 35(6)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(6) k. Intent That Mails Be Used as Part of Scheme. Most Cited Cases One causes the mail to be used, as required for conviction of mail fraud, when he does an act with knowledge that use of mails will follow in ordinary course of business, or where such use can reasonably be foreseen, even though not actually intended. 18 U.S.C.A. 1341. [6] Postal Service 306 49(11)

306 Postal Service 306III Offenses Against Postal Laws 306k49 Evidence 306k49(8) Weight and Sufficiency 306k49(11) k. Use of Mails to Defraud. Most Cited Cases There was sufficient evidence that defendants could have foreseen that city administrator would file statements of economic interest with California Fair Political Practices Commission, in which administrator failed to disclose his hidden interest in an income from poker club, as required to support defendants' convictions for mail fraud in connection with their holding of such interest for administrator. 18 U.S.C.A. 1341. Appeal from the United States District Court for the Central District of California. Before CHAMBERS and KOZINSKI, Circuit Judges, and STRAND,FN* District Court Judge. FN* Honorable Roger G. Strand, United States District Judge for the District of Arizona, sitting by designation. CHAMBERS, Circuit Judge: This appeal arises from the conviction of George and Jean Dadanian, brothers, for mail fraud and running an illegal gambling business. See 18 U.S.C. 1341, 1955. George Dadanian was also convicted of interstate travel in aid of a racketeering enterprise and racketeering. See 18 U.S.C. 1952, 1962(c). Appellants challenge their convictions on several grounds. We find that none of these grounds warrants reversal and affirm. BACKGROUND This prosecution was the result of the Dadanians' involvement in a fraudulent scheme to acquire a poker license in the City of Bell, California. John Pitts, the Bell City Administrator and Peter Werrlein, a Bell City Councilman, persuaded the City of Bell to authorize poker playing and to grant one poker club license in the city to the California Bell Club (CBC) **in which they held a secret fifty-one percent interest. Initially **Kevin Kirwan held Pitts' and Werrlein's interest on their behalf. A dispute arose between *1445 Kirwan and Pitts, and Pitts decided to change his front man from Kirwan to George Danadian. In order to preserve the appearance that Kirwan was selling his club interest to Dadanian rather than transferring Pitts' hidden interest, the Dadanians paid Kirwan with money he was to return to them under the table. George Dadanian and Kirwan traveled from Los Angeles to Las Vegas where they executed the documents for the interest transfer.

When the Dadanians applied to the Bell city council for approval to hold an interest in the CBC, they failed to disclose their interest was secretly held for Pitts. George Dadanian held Pitts' interest in exchange for which Pitts agreed to assist the Dadanians in acquiring a second poker club license in the City of Bell. Also, it was decided Pitts would receive $5,000 a month from the CBC distributions paid to the Dadanians. Pitts entered into a plea agreement with the government and testified against the Dadanians at trial. SUFFICIENCY OF THE MAIL FRAUD CONVICTIONS **The mail fraud counts of the indictment charged the mailing of false statements of economic interest by Pitts to the California Fair Political Practices Commission. In completing the statements, Pitts failed to disclose his hidden interest in and income from the California Bell Club. Count Nine also charged the mailing of a letter by Pitts to a plaintiff in a lawsuit filed by the limited partners of the CBC against the Danadians alleging the secret ownership arrangement. Enclosed with the letter was a copy of a false economic interest form. The letter urged Pitts be dismissed from the lawsuit. The Dadanians contend there is insufficient evidence to support their convictions for mail fraud because the government failed to establish that the mailings were reasonably foreseeable. They also contend the mailing by Pitts of false statements of economic interest was in his official capacity and legally compelled. In reviewing a claim for insufficient evidence, this court must determine after viewing the evidence in the light most favorable to the prosecution, whether any rational trier of fact could have found the elements of the crime beyond a reasonable doubt. United States v. Stewart, 770 F.2d 825, 831 (9th Cir.1985) , cert. denied, 474 U.S. 1103, 106 S.Ct. 888, 88 L.Ed.2d 922 (1986), [citing Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979) ]. [4][5] The elements of mail fraud are: (1) a scheme or artifice to defraud; and (2) use of the mails in furtherance of the scheme. United States v. Vaughn, 797 F.2d 1485, 1492-93 (9th Cir.1986). One causes the mail to be used when he does an act with knowledge that the use of the mails will follow in the ordinary course of business, or where such use can reasonably be foreseen, even though not actually intended. Pereira v. U.S., 347 U.S. 1, 8-9, 74 S.Ct. 358, 362-63, 98 L.Ed. 435 (1954). It is well settled ... that so long as one participant in a fraudulent scheme causes a use of the mails in execution of the fraud, all other knowing participants in the scheme are legally liable for that use of the mails. United States v. Toney, 598 F.2d 1349, 1355 (5th Cir.1979), cert. denied, 444 U.S. 1033, 100 S.Ct. 706, 62 L.Ed.2d 670 (1980). [6][7] In viewing the evidence in the light most favorable to the government, a jury could reasonably find that the Danadians could have foreseen that Pitts, as Bell City Administrator, would file statements of economic interest with the Fair Political Practices Commission. Since the concealment of Pitts' CBC financial interest was the cornerstone of the scheme to defraud, it was reasonably forseeable that Pitts would falsify and mail his economic interest statements to ensure nondisclosure. Similarly, the mailing of the letter denying Pitts' interest in CBC to the limited partners who had sued the Dadanians was reasonably forseeable. A rational jury could have found beyond a reasonable doubt that the Dadanians knew of the scheme to defraud and that the mail was used in furtherance thereof. We reject appellants' contention that their mail fraud convictions are invalid under Parr v. United States, 363 U.S. 370, 80 S.Ct. 1171, 4 L.Ed.2d 1277 (1960) because the mailings were legally compelled. In Parr the mailing of tax assessments which did not contain misrepresentations was held not to be an unlawful execution of a fraudulent scheme to embezzle school district funds since the defendants were required by law to assess and collect taxes, and because the tax assessments were neither alleged nor proved to be illegal, excessive or padded. Id., at 387, 391, 80 S.Ct. at 1181, 1183. Here Pitts' statements of economic interest, while required by law to be filed, were false on their face. Unlike *1447 Parr, these false statements were made in furtherance of the scheme to keep secret that Dadanian held the CBC interest for Pitts. See United States v. Bagnariol, 665 F.2d 877, 899 (9th Cir.1981) (per curiam), cert. denied, 456 U.S. 962, 102 S.Ct. 2040, 72 L.Ed.2d 487 (1982). O. Thronas, Inc. v. Blake, 2010 WL 3185118, RICO Bus.Disp.Guide 11,921 (D.Hawai'i,Aug 10, 2010)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(12) k. Civil Liabilities; Actions. Most Cited Cases Corporations whose complaint did not contain a single statement alleging any named defendant caused the use of wires interstate failed to adequately plead a civil Racketeer Influenced and Corrupt Organizations Act (RICO) claim against individuals who allegedly embezzled their funds. Corporations alleged that an alleged coconspirator, who was not a named defendant, was the only person who actually caused the transmission of funds through the wires from state to state. 18 U.S.C.A. 1962(c).

From 172 ALR Fed 109,

The court reiterated its view 18 U.S.C.A. 1346 was constitutional because mail fraud required the element of mens rea in U.S. v. Castro, 89 F. 3d 1443, 45 Fed. R. Evid. Serv. 43 ( 11th Cir. 1996), reh'g and suggestion for reh'g en banc denied, 99 F.3d 1157 (11th Cir. 1996), a case holding that attorneys violated 1346 by participating in a scheme whereby they would make kickbacks to a county circuit court judge in exchange for receiving special assistant public defender appointments. The court found that because the defendants' voidforvagueness challenge did not raise a First Amendment issue, it was proper to consider 1346 as it applied to the facts of the case. Consequently, the applicable rule was that a statute is unconstitutionally vague when it fails to define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner which does not encourage arbitrary and discriminatory enforcement. The court noted that this constitutional question was closely related to the question of whether the statutory standard incorporated a requirement of mens rea, and that, as it had previously found, 1346 incorporated the prerequisites of 1341, a statute that had withstood repeated vagueness challenges because it required willful action and specific intent to defraud in order for a defendant to be guilty of mail fraud. The court concluded that since the jury had found that the defendants had specific intent to defraud the state of honest services, and since the defendants did not challenge this finding, the term "honest services" was not unconstitutionally vague as applied to the defendants' particular case. 13. Scheme or artifice to defraud [Cumulative Supplement] Mail or wire fraud can take form of: (1) scheme or artifice to defraud, or (2) obtaining money or property by means of false or fraudulent pretenses, representations or promises. 18 U.S.C.A. 1341, 1343. U.S. v. Woods, 335 F.3d 993 (9th Cir. 2003). IV. SPECIFIC APPLICATIONS A. Public Sector Cases 17. Generally The court also specifically rejected the argument that 18 U.S.C.A. 1341 and 1346 do not reach the intangible right of honest public services in U.S. v. Frega, 933 F. Supp. 1536 (S.D. Cal. 1996), a case upholding an indictment for mail fraud based on an alleged scheme to defraud the people of the State of California of their right to the honest services of county judges. In so holding, the court noted that it was clearly with Congress's power to overturn the McNally v. U.S., 483 U.S. 350, 107 S. Ct. 2875, 97 L. Ed. 2d 292, R.I.C.O. Bus. Disp. Guide (CCH) 6663 (1987), holding that 1346 did not encompass the intangible right to have state governmental affairs conducted honestly, and that the legislative history of 1346 clearly demonstrated such an intent. The court rejected the defendant's argument that 1346 was intended merely to extend the reach of mail fraud to intangible property rights, noting that if it were so construed, it would have been superfluous, since the Supreme Court in Carpenter v. U.S., 484 U.S. 19, 108 S. Ct. 316, 98 L. Ed. 2d 275, 14 Media L. Rep. (BNA) 1853, 5 U.S.P.Q.2d (BNA) 1059, Fed. Sec. L. Rep. (CCH) 93423, R.I.C.O. Bus. Disp. Guide (CCH) 6785

(1987), had already held that while the mail fraud statute did not reach public corruption, it did reach intangible property rights. The court also rejected the argument that the term "another" did not unambiguously refer to states, and that Congress had therefore failed in its attempt to overturn McNally, since the court found that the term "another" could easily be read to include a state citizen that was the victim of public corruption fraud. 18. Bribery of public official The court upheld a mail fraud indictment in U.S. v. Frega, 933 F. Supp. 1536 (S.D. Cal. 1996), based on an alleged scheme to defraud the people of the State of California of their right to have the honest services of county judges performed free from bribery, undue influence, and deceit. The indictment alleged that the defendant judges had presided over cases in which the defendant attorney appeared, resulting in favorable verdicts, and that the attorney had made various payments or gifts to the two judges with the intent to influence or reward them. The mail fraud counts were based on various mailings involved in the underlying cases. The court rejected the argument that the 18 U.S.C.A. 1346 reference to "honest service" was too vague to inform the defendants that the conduct at issue was proscribed, noting that even if the term "honest services" was vague in the abstract, the indictment had further defined it as freedom from bribery, undue influence, and deceit. The court added that it was not unreasonable to conclude that a person of reasonable intelligence would conclude that the accepting of bribes while sitting as a judge constituted a criminal offense. The court also rejected the argument that the fraudulent scheme must be limited to bribery schemes, meaning that there must be some nexus between the gifts or bribes and acts taken by the judges. The defendant argued that such a limit was to be implied from the legislative history of 1346, which stated that the purpose was to permit the government to resume prosecution of public corruption cases involving "bribes, kickbacks, and conflicts of interest"from which the defendant argued that the statute had to be limited to those acts under the rule that where two rational readings of a criminal statute are possible, the more lenient must be adopted unless Congress clearly indicated otherwise. The court found that the listing of certain acts in the legislative history was not intended to be exclusive. The court also found that even if the scope of 1346 were so limited, the acts charged in the indictment would fall within it, since "bribery" was expressly mentioned and the pattern of "undue influence" and "deceit" was one of severe conflicts of interest. Although there might be some ambiguity regarding application of 1346 to other hypothetical circumstances, it clearly applied to the defendants' case. U.S. v. Frega, 933 F.Supp. 1536 (S.D.Cal.,Jul 09, 1996) Attorney and two California Superior Court judges who were indicted for conspiracy to commit bribery and mail fraud, based on allegations that attorney gave judges gifts with intent of influencing or rewarding them in regard to cases in which he was counsel of record and in which they were presiding, moved to dismiss indictment on ground that they failed to state federal offenses. The District Court, Rafeedie, J., held that: (1) federal bribery statute did not apply to instant prosecution, and (2) mail fraud statute did apply. Motions granted in part and denied in part. [4] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Federal bribery statute did not apply to prosecution of California Superior Court judges and attorney, based on allegation that attorney gave gifts, which judges accepted, with intent to influence or reward judges in cases that they presided over and in which attorney was counsel of record; indictment did not allege that federal funds were corruptly administered, were in danger of being corruptly administered, or even could have been corruptly administered. 18 U.S.C.A. 666. [6] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Congress' specific purpose in enacting bribery statute was to close loopholes left by statutes that prohibit theft

of federal government property and bribing of federal public officials; latter statutes failed to cover conduct where federal funds were stolen and then commingled with nonfederal funds so that federal funds could not be traced, and they also failed to cover many situations involving nonfederal employees who corruptly administered federal funds. 18 U.S.C.A. 201, 641, 666. [7] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Although Congress intended bribery statute to have broad application, that broadness is in regard to protection of federal funds. 18 U.S.C.A. 666. [8] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases In bribery prosecution, government need not be able to trace federal funds directly, but rather, it is sufficient if state employee has access-control is not necessary-to commingled state and federal funds. 18 U.S.C.A. 666. [9] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Bribery statute was intended to protect integrity of federal funds, and not as general anticorruption statute. 18 U.S.C.A. 666. [10] Constitutional Law 92 2351

92 Constitutional Law 92XX Separation of Powers 92XX(B) Legislative Powers and Functions 92XX(B)2 Encroachment on Judiciary 92k2351 k. Construction of Statutes in General. Most Cited Cases (Formerly 92k52) Constitutional Law 92 2384

92 Constitutional Law 92XX Separation of Powers 92XX(B) Legislative Powers and Functions 92XX(B)2 Encroachment on Judiciary 92k2381 Imposition of Legislative Preference in Particular Proceedings 92k2384 k. Overturning Judgment. Most Cited Cases (Formerly 92k57) Although Congress may not enact legislation to undo result of Supreme Court decisions of constitutional review, such is not true with regard to decisions of statutory interpretation. [11] Postal Service 306 35(9)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud

306k35(9) k. Injury from Fraud. Most Cited Cases Federal mail fraud statute reached intangible right of honest public services and thus, it applied to prosecution of California Superior Court judges and attorney, alleging that attorney gave gifts, which judges accepted, with intent to influence judges in cases that they presided over and in which attorney was counsel of record, and that various mailings were used to further scheme. 18 U.S.C.A. 1346. [12] Statutes 361 212.1

361 Statutes 361VI Construction and Operation 361VI(A) General Rules of Construction 361k212 Presumptions to Aid Construction 361k212.1 k. Knowledge of Legislature. Most Cited Cases Congress is presumed to have amended statute with knowledge of Supreme Court decisions regarding that statute. [13] Statutes 361 206

361 Statutes 361VI Construction and Operation 361VI(A) General Rules of Construction 361k204 Statute as a Whole, and Intrinsic Aids to Construction 361k206 k. Giving Effect to Entire Statute. Most Cited Cases Statute should not be construed so as to make any aspect superfluous. [14] Postal Service 306 35(9)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(9) k. Injury from Fraud. Most Cited Cases Another, as used in mail fraud statute, which prohibits schemes to deprive another of intangible right of honest services, includes state citizen, who would be victim of public corruption fraud. 18 U.S.C.A. 1346. [15] Postal Service 306 35(1)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(1) k. Statutory Provisions. Most Cited Cases Mail fraud statute was not unconstitutionally vague as applied in prosecution of California Superior Court judges and attorney, alleging that attorney gave judges gifts with intent of influencing or rewarding them in regard to cases in which he was counsel of record; even though honest services was not defined in statute, government alleged specific intent to defraud, and person of reasonable intelligence would conclude that accepting bribes while sitting as judge was criminal offense. 18 U.S.C.A. 1346.

[16] Constitutional Law 92

4506

92 Constitutional Law 92XXVII Due Process 92XXVII(H) Criminal Law 92XXVII(H)2 Nature and Elements of Crime 92k4502 Creation and Definition of Offense 92k4506 k. Vagueness. Most Cited Cases (Formerly 92k258(2))

Criminal Law 110

13.1

110 Criminal Law 110I Nature and Elements of Crime 110k12 Statutory Provisions 110k13.1 k. Certainty and Definiteness. Most Cited Cases (Formerly 110k13.1(1)) Void for vagueness doctrine stems from Due Process Clause and requires that meaning of penal statute be determinable; thus, statute will be struck down if it fails to give adequate notice to people of ordinary intelligence concerning conduct it proscribes. U.S.C.A. Const.Amend. 14. [17] Postal Service 306 35(4)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(4) k. Legality of Object. Most Cited Cases United States Supreme Court's decision in Parr, that mail fraud convictions cannot be based on mailing of innocent documents that are required to be mailed by law, does not apply if documents that are required to be mailed are themselves false. 18 U.S.C.A. 1341. [18] Postal Service 306 35(4)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(4) k. Legality of Object. Most Cited Cases Parr exception to mail fraud statute's mailing element, which exception provides that mail fraud convictions cannot be based on mailing of innocent documents that are required to be mailed by law, did not require dismissal of mail fraud indictment where government explained alleged falsity or nonrequirement of mailing as to each document. 18 U.S.C.A. 1341. MEMORANDUM OPINION AND ORDER RE: MOTIONS TO DISMISS COUNTS 1 AND 2-17 OF THE INDICTMENT RAFEEDIE, District Judge: FN* FN* U.S. District Court Judge for the Central District of California, sitting by designation. Introduction Defendants Patrick Frega, G. Dennis Adams, and James Malkus have been indicted on **one count of conspiracy to commit bribery in violation of 18 U.S.C. 666 and **sixteen counts of mail fraud in violation of 18 U.S.C. 1341, 1346. All three defendants have moved the Court to dismiss Counts 1 and 2-17 of the indictment on the ground that they fail to state federal offenses. The Court read the papers filed in connection with the memorandum, held a hearing on Count 1 on June 4, 1996 and on Counts 2-17 on June 25, 1996, and has had the benefit of oral argument of counsel. The Court HEREBY DISMISSES Count 1 of the indictment for failure to state a federal offense, but DENIES the motion to dismiss Counts 2-17.FN1 FN1. This Opinion deals with the Indictment that was filed on April 9, 1996. Subsequently, the grand jury has returned two Superseding Indictments, the most recent on June 25, 1996. That indictment replaces the 666 charge with a Racketeering Conspiracy, 18 U.S.C. 1962(d). Facts

In this case, the Court is confronted with grave allegations of a twelve year pattern of judicial corruption in the California Superior Court system in San Diego. During that time, Defendants Adams and Malkus were Superior Court judges, and Defendant Frega was a local plaintiff's attorney specializing in personal injury cases. Malkus has since resigned as a judge, Adams was removed by the California Commission on Judicial Performance, FN2 and Frega continues to practice law in San Diego. FN2. See Adams v. Commission on Judicial Performance, 10 Cal.4th 866, 42 Cal.Rptr.2d 606, 897 P.2d 544 (1995). The forty-five page, eighteen count indictment charges that Frega gave the former judges gifts with the intent of influencing or rewarding them in regard to cases in which he was counsel of record and in which they were presiding, and that the judges accepted these gifts with the understanding that they would be corruptly influenced. Count 1 charges bribery in violation of 18 U.S.C. 666, Counts 2-17 charge mail fraud in violation of 18 U.S.C. 1341, 1346, and Count 18 charges Frega alone with racketeering in violation of 18 U.S.C. 1962.FN3 FN3. The RICO count has not yet been subject to attack and is not the subject of this opinion. According to the indictment, Malkus presided over at least five cases in which Frega appeared. FN4 Of these cases, two resulted in $4 million verdicts for Frega's clients, and another in a $2 million settlement. Over the same period, Frega allegedly lavished on Malkus such gifts as a $612 health club membership, $9,900 in salary payments to Malkus' son for employment arranged by Frega with a former client, and over $3,500 in car repairs. FN4. It is not clear from the indictment whether Malkus actually had complete control of these cases, or whether he presided over them for more limited purposes, such as a particular motion. Similarly, Adams presided over or handled portions of at least seven cases in which Frega appeared. Of these, one resulted in a $5 million non-jury verdict in favor of Frega's client. The indictment does not disclose the results of the other cases. Over the same period, Frega supposedly paid over $1,700 for a professional writer to ghostwrite a novel for Adams, gave Adams a $2,000 computer, arranged for a former client to provide or contributed himself over $8,000 in car services to Adams and his family, arranged for the former client to sell a car to Adams at $1,000 below cost, contributed $4,000 and $2,200 toward the costs of cars for Adams' daughter and father respectively, and paid $614 for a new bed for Adams. *1539 The mail fraud counts are based on an alleged scheme to defraud the people of the State of California by depriving them of their right to the honest services of Judges of the State Superior Court in San Diego County performed free from bribery, undue influence, and deceit. (Indictment, 30 at 2). The fraudulent scheme alleged was again that Frega gave gifts, which the former judges accepted, with the intent to influence or reward Adams and Malkus in cases that they presided over and in which Frega was counsel of record. The mailings that form the jurisdictional element of the crime are as follows: **Count 2: May 31, 1991-Notice of Case Management Conference; **Count 3: Aug. 26, 1991-Notice of Change of Address; **Count 4: Sept. 30, 1991-Ex Parte Application for Appointment of Settlement Judge; **Count 5: Sept. 30, 1991-Declaration of Plaintiff's Counsel; **Count 6: Oct. 10, 1991-Memorandum of Proposed Decision; **Count 7: Oct. 25, 1991-Request for Dismissal;

**Count 8: Nov. 1, 1991-Letter from G. Dennis Adams (to Commission on Judicial Performance); **Count 9: Nov. 5, 1991-Letter from Michael I. Greer (to Commission on Judicial Performance); **Count 10: Nov. 14, 1991-Letter from G. Dennis Adams (to Commission on Judicial Performance); **Count 11: Nov. 26, 1991-Order; **Count 12: Dec. 26, 1991-Letter from G. Dennis Adams (to Commission on Judicial Performance); **Count 13: Apr. 7, 1992-Letter from Patrick R. Frega (to Commission on Judicial Performance); **Count 14: Apr. 8, 1992-Letter from James E. Fitting (to Commission on Judicial Performance); **Count 15: Apr. 14, 1992-Opposition to Objections to Proceedings before James A. Malkus; **Count 16: Apr. 14, 1992-Verified Answer of Judge Malkus; and **Count 17: Nov. 10, 1993-Letter from James A. Malkus (to Commission on Judicial Performance).

I. Count 1-18 U.S.C. 666 (Bribery) Although the defendants mount a number of attacks on Count 1 of the indictment, the only one that the Court finds persuasive is the jurisdictional challenge to the reach of 18 U.S.C. 666.FN5 Since that attack is dispositive, the Court need not and therefore does not reach the other issues. FN5. The statute states in relevant part: (a) Whoever, if the circumstance described in subsection (b) of this section exists(1) being an agent of an organization, or of a State, local, or Indian tribal government, or any agency thereof..... (B) corruptly solicits or demands for the benefit of any person, or accepts or agrees to accept, anything of value from any person, intending to be influenced or rewarded in connection with any business, transaction, or series of transactions of such organization, government, or agency involving anything of value of $5,000 or more; or (2) corruptly gives, offers, or agrees to give anything of value to any person, with intent to influence or reward an agent of an organization or of a State, local or Indian tribal government, or any agency thereof, in connection with any business, transaction, or series of transactions of such organization, government, or agency involving anything of value of $5,000 or more; shall be fined under this title, imprisoned not more than 10 years, or both. (b) The circumstance referred to in subsection (a) of this section is that the organization, government, or agency receives, in any one year period, benefits in excess of $10,000 under a Federal program involving a grant, contract, subsidy, loan, guarantee, insurance, or other form of Federal assistance. The primary issue in this case is whether 666 reaches conduct of the sort alleged in Count 1-conduct that may generally be described as bribery and illegal gratuities.FN6 *1540 Resolution of this matter is one of statutory

interpretation. FN6. The defendants argue that Count 1 fails to allege illegal gratuities, as it states its language purely in terms of bribery. However, the indictment charges that the illegal payments were made and received with the intent to influence and reward. Indictment, 12. This language tracks that of 666 itself, while notably does not mention gratuity. [1][2] The general rule of statutory interpretation is that the Court is to begin with the language of the statute itself. Randall v. Loftsgaarden, 478 U.S. 647, 656, 106 S.Ct. 3143, 3149, 92 L.Ed.2d 525 (1986); Reiter v. Sonotone Corp., 442 U.S. 330, 337, 99 S.Ct. 2326, 2330, 60 L.Ed.2d 931 (1979). If the language of the statute is sufficiently clear in its context and not at odds with the legislative history, then there is no need to consider other policy issues. Randall, 478 U.S. at 656, 106 S.Ct. at 3149. Moreover, the Court is not free to substitute legislative history for the language of the statute. Aronsen v. Crown Zellerbach, 662 F.2d 584, 588 n. 7 (9th Cir.1981). A. Ambiguities in the Statute As Applied [3][4] In this case, however, the Court concludes that the plain language of 666 is not clear as to whether it applies to the conduct alleged in this case. First, where an interpretation of a federal criminal statute would upset the balance of power between the federal and state governments, Congress must express its intention clearly for a court to adopt that interpretation. United States v. Bass, 404 U.S. 336, 349, 92 S.Ct. 515, 523, 30 L.Ed.2d 488 (1971). Second, the Court has difficulty determining how the particular transactions in this matterthe cases over which Malkus and Adams presided-would be valued so as to satisfy the $5,000 transaction element of 666. 1. Federal-State Balance Under the Government's theory of prosecution, 666 would become a federal anti-bribery statute. Every state falls within the $10,000 federal funding jurisdiction element, and thus, every state employee would fall within the jurisdiction of the statute.FN7 There remains, of course, the $5,000 transaction requirement, but according to the Government, any such transaction would be covered by 666, even if there were no connection at all to federal funds. FN7. At oral argument, the United States agreed that its construction of the statute would enable it to prosecute, for example, a secretary for a state parking agency receiv[ing] federal funds. (Transcript of June 4, 1996 hearing, at 16:9-10). This reading of 666 is certainly not implausible. However, it would drastically change the balance of power between federal and state governments by bringing conduct that had previously been entirely in the realm of the states within the federal purview. Yet, unless Congress conveys its purpose clearly, it will not be deemed to have significantly changed the federal-state balance. Bass, 404 U.S. at 349, 92 S.Ct. at 523. In Bass, the issue was whether 18 U.S.C. 1202, which made it a crime for a felon to receive[ ], possess[ ], or transport[ ] in commerce or affecting commerce any firearm, required the Government to prove that a defendant had possessed a firearm in commerce or affecting commerce, or whether that phrase modified only the prohibited act of transportation. Confronted with an ambiguous statute and equally ambiguous legislative history, the Supreme Court concluded that the phrase applied to the prohibited act of possession. Otherwise, the statute would have made general possession of firearms by felons criminal and would alter sensitive federalstate relationships [and] could overextend limited federal police resources. Id. The situation in this case is akin to that in Bass. Although Congress may well have the constitutional authority to enact a national anti-bribery statute, such a statute would thrust the federal government into prosecuting conduct readily denounced as criminal by the States. Id. In this regard, it is significant that California has enacted statutes to prohibit the bribery of state court judges. Calif. Penal Code 92 states that: [e]very person who gives or offers to give a bribe to any judicial officer ... with intent to influence his ...

decision ... is punishable by imprisonment in the state prison for two, three or four years. Similarly, Calif. Penal Code 93 states that [e]very judicial officer ... who asks, receives, or agrees to receive, any bribe, *1541 upon any agreement or understanding that his vote, opinion, or decision upon any matters or question which is or may be brought before him for decision, shall be influenced thereby, is punishable by imprisonment in the state prison for two, three, or four years. Since California has made this conduct criminal, there must be a clear statement of Congress' intention to have 666 reach this same conduct. Therefore, the Court must examine the legislative history of the statute to seek such a clear statement of intent. 2. $5,000 Transaction Element A second difficulty in applying 666 to the conduct alleged in Count 1 relates to the $5,000 transaction requirement. It is clear that Count 1 charges that the transactions are intended to be the cases over which Adams and Malkus presided and in which they were allegedly corruptly influenced. FN8 However, the indictment fails to allege that these cases were valued at $5,000 or more, as is required by the statute. FN8. [M]ore than $100,000.00 in bribe payments ... were made and received with the intent to influence and reward California Superior Court Judges in connection with cases in the California State Court system. Indictment, 12 (emphasis added). This language is exactly parallel to that of the statute, which requires that the bribe or gratuity be in connection with any business, transaction, or series of transactions ... involving anything of value of $5,000 or more. 18 U.S.C. 666(a)(1)(B). This omission appears to be more than a simple technical error, as it is unclear how the United States intends to value the cases that Adams and Malkus presided over. The Court can conceive of at least three ways in which the cases could be valued: (1) the amount in controversy; FN9 (2) the ultimate settlement value or verdict; or (3) the value of the case to Frega. Nowhere does the indictment explain the Government's theory of valuation. FN9. See 28 U.S.C. 1332(a) (providing diversity of citizenship subject-matter jurisdiction where the amount in controversy exceeds $50,000). Significantly, if 666 is used to prosecute non-federal employees who corruptly administer federal funds, even if federal funds are not directly threatened, there is only one measure of value: the value of the funds corruptly transacted. See, e.g., United States v. Valentine, 63 F.3d 459, 461-62 (6th Cir.1995) (transactions were $8,363 misappropriated from copying fees and $7,000 of lost wages when employee labor was misappropriated for personal use); United States v. Wyncoop, 11 F.3d 119, 120 (9th Cir.1993) (transaction was $65,000 in federal student loans); United States v. Simas, 937 F.2d 459, 463 (9th Cir.1991) (transaction was stair cleaning project worth $5,790); United States v. Westmoreland, 841 F.2d 572, 575 (5th Cir.1988) (transactions were purchases of goods worth $14,482.92). This ambiguity in calculating the transaction value, combined with the lack of ambiguity in other cases, indicates that the language of the statute is insufficiently clear to determine whether the statute was meant to apply to the situation at hand. B. Legislative History [5] Where a statute is not plainly clear on its face, the Court is to consider the legislative history and the context of enactment of the statute. See Dowling v. United States, 473 U.S. 207, 213, 105 S.Ct. 3127, 3131, 87 L.Ed.2d 152 (1985); United States v. Aguilar, 21 F.3d 1475, 1480 (9th Cir.1994) (noting that it cannot be said that the language of the statute clearly expresses the congressional intent), rev'd on other grounds, 515 U.S. 593, 115 S.Ct. 2357, 132 L.Ed.2d 520 (1995). Section 666 was added to Title 18 in 1984 as part of the 1985 continuing appropriations for the Comprehensive Crime Control Act of 1984. In enacting the section, the Congressional committee indicated that the purpose of

the statute was to protect the integrity of the vast sums of money distributed through Federal programs from theft, fraud, and undue influence by bribery. Senate Report No. 98-225, 1984 U.S.C.C.A.N. 3182, 3510-11. While the statute was meant to be construed broadly, according to the report, its reach was not meant to be unlimited: [N]ot every Federal contract or disbursement of funds would be covered. For *1542 example, if a government agency lawfully purchases more than $10,000 in equipment from a supplier, it is not the intent of this section to make a theft of $5,000 or more from the supplier a Federal crime. Id. [6] Congress thus had a specific purpose in mind when it enacted 666: the closing of loopholes left by 18 U.S.C. 641 and 18 U.S.C. 201, which respectively prohibit the theft of federal government property and the bribing of federal public officials. These statutes, however, failed to cover conduct where federal funds were stolen and then comingled with non-federal funds so that federal funds could not be traced. They also failed to cover many situations involving non-federal employees who corruptly administered federal funds. The Senate Report identified three cases that Congress intended the statute to cover: United States v. Hinton, 683 F.2d 195 (7th Cir.1982), aff'd sub nom., Dixson v. United States, 465 U.S. 482, 104 S.Ct. 1172, 79 L.Ed.2d 458 (1984); United States v. Del Toro, 513 F.2d 656 (2d Cir.), cert. denied, 423 U.S. 826, 96 S.Ct. 41, 46 L.Ed.2d 42 (1975); United States v. Mosley, 659 F.2d 812 (7th Cir.1981). All three cases involved non-federal employees who administered federal funds corruptly. Although two of the cases concluded that 201 reached this conduct, they entailed fairly detailed factual analyses of the nature of the federal funding statutes involved and required conclusions that non-federal employees were nevertheless federal agents due to the degree of supervision they received. Moreover, the cases indicated that state employees who administered federal funds without substantial federal oversight and involvement would not be subject to 201. By citing these cases specifically in the legislative history, Congress evidenced an intent to close the loophole left by these cases. [7][8] Thus, although Congress did intend 666 to have a broad application, that broadness is in regard to the protection of federal funds. The Government need not be able to trace the federal funds directly; it is sufficient if the state employee has access-control is not necessary-to comingled state and federal funds. Simas, 937 F.2d at 463 (Bay Area Rapid Transit manager who took bribes in exchange for disbursement of contracts for goods and services). Indeed, the Government relies heavily on Simas, but that case appears to the Court to be consistent with the Court's interpretation, as it noted that Congress has cast a broad net to encompass local officials who may administer federal funds, regardless of whether they actually do. Id. [9] The specificity required for prosecution under 666 is demonstrated in other ways. Section 666 contains a jurisdictional element that the organization, government, or agency receive more than $10,000 in federal funding in a year. A survey of published cases involving 666 indicates that courts have required that this funding be shown to exist at a fairly specific level, and not at the general governmental level. For example, the defendant in United States v. Valentine, 63 F.3d 459 (6th Cir.1995), worked as Secretary/Treasurer of the water department for a Tennessee city. The Sixth Circuit held that 666 required a showing that the water department, as opposed to the city government, receive more than $10,000 in federal funding in a given year.FN10 Id. at 462; see also Simas, 937 F.2d at 463 (multi-county transportation agency as the recipient, as opposed to the counties). This specificity is significant in that it reinforces the view that 666 was intended to protect the integrity of federal funds, and not as a general anti-corruption statute. Otherwise, the $10,000 element in Valentine could have been satisfied by the fact that the city received more than $10,000 in federal funding, and as an employee of the municipal water department, the defendant was a city employee. FN10. The defendant also worked as the City Recorder, and in that position, the jurisdictional element was satisfied by showing that the city received more than $10,000 in federal funding in a year. Id. at 462. Of course, state court judges could be subject to 666 in certain circumstances. For example, if the state court system received federal funding for the purpose of appointing *1543 counsel in death penalty habeas proceedings, and a state court judge accepted a bribe in exchange for appointing a particular attorney as habeas

counsel, 666 would clearly be implicated, even if the actual funds used to pay counsel were state funds. Indeed, 666 might be implicated even in the absence of a specific directive for the federal funding, if misappropriation of employment were involved. See Valentine, 63 F.3d at 461-62 (using government employees for personal errands); United States v. Grubb, 11 F.3d 426, 434 (4th Cir.1993) (providing two years of county government employment). However, there is no such implication in this case.FN11 FN11. At the hearing, the Government suggested that the defendants' actions had jeopardized the financial integrity of the state of California, since the state court system would now have to handle attempts to reopen judgments rendered by Adams and Malkus. However, this argument would swallow 666 entirely, since in almost every instance that bribery of state officials occurs, there will be attempts to redo tainted decisions. Accordingly, the Court concludes that the legislative history of 666 demonstrates that Congress intended a broad reach for the statute, but only as to the protection of federal funds. In this case, the indictment does not allege that federal funds were corruptly administered, were in danger of being corruptly administered, or even could have been corruptly administered. Although the alleged conduct of the defendants is troubling, it does not appear to have threatened, either directly or indirectly, federal funds. For that reason, the Court dismisses Count 1 of the indictment. II. Counts 2-17-18 U.S.C. 1341 (Mail Fraud) Next, the defendants attack the sixteen mail fraud counts. Malkus raises two grounds for dismissing the mail fraud counts: **(1) scheme to defraud does not encompass public corruption; and **(2) the mail fraud statute is unconstitutionally vague. Frega adds two grounds: **(3) deprivation of honest services can only involve bribery or some reference to state law; and **(4) the mailings were not false. A. Public Corruption and the Reach of 18 U.S.C. 1346 The first argument raised by the defendants is that 1341, 1346 do not reach the intangible right of honest public services. This argument is drawn entirely from the recent Fifth Circuit case of United States v. Brumley, 79 F.3d 1430 (5th Cir.1996), and so the Court will explain the analysis of that case in some detail. In Brumley, the defendant was a state workers' compensation official who accepted over $86,000 in loans from a local attorney between 1987 and 1992, with the understanding that the loans would never be repaid. During that same time, the defendant attempted to derail a state workers' compensation agency investigation of a local attorney. The defendant first urged the agency to reconsider its decision to investigate; when that failed, he helped the attorney alter subpoenaed documents. Based on this conduct, the defendant was convicted of three counts of wire fraud, three counts of money laundering, and one count of conspiracy to commit mail and wire fraud. 79 F.3d at 1432-33. The Fifth Circuit concluded that the wire fraud statute FN12 did not reach this conduct and reversed the convictions. The central issue in the case was whether the definition in 1346 was intended to reach public corruption. The court concluded that the term another in the section was ambiguous as to what it referred. FN12. For the purposes of this matter, the wire fraud and mail fraud statutes are identical. See United States v. Manarite, 44 F.3d 1407, 1411 n. 5 (9th Cir.1995) (noting that wire fraud is interpreted in light of mail fraud cases). Wire fraud, 18 U.S.C. 1343, states in relevant part: Whoever, having devised or intending to devise any scheme or artifice to defraud, ... transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than five years, or both. Therefore, the court turned to the legislative history of 1346 for guidance. Section 1346, however, contained only two pieces of *1544 legislative history. Id. at 1435-37. One was Representative Conyer's statement that: This amendment restores the mail fraud provision to where that provision was before the McNally decision.

The amendment also applies to the wire fraud provision and precludes the McNally result with regard to that provision.... This amendment is intended merely to overturn the McNally decision. No other change in the law is intended. 134 Cong.Rec. H11, 108-01 (daily ed. Oct. 21, 1988). The other piece of legislative history was a Senate Judiciary Report detailing the Congressional intent in enacting 1346 and other laws. That report stated in relevant part: This section overturns the decision of McNally v. United States in which the Supreme Court held that mail and wire fraud statutes protect property but not intangible rights. Under the amendment, those statutes will protect any person's intangible right to the honest services of another, including the right of the public to the honest services of public officials. The intent is to reinstate all of the pre-McNally case law pertaining to the mail and wire fraud statutes without change. 134 Cong.Rec. S17, 360-02 (daily ed. Nov. 10, 1988). The court found this legislative history to be unpersuasive. First, the statement by Rep. Conyer was not given any weight because it was the contemporaneous remark of a sponsor of legislation. Second, the Senate Judiciary Report was given no weight because post-enactment statements of a congressional committee are not entitled to much weight. Brumley, 79 F.3d at 1437. Finally, the court asserted that Congress could not overturn a Supreme Court decision through legislation. Thus, the court deemed any statements of such intent to be invalid. Id. The court also was persuaded by the fact that at the time that it enacted 1346, Congress had two other pending bills that would have extended the statute to reach public corruption. The fact that these bills were not passed was evidence, in the court's view, that Congress did not intend mail fraud to reach public corruption. Id. at 1437-39. One judge of the three-judge panel dissented, concluding that Congress could have been more precise in its drafting, but that the legislative history was clear and not contradicted by any other statements in the record. In the Court's view, Brumley has severe flaws in its analysis, and since it is not controlling authority, the Court declines to follow it. 1. Statutory Interpretation Decisions [10][11] First, the two-judge majority concluded without citation that Congress could not enact legislation to undo the result in McNally. While this assertion is true with regard to Supreme Court decisions of constitutional review, it is obviously not true with regard to decisions of statutory interpretation. See Rivers v. Roadway Express, 511 U.S. 298, ----, 114 S.Ct. 1510, 1515, 128 L.Ed.2d 274 (1994) (accepting that Congress can enact a statute that responds to a judicial decision); Hilton v. South Carolina Public Railways Comm'n, 502 U.S. 197, 202, 112 S.Ct. 560, 563-64, 116 L.Ed.2d 560 (1991) (Congress has had almost 30 years in which it could have corrected our decision in Parden [v. Terminal Ry. of Alabama State Docks Dept., 377 U.S. 184, 84 S.Ct. 1207, 12 L.Ed.2d 233 (1964) ] if it disagreed with it, and has not chosen to do so.); Patterson v. McLean Credit Union, 491 U.S. 164, 172-73, 109 S.Ct. 2363, 2370-71, 105 L.Ed.2d 132 (1989) ([U]nlike in the context of constitutional interpretation, the legislative power is implicated, and Congress remains free to alter what we have done).FN13 FN13. See also Quill Corp. v. North Dakota, 504 U.S. 298, 318, 112 S.Ct. 1904, 1916, 119 L.Ed.2d 91 (1992) (noting that with regard to Supreme Court decisions based on the Dormant Commerce Clause, Congress remains free to disagree with our conclusions); 49 U.S.C. 1513 (Airport Development Acceleration Act of 1973) (overruling Evansville-Vanderburgh Airport Authority District v. Delta Airlines, Inc., 405 U.S. 707, 92 S.Ct. 1349, 31 L.Ed.2d 620 (1972); 73 Stat. 555, 15 U.S.C. 381-84 (overruling Northwestern States Portland Cement Co. v. Minnesota, 358 U.S. 450, 79 S.Ct. 357, 3 L.Ed.2d 421 (1959); 59 Stat. 33, 15 U.S.C. 1011 (McCarran-Ferguson Act of 1945) (overruling United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440 (1944)); see generally Abner J. Mikva & Jeff Bleich, When Congress Overrules the Court, 79

Calif.L.Rev. 729, 732-33 (1991). *1545 McNally v. United States was a case involving statutory interpretation, and not constitutional review, as is clear from that case's statement that [i]f Congress desires to go further, it must speak more clearly than it has. 483 U.S. 350, 360, 107 S.Ct. 2875, 2881-82, 97 L.Ed.2d 292 (1987). Thus, in McNally, the Supreme Court did not rule that Congress lacked the constitutional authority to criminalize public corruption. Accordingly, Congress had the authority to undo the decision in McNally. 2. Clear Legislative History Second, Brumley's decision to ignore the legislative history concerning 1346 is curious. Brumley cites Consumer Product Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 118, 100 S.Ct. 2051, 2061, 64 L.Ed.2d 766 (1980), and Chrysler Corp. v. Brown, 441 U.S. 281, 311, 99 S.Ct. 1705, 1722-23, 60 L.Ed.2d 208 (1979) , for the proposition that the Supreme Court has never attributed a great deal of significance to contemporaneous remarks of a sponsor of legislation. Brumley, 79 F.3d at 1437. It then cites GTE Sylvania and Weinberger v. Rossi, 456 U.S. 25, 33-36, 102 S.Ct. 1510, 1516-1518, 71 L.Ed.2d 715 (1982), for the proposition that postenactment statements of a congressional committee are not entitled to much weight. Brumley, 79 F.3d at 1437. However, Brumley appears to have accorded this legislative history no weight, rather than not much weight. Otherwise, there would have been no need to turn to the discarded versions of 1346. In particular, there is no legislative history that contradicts Rep. Conyer's statement or that of the Judiciary Committee regarding Congress' intent in enacting 1346. Had there been some contrary statements, then ignoring that legislative history would have been understandable. Moreover, the statements by Rep. Conyer and the Judiciary Committee are completely consistent with the context of the enactment of 1346. In McNally, the Supreme Court stated: [W]e read 1341 as limited in scope to the protection of property rights. If Congress desires to go further, it must speak more clearly than it has. 483 U.S. at 360, 107 S.Ct. at 2882. One year later, Congress enacted 1346. The timing of these events cannot be coincidental; Congress was responding to the Supreme Court's invitation to extend the scope of 1341. Finally, Brumley places great weight on H.R. 3050 and S. 2973, alternate versions of 1346 wherein public corruption was explicitly mentioned, as proving that Congress did not intend for 1346 to reach public corruption. The Court finds these alternative bills to be unpersuasive evidence on the issue of whether Congress intended to extend mail fraud to public officials. H.R. 3050 stated: As used in Sections 1341 and 1343, the term defraud includes the defrauding of the citizens of a body politic (1) of their right to the conscientious, loyal, faithful, disinterested and unbiased performance of official duties by a public official thereof; or (2) of their right to have the public business conducted honestly, impartially, free from bribery, corruption, bias, dishonesty, deceit, official misconduct and fraud. Similarly, S. 2793 would have created a new section, 18 U.S.C. 225, entitled Public Corruption. This bill would have made it a federal crime to use the mails, wires, or interstate commerce to deprive or defraud citizens of the honest services of government officials. Brumley seizes on the fact that the House did not accept this text as part of the Anti-Drug Abuse Act of 1988 to argue that the House clearly refused to join the Senate. 79 F.3d at 1439. However, it is equally plausible to conclude that the House declined to pass its equivalent of S. 2793 because 1346 encompassed S. 2793 and made the latter bill unnecessary. Or perhaps the House concluded that S. 2793 was too narrow in scope, as it does not purport to reach private corruption through the mails. Since there is no legislative history as to why the House acted the way that it *1546 did, it is difficult to see how the Fifth Circuit could use the House's inaction to interpret Congress' intent with regard to 1346 in a way contrary to the legislative history on 1346.FN14

FN14. At the June 25 hearing, Malkus argued that the issue was not so much whether Congress could amend the mail fraud statute to reach public corruption, but whether Congress had taken sufficient steps to amend the statute in light of McNally. It is true that in McNally the Supreme Court expressed a reluctance to involve[ ] the Federal Government in setting standards of disclosure and good government for local and state officials. 483 U.S. at 360, 107 S.Ct. at 2882. However, this statement does not mean that Congress must set such standards clearly in order for the statute to be valid; rather, the lack of standards at the time suggested that Congress may not have intended the broader reading, and that in the absence of direction from Congress, the Court would assume, as a matter of statutory interpretation, that Congress intended the more narrow reading. Indeed, framing the issue as Malkus does, of whether Congress did enough to amend the statute begs the question. Either Congress has the constitutional authority to expand the mail fraud statute to cover public corruption or it does not, cf. United States v. Lopez, 514 U.S. 549, ----, 115 S.Ct. 1624, 1626, 131 L.Ed.2d 626 (1995) (striking down the Gun-Free School Zones Act as beyond the power of Congress to enact); and if it has the authority, then either it used that authority or it did not. Section 1346 quite obviously responds to that point by signalling that Congress in fact intended the broader reading of the mail fraud statute. 3. Superfluousness Third, Brumley, as interpreted by Frega, renders 1346 superfluous in light of Carpenter v. United States, 484 U.S. 19, 108 S.Ct. 316, 98 L.Ed.2d 275 (1987). According to Frega, 1346-and Brumley-merely extend the reach of mail fraud to intangible property rights. However, prior to the enactment of 1346, in Carpenter, the Supreme Court held that the mail fraud statute, while it did not reach public corruption, did reach intangible property rights. The intangible property in question consisted of proprietary business information in a newspaper column that was yet to be published. **In distinguishing McNally, the Supreme Court held that McNally did not limit the scope of 1341 to tangible as distinguished from intangible property rights. Id. at 25, 108 S.Ct. at 320. [12][13] Congress is presumed to have amended a statute with the knowledge of Supreme Court decisions regarding that statute. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 382 & n. 66, 102 S.Ct. 1825, 1841 & n. 66, 72 L.Ed.2d 182 (1982); Lorillard v. Pons, 434 U.S. 575, 580-81, 98 S.Ct. 866, 86970, 55 L.Ed.2d 40 (1978). Furthermore, a statute should not be construed so as to make any aspect superfluous. Boise Cascade Corp. v. Environmental Protection Agency, 942 F.2d 1427, 1432 (9th Cir.1991); Wilshire Westwood Associates v. Atlantic Richfield Corp., 881 F.2d 801, 804 (9th Cir.1989). Thus, Frega's argument that 1346 merely extended the mail fraud statute to protect intangible property rights is incorrect. 4. Another [14] It is worth mentioning that Brumley hinges on the ambiguity in the definition of the word another . Through this ambiguity, the case is able to turn to and then ignore the legislative history concerning 1346. **However, like the dissenting judge in Brumley, the Court believes that another can easily be read to include a state citizen, who would be the victim of the public corruption fraud. The indictment adopts this theory, as the victims of the fraud are identified as the people of the State of California. (Indictment, 30 at 2). 5. Other Cases Notably, every other case that has considered the effect of 1346 has deemed it to override McNally. In West Virginia University Hospitals, Inc. v. Casey, 499 U.S. 83, 114-15, 111 S.Ct. 1138, 1155, 113 L.Ed.2d 68 (1991) (Stevens, J., dissenting), Justice Stevens concluded that Congress quickly corrected the result in McNally. In United States v. Dischner, 974 F.2d 1502, 1518 n. 16 (9th Cir.1992), cert. denied, 507 U.S. 923, 113 S.Ct. 1290, 122 L.Ed.2d 682 (1993), the Ninth Circuit noted in dicta that McNally has since been nullified by statute. Every Circuit has reached the same conclusion. United States v. Grandmaison, 77 F.3d 555, 566 (1st Cir.1996); United States v. Catalfo, 64 F.3d 1070, 1077 n. 5 (7th Cir.1995) , cert. *1547 denied, 517 U.S. 1192, 116 S.Ct. 1683, 134 L.Ed.2d 784 (1996); United States v. Bryan, 58 F.3d 933, 940 n. 1 (4th Cir.1995); United States v. Waymer, 55 F.3d 564, 568 n. 3 (11th Cir.1995), cert. denied, 517 U.S. 1119, 116 S.Ct. 1350, 134 L.Ed.2d 519 (1996); United States v. DeFries, 43 F.3d 707, 709 n. 1 (D.C.Cir.1995); United States v. Thomas, 32 F.3d 418,

419 (9th Cir.1994); United States v. Mittelstaedt, 31 F.3d 1208, 1211 (2d Cir.1994), cert. denied sub nom., 513 U.S. 1084, 115 S.Ct. 738, 130 L.Ed.2d 640 (1995); United States v. Holley, 23 F.3d 902, 910 (5th Cir.), cert. denied, 513 U.S. 1043, 115 S.Ct. 635, 130 L.Ed.2d 542 (1994); United States v. Ames Sintering Co., 927 F.2d 232, 235 (6th Cir.1990); United States v. Granberry, 908 F.2d 278, 281 n. 1 (8th Cir.1990) , cert. denied, 500 U.S. 921, 111 S.Ct. 2024, 114 L.Ed.2d 110 (1991); United States v. Martinez, 905 F.2d 709, 715 (3d Cir.), cert. denied, 498 U.S. 1017, 111 S.Ct. 591, 112 L.Ed.2d 595 (1990). The Court therefore concludes that Brumley was decided incorrectly and declines to follow it. B. Void for Vagueness Doctrine [15] Next, Malkus argues that 1346 is unconstitutionally vague, because the term honest services is defined nowhere within the United States Code. [16] The void for vagueness doctrine stems from the Due Process Clause and requires that the meaning of a penal statute be determinable. Schwartzmiller v. Gardner, 752 F.2d 1341, 1345 (9th Cir.1984) . Thus, a statute will be struck down if it fails to give adequate notice to people of ordinary intelligence concerning the conduct it proscribes. Id. The Court must consider whether 1346, as applied to these defendants and the activities alleged in the indictment, is vague. The Eleventh Circuit has rejected this same challenge in United States v. Waymer, 55 F.3d 564, 568 (11th Cir.1995). In Waymer, the defendant was a member of the Atlanta Board of Education who entered into a business relationship with the president of a service company. Under the terms of this agreement, the defendant would receive a 15 percent commission on service contracts for sanitation and pest control of two local schools. Although the defendant disclosed the existence of his relationship with the president of the service company, the defendant did not disclose the commission arrangement. The jury concluded that the defendant had specifically intended to commit a fraud on Atlanta's citizens. This finding was sufficient to conclude that the statute was not unconstitutionally vague as applied, since the Government carried its burden of proving specific intent. Id. at 568-69. The indictment in this case alleges that Frega, Malkus, and Adams devised a scheme to defraud the people of the State of California by depriving them of their right to the honest services of Judges of the State Superior Court in San Diego County performed free from bribery, undue influence, and deceit. (Indictment, 30 at 2). As in Waymer, the Government has alleged specific intent to defraud . In fact, even if the term honest services is unconstitutionally vague-which it does not appear to be-in this case the indictment further defines it as freedom from bribery, undue influence, and deceit. These allegations must be taken as true. United States v. Bohonus, 628 F.2d 1167, 1174 (9th Cir.), cert. denied, 447 U.S. 928, 100 S.Ct. 3026, 65 L.Ed.2d 1122 (1980). It is not unreasonable to conclude that a person of reasonable intelligence would conclude that the accepting of bribes while sitting as a judge constituted a criminal offense. Certainly, the criminal nature of these activities is more apparent than the nondisclosure in Waymer. Cf. Bohonus, 628 F.2d at 1174-75 (accepting of kickback payments was clearly fraudulent). C. Bribery or Other State Law Reference Next, Frega argues that the fraudulent scheme must be limited to bribery schemes, meaning that there must be some nexus between the gifts/bribes and acts taken by the judges. Primarily, Frega relies on statements made by Senator Biden in his effort to pass S. 2973. *1548 In 1989, Senator Biden stated on the record: [Section 1346] allowed the government to resume prosecution of those public corruption cases that involve bribes, kickbacks, and conflicts of interest, since such acts of wrongdoing deprive the public of its right to the honest services of a public official. Statement of Senator Biden, 135 Cong.Rec. S 1063 (daily ed. Feb. 2, 1989). Frega argues that Senator Biden's interpretation of 1346 is rational, and where there are two rational readings of a criminal statute, the more

lenient one must be adopted unless Congress has clearly indicated otherwise. However, if one examines Senator Biden's full statement carefully, it becomes apparent that he did not intend for the list above to be exclusive. In his statement, he discusses the shortcomings of 1346. **First, election fraud was not covered by the statute. **Second, persons who provide false information were not covered by the statute. **Third, mail and wire fraud did not reach modern technology and commercial delivery systems. Id. The activities alleged in the indictment do not fall within these exceptions, and therefore it is arguable whether Senator Biden would have considered them to be covered by 1346. Moreover, even the scope of coverage by 1346 detailed by Senator Biden indicates that the activities alleged in the indictment are sufficiently covered: bribes, kickbacks, and conflicts of interest. The indictment charges the defendants with scheming to defraud the public through bribery, undue influence, and deceit. The pattern of undue influence and deceit is one of severe conflicts of interest. Frega also argues that mail fraud must reference explicitly established standards in order to provide notice to a defendant that his or her conduct is criminal. McNally contained language to this effect, when the Supreme Court noted that if state law expressly permitted or did not forbid a state officer ... to have an ownership interest in an insurance agency handling the state's insurance, it would take a much clearer indication than the mail fraud statute evidences to convince us that having and concealing such an interest defrauds the State and is forbidden under federal law. 483 U.S. at 361 n. 9, 107 S.Ct. at 2882 n. 9. There is, to be sure, some ambiguity as to the outer reaches of the mail fraud statute. However, pre-McNally courts did not resort to state law standards to define the forbidden conduct. See United States v. Lemire, 720 F.2d 1327, 1335-36 (D.C.Cir.1983) (The duty breached need not arise from state or federal law; in particular, it may stem from an employment relationship of the sort that imposes discretion and consequently obligations of loyalty and fidelity on the employee.); see also United States v. Von Barta, 635 F.2d 999, 999 (2d Cir.1980), cert. denied, 450 U.S. 998, 101 S.Ct. 1703, 68 L.Ed.2d 199 (1981); Bohonus, 628 F.2d at 1172; United States v. Reece, 614 F.2d 1259, 1261 (10th Cir.1980). Since the Court has interpreted 1346 as restoring the federal common law regarding mail fraud to the pre-McNally state, Lemire and these other cases are relevant precedents. D. Mailing Element [17] Finally, Frega argues that the mailings alleged in the indictment do not satisfy the mailing element of the mail fraud statute. The statute merely requires that, as part of the scheme to defraud, the defendant places in any post office ... any matter or thing whatever to be sent or delivered by the Postal Service. 18 U.S.C. 1341. However, in Parr v. United States, 363 U.S. 370, 80 S.Ct. 1171, 4 L.Ed.2d 1277 (1960), the Supreme Court reversed the mail fraud convictions of defendants accused of defrauding the school district while mailing innocent letters and tax statements that were required to be mailed by law. Id. at 390-91, 80 S.Ct. at 1183-84. The mailings were not unlawful step[s] in a plot, part[s] of the execution of the fraud, incident to an essential part of the scheme, or made for the purpose of executing such scheme. Id. at 391, 80 S.Ct. at 1183 (citations omitted) (alterations in original). Parr recognized that the facts in the case were unique, and therefore, it seemed to limit itself to its factual situation. *1549 **Parr does not apply if the documents that are required to be mailed are themselves false. United States v. Dadanian, 818 F.2d 1443, 1446 (9th Cir.1987), reh'g and rev'd on other grounds, 856 F.2d 1391 (1988). Thus, Counts 8, 9, 10, 12, 13, 14, 16 and 17 need not be dismissed under Parr, because the indictment alleges that these mailings to the Judicial Commission were false. (Indictment, 32 at 5(g)). [18] Although the Indictment does not specifically state that the mailings for the other counts are false or were not required by law to be mailed, the Government has explained the alleged falsity or non-requirement of mailing in its Opposition. The mailings in Counts 2 and 3 were false because Frega had omitted his name from the pleadings, allegedly to hide his association in the cases. Counts 4 and 5 were mailings that were not required by law, but were instead attempts to further the scheme to defraud by seeking appointment of Adams as a settlement judge. Count 6 was allegedly a mailing of a proposed decision from Malkus to Frega. **A proposed

opinion cannot be considered to have been required by law to be mailed. Count 7, a Request for Dismissal, and Count 11, an Order signed by Malkus, have been alleged not to have been required by law to be mailed. Count 15 is a mailed Opposition to Objection to Proceedings before Malkus. Opposing counsel apparently sought to recuse Malkus, to which Frega objected. Frega's opposition was thus not a required mailing, but instead a furtherance of the scheme to defraud. Therefore, the Court denies the motion to dismiss the mail fraud counts. Conclusion The Court does not dismiss Count 1 of the indictment lightly. Allegations of a conspiracy to fix judicial decisions strike at the very heart of notions of fairness and due process. However, review of the legislative history of 666 leads the Court to conclude that the statute was intended to have a broad reach with respect to particular conduct, but that the acts alleged in this case do not fall within that proscribed conduct. As to Counts 2-17, the Court concludes that the mail fraud statute, 18 U.S.C. 1341, 1346, reaches public corruption, is not unconstitutionally vague as applied to the conduct alleged in this case, and need not reference state law to define fraudulent conduct. Furthermore, the mailings in this matter do not fall within the rule of Parr, as they have been alleged to be either false or not required by law. IT IS SO ORDERED. U.S. v. Frega, 179 F.3d 793, 99 Cal. Daily Op. Serv. 4392, 1999 Daily Journal D.A.R. 5643 (9th Cir. (Cal.),Jun 08, 1999) Frega the conductor, was convicted of conducting the affairs of the Superior Court through a pattern of racketeering activity in violation of RICO, 18 U.S.C. 1962 9(c); Judge Adams and Judge Malkus of the Superior Court of the County of San Diego, were convicted of mail fraud, [The mail fraud counts specifically related to mailings done in furtherance of the defendants' alleged scheme to defraud the people of the State of California by depriving them of their right to the honest services of judges of the Superior Court] And Frega, Adams and Malkus, engaged in and were convicted of the commission of acts which constituted conspiracy to conduct the affairs of the San Diego Superior Court through a pattern of racketeering activity in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. Section 1962 (d) Summary: The Indictment charged all three with RICO conspiracy in violation of 18 U.S.C. 1962(d) (Count One). This charge was based on allegations that the three defendants had **conspired to conduct the affairs *799 of the Superior Court through a pattern of racketeering activity consisting of multiple acts of **bribery in violation of Sections 92 and 93 of the California Penal Code and **extortion in violation of 18 U.S.C. 1951. Frega, Adams and Malkus were also charged with **eighteen counts of mail fraud in violation of 18 U.S.C. 1341 and 1346. The mail fraud counts specifically related to mailings done in furtherance of the defendants' alleged scheme to defraud the people of the State of California by depriving them of their right to the honest services of judges of the Superior Court. Most of the mailings listed in the Indictment related to an investigation of the defendants' actions conducted by the California Commission on Judicial Performance and involved documents sent to the

Commission by Frega and the judges.FN2 **A few related to proceedings in the Superior Court. **Additionally, the grand jury charged Frega with a substantive RICO offense in violation of 18 U.S.C. 1962(c), and with forfeiture allegations pursuant to 18 U.S.C. 1963. The substantive RICO charge alleged that Frega not only conspired to conduct the affairs of the Superior Court through his bribes, as charged in Count One, but that he in fact succeeded in doing so. Following jury trial, defendants, including attorney and state court judges, were convicted in the United States District Court for the Southern District of California, Edward Rafeedie, J., of **mail fraud and **conspiring to conduct affairs of state court through pattern of racketeering activity in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO). **Defendant attorney was also convicted of conducting affairs of court through pattern of racketeering activity in violation of RICO. Defendants appealed, and government crossappealed from sentences. The Court of Appeals, Reinhardt and Rymer, Circuit Judges, held that: (1) alleged prosecutorial conflict of interest did not violate due process; (2) prosecution did not exceed bounds of federal authority under commerce clause; (3) defendants did not establish vindictive prosecution based on prior dismissal of bribery charge; (4) mail fraud statute was not vague; (5) mail fraud convictions were not tainted by variance or instructional error; (6) indictment charging substantive RICO offense was valid; (7) predicate acts of bribery were established by sufficient evidence; (8) instructions on substantive RICO charge were proper; (9) instruction given in response to jury inquiry on RICO conspiracy charge was misleading and erroneous; (10) defendant attorney's sentence did not have to be enhanced for his alleged leadership role; and (11) court properly determined value of improper benefit accrued and amount of benefit defendant attorney intended or expected to receive. Reversed in part, affirmed in part, and remanded. Rymer, Circuit Judge, concurred in part, dissented in part, and filed opinion. [3] Conspiracy 91 28(3)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k28 Conspiracy to Commit Crime 91k28(3) k. Particular Crimes. Most Cited Cases States 360 4.4(2)

360 States 360I Political Status and Relations 360I(A) In General 360k4.4 Powers Reserved to States 360k4.4(2) k. Police Power. Most Cited Cases Prosecution of state court judge for conspiracy to conduct affairs of state court through pattern of racketeering activity, in violation of Racketeer Influenced and Corrupt Organizations Act (RICO), did not exceed bounds of federal authority, despite claim that state judiciary was area of traditional state concern, as RICO explicitly made it unlawful to agree to conduct enterprise through predicate acts of state criminal violations. 18 U.S.C.A. 1961(1)(A), 1962(d). [4] Conspiracy 91 28(3)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k28 Conspiracy to Commit Crime 91k28(3) k. Particular Crimes. Most Cited Cases

States 360

4.4(1)

360 States 360I Political Status and Relations 360I(A) In General 360k4.4 Powers Reserved to States 360k4.4(1) k. In General. Most Cited Cases Racketeer Influenced and Corrupt Organizations Act (RICO) did not exceed scope of Congress's authority under commerce clause on its face or as applied to defendant who was state court judge that allegedly conspired to conduct affairs of state court through pattern of racketeering activity; RICO, by definition, prohibited participating in enterprise engaged in, or the activities of which affect, interstate or foreign commerce, and state courts had at least de minimis effect on interstate commerce. U.S.C.A. Const. Art. 1, 8, cl. 3; 18 U.S.C.A. 1962(c, d). [5] Criminal Law 110 37.15(2)

110 Criminal Law 110II Defenses in General 110k36.5 Official Action, Inaction, Representation, Misconduct, or Bad Faith 110k37.15 Vindictive Prosecution 110k37.15(2) k. Particular Cases. Most Cited Cases Prosecution of attorney and state court judges for conspiracy in violation of Racketeer Influenced and Corrupt Organizations Act (RICO), after they obtained dismissal of indictment charging bribery, did not amount to vindictive prosecution, absent showing of likelihood that second superseding indictment which charged RICO violation would not have been returned absent hostility or punitive animus towards defendants because they moved to dismiss bribery charges. 18 U.S.C.A. 1962(d). [6] Postal Service 306 35(9)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(9) k. Injury from Fraud. Most Cited Cases Mail fraud statute extends to schemes that seek to deprive the people of a state of the intangible right to honest services. 18 U.S.C.A. 1346. [7] Criminal Law 110 1139

110 Criminal Law 110XXIV Review 110XXIV(L) Scope of Review in General 110k1139 k. Additional Proofs and Trial De Novo. Most Cited Cases Court of Appeals reviews de novo a district court's construction or interpretation of a statute, while the constitutionality of a statute is a question of law reviewed de novo. [8] Postal Service 306 35(1)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(1) k. Statutory Provisions. Most Cited Cases Use of term another in mail fraud statute, which prohibited schemes to deprive another of intangible right of honest services, was not unconstitutionally vague, as another could be read as referring to another state citizen or could merely be inelegant, and, in any event, language was added in clear Congressional attempt to encompass public corruption and thereby overrule prior Supreme Court holding that statute did not extend to

schemes to deprive people of a state of intangible right to honest services. 18 U.S.C.A. 1346. [9] Postal Service 306 35(1)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(1) k. Statutory Provisions. Most Cited Cases Mail fraud statute, which prohibits schemes to deprive another of intangible right of honest services, was not unconstitutionally vague, as to judges who allegedly accepted bribes, as it was not unreasonable to conclude that person of reasonable intelligence would conclude that accepting of bribes while sitting as judge constituted a criminal offense. 18 U.S.C.A. 1346. [10] Criminal Law 110 13.1(1)

110 Criminal Law 110I Nature and Elements of Crime 110k12 Statutory Provisions 110k13.1 Certainty and Definiteness 110k13.1(1) k. In General. Most Cited Cases A statute will be struck down on void for vagueness grounds if it fails to give adequate notice to people of ordinary intelligence concerning the conduct it proscribes. [11] Postal Service 306 48(8) 306 Postal Service 306III Offenses Against Postal Laws 306k48 Indictment or Information 306k48(8) k. Issues, Proof, and Variance. Most Cited Cases Mail fraud convictions did not contain fatal variance from indictment, which charged single scheme, **notwithstanding either claim that multiple independent goals and relationships were actually shown or fact that jury failed to convict all three defendants on any single mail fraud count, since schemes shown, and factors to be considered, were essentially the same, and verdict was consistent with finding that all defendants were involved in larger scheme as charged. 18 U.S.C.A. 1346. [12] Postal Service 306 48(8)

306 Postal Service 306III Offenses Against Postal Laws 306k48 Indictment or Information 306k48(8) k. Issues, Proof, and Variance. Most Cited Cases In mail fraud prosecution based on alleged scheme to defraud state citizens of their right to judges' honest services, evidence did not have to exclude every hypothesis but that of a single scheme, even though indictment charged single scheme. 18 U.S.C.A. 1346. [13] Criminal Law 110 798(.7)

110 Criminal Law 110XX Trial 110XX(G) Instructions: Necessity, Requisites, and Sufficiency 110k798 Manner of Arriving at Verdict 110k798(.7) k. Unanimity as to Facts, Conduct, Methods, or Theories. Most Cited Cases (Formerly 110k798(.5)) Bribery and concealment of bribery were part and parcel of same alleged scheme, under mail fraud statute, so district court was not required to give unanimity instruction to avoid finding of multiple conspiracies. 18 U.S.C.A. 1346.

[14] Criminal Law 110

829(4)

110 Criminal Law 110XX Trial 110XX(H) Instructions: Requests 110k829 Instructions Already Given 110k829(4) k. Matters of Defense. Most Cited Cases Defendants charged with mail fraud were not entitled to instruction that good faith was a complete defense to mail fraud charges, where district court provided adequate instructions on specific intent element of mail fraud. 18 U.S.C.A. 1346. [15] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Bribery 63 6(1)

63 Bribery 63k5 Indictment or Information 63k6 Requisites and Sufficiency 63k6(1) k. In General. Most Cited Cases Under California law, bribery conviction did not require link between a particular thing of value and a specific official act that was influenced or intended to be influenced, so indictment charging violation of Racketeer Influenced and Corrupt Organizations Act (RICO), based on predicate acts of bribery, was not facially invalid for failing to identify specific decisions or acts to be influenced. 18 U.S.C.A. 1962(c); West's Ann.Cal.Penal Code 92, 93. [16] Criminal Law 110 1139

110 Criminal Law 110XXIV Review 110XXIV(L) Scope of Review in General 110k1139 k. Additional Proofs and Trial De Novo. Most Cited Cases Court of Appeals reviews the denial of a motion to dismiss an indictment for facial invalidity or insufficiency de novo. [17] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases In order to prove violation of the federal antigratuity statute, the government must prove a link between a thing of value conferred upon a public official and a specific official act for or because of which it was given. 18 U.S.C.A. 201(c)(1)(A). [18] Bribery 63 1(2)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(2) k. Bribery of Jurors and Particular Classes of Officers. Most Cited Cases A bribe intended to influence a case or decision not yet on a judge's docket, or intended to influence the assigning of cases, or intended to influence, generally, a judge's future actions with respect to matters that may come before him, falls within prohibitions of California bribery statutes. West's Ann.Cal.Penal Code 7(6), 92, 93.

[19] Bribery 63

11

63 Bribery 63k8 Evidence 63k11 k. Weight and Sufficiency. Most Cited Cases Predicate acts of bribery underlying conviction of attorney for substantive violation of Racketeer Influenced and Corrupt Organizations Act (RICO) were supported by sufficient evidence that bribes were intended to influence judges' official actions, as there was no requirement that judge act in response to a bribe, and evidence of judges' unofficial acts, such as giving legal advice and granting attorney private access to judges' chambers, was admissible as probative of relationship between attorneys and judges. 18 U.S.C.A. 1962(c). [20] Criminal Law 110 1144.13(3)

110 Criminal Law 110XXIV Review 110XXIV(M) Presumptions 110k1144 Facts or Proceedings Not Shown by Record 110k1144.13 Sufficiency of Evidence 110k1144.13(2) Construction of Evidence 110k1144.13(3) k. Construction in Favor of Government, State, or Prosecution. Most Cited Cases Criminal Law 110 1159.2(7)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(7) k. Reasonable Doubt. Most Cited Cases Court of Appeals reviews challenges to the sufficiency of the evidence adduced at trial to see whether, viewing the evidence in the light most favorable to the government, the jury could reasonably have found the essential elements of the crime beyond a reasonable doubt. [21] Criminal Law 110 1139

110 Criminal Law 110XXIV Review 110XXIV(L) Scope of Review in General 110k1139 k. Additional Proofs and Trial De Novo. Most Cited Cases Criminal Law 110 1152(1)

110 Criminal Law 110XXIV Review 110XXIV(N) Discretion of Lower Court 110k1152 Conduct of Trial in General 110k1152(1) k. In General. Most Cited Cases Court of Appeals reviews a district court's formulation of jury instructions for abuse of discretion, but question of whether a jury instruction misstates the elements of a statutory crime is a question of law and is reviewed de novo. [22] Criminal Law 110 822(1)

110 Criminal Law 110XX Trial 110XX(G) Instructions: Necessity, Requisites, and Sufficiency 110k822 Construction and Effect of Charge as a Whole 110k822(1) k. In General. Most Cited Cases In reviewing jury instructions, the relevant inquiry is whether the instructions as a whole are misleading or inadequate to guide the jury's deliberation, and the trial court has substantial latitude so long as its instructions fairly and adequately cover the issues presented. [23] Criminal Law 110 822(1)

110 Criminal Law 110XX Trial 110XX(G) Instructions: Necessity, Requisites, and Sufficiency 110k822 Construction and Effect of Charge as a Whole 110k822(1) k. In General. Most Cited Cases A single instruction to a jury may not be judged in artificial isolation, but must be viewed in the context of the overall charge. [24] Criminal Law 110 1172.1(1)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1172 Instructions 110k1172.1 In General 110k1172.1(1) k. Instructions in General. Most Cited Cases Jury instructions, even if imperfect, are not a basis for overturning a conviction absent a showing that they prejudiced the defendant. [25] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Under California law, bribery conviction does not require that both the offer and the acceptance be corrupt; rather, only offeror's intent need be corrupt, not the recipient's. [26] Bribery 63 1(2)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(2) k. Bribery of Jurors and Particular Classes of Officers. Most Cited Cases Under California law, whether particular judicial act was legally supportable and correct aside from purported bribe was irrelevant to bribery charge, as crucial issue was defendant's intent in making the payment, not what the judge who accepted the payment believed or did. [27] Bribery 63 14

63 Bribery 63k12 Trial 63k14 k. Instructions. Most Cited Cases Instruction informing jury that giving something of value to judge does not amount to bribery, under California law, absent intent to affect official judicial action adequately set forth distinction between payments that were gifts, and those that were bribes.

[28] Bribery 63

1(2)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(2) k. Bribery of Jurors and Particular Classes of Officers. Most Cited Cases Defendant's payments to family members of judge could constitute bribe, under California law, regardless of whether judge was made aware of payment, as critical finding related to defendant's intent in making payment, not whether judge was in fact aware of or influenced by the payment. [29] Criminal Law 110 829(4)

110 Criminal Law 110XX Trial 110XX(H) Instructions: Requests 110k829 Instructions Already Given 110k829(4) k. Matters of Defense. Most Cited Cases District court was not required to instruct jury on what did not constitute official action, for purpose of finding predicate act of bribery in prosecution for violation of Racketeer Influenced and Corrupt Organizations Act (RICO), where court correctly instructed jury on what did constitute official action. 18 U.S.C.A. 1962(c). [30] Bribery 63 1(2)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(2) k. Bribery of Jurors and Particular Classes of Officers. Most Cited Cases Defendant attorney's alleged payments of $1,000 bill for rental car used by judge's daughter, payment of $1,500 bill for repairs to vehicle owned by daughter, and payment of $5,250 towards purchase of automobile for another judge constituted predicate acts of bribery, under California law, for purpose of prosecution for substantive violation of Racketeer Influenced and Corrupt Organizations Act (RICO). 18 U.S.C.A. 1962(c). [31] Criminal Law 110 863(2)

110 Criminal Law 110XX Trial 110XX(J) Issues Relating to Jury Trial 110k863 Instructions After Submission of Cause 110k863(2) k. Requisites and Sufficiency. Most Cited Cases Criminal Law 110 1174(1)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1174 Conduct and Deliberations of Jury 110k1174(1) k. In General. Most Cited Cases Judge's response to jury inquiry regarding what predicate acts could constitute pattern of racketeering underlying conspiracy charge under Racketeer Influenced and Corrupt Organizations Act (RICO) was **unresponsive, **misleading and **legally incorrect, thus warranting reversal of convictions; instruction created strong possibility that jury verdict was based on legally inadequate evidence, or that verdict was not unanimous, since it neither identified predicate acts nor explained how jury was to identify such acts. U.S.C.A. Const. Art. 3, 2; U.S.C.A. Const.Amend. 6. [32] Criminal Law 110 110 Criminal Law 110XX Trial 863(2)

110XX(J) Issues Relating to Jury Trial 110k863 Instructions After Submission of Cause 110k863(2) k. Requisites and Sufficiency. Most Cited Cases When a jury makes explicit its difficulties a trial judge should clear them away with concrete accuracy. [33] Conspiracy 91 28(3)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k28 Conspiracy to Commit Crime 91k28(3) k. Particular Crimes. Most Cited Cases To establish conspiracy under Racketeer Influenced and Corrupt Organizations Act (RICO) does not require proof that individual defendant participated personally, or agreed to participate personally, in two predicate offenses; rather, **the conspiracy must contemplate the commission of two predicate acts by one or more of its members. 18 U.S.C.A. 1962(d).

18 U.S.C. 201 **Bribery by loans U.S. v. Kemp; U.S. v. Gordon; U.S. v. Crozier;
U.S. v. Bryant, 556 F.Supp.2d 378,(D.NJ. Jun 05, 2008);

Bribery by shares of stock,

Phansalkar v. Andersen Weinroth & Co., L.P., 2002 WL 1402297 (S.D.N.Y.,Jun 26, 2002; U.S. v. Williams, 705 F.2d 603, 12 Fed. R. Evid. Serv. 1648 (2nd Cir. (N.Y.) Apr 05, 1983); U.S. v. Jefferson 562 F.Supp.2d 687 (E.D. Va., 2008); U.S. v. Kozeny 493 F.supp.2d 693 (S.D.N.Y., Jun 21, 2007)

U.S. v. Lupton, 620 F.3d 790 (7th Cir.(Wis.),Sep 01, 2010) Conscious purpose of evading the truth constitutes intent Background: Defendant was convicted in the United States District Court for the Eastern District of Wisconsin, Lynn Adelman, J., of **corrupt solicitation, **wire fraud, and making false statements to government officials. Defendant appealed. Holdings: The Court of Appeals, Tinder, Circuit Judge, held that: (1) proffered expert did not have sufficient knowledge, skill, experience, training, or education to qualify him to render opinion on what constituted innocent, normal, and acceptable practices among real estate brokers; (2) testimony of proffered expert was not sufficiently reliable; (3) district court was within its discretion in excluding expert's legally interpretive testimony of state statutes to illuminate broker conduct relative to honest services fraud; (4) expert testimony regarding state statutes that was relevant to defendant's defense, but that was tangential to crucial questions that factfinder had to answer, would have been of limited value at best and unduly confusing at worst; (5) evidence was sufficient to support conclusion that defendant was agent for purposes of statute that prohibited corrupt solicitation; (6) evidence was sufficient to support finding that defendant's purported commission splitting was neither bona fide nor sought in ordinary course of business; (7) defendant had knowingly and willfully made materially false statement in connection with matter within jurisdiction of federal agency; and (8) defendant's statements to agents of Federal Bureau of Investigation (FBI) were material. Affirmed.

[1] Criminal Law 110

478(1)

110 Criminal Law 110XVII Evidence 110XVII(R) Opinion Evidence 110k477 Competency of Experts 110k478 Knowledge, Experience, and Skill 110k478(1) k. In general. Most Cited Cases Real estate broker, attorney, professor, author, and former state bureaucrat did not have sufficient knowledge, skill, experience, training, or education to qualify him to render opinion on what constituted innocent, normal, and acceptable practices among real estate brokers, as required to offer expert opinion in bench trial to illuminate broker conduct relative to honest services fraud, where proffered expert had 30 year distance from day-to-day goings-on in brokerage world and lack of experience with state statutes and contract at issue. 18 U.S.C.A. 666(a)(1)(B); Fed.Rules Evid.Rule 702, 28 U.S.C.A. [2] Criminal Law 110 486(2)

110 Criminal Law 110XVII Evidence 110XVII(R) Opinion Evidence 110k482 Examination of Experts 110k486 Basis of Opinion 110k486(2) k. Necessity and sufficiency. Most Cited Cases Testimony of real estate broker, attorney, professor, author, and former state bureaucrat was not sufficiently reliable to be admitted in bench trial as expert opinion, due to lack of methodology, to illuminate broker conduct relative to honest services fraud, since he simply read state statutes and discussed how he thought they might apply and his opinion lacked any data, such as how state courts had applied statutes or how often situations such as defendant's had arisen. 18 U.S.C.A. 666(c); Fed.Rules Evid.Rule 702, 28 U.S.C.A. [3] Criminal Law 110 1139

110 Criminal Law 110XXIV Review 110XXIV(L) Scope of Review in General 110XXIV(L)13 Review De Novo 110k1139 k. In general. Most Cited Cases Criminal Law 110 1153.12(3)

110 Criminal Law 110XXIV Review 110XXIV(N) Discretion of Lower Court 110k1153 Reception and Admissibility of Evidence 110k1153.12 Opinion Evidence 110k1153.12(3) k. Admissibility. Most Cited Cases The Court of Appeals reviews whether a district court applied the Daubert framework de novo, but the Court of Appeals reviews the ultimate conclusion as to the admissibility of expert testimony only for abuse of discretion. Fed.Rules Evid.Rule 702, 28 U.S.C.A [4] Criminal Law 110 110 Criminal Law 476.6

110XVII Evidence 110XVII(R) Opinion Evidence 110k468 Subjects of Expert Testimony 110k476.6 k. Miscellaneous matters. Most Cited Cases District court was within its discretion in bench trial in excluding expert's legally interpretive testimony of state statutes to illuminate broker conduct relative to honest services fraud, since meaning of statutes, regulations, and contract terms was subject for court, not for testimonial experts. 18 U.S.C.A. 666(a)(1)(B); Fed.Rules Evid.Rule 702, 28 U.S.C.A. [5] Criminal Law 110 476.6

110 Criminal Law 110XVII Evidence 110XVII(R) Opinion Evidence 110k468 Subjects of Expert Testimony 110k476.6 k. Miscellaneous matters. Most Cited Cases Expert testimony regarding state statutes that was relevant to defendant's defense, i.e., that what he did was legal under state law, but that was tangential to crucial questions that factfinder had to answer, namely whether government could prove elements of federal law beyond reasonable doubt, would have been of limited value at best and unduly confusing at worst, and thus could be excluded in bench trial on that basis. 18 U.S.C.A. 666; Fed.Rules Evid.Rule 403, 28 U.S.C.A. [6] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In general. Most Cited Cases Whether defendant could be considered an agent for purposes of statute that prohibited corrupt solicitation had to be determined by that statute, not by terms of private contract. 18 U.S.C.A. 666(a)(1)(B). [7] Criminal Law 110 1144.13(3)

110 Criminal Law 110XXIV Review 110XXIV(M) Presumptions 110k1144 Facts or Proceedings Not Shown by Record 110k1144.13 Sufficiency of Evidence 110k1144.13(2) Construction of Evidence 110k1144.13(3) k. Construction in favor of government, state, or prosecution. Most Cited Cases Criminal Law 110 1159.2(7)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(7) k. Reasonable doubt. Most Cited Cases Criminal Law 110 1159.2(9)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(9) k. Weighing evidence. Most Cited Cases Criminal Law 110 1159.4(1)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.4 Credibility of Witnesses 110k1159.4(1) k. In general. Most Cited Cases On a challenge to the sufficiency of the evidence to sustain a conviction, the Court of Appeals must be convinced, after viewing the evidence in the light most favorable to the government, that no rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt; in making this inquiry, the Court does not reweigh the evidence or second-guess the factfinder's credibility determinations. [8] Bribery 63 11

63 Bribery 63k8 Evidence 63k11 k. Weight and sufficiency. Most Cited Cases Evidence was sufficient to support conclusion that defendant had been authorized to act on behalf of state in connection with sale of building, and therefore was agent for purposes of statute that prohibited corrupt solicitation, where defendant had been authorized to perform all duties, responsibilities, and necessary actions required to market building, he served as prospective buyers' primary contact for negotiations with state, and defendant had stated that he was obligated to do technically the right thing for the state. 18 U.S.C.A. 666(d) (1). [9] Bribery 63 11

63 Bribery 63k8 Evidence 63k11 k. Weight and sufficiency. Most Cited Cases Evidence was sufficient to support finding that defendant's purported commission splitting was neither bona fide nor sought in ordinary course of business, as required for conviction for violating statute that prohibited corrupt solicitation, where defendant always had emphasized that payment was for him alone and defendant did not say that he would get consent in writing, as required by state law, when asked how he envisioned that commission split would occur. 18 U.S.C.A. 666(c); W.S.A. 452.133(3). [10] Criminal Law 110 1130(5)

110 Criminal Law 110XXIV Review 110XXIV(I) Briefs 110k1130 In General 110k1130(5) k. Points and authorities. Most Cited Cases Defendant, who had been found guilty of wire fraud under both theories of honest services and straight

property as dubbed by government, forfeited any challenge on appeal to his conviction for mine run wire fraud under traditional theory, where evidence was sufficient to support it and defendant's arguments on appeal pertained only to honest services. 18 U.S.C.A. 1343, 1346. [11] Telecommunications 372 1014(2)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(2) k. Nature and elements of offense in general. Most Cited Cases Evidence was sufficient to convict defendant of straight property wire fraud, as dubbed by government, where defendant had participated in scheme to defraud company out of part of commission that it legally was due, defendant had acted with intent to defraud company, and defendant had transmitted interstate wire communication in furtherance of his scheme. 18 U.S.C.A. 1343. [12] Telecommunications 372 1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(10) k. Honest services fraud. Most Cited Cases Defendant could be convicted of honest services wire fraud for soliciting kickback from another real estate broker to advance that broker's interests in bidding process for state building that intangibly harmed state and company for which he was working by doing so; even if defendant had been allowed to share information that he shared with broker, plot was foiled long before defendant received any kickback, and defendant recommended another party's bid, perfectly legal act could be performed in corrupt way or as means to achieve more sinister goal. 18 U.S.C.A. 1343, 1346; W.S.A. 452.139(1). [13] Telecommunications 372 1014(5)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(5) k. Success or possibility of success of scheme. Most Cited Cases **The wire fraud statutes criminalize the fraudulent acts undertaken to secure illicit gains, not their ultimate successes. 18 U.S.C.A. 1343, 1346. [14] Fraud 184 68.10(2)

184 Fraud 184III Criminal Responsibility 184k68.10 Fraud on Government 184k68.10(2) k. Knowledge, intent, and purpose. Most Cited Cases Defendant had knowingly and willfully made materially false statement in connection with matter within jurisdiction of federal agency by making false statements to agents of Federal Bureau of Investigation (FBI), that he had not shared specific bid details from prospective buyers with other prospective buyers and denying

that he had suggested that another real estate broker pay kickback to him. 18 U.S.C.A. 1001. [15] Fraud 184 68.10(2)

184 Fraud 184III Criminal Responsibility 184k68.10 Fraud on Government 184k68.10(2) k. Knowledge, intent, and purpose. Most Cited Cases The knowingly and willfully requirement in the statute which makes it a crime to knowingly and willfully make a materially false statement in connection with a matter within the jurisdiction of a federal agency relates only to the defendant's knowledge and intent that the statements he made to a government entity were false or **were made with the conscious purpose of evading the truth; it has nothing to do with the legality of the underlying conduct about which the defendant spoke. 18 U.S.C.A. 1001. [16] Fraud 184 68.10(4)

184 Fraud 184III Criminal Responsibility 184k68.10 Fraud on Government 184k68.10(4) k. Materiality and effect. Most Cited Cases Defendant's statements to agents of Federal Bureau of Investigation (FBI), that he had not shared specific bid details from prospective buyers with other prospective buyers and denying that he had suggested that another real estate broker pay him, were material, as required to convict defendant of knowingly and willfully making materially false statement in connection with matter within jurisdiction of federal agency, although agents had secretly recorded tapes of defendant making contrary statements and statements did not have any actual impact on investigation. 18 U.S.C.A. 1001. [17] Fraud 184 68.10(4)

184 Fraud 184III Criminal Responsibility 184k68.10 Fraud on Government 184k68.10(4) k. Materiality and effect. Most Cited Cases To be material for purposes of the statute which makes it a crime to knowingly and willfully make a materially false statement in connection with a matter within the jurisdiction of a federal agency, a statement must have a natural tendency to influence, or be capable of influencing, the decision of the decisionmaking body to which it was addressed; the statement need not actually influence the agency to which it was directed, or even the agency need not rely on the statement in any way. 18 U.S.C.A. 1001. [18] Fraud 184 68.10(4)

184 Fraud 184III Criminal Responsibility 184k68.10 Fraud on Government 184k68.10(4) k. Materiality and effect. Most Cited Cases When statements are aimed at misdirecting agents and their investigation, even if they miss spectacularly or stand absolutely no chance of succeeding, they satisfy the materiality requirement of the statute which makes it a crime to knowingly and willfully make a materially false statement in connection with a matter within the jurisdiction of a federal agency. 18 U.S.C.A. 1001. [19] Criminal Law 110 1130(6)

110 Criminal Law 110XXIV Review 110XXIV(I) Briefs 110k1130 In General 110k1130(6) k. Reply briefs. Most Cited Cases Argument was waived that had been raised for first time on appeal in reply brief. [20] Fraud 184 68.10(1)

184 Fraud 184III Criminal Responsibility 184k68.10 Fraud on Government 184k68.10(1) k. In general; false statements or entries. Most Cited Cases Federal statute imposing criminal liability for making false statements to federal investigators does not include an exception for false statement that consists of mere denial of wrongdoing, the so-called exculpatory no. 18 U.S.C.A. 1001. U.S. v. Ganim, 510 F.3d 134 (2nd Cir.(Conn.),Dec 04, 2007) In the prosecution of bribery and extortion in order to obtain a conviction, states the requirement to prove, and instructs on the definition of the element of quid pro quo to the public offenses of bribery 18 U.S.C. 201, and extortion 18 U.S.C. 1951. Holdings: The Court of Appeals, Sotomayor, Circuit Judge, held that: (1) to obtain conviction for Hobbs Act extortion, it was sufficient for government to prove that former mayor understood that he was expected, as a result of payment, to exercise particular kinds of influence, on behalf of payor, as specific opportunities arose; (2) jury instruction describing crime of bribery for purposes of charges of honest services mail fraud accurately set forth applicable law; and (3) any error in instruction for bribery involving programs receiving federal funds was not plain error. Affirmed. See also 2007 WL 4233388. [1] Criminal Law 110 1139

110 Criminal Law 110XXIV Review 110XXIV(L) Scope of Review in General 110XXIV(L)13 Review De Novo 110k1139 k. In General. Most Cited Cases Court of Appeals reviews jury instructions de novo, reversing only where an instruction either failed to inform the jury adequately of the law or misled the jury about the correct legal rule. [2] Criminal Law 110 110 Criminal Law 110XX Trial 805(1)

110XX(G) Instructions: Necessity, Requisites, and Sufficiency 110k805 Form and Language in General 110k805(1) k. In General. Most Cited Cases Criminal Law 110 822(1)

110 Criminal Law 110XX Trial 110XX(G) Instructions: Necessity, Requisites, and Sufficiency 110k822 Construction and Effect of Charge as a Whole 110k822(1) k. In General. Most Cited Cases No particular form of words is required so long as, taken as a whole, jury instructions correctly convey the required legal principles. [3] Criminal Law 110 822(1)

110 Criminal Law 110XX Trial 110XX(G) Instructions: Necessity, Requisites, and Sufficiency 110k822 Construction and Effect of Charge as a Whole 110k822(1) k. In General. Most Cited Cases Court of Appeals does not review portions of jury instructions in isolation, but rather considers instructions in their entirety to determine whether, on the whole, they provided the jury with an intelligible and accurate portrayal of the applicable law. [4] Extortion and Threats 165 16

165 Extortion and Threats 165I Official Extortion 165k16 k. Trial. Most Cited Cases Phrase particular kinds of influence, as used in portion of jury instruction on offense of Hobbs Act extortion explaining that government did not have to prove explicit promise to perform particular act made at time of payment, could only be understood to refer to undertaking of official acts that made up defendant's part of bargain, and thus was not ambiguous, given that preceding paragraph clearly articulated payment in return for official acts quid pro quo requirement. 18 U.S.C.A. 1951. [5] Extortion and Threats 165 4

165 Extortion and Threats 165I Official Extortion 165k3 Elements of Offenses 165k4 k. In General. Most Cited Cases To obtain conviction of former mayor for Hobbs Act extortion, it was sufficient for government to prove that former mayor understood that he was expected, as a result of payment, to exercise particular kinds of influence, on behalf of payor, as specific opportunities arose; **government did not have to prove, as former mayor contended, that benefits received were directly linked to a particular act at time of agreement. 18 U.S.C.A. 1951. [6] Extortion and Threats 165 165 Extortion and Threats 165I Official Extortion 4

165k3 Elements of Offenses 165k4 k. In General. Most Cited Cases To establish Hobbs Act extortion, it is enough that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts. 18 U.S.C.A. 1951. [7] Extortion and Threats 165 1

165 Extortion and Threats 165I Official Extortion 165k1 k. Nature of Offense in General. Most Cited Cases Crime of extortion occurs without regard to whether the promised official act is carried out. [8] Extortion and Threats 165 4

165 Extortion and Threats 165I Official Extortion 165k3 Elements of Offenses 165k4 k. In General. Most Cited Cases In prosecution for Hobbs Act extortion, so long as the jury finds that an official accepted gifts in exchange for a promise to perform official acts for the giver, it need not find that the specific act to be performed was identified at the time of the promise, nor need it link each specific benefit to a single official act. 18 U.S.C.A. 1951. [9] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Like extortion, the crime of bribery requires a quid pro quo. [10] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Bribery can be accomplished through an ongoing course of conduct, so long as evidence shows that the favors and gifts flowing to a public official are in exchange for a pattern of official actions favorable to the donor. [11] Postal Service 306 50

306 Postal Service 306III Offenses Against Postal Laws 306k50 k. Trial and Review. Most Cited Cases Taken as a whole, **jury instruction that described crime of bribery for purposes of charges of honest services mail fraud that were based upon former mayor's alleged participation in bribery scheme accurately set forth applicable law when instruction explained that bribe required some specific quid pro quo, or specific official action in return for benefit or payment, and then described in detail type of legal lobbying that was not bribery, notwithstanding former mayor's contention that instruction was improperly broad in permitting conviction based upon his knowledge that he was expected, due to payment, to exercise influence to payor's

benefit and intended to do so, as specific opportunities arose, when accepting payment. 18 U.S.C.A. 1346. [12] Criminal Law 110 1038.1(2)

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1038 Instructions 110k1038.1 Objections in General 110k1038.1(2) k. Plain or Fundamental Error. Most Cited Cases Court of Appeals would review for plain error jury instruction to which defendant did not object before district court on grounds asserted on appeal, reversing only if error was clear or obvious and affected substantial rights. [13] Criminal Law 110 1030(1)

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1030 Necessity of Objections in General 110k1030(1) k. In General. Most Cited Cases To affect substantial rights, for purposes of plain error review, an error must have been prejudicial, in that it must have affected the outcome of the district court proceedings. [14] Bribery 63 14

63 Bribery 63k12 Trial 63k14 k. Instructions. Most Cited Cases Criminal Law 110 1038.1(4)

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1038 Instructions 110k1038.1 Objections in General 110k1038.1(3) Particular Instructions 110k1038.1(4) k. Elements of Offense and Defenses. Most Cited Cases Although inclusion of word rewarded in jury instruction for bribery involving programs receiving federal funds introduced unnecessary ambiguity, by possibly implying illegal gratuity theory not pursued by government, it was not clear or obvious that using word reward was error, particularly when phrase influenced or rewarded appeared in statute, and, in light of requirement that jury find specific quid pro quo, jury necessarily convicted defendant of bribery, rather than lesser included offense of receiving illegal gratuities, and therefore any error was not plain error warranting reversal. 18 U.S.C.A. 666. SOTOMAYOR, Circuit Judge: Defendant-appellant Joseph P. Ganim (Ganim), the former mayor of Bridgeport, Connecticut, appeals from the judgment of the United States District Court for the District of Connecticut (Arterton, J.). Ganim was convicted, after a jury trial, of racketeering in violation of 18 U.S.C. 1962(c); racketeering conspiracy in

violation of 18 U.S.C. 1962(d); extortion in violation of 18 U.S.C. 1951; honest services mail fraud in violation of 18 U.S.C. 1341 & 1346; bribery involving programs receiving federal funds in violation of 18 U.S.C. 666(a)(1)(B); conspiracy to commit bribery in violation of 18 U.S.C. 371; and filing false income tax returns in violation of 26 U.S.C. 7206(1). Ganim was sentenced principally to 108 months' imprisonment for his offenses. On appeal, Ganim contends that in order to prove his guilt (on all but the tax crimes), the government was required to link each alleged benefit Ganim received to *137 a specific official act he performed.FN1 We hold that the government was not required to allege or to prove that type of direct link, and conclude that the jury was properly charged on the law. In a separate summary order filed today, we reject Ganim's other challenges to his conviction and sentence, and hold that: (1) the indictment and bills of particular sufficiently informed Ganim of the charges against him; (2) the prosecutor's closing remarks did not amount to misconduct warranting reversal; (3) the district court did not err in declining to recess jury deliberations after a juror reported that she may have been fired from her job; and (4) Ganim's resentencing process under United States v. Crosby, 397 F.3d 103 (2d Cir.2005) was constitutional and his sentence was reasonable. We AFFIRM the judgment below. FN1. Ganim advances no argument-save a conclusory one in a footnote of his reply brief-why his conviction on the tax crimes (Counts 22 and 23) would be affected by his arguments concerning the bribery-related crimes. We decline to consider his belated and buried argument, see United States v. Gabriel, 125 F.3d 89, 100 n. 6 (2d Cir.1997), abrogated on other grounds by Arthur Andersen LLP v. United States, 544 U.S. 696, 125 S.Ct. 2129, 161 L.Ed.2d 1008 (2005) , as recognized in United States v. Quattrone, 441 F.3d 153, 176, 180 n. 28 (2d Cir.2006) , and note only that the tax crimes for which he was convicted do not depend on whether the income he failed to report was obtained legally or not. BACKGROUND I. Offense ConductFN2 FN2. The following account of Ganim's criminal conduct is drawn from the evidence the prosecution adduced at trial, primarily the testimony of the cooperating witnesses Leonard J. Grimaldi and Paul J. Pinto, presented in the light most favorable to the guilty verdict. See United States v. Males, 459 F.3d 154, 155 (2d Cir.2006). Ganim served as the mayor of Bridgeport, Connecticut (the City) from 1991 through the time of his conviction in 2003. As mayor, Ganim was responsible for the overall operation of municipal government and, among other responsibilities, had final authority over the City's contracts. During his first campaign for mayor, Ganim became acquainted with **Leonard J. Grimaldi (Grimaldi), who acted as a media advisor, and **Paul J. Pinto (Pinto), who began as his driver and aide. Ganim developed close relationships with Grimaldi and Pinto over the years that followed. Grimaldi subsequently formed a public relations company called Harbor Communications, of which he was the sole proprietor and employee. Pinto became associated with (and later purchased an ownership interest in) **the Kasper Group, a Bridgeport architecture and engineering firm. A. PSG Contract Bid In 1995 and 1996, Bridgeport was considering privatizing its wastewater treatment facilities. Ganim suggested that Grimaldi contact **Professional Services Group (PSG) to act as PSG's public relations consultant in connection with its bid for the water treatment contract. Grimaldi then contacted PSG, which retained him as a consultant for a fee of $30,000. PSG submitted a proposal for the contract, as did U.S. Water, a competing firm which was represented by Pinto and by United Properties. The owners of United Properties,**Albert Lenoci, Sr. and Albert Lenoci, Jr. (the Lenocis), were Ganim's political benefactors. After the bids were submitted, Ganim told Pinto that he had decided to award the contract to PSG, but that Pinto should arrange a financial deal between PSG and United Properties because Ganim did not want to choose between big supporters. *138 Ganim told Pinto that [i]f they want the deal, they'll do it. In turn, Pinto explained to Grimaldi that if PSG wanted to win the contract, it would have to take care of the Lenocis. Grimaldi acquiesced, as did PSG upon his advice. PSG agreed to pay Grimaldi $70,000 more per year for the contract's duration, which he was to pass on to Pinto and the Lenocis. Pinto informed Ganim of the deal, and Ganim approved the selection of PSG to operate the wastewater treatment facilities.

Between May 1997 and April 1999, PSG paid Grimaldi roughly $311,396 in consulting fees, much but not all of which Grimaldi paid to Pinto. Grimaldi and Pinto used some portion of this money to provide Ganim benefits such as entertainment, meals and clothing. B. Fifty-Fifty Fee Sharing Agreement In December 1996, Ganim traveled with Pinto and Grimaldi to Tucson, Arizona. During the trip, **[evid of quid pro quo]Ganim told them they should join forces by agreeing to split any consulting fees they earned through future dealings with the City, and that Ganim would steer contracts to the pair, in return for which they would tak[e] care of his expenses and needs. Upon returning to Bridgeport, the three men met to confirm the agreement. Grimaldi testified that during that meeting, he and Pinto agreed that: a portion of that money [from the agreement] would be to take care of [Ganim]. If he needed cash, we would take care of him. If he needed suits, we'd take care of him. If he needed shirts, we'd take care of him. Any needs that he required, off of that 50/50 arrangement, we would take care of [Ganim]. In exchange for that, [Ganim] would make sure that all of our clients would get work from the city if they wanted it, that he would steer city contracts and jobs to our clients.... Pursuant to the fee sharing agreement, Ganim steered certain projects (some of which are discussed below) to Pinto's and Grimaldi's clients from February 1997 to April 1999. **Meanwhile, Grimaldi and Pinto provided Ganim with cash, meals, fitness equipment, designer clothing, wine, jewelry and other items. **Also at around that time, Grimaldi employed Ganim's wife. At Ganim's insistence, Grimaldi overpaid her, gave her payments in cash and did not report her income to the Internal Revenue Service. C. Bridgeport Energy-Funded Programs In 1998, Ganim had Grimaldi arrange for Bridgeport Energy-one of Grimaldi's clients-to contribute one million dollars to fund a promotional advertising campaign and the City's Clean & Green program, which demolished and rehabilitated blighted properties. Ganim then arranged for Grimaldi to oversee the advertising campaign and for one of the Lenocis' firms, represented by Pinto, to administer the Clean & Green monies. **Pursuant to the fee-sharing agreement, Grimaldi and Pinto used a portion of their consulting fees for these programs to benefit Ganim. D. PSG Contract Extension & One-Third-Each Fee Sharing In late 1998, PSG sought a long-term extension of its contract to operate the City's wastewater treatment facilities. **In a meeting with Grimaldi and Pinto, Ganim told Grimaldi that he would support the contract extension. In exchange, Grimaldi was to renegotiate his contract with PSG to get more of his consulting fees up front. Ganim also directed that the three men would split those fees-as well as fees from all future deals with the City-one-*139 third each. Grimaldi was to pay Ganim's share to Pinto, who would hold the fees for Ganim. Following these discussions, Grimaldi successfully renegotiated his consulting fees with PSG, such that he was paid $495,000 in a front-loaded deal. On May 27, 1999, Ganim awarded PSG the contract extension. Over several weeks Grimaldi paid Pinto roughly two-thirds of the consulting fee, one third of which was for Ganim. Pinto kept Ganim's share mixed with his own money to avoid detection. Throughout most of 1999, **Grimaldi and Pinto provided Ganim-upon his request-with money and benefits such as wine, cabinets, home improvements and meals. Pinto stated at trial that I was holding [Ganim's] money. When he needed the money, I'd give it to him or use it the way he directed me to.... In September 1999, Ganim and Grimaldi had a falling out, and eventually Grimaldi stopped paying Ganim's portion of the money to Pinto. From that point forward, Ganim shunned Grimaldi and prevented his clients from obtaining contracts with the City. E. Life Insurance Policy In early 1999, Ganim sought to use City funds to purchase a one-million-dollar life insurance policy for himself, as well as for certain City department heads as cover. He approached **Frank Sullivan (Sullivan), a childhood friend who had become a stockbroker, about brokering the deal. Ganim approved the purchase of the policies in April 1999 without the City Council's approval. After the purchase of the policies was leaked to

the media, Ganim wrote to The Hartford Life Insurance Company to request that his own policy be terminated, but did not fill out the appropriate paperwork so that the policy would remain in effect. At the end of the fiscal year, Ganim had the funding for the policies inserted as one of many summary budget transfers, which were approved by the City Council. Sullivan received a $17,500 commission for serving as the broker for Ganim's policy. Acting on behalf of Ganim, Pinto advised Sullivan that if Sullivan wanted to do more business with the City, he would have to pay a kickback. Sullivan subsequently paid $5,000 in cash for Ganim and Pinto to share. F. Pension Plans In the fall of 1999, Sullivan sought to become the broker of record for two municipal pension plans, Plan A and Plan B. **Ganim had Pinto tell Sullivan that if he wanted the position, Sullivan would have to give fifty percent of his commissions to Ganim and Pinto. With Ganim's support, Sullivan was appointed as the broker for the Plan B pension in September 1999. The following year, and again with Ganim's support, the Director of Finance for the City of Bridgeport retained Sullivan's investment firm to assist the city in underwriting the Plan A pension. Sullivan received $38,000 as the first installment of his brokerage commission, which he intended to split with Pinto and Ganim. They did not request their respective cuts, however, as they had become anxious about the pending federal investigation against them. G. Juvenile Detention Facility In early 1999, the City, pursuant to a State of Connecticut project, was attempting to condemn property owned by B.C. Sand & Gravel in order to build a juvenile detention facility. B.C. Sand & Gravel retained Pinto, agreeing to pay him $100,000 if he successfully stopped the condemnation. Pinto informed Ganim of the agreement, who then exercised his influence to change the City's position on the *140 condemnation. The State ultimately abandoned the project, and, as a result, Pinto received his fee from B.C. Sand & Gravel. Pinto held half of that fee for Ganim's benefit pursuant to their usual fee sharing arrangement, and from that sum provided Ganim with cash and benefits upon his request. H. United Properties & Dollar-A-Square-Foot The Lenocis, principals of United Properties, were seeking in 1998 and 1999 to develop tracts of land in the City, including a site called Father Panik and another called Steel Point. The Lenocis and Pinto worked out a deal whereby United Properties would pay Pinto one dollar for each square foot of space they constructed in the City in the future. Pinto was to use some of that money to take care of Ganim, who in turn lobbied to get the Lenocis a long-term lease to develop Father Panik. In 2000, the City sought bids to develop Steel Point. In a November 2000 meeting with Pinto and Ganim, the Lenocis promised to raise $500,000 for Ganim's anticipated gubernatorial campaign in exchange for his commitment to get them the Steel Point project. But the Lenocis did not bid on the project when federal search warrants were executed at United Properties. Because neither the Father Panik nor the Steel Point projects materialized, Ganim and Pinto received no money in connection with these projects. I. False Income Tax Returns On his 1998 and 1999 income tax returns, Ganim failed to report as income $47,996 and $265,733, respectively, in cash and benefits provided by Pinto and Grimaldi, including the sums Grimaldi paid to Ganim's wife. J. Ganim's Defense Ganim testified in his own defense at trial. He acknowledged that Pinto and Grimaldi provided him with cash, meals, clothing, wine and other gifts, but claimed they did so out of friendship or legitimate lobbying activity. He denied receiving any gifts in exchange for official acts, denied entering any fee-sharing agreement with Pinto and Grimaldi, denied being partners with them or being aware of the deals between Pinto and Grimaldi, and claimed that he acted only in the best interest of the City. Ganim confirmed that his wife had worked for Grimaldi, but claimed that their failure to report her wages was inadvertent. He also admitted acquiring a life insurance policy paid for by City funds but denied having purchased it secretly or without proper City Council authorization.

II. Judicial Proceedings A. Indictment Between 1997 and 2001, the Federal Bureau of Investigation and the Internal Revenue Service conducted an investigation of municipal corruption in the City. On October 31, 2001, a grand jury in the United States District Court for the District of Connecticut returned a twenty-four count indictment against Ganim, and on March 27, 2002, the grand jury returned a superseding indictment containing the same charges. Count 1 alleged that Ganim, along with Pinto and Grimaldi, conducted a racketeering enterprise in violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1962(c) (RICO), and listed eleven predicate racketeering acts. Count 2 alleged conspiracy to conduct a racketeering enterprise. Counts 321, which overlapped with many of the predicate RICO acts, were separately charged as the *141 following crimes: **(1) extortion in violation of the Hobbs Act, 18 U.S.C. 1951 & 1952; **(2) mail fraud in violation of 18 U.S.C. 1341 & 1346; **(3) bribery involving programs receiving federal funds (federal programs bribery) in violation of 18 U.S.C. 666; and (4) conspiracy under 18 U.S.C. 371 to commit bribery under 18 U.S.C. 666. Counts 22 and 23 alleged the filing of false tax returns in violation of 28 U.S.C. 7206(1). Count 24 was a forfeiture count under 18 U.S.C. 1963. The district court granted Ganim's motion for a bill of particulars, ordering the government to provide a limited bill setting out the specific benefits Ganim is alleged to have received. United States v. Ganim, 225 F.Supp.2d 145, 148, 155 (D.Conn.2002). After receiving the bill of particulars, Ganim moved for a supplemental bill on the grounds that the first was incomplete. The district court granted the motion, and the government subsequently filed a supplemental bill. B. The Trial and Verdict Ganim's trial commenced on January 8, 2003, and lasted ten weeks. Before the case was submitted to the jury, Counts 18 and 21 of the indictment were dismissed for reasons not relevant here. After deliberating for eight days, the jury returned a verdict convicting Ganim on 16 of the remaining 22 counts. DISCUSSION Ganim challenges the jury charges given on the bribery-related crimes at issue: (1) extortion in violation of the Hobbs Act, 18 U.S.C. 1951; (2) honest services mail fraud in violation of 18 U.S.C. 1341 & 1346; (3) federal programs bribery in violation of 18 U.S.C. 666(a)(1)(b); and (4) bribe receiving in violation of Connecticut General Statutes section 53a-148 FN3 (collectively, the bribery-related crimes). As explained further below, each of these statutes criminalizes, in some respect, a quid pro quo agreement-to wit,** a government official's receipt of a benefit in exchange for an act he has performed, or promised to perform, in the exercise of his official authority. Ganim's challenges to the jury charge primarily relate to a single issue: namely, whether proof of a government official's promise to perform a future, but *142 unspecified, official act FN4 is sufficient to demonstrate the requisite quid pro quo for a conviction. Ganim essentially claims that at the time a quid pro quo agreement is reached, a direct link must exist between a benefit received and a specifically identified official act. **We disagree, and hold that the requisite quid pro quo for the crimes at issue may be satisfied upon a showing that a government official received a benefit in exchange for his promise to perform official acts or to perform such acts as the opportunities arise. FN3. This Connecticut statute served as the basis for some of the RICO predicate offenses. FN4. Except where otherwise noted herein, we use the term official act in a general sense to mean an act taken under color of official authority, not necessarily as the term is used and statutorily defined in 18 U.S.C. 201 or elsewhere. A. Standard of Review [1][2][3] We review jury charges de novo, reversing only where a charge either failed to inform the jury adequately of the law or misled the jury about the correct legal rule. United States v. Ford, 435 F.3d 204, 20910 (2d Cir.2006) (internal citation omitted). No particular form of words is required, so long as taken as a

whole the instructions correctly convey the required legal principles. Victor v. Nebraska, 511 U.S. 1, 5, 114 S.Ct. 1239, 127 L.Ed.2d 583 (1994). Moreover, this Court does not review portions of the instructions in isolation, but rather consider[s] them in their entirety to determine whether, on the whole, they provided the jury with an intelligible and accurate portrayal of the applicable law. United States v. Weintraub, 273 F.3d 139, 151 (2d Cir.2001). B. Hobbs Act Extortion 1. Relevant Law The Hobbs Act makes it a crime to obstruct[ ], delay[ ], or affect [ ] commerce or the movement of any article or commodity in commerce, by robbery or extortion, and defines extortion as the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. 18 U.S.C. 1951(a), (b)(2). Ganim challenges his conviction for extortion under color of official right. In McCormick v. United States, 500 U.S. 257, 111 S.Ct. 1807, 114 L.Ed.2d 307 (1991), the Supreme Court considered the requirements for an extortion conviction under color of official right in the special context of campaign contributions. The Court held: The receipt of such contributions is ... vulnerable under the Act as having been taken under color of official right, but only if the payments are made in return for an explicit promise or undertaking by the official to perform or not to perform an official act. In such situations the official asserts that his official conduct will be controlled by the terms of the promise or undertaking. Id. at 273, 111 S.Ct. 1807 (emphasis added). That is, proof of an express promise is necessary when the payments are made in the form of campaign contributions. Id. at 273-74, 111 S.Ct. 1807. The Court, however, explicitly did not decide whether a quid pro quo requirement exists in other contexts, such as when an elected official receives gifts, meals, travel expenses, or other items of value. Id. at 274 n. 10, 111 S.Ct. 1807. In Evans v. United States, 504 U.S. 255, 112 S.Ct. 1881, 119 L.Ed.2d 57 (1992), the Court held that an affirmative act of inducement by a public official is not an element of the offense of extortion under color of official right. Id. at 257, 268, 112 S.Ct. 1881. The Court also found that the *143 jury instruction, which allowed for a conviction if the official accepted money in exchange for [a] specific requested exercise of his or her official power, satisfied McCormick's quid pro quo requirement. Id. at 258, 267, 112 S.Ct. 1881. The Court explained that **the offense [of extortion] is completed at the time when the public official receives a payment in return for his agreement to perform specific official acts; **fulfillment of the quid pro quo is not an element of the offense. Id. at 268, 112 S.Ct. 1881. Thus, the Court concluded, the government need only show that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts. Id. We harmonized McCormick and Evans in United States v. Garcia, 992 F.2d 409 (2d Cir.1993), stating: Although the McCormick Court had ruled that extortion under color of official right in circumstances involving campaign contributions occurs only if the payments are made in return for an explicit promise or undertaking by the official to perform or not to perform an official act, **Evans modified this standard in non-campaign contribution cases by requiring that the government show only that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts. Garcia, 992 F.2d at 414 (internal citations omitted). Drawing from Justice Kennedy's concurrence in Evans, we found that a quid pro quo was required to sustain a conviction in the non-campaign context, **but that the agreement may be implied from the official's words and actions because otherwise the law's effect could be frustrated by knowing winks and nods. Id. (quoting Evans, 504 U.S. at 274, 112 S.Ct. 1881 (Kennedy, J., concurring)).

The facts in Garcia were similar to the ones now before us. Over the course of several years, then New York Congressman Robert Garcia solicited **money and **loans from a defense-contractor company, and in exchange steered federal projects to the company and interceded on its behalf with banks and government agencies. The jury instruction, given shortly before the Supreme Court's decision in Evans, failed to charge the jury that it must find a quid pro quo to convict. Rather, the district court presented three alternative theories that could sustain a conviction: **(1) soliciting money in connection with the official's duties; **(2) offering to confer a benefit or to take some official action (or inaction) in exchange for money; and **(3) accepting money that could reasonably have affected the exercise of official duties. Garcia, 992 F.2d at 413. We reversed the conviction because only the second alternative presented in the jury charge satisfied the quid pro quo standard articulated in Evans. Specifically, we explained that [a]lthough no explicit agreement between [the company] and Garcia need have been shown, the government must have shown that Garcia received the payment knowing that [it] was made in return for official acts. Id. at 415 (quoting Evans, 504 U.S. at 268, 112 S.Ct. 1881) (alternation in original). Thus, we explained, it was not enough for the jury to have concluded that Garcia's acceptance of money was in connection with [his] official duties' or reasonably could have affected the performance of his official duties. Garcia, 992 F.2d at 415 (quoting Evans, 504 U.S. at 268, 112 S.Ct. 1881) (alteration in original). Rather, in order to satisfy the requisite quid pro quo, [t]he jury was required to find that Garcia understood that the payment was made in return for performance of those duties. Garcia, 992 F.2d at 415. *144 Shortly after Garcia, we were called upon again in United States v. Coyne, 4 F.3d 100 (2d Cir.1993), to delineate the contours of the quid pro quo requirement in the context of a jury charge challenge. Coyne concerned the conviction of the Albany County Executive for his extortion of a $30,000 loan from the owner of a company he had helped to obtain a lucrative city contract. We upheld the following Hobbs Act jury instruction: [Y]ou may only find the defendant guilty of this crime if you find that he obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts rather than being given voluntarily or unrelated to the defendant's office. The defendant need not have affirmatively induced the payment by his actions, but he must know the payment is offered in exchange for a specific requested exercise of his official power in order to violate the statute. Id. at 113-14. We found that the instruction tracked the Supreme Court's statement in Evans. Id. at 114. We also explained that the government does not have to prove an explicit promise to perform a particular act made at the time of payment. Id. Instead, it is sufficient if the public official understands that he or she is expected as a result of the payment to exercise particular kinds of influence-i.e., on behalf of the payor-as specific opportunities arose. Id. (internal citation omitted). 2. Jury Charge In charging the jury on the elements of extortion, the district court explained that the government was required to prove that the defendant wrongfully used the authority of his office or position to obtain the money, goods or services to which he was not entitled. FN5 The court continued: FN5. The jury was charged on the law of Hobbs Act extortion in connection with Count 1 (racketeering acts 1A and 6), and then again in summary form in connection with Count 3. To satisfy this element, the government must prove that the defendant obtained a payment to which he was not entitled by use of his office, knowing that the payment was made in return for official acts rather than being given voluntarily or unrelated to the defendant's official position. The defendant need not have initiated the payments, but he must have known that the payment was made in exchange for a specific exercise of the defendant's official powers. You do not have to determine whether the defendant could or did actually perform the service, or whether he actually had a duty to do so. The government does not have to prove an explicit promise to perform a particular act made at the time of payment. It is sufficient if the defendant understood he was expected as a result of the payment to exercise particular kinds of influence, that is, on behalf of the payor, as specific opportunities arose. (emphasis added)

Both parties appear to agree that the language in the first paragraph-requiring that the defendant know that the payment was made in return for official acts, and that the payment was made in exchange for a specific exercise of the defendant's official powers-accurately portrays the applicable quid pro quo standard. Ganim objects, however, to the statement in the second paragraph that [i]t is sufficient if the defendant understood he was expected as a result of the payment to exercise particular kinds of influence, that is, on behalf of the payor, as specific opportunities arose. He claims that this instruction misled the jury as to what establishes a quid pro quo under the Hobbs *145 Act, because it did not require the jury to find that any of the benefits received were connected to a specific act. [4] To the extent Ganim objects to the particular kinds of influence phraseology in the second paragraph quoted above from the jury charge, we find no error. Because the preceding paragraph in the charge clearly articulated the payment ... in return for official acts quid p ro quo, the phrase kinds of influence, which might otherwise be ambiguous, would only be understood to refer to undertaking the official acts that made up Ganim's part of the bargain. [5][6][7] Moreover, to the extent Ganim claims that the benefits received must be directly linked to a particular act at the time of agreement, he overstates the law. We explained in Coyne, in language mirroring the jury charge here, that it is sufficient if the public official understands that he or she is expected as a result of the payment to exercise particular kinds of influence-i.e., on behalf of the payor-as specific opportunities arise. See Coyne, 4 F.3d at 114; see also United States v. Bradley, 173 F.3d 225, 231-32 (3d Cir.1999) (upholding Hobbs Act jury instruction containing substantially similar language). FN6 Our statement in Coyne is a natural corollary of Evans' pronouncement that the government need not prove the existence of an explicit agreement at the time a payment is received, Evans, 504 U.S. at 268, 112 S.Ct. 1881. See Coyne, 4 F.3d at 114 (implicitly drawing the connection); see also Bradley, 173 F.3d at 231-32 (same). Rather, it is enough that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts. Evans, 504 U.S. at 268, 112 S.Ct. 1881. Moreover, given that the crime of extortion occurs without regard to whether the promised official act is carried out, see id. ([F]ulfillment of the quid pro quo is not an element of the offense.), Ganim's proposal-that a specific act be identified and directly linked to a benefit at the time the benefit is received-demands too much. FN6. To the extent that our statement in Coyne was dicta, insofar as the jury charge did not contain the as specific opportunities arise language, we now hold what we stated then. In contending otherwise, Ganim's reliance on United States v. Sun-Diamond Growers of California, 526 U.S. 398, 119 S.Ct. 1402, 143 L.Ed.2d 576 (1999), is misplaced. Sun-Diamond was a trade association convicted of providing illegal gratuities under 18 U.S.C. 201(c)(1)(A) for having given tickets, meals and other items to the Secretary of Agriculture. Id. at 401, 119 S.Ct. 1402. The indictment alluded to two matters before the Secretary in which [Sun-Diamond] had an interest, but did not allege a specific connection between either of them-or between any other action of the Secretary-and the gratuities conferred. Id. at 401-02, 119 S.Ct. 1402. The district court instructed the jury that it could convict Sun-Diamond of giving illegal gratuities if it found that Sun-Diamond provided [the Secretary] with unauthorized compensation simply because he held public office, and that [t]he government need not prove that the alleged gratuity was linked to a specific or identifiable official act or any act at all. Id. at 403, 119 S.Ct. 1402. The issue before the Supreme Court was whether a conviction under the illegal gratuity statute requires any showing beyond the fact that a gratuity was given because of the recipient's official position. Id. at 400, 119 S.Ct. 1402. The Court held that the statute did require something more; namely, a link between a thing of value conferred upon a public official and a specific official act for or because of *146 which it was given. Id. at 414, 119 S.Ct. 1402. The Court explained that a contrary ruling would not fit comfortably with the statutory text, which prohibits only gratuities given or received for or because of any official act performed or to be performed, and then defines official act as any decision or action on any question, matter, cause, suit, proceeding or controversy. Id. at 406, 119 S.Ct. 1402 (alteration in original) (quoting 18 U.S.C. 201(a)(3), (c)(1)(A)). The Court also explained that, if an official's position rather than an official's act were sufficient to convict, the line between illegal and legal gift giving would be indiscernible. Id. at 408-11, 119 S.Ct. 1402. Ganim seems to acknowledge, as he must, that Sun-Diamond's holding does not on its face extend to the extortion statute, or to any other of the bribery-related statutes under which he was convicted. He nonetheless

argues that common sense requires us to extend this direct link requirement beyond the gratuities context to the bribery-related crimes at issue. Otherwise, he contends, the government would be able to convict upon proof of a less exacting nexus than it must to demonstrate a gratuities offense, notwithstanding that extortion and bribery are far more serious crimes that carry more severe criminal penalties. But Ganim's argument misapprehends Sun-Diamond. To begin, there is good reason to limit Sun-Diamond's holding to the statute at issue in that case , as it was the very text of the illegal gratuity statute-for or because of any official act -that led the Court to its conclusion that a direct nexus was required to sustain a conviction under 201(c)(1)(A). Sun-Diamond, 526 U.S. at 406, 119 S.Ct. 1402 (alternation in original) (The insistence upon an official act, carefully defined, seems pregnant with the requirement that some particular official act be identified and proved.). Neither the Hobbs Act provision under which Ganim was convicted, 18 U.S.C. 1951, nor any other of the bribery-related statutes at issue, contain the same express statutory requirement. See 18 U.S.C. 1951(b)(2) (proscribing the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.); 18 U.S.C. 666(a)(1)(B) (making it illegal for a local public official to corruptly solicit[ ] or demand [ ] for the benefit of any person, or accept[ ] or agree[ ] to accept, anything of value from any person, intending to be influenced or rewarded in connection with any business, transaction, or series of transactions of the local government involving any thing of value of $5,000 or more); 18 U.S.C. 1341 & 1346 (criminalizing the use of the mails for the purpose of executing a scheme or artifice to deprive another of the intangible right of honest services); Conn. Gen.Stat. 53a-148(a) (A public servant or a person selected to be a public servant is guilty of bribe receiving if he solicits, accepts or agrees to accept from another person any benefit for, because of, or as consideration for his decision, opinion, recommendation or vote.). Nor is there any principled reason to extend Sun-Diamond's holding beyond the illegal gratuity context. Undergirding the Court's decision in Sun-Diamond was a need to distinguish legal gratuities (given to curry favor because of an official's position) from illegal gratuities (given because of a specific act). The Court offered a strictly worded requirement that the government show a link to a specific official act to supply a limiting principle that would distinguish an illegal gratuity from a legal one. **The same limiting principle is not needed in the extortion or bribery contexts, however, because it is the requirement *147 of an intent to perform an act in exchange for a benefit-i.e., the quid pro quo agreement-that distinguishes those crimes from both legal and illegal gratuities. See United States v. Alfisi, 308 F.3d 144, 149-52 (2d Cir.2002) (declining to extend Sun-Diamond' s holding to bribery under 18 U.S.C. 201(b)(1)(A) which contains the element of a quid pro quo or a direct exchange). [8] Thus, now, as before Sun-Diamond, so long as the jury finds that an official accepted gifts in exchange for a promise to perform official acts for the giver, it need not find that the specific act to be performed was identified at the time of the promise, nor need it link each specific benefit to a single official act. To require otherwise could subvert the ends of justice in cases-such as the one before us-involving ongoing schemes. In our view, a scheme involving payments at regular intervals in exchange for specific officials acts as the opportunities to commit those acts arise does not dilute the requisite criminal intent or make the scheme any less extortionate. Indeed, a reading of the statute that excluded such schemes would legalize some of the most pervasive and entrenched corruption, and cannot be what Congress intended. Our post-Sun Diamond decision in United States v. Middlemiss, 217 F.3d 112 (2d Cir.2000), upon which Ganim relies, does not suggest otherwise. In Middlemiss, the victim paid defendants monthly payments of $2,000, and a final payment of $45,000, because [the victim] reasonably believed that [the defendants] had power to influence airport and other officials who could terminate his cafeteria lease or begin administrative investigations into the health and tax code compliance of his businesses. Id. at 117. We found no plain error in a Hobbs Act jury instruction that the defendants had to know a link existed between the payments and their acts. Id. at 121-22. Contrary to Ganim's suggestion, we did not extend Sun-Diamond's holding to the extortion context in Middlemiss. We simply noted that the jury charge at issue in Middlemiss, unlike the one in SunDiamond, conveyed that the official had to know a link existed between the money paid and the official act performed, and for that reason defendant's reliance on Sun-Diamond was unavailing. Neither the jury charge nor our decision, however, required a direct this-for-that relationship between each payment and benefit. Rather, we explained that the government, more generally, need only show that a public official has obtained a payment

to which he was not entitled, knowing that the payment was made in return for official acts. Id. at 117 (quoting United States v. Delano, 55 F.3d 720, 731 (2d Cir.1995)). **In short, requiring a jury to find a quid pro quo, as governing law does, ensures that a particular payment is made in exchange for a commitment to perform official acts to benefit the payor in the future . Once the quid pro quo has been established, however, the specific transactions comprising the illegal scheme need not match up this for that. While it frequently will be true that particular bribes or extorted payments are linked at the time of the corrupt agreement to particular official acts, that will not always be the case-for example, because the opportunity to undertake the requested act has not arisen, or because the payment is one of a series to ensure an ongoing commitment to perform acts to further the payor's interests. Accordingly, the Hobbs Act jury instructions were not erroneous. C. Honest Services Mail Fraud 1. Relevant Law Title 18, Section 1341 of the United States Code criminalizes the use of the *148 mails for the purpose of executing a scheme or artifice to defraud. 18 U.S.C. 1341. When mail fraud is prosecuted as a scheme or artifice to deprive another of the intangible right of honest services, 18 U.S.C. 1346, it is referred to as honest services mail fraud; when it is prosecuted simply as a scheme to deprive another of property by means of false pretenses, it is referred to as traditional mail fraud. The government clarified during pretrial proceedings that it would prosecute the honest services mail fraud charges as a scheme to deprive the citizenry of Ganim's honest services by bribery of (or extortion by) an elected official. See United States v. Ganim, 225 F.Supp.2d 145, 147 (D.Conn.2002). Thus, the honest services mail fraud charges-which are the only ones challenged here-were all tried under the substantive law of either extortion or bribery. FN7 FN7. For purposes of this appeal, we presume that the same standard for proving a quid pro quo exists under both 18 U.S.C. 666 and 201(b)(1), as neither party has argued that there is, or should be, any difference of which we should be cognizant. See United States v. Ford, 435 F.3d 204, 213 (2d Cir.2006) (citing Sun-Diamond for the proposition that bribery under 666 requires a quid pro quo); Alfisi, 308 F.3d at 149 (citing Sun-Diamond for the proposition that bribery under 201(b)(1) requires a quid pro quo). We note here, and have held previously, that there are other differences between the two provisions that are salient under circumstances not present here. See Ford, 435 F.3d at 210 & n. 2, 213-14 & n. 5 (stating that the language of the two provisions differs in significant respects, including that Section 201 lacks an explicit intent requirement as to recipients of alleged bribes while Section 666 contains one, and concluding that those differences were important with respect to the level of awareness each provision required of the recipient of a bribe). [9] Like extortion, the crime of bribery requires a quid pro quo. See, e.g., Alfisi, 308 F.3d at 148 ([B]ribery ... requires a quid pro quo element.); see also Sun-Diamond, 526 U.S. at 405, 119 S.Ct. 1402 (distinguishing an illegal gratuity from a bribe which requires proof of a quid pro quo). And, like in the extortion cases, donors and recipients engaged in ongoing bribery schemes do not always spell out in advance the specific match between gift and act. For example, in United States v. Bonito, 57 F.3d 167 (2d Cir.1995), we upheld the conviction of a real estate developer who gave a car to a city housing official as a bribe, but when the deal the developer hoped the official could ensure fell through, the official found other ways of using his position for the developer's financial benefit. Id. at 169-71, 174. We found the jury charge sufficient because it required the jury to find a corrupt intent on the part of the payor to influence the performance of official acts. Id. at 171. [10] The Fourth Circuit also shares our view that, in order to establish the quid pro quo essential to proving bribery, the government need not show that the defendant intended for his payments to be tied to specific official acts (or omissions). United States v. Jennings, 160 F.3d 1006, 1014 (4th Cir.1998). In Jennings, a construction contractor was convicted of federal programs bribery under 18 U.S.C. 666(a)(2) for giving a series of cash payments to a city official responsible for awarding jobs renovating vacant housing units. Id. at 1010-12. In return for the money, the official steered contracts to Jennings worth hundreds of thousands of dollars. Id. In upholding the bribery conviction, the Fourth Circuit emphasized that bribery required an intent to effect an exchange, but that each payment need not be correlated with a specific official act.... In other words,

the intended exchange in bribery can be this for these or these for these, not just this for that. *149 Id. at 1014 (internal citation omitted). Thus, bribery can be accomplished through an ongoing course of conduct, so long as evidence shows that the favors and gifts flowing to a public official [are] in exchange for a pattern of official actions favorable to the donor. Id. (emphasis in original) (internal quotation omitted). 2. Jury Charge [11] The district court charged the jury that it could convict Ganim for honest services mail fraud if the jury found that he engaged in a scheme to receive something of value either through bribery or through extortion. FN8 As the jury had already been instructed on the elements of extortion, the court turned to the crime of bribery: FN8. The jury was charged on the law of honest services mail fraud in connection with Count 1 (racketeering acts 1B, 1C, 1D, 2B, 3A, 3B, 4A, 4B, 7B, 7C, 7D, 7E, 8B and 9), and, for Counts 4-6, 8, 14, 17 and 19, was referred back to the charge on the related racketeering acts. The term bribe means a corrupt payment that a public official accepted or agreed to accept with the intent to be influenced in the performance of his or her public duties. A bribe requires some specific quid pro quo, a Latin phrase meaning this for that or these for those, that is, a specific official action in return for the payment or benefit. If the public official knows that he or she is expected as a result of the payment to exercise particular kinds of influence or decision making to the benefit of the payor, and, at the time the payment is accepted, intended to do so as specific opportunities arose, that is bribery. *** [B]ribery is not proved if the benefit is intended to be, and accepted as simply an effort to buy favor or generalized goodwill from a public official who either has been, is, or may be at some unknown, unspecified later time, be in a position to act favorably on the giver's interests-favorably to the giver's interest. That describes legal lobbying. *** Public officials may lawfully receive a campaign contribution, and he or she may also lawfully accept a personal benefit if his or her intent in taking those items is solely to cultivate a relationship with the person or persons who provided them. (emphasis added). Once again, Ganim objects that by permitting the jury to convict based on the defendant's knowledge that he is expected as a result of the payment to exercise particular kinds of influence or decision making to the benefit of the payor, and, at the time payment is accepted, intended to do so as specific opportunities arose, the charge was improperly broad. Ganim argues that the later instruction-that accepting a benefit that is intended to ... buy favor or generalized goodwill from an official who may at some unknown, unspecified later time, be in a position to act favorably-did not cure the earlier error because the two instructions cannot be reconciled. We find no error in the instruction. Even more specifically than did the charge on extortion, the passage quoted above explained that [a] bribe requires some specific quid pro quo ... that is, a specific official action in return for the payment or benefit. This statement conformed even to the heightened conception of a quid pro quo that Ganim urges this Court to adopt. Further, the district court set forth in detail the type of legal lobbying that is not bribery-the precise activity Ganim is concerned an overly broad charge could *150 sweep up. Taken as a whole, this charge provided the jury with an intelligible and accurate portrayal of the applicable law pertaining to bribery and thus to honest services mail fraud. United States v. Weintraub, 273 F.3d 139, 151 (2d Cir.2001). And, for the reasons explained above, his reliance on Sun-Diamond is misplaced. Cf. Alfisi, 308 F.3d at 151 n. 4 (We do not agree that Sun-Diamond requires us to define the crime of bribery narrowly.... Sun-Diamond ... says nothing about bribery....). D. Federal Programs Bribery and Bribe Receipt Under Connecticut Law 1. Relevant Law

One is guilty of a crime under 18 U.S.C. 666 if he is an agent of local government and corruptly solicits or demands for the benefit of any person, or accepts or agrees to accept, anything of value from any person, intending to be influenced or rewarded in connection with any business, transaction, or series of transactions of the local government involving any thing of value of $5,000 or more. 18 U.S.C. 666(a)(1)(B). The parties agree that, for purposes of this case, the law of bribe receiving under Connecticut law is governed by the same legal framework pertaining to 18 U.S.C. 666.FN9 FN9. The jury was charged on the law of federal programs bribery in connection with Count 7, and referred back to that charge in connection with the counts of conspiracy to commit federal programs bribery, Counts 16 and 20. The jury was charged on the law of bribe receiving under Connecticut law in connection with Count 1 (racketeering acts 2A, 7A, 81, 8C, 8D, 10A). Ganim's brief expressed the position that he treats the substantive law under the Connecticut bribe receiving statute as identical, for purposes relevant to this appeal, to bribery under federal law. The government confirmed at oral argument that it held the same position. We do not address the jury instruction for the charges based on bribe receiving under Connecticut law because Ganim has not separately challenged those instructions, except in a passing footnote in his reply brief, and on grounds not presented to the district court. We have interpreted 666 to impose criminal liability for both kinds of crime proscribed by 201: bribery and illegal gratuities. Specifically, we held in United States v. Crozier, 987 F.2d 893 (2d Cir.1993), that a predecessor of the current 666 criminalized both bribery and illegal gratuities, because that statute's language making it a crime to accept a thing of value for or because of the recipient's conduct in any transactions includes both past acts supporting a gratuity theory and future acts necessary for a bribery theory. Id. at 899. Although the current version of the statute does not contain the for or because of language, we held in Bonito that the deleted language has been replaced with language that is to the same effect-namely, that the payment must be to influence or reward the official conduct. 57 F.3d at 171 (quoting 18 U.S.C. 666(a)(1)(B)). We intimated there that a payment made to influence connotes bribery, whereas a payment made to reward connotes an illegal gratuity. Id.; cf. Sun-Diamond, 526 U.S. at 404-05, 119 S.Ct. 1402 (explaining that under 18 U.S.C. 201, [b]ribery requires intent to influence whereas an illegal gratuity may constitute merely a reward for some future act). The government implicitly agreed in its brief that 666 proscribes both bribery and gratuities, and confirmed at oral argument that it agreed to prosecute violations of the statute as bribery only. 2. Jury Charge The district court's charge on federal programs bribery instructed the jury, in pertinent part, as follows: *151 The third element that the government must prove is that the defendant acted with the corrupt intent to be influenced or rewarded in connection with some business, transaction or series of transactions of the City of Bridgeport itself or one of its agencies. A corrupt intent means the intent to engage in some specific quid pro quo ... or the intent to give some advantage inconsistent with official duty and the rights of others . Corruptly means having an improper motive or purpose. Put another way, a public official acts corruptly if he solicits, accepts or agrees to accept a personal benefit, at least in part, with the intent to be improperly influenced or rewarded in connection with the performance of an official act. The motive to act corruptly is ordinarily a hope or an expectation of either financial gain or other benefit to one's self or some profit or benefit to another. (emphasis added). The jury charge language that Ganim objects to with respect to the other bribery-related crimes-i.e., phrases like kinds of influence or as specific opportunities arise-are absent from this charge. Ganim argues, however, that the instruction incorporates its own, unique error in the form of the word rewarded. He claims the district court's use of the word reward, in the second paragraph above, permitted the jury to convict Ganim on a gratuities theory rather than a bribery theory.FN10 FN10. Ganim also objects to the charge's reference to a series of transactions, which watered down the quid pro quo by eliminating the requirement that the benefit be linked to a single, specific act. As the government notes, the phrase appears in the statute itself, so there is no error.

[12][13] Given the law in this circuit, see, e.g., Bonito, 57 F.3d at 171, the inclusion of the word rewarded in the charge introduced unnecessary ambiguity as it may have implied an illegal gratuity theory which the government, in fact, had not pursued. Future courts, cognizant of the gratuity/bribery distinction in 666 prosecutions, should endeavor to be more precise. Ganim, however, failed to object to the influenced or rewarded language at trial, despite raising a different objection to the 666 instruction that is not at issue in this appeal.FN11 We therefore review the charge for plain error, reversing only if the error is clear or obvious and affects substantial rights. United States v. Olano, 507 U.S. 725, 733-34, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993). To affect substantial rights, an error must have been prejudicial: It must have affected the outcome of the district court proceedings. Id. at 734, 113 S.Ct. 1770. FN11. Indeed, the Defendant's Requests to Charge filed with the district court itself included the phrase intending to be influenced or rewarded, not once but three times. [14] Here, it was not clear or obvious that using the word reward was error, particularly because the phrase influenced or rewarded is contained in the statute itself. 18 U.S.C. 666(a)(1)(B). Moreover, it is unlikely that including the word had any effect at all, much less one affect[ing] the outcome of the district court proceedings. Olano, 507 U.S. at 734, 113 S.Ct. 1770. That is, we cannot conclude that the charge as given permitted the jury to convict on a gratuities theory. A jury would not have understood the word reward to have any particular legal meaning beyond that ascribed to it in the instructions, and the district court plainly instructed the jury that to convict Ganim of federal programs bribery, it would have to find a specific quid pro *152 quo. As Sun-Diamond explained, what distinguishes a bribe from a gratuity is its intent element: only bribery requires the specific intent to give or receive something of value in exchange for an official act. SunDiamond, 526 U.S. at 404-05, 119 S.Ct. 1402 (emphasis in original). Because the jury was required to find that element, it necessarily convicted Ganim of bribery under 18 U.S.C. 666, rather than the lesser included offense of receiving illegal gratuities. Thus, to the extent there was error in the 666 jury instruction, it was not plain error. CONCLUSION For the foregoing reasons, we hold that the jury instructions required the jury to find a sufficiently specific nexus between the personal benefits Ganim received and the official acts he agreed to perform in return for them. And for the additional reasons discussed in our accompanying summary order, we AFFIRM the judgment of conviction. U.S. v. Coyne, 4 F.3d 100 (2nd Cir.(N.Y.),Jul 30, 1993) In the prosecution of bribery and extortion in order to obtain a conviction, states the requirement to prove, and instructs on the definition of and applies the element of quid pro quo to the public offenses of bribery 18 U.S.C. 201, and extortion 18 U.S.C. 1951. Jury instruction as to guilt for extortion, receiving payment not entitled to knowing that the payment was made in return for official acts rather than being given voluntarily or unrelated to the defendant's office. Search terms: jud! /s brib! & quid pro quo & established by U.S. v. Whitfield, 590 F.3d 325 (5th Cir.(Miss.),Dec 11, 2009) Conviction of judges and attorney for crime of depriving a state of the honest services of its officials, 18 U.S.C. 1346 honest services mail fraud, commited by bribery loans, through bribery loans Background: Following denial of their motions for judgment of acquittal, defendants, a trial attorney and two former Mississippi state judges, were convicted after jury trial in the United States District Court for the Southern District of Mississippi, Henry T. Wingate, Chief Judge, of numerous offenses in connection with their

roles in two separate bribery schemes. Defendants appealed. Holdings: The Court of Appeals, Garwood, Circuit Judge, held that: (1) addressing an issue of apparent first impression for the court, even assuming arguendo that defendant judges were agents of the Mississippi Administrative Office of the Courts (AOC), insofar as they performed functions that involved AOC funds, their decisions as presiding judges in two lawsuits involving defendant attorney were not made in connection with any business, transaction, or series of transactions of the AOC, within the meaning of the statute governing federal program bribery; (2) the district court's jury instructions concerning honest services fraud accurately stated the law, even though court did not include actual phrase quid pro quo; (3) the district court did not err in its conspiracy instruction; (4) the evidence was sufficient to establish that defendant judge knew or intended that the mails would be used to further a fraudulent scheme; (5) defendants were properly joined; (6) the district court did not abuse its discretion in denying defendants' motions to sever; (7) in granting defendant's motion for a continuance, the district court made a sufficient ends-of-justice finding on the record; (8) defendant who consented to the continuance was precluded from later challenging it on Speedy Trial Act grounds; (9) the district court did not err in denying defendant's untimely motion for dismissal due to a defect in the indictment; (10) defendant was not prejudiced by error in indictment or grand jury testimony; (11) the district court did not commit reversible error in excusing potential juror based on her religious belief; (12) the district court did not abuse its discretion in excluding, as irrelevant, testimony concerning defendant attorney's history of loan guarantees; (13) the district court did not abuse its discretion by admitting into evidence the transcript of defendant's divorce proceedings; (14) the district court did not abuse its discretion by allowing the use of summary charts or the testimony of a summary witness; (15) the district court did not err in awarding one party to defendant attorney's state-court litigation $1.5 million in restitution; (16) defendants' double jeopardy/collateral estoppel claims were either waived or forfeited; and (17) even if defendants' double jeopardy/collateral estoppel claims were merely forfeited, the district court did not commit plain error with respect to those claims. Affirmed in part, vacated in part, and remanded for resentencing. [1] Judges 227 11(2)

227 Judges 227I Appointment, Qualification, and Tenure 227k11 Removal or Discipline 227k11(2) k. Standards, canons, or codes of conduct, in general. Most Cited Cases Under Mississippi law, state judges were required to file an annual statement of economic interest disclosing any private sources of income in excess of $2,500.00, including cash and loan forgiveness. [4] Bribery 63 1(2)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(2) k. Bribery of jurors and particular classes of officers. Most Cited Cases For an individual to be an agent, for purposes of the statute governing federal program bribery, he must be authorized to act on behalf of the agency with respect to its funds. 18 U.S.C.A. 666, 666(d)(1). [5] Bribery 63 1(2)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(2) k. Bribery of jurors and particular classes of officers. Most Cited Cases Although the conduct prohibited by the statute governing federal program bribery need not actually affect the federal funds received by the agency, there must be some nexus between the criminal conduct and the agency receiving federal assistance. 18 U.S.C.A. 666. [6] Bribery 63 1(2)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(2) k. Bribery of jurors and particular classes of officers. Most Cited Cases Under the statute governing federal program bribery, the funds in question need not be purely federal, nor must the conduct in question have a direct effect on federal funds; rather, the statute possibly can reach misuse of virtually all funds of an agency that administers the federal program in question. 18 U.S.C.A. 666. [7] Bribery 63 1(2)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(2) k. Bribery of jurors and particular classes of officers. Most Cited Cases Even assuming arguendo that state judges were agents of the Mississippi Administrative Office of the Courts (AOC), insofar as they performed functions that involved AOC funds, their decisions as presiding judges in two lawsuits involving trial attorney later implicated in bribery schemes were not made in connection with any business, transaction, or series of transactions of the AOC, within the meaning of the statute governing federal program bribery; purpose of the AOC was to assist in the efficient administration of the nonjudicial business of the state courts, whereas judges' role in presiding over the lawsuits involved the judicial business of the state courts, and so the bribes that the judges accepted in conjunction with their handling of the cases had no connection with the business of the AOC. 18 U.S.C.A. 666, 666(a)(1)(B), (a)(2). [8] Bribery 63 1(2)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(2) k. Bribery of jurors and particular classes of officers. Most Cited Cases Statute governing federal program bribery was intended to protect the integrity of federal funds, and not as a general anti-corruption statute. 18 U.S.C.A. 666. [10] Criminal Law 110 1130(5)

110 Criminal Law 110XXIV Review 110XXIV(I) Briefs 110k1130 In General 110k1130(5) k. Points and authorities. Most Cited Cases Although a party generally waives any argument that it fails to brief on appeal, an exception to this rule exists, whereby the Court of Appeals will consider a point of error not raised on appeal when it is necessary to prevent a miscarriage of justice. F.R.A.P.Rule 28(a)(9)(A), 28 U.S.C.A.

[11] Criminal Law 110

1048

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)2 Exceptions 110k1048 k. Necessity of exceptions in general. Most Cited Cases In exceptional circumstances, especially in criminal cases, appellate courts, in the public interest, may, of their own motion, notice errors to which no exception has been taken, if the errors are obvious, or if they otherwise seriously affect the fairness, integrity, or public reputation of judicial proceedings. [12] Criminal Law 110 1030(1)

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1030 Necessity of Objections in General 110k1030(1) k. In general. Most Cited Cases Criminal Law 110 1030(3)

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1030 Necessity of Objections in General 110k1030(3) k. Criminal liability. Most Cited Cases Although, generally, the plain error rule is invoked when an appellant raises an issue on appeal that he failed to preserve in the court below, it may have equal force in the inverse situation, when appellants raised the issue below but not on appeal, where enforcement of the waiver doctrine would result in a conviction that is unsupported by the plain language of the statute itself. [14] Telecommunications 372 1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(10) k. Honest services fraud. Most Cited Cases In order to convict for the federal crime of depriving a state of the honest services of one of its officials, federal prosecutor must prove that conduct of a state official breached a duty respecting the provision of services owed to the official's employer under state law. 18 U.S.C.A. 1346. [15] Telecommunications 372 1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud

372k1014(10) k. Honest services fraud. Most Cited Cases In order to constitute the federal crime of depriving a state of the honest services of one of its officials, the state statute setting forth the duty that the official breached must concern something close to bribery; the mere violation of a gratuity statute will not suffice. 18 U.S.C.A. 1346. [16] Telecommunications 372 1021

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1015 Prosecutions 372k1021 k. Instructions. Most Cited Cases At trial of attorney and two former state judges charged with honest services fraud in connection with two separate prolonged bribery schemes, jury instructions accurately stated the law, even though district court did not include phrase quid pro quo; court required government to prove that defendants entered into corrupt agreement for attorney to provide judge with things of value with intent to influence judge's action or judgment on any matter which may then have been or was thereafter pending subject to judge's action or judgment, court instructed jury to consider whether judges' rulings were accompanied by honest belief in the law and facts of a case rather than a corrupt purpose, government was not required to prove that defendants had identified a particular case that would be influenced, only that they had specific intent to give or receive something of value in exchange for an official act to be performed in the future, and this sufficiently conveyed essential idea of give-and-take. 18 U.S.C.A. 1346; Miss.Code 1972, 97-11-11. [17] Conspiracy 91 48.2(2)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k48 Trial 91k48.2 Instructions 91k48.2(2) k. Particular conspiracies. Most Cited Cases At trial of attorney and two former state judges charged with numerous offenses in connection with two separate bribery schemes, district court did not err in its conspiracy instruction; court specifically distinguished between the conspiracy involving attorney and first judge, which was charged in count one, and conspiracy involving attorney and second judge, which was charged in count two, jury charge closely tracked the elements of conspiracy as set forth in the Fifth Circuit's Pattern Jury Instructions, and court instructed jury to consider each count and each defendant separately in accordance with the Pattern Jury Instructions on cases involving multiple defendants and multiple counts. [18] Criminal Law 110 805(1)

110 Criminal Law 110XX Trial 110XX(G) Instructions: Necessity, Requisites, and Sufficiency 110k805 Form and Language in General 110k805(1) k. In general. Most Cited Cases District court does not err by giving a charge that tracks the Fifth Circuit's Pattern Jury Instructions and that is a correct statement of the law. [19] Postal Service 306 35(2)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(2) k. Nature and elements of offense in general. Most Cited Cases Postal Service 306 35(20)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(20) k. Persons liable. Most Cited Cases Mail fraud statute applies to anyone who knowingly causes to be delivered by mail anything for the purpose of executing any scheme or artifice to defraud. 18 U.S.C.A. 1341. [20] Postal Service 306 35(6)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(6) k. Intent that mails be used as part of scheme. Most Cited Cases Under the mail fraud statute, the government is not required to prove that the defendant specifically intended for the mails to be used in furtherance of the alleged fraudulent scheme; rather, the test to determine whether the defendant caused the mails to be used is whether the use was reasonably foreseeable. 18 U.S.C.A. 1341. [21] Postal Service 306 49(11)

306 Postal Service 306III Offenses Against Postal Laws 306k49 Evidence 306k49(8) Weight and Sufficiency 306k49(11) k. Use of mails to defraud. Most Cited Cases There was sufficient evidence that state judge involved in bribery scheme with attorney knew or intended that the mails would be used to further a fraudulent scheme, to support judge's conviction for mail fraud; evidence indicated that state rules of civil procedure authorized circuit clerk to issue summons, along with copy of complaint filed on behalf of attorney's client, to opposing party by mail, counsel for opposing party followed the very common practice of sending subpoena duces tecum by mail with return receipt requested , and the appellate court found it difficult to believe that judge, who was a trial judge, would have been unaware that litigants commonly use the mail to serve responsive motions on one another. 18 U.S.C.A. 1341; Miss.Rules Civ.Proc., Rules 4(c)(3), 45. [22] Criminal Law 110 1139

110 Criminal Law 110XXIV Review 110XXIV(L) Scope of Review in General 110XXIV(L)13 Review De Novo 110k1139 k. In general. Most Cited Cases Criminal Law 110 110 Criminal Law 1166(6)

110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1166 Preliminary Proceedings 110k1166(6) k. Joinder or severance of counts or codefendants. Most Cited Cases Claim of misjoinder is a matter of law that the Court of Appeals reviews de novo, but the court may affirm if it finds that misjoinder occurred but that the error was harmless. [23] Criminal Law 110 622.6(4)

110 Criminal Law 110XX Trial 110XX(A) Preliminary Proceedings 110k622 Joint or Separate Trials of Codefendants 110k622.6 In General 110k622.6(4) k. Conspiracy. Most Cited Cases Defendants charged with two separate, albeit similar, conspiracies having one common participant are not, without more, properly joined. Fed.Rules Cr.Proc.Rule 8(b), 18 U.S.C.A. [24] Criminal Law 110 622.7(2)

110 Criminal Law 110XX Trial 110XX(A) Preliminary Proceedings 110k622 Joint or Separate Trials of Codefendants 110k622.7 Grounds for Severance or Joinder 110k622.7(2) k. Relatedness of offenses. Most Cited Cases When otherwise separate offenses are charged as predicate acts of a substantive Racketeer Influenced and Corrupt Organizations Act (RICO) count, they may be related to each other in such a way as to satisfy the rule governing joinder of defendants. 18 U.S.C.A. 1961 et seq.; Fed.Rules Cr.Proc.Rule 8(b), 18 U.S.C.A. [25] Criminal Law 110 622.7(2)

110 Criminal Law 110XX Trial 110XX(A) Preliminary Proceedings 110k622 Joint or Separate Trials of Codefendants 110k622.7 Grounds for Severance or Joinder 110k622.7(2) k. Relatedness of offenses. Most Cited Cases Defendants, a trial attorney and two state judges, were properly joined where the judges were charged for their participation in two separate bribery schemes linked only by attorney's involvement in both, and the bribery and wire fraud charges involving the attorneys constituted the predicate acts underlying the substantive Racketeer Influenced and Corrupt Organizations Act (RICO) count brought against attorney. 18 U.S.C.A. 1961 et seq.; Fed.Rules Cr.Proc.Rule 8(b), 18 U.S.C.A. [43] Indictment and Information 210 144.1(2)

210 Indictment and Information 210IX Motion to Dismiss 210k144.1 Grounds 210k144.1(2) k. Grand or petit jury irregularities. Most Cited Cases

Defendant, a state court judge who, together with a trial attorney, allegedly were part of a bribery scheme, was not prejudiced by a factual error in the indictment or in the grand jury testimony concerning the effect of the fiat signed by defendant in a case involving his codefendant, and so dismissal of the indictment was not warranted, where the grand jury was presented with substantial evidence in support of the government's allegations against defendant, and the minor factual error concerning the effect of the fiat was inconsequential. Fed.Rules Cr.Proc.Rule 12(b)(3)(B), 18 U.S.C.A. [50] Criminal Law 110 1166.6

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1166.5 Conduct of Trial in General 110k1166.6 k. In general. Most Cited Cases Non-constitutional trial error is harmless unless it had substantial and injurious effect or influence in determining the jury's verdict. [51] Criminal Law 110 1170(2)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1170 Exclusion of Evidence 110k1170(2) k. Curing error by other evidence of same fact. Most Cited Cases At trial of attorney and two former state judges charged with numerous offenses for their roles in two separate bribery schemes, even assuming the district court abused its discretion in refusing to admit evidence concerning attorney's alleged preexisting professional relationship with the judges, such refusal was harmless, as the evidence on this point was cumulative; the record was replete with witness testimony and arguments by attorney's counsel highlighting attorney's longstanding relationship with both judges. [52] Criminal Law 110 675

110 Criminal Law 110XX Trial 110XX(C) Reception of Evidence 110k675 k. Cumulative evidence in general. Most Cited Cases At trial of attorney and two former state judges charged with numerous offenses for their roles in two separate bribery schemes, the district court did not abuse its discretion in refusing to admit an exhibit indicating that more than half of the contributions to a particular year's election campaigns for Mississippi chancery court and circuit court candidates originated with attorneys; on cross-examination, one judge's attorney elicited testimony from the Executive Director on the Mississippi Commission on Judicial Performance supporting the conclusion that most of the contributions to judicial candidates come from attorneys, and so, to the extent that this information was relevant to attorney's intent, defendants were not prejudiced by the exclusion of the exhibit. [53] Criminal Law 110 675

110 Criminal Law 110XX Trial 110XX(C) Reception of Evidence 110k675 k. Cumulative evidence in general. Most Cited Cases

At trial of attorney and two former state judges charged with numerous offenses for their roles in two separate bribery schemes, the district court did not abuse its discretion in excluding evidence that attorney was an expert in Jones Act and insurance litigation; to the extent that it was relevant, counsel for attorney made this point when he elicited testimony from opposing counsel in attorney's state-court case indicating that attorney had a very successful practice and was a very skilled and competent trial lawyer. 46 U.S.C.A. 30104 et seq. [54] Criminal Law 110 675

110 Criminal Law 110XX Trial 110XX(C) Reception of Evidence 110k675 k. Cumulative evidence in general. Most Cited Cases At trial of attorney and two former state judges charged with numerous offenses for their roles in two separate bribery schemes involving, inter alia, attorney's guarantees of judges' loans, the district court did not abuse its discretion in excluding, as irrelevant, testimony concerning attorney's history of loan guarantees; even if it were assumed that the excluded loan was relevant to attorney's intent, bank's loan officer testified that attorney had guaranteed a number of loans for others, including employees and members of a particular law firm, defense counsel was permitted to reiterate this point in his closing argument, and so the excluded testimony would have been cumulative, and defendants were not harmed by its exclusion. [55] Criminal Law 110 338(1)

110 Criminal Law 110XVII Evidence 110XVII(D) Facts in Issue and Relevance 110k338 Relevancy in General 110k338(1) k. In general. Most Cited Cases Evidence of noncriminal conduct to negate the inference of criminal conduct is generally irrelevant. [56] Criminal Law 110 476.6

110 Criminal Law 110XVII Evidence 110XVII(R) Opinion Evidence 110k468 Subjects of Expert Testimony 110k476.6 k. Miscellaneous matters. Most Cited Cases Criminal Law 110 629.5(7)

110 Criminal Law 110XX Trial 110XX(A) Preliminary Proceedings 110k629 List of Witnesses and Disclosure of Other Matters 110k629.5 Effect of Failure to Make Proper Disclosure 110k629.5(7) k. Expert witnesses. Most Cited Cases At trial of attorney and two former state judges charged with numerous offenses for their roles in two separate bribery schemes, the district court did not abuse its discretion in excluding the testimony of defendants' expert witness, who would have testified that the judges decided each of two cases involving defendant attorney correctly; expert's testimony would not have assisted the jury and was founded on unreliable methodology, and expert's opinion regarding the correctness of judge's rulings constituted a new matter that was not disclosed in his expert report. Fed.Rules Cr.Proc.Rule 16(b)(1)(C), 18 U.S.C.A.

[60] Criminal Law 110

662.7

110 Criminal Law 110XX Trial 110XX(C) Reception of Evidence 110k662 Right of Accused to Confront Witnesses 110k662.7 k. Cross-examination and impeachment. Most Cited Cases Insofar as the confrontation clause is concerned, trial judges retain wide latitude to impose reasonable limits on defense counsel's cross-examination of a prosecution witness for bias based on concerns about, among other things, harassment, prejudice, confusion of the issues, the witness' safety, or interrogation that is repetitive or only marginally relevant. U.S.C.A. Const.Amend. 6. [65] Criminal Law 110 429(2)

110 Criminal Law 110XVII Evidence 110XVII(P) Documentary Evidence 110k429 Public or Official Acts, Proceedings, Records, and Certificates 110k429(2) k. Judicial acts, proceedings, and records. Most Cited Cases At trial of attorney and two former state judges charged with numerous offenses for their roles in two separate bribery schemes, the district court did not abuse its discretion by admitting into evidence the transcript of judge's divorce proceedings, in which judge testified falsely that he was the only guarantor on a $40,000.00 campaign loan and that he had not contributed to the purchase of the home he shared with his then-girlfriend; **this evidence was relevant because it helped the government establish judge's culpable mental state and the pattern of deception surrounding the loans he accepted from attorney. [67] Criminal Law 110 400(1)

110 Criminal Law 110XVII Evidence 110XVII(J) Best and Secondary Evidence 110k399 Record or Other Writing as Best Evidence 110k400 In General 110k400(1) k. In general. Most Cited Cases At trial of attorney and two former state judges charged with numerous offenses for their roles in two separate bribery schemes, the district court did not abuse its discretion by allowing the use of summary charts or the testimony of a summary witness; the testimony and the charts were neither cumulative nor prejudicial, **the information presented to the jury synthesized bank records and checks that were properly admitted, in order to explain the voluminous records supporting the transfer of money from attorney to both judges, defendants were permitted to cross-examine the summary witness fully, there was no contention that the charts were incorrect or misleading, and the district court properly instructed the jury as to the limited purposes of the summary charts, minimizing any risk of prejudice. Fed.Rules Evid.Rule 1006, 28 U.S.C.A. Before GARWOOD, BENAVIDES and HAYNES, Circuit Judges. GARWOOD, Circuit Judge: Defendants-appellants, attorney Paul Minor and former Mississippi state judges John Whitfield and Walter (Wes) Teel, were charged with participating in two separate bribery schemes in which Minor arranged, guaranteed, and eventually paid off loans for Whitfield and Teel, allegedly in order to corruptly influence the outcome of cases Minor filed in their courts. A jury found all three appellants guilty of conspiracy in violation of 18 U.S.C. 371; mail, wire, and honest services fraud in violation of 18 U.S.C. 1341, 1343, 1346, *336 and 2; and federal program bribery in violation of 18 U.S.C. 666. Additionally, Minor was convicted of racketeering in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962.

Appellants appeal their convictions and sentences on numerous grounds. For the following reasons, we VACATE all the convictions related to federal program bribery under 18 U.S.C. 666, including the conviction of Minor and Teel for conspiracy to violate section 666. We AFFIRM all other convictions, and we REMAND for resentencing as to all appellants in accordance with this opinion. FACTS This case concerns two separate bribery schemes, at the center of which lay Paul Minor, formerly a successful trial attorney in Mississippi. Minor had a professional, if not personal, relationship with appellants John Whitfield and Wes Teel prior to the events giving rise to this prosecution. Acting as guarantor, Minor arranged for Peoples Bank in Biloxi, Mississippi to loan Whitfield and Teel substantial amounts of money, purportedly in connection with each of their campaigns for state judicial office. Although the structure of the loan transactions was similar, neither Whitfield nor Teel had any knowledge of Minor's dealings with the other. As the two bribery schemes were thus distinct, we relate the facts surrounding each separately. I. Whitfield Scheme [1] In the fall of 1998, Whitfield was in the midst of a reelection campaign to retain his position as circuit judge on the Second Circuit Court of Mississippi. Minor arranged for The Peoples Bank in Biloxi, Mississippi, with which he had substantial deposits, to grant Whitfield two loans with Minor serving as guarantor. Peoples Bank sought no collateral to secure the loans, but rather, in the words of the loan officer that handled the transactions, relied simply on the strength of Mr. Minor's financial ability to ensure repayment. On October 12, 1998, Peoples Bank loaned Whitfield $40,000 for campaign funds, which he deposited into his campaign account. Later, after Whitfield's successful reelection, Peoples Bank granted Whitfield another loan for $100,000 on November 19, 1998, the purpose of which was described in the loan documents as a down payment on home. Whitfield deposited the proceeds of this loan in the bank account of his then-girlfriend, who used the majority of the money to place a down-payment on a house for the two of them. Whitfield and his girlfriend spent the remainder of the loan proceeds to purchase home furnishings and to pay credit card bills.FN1 **Whitfield never listed either loan on his campaign disclosure forms, nor did he report subsequent loan repayments made by Minor on the annual statements of economic interest that he was required to file as a judge.FN2 FN1. In January of 1999, Whitfield perjured himself while testifying in a divorce proceeding involving his then-wife, claiming that he was the sole guarantor on the $40,000 loan and that he did not contribute any money towards the purchase of the home shared by him and his girlfriend. FN2. Under Mississippi law, Whitfield and Teel were required to file an annual statement of economic interest disclosing any private sources of income in excess of $2,500, including cash and loan forgiveness. At trial, the Government contended that, as Whitfield had little or no money at the time, he accepted the loans never intending to pay them back himself. Indeed, by the time that the loans were eventually repaid at the insistence of bank examiners *337 in 2002, Whitfield had only contributed a total of approximately $13,200 towards repayment of his loans and the interest thereon, $5,000 of which came from the campaign account originally funded by the $40,000 loan and approximately $5,650 of which was only made possible by a timely and unexplained cash deposit made to his personal checking account after his check to Peoples Bank had bounced. **In contrast, over the nearly four-year period in which the loans were outstanding, Minor, either directly or indirectly, paid a total of approximately $178,600 in principal and interest on the loans. At Minor's request, the loans were structured as renewable short-term balloon loans, whereby every six months the accumulated interest became due and the loan principal would either have to be renewed or paid in full. Under the Government's theory of the case, this arrangement allowed Minor to keep Whitfield on a string while Minor held the bank at bay. Every six months when the loans became due, bank officials would attempt to notify Whitfield by mail and telephone, yet Whitfield was unresponsive and largely ignored his obligation. As a result, the bank would be forced to contact Minor, who, instead of paying directly by check, would cash a check and renew the loans by making the necessary payments in cash.FN3 **Whitfield would occasionally make small payments with his own money, but, as noted above, the vast majority of the payments were made by Minor.

FN3. On the stub of one such check for $7,000, Minor's office manager noted its purpose as loan interest for J.W. Meanwhile, shortly after Minor arranged the loans for Whitfield in the fall of 1998, Minor's law firm filed a potentially lucrative personal injury suit, Marks v. Diamond Offshore Management Co.,FN4 in the Second Circuit Court. Marks was injured while working on an off-shore oil rig, and he hired Minor & Associates on a contingent-fee basis to represent him in the ensuing Jones Act suit against his employer. Although plaintiffs seeking personal injury damages generally prefer to try their cases before a jury, Minor's firm made the unusual request for a bench trial. Normally, the Second Circuit Court followed a procedure whereby cases were randomly assigned among the four Second Circuit judges after the defendant had filed an answer. However, immediately upon filing their complaint, Minor's firm circumvented this process by filing a motion with Judge Whitfield seeking an expedited hearing to set a trial date, purportedly so that Marks could obtain funds to cover his medical expenses as soon as possible. On February 10, 1999, **twelve days before Diamond Offshore had even received a summons (and thus had yet to file an answer triggering the random assignment procedure), Whitfield issued a Fiat requiring the parties to appear before him in a hearing on the motion to set a trial date. At the hearing Whitfield set the case for trial in his own court, thereby effectively assigning the case to himself. FN4. 2000 WL 35444564 (Miss.Cir. Sep. 25, 2000). Diamond Offshore's attorneys became suspicious and investigated for a potential relationship between Whitfield and Minor & Associates. **However, they discovered no connection (in part because Whitfield's campaign disclosure forms revealed none), nor did Whitfield inform the parties of his financial arrangement with Minor. The case was tried before Whitfield June 20-22, 2000. On July 12, 2000, Whitfield ruled in favor of Marks and awarded him $3.75 million in damages. Whitfield's loans matured again soon thereafter, and, *338 unbeknownst to Diamond Offshore's counsel, on September 8, 2000, Minor made a $6,900 cash payment to renew them. On October 3, 2000, in response to Diamond Offshore's post-trial motions, Whitfield reduced the award and issued a final judgment in Marks' favor for $3.64 million, $3 million of which was attributable to noneconomic soft damages (pain, suffering, loss of enjoyment of life). Diamond Offshore later appealed to the Mississippi Supreme Court, which, sitting en banc, affirmed the finding of liability. Diamond Offshore Mgmt. Co. v. Marks, 2003 Miss. LEXIS 88, at *36, 2003 WL 556438 (Miss. Feb. 27, 2003), withdrawn, 2007 Miss. LEXIS 237 (Miss. Apr. 26, 2007). However, after conceding that the trial court had ample material in the record to justify a high award of damages, the court reduced the compensatory damages to $1 million (leaving a total award of $1.64 million), which it deemed to be within the range of what we consider acceptable for [Marks'] pain, suffering, and loss of enjoyment of life. Id. at *36-37, 2003 WL 556438.FN5 FN5. On April 19, 2007, the Mississippi Supreme Court requested sua sponte that the parties submit a copy of the indictment and jury verdict from the district court proceedings in the instant case. Diamond Offshore Mgmt. Co. v. Marks, 2007 Miss. LEXIS 243, at *1 (Miss. Apr. 19, 2007). One week later, the court granted Diamond Offshore's motion for rehearing, withdrew its original opinion, vacated Whitfield's judgment, and remanded the case for a new trial on all issues. Diamond Offshore Mgmt. Co. v. Marks, 2007 Miss. LEXIS 237, at *1 (Miss. Apr. 26, 2007). Soon after the close of the Marks trial, Whitfield resigned from the bench, and Minor helped him obtain a job at a prominent law firm in Gulfport, Mississippi. At that point, Minor deviated from his standard method of payment on the loans by funneling money through Whitfield rather than paying the bank himself. In May and December of 2001, Minor wrote two checks to Whitfield for $15,000 and $10,000 respectively. The checks were accompanied by cover letters attempting to conceal their true purpose, which was revealed when Whitfield issued checks to Peoples Bank in the exact same amounts as soon as Minor's checks cleared.FN6 Afterward, Minor returned to his practice of making cash payments directly to the bank. FN6. The first check was purportedly an advance on an unresolved lawsuit involving Whitfield's mother that was being handled by Minor's firm, while the second check was purportedly payment for a position paper on a particular matter of law that Whitfield apparently never wrote. Eventually, in July of 2002, federal and state bank examiners conducting a routine audit of Peoples Bank discovered and criticized the loans, which by that point had been consolidated into a single obligation. As a result, the bank requested that the debt be satisfied in full. Minor agreed, and instead of paying it off himself

directly, he enlisted the help of Leonard Radlauer, an attorney from New Orleans, to act as a strawman. Radlauer, who was a friend of Minor's from law school, was also an acquaintance of Whitfield and had contributed to his campaign when Whitfield first ran for office. Minor asked Radlauer if he would pay off the Whitfield loan in order to keep it out of the newspapers and assured Radlauer that he was not doing anything funny. Radlauer agreed, and on August 27, 2002, Minor wired $125,000 to Radlauer's account in New Orleans. That same day, Radlauer wired $118,652.42 to Peoples Bank to pay off Whitfield's loan. Minor insisted that Radlauer keep the difference, but Radlauer eventually returned the money to Minor.FN7 FN7. It appears that Radlauer only returned the money after he later found himself under investigation by the FBI for his role in the transaction. *339 Some three weeks later, Minor traveled to New Orleans and approached Radlauer in a local bar appearing panic stricken and very nervous. Minor informed Radlauer that the Federal Bureau of Investigation (FBI) might want to talk with him and assured him that Whitfield would pay him back. When Radlauer protested that there was nothing to repay, Minor suggested that he misrepresent the true nature of the transaction to the FBI so as to conceal Minor's role. In the meantime, a FedEx envelope from Whitfield's law firm containing a falsified Whitfield promissory note to Radlauer for$117,013.21 had arrived at Radlauer's office. The note was back-dated to August 26, 2002, the day before Radlauer had made the wire transfer to Peoples Bank. The envelope also contained a handwritten note from Whitfield thanking Radlauer for his assistance and kindness in paying off the loan and assuring Radlauer that he would repay the entire amount plus interest. Realizing that he had been drawn into a shady transaction, Radlauer immediately returned the false promissory note to Whitfield, and, in a letter sent to both Whitfield and Minor, insisted that he be kept out of any improper arrangements in the future. Neither man responded. By the following summer, Whitfield and Minor were under indictment. II. Teel Scheme In October 1998, at the same time that Whitfield was seeking reelection, Wes Teel was running for judicial office for the first time and facing a run-off election for a seat on the Eighth Chancery Court District of Mississippi. Just as he had done for Whitfield, Minor offered to guarantee a loan from Peoples Bank, in this case a line of credit up to $25,000. Teel accepted, and the loan closed on November 12, 1998. Teel withdrew $24,500, which he deposited in his campaign account, and with the help of those funds he won the election. **Teel did not report the loan on his campaign disclosure forms. FN8 FN8. Teel did report the $7,000 in cash contributions that Minor made to his campaign in early November of 1998. Again, at Minor's request, the loan was structured so as to require a balloon payment or renewal every six months. As was the case with Whitfield, Teel ignored letters and phone calls from the bank when his loan matured six months later, so the bank contacted Minor. However, unlike Whitfield, Teel never made any payments at all on the loan with his own funds. On June 28, 1999, after having cashed a check a few days earlier, Minor paid approximately $1,200 cash to renew Teel's loan, just minutes before making cash payments on both of Whitfield's loans at the Peoples Bank branch in Biloxi. When Teel's loan became due again in February of 2000, Minor enlisted the help of his friend and fellow attorney Richard (Dickie) Scruggs to act as intermediary in paying off the loan in full. In exchange for signing a 30-day promissory note, Scruggs gave Teel a check for $27,500 on February 23, 2000, which Teel used to pay off his loan. Minor then reimbursed Scruggs by check on March 9, 2000, thereby satisfying Teel's obligation to Scruggs.FN9 Teel never contacted Scruggs regarding the promissory note again. **Additionally, Teel failed to include the $27,500 check in his annual statement of economic interest for that year. FN9. Sometime thereafter, Minor asked Scruggs to take his place as guarantor on one or both of Whitfield's loans, but Scruggs refused. In the meantime, Minor & Associates was in the early stages of litigating Peoples Bank v. United States Fidelity and *340 Guaranty (USF&G), which it had filed in the Eighth Chancery Court District the summer before Teel's election. Minor's firm represented Peoples Bank (the same bank that had made the loans to Whitfield and Teel) in a suit against its insurer, USF&G. Peoples Bank claimed that USF&G had a duty to defend it against a particular class of lawsuits being brought by its customers, but USF&G denied coverage

under the bank's insurance policy. **Despite the fact that this was a complex insurance dispute, Minor's firm had elected to try the case without a jury in chancery court, which is an equity court that generally handles matters such as divorce, child custody, juvenile delinquency, and property disputes.FN10 FN10. Judge Randall, who was originally assigned to the case, testified that he had never seen such a dispute filed in chancery court and that it was very unusual. Immediately upon filing the complaint, Minor again saw to it that his own judge of choice was assigned to the case by filing a motion for an expedited hearing to schedule a trial before Judge J.N. Randall, who was appointed to the bench by the Governor largely at Minor's recommendation. Just as Whitfield had done in the Marks case, Randall issued a Fiat setting a hearing in his court and effectively assumed control of the case. However, Randall did not prove to be as cooperative as Minor would have liked. When USF&G moved to transfer the case to Circuit Court, Randall, who had never handled an insurance dispute before, granted the motion. Minor got very upset, and, in an ex parte conversation, convinced Randall to take the case back. In discovery, Minor sought access to all of USF&G's documents relating to Peoples Bank's claim, but USF&G objected on the basis of attorney-client privilege and work product. Already overloaded with work himself, Randall assigned the discovery dispute to Teel, who, on October 16, 2000, rejected USF&G's privilege claims and ordered all documents disclosed to Peoples Bank. In response, USF&G filed a motion to reconsider with Randall, and Randall granted the motion and set aside Teel's ruling. Minor was extremely upset and immediately called upon Randall in his chambers for another ex parte meeting. Minor upbraided Randall and convinced him to reassign the entire case to Teel, and Randall obliged.FN11 FN11. Finding the circumstances surrounding the filing of the case in chancery court and the reassignment of the case suspicious, USF&G's attorneys investigated for a connection between Minor & Associates and Teel but found none. After Teel took control of the case, USF&G's attorneys moved to stay the proceedings pending the outcome of USF&G v. Omnibank, which was then pending before the Mississippi Supreme Court. See 812 So.2d 196 (Miss.2002). In Omnibank, another bank had sued USF&G based on the same contractual provisions at issue in Peoples Bank, and the Mississippi Supreme Court's decision would likely have resolved the dispositive issues in Peoples Bank as well. The federal district court in Omnibank had granted summary judgment in favor of the bank, finding that USF&G did have a duty to defend. See Ramsay v. Omnibank, 215 F.3d 502, 504 (5th Cir.2000). On appeal, this court had certified the duty-to-defend question to the Mississippi Supreme Court. See id. On July 30, 2001, Teel concluded that the motion to stay was well taken and agreed to stay the case, but only for a month, until September 1, 2001. Teel did not reschedule the trial, which was set for the following December. Therefore, when the Mississippi Supreme Court still had *341 not reached a decision one month later, USF&G was faced with an imminent trial and the possibility of significant punitive damages. On December 18, 2001, Teel granted summary judgment for Peoples Bank on the duty-to-defend issue, reserving the issues of bad faith and punitive damages for trial. Fearful of a significant punitive damages award, USF&G agreed to enter into settlement talks. Teel served as the mediator, engaging in private discussions with each party in the attempt to reach an agreement. After these conferences proved unproductive, however, Teel took the unusual step of bringing the parties together to make an announcement. Teel declared that he was offended by USF&G's failure to defend Peoples Bank and that, in his determination, $1.5 million (five times the amount of actual damages in the case) was an appropriate settlement figure. On December 21, 2001, fearing a worse outcome if they tried the punitive damages issue before Teel, USF&G agreed to the $1.5 million settlement. Just over three months later, the Mississippi Supreme Court issued its opinion in Omnibank, determining that USF&G had no duty to defend under the insurance policy. See 812 So.2d at 201-02. **Meanwhile, unbeknownst to USF&G's attorneys, Minor had been providing other financial assistance to Teel (in addition to the loan transactions that had been completed the year before). In October of 2001 (after the one month stay had lapsed and the parties were preparing for trial in Peoples Bank), Teel, along with two other chancellors from the Eighth Chancery Court District, was under investigation by the Mississippi Administrative Office of the Courts-in Teel's case for allegedly keeping reimbursement money for himself rather than paying office-supply vendors. Minor held several strategy meetings with the judges and hired a public relations firm to

help with media exposure. On or about October 31, 2001, Minor flew Teel and the other judges in his private plane to Jackson for a meeting in these matters that Minor had personally arranged with the Mississippi Attorney General. Finally, in June of 2002, after Teel was acquitted of the criminal charges, Minor sent Teel's attorney a check for $10,000 to cover part of the defense costs, for which he received a thank-you note from Teel. PROCEDURAL HISTORY On July 25, 2003, a federal grand jury sitting in the Southern District of Mississippi returned a sixteencount indictment against defendants Minor, Whitfield, Teel, and two others, Mississippi Supreme Court Justice Oliver E. Diaz and his former wife, Jennifer Diaz. First and Second Superseding indictments were returned on February 20, 2004 and October 19, 2004, respectively, and Jennifer Diaz was eventually dismissed from the case in 2005. Following trial on the Second Superseding Indictment in the summer of 2005, the jury returned its verdict August 12, 2005. Justice Diaz was acquitted on all counts, Minor was acquitted on six counts, and Whitfield was acquitted on one count. The district court declared a mistrial on all other counts submitted to the jury, on none of which did the jury return a verdict. FN12 FN12. No verdict was returned in 2005 on any of the counts involving Teel. One of the six counts on which Minor was acquitted in the 2005 trial (Count four) was a 1341 charge based on Whitfield's September 20, 2002 transmittal of his August 26, 2002 $117,013.21 note to Radlauer (this transmittal was not alleged as a 1341 count against Minor in the instant 2007 trial). Whitfield was also charged in that Count Five and the 2005 jury did not return any verdict as to Whitfield on that count. The other five counts in the Second Superseding Indictment of which Minor was acquitted each alleged offenses involving Minor and Diaz only. The sole count in the Second Superseding Indictment of which Whitfield was acquitted in the 2005 trial was Count Five, a 1343 wire fraud count based on Radlauer's August 27, 2002 wire transfer of $118,652.42 to Peoples Bank in Biloxi (this transmittal was not alleged as a 1343 count against Whitfield in the instant 2007 trial). Minor was also charged in that Count Five and the 2005 jury did not return any verdict as to Minor on that count. The counts (other than those involving Diaz or Teel) on which the jury did not return a verdict in 2005 included: Count One, charging RICO against Minor, predicate acts including bribery in $40,000 and in $100,000 loans to Whitfield; Count Two charging mail fraud against Minor and Whitfield as to the service of summons in the Marks v. Diamond Offshore case; Count Three same as Count Two except related to a subpoena in the Marks case; Count Four (no verdict as to Whitfield); Count Five (no verdict as to Minor); Count Twenty-two (Whitfield accepting a bribe from Minor in the Marks case, contrary to 666); Count Twelve (Minor bribe of Whitfield in the Marks case contrary to 666). *342 On December 6, 2005, a fourteen-count Third Superseding Indictment was returned against defendants Minor, Whitfield, and Teel. Count One charged Minor and Whitfield with conspiracy to commit various offenses against the United States under 18 U.S.C. 371, including mail, wire, and honest services fraud in violation of 18 U.S.C. 1341, 1343, 1346, and 2 and federal program bribery in violation of 18 U.S.C. 666. Count Two charged Minor and Teel with conspiracy to violate the same statutes. Count Three charged Minor with racketeering in violation of RICO, 18 U.S.C. 1962, **the predicate acts being bribery and wire fraud. **Counts Four through Seven charged Minor and Whitfield with devising a scheme to defraud the State of Mississippi of its intangible right to honest services through mail fraud, and Count 8 charged Minor with devising a scheme to defraud the State of Mississippi of its intangible right to honest services through wire fraud. Counts Nine and Ten charged Minor and Teel with devising a scheme to defraud the State of Mississippi of its intangible right to honest services through mail fraud. Count Eleven charged Whitfield with accepting bribes while acting as an agent of a state agency receiving federal funds in violation of 18 U.S.C. 666(a)(1) (B), and Count Twelve charged Minor with offering those bribes in violation of 18 U.S.C. 666(a)(2). Finally, under those same statutes, Count Thirteen charged Teel with accepting bribes while acting as an agent of a state agency receiving federal funds, and Count Fourteen charged Minor with offering those bribes. None of the defendants testified at trial. On April 2, 2007, the jury found appellants guilty on all charges. In regard to Count Two, the jury found that the Government had proved that the Minor and Teel had conspired to commit federal program bribery under 18 U.S.C. 666, but not mail, wire, and honest services fraud under 18 U.S.C. 1341, 1343, 1346, and

2. In regard to the predicate acts underlying the Count Three RICO charges against Minor, the jury found that the Government had proved bribery as to the $100,000 loan to Whitfield and wire fraud as to the wire transfer made by Radlauer, but that the Government had failed to prove bribery as to the $40,000 and $24,500 campaign loans that Minor made to Whitfield and Teel respectively. Finally, the jury concluded that, for the purposes of the counts related to federal program bribery under 18 U.S.C. 666, Whitfield and Teel had served as agents of the Mississippi Administrative Office of the Courts (but not of the Harrison County,*343 Mississippi Board of Supervisors general fund). Defendants were sentenced in September 2007. The district court sentenced Minor as follows: sixty months as to Counts One, Two, Four, Five, Six, Eight, Nine, and Ten (conspiracy and mail, wire, and honest services fraud); one hundred and thirty-two months as to Count Three (racketeering); and one hundred and twenty months as to Counts Twelve and Fourteen (federal program bribery), with all sentences to run concurrently for a total sentence of one hundred and thirty-two months and three years' supervised release. The district court fined Minor $250,000 per count, for a total of $2.75 million. Finally, the district court ordered Minor, along with Teel, to pay $1.5 million in restitution to USF&G. The district court sentenced Whitfield to sixty months as to Counts One, Four, Five, Six, and Seven (conspiracy and mail, wire, and honest services fraud) and one hundred and ten months as to Count Eleven (federal program bribery), with all sentences to run concurrently for a total sentence of one hundred and ten months and three years' supervised release. Finally, Whitfield was fined $125,000. The district court sentenced Teel to sixty months as to Counts Two, Nine, and Ten (conspiracy and mail, wire, and honest services fraud) and seventy months as to Count Thirteen (federal program bribery), with all sentences to run concurrently for a total sentence of seventy months, and two years' supervised release. Finally, Teel, as stated above, was held jointly and severally liable with Minor on the $1.5 million restitution award to USF&G. Appellants timely filed this appeal, asserting numerous errors on the part of the district court. We address them each in turn below. DISCUSSION I. Federal Program Bribery under 18 U.S.C. 666 Appellants challenge their convictions for federal program bribery under 18 U.S.C. 666. That statute, entitled Theft or bribery concerning programs receiving federal funds, provides in relevant part as follows: (a) Whoever, if the circumstance described in subsection (b) of this section exists(1) being an agent of an organization, or of a State, local, or Indian tribal government, or any agency thereof**** (B) corruptly solicits or demands for the benefit of any person, or accepts or agrees to accept, anything of value from any person, intending to be influenced or rewarded in connection with any business, transaction, or series of transactions of such organization, government, or agency involving any thing of value of $5,000 or more; or (2) corruptly gives, offers, or agrees to give anything of value to any person, with intent to influence or reward an agent of an organization or of a State, local or Indian tribal government, or any agency thereof, in connection with any business, transaction, or series of transactions of such organization, government, or agency involving anything of value of $5,000 or more; shall be fined under this title, imprisoned not more than 10 years, or both. (b) The circumstance referred to in subsection (a) of this section is that the organization, government, or agency receives, in any one year period, benefits in excess of $10,000 under a Federal *344 program involving a grant, contract, subsidy, loan, guarantee, insurance, or other form of Federal assistance.

18 U.S.C. 666(a)-(b) (emphasis added). At trial, the Government claimed that, by virtue of their judicial offices, Whitfield and Teel were agents of the Mississippi **Administrative Office of the Courts (AOC), which is a Mississippi state agency charged with assist[ing] in the efficient administration of the nonjudicial business of the courts of the state. Miss.Code Ann. 9-21-1 (1972).FN13 In the years during which Whitfield and Teel served as judges, the AOC received well over $10,000 in federal funding in connection with four programs related to: (1) improving state youth courts; (2) studying juvenile defense; (3) collecting information on cases involving aliens; and (4) installing modern display systems in the courtrooms. FN13. The Government also asserted that Whitfield and Teel were agents of Harrison County, but the jury ultimately rejected that contention. Before the case was submitted to the jury, appellants filed motions for a judgment of acquittal under FED.R.CRIM.P. 29 on all counts related to section 666.FN14 (SROA Vol. 98 at 4059, Vol. 102 at 4637-38). In their motions, appellants asserted, inter alia, that (1): as judges, Whitfield and Teel were not agents of the AOC; and (2) their judicial rulings in Marks and Peoples Bank were neither transactions of the AOC nor otherwise connected to any business of the AOC. On appeal, appellants argued that there was insufficient evidence for a reasonable jury to find that Whitfield and Teel were agents of the AOC, but they failed to renew their claims that Whitfield and Teel's challenged judicial rulings in the referenced private party lawsuits were not related to the business or transactions of the AOC. Troubled by the failure of the parties to address what we regarded as a fundamental issue in the case, we requested that the parties submit supplemental briefs discussing whether Whitfield and Teel's judicial rulings in Marks and Peoples Bank were made in connection with the transactions or business of the AOC, and the parties have done so. FN14. Appellants also filed motions to dismiss the indictment for failure to state an offense under FED.R.CRIM.P. 12. As the Rule 29 motions are dispositive, we do not consider the Rule 12 motions here. A. Standard of Review [2][3] We review de novo the denial of Rule 29 motion for a judgment of acquittal. United States v. Valle, 538 F.3d 341, 344 (5th Cir.2008). However, where a party fails to raise an issue on appeal, review, if any, is generally for plain error. See United States v. Evans, 848 F.2d 1352, 1359 (5th Cir.1988). B. Were Whitfield and Teel agents of the AOC? [4] Section 666 broadly defines agent as a person authorized to act on behalf of another person or a government and, in the case of an organization or government, includes a servant or employee, and a partner, director, officer, manager, and representative. 18 U.S.C. 666(d)(1). In United States v. Phillips, we held that for an individual to be an agent for the purposes of section 666, he must be authorized to act on behalf of [the agency] with respect to its funds. 219 F.3d 404, 411 (5th Cir.2000). At trial, the Government presented testimony that the AOC handled the finances for the entire Mississippi court system, including payroll, travel expenses, inventory, and budgeting. Each judge was allotted*345 $40,000 annually from the AOC to pay the salaries of chambers staff, including secretaries, paralegals, and law clerks. Although these staff personnel were technically employees of the AOC, in reality the judges maintained independent control over their chambers staff and were responsible for all employment decisions. Additionally, the judges were provided with another $4,000 each year to cover operating expenses and could request reimbursement for travel expenses. [5][6] Appellants contend that they should not be considered agents of the AOC under section 666, because the agency funds under their control were entirely unrelated to and separate from the federal funds received by the AOC. This court has held that [a]lthough the conduct prohibited by section 666 need not actually affect the federal funds received by the agency, there must be some nexus between the criminal conduct and the agency receiving federal assistance. United States v. Moeller, 987 F.2d 1134, 1137 (5th Cir.1993). In Phillips, we observed that the funds in question need not be purely federal, nor must the conduct in question have a direct

effect on federal funds. The statute possibly can reach misuse of virtually all funds of an agency that administers the federal program in question. 219 F.3d at 411 (citing Salinas v. United States, 522 U.S. 52, 118 S.Ct. 469, 473-74, 139 L.Ed.2d 352 (1997)). In Sabri v. United States, the Supreme Court explained why courts have interpreted section 666 broadly in this regard: Money is fungible, bribed officials are untrustworthy stewards of federal funds, and corrupt contractors do not deliver dollar-for-dollar value. Liquidity is not a financial term for nothing; money can be drained off here because a federal grant is pouring in there. 541 U.S. 600, 124 S.Ct. 1941, 1946, 158 L.Ed.2d 891 (2004). Therefore, so long as there is a nexus between the criminal conduct and the agency, see Moeller, 987 F.2d at 1137, the lack of a direct connection between the AOC funds under the judges' control and the federal funds in question does not preclude them from being considered agents of the AOC for the purposes of section 666. In the sense that Whitfield and Teel hired chambers staff that were paid at the expense of the AOC, they were authorized as judges to act on behalf of [the AOC] with respect to its funds. See Phillips, 219 F.3d at 411. Therefore, we will assume, arguendo, that Whitfield and Teel were agents of the AOC, but only in so far as they performed functions that involved AOC funds. See Moeller, 987 F.2d at 1137 (focusing the section 666 agency inquiry on whether the defendants were acting on behalf of the state agency receiving federal funds when they accepted the alleged bribes). C. Were the judicial rulings in Marks and Peoples Bank made in connection with any business, transaction, or series of transactions of the AOC? [7] In order for section 666 to apply, the bribe must be offered or accepted in connection with any business, transaction, or series of transactions of the agency receiving federal funds. 18 U.S.C. 666(a)(1)(B), (2). Thus, the key inquiry on this issue is whether Whitfield and Teel's decisions in Marks and Peoples Bank were connected with the transactions or business of the AOC. [8] Although this court has yet to address the reach of 666 in this particular respect, we note that at least one federal district court has dismissed an indictment brought under similar circumstances. See United States v. Frega, 933 F.Supp. 1536, 1542-43 (S.D.Cal.1996), aff'd in part, rev'd *346 in part on other grounds, 179 F.3d 793 (9th Cir.1999). In Frega, an attorney and two state judges were charged with violating section 666 for a scheme in which the attorney allegedly bribed the judges in exchange for favorable rulings in cases pending in their courts. Id. at 1538. The district court dismissed the section 666 count of the indictment because it failed to allege that federal funds were corruptly administered, were in danger of being corruptly administered, or even could have been corruptly administered. Id. at 1543. As the Frega court observed, 666 was intended to protect the integrity of federal funds, and not as a general anti-corruption statute .... Of course, state judges could be subject to 666 in certain circumstances. For example, if the state court system received federal funding for the purpose of appointing counsel in death penalty habeas proceedings, and a state court judge accepted a bribe in exchange for appointing a particular attorney as habeas counsel, 666 would clearly be implicated, even if the actual funds used to pay counsel were state funds. Id. at 1542-43. The related cases of United States v. Massey, 89 F.3d 1433 (11th Cir.1996), and United States v. Castro, 89 F.3d 1443 (11th Cir.1996), illustrate the point made by the district court in Frega. In those cases, the defendants were convicted under section 666 for their role in a bribery scheme in which state judges accepted kickbacks from attorneys in exchange for appointments as special assistant public defenders, an arrangement which garnered the attorneys (and ultimately the judges) significant fees at the expense of the county (which was a recipient of federal funds, in excess of 90 million a year). Castro, 89 F.3d at 1447-48, 1454; Massey, 89 F.3d at 1436-37. A review of the record in this case makes clear that, insofar as Whitfield and Teel may have been agents of the AOC, their role as such had nothing to do with their capacity as judicial decisionmakers. As stated above, the purpose of the AOC is to assist in the efficient administration of the nonjudicial business of the courts of the state. Miss.Code Ann. 9-21-1 (1972) (emphasis added). As a fundamental matter, Whitfield and Teel's role in presiding over Marks and Peoples Bank involved the judicial business of the Mississippi courts. If Minor had bribed Whitfield or Teel in exchange for their appointment of a friend or family member as a law clerk or secretary, then section 666 might have been implicated in this case. As it stands, however, the bribes that Whitfield and Teel accepted in conjunction with their handling of Marks and Peoples Bank clearly had no connection with any business, transaction, or series of transactions of the AOC. See 18 U.S.C. 666(a)(1)(B),

(2). [9][10][11][12] In its supplemental brief, the Government does not deny that appellants raised this point at trial in their Rule 29 motions for a judgment of acquittal. However, the Government protests that appellants failed to raise this issue on appeal. As a general rule, a party waives any argument that it fails to brief on appeal. See FED. R.APP. P. 28(a)(9)(A); Procter & Gamble Co. v. Amway Corp., 376 F.3d 496, 499 n. 1 (5th Cir.2004). However, this court has recognized an exception to this rule whereby we will consider a point of error not raised on appeal when it is necessary to prevent a miscarriage of justice. United States v. Montemayor, 703 F.2d 109, 114 n. 7 (5th Cir.1983) . Indeed, the Federal Rules of Criminal Procedure grant us the authority to reverse a conviction on the basis of plain error, even though the defendant has not raised the *347 issue on appeal. FED.R.CRIM.P. 52(b) (A plain error that affects substantial rights may be considered even though it was not brought to the court's attention.). As the Supreme Court has observed: In exceptional circumstances, especially in criminal cases, appellate courts, in the public interest, may, of their own motion, notice errors to which no exception has been taken, if the errors are obvious, or if they otherwise seriously affect the fairness, integrity, or public reputation of judicial proceedings. Silber v. United States, 370 U.S. 717, 82 S.Ct. 1287, 1288, 8 L.Ed.2d 798 (1962) (quoting United States v. Atkinson, 297 U.S. 157, 56 S.Ct. 391, 392, 80 L.Ed. 555 (1936)). In Silber the Court reversed a conviction on an issue that it recognized was not presented to the Court of Appeals and was not briefed or argued in this Court. Id. Similarly, in United States v. Musquiz, 445 F.2d 963, 966 (5th Cir.1971), we reversed a conviction for insufficient evidence on a basis not urged below or on appeal, stating We notice this error on our own motion, as we think we are required to do when the error is so obvious that failure to notice it would seriously affect the fairness, integrity, or public reputation of judicial proceedings. (quoting the above passage from Atkinson quoted in Silber). See also, e.g., United States v. Gonzalez, 259 F.3d 355, 359 (5th Cir.2001) (We may raise an issue sua sponte even though it is not assigned or specified when plain error is apparent, quoting United States v. Pineda-Ortuno, 952 F.2d 98, 105 (5th Cir.1992)).FN15 FN15. We are aware that, generally speaking, the plain error rule is invoked when an appellant raises an issue on appeal that he failed to preserve in the court below. Here, we are confronted with the inverse situation, where appellants raised the issue below but not on appeal. Nevertheless, we conclude that the plain error rule has equal force in the present context, where enforcement of the waiver doctrine would result in a conviction that is unsupported by the plain language of the statute itself. See, e.g., United States v. Spruill, 292 F.3d 207, 213-15 (5th Cir.2002). We also note that as this matter was discussed at oral argument and the subject of full supplemental briefing, all parties have had an opportunity to be heard on this question despite its omission in the original appellate briefing. We believe that this case presents just such an exceptional circumstance. Whitfield's and Teel's role as presiding judges in Marks and Peoples Bank had no connection with any business, transaction, or series of transactions of the AOC. See 18 U.S.C. 666(a)(1)(B), (2). Therefore, by its own plain language, section 666 applies neither to Whitfield's and Teel's acceptance of bribes nor to Minor's offering of bribes in connection with those cases. The Government has cited no authority supporting a contrary conclusion. As such, we hold that the district court committed plain error when it denied appellants' Rule 29 motions for judgment of acquittal on the section 666 counts of the indictment. II. Jury Instructions A. Bribery [13] Appellants assert that the jury instructions were inadequate because the district court failed to require the Government to prove an explicit quid pro quo in connection with the bribery-related charges. We review a district court's jury instructions for abuse of discretion. United States v. Freeman, 434 F.3d 369, 377 (5th Cir.2005). In doing so, [w]e consider whether the instruction, taken as a whole, is a correct statement of the law and whether it clearly instructs jurors as to the principles of law applicable to the factual issues confronting them. Id. (quoting United States v. Daniels, 281 F.3d 168, 183 (5th Cir.2002)).

*348 [14][15] As we have already disposed of the counts related to section 666, we consider the district court's bribery instruction only insofar as it relates to the alleged scheme to deprive the state of Mississippi of its intangible right to Whitfield's and Teel's honest services. In United States v. Brumley, we held that, in order to convict for the federal crime of depriving a state of the honest services of one of its officials, a federal prosecutor must prove that conduct of a state official breached a duty respecting the provision of services owed to the official's employer under state law. 116 F.3d 728, 734 (5th Cir.1997) (en banc). However, we were careful to note that, in order to constitute a federal crime, the state statute must concern something close to bribery and that the mere violation of a gratuity statute ... will not suffice. Id. Consistent with that opinion and at the request of all parties, the district court based its definition of bribery in the jury charge on the Mississippi offense of bribery, which prohibits giving things of value to an official with intent to influence his vote, opinion, action or judgment on any question, matter, cause or proceeding which may be then pending, or may be thereafter subject to vote, opinion, action or judgment of the official. Miss.Code Ann. 97-11-11 (1972). Specifically, the jury charge read as follows: In order to prove the scheme to defraud another of honest services through bribery, the Government must prove beyond a reasonable doubt that the particular defendant entered into a corrupt agreement for Paul S. Minor to provide the particular judge with things of value specifically with the intent to influence the action or judgment of the judge on any question, matter, cause or proceeding which may be then or thereafter pending subject to the judge's action or judgment. Additionally, when discussing the mens rea necessary to convict appellants, the district court instructed the jury as follows: You've heard evidence about rulings that then Judge Whitfield and then Judge Teel made on civil cases in which Mr. Minor's law firm represented civil plaintiffs. Such evidence bears on whether the defendant judges had any specific intent to violate the law. That is, a specific intent to take a bribe. In addressing this question, you may consider whether the rulings were accompanied by the judges' honest belief in the law and facts of a particular case rather than a corrupt purpose. This jury charge was also consistent with the language of the Fifth Circuit Pattern Jury Instructions on Bribery of a Public Official under 18 U.S.C. 201(b)(1) and Receiving Bribe by Public Official under 18 U.S.C. 201(b)(2), which require the jury to find that the defendant gave something of value ... corruptly with intent to influence an official act (bribery) or accepted something of value ... corruptly in return for being influenced in his performance of an official act (receiving a bribe). See FIFTH CIRCUIT PATTERN JURY INSTRUCTIONS (Criminal Cases) 2.12, 2.13 (2001). Appellants do not contest the district court's incorporation of the Mississippi definition of bribery in the jury charge. Rather, they claim that, because the loan guarantees were made in the context of the Whitfield and Teel's electoral campaigns, their constitutional right to free political speech is at stake in this case. See Fed. Election Comm'n v. Wis. Right to Life, Inc., 551 U.S. 449, 127 S.Ct. 2652, 2676, 168 L.Ed.2d 329 (2007) (recognizing that contributing money to, and spending money on behalf of, political candidates *349 implicates core First Amendment protections). As such, appellants assert that the Government was required to prove something more than mere bribery under Mississippi law-namely, that there was an explicit quid pro quo involving a specific official act identified at the time that Minor arranged and guaranteed the loans from Peoples Bank. See McCormick v. United States, 500 U.S. 257, 111 S.Ct. 1807, 1815-17, 114 L.Ed.2d 307 (1991). Appellants claim that, by failing to sufficiently require a quid pro quo exchange, the district court allowed the jury to convict them for acts that essentially amounted to gratuity, not bribery. See United States v. SunDiamond Growers of California, 526 U.S. 398, 119 S.Ct. 1402, 1406-07, 143 L.Ed.2d 576 (1999). In their proposed jury instructions, appellants requested that the district court instruct the jury that: (1) the thing of value must be given in order to influence or induce a specific official act; (2) a financial transaction is not a bribe unless at the time of the transaction Mr. Minor intended it to cause or accomplish some specific official action by the judge which, at the time of the transaction, was identified by Paul Minor; and (3) [a] corrupt intent exists only if there is a specific quid pro quo for the official to engage in a specific official act in exchange for the thing of value .... Vague expectations of some future benefit are not sufficient to make a payment a bribe. In McCormick, the Supreme Court held that a conviction under the Hobbs Act for extortion under color of official right requires a showing of an explicit quid pro quo when the alleged illegal payments take the form of

campaign contributions. 111 S.Ct. at 1817. The Court expressed concern that [t]o hold otherwise would open to prosecution not only conduct that has long been thought to be well within the law but also conduct that in a very real sense is unavoidable so long as election campaigns are financed by private contributions and expenditures. Id. at 1816. Thus, to prove a violation under the Hobbs Act, the Government is required to prove that the payments are made in return for an explicit promise ... to perform or not to perform an official act. Id. In Evans v. United States, the Supreme Court clarified that no overt act is required on the part of the official, because the offense [of extortion under color of official right] is completed at the time when the public official receives a payment in return for his agreement to perform specific official acts. 504 U.S. 255, 112 S.Ct. 1881, 1889, 119 L.Ed.2d 57 (1992) (emphasis added). Therefore, to establish a quid pro quo, the Government need only show that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts. Id. McCormick and Evans left open the question of what level of specificity is required to prove a quid pro quo in regard to the quo or agreed-upon official act. In United States v. Tomblin, a bribery case involving campaign contributions, we observed that [t]he government need not prove the occurrence of the quid pro quo; proof of the agreement will suffice. 46 F.3d 1369, 1380 (5th Cir.1995) (citing Evans, 112 S.Ct. at 1889). In support of this proposition, we cited with approval to the Second Circuit's decision in United States v. Coyne, which held that the government does not have to prove an explicit promise to perform a particular act made at the time of payment. Rather, it is sufficient if the public official understands that he or she is expected as a result of the payment to exercise particular kinds of influence ... as specific opportunities arise. Id. at 1381 n. 19 (quoting *350United States v. Coyne, 4 F.3d 100, 114 (2d Cir.1993) , cert. denied, 510 U.S. 1095, 114 S.Ct. 929, 127 L.Ed.2d 221 (1994)). Similarly, while noting that the generalized hope or expectation of ultimate benefit on the part of the donor does not constitute a bribe, the Fourth Circuit has observed that the government need not show that the defendant intended for his payments to be tied to specific official acts. United States v. Jennings, 160 F.3d 1006, 1013-14 (4th Cir.1998) (internal quotations and citations omitted). The Jennings court went on to explain that all that must be shown is that payments were made with the intent of securing a specific type of official action or favor in return. For example, payments may be made with the intent to retain the official's services on an as needed basis, so that whenever the opportunity presents itself the official will take specific action on the payor's behalf. This sort of I'll scratch your back if you scratch mine arrangement constitutes bribery because the payor made payments with the intent to exchange them for specific official action. Id. at 1014 (emphasis in original) (internal citations omitted). Thus, in the wake of McCormick and Evans, this circuit and others took the position that a particular, specified act need not be identified at the time of payment to satisfy the quid pro quo requirement, so long as the payor and payee agreed upon a specific type of action to be taken in the future. Appellants argue that these cases were abrogated by the Supreme Court's subsequent decision in SunDiamond. See 119 S.Ct. at 1406-07, 1411. In that case, the defendant trade association was charged under the federal gratuity statute, 18 U.S.C. 201(c)(1)(A), for giving various gifts to the Secretary of Agriculture in exchange for his influence in shaping federal regulations affecting the trade association's interests. Id. at 1405. Although describing [the] two matters before the Secretary in which respondent had an interest, the indictment did not allege a specific connection between either of them-or between any other action of the Secretary-and the gratuities conferred. Id. The defendant argued that it could not be convicted under the gratuity statute without a showing that it had offered the allegedly illegal gratuities in exchange for specific official acts. See id. at 1406. To place this argument in context, the Supreme Court outlined the distinction between the related offenses of gratuity and bribery, both of which are contained in 18 U.S.C. 201: The distinguishing feature of each crime is its intent element. **Bribery requires intent to influence an official act or to be influenced in an official act, while **illegal gratuity requires only that the gratuity be given or accepted for or because of an official act. In other words,** for bribery there must be a quid pro quo-a specific intent to give or receive something of value in exchange for an official act. **An illegal gratuity, on the other hand, may constitute merely a reward for some future act that the public official will take (and may already have determined to take), or for a past act that he has already taken. Id. The Court took issue with the portion of the jury charge in Sun-Diamond suggesting that 201(c)(1)

(A), unlike the bribery statute, did not require any connection between respondent's intent and a specific official act. Id. The Court rejected the Government's position that the gratuity statute reaches any effort to buy favor or generalized goodwill from an official who either has been, is, or may at some unknown, unspecified later time, be in a position to act favorably to the giver's interests. Id. at 1407 (emphasis in original) (internal quotations and citations omitted).*351 Instead, the Court concluded that the language of the gratuity statute seems pregnant with the requirement that some particular act be identified and proved. Id. Thus, the Court ultimately held that in order to establish a violation of 18 U.S.C. 201(c)(1)(A), the Government must prove a link between a thing of value conferred upon a public official and a specific official act for or because of which it was given. Id. at 1411. Appellants ask this court to extend Sun-Diamond's reasoning to apply in the context of deprivation of honest services through bribery. In United States v. Kemp, the Third Circuit did just that. 500 F.3d 257, 281 (3rd Cir.2007), cert. denied, --- U.S. ----, 128 S.Ct. 1329, 170 L.Ed.2d 138 (2008) (finding that Sun-Diamond's discussion of the quid pro quo required for bribery under 18 U.S.C. 201(b) is equally applicable to bribery in the honest services fraud context). Nevertheless, the Third Circuit determined that the jury charge in question met the standard laid out by the Supreme Court in Sun-Diamond. Id. The contested portion of the district court's jury instruction in Kemp stated that where there is a stream of benefits given by a person to favor a public official, ... it need not be shown that any specific benefit was given in exchange for a specific official act. Id. (internal citation and quotations omitted). In concluding that this was an accurate statement of the law, the court observed that [t]he key to whether a gift constitutes a bribe is whether the parties intended for the benefit to be made in exchange for some official action; the government need not prove that each gift was provided with the intent to prompt a specific official action. Id. at 282 (citing Jennings, 160 F.3d at 1014). In United States v. Kincaid-Chauncey, the Ninth Circuit agreed with the Third Circuit that, in a prosecution for honest services fraud, [w]hen the government's theory is that a public official accepted money in exchange for influence, ... at least an implicit quid pro quo is required. 556 F.3d 923, 943 (9th Cir.2009) (citing Kemp, 500 F.3d at 281-82). The court observed that bribery requires a link between the item of value received and an understanding that the public official receiving it is to perform official acts on behalf of the payor when called upon. Id. at 943. The court cited to Sun-Diamond as an example of the Supreme Court's imposition of a nexus requirement in a similar context. Id. However, the court went on to note that the district court need not use the words quid pro quo when it instructs the jury so long as the essential idea of give-and-take is conveyed. Nor need the implicit quid pro quo concern a specific official act. Id. (internal citations omitted). In United States v. Ganim, a case involving federal program bribery, extortion, and honest services fraud through bribery, the Second Circuit took a different tack to arrive at the same result. See 510 F.3d 134, 144-50 (2nd Cir.2007), cert. denied, --- U.S. ----, 128 S.Ct. 1911, 170 L.Ed.2d 749 (2008). Like the Third Circuit in Kemp and the Ninth Circuit in Kincaid-Chauncey, the Ganim court rejected the contention that the benefits received must be directly linked to a particular act at the time of agreement. Id. at 145, 148-49; see also United States v. Abbey, 560 F.3d 513, 519 (6th Cir.2009) (holding that, in order to prove extortion, the Government did not need to assert a direct link between [the official's] receipt of property and an explicit promise to perform a specific, identifiable act of improper influence when the gift was given.) However, in contrast to the Third and Ninth Circuits, the Ganim court concluded that Sun-Diamond had no application outside*352 of the illegal gratuity context. 510 F.3d at 145-47, 150.FN16 FN16. We recognize the fact that the Ganim court went on to suggest in dicta that, if Sun-Diamond were to apply in the extortion and honest services contexts, then a particular official act would need to be identified at the time of payment. See 510 F.3d at 146-47. In reaching this conclusion, the court distinguished Sun-Diamond based on that case's heavy reliance on the particular language of the gratuity statute, which criminalizes payments for or because of any official act. Id. at 146. In contrast, the court observed that the bribery-related statutes at issue in Ganim did not contain any similar language. Id. Additionally, the court determined that there was no principled reason to extend SunDiamond's holding beyond the illegal gratuity context, because the Supreme Court's chief concern in SunDiamond was supply[ing] a limiting principle that would distinguish an illegal gratuity from a legal one. Id. at 146. However, no such limiting principle was required outside the gratuity context, because, unlike the gratuity statute, the extortion and bribery statutes require an intent to perform an act in exchange for a benefit-i.e., the quid pro quo agreement. Id. at 146-47. Therefore, by requiring that the Government prove the existence of a

corrupt exchange, the bribery statutes obviated the need to demonstrate a direct link between the payments and a particular official act. Id. In summation, the court concluded as follows: Thus, now, as before Sun-Diamond, so long as the jury finds that an official accepted gifts in exchange for a promise to perform official acts for the giver, it need not find that the specific act to be performed was identified at the time of the promise, nor need it link each specific benefit to a single official act. To require otherwise could subvert the ends of justice in cases-such as the one before us-involving ongoing schemes. In our view, a scheme involving payments at regular intervals in exchange for specific officials acts as the opportunities to commit those acts arise does not dilute the requisite criminal intent or make the scheme any less extortionate. Indeed, a reading of the statute that excluded such schemes would legalize some of the most pervasive and entrenched corruption, and cannot be what Congress intended. Id. at 147. Although this statement was included in the court's discussion of extortion, **the court indicated that the same reasoning applied in the context of honest services fraud through bribery. Id. at 146, 149-50. [16] We begin our analysis of the instant case by noting that, rather than a single payment or transaction, this case involves two ongoing bribery schemes similar to the ones addressed in Kemp, Kincaid-Chauncey, and Ganim. By ensuring that the loans became due every six months, Minor kept Whitfield and Teel at his mercy for as long as those debts remained outstanding. And because Minor made payments on behalf of Whitfield and Teel each time the loans became due, the illegal transactions continued well after Minor initially agreed to guarantee the loans. In Teel's case, even after the loan was paid off, Minor provided Teel with valuable financial and legal assistance in connection with his state prosecution for embezzling state funds. Thus, rather than single, lump-sum bribes, this case involved two prolonged bribery schemes spanning nearly four years each. Whether we adopt the Third and Ninth Circuit's conclusion that Sun-Diamond applies in to honest services fraud but that a particular act need not be identified at the time of payment, or the Second Circuit's*353 conclusion that Sun-Diamond does not apply to honest services fraud at all, we arrive at the same result-namely, that the district court's jury instructions in this case accurately stated the law and did not constitute reversible error. For the sake of argument, we will assume that McCormick and Sun-Diamond do apply and that a quid pro quo instruction was required in this case. In doing so, we are also willing to assume that the initial $40,000 loan guarantee to Whitfield and the $25,000 loan guarantee to Teel were campaign contributions. However, we reject any attempt to characterize the $100,000 loan guarantee to Whitfield for the down-payment on a home and the financial and legal assistance provided to Teel in connection with his state prosecution for embezzlement as having anything to do with their respective electoral campaigns. Still, even if we assume that a quid pro quo instruction was necessary because at least some of the financial transactions in question were campaign-related, we conclude that the jury charge in this case sufficiently fulfilled that requirement. See United States v. Siegelman, 561 F.3d 1215, 1225 (11th Cir.2009). The jury instructions required the Government to prove that appellants entered into a corrupt agreement for Paul S. Minor to provide the particular judge with things of value specifically with the intent to influence the action or judgment of the judge on any question, matter, cause or proceeding which may be then or thereafter pending subject to the judge's action or judgment. (emphasis added). **Additionally, the jury was instructed to consider whether the rulings were accompanied by the judges' honest belief in the law and facts of a particular case rather than a corrupt purpose. (emphasis added). Although the district court did not require the Government to prove that Minor and the judges had identified a particular case that would be influenced at the time that Minor guaranteed the loans,FN17 the overwhelming weight of authority from this court and our sister circuits supports the conclusion that the law does not require such a showing from the Government. See Tomblin, 46 F.3d at 1381, n. 19 (Fifth Circuit); Abbey, 560 F.3d at 519 (Sixth Circuit); Kincaid-Chauncey, 556 F.3d at 943 (Ninth Circuit); Kemp, 500 F.3d at 282 (Third Circuit); Ganim, 510 F.3d at 145 (Second Circuit); Jennings, 160 F.3d at 1014 (Fourth Circuit). The law only requires that the Government prove the specific intent to give or receive something of value in exchange for an official act to be performed sometime in the future. See Sun-Diamond, 119 S.Ct. at 1406. This was satisfied by the portion of the jury charge requiring the Government to prove that appellants entered into a corrupt agreement and that the judges' rulings were based upon a corrupt purpose rather than an honest belief in the law and facts. Despite the district court's failure to include the actual phrase quid pro quo in the jury charge, in the instant context the instructions sufficiently conveyed the essential idea of give-and-take. See Kincaid-Chauncey, 556 F.3d at 943. Under the undisputed

facts here, the jury's finding that there was a corrupt agreement necessarily entailed a finding of an exchange of things of value for favorable rulings in the judges' courts. Therefore, to the extent that a quid pro quo instruction may have been required in this case, the district court adequately delivered one. U.S. v. Kemp, 500 F.3d 257 (3rd Cir.(Pa.),Aug 27, 2007) U.S. v. Kincaid-Chauncey, 556 F.3d 923, 78 Fed. R. Evid. Serv. 1185, 09 Cal. Daily Op. Serv. 2006, 2009 Daily Journal D.A.R. 2455 (9th Cir.(Nev.),Feb 20, 2009) Background: Defendant, an elected official, was convicted in the United States District Court for the District of Nevada, Larry R. Hicks, J., of **honest services wire fraud, **aiding and abetting honest services wire fraud, **conspiracy to commit honest services wire fraud, and **Hobbs Act extortion under color of right. The District Court, 2006 WL 2095872, denied defendant's motion to set aside the verdict and enter judgment of acquittal. Defendant appealed. Holdings: The Court of Appeals, Bybee, Circuit Judge, held that: (1) proposed witness testimony in response to cross examination of government witness was inadmissible; (2) trial court's refusal to allow witness testimony in response to cross examination testimony of government witness did not deprive defendant of due process or right to present a defense; (3) a conviction for extortion under color of official right, whether in the campaign or non-campaign contribution context, requires that the government prove a quid pro quo; (4) jury instruction for charge of Hobbs Act extortion under color of right accurately set forth applicable law; and (5) **jury instruction describing crime of bribery for purposes of charges of honest services wire fraud accurately set forth applicable law. Affirmed. Berzon, Circuit Judge, filed concurring opinion. [1] Witnesses 410 398(1)

410 Witnesses 410IV Credibility and Impeachment 410IV(E) Contradiction 410k398 Right to Contradict Testimony in General 410k398(1) k. In General. Most Cited Cases Impeachment by contradiction permits courts to admit extrinsic evidence that specific testimony is false because contradicted by other evidence. [2] Witnesses 410 405(1)

410 Witnesses 410IV Credibility and Impeachment 410IV(E) Contradiction 410k403 Testimony Subject to Contradiction 410k405 Irrelevant, Collateral, or Immaterial Matters 410k405(1) k. In General. Most Cited Cases Impeachment by contradiction is permitted to prevent witnesses from engaging in perjury and then using the prohibition on collateral fact testimony to conceal the perjury. [3] Witnesses 410 410 Witnesses 398(3)

410IV Credibility and Impeachment 410IV(E) Contradiction 410k398 Right to Contradict Testimony in General 410k398(3) k. Right of Cross-Examiner to Contradict Answers Elicited on Cross-Examination. Most Cited Cases In general, a witness may be impeached by contradiction only if the statements in issue have been volunteered on direct examination. [4] Witnesses 410 405(1)

410 Witnesses 410IV Credibility and Impeachment 410IV(E) Contradiction 410k403 Testimony Subject to Contradiction 410k405 Irrelevant, Collateral, or Immaterial Matters 410k405(1) k. In General. Most Cited Cases Witness testimony regarding money allegedly unlawfully given to public officials by strip club operator seeking permits was inadmissible as impeachment of cross-examination testimony by contradiction; none of club operator's testimony about majority of such witnesses stated he definitely remembered giving unlawful money to them, contributions to three witnesses were not alleged to have been given illegally, and testimony from one witness would have simply disputed aggregate amount allegedly given over twenty-year period. Fed.Rules Evid.Rule 608(b), 28 U.S.C.A. [5] Criminal Law 110 369.1

110 Criminal Law 110XVII Evidence 110XVII(F) Other Offenses 110k369 Other Offenses as Evidence of Offense Charged in General 110k369.1 k. In General. Most Cited Cases Proposed witness testimony would not have supported defendant's theory that employee of strip club owner who was allegedly attempting to bribe defendant had stolen the bribe before defendant could have received it, and was thus inadmissible, where only evidence providing a foundation that employee carried the money from club owner to witness, a necessary link to prove the theory that employee stole the money, was club owner's prior statements to FBI agents. Fed.Rules Evid.Rule 404(b), 28 U.S.C.A. [6] Criminal Law 110 661

110 Criminal Law 110XX Trial 110XX(C) Reception of Evidence 110k661 k. Necessity and Scope of Proof. Most Cited Cases **Constitution guarantees a criminal defendant a meaningful opportunity to introduce relevant evidence on his behalf. U.S.C.A. Const.Amends. 5, 6. [7] Criminal Law 110 633.6

110 Criminal Law 110XX Trial 110XX(B) Course and Conduct of Trial in General 110k633.3 Role and Obligations of Judge

110k633.6 k. Order, Decorum, and Efficiency of Proceedings. Most Cited Cases Criminal Law 110 661

110 Criminal Law 110XX Trial 110XX(C) Reception of Evidence 110k661 k. Necessity and Scope of Proof. Most Cited Cases A defendant's right to present relevant evidence is not unlimited, but rather is subject to reasonable restrictions and may have to bow to accommodate other legitimate interests in criminal trials; such interests include the orderly administration of the trial, and the admission of reliable evidence. [8] Criminal Law 110 661

110 Criminal Law 110XX Trial 110XX(C) Reception of Evidence 110k661 k. Necessity and Scope of Proof. Most Cited Cases Evidentiary rules do not violate the constitutional right to present a defense so long as they are not arbitrary or disproportionate to the purposes they are designed to serve; to violate such standard, an evidentiary rule must infringe upon a weighty interest of the accused. U.S.C.A. Const.Amend. 6. [9] Constitutional Law 92 4680

92 Constitutional Law 92XXVII Due Process 92XXVII(H) Criminal Law 92XXVII(H)5 Evidence and Witnesses 92k4680 k. Credibility and Impeachment. Most Cited Cases Criminal Law 110 661

110 Criminal Law 110XX Trial 110XX(C) Reception of Evidence 110k661 k. Necessity and Scope of Proof. Most Cited Cases Witnesses 410 405(1)

410 Witnesses 410IV Credibility and Impeachment 410IV(E) Contradiction 410k403 Testimony Subject to Contradiction 410k405 Irrelevant, Collateral, or Immaterial Matters 410k405(1) k. In General. Most Cited Cases Trial court's refusal to allow witness testimony regarding money allegedly unlawfully given to public officials by strip club operator seeking permits, in response to operator's testimony on cross-examination, did not violate defendant's right to due process or to present a defense; rules against permitting impeachment by contradiction serve important trial management interests by keeping the trial focused on germane issues, and defendant was permitted to advance theories of defense through numerous other methods. U.S.C.A. Const.Amends. 5, 6.

[10] Criminal Law 110

1139

110 Criminal Law 110XXIV Review 110XXIV(L) Scope of Review in General 110XXIV(L)13 Review De Novo 110k1139 k. In General. Most Cited Cases Court of Appeals reviews whether a jury instructions correctly stated the elements of a crime de novo. [11] Criminal Law 110 822(1)

110 Criminal Law 110XX Trial 110XX(G) Instructions: Necessity, Requisites, and Sufficiency 110k822 Construction and Effect of Charge as a Whole 110k822(1) k. In General. Most Cited Cases In reviewing jury instructions, the relevant inquiry is whether the instructions as a whole are misleading or inadequate to guide the jury's deliberation. [12] Extortion and Threats 165 4

165 Extortion and Threats 165I Official Extortion 165k3 Elements of Offenses 165k4 k. In General. Most Cited Cases A conviction for extortion under color of official right, whether in the campaign or non-campaign contribution context, requires that the government prove a quid pro quo. 18 U.S.C.A. 1951(a). [13] Extortion and Threats 165 16

165 Extortion and Threats 165I Official Extortion 165k16 k. Trial. Most Cited Cases Although the exact words quid pro quo were not expressed in jury instruction for Hobbs Act extortion counts, instruction describing crime of extortion under color of right based upon elected official's alleged participation in bribery scheme accurately set forth applicable law when instruction explained that bribe required some official action in return for payment. 18 U.S.C.A. 1951(a). [14] Telecommunications 372 1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(10) k. Honest Services Fraud. Most Cited Cases Honest services fraud occurs when an employee deprives his employer of its right to have its affairs conducted free from deceit, fraud, dishonesty, conflict of interest, and self-enrichment, and consistent with the employee's fiduciary duties to the employer. 18 U.S.C.A. 1343.

[15] Telecommunications 372

1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(10) k. Honest Services Fraud. Most Cited Cases In cases involving public officials, the honest services fraud theory relies on the idea that a public official acts as trustee for the citizens and the State and thus owes the normal fiduciary duties of a trustee. 18 U.S.C.A. 1343. [16] Telecommunications 372 1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(10) k. Honest Services Fraud. Most Cited Cases **Proof of quid pro quo should not be required in all honest services fraud prosecutions; imposing a quid pro quo requirement on all such cases risks being under-inclusive, **because some honest services fraud, such as the failure to disclose a conflict of interest where required, may not confer a direct or easily demonstrated benefit. 18 U.S.C.A. 1343. [17] Constitutional Law 92 1435

92 Constitutional Law 92XV Right to Petition for Redress of Grievances 92k1435 k. In General. Most Cited Cases Endeavors by lobbyists and others to persuade elected officials of the wisdom or error of policy proposals are protected by the right to petition the Government for a redress of grievances guaranteed by the First Amendment. U.S.C.A. Const.Amend. 1. [18] Telecommunications 372 1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(10) k. Honest Services Fraud. Most Cited Cases Attempts to persuade or mere favoritism, evidenced by a public official's willingness to take a lobbyist's telephone call or give a lobbyist greater access to his appointment schedule, are not sufficient to demonstrate either the lobbyist's or the public official's intent to deprive the public of honest services. 18 U.S.C.A. 1343. [19] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases

Telecommunications 372

1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(10) k. Honest Services Fraud. Most Cited Cases When the government's theory in a prosecution for honest services fraud is that a public official accepted money in exchange for influence, an implicit quid pro quo is required in order to ensure that defendant had the requisite intent to defraud and to avoid convicting people for having the mere intent to curry favor. 18 U.S.C.A. 1343. [20] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Telecommunications 372 1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(10) k. Honest Services Fraud. Most Cited Cases Telecommunications 372 1021

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1015 Prosecutions 372k1021 k. Instructions. Most Cited Cases **Quid pro quo necessary for a bribery honest services fraud conviction need not be explicit, and the district court need not use the words quid pro quo when it instructs the jury so long as the essential idea of give-and-take is conveyed. 18 U.S.C.A. 1343. [21] Bribery 63 14

63 Bribery 63k12 Trial 63k14 k. Instructions. Most Cited Cases Telecommunications 372 1021

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1015 Prosecutions 372k1021 k. Instructions. Most Cited Cases

Jury instruction that described crime of bribery for purposes of charges of honest services wire fraud that were based upon elected official's alleged participation in bribery scheme accurately set forth applicable law when instruction explained that bribe required that elected official accepted something of value in conjunction with an intent to be influenced, and then contained numerous references to specific intent to defraud public. 18 U.S.C.A. 1343. [22] Bribery 63 14

63 Bribery 63k12 Trial 63k14 k. Instructions. Most Cited Cases Before: ALEX KOZINSKI, Chief Judge, MARSHA S. BERZON and JAY S. BYBEE, Circuit Judges. Opinion by Judge BYBEE; Concurrence by Judge BERZON. BYBEE, Circuit Judge: Mary Kincaid-Chauncey appeals her convictions for **honest services wire fraud, **aiding and abetting honest services wire fraud, **conspiracy to commit honest services wire fraud, and **Hobbs Act extortion under color of official right. Kincaid-Chauncey raises three claims of error: She claims that the district court precluded her from calling witnesses to support her defense and that the district court gave erroneous instructions on both the honest services fraud and the extortion counts. For the reasons that follow, we affirm the district court's judgment. I This case requires us to delve into the tawdry relationship between a Las Vegas strip club owner and several former Clark County elected officials. The Clark County Board of County Commissioners has jurisdiction over unincorporated Clark County, Nevada. Its territorial jurisdiction includes, importantly, the famous Las Vegas strip, with its lucrative hotels, casinos, and associated enterprises. The Clark County Commission has seven members, whose responsibilities include enacting ordinances and issuing permits governing the operation of businesses in Clark County. Mary Kincaid-Chauncey, the defendant-appellant in this case, held the elected office of Clark County Commissioner from 1997 to 2004. Michael Galardi and his step-father operated a strip club named Cheetahs in the City of Las Vegas from 1991 to 2003. Business apparently was good, so, in 1999, Galardi made plans to expand his adult entertainment operations by opening two new strip clubs, Jaguars and Leopard Lounge. Galardi chose to open his new enterprises outside of the City of Las Vegas, in surrounding Clark County. Galardi needed to obtain a variety of permits from the Clark County government to open his new strip clubs, including liquor licenses and business permits. Galardi also wanted the Commission to relax the ordinances governing strip clubs in Clark County. Specifically, Galardi sought an ordinance permitting dancers in strip clubs to dance completely nude and to permit clubs with all nude dancers to serve alcohol. He also sought to prevent passage of ordinances that would have required dancers in clubs serving alcohol to be at least 21 years old and forbidden dancers to touch their patrons. When it became difficult to work within the strictures of the county ordinances, Galardi *927 sought to annex the land on which Jaguars was located into the City of Las Vegas. In 1999 Galardi began a corrupt relationship with Lance Malone, who was a Clark County commissioner from 1997 to 2000. After leaving office in 2000, Malone quickly gained employment with Galardi, working as a lobbyist of sorts. Malone's chief duties in his new job included establishing relationships with public officialsincluding his former colleagues on the county commission FN1-and delivering bribe money from Galardi to the officials. The scheme was to be short-lived, however, as the FBI began investigating Galardi's operations in 2000. The Bureau obtained wiretap authorizations to monitor the telephones of Galardi and Malone in June 2001, the wiretaps continued until December 2002. The FBI executed search warrants of Galardi's strip clubs and other locations on May 14, 2003. Federal agents simultaneously confronted several people involved in the bribery ring, including Galardi, Kincaid-Chauncey, and Kenny.

FN1. In addition to Kincaid-Chauncey, two other Clark County commissioners were alleged to have received illegal bribes from Galardi: Dario Herrera and Erin Kenny. Kenny and Galardi eventually cooperated with the investigation and pled guilty to various charges. Herrera was tried with KincaidChauncey. **The FBI's investigation revealed that the bribery scheme worked as follows: Galardi would typically give cash-normally in $5,000 or $10,000 increments-to Malone to distribute to various public officials, usually county commissioners, in exchange for favorable action on ordinances, permits, and licenses affecting the operation of his two new strip clubs. Occasionally, Galardi would personally bribe the officials. The bribery payments occurred at various locations, including in restaurants, inside parked cars, and at the officials' homes. To assure himself that the officials actually received the money Malone was instructed to give them, Galardi told Malone to have the officials call Galardi, using Malone's cell phone, to tell him thanks after they received the money. On February 21, 2006, a second superseding indictment charged Kincaid-Chauncey, Herrera, and Malone with conspiracy, aiding and abetting, honest services wire fraud, and extortion under color of official right. See 18 U.S.C. 2, 371, 1343, 1346, 1951. The indictment charged Kincaid-Chauncey with receiving four payments from Galardi. The first payment alleged in the indictment occurred on August 2, 2001. Malone met with KincaidChauncey in her car in the parking lot of a restaurant. After the meeting, Kincaid-Chauncey called Galardi using Malone's cell phone, and told him thanks for all your help. On that same day, Kincaid-Chauncey's son, who had been having financial difficulties, deposited $3,800 in cash to his bank account. About one hour after this meeting, Malone called Erin Kenny and said, [W]e've got Mary Kincaid on board. Around this time, **Kincaid-Chauncey voted on matters before the county commission that affected Galardi's business interests without disclosing any conflict of interest. Specifically, on August 29, 2001, she voted to approve a limited liquor license for the Jaguars strip club. On September 25, 2001, she voted to extend the Jaguars liquor license for an additional month. Tape-recorded telephone conversations introduced at trial also established that Kincaid-Chauncey was taking orders from Malone and Galardi. For example, on September 14, 2001, Malone said to Kincaid-Chauncey, Mike has an item on the agenda on the nineteenth.... We also need you on the twenty-fifth. Kincaid-Chauncey replied, Yeah, I'll be there. *928 The second payment alleged in the indictment occurred on October 24, 2001. Malone met KincaidChauncey at her home and paid her $5,000 in cash. Shortly after the meeting, Kincaid-Chauncey called Galardi to thank him. On the same day, Malone called Galardi because he found an extra $300 in his pocket when he was changing his pants. Malone said, I don't know if she got it all ... I think she only got uh forty-seven. Malone then called Kincaid-Chauncey and asked her if she got a total of five. She responded that she did. A week later, on October 31, 2001, and again on November 28, 2001, **Kincaid-Chauncey voted to approve liquor licenses for Galardi's strip clubs without disclosing her conflict of interest. Kincaid-Chauncey admitted at trial to having received this $5,000 from Malone, but she testified that the payment was a campaign contribution to help pay debts incurred in her son's unsuccessful campaign for a seat on the North Las Vegas City Council. The third payment alleged in the indictment occurred in February 2002. Malone called Kincaid-Chauncey on February 23, 2002, to set up a lunch meeting with Galardi on February 28. After Kincaid-Chauncey, Malone, and Galardi had lunch together, Malone and Kincaid-Chauncey got in Kincaid-Chauncey's car, where Malone allegedly gave her $5,000. On March 27 and April 30, 2002, **Kincaid-Chauncey again voted on matters affecting Galardi's strip clubs without disclosing her conflict of interest.FN2 FN2. As noted infra, Kincaid-Chauncey was acquitted of the Hobbs Act charge based on this payment. The fourth and final payment alleged in the indictment occurred in June 2002. Kincaid-Chauncey called Malone on June 3, 2002, to tell him that her grandson had been accepted into an Olympic ski school but needed $15,000 for the tuition. Galardi said that he gave Kincaid-Chauncey $5,000 through Malone sometime in June 2002. Kincaid-Chauncey admitted receiving $4,000-not $5,000-from Malone during a tour of Jaguars with her daughter. A series of recorded telephone conversations followed this payment in June and July 2002, in which

Malone gave Kincaid-Chauncey explicit instructions on how Galardi wanted her to vote on ordinances governing nude dancing. For example, on July 30, 2002, discussing an upcoming hearing on the all nude dancing ordinance, Malone told Kincaid-Chauncey that I'm sure Mike's not gonna want you to ... hang your head out there ... and get it chopped off. On July 31, 2002, Malone called Kincaid-Chauncey and told her to put her cell phone on vibrate during the hearing on the ordinance so he could call to tell her what to say if he needed to.FN3 Kincaid-Chauncey told Malone that she would be voting in favor of an ordinance that limited the touching between nude dancers and their patrons, even though Galardi opposed it, because she did not want to be the only one voting against it. On that same day, Kincaid-Chauncey voted for the limited touch ordinance. A few days later on August 5, 2002, without disclosing her relationship with Galardi, she submitted a memorandum to the county manager requesting that the County Commission reconsider the limited touch ordinance. In her memorandum, she said that she voted in favor of it because she thought the City of Las Vegas would be considering, and was likely to pass, a similar ordinance and she wanted the rules to *929 be uniform in the city and county to make it easier for the metropolitan police to enforce the ordinances. Her memorandum said that she had since learned that the city would not be considering such an ordinance. This claim contradicted the substance of a conversation on July 29, 2002, between Malone and Kincaid-Chauncey before the limited touch ordinance was passed. In that conversation, Malone told Kincaid-Chauncey that the limited touch ordinance would put the county businesses at a ... competitive disadvantage with strip clubs in the City of Las Vegas. FN3. Malone in fact did call and leave her a message during the hearing, suggesting to her what she should say during the meeting. Phone conversations of a similar nature-with-Malone telling KincaidChauncey what to say at various hearings-occurred throughout August 2002. **On the basis of those four payments, Kincaid-Chauncey was indicted for one count of conspiracy to deprive the Clark County Commission and the citizens of Clark County of their right to honest services in violation of 18 U.S.C. 371, 1343, and 1346; nine counts of honest services wire fraud in violation of 18 U.S.C. 2, 1343, and 1346; FN4 and four counts of Hobbs Act color of official right extortion in violation of 18 U.S.C. 1951.FN5 FN4. The honest services wire fraud counts were based on telephone calls made on the following dates: August 2, 2001; September 14, 2001; October 24, 2001; February 23, 2002; June 5, 2002; July 31, 2002; August 5, 2002; August 19, 2002; and September 5, 2002. FN5. The Hobbs Act charges were based on payments allegedly received on August 2, 2001; October 24, 2001; February 28, 2002; and in June 2002. Kincaid-Chauncey stood trial jointly with Dario Herrerra in March 2006. FN6 During the eight week trial, Kincaid-Chauncey pursued two lines of defense. **First, she argued that Malone had deceived Galardi into thinking that he had given the money to the county commissioners, but had really kept the money for himself (the Theft Theory). **Second, she argued that Galardi exaggerated the extent of his bribery scheme, implicating numerous innocent public officials to gain a bargaining advantage with the prosecutors (the Liar Theory). FN6. Lance Malone eventually pleaded guilty to a reduced set of charges. To pursue these theories, Kincaid-Chauncey questioned Galardi on cross-examination about whether he paid money to nine other public officials, including, in no particular order: **Thom Reilly, the Clark County Manager; **Mark Scofield, the Clark County Tax Assessor; **Lynette Boggs-McDonald, a Las Vegas City Council member; **Oscar Goodman, the mayor of the City of Las Vegas;** Ardel Jorgensen, a Clark County business licensing official; **David Roger, the Clark County District Attorney; **Lee Gates and Donald Mosley, both Clark County District Court judges; and Yvonne Atkinson-Gates, a Clark County Commissioner and the wife of Judge Gates. Kincaid-Chauncey also introduced evidence of inconsistent statements regarding whether Galardi paid money to those officials, and she sought to call each of the nine officials to contradict Galardi's testimony. The district court permitted Kincaid-Chauncey to call Thom Reilly and Mark Scofield. Thom Reilly was the Clark County Manager during the time period in question. Galardi testified on cross-examination that he had

given $5,000 in cash to Thom Reilly as a bribe. The district court permitted Kincaid-Chauncey to call Reilly at trial because Galardi's testimony directly concerned a payment which Galardi testified was made to Malone and that Galardi assumed ... had been paid to Reilly. Reilly testified that he never received any money from Galardi. Mark Scofield was the Clark County Tax Assessor. Galardi testified on cross-examination that he gave Scofield $5,000 in cash. Galardi was impeached with prior *930 inconsistent statements he made to the FBI concerning another $5,000 check payment he claimed to have made to Scofield. The district court permitted Kincaid-Chauncey to call Scofield at trial, but she declined to do so. First, the district court ruled that the testimony was admissible to impeach by contradiction under United States v. Castillo, 181 F.3d 1129 (9th Cir.1999). Second, the court ruled that the testimony was admissible, under Federal Rule of Evidence 404(b), to establish Malone's scheme or plan to steal the bribe money he received from Galardi. At trial, Kincaid-Chauncey called Reilly but not Scofield. The district court ruled that Kincaid-Chauncey could not call any of the other seven witnesses. Again relying on Castillo, the court ruled that their testimony was not admissible to impeach by contradiction because it sought to contradict testimony elicited on cross-examination. The court also denied Kincaid-Chauncey's request to admit the testimony under Rule 404(b). Kincaid-Chauncey made the appropriate objections to these rulings at trial. Kincaid-Chauncey advanced the Theft Theory at trial by calling Reilly, who testified that he never received money that Galardi allegedly gave to Malone to give to him and that Malone never offered him any money. Kincaid-Chauncey also introduced evidence of Malone's previous acts of fraud as well as a telephone call between Malone and his father. In the call, Malone's father tells Malone that it would not be a good idea to keep $20,000 that Galardi had given to Malone to bribe a public official. Kincaid-Chauncey advanced the Liar Theory at trial by calling various FBI agents and other government employees who Galardi claimed to have paid off. She also introduced numerous examples of Galardi's prior inconsistent statements. As the trial drew to a close, Kincaid-Chauncey objected to the proposed jury instructions for the honest services fraud and Hobbs Act charges. She argued that the instructions for both the honest services fraud counts and the Hobbs Act counts should require the jury to find the existence of a quid pro quo as an element of the crime. The district court's final jury instructions did not incorporate the changes that Kincaid-Chauncey proposed. On May 8, 2006, the jury found Kincaid-Chauncey guilty of all counts against her except the Hobbs Act charge based on the February 28, 2002, payment. At sentencing, the district court imposed a thirty-month term of incarceration to be followed by a two year period of supervised release. II Kincaid-Chauncey advances three claims. We address each in turn. A Kincaid-Chauncey first argues that the district court erred in refusing to permit her to call seven of nine proposed witnesses to advance her theories of defense.FN7 For the reasons explained below, we find that the district court did not deny Kincaid-Chauncey the opportunity to present a defense or abuse its discretion in refusing to admit the testimony of each of the seven contested witnesses. Because the determination of whether the evidence should have been admitted is particular to each witness, we briefly discuss each of *931 KincaidChauncey's proposed witnesses and their expected testimony. FN7. We review for abuse of discretion non-constitutional claims of error in excluding evidence. See United States v. Lynch, 437 F.3d 902, 913 (9th Cir.2006) (en banc) (per curiam). We review de novo constitutional claims that an evidentiary ruling precluded the presentation of a defense. Id. Lynnette Boggs-McDonald was a member of the Las Vegas City Council from June 1999 until April 2004. She served as a Clark County Commissioner from April 2004 until she lost reelection in 2006. Galardi testified

on cross-examination that he had given a campaign contribution to Boggs-McDonald, but that he did not remember how much or whether he had paid with cash or a check. He also testified that he did not expect anything in return for the contribution. This testimony conflicted with previous statements that Galardi made to investigators before trial that Galardi paid Boggs-McDonald $10,000 in cash through Lance Malone. KincaidChauncey called an FBI agent who testified that Galardi told the FBI prior to trial that he had paid $10,000 in cash to Boggs-McDonald. The government and Kincaid-Chauncey stipulated that Galardi told the FBI before trial that he had paid public officials, including Boggs-McDonald, upwards of six figures. The district court excluded Boggs-McDonald because Galardi's testimony about her was elicited on cross. Boggs-McDonald was expected to testify that she only received a $1,000 check as a campaign contribution from Galardi. Oscar Goodman has been the mayor of the City of Las Vegas since June 1999. Galardi testified on crossexamination that he personally gave $10,000 to Oscar Goodman before Goodman began his original campaign for mayor. Goodman was expected to testify that he never received any money from Galardi. Ardel Jorgensen was the Business Licensing Director for Clark County. On cross-examination, Galardi testified that he had Lance Malone give $20,000 in cash to Jorgensen at a meeting where Galardi was present. Galardi testified that he saw Malone put the money in Jorgensen's bag. Although Galardi did not consider the payment to be a bribe because he gave it to her in recognition of the help she had already provided, he acknowledged that it was illegal. Defense counsel impeached Galardi's testimony during cross-examination by asking about statements he made to his former attorneys indicating that he had not paid any money to Jorgensen. The defense expected that Jorgensen would testify that she never received any cash payment from Galardi. David Roger has been the Clark County District Attorney since 2002. On cross-examination, Galardi testified that he gave a $20,000 check to Peter Christiansen, Galardi's attorney, to give to David Roger as a campaign contribution for Roger's bid to become the Clark County District Attorney. However, Galardi testified that Roger returned the check when it became public that he had accepted a campaign contribution from a strip club owner. Roger was expected to testify that he never received any illegal contributions from Galardi. Donald Mosley has been a judge on the State of Nevada District Court since 1983. Galardi testified on cross-examination that he and his father gave about $50,000 to Mosley over a twenty year period but that they did not expect anything in return for those payments. Mosley was expected to testify at trial that he only received about $5,000 from Galardi during the twenty years in question. Lee Gates has been a judge on the State of Nevada District Court since 1991. Galardi testified on crossexamination that he contributed to Judge Gates's campaign by giving money to Peter Christiansen, though he could not remember the precise amount. He testified that he made the contribution in the hope that Gates would exert pressure on his wife, Yvonne Atkinson-Gates, to change her position on upcoming *932 votes before the Clark County Commission. At trial, Gates was expected to testify that he did not receive any money from Galardi. Yvonne Atkinson-Gates was a Clark County Commissioner from 1993 until March 2007. On crossexamination, Galardi testified that he never paid any money directly to Atkinson-Gates, but that he made a campaign contribution to her husband in the hope that it would influence Atkinson-Gates to reconsider her position on a matter before the Clark County Commission. Galardi further stated on cross-examination that Atkinson-Gates told Malone that $100,000 would make any problems [with zoning issues] go away while Atkinson-Gates was on a pre-opening tour of the strip club Jaguars. Atkinson-Gates was called as a witness but was not allowed to testify about whether she made that statement. 1 The district court ruled that the testimony of these seven witnesses was inadmissible because it constituted impeachment of cross-examination testimony by contradiction.FN8 Kincaid-Chauncey asserts that this was error. FN8. Kincaid-Chauncey claims that the trial court incorrectly analyzed this issue as one of the preclusion of the use of extrinsic evidence of specific instances of conduct by a witness delineated in Federal Rule of Evidence 608(b). To the extent that Kincaid-Chauncey believes the district court

excluded the evidence under Rule 608(b), she is mistaken. The court explicitly relied on United States v. Castillo, a case which abjures reliance on Rule 608(b) when analyzing questions of impeachment by contradiction. See 181 F.3d 1129, 1132 (9th Cir.1999) ( Although Castillo briefed and argued the district court's ruling under Rule 608(b), impeachment by contradiction is not governed by that subsection.). Although impeachment by contradiction is not specifically formalized in the Federal Rules of Evidence, it is part of the general body of evidentiary law and is a permissible theory of impeachment under Federal Rule of Evidence 607. Id. at 1133. [1][2] Impeachment by contradiction permits courts to admit extrinsic evidence that specific testimony is false, because contradicted by other evidence. United States v. Castillo, 181 F.3d 1129, 1132 (9th Cir.1999). Impeachment by contradiction is an exception to the collateral fact rule embodied in Federal Rule of Evidence 608(b), which generally prohibits the introduction of extrinsic evidence to attack the credibility of a witness. When impeaching by contradiction, the fact to be contradicted must be material. 4 JOSEPH M. MCLAUGHLIN, WEINSTEIN'S FEDERAL EVIDENCE, 608.20[3] [a], at 608-38 (2d ed.1999). Impeachment by contradiction is permitted to prevent witnesses from engaging in perjury and then using the prohibition on collateral fact testimony to conceal the perjury. Castillo, 181 F.3d at 1132-33 (citing 2A CHARLES A. WRIGHT & VICTOR J. GOLD, FEDERAL PRACTICE & PROCEDURE, 6119, at 116-17 (1993)). We have also recognized that, when making the decision whether to permit impeachment by contradiction, trial courts should consider the Rule 403 factors, such as confusion of the jury or the cumulative nature of the evidence. See id. at 1133; 4 MCLAUGHLIN, 607.06[3][b], at 607-79. [3] Impeachment by contradiction comes with an important limitation. **In general, a witness may be impeached by contradiction only if the statements in issue [have] been volunteered on direct examination. United States v. Green, 648 F.2d 587, 596 n. 12 (9th Cir.1981) (emphasis added). In Castillo, we read our cases to hold that extrinsic evidence may not be admitted to impeach testimony invited by questions posed during cross-examination. 181 F.3d at 1133. We explained that when the testimony to be contradicted is offered under cross-examination, impeachment by *933 contradiction is far less likely to achieve its intended purpose of rooting out perjury because opposing counsel may manipulate questions to trap an unwary witness into volunteering statements on cross-examination and because it is often difficult to determine whether testimony is invited or whether it is volunteered on cross-examination. Id. at 1133-34. **But we held that the general rule need not be rigidly enforced so as to exclude all impeachment by contradiction of testimony given during cross-examination. Id. at 1134 & n. 1. In this case, all nine of the witnesses offered by Kincaid-Chauncey-Reilly, Scofield, and the seven excluded witnesses-were expected to contradict testimony Galardi gave during cross-examination. Under Castillo, the district court could have excluded the testimony of all nine witnesses. Such a ruling would have been well within our statement in Castillo that extrinsic evidence may not be admitted to impeach testimony invited by questions posed during cross-examination. Id. at 1133. Nevertheless, after reviewing the transcript of Galardi's testimony carefully, the district court only excluded the testimony of seven of Kincaid-Chauncey's nine proffered witnesses. In an exercise of the discretion afforded in Castillo, the district court permitted KincaidChauncey to call Reilly and Scofield. The district court explained that it did so because Galardi specifically testified that he gave money to Malone to give to those two individuals, and they were expected to testify that they never received any money. As the district court explained with respect to Reilly, although it was a very close question whether to permit his questioning, his testimony was distinct from all of the others. [4] The district court then reviewed name-by-name its reasons for excluding the other seven witnesses. None of Galardi's trial testimony about six of the seven witnesses stated that he definitely remembered giving unlawful money to them directly or through Malone.FN9 His testimony about three of them-Goodman, Roger, and Gates-concerned campaign contributions that were not alleged to have been given illegally. The testimony expected from Mosley would have simply disputed the aggregate amount of what apparently was a series of gifts over a twenty year period. Finally, Atkinson-Gates would have merely disputed making an entirely collateral statement during a tour of one of Galardi's strip clubs. Allowing the defendant to call the mayor, members of the city council, judges, and other public officials to testify about extraneous events would have created a huge sideshow to what was already a trial of notoriety. None of the proffered testimony was central to the core issues of the trial, and thus it is precisely the type of evidence that the collateral fact rule is designed to exclude.

FN9. Galardi did testify on cross-examination that he gave $20,000 to Malone to give to Jorgensen, who was expected to testify that she never received any money from Galardi. Her expected testimony thus appears to meet the criteria the district court placed on whether such testimony would be admitted. However, Galardi testified that he saw Malone put the money in Jorgensen's bag, so it would have been difficult to use this testimony to support Kincaid-Chauncey's Theft Theory. As for the Liar Theory, Galardi's pre-trial statement that he did not give any money to Jorgensen was used to impeach him at trial. Jorgensen's testimony thus would have added little to Kincaid-Chauncey's case. The district court's decision to exclude the testimony of the seven witnesses is well within our rule in Castillo and thus was not an abuse of discretion. Nor did the district court abuse its discretion by admitting some of the defendant's witnesses and not others. The district court plainly could have excluded all nine of the witnesses; even if, in its discretion, the *934 court decides to admit the testimony of one or more witnesses, the court is not obligated to admit the testimony of all proffered witnesses. 2 [5] Next, Kincaid-Chauncey argues that the testimony of the witnesses was admissible under Federal Rule of Evidence 404(b) FN10 as proof of Malone's common scheme or plan to steal money from Galardi, which supported her Theft Theory. Of the seven excluded witnesses, only the testimony of Boggs-McDonald could possibly have advanced the theory that Malone was stealing the bribe money and is thus amenable to a Rule 404(b) analysis. However, Boggs-McDonald's expected testimony would not have provided support for the theory that Malone had a scheme to steal the bribe money that Galardi gave him. Galardi's cross-examination testimony concerning Boggs-McDonald was that he remembered making a campaign contribution, but that he could not remember whether he had paid her through Malone and that he did not remember making a statement to FBI investigators that he had paid her through Malone. The only evidence providing a foundation that Malone carried the money from Galardi to Boggs-McDonald-a necessary link to prove the theory that Malone stole the money-was Galardi's prior statements to FBI agents. Yet, as the government points out, under the hearsay rules these prior inconsistent statements only could be introduced as impeachment evidence, not substantive evidence. See FED. R. EVID. 801(d)(1). The defendant's remedy was to impeach Galardi by crossexamining him on his own inconsistent statements, not by calling additional witnesses. Accordingly, the district court did not err in ruling that Boggs-McDonald's testimony was not admissible under Rule 404(b). FN10. Federal Rule of Evidence 404(b) states in relevant part: Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show action in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident.... 3 Finally, Kincaid-Chauncey makes an overarching argument that the district court's refusal to admit the testimony of these witnesses deprived her of her Fifth Amendment right to due process and her Sixth Amendment right to present a defense, claims that we review de novo. See United States v. Lynch, 437 F.3d 902, 913 (9th Cir.2006) (en banc) (per curiam). [6][7][8] The Constitution guarantees a criminal defendant a meaningful opportunity to introduce relevant evidence on his behalf. Menendez v. Terhune, 422 F.3d 1012, 1033 (9th Cir.2005) (citing Crane v. Kentucky, 476 U.S. 683, 690, 106 S.Ct. 2142, 90 L.Ed.2d 636 (1986)). However, [a] defendant's right to present relevant evidence is not unlimited, but rather is subject to reasonable restrictions and may have to bow to accommodate other legitimate interests' in criminal trials. United States v. Scheffer, 523 U.S. 303, 308, 118 S.Ct. 1261, 140 L.Ed.2d 413 (1998) (quoting Rock v. Arkansas, 483 U.S. 44, 55, 107 S.Ct. 2704, 97 L.Ed.2d 37 (1987)). Such interests include the orderly administration of the trial-governed by the rules of procedure-and the admission of reliable evidence. Our evidentiary rules do not violate the constitutional right to present a defense so long as they are not arbitrary or disproportionate to the purposes they are designed to serve. Id.; see also *935United States v. Valenzuela-Bernal, 458 U.S. 858, 867, 102 S.Ct. 3440, 73 L.Ed.2d 1193 (1982). To violate that standard, an evidentiary rule must infringe [ ] upon a weighty interest of the accused. Scheffer, 523 U.S. at 308, 118 S.Ct. 1261.

[9] We cannot see how Kincaid-Chauncey was denied her right to due process or to present a defense. As we discussed above, the rules against permitting impeachment by contradiction serve important trial management interests by keeping the trial focused on germane issues. Moreover, the district court permitted Kincaid-Chauncey to call two of the three witnesses (Reilly and Scofield) who would have advanced the Theft Theory. Kincaid-Chauncey ultimately called Reilly, but not Scofield. It is difficult to see how KincaidChauncey was denied due process or an opportunity to put on her defense when she chose not to put on one of the witnesses she claims she needed. A third witness Kincaid-Chauncey argues would have advanced her Theft Theory was Boggs-McDonald. But, as we pointed out in the previous section, Galardi did not make any statements on either direct or cross-examination that he gave Malone any money to give to Boggs-McDonald. The only statements in the record concerning payment to Boggs-McDonald via Malone are statements that Galardi made to the FBI. As unsworn prior inconsistent statements, these statements could only be admitted to impeach Galardi, not to establish that Galardi in fact did give money to Malone to give to Boggs-McDonald. Nothing in the Constitution requires that Kincaid-Chauncey be permitted to introduce extrinsic evidence under these circumstances. None of the six witnesses proffered for the Liar Theory would have advanced that theory, either. As noted above, three of the witnesses would have disputed whether Galardi gave them campaign contributions (Goodman, Roger, and Gates); one would have disputed the amount of a series of gifts (Mosley); and one would have disputed whether she made a collateral statement (Atkinson-Gates). The final proffered witness, Jorgensen, would have directly contradicted Galardi's cross-examination testimony, but Kincaid-Chauncey was permitted to impeach Galardi with his prior inconsistent statement concerning the payment to Jorgensen. The marginal value that would have accrued to the defense from Jorgensen's testimony does not make the rule governing impeachment by contradiction arbitrary or disproportionate to the purposes [it is] designed to serve. Scheffer, 523 U.S. at 308, 118 S.Ct. 1261.FN11 FN11. It we were to accept Kincaid-Chauncey's argument that the Constitution requires district courts to admit extrinsic evidence in these circumstances, it would virtually eliminate the prohibition on introducing extrinsic evidence for impeachment purposes whenever a testifying co-defendant cooperates with the government: Although she styles her defense in part as the Liar Theory, the theory is nothing more than the routine impeachment of a co-conspirator who turned state's evidence. The end result would be that the impeachment by contradiction exception to the prohibition on extrinsic impeachment evidence would swallow the general rule. We are confident that no violation of Kincaid-Chauncey's constitutional right to present a defense occurred because she was permitted to advance these two theories through numerous other methods. The district court permitted her to call two witnesses to testify in support of the Theft Theory. She also introduced evidence of Malone's previous acts of fraud under Rule 404(b), and she introduced a recorded telephone conversation where Malone's father told Malone it would not be a good idea to keep for himself $20,000 that Galardi had given to Malone to give to a public official. Kincaid-Chauncey had a full and fair opportunity to present the Liar Theory, as *936 well. It is obvious that Galardi was a troublesome witness for the government, as he was frequently confronted with prior inconsistent statements made to either the FBI or his previous attorneys. The record is replete with rigorous cross-examination of Galardi on the consistency of his statements and testimony from FBI agents, which called the truthfulness of Galardi's testimony into question. For these reasons, we conclude that the district court's exclusion of the seven witnesses did not deprive Kincaid-Chauncey of due process or her constitutional right to present a defense. **** In sum, we conclude that the district court did not err in excluding the testimony of the seven challenged witnesses. B [10][11] Kincaid-Chauncey next challenges the jury instructions given on the Hobbs Act charges. She alleges that the district court erred by failing to instruct the jury that an explicit quid pro quo was necessary to convict her of violating the Hobbs Act.FN12 Although we agree that the government must prove the existence of a quid pro quo to obtain a conviction under the Hobbs Act for non-campaign related payments , we reject the notion that the quid pro quo needs to be explicitly stated.

FN12. We review the question of whether a jury instruction correctly states the elements of a crime de novo. United States v. Phillips, 367 F.3d 846, 854 (9th Cir.2004). In reviewing jury instructions, the relevant inquiry is whether the instructions as a whole are misleading or inadequate to guide the jury's deliberation. United States v. Frega, 179 F.3d 793, 806 n. 16 (9th Cir.1999). The Hobbs Act, among other things, prohibits a wide variety of activities that fall under the general rubric of extortion. Specifically, it says: Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by ... extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined under this title or imprisoned not more than twenty years, or both. 18 U.S.C. 1951(a). The statute defines extortion as the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. Id. 1951(b)(2) (emphasis added). To convict Kincaid-Chauncey of Hobbs Act extortion under a color of official right theory, the government was required to prove that she (1) was a government official; (2) who accepted property to which she was not entitled; (3) knowing that she was not entitled to the property; and (4) knowing that the payment was given in return for official acts; (5) which had at least a de minimis effect on commerce. See 18 U.S.C. 1951(b)(2) (defining extortion); Evans v. United States, 504 U.S. 255, 268, 112 S.Ct. 1881, 119 L.Ed.2d 57 (1992); United States v. Boyd, 480 F.3d 1178, 1179 (9th Cir.2007) (requiring only a de minimis effect on interstate commerce to support a Hobbs Act prosecution); United States v. Du Bo, 186 F.3d 1177, 1179 (9th Cir.1999) (intent is a required element of a Hobbs Act conviction). In McCormick v. United States, the Supreme Court held that when the defendant is charged with color of official right extortion and the unlawfully gained property is in the form of a campaign contribution, the government must prove that there was an explicit quid pro quo. 500 U.S. 257, 271-74, 111 S.Ct. 1807, 114 L.Ed.2d 307 (1991); *937 see also United States v. Ganim, 510 F.3d 134, 142 (2d Cir.2007) ([P]roof of an express promise is necessary when the payments are made in the form of campaign contributions.). However, [w]hether or not there is a quid pro quo requirement in the non-campaign context is an issue that has not been directly addressed by the Supreme Court. United States v. Collins, 78 F.3d 1021, 1034 (6th Cir.1996). Nevertheless, [a]lmost all the circuits that have addressed this precise issue have held that the quid pro quo requirement applies to all Hobbs Act extortion prosecutions, not just to those involving campaign contributions. United States v. Tucker, 133 F.3d 1208, 1215 (9th Cir.1998) (collecting cases); see also Evans, 504 U.S. at 278, 112 S.Ct. 1881 (Kennedy, J., concurring) ([T]he rationale underlying the Court's holding [in McCormick ] applies not only in campaign contribution cases, but in all 1951 prosecutions.); Ganim, 510 F.3d at 143; United States v. Antico, 275 F.3d 245, 258 (3d Cir.2001); United States v. Giles, 246 F.3d 966, 972-73 (7th Cir.2001); Collins, 78 F.3d at 1035; United States v. Martinez, 14 F.3d 543, 553 (11th Cir.1994). [12] In Tucker, we assumed without deciding that a prosecution for extortion under color of official right in the non-campaign contribution context required a quid pro quo. 133 F.3d at 1215 (upholding against a sufficiency of the evidence challenge Hobbs Act color of official right extortion convictions). Today, we join our sister circuits and make explicit the Tucker assumption: **We hold that a conviction for extortion under color of official right, whether in the campaign or non-campaign contribution context, requires that the government prove a quid pro quo. That being said, it is well established that to convict a public official of Hobbs Act extortion for receipt of property other than campaign contributions, **[t]he official and the payor need not state the quid pro quo in express terms, for otherwise the law's effect could be frustrated by knowing winks and nods. Evans, 504 U.S. at 274, 112 S.Ct. 1881 (Kennedy, J., concurring). **An explicit quid pro quo is not required; an agreement implied from the official's words and actions is sufficient to satisfy this element. See id. at 268, 112 S.Ct. 1881 (majority opinion) ([The] Government need only show that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts.); Ganim, 510 F.3d at 143;

Antico, 275 F.3d at 258; Giles, 246 F.3d at 972. [13] Applied to this case, these principles clearly demonstrate that the jury was properly instructed on the Hobbs Act counts. The district court instructed the jury as follows: In order for a defendant to be found guilty of [violating 1951], the Government must prove each of the following elements beyond a reasonable doubt: **First, the defendant was a public official. **Second, the defendant obtained money, which the defendant knew he or she was not entitled to. **Third, the defendant knew that the money was given in return for taking some official action. And, **four, commerce or the movement of an article, commodity, or people in commerce from one state to another was affected in some way. **In the case of a public official who obtains money, other than a campaign contribution, the Government does not have to prove an explicit promise to perform a particular act made at the time of the payment. Rather, it is sufficient if the public official understands that he or she is expected as a result of the payment to exercise particular kinds of influence as specific opportunities arise. *938 Kincaid-Chauncey argues that this instruction was erroneous because it instructed the jury that no proof of a quid pro quo was required for counts involving non-campaign contributions. We reject her argument. Although [n]o specific instruction to find an express quid pro quo was given, Antico, 275 F.3d at 259, this instruction adequately stated the implicit quid pro quo element that Evans requires. The instruction tells the jury that it can only find a defendant guilty if it finds that she knew that the money was given in return for taking some official action. It then elaborates that the government does not have to show an express promise, but the public official must understand that she is expected as a result of the payment to exercise particular kinds of influence as specific opportunities arise. [A]lthough the magic words quid pro quo were not uttered, a simplified version of the concept, the idea that you get something and you give something, was. Giles, 246 F.3d at 973. The circuits that have considered similar language in jury instructions for Hobbs Act color of official right extortion charges have approved it. In United States v. Ganim, for example, the former mayor of Bridgeport, Connecticut, was charged with violating, among other statutes, 1951 for receiving a variety of non-campaign related payments and kickbacks. See 510 F.3d at 137-40. At trial, the district court instructed the jury on the quid pro quo element: The government does not have to prove an explicit promise to perform a particular act made at the time of payment. It is sufficient if the defendant understood he was expected as a result of the payment to exercise particular kinds of influence, that is, on behalf of the payor, as specific opportunities arose. Id. at 144. The Second Circuit held that there was no error in that charge, in light of the fact that the preceding paragraph of the jury instruction specified that the payment needed to be in return for official acts. Id. at 145. As in Ganim, this jury charge-that the defendant knew that the money was given in return for taking some official action-required a link between the payment and the exercise of official acts. See also United States v. Bradley, 173 F.3d 225, 231 (3d Cir.1999) (upholding similarly worded jury instruction because it complies with the most recent Supreme Court holding on the issue of whether an agreement is required for conviction under the Hobbs Act); accord Giles, 246 F.3d at 972 ([W]e ... agree with the Ninth Circuit in Tucker that the government need not show an explicit agreement, but only ... that the public official understood that as a result of the payment he was expected to exercise particular kinds of influence on behalf of the payor.); Tucker, 133 F.3d at 1215 (The government need not show an explicit agreement ... the government need only show that [the public official] received the payment knowing that [it] was made in return for official acts (internal quotation marks omitted)); United States v. Coyne, 4 F.3d 100, 114 (2d Cir.1993) ([I]t is sufficient if the public official understands that he or she is expected as a result of the payment to exercise particular kinds of influence ... as specific opportunities arise.).

Accordingly, we find no error in the district court's jury instruction concerning non-campaign related payments received by Kincaid-Chauncey charged as Hobbs Act violations. C Finally, Kincaid-Chauncey asserts that the district court erred in failing to instruct the jury that the crime of honest services fraud requires proof of a quid pro quo. For the reasons that follow, we conclude*939 that the district court's jury instructions were adequate. 1 [14][15] The wire fraud statute states: Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both. 18 U.S.C. 1343. For decades, federal prosecutors have used 1343, as well as the substantially similar mail fraud statute, 18 U.S.C. 1341, to develop a theory of honest services fraud. Honest services fraud occurs when an employee deprives his employer of its right to have its affairs conducted free from deceit, fraud, dishonesty, conflict of interest, and self-enrichment, and consistent with the employee's fiduciary duties to the employer. United States v. Woodward, 149 F.3d 46, 54 (1st Cir.1998). **In cases involving public officials, the theory relies on the idea that a public official acts as trustee for the citizens and the State ... and thus owes the normal fiduciary duties of a trustee, e.g., honesty and loyalty to them. United States v. Silvano, 812 F.2d 754, 759 (1st Cir.1987) (quoting United States v. Mandel, 591 F.2d 1347, 1363 (4th Cir.1979)). In McNally v. United States, the Supreme Court held that the mail fraud statute did not extend to cover honest services fraud. 483 U.S. 350, 359-60, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). Concerned about the ambiguity of the outer bounds of an honest services fraud theory and afraid to involve [ ] the Federal Government in setting standards of disclosure and good government for local and state officials, the McNally Court instructed Congress to speak more clearly if it wanted to make honest services fraud a crime. Id. at 360, 107 S.Ct. 2875. Congress chose to speak more clearly the very next year by adding 1346 to Title 18 of the United States Code. United States v. Weyhrauch, 548 F.3d 1237, 1243 (9th Cir.2008); see Act of Nov. 18, 1988, Pub.L. 100-690, 102 Stat. 4181, 4508 (1988) (codified at 18 U.S.C. 1346). Section 1346 supplies a definition: For the purposes of this chapter, the term scheme or artifice to defraud includes a scheme or artifice to deprive another of the intangible right of honest services. By enacting 1346, Congress revived the pre- McNally rules on honest services fraud. See, e.g., Weyhrauch, 548 F.3d at 1243 ([W]e turn for guidance in construing the statute to our pre- McNally case law and any relevant post- McNally decisions, and then consider pre- and postMcNally decisions from our sister circuits.); United States v. Sorich, 523 F.3d 702, 707 (7th Cir.2008) ([Section 1346] superseded McNally and reinstated the line of cases preceding it.); United States v. Williams, 441 F.3d 716, 722 (9th Cir.2006) ([B]y overruling McNally, Congress restored the pre- McNally landscape.); United States v. Rybicki, 354 F.3d 124, 136-37 (2d Cir.2003) (en banc). But see United States v. Brumley, 116 F.3d 728, 733 (5th Cir.1997) (Congress [in passing 1346] could not have intended to bless each and every pre- McNally lower court honest services' opinion.... Congress, then, has set us back on a course of defining honest services, and we turn to that task.). The intangible rights' theory [of honest services fraud] has been a subject of controversy in the history of the federal mail *940 and wire fraud statutes, Williams, 441 F.3d at 721, and, we would add, it continues to cause controversy despite (or perhaps because of) Congress's statutory abrogation of McNally. The greatest source of controversy, given the amorphous and open-ended nature of 1346, has arisen over the need to find limiting principles to cabin the broad scope of 1346.FN13 Sorich, 523 F.3d at 707. Without some kind of limiting principle, honest services wire fraud could potentially make relatively innocuous conduct subject to criminal sanctions. See Julie R. O'Sullivan, The Federal Criminal Code Is a Disgrace: Obstruction Statutes

as Case Study, 96 J. CRIM. L. & CRIMINOLOGY 643, 663 (2006) ([R]ead literally, [ 1346] would make a crime of the nondisclosure of virtually every breach of any public or private employment relationship-turning 1346 into a draconian personnel regulation that transforms private and governmental workplace violations into felonies. (quoting United States v. Czubinski, 106 F.3d 1069, 1077 (1st Cir.1997))). FN13. The courts of appeals have turned to at least four different kinds of limiting principles for 1346. The Fifth Circuit has held that the public official must have violated some state law to be convicted of honest services fraud. See, e.g., Brumley, 116 F.3d at 734-35; see also United States v. Panarella, 277 F.3d 678, 692-93 (3d Cir.2002) (finding violation of state law to be sufficient to demonstrate a violation of 1346, but declining to decide whether it was necessary to show a violation of 1346). We have recently held that the government does not need to prove an independent violation of state law to sustain an honest services fraud conviction. Weyhrauch, 548 F.3d at 1248. The Seventh Circuit has held that [m]isuse of office ... for private gain is the line that separates run of the mill violations of state-law fiduciary duty ... from federal crime, United States v. Bloom, 149 F.3d 649, 655 (7th Cir.1998) (emphasis added), but defines private gain broadly to include illegitimate gain, which usually will go to the defendant, but need not. Sorich, 523 F.3d at 709. The First and Tenth Circuits, in contrast, have held that intent is a sufficient limiting element. See United States v. Sawyer, 239 F.3d 31, 41 (1st Cir.2001) ( Sawyer II ); United States v. Welch, 327 F.3d 1081, 1106 (10th Cir.2003) ( [T]he only intent that need be proven in an honest services fraud is the intent to deprive another of the intangible right of honest services. (quoting Rybicki, 287 F.3d at 262)). Finally, the Third Circuit has held that when the theory of prosecution is that a public official accepted a bribe, honest services fraud requires a quid pro quo. United States v. Kemp, 500 F.3d 257, 281-82 (3d Cir.2007). As explained in further detail infra, **we agree with the Third Circuit that, for a bribery theory of honest services fraud, a quid pro quo is required; **we also agree with the First and Tenth Circuits that all honest services frauds require proof of the defendant's specific intent to defraud the public. Because Kincaid-Chauncey has not so argued, we are not presented with the opportunity to decide whether 1346 also requires private gain. [16] Playing off of this sentiment, Kincaid-Chauncey claims that, without a quid pro quo requirement, the honest services fraud statute criminaliz[es] behavior which is not clearly wrongful and which the official could not know was wrongful. She argues that McCormick and Evans, which established a quid pro quo requirement for Hobbs Act color of official right extortion prosecutions, require a similar result here; otherwise, numerous relatively innocuous acts would be swept into the statute's reach. We agree that a limiting principle needs to be identified for 1346 prosecutions. And we agree that a quid pro quo requirement may be a useful limiting principle for some theories of honest services fraud prosecution. **However, we do not believe that a quid pro quo should be required in all 1346 prosecutions; in fact, imposing a quid pro quo requirement on all 1346 cases risks being under-inclusive, because some honest services fraud, such as the failure to disclose a conflict of interest where required, may not confer a direct or easily demonstrated *941 benefit. See United States v. Panarella, 277 F.3d 678, 692 (3d Cir.2002). McCormick and Evans, while instructive, are clearly not controlling. As we discussed in the previous section, those cases concerned prosecutions under the Hobbs Act for color of official right extortion. Importantly, Hobbs Act extortion is defined as the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. 18 U.S.C. 1951(b)(2) (emphasis added). Because depriving another of property is a statutory prerequisite to a Hobbs Act violation, the quid pro quo requirement goes to the heart of the harm that the Hobbs Act prohibition against color of official right extortion is designed to punish: a public official using his position of power to demand property to which he knows he is not entitled. Like the Hobbs Act, 1343 also punishes the obtaining ... [of] property through wire fraud. But 1343 covers a broad range of public and private actions, and depriving another of property is not a necessary element of a 1343 violation. As Congress made perfectly clear post- McNally, it is also a violation of 1343 to devise any scheme or artifice to defraud through the wires, by which Congress meant to include a scheme or artifice to deprive another of the intangible right of honest services. 18 U.S.C. 1346. Fraud to obtain property is one means of violating 1343, but it is not the only means for doing so. FN14 FN14. The public's intangible right to honest services cannot be construed as property traditionally understood. See Ove v. Gwinn, 264 F.3d 817, 825 (9th Cir.2001) ([T]he deprivation of honest

services' does not constitute concrete financial loss [sufficient to establish an injury to state a RICO claim].). Although both the Hobbs Act and 1346 may be used to root out public corruption, a broader problem-violations of fiduciary duties, public or private-animates 1346. See, e.g., Williams, 441 F.3d at 722-23 (citing cases applying 1346 to private individuals who breach fiduciary duties); Sawyer II, 239 F.3d at 39 (Underlying the applicability of 1341[, 1343,] and 1346 to government officials is the notion that a public official acts as trustee for the citizens and the State ... and thus owes the normal fiduciary duties of a trustee, e.g., honesty and loyalty to them. (internal quotation marks and citations omitted)). We have long recognized that the wire fraud statute requires proof of specific intent to defraud. See, e.g., United States v. Bohonus, 628 F.2d 1167, 1172 (9th Cir.1980) (The specific intent requirement [in 1343] is an aspect of the scheme to defraud requirement; i.e., there is no fraudulent scheme without specific intent.). Moreover, we also recognized pre- McNally that to sustain an honest services fraud conviction, [n]either breach of a fiduciary duty, nor the receipt of secret profits ... would suffice, standing alone, to show [an honest services fraud] violation. Id. Instead, there must be a recognizable scheme formed with intent to defraud. Id. This specific intent requirement for honest services fraud survives McNally by virtue of 1346, see Williams, 441 F.3d at 722, and is necessary to distinguish legal conduct from honest services fraud. See Welch, 327 F.3d at 1106 (A scheme where the accused intends to gain property, including money, at the expense of a victim is within the purview of the mail and wire fraud statutes. Yet, the intent to defraud does not depend upon the intent to gain, but rather, on the intent to deprive. (citations omitted)); Sawyer II, 239 F.3d at 41, 46-47; United States v. Sawyer, 85 F.3d 713, 729-31 & nn. 12, 15 (1st Cir.1996) ( Sawyer I ). [17][18] The political system functions because lobbyists and others are able to persuade elected officials of the wisdom or error of policy proposals. We echo the admonition that [s]uch endeavors ... are *942 protected by the right to petition the Government for a redress of grievance[s] guaranteed by the First Amendment of the United States Constitution. Sawyer I, 85 F.3d at 731 n. 15. Attempts to persuade or mere favoritism, evidenced by a public official's willingness to take a lobbyist's telephone call or give a lobbyist greater access to his appointment schedule, are not sufficient to demonstrate either the lobbyist's or the public official's intent to deprive the public of honest services. Accord United States v. Sun-Diamond Growers of Cal., 526 U.S. 398, 404-06, 119 S.Ct. 1402, 143 L.Ed.2d 576 (1999) (acknowledging that there are some noncriminal gifts given to public officials in order to build a reservoir of goodwill that might ultimately affect one or more of a multitude of unspecified acts, now and in the future). If proof that an individual attempted to influence a public official and that the public official failed to disclose that influence were sufficient to demonstrate a violation of 1346, every individual who wrote a letter to his member of Congress last year (not to mention every member of Congress who received one) risks becoming a federal felon. This would be an untenable result. The requirement of a specific intent to defraud avoids this outcome. Although we have rejected Kincaid-Chauncey's invitation to read a quid pro quo requirement generally into honest services fraud, we find that her argument has merit in one important instance. The courts have recognized two principal theories of honest services fraud in cases involving public officials: **fraud based on a public official's acceptance of a bribe and fraud based on a public official's failure to disclose a material conflict of interest. [overruled by Skilling v. U.S. 130 S.Ct. 2896] See, e.g., Weyhrauch, 548 F.3d at 1247 (We are persuaded that Congress' intent in reinstating the honest services doctrine after McNally was to bring at least the two core categories of official misconduct, [ (1) taking a bribe or otherwise being paid for a decision while purporting to be exercising independent discretion and (2) nondisclosure of material information,] within the reach of 1346.); United States v. Urciuoli, 513 F.3d 290, 295 n. 3 (1st Cir.2008) (Typical cases [of honest services fraud] involve votes paid for by bribes or based on private undisclosed financial interests of the legislator ... or other non-disclosures in relation to official duties.); Kemp, 500 F.3d at 279 (Honest services fraud ... typically occurs in either of two situations: (1) bribery, where a [public official] was paid for a particular decision or action; or (2) failure to disclose a conflict of interest resulting in personal gain. (internal quotation marks and citation omitted; second alteration in original)); United States v. Brown, 459 F.3d 509, 521 (5th Cir.2006) ([C]ases upholding convictions arguably falling under the honest services rubric can be generally categorized in terms of either bribery and kickbacks or self-dealing.); Rybicki, 354 F.3d at 139-41 (categorizing honest services fraud case as either bribery or self-dealing); Sawyer II, 239 F.3d at 46 (stating that the elements of honest services fraud are satisfied if government proves either that[the defendant] intended to improperly influence a public official in her duties, or that he intended for public officials to fail to disclose a conflict of interest); Woodward, 149 F.3d at 57 ([T]wo of the ways that a public

official can steal his honest services from his public employer [include] (1) the official can be influenced or otherwise improperly affected in the performance of his duties; or (2) the official can fail to disclose a conflict of interest, resulting in personal gain.); see also Sorich, 523 F.3d at 707 ([I]n most honest services cases, the defendant violates a fiduciary duty in return for cash-kickbacks, bribes, or other payments.); *943United States v. Jennings, 487 F.3d 564, 577 (8th Cir.2007) (upholding honest services fraud conviction on failure to disclose conflict of interest theory); United States v. Hasner, 340 F.3d 1261, 1272 (11th Cir.2003) (A government official may be guilty of honest services fraud if he withholds material information.); United States v. deVegter, 198 F.3d 1324, 1327-28 (11th Cir.1999) ([T]he paradigm case of honest services fraud is the bribery of a public official....). [19] When the government's theory is that a public official accepted money in exchange for influence, we agree that at least an implicit quid pro quo is required. See Kemp, 500 F.3d at 281-82. This requirement is necessary to ensure that the defendant had the requisite intent to defraud and to avoid convicting people for having the mere intent to curry favor. Id. at 281. Without a link between the item of value received and an understanding that the public official receiving it is to perform official acts on behalf of the payor when called upon, there is no discernible way to distinguish between an elected official responding to legitimate lobbying and a corrupt politician selling his votes to the highest bidder. The Supreme Court has rejected such broad theories of criminal liability in a similar context. See Sun-Diamond Growers, 526 U.S. at 404-05, 408, 119 S.Ct. 1402 (requiring a link between receipt of an illegal gratuity and an official act in order to sustain conviction for violating the gratuity statute, 18 U.S.C. 201(c), lest the giving of gifts by reason of the recipient's mere tenure in [public] office constitute[ ] a violation). [20] Like the quid pro quo requirement for Hobbs Act extortion under color of official right charges, **the quid pro quo necessary for a bribery honest services fraud conviction need not be explicit, and the district court need not use the words quid pro quo when it instructs the jury so long as the essential idea of give-and-take is conveyed. See Giles, 246 F.3d at 973. Nor need the implicit quid pro quo concern a specific official act. See Kemp, 500 F.3d at 282 ([T]he government need not prove that each gift was provided with the intent to prompt a specific official act.); accord United States v. Jennings, 160 F.3d 1006, 1014 (4th Cir.1998) (The quid pro quo requirement is satisfied so long as the evidence shows a course of conduct of favors and gifts flowing to a public official in exchange for a pattern of official actions favorable to the donor. (internal quotation marks omitted)). FN15 Other *944 theories of honest services fraud-for example, when a government official violates a conflict of interest disclosure requirement-do not require a quid pro quo because they are sufficiently limited by the specific intent requirement that we have long recognized in all mail and wire fraud prosecutions. See also United States v. Selby, 2009 WL 102711, at *9 (9th Cir. January 15, 2009) (upholding conviction of honest services wire fraud based on a conflict of interest in violation of 18 U.S.C. 208). FN15. It is sufficient, for example, if the evidence establishes that the government official has been put on retainer-that is, that the government official has received payments or other items of value with the understanding that when the payor comes calling, the government official will do whatever is asked. Only individuals who can be shown to have had the specific intent to trade official actions for items of value are subject to criminal punishment on this theory of honest services fraud. The retainer theory of quid pro quo eliminates the possibility that an innocent lobbyist or politician will be convicted for depriving the public of honest services. The Third and First Circuits have both explicitly approved such retainer theories of honest services fraud, although they called them by different names. See Kemp, 500 F.3d at 282 ([W]e agree with the government that the District Court's instruction to the jury that it could convict upon finding a stream of benefits' was legally correct.); Sawyer I, 85 F.3d at 730 ([A] person with continuing and long-term interests before an official might engage in a pattern of repeated, intentional gratuity offenses in order to coax ongoing favorable official action in derogation of the public's right to impartial official services.); see also Jennings, 160 F.3d at 1014 (stating, in a federal bribery case, that the quid pro quo requirement is satisfied if payments [are] made with the intent to retain the official's services on an as needed basis, so that whenever the opportunity presents itself the official will take specific action on the payor's behalf). 2 We now apply these principles to the facts of this case. The district court instructed the jury on the wire

fraud counts FN16 as follows: FN16. For the campaign contributions alleged as acts in furtherance of the honest services fraud scheme, the district court gave an explicit quid pro quo instruction, which Kincaid-Chauncey does not challenge as inadequate. In order for a defendant to be found guilty of [wire fraud], the Government must prove each of the following elements beyond a reasonable doubt. **First, the defendant made up or knowingly participated in a scheme or plan to deprive the Clark County Board of County Commissioners and the citizens of Clark County of their right to honest services. **Second, the defendant acted with the intent to deprive the Board of County Commissioners and the citizens of Clark County of their right to honest services. And, **third, the defendant transmitted, or caused someone to transmit, a wire communication in interstate commerce to carry out or to attempt to carry out the scheme or plan.... What must be proved beyond a reasonable doubt is that the defendant, with intent to defraud, knowingly and willfully devised, intended to devise, or participated in a scheme to defraud substantially the same as the one alleged in the indictment. These instructions appropriately directed the jury's attention to the issue of intent to defraud. The instructions state that Kincaid-Chauncey could not be found guilty unless she made up or knowingly participated in a scheme or plan to deprive the County or its citizens of their right to honest services. The instructions repeat that Kincaid-Chauncey must have acted with the intent to deprive the Board of County Commissioners and the citizens of Clark County of their right to honest services. (emphasis added). The instructions go on to say that the government must prove beyond a reasonable doubt that the defendant with intent to defraud, knowingly and willfully devised, intended to devise, or participated in a scheme to defraud. (emphasis added). The instructions then proceed to define what it means to intend to defraud the public of honest services: Public officials inherently owe a duty to the public to act in the public's best interest. If, instead, the official accepts something of value with an intent to be influenced, the official has defrauded the public of the official's honest services even though no tangible loss to the public has been shown because the public official deprived the public of its right to honest and faithful government. In addition, when an official acting with the intent to defraud, fails to disclose a personal interest in a matter over which he or she has decision-making power, the public is deprived of its right to honest services because it is deprived of its right either to disinterested decision making itself or full disclosure as to the official's motivation behind an official *945 act. It is not enough for the Government to prove that the defendant failed to disclose such a conflict of interest. Rather, the Government must prove that the defendant acted with the intent to defraud. The Government proves intent to defraud if it proves that the scheme was reasonably calculated to deceive persons of ordinary prudence and comprehension. A public official's duty to disclose material information need not be expressly imposed by statute or code because a public official inherently owes a fiduciary duty to the public to make governmental decisions in the public's best interest. The focus of honest services fraud is on the fraudulent and deceptive conduct of the public official who abuses a position of trust, and the Government is not required to link any particular payment to a specific act on the part of the public official. This instruction permitted the jury to find that Kincaid-Chauncey defrauded the public of her honest services on one of two theories: that she accepted something of value with the intent to be influenced or that she failed to disclose a conflict of interest and thereby intended to defraud the public. We must reverse KincaidChauncey's convictions for honest services fraud if the instructions regarding either of those two theories stated

the necessary elements inaccurately, Martinez v. Garcia, 379 F.3d 1034, 1040 (9th Cir.2004), and the error was not harmless, Neder v. United States, 527 U.S. 1, 9, 119 S.Ct. 1827, 144 L.Ed.2d 35 (1999). [21] The first theory permitted a finding of guilt only if the jury found that Kincaid-Chauncey accept[ed] something of value with an intent to be influenced. Because this is a bribery theory of prosecution, the intent to defraud must have been shown at least through an implicit quid pro quo. The intent element described in this instruction is rather thin; if given in isolation, this instruction might well be inadequate to ensure that the jury found that Kincaid-Chauncey had acted with the intent to defraud. Two factors, however, prevent us from reaching that conclusion. First, the instructions do not permit the jury to convict a defendant simply for having the intent to be influenced. Instead, the defendant needed to accept something of value in conjunction with that intent. Though the district court specifically stated that the Government is not required to link any particular payment to a specific act on the part of the public official, this instruction is not very different from the implicit quid pro quo instruction we just approved in connection with the Hobbs Act charges against Kincaid-Chauncey. The Hobbs Act instruction stated: [T]he Government does not have to prove an explicit promise to perform a particular act made at the time of the payment. Rather, it is sufficient if the public official understands that he or she is expected as a result of the payment to exercise particular kinds of influence as specific opportunities arise. There is little distance between the knowledge that a payment creates an expectation to exercise particular kinds of influence and the intent to be influenced, motivated by the receipt of something of value. The district court's instruction that the Government is not required to link any particular payment to a specific act on the part of the public official, contrary to Kincaid-Chauncey's argument, did not remove the necessary link between the receipt of the item of value and the intent to be influenced. The Third Circuit has used nearly identical language to describe the stream of benefits theory of honest services fraud. See Kemp, 500 F.3d at 282 ([T]he government need not prove that *946 each gift was provided with the intent to prompt a specific official act.). This instruction, though thin, was sufficient to convey the idea of an implicit quid pro quo. Second, we are required to review the jury instructions as a whole, Frega, 179 F.3d at 806 n. 16, and the instructions here contain numerous references to the specific intent to defraud the public, which strengthen the quid pro quo element in the instructions. For example, the district court cautioned the jury that [a] public official does not commit honest services fraud if his or her intent was limited to the cultivation of a personal, business, or political friendship. Rather, the official must have had an intent to be improperly influenced in his or her official duties. The jury was also instructed that [a] public official's receipt of hospitality does not defraud the public of its right to honest services unless the public official accepts such hostility [sic] with the intent to be influenced or to deceive the public. The instructions required that the jury focus on the fraudulent and deceptive conduct of the public official who abuses a position of trust. To satisfy the specific intent to defraud, the instructions required the government to prove beyond a reasonable doubt that the scheme was reasonably calculated to deceive persons of ordinary prudence and comprehension. The jury thus could not convict for mere influence or political friendships. Accord Kemp, 500 F.3d at 281-82 (approving an instruction that left no danger that the jury would convict upon merely finding that[the defendants] provided benefits to [a public official] in a general attempt to curry favor or build goodwill). Instead, conviction required fraudulent and deceptive conduct. Thus, while the instructions stated that all a finding of guilt required was receipt of an item of value coupled with an intent to be influenced, the rest of the instructions prevented a conviction based on the type of legitimate influence that is necessary to the functioning of any political system. The district court did not use the words quid pro quo, but the instructions, on the whole, adequately conveyed the idea that you get something and you give something. Giles, 246 F.3d at 973. Because the instructions, taken as a whole, contained an implicit quid pro quo requirement, they adequately stated the elements of honest services fraud on a bribery theory. [22] The second theory on which the jury instructions permitted a finding of guilt on the honest services fraud counts was the failure to disclose a conflict of interest. This portion of the instruction specifically notes that the mere failure to disclose a conflict of interest is inadequate, but that the government must also prove that Kincaid-Chauncey acted with the specific intent to defraud in her failure to disclose a conflict of interest. The instruction permitted conviction if the public official participated in the matter without disclosing her conflict of interest, provided that the non-disclosure was coupled with an intent to defraud. The instruction thus

required that Kincaid-Chauncey satisfy the requisite mental state for an honest services fraud conviction based on a nondisclosure theory. As we stated above, this theory of honest services fraud does not require demonstration of a quid pro quo to prove the required intent to defraud.FN17 FN17. Again, Kincaid-Chauncey has not argued that the failure to disclose a conflict of interest theory of honest services fraud also requires a violation of a specific, applicable conflict of interest or disclosure requirement, or personal gain, so we do not decide whether it does. *947 We conclude that the instructions adequately stated the elements of 1346 for both theories of prosecution. U.S. v. Inzunza, 2011 WL 1365590, 2011 Daily Journal D.A.R. 5228 (9th Cir.(Cal.),Apr 12, 2011)

Private gain is not an element of mail / wire fraud honest services fraud in the 9th Cir., unlike 7th Cir. case law Montesano v. Seafirst Commercial Corp. 818 F.2d 423 (C.A.5(La.), 1987 RICO Case example of conspiracy to repossess vessel
U.S. v. Woodward, 149 F.3d 46, 57, 49 Fed. R. Evid. Serv. 800 (1st Cir. (Mass.) Jul 20, 1998) 18 U.S.C. 1341, 1346 nonreciprocal gifts are evidence of bribes. Case involving defendants acceptance of gratuities. Defendant was convicted in the United States District Court for the District of Massachusetts, Douglas P. Woodlock, J., of mail fraud, wire fraud, interstate travel to commit bribery, and conspiracy to commit those offenses. Defendant appealed. The Court of Appeals, Bownes, Senior Circuit Judge, held that: (1) evidence established intent to deprive public of defendant's honest services; (2) defendant caused telephone call underlying wire fraud conviction; (3) use of mails supporting mail fraud conviction was established by credit card company's mailing of bills for charges used to pay for gratuities; (4) evidence supported Travel Act conviction; (5) Travel Act conviction did not violate effects doctrine; (6) defendant may be prosecuted for deprivation of honest services if he has a dual intent; and (7) evidence of defendant's acceptance of Super Bowl trip was admissible. Affirmed. See also: 85 F.3d 713. West Headnotes [1] Postal Service 306 35(2)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(2) k. Nature and Elements of Offense in General. Most Cited Cases Telecommunications 372 372 Telecommunications 1014(2)

372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(2) k. Nature and Elements of Offense in General. Most Cited Cases (Formerly 372k363) Telecommunications 372 1018(4)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1015 Prosecutions 372k1018 Evidence 372k1018(4) k. Weight and Sufficiency. Most Cited Cases (Formerly 372k363) To support a conviction for mail or wire fraud, the government must prove beyond a reasonable doubt (1) the defendant's knowing and willing participation in a scheme or artifice to defraud with the specific intent to defraud, and (2) the use of the mails or interstate wire communications in furtherance of the scheme. 18 U.S.C.A. 1341, 1343. [2] Postal Service 306 35(9)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(9) k. Injury from Fraud. Most Cited Cases For purposes of mail fraud statute defining term scheme or artifice to defraud as including scheme to deprive another of right of honest services, **public official's undisclosed, biased decision-making for personal gain, whether or not tangible loss to the public is shown, constitutes a deprivation of honest services. 18 U.S.C.A. 1346. [8] Criminal Law 110 1144.13(2.1)

110 Criminal Law 110XXIV Review 110XXIV(M) Presumptions 110k1144 Facts or Proceedings Not Shown by Record 110k1144.13 Sufficiency of Evidence 110k1144.13(2) Construction of Evidence 110k1144.13(2.1) k. In General. Most Cited Cases Criminal Law 110 1159.2(2)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(2) k. Verdict Unsupported by Evidence or Contrary to Evidence. Most Cited Cases 1503. Influencing or injuring officer or juror generally

Appellate court must reverse a conviction on the grounds of evidentiary insufficiency when an equal or nearly equal theory of guilt and a theory of innocence is supported by the evidence viewed in the light most favorable to the verdict; in such cases, reasonable jury must necessarily entertain reasonable doubt. [9] Postal Service 306 35(5)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(5) k. Knowledge and Intent in General. Most Cited Cases Telecommunications 372 1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(10) k. Honest Services Fraud. Most Cited Cases (Formerly 372k362) Defendant's acceptance of free meals and entertainment from lobbyist established intent to deprive public of his honest services as state legislator, as required for mail and wire fraud convictions based on honest services scheme; defendant knew lobbyist was conferring gratuities at time when he could take official action favorable to lobbyist's employer, and did so act, and defendant, who asserted that gratuities were bestowed as result of his friendship with lobbyist, also knew that lobbyist was conferring such benefits on other legislators with whom he had only business relationship. 18 U.S.C.A. 1341, 1343, 1346. [11] Criminal Law 110 312

110 Criminal Law 110XVII Evidence 110XVII(B) Presumptions and Inferences 110k305 Presumptions 110k312 k. Intent. Most Cited Cases Jury is entitled to infer defendant's intent from the circumstances surrounding his actions; in other words, from indirect, as opposed to direct, evidence. [12] Criminal Law 110 549

110 Criminal Law 110XVII Evidence 110XVII(V) Weight and Sufficiency 110k549 k. Weight and Conclusiveness in General. Most Cited Cases Juries are not required to examine the evidence in isolation; individual pieces of evidence, insufficient in themselves to prove a point, may in cumulation prove it, and the sum of an evidentiary presentation may well be greater than its constituent parts.

[13] Postal Service 306

35(8)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(8) k. Effectiveness of Matter Mailed to Further Fraud. Most Cited Cases Telecommunications 372 1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(10) k. Honest Services Fraud. Most Cited Cases (Formerly 372k362) It is not necessary for the government to link a particular gratuity with a specific act to obtain a mail or wire fraud conviction based on scheme to steal public employee's honest services. 18 U.S.C.A. 1341, 1343, 1346. [14] Postal Service 306 35(5)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(5) k. Knowledge and Intent in General. Most Cited Cases Telecommunications 372 1014(10)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(10) k. Honest Services Fraud. Most Cited Cases (Formerly 372k362) **Defendant's intent to deprive public of his honest services as state legislator was established by his intentional failure to disclose, as required, conflict of interest arising from his acceptance of gratuities from lobbyist for industry for which defendant had decision-making power over important legislation, thereby supporting mail and wire fraud convictions. 18 U.S.C.A. 1341, 1343, 1346; M.G.L.A. c. 268B, 5. 306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(9) k. Injury from Fraud. Most Cited Cases **For purposes of mail fraud statute including within definition of scheme or artifice to defraud scheme to deprive another of right to honest services, obligation to disclose material information inheres in the legislator's general fiduciary duty to the public. 18 U.S.C.A. 1346.

[16] Postal Service 306

35(5)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(5) k. Knowledge and Intent in General. Most Cited Cases Telecommunications 372 1014(3)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(3) k. Knowledge and Intent in General. Most Cited Cases (Formerly 372k362) **Defendant's intentional failure to disclose, as required by state law, gifts that he received from insurance company and insurance association while serving as state legislator established requisite intent to deceive necessary for mail and wire fraud convictions. 18 U.S.C.A. 1341, 1343, 1346; M.G.L.A. c. 268B, 5. [17] Telecommunications 372 1014(4)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(4) k. Knowledge That Communication Be Part of Scheme; Foreseeability. Most Cited Cases (Formerly 372k362) Defendant could reasonably have foreseen that telephone would be used to make hotel reservations for out-of-state conference for lobbyist from whom defendant received gratuities, and therefore caused wiring for purposes of wire fraud conviction based on scheme to defraud public of right to defendant's honest services as state legislator. 18 U.S.C.A. 1343, 1346. [18] Telecommunications 372 1014(4)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(4) k. Knowledge That Communication Be Part of Scheme; Foreseeability. Most Cited Cases (Formerly 372k362) To support wire fraud conviction, defendant need not personally use the wires as long as such use was a reasonably foreseeable part of the scheme in which he participated. 18 U.S.C.A. 1343. [19] Postal Service 306 35(8)

306 Postal Service 306III Offenses Against Postal Laws

306k35 Use of Mails to Defraud 306k35(8) k. Effectiveness of Matter Mailed to Further Fraud. Most Cited Cases Telecommunications 372 1014(6)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(6) k. Effectiveness of Communication to Further Fraud. Most Cited Cases (Formerly 372k362) Use of the mails or wires to further the fraudulent scheme need only be incidental to support conviction for mail or wire fraud. 18 U.S.C.A. 1341, 1343. [20] Telecommunications 372 1018(4)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1015 Prosecutions 372k1018 Evidence 372k1018(4) k. Weight and Sufficiency. Most Cited Cases (Formerly 372k363) Jury could reasonably have concluded, in support of wire fraud conviction, that telephone call made to arrange hotel reservations for lobbyist attending out-of-state conference had purpose of executing scheme to deprive public of its right to defendant's honest services as state legislator through gratuities received with intent to favor unlawfully lobbyist's employer; lobbyist would not have been able to confer illegal gratuities during conference if lobbyist had no hotel room in which to stay while at conference. 18 U.S.C.A. 1341, 1346. [21] Postal Service 306 35(8)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(8) k. Effectiveness of Matter Mailed to Further Fraud. Most Cited Cases Credit card company's mailing of bills to lobbyist for charges arising from lobbyist's use of card to pay for illegal gratuities given to defendant established use of mails for purpose of furthering scheme to defraud public of right to defendant's honest services as state legislator, supporting mail fraud conviction; it was necessary part of ongoing scheme that lobbyist pay his credit card bills after receiving them in mail. 18 U.S.C.A. 1341, 1346. [22] Commerce 83 82.10

83 Commerce 83II Application to Particular Subjects and Methods of Regulation 83II(J) Offenses and Prosecutions 83k82.5 Federal Offenses and Prosecutions

83k82.10 k. Offenses Involving Activity Unlawful Under State Law. Most Cited Cases Elements of Travel Act violation include (1) interstate travel or the use of an interstate facility, (2) with the intent to promote, manage, establish, carry on, or facilitate an unlawful activity, and (3) followed by performance or attempted performance of acts in furtherance of the unlawful activity. 18 U.S.C.A. 1952. [23] Commerce 83 82.10

83 Commerce 83II Application to Particular Subjects and Methods of Regulation 83II(J) Offenses and Prosecutions 83k82.5 Federal Offenses and Prosecutions 83k82.10 k. Offenses Involving Activity Unlawful Under State Law. Most Cited Cases Evidence that established defendant's intent for purposes of wire and mail fraud convictions, based on his acceptance of gratuities pursuant to scheme to defraud public of right to his honest services, also established requisite intent for Travel Act conviction arising from acceptance of gratuity in violation of Massachusetts' gratuity statute. 18 U.S.C.A. 1341, 1343, 1346; M.G.L.A. c. 268B, 3. [24] Commerce 83 82.10

83 Commerce 83II Application to Particular Subjects and Methods of Regulation 83II(J) Offenses and Prosecutions 83k82.5 Federal Offenses and Prosecutions 83k82.10 k. Offenses Involving Activity Unlawful Under State Law. Most Cited Cases Government was not required to prove that defendant violated Florida bribery statute, rather than Massachusetts statute, to obtain Travel Act conviction based on defendant's acceptance of gratuity in Florida while he was legislator of Massachusetts; jury could have concluded that gratuity was paid for purpose of influencing legislative activities in and affecting Massachusetts. 18 U.S.C.A. 1952; M.G.L.A. c. 268B, 3. [25] Commerce 83 82.10

83 Commerce 83II Application to Particular Subjects and Methods of Regulation 83II(J) Offenses and Prosecutions 83k82.5 Federal Offenses and Prosecutions 83k82.10 k. Offenses Involving Activity Unlawful Under State Law. Most Cited Cases Travel Act does not require the government to prove that the alleged unlawful activity violates the laws of the state ultimately traveled to, or of the state in which money actually changed hands; conviction may be sustained where the evidence demonstrates unlawful activity in violation of the laws of the state in which the effects of the fraudulent scheme are felt. 18 U.S.C.A. 1952(b)(2). [26] Commerce 83 82.10

83 Commerce 83II Application to Particular Subjects and Methods of Regulation 83II(J) Offenses and Prosecutions

83k82.5 Federal Offenses and Prosecutions 83k82.10 k. Offenses Involving Activity Unlawful Under State Law. Most Cited Cases Defendant's receipt, as Massachusetts legislator, of gratuities in Florida, followed by recommittal of bill against interests of lobbyist providing gratuities during period defendant held relevant committee cochair, satisfied requirement, for Travel Act conviction, that defendant perform act in furtherance of unlawful activity after his interstate travel to Florida. 18 U.S.C.A. 1952; M.G.L.A. c. 268B, 3. [27] Commerce 83 82.10

83 Commerce 83II Application to Particular Subjects and Methods of Regulation 83II(J) Offenses and Prosecutions 83k82.5 Federal Offenses and Prosecutions 83k82.10 k. Offenses Involving Activity Unlawful Under State Law. Most Cited Cases Travel Act conviction based on defendant's acceptance of gratuities in Florida, while he was Massachusetts legislator, did not violate effects doctrine; potential effect on Massachusetts of defendant's acceptance of gratuities from lobbyist interested in Massachusetts legislation provided sufficient nexus with conduct to satisfy doctrine, and acceptance of gratuities also was sufficiently linked to officials acts taken in Massachusetts in lobbyist's favor before and after travel to Florida. 18 U.S.C.A. 1952; M.G.L.A. c. 268B, 3. [30] Commerce 83 82.10

83 Commerce 83II Application to Particular Subjects and Methods of Regulation 83II(J) Offenses and Prosecutions 83k82.5 Federal Offenses and Prosecutions 83k82.10 k. Offenses Involving Activity Unlawful Under State Law. Most Cited Cases To violate the Travel Act, a gratuity need not be motivated by a specifically identified official act. 18 U.S.C.A. 1952. [31] Conspiracy 91 23.1

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k23.1 k. In General. Most Cited Cases To convict defendant of conspiracy, government must prove **that a conspiracy existed, **that defendant knew of and voluntarily participated in it, and **that an overt act took place in furtherance of it. [32] Conspiracy 91 24(1)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k24 Combination or Agreement 91k24(1) k. In General. Most Cited Cases Conspiratorial agreement need not be explicit; a tacit agreement will

suffice. [33] Conspiracy 91 24.5

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k24.5 k. Knowledge and Intent. Most Cited Cases To establish defendant's voluntary participation in the conspiracy, the evidence must establish both his intent to agree and his intent to effectuate the object of the conspiracy. [34] Conspiracy 91 47(2)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence 91k47 Weight and Sufficiency 91k47(2) k. Circumstantial Evidence. Most Cited Cases Neither the conspiratorial agreement nor defendant's participation in it need be proven with direct evidence. [40] Postal Service 306 35(5)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(5) k. Knowledge and Intent in General. Most Cited Cases Defendant may be prosecuted of mail fraud for deprivation of honest services if he has a dual intent, i.e., if he is found to have intended both a lawful and an unlawful purpose to some degree; if jury finds that an unlawful purpose was present, it may convict the defendant. 18 U.S.C.A. 1346. [41] Bribery 63 14

63 Bribery 63k12 Trial 63k14 k. Instructions. Most Cited Cases Conspiracy 91 48.1(3)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k48 Trial 91k48.1 Questions for Jury 91k48.1(2) Particular Conspiracies 91k48.1(3) k. Fraud. Most Cited Cases Postal Service 306 50

306 Postal Service 306III Offenses Against Postal Laws

306k50 k. Trial and Review. Most Cited Cases Telecommunications 372 1021

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1015 Prosecutions 372k1021 k. Instructions. Most Cited Cases (Formerly 372k363) Intent instruction was proper in prosecution for mail and wire fraud, interstate travel to commit bribery, and conspiracy, based on alleged scheme to defraud public of defendant's honest services as state legislator, when it indicated that defendant could be convicted if he had both intent to cultivate business and political relationship and intent to be influenced in official legislative duties. 18 U.S.C.A. 371, 1341, 1343, 1346, 1952. [42] Criminal Law 110 25

110 Criminal Law 110I Nature and Elements of Crime 110k19 Criminal Intent and Malice 110k25 k. Unintended Consequences of Act. Most Cited Cases Criminal law may punish conduct even if its illegal purpose is incidental to other, legal purposes. [46] Criminal Law 110 369.2(3.1)

110 Criminal Law 110XVII Evidence 110XVII(F) Other Offenses 110k369 Other Offenses as Evidence of Offense Charged in General 110k369.2 Evidence Relevant to Offense, Also Relating to Other Offenses in General 110k369.2(3) Particular Offenses, Prosecutions for 110k369.2(3.1) k. In General. Most Cited Cases Criminal Law 110 371(1)

110 Criminal Law 110XVII Evidence 110XVII(F) Other Offenses 110k371 Acts Showing Intent or Malice or Motive 110k371(1) k. In General. Most Cited Cases Criminal Law 110 371(11)

110 Criminal Law 110XVII Evidence 110XVII(F) Other Offenses 110k371 Acts Showing Intent or Malice or Motive 110k371(11) k. In Prosecutions for Bribery. Most Cited Cases Evidence that, at time outside applicable statute of limitations,

defendant had accepted gratuity in form of Super Bowl trip for himself and his wife was admissible in prosecution for mail and wire fraud, interstate travel to commit bribery, and conspiracy arising from scheme to defraud public of defendant's honest services as state legislator; evidence was probative on issues of intent and nature of conspiracy, and its probative value was not substantially outweighed by potential for unfair prejudice. 18 U.S.C.A. 371, 1341, 1343, 1346, 1952; Fed.Rules Evid.Rule 403, 28 U.S.C.A. This case is the sequel to United States v. Sawyer, 85 F.3d 713 (1st Cir.1996), as we discuss in detail infra. Appellant Francis H. Woodward appeals his four-count conviction for mail and wire fraud, 18 U.S.C. 1341, 1343; interstate travel to commit bribery, 18 U.S.C. 1952 (the Travel Act); and conspiracy to commit those offenses, 18 U.S.C. 371. **The charges stem from his acceptance of illegal gratuities from William Sawyer and others, with the intent of depriving Woodward's constituents of his honest services as a legislator. In this appeal, Woodward claims that the evidence was insufficient to establish his guilt beyond a reasonable doubt on any of the four counts. He also argues that the district court erred in certain evidentiary rulings and in its jury instructions. We affirm. I Facts When reviewing an appeal from a conviction, we view the facts in the light most favorable to the verdict. United States v. Gonzalez-Maldonado, 115 F.3d 9, 12 (1st Cir.1997); Sawyer, 85 F.3d at 731. Francis H. Woodward was first elected to the Massachusetts House of Representatives in 1977. He was assigned to the Joint Committee on Insurance (Insurance Committee), and served as the Committee's House Chair from January, 1985 through January 19, 1991. Beginning January 20, 1991 and continuing through April 1992 when he resigned from the legislature, Woodward was assigned to the Transportation Committee, which had no jurisdiction over insurance matters. During the relevant time period, John Hancock Mutual Life Insurance Company (Hancock) was one of the two largest life insurance companies in Massachusetts, and one of the ten largest in the entire United States. Because Hancock is domiciled in Massachusetts and is regulated primarily at the state level, Massachusetts' laws and regulations have a major impact on Hancock, affecting such issues as the corporation's organization and funding. William Sawyer was the senior legislative counsel in Hancock's Government Relations Department. He was responsible for lobbying the Massachusetts legislature on behalf of bills favored by Hancock and the industry, and against those bills they opposed. He actively lobbied the Insurance Committee. Hancock was also a member of an industry trade association known as the Life Insurance Association of Massachusetts (LIAM). LIAM also employed lobbyists who worked on Massachusetts legislation, in coordination with the lobbyists of its member companies. Sawyer was an active participant in LIAM as well. Bills filed in the Massachusetts legislature were assigned to committee by subject matter. The Insurance Committee, comprising eleven representatives and six senators, was one of the principal legislative committees to which

legislation of interest to Hancock and LIAM was assigned. From 1985 through 1990, the Insurance Committee received, on average, three hundred bills a year, one hundred of which affected the life insurance industry. Of those bills, the industry was interested in passing an average of only five per year; it opposed the rest. The committee's procedures were, in general, as follows. First, public hearings were held on the bills. Following such hearings, the members of the committee voted on the bills in executive sessions that were open to the public. If the bill received a favorable recommendation in the committee's executive session, it was reported out favorably for further action on the floor of either the House or the Senate. If it received an unfavorable recommendation or a study order in the committee's executive session vote, then *52 in all likelihood the bill would not pass in that session. The Insurance Committee was co-chaired by one House and one Senate member. The co-chairs, Woodward and his Senate co-chair, directed the activities of the committee, supervising the committee staff and scheduling all public hearings, executive sessions, and meetings. As co-chair, Woodward had the authority to assign bills to the hearing calendar and subsequent executive sessions, and to take other action that would help to advance bills through the committee (or he could choose not to take such action). Woodward also had the authority to affect the disposition of a bill, including the ability to carry FN1 a bill through the legislative process or to send it to study, which effectively shelved it. FN1. The parties dispute whether carrying means merely signing paperwork, or whether it means advocating or leading the debate for the bill. As we discuss infra at 60-61, accepting the facts in the light most favorable to the verdict, carrying implies active involvement rather than merely ministerial paperwork. As one of the four most active lobbyists on behalf of domestic life insurance companies, Sawyer was frequently present at Insurance Committee meetings. He saw Woodward two or three times a week, and was the lobbyist who met most often with Woodward. After Woodward was removed from the Insurance Committee in January 1991, Sawyer continued to appear at committee meetings and to meet with Woodward's successor as House Chair with the same frequency as he had before. At the heart of the government's case was the evidence of Sawyer's expenditures on Woodward for shared meals and entertainment. From 1984 through 1992, Woodward accepted in excess of $9,000 in gratuities from Hancock and LIAM through their lobbyists Sawyer and William F. Carroll, the president of LIAM. Hancock provided the majority of this largesse, at least $8,740 in meals, rounds of golf, and other entertainment. The government introduced evidence showing that, from March 28, 1984 through January 23, 1992, Sawyer expended $8,740 on behalf of Woodward. Of that total, $1,827 was expended after the statute of limitations period began, i.e., after July 27, 1990. One thousand three hundred forty dollars ($1,340) of the total expenditures occurred after January 19, 1991, when Woodward was removed from the Insurance Committee.FN2 FN2. Woodward argues, as he did at trial, that expenditures occurring after that date are irrelevant to the charges against him because they came after any potential utility of Woodward to the life insurance industry had ended. The jury acquitted him of all

substantive charges stemming from gratuities received after the end of 1990. Sawyer's expenditures consisted of (1) shared meals and entertainment at conferences, generally once or twice a year; (2) miscellaneous meals and rounds of golf each year in Massachusetts; (3) a dinner at the annual Fourth of July social gathering on Cape Cod; and (4) a trip in January 1986 to the Super Bowl in New Orleans. Expenditures from categories (1) and (2) are the subject of this appeal on the sufficiency issue. The jury acquitted Woodward as to category (3) expenditures. Evidence relating to the Super Bowl was not the subject of the indictment, but was admitted, over Woodward's objection, to show the nature of the conspiracy and for its bearing on intent; Woodward appeals the admission of that evidence. The National Conference of Insurance Legislators (COIL) is a national association of state legislators involved in insurance matters. Every year the organization sponsored one or more conferences for legislators, at various sites around the country, where educational presentations were made concerning insurance matters. Woodward attended many COIL conferences, as did other legislators from Massachusetts and elsewhere. Legislators' travel and hotel expenses were paid from a legislative account or campaign funds but not by the insurance industry. Woodward and Sawyer frequently played golf at exclusive clubs near the conference site, and Sawyer generally paid the costs of the golf. Sawyer used his corporate credit card to pay for business-related expenses. He submitted an expense account statement with receipts, and Hancock reimbursed Sawyer*53 for such expenses. In addition, Sawyer paid for a number of dinners at local restaurants that would be attended by legislators such as Woodward who were attending the conferences. At times, William Carroll of LIAM would pay for the dinners. Sawyer/Hancock also paid for Woodward's entertainment while at these conferences, such as tickets for the Grand Ole Opry when the conference was in Nashville. In addition to the COIL conference expenditures, Sawyer paid for Woodward's meals at expensive restaurants, as early as 1984, when Woodward was in the Legislature but before Woodward served as co-chair of the Insurance Committee. This practice continued throughout the years Woodward remained in the House, with higher amounts generally in the years he was committee chair. Sawyer also paid for an average of three to five golf outings with Woodward each year at various locations in Massachusetts. These were principally at Sawyer's private golf club, the Woodland Golf Club. Hancock also paid for other forms of entertainment, including boat rentals and tickets to tourist attractions such as Busch Gardens. The government introduced into evidence a chart showing the amount of annual gratuities accepted by Woodward. The pattern formed by these amounts is noteworthy. In 1984 and 1985, before Woodward became chair of the Committee and for the first year afterward, Woodward accepted gratuities in the range of $200-300 from Sawyer/Hancock. In 1986 there was a marked increase to $2,527, including over $1,800 to cover the air fare, hotel, and tickets (for him and his wife) to attend the Super Bowl in New Orleans. In 1987-91, Woodward received gratuities in the amount of $1,547, $1,093, $513 FN3, $1,230, and $1,324. Woodward served as committee chair during all but the last of these years. During his last four months in the legislature, January through April 1992, he received only $16, and his gratuities dropped to $0 after he resigned from office in April. After Woodward was replaced as committee chair by Rep. Francis Mara, Sawyer began wining and dining Mara in the same manner as he had Woodward. Sawyer, 85 F.3d at 721.

FN3. The evidence relating to 1989 appears to underrepresent the actual amount of gratuities received in that year. The numerical evidence in the chart came from Sawyer's expense accounts submitted to Hancock for reimbursement. For years other than 1989, if Woodward participated in a particular event, then Sawyer's expenditure on that event was divided among the number of participants in order to calculate, as closely as possible, the share received by Woodward. In 1989, for a conference on Amelia Island, Sawyer's records do not reflect which legislators participated in which events. Therefore it was not clear what share each individual legislator received of the $5,282 of Sawyer's total expenses for the conference. Thus, although the records reflect that Woodward did share in the total expenditures, the calculation of his annual gratuities for 1989 does not include Woodward's share of the Amelia Island expenses. In addition to Sawyer's payments on behalf of Woodward, LIAM lobbyists also paid for some of Woodward's meals during the period of the charged conspiracy (1984-92). These amounted to $444. Woodward's official actions, for the most part, conformed with the way Sawyer and Hancock wanted the recipient of their gratuities to conduct himself. Sawyer was the lobbyist with whom Woodward met the most, according to Robert J. Smith, the research director for the Insurance Committee. They met approximately three times a week when the legislature was in session. And Woodward repeatedly acted on behalf of Hancock and the life insurance industry in his capacity as co-chair of the Committee. According to Smith, Woodward was the most pro-life-insurance-industry chair of the Insurance Committee during Smith's tenure, 1985-95 (which included six other House and Senate chairs). Woodward actively supported the industry's position on most bills of importance to the industry. As his defense to the charge that he engaged in illegal theft of honest services, Woodward presented evidence that Sawyer's expenditures on his behalf were based not on bribery but on their close friendship. In addition to their business relationship, Woodward and Sawyer maintained a personal relationship. They met in the late 1970s, which is the time Woodward began serving on the Insurance Committee. The two families socialized together even before Woodward assumed*54 the chair of the Committee in 1984. The two couples drove together to a conference in New York in 1980, and the Sawyers and their children visited the Woodwards at the latter's house on Cape Cod as early as 1982. Beginning in about 1984, the Sawyers would traditionally stay at the Woodwards' house on the Cape for an annual Fourth of July weekend gathering. The two families also shared other times, including family celebrations and tragedies. Mrs. Woodward testified that the Sawyers were one of three couples with whom the Woodwards were the closest. **The jury convicted Woodward of four FN4 (of the twenty-eight) charges against him: one count each of mail and wire fraud, one count of interstate travel to commit bribery, and one count of conspiracy to commit the foregoing three offenses. FN4. To be more precise, the jury convicted him of five charges, but the district court dismissed one of them as multiplicitous. II

Requisite Intent Under Mail and Wire Fraud Statutes [1] To support a conviction for mail or wire fraud, the government must prove beyond a reasonable doubt: (1) the defendant's knowing and willing participation in a scheme or artifice to defraud with the specific intent to defraud, and (2) the use of the mails or interstate wire communications in furtherance of the scheme. Sawyer, 85 F.3d at 723; see 18 U.S.C. 1341, 1343.FN5 [T]he term scheme or artifice to defraud includes a scheme or artifice to deprive another of the intangible right of honest services. 18 U.S.C. 1346; see Sawyer, 85 F.3d at 723-24. FN5. In relevant part, 18 U.S.C. 1341 and 1343 provide: Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises ... [uses the mails or wires, or causes their use] for the purpose of executing such scheme or artifice ... [shall be punished]. The government charged that Woodward engaged in a scheme to deprive the Commonwealth of Massachusetts and its citizens (collectively, the public or citizenry) of their right to his honest services as a state legislator, performed free from deceit, fraud, dishonesty, conflict of interest, and self-enrichment. In addition to this general duty of honest services, the government charged that Woodward had a specific duty to abide by Massachusetts reporting requirements. With regard to the scheme to defraud, the government charged, inter alia, that Woodward accepted, from individuals (including Sawyer) representing Hancock and LIAM, golf, meals, tickets, and other entertainment and benefits, in violation of Massachusetts law; that Woodward filed false Statements of Financial Interest (SFI) under oath, in which he unlawfully failed to report to the State Ethics Commission his receipt of the gratuities; that Sawyer on behalf of Hancock and LIAM was given greater access to the Insurance Committee and to Woodward as House Chair than was available generally to the citizenry; and that, from 1984 through 1990, Woodward repeatedly performed official acts on behalf of Hancock and LIAM. The government further charged that Woodward used the mails and interstate telephone wires in furtherance of the scheme, in violation of 18 U.S.C. 1341 and 1343. In Sawyer, we discussed mail and wire fraud in connection with theft of honest services in a closely analogous situation where the same facts formed the backdrop for the case. We particularly highlighted the intent required to support a conviction; intent is also a major issue in the present case. But as Woodward stresses, his situation-as the legislator-is not exactly identical to that of Sawyer as the lobbyist. We will, therefore, summarize our analysis in Sawyer, insofar as is applicable here. [2] We explained that, prior to Sawyer, honest services fraud had typically been found in two types of circumstances: (1) bribery, where a legislator was paid for a particular decision or action, or (2) failure to disclose a conflict of interest, resulting in personal gain. 85 F.3d at 724. As to the latter, we noted that [a] public official has *55 an affirmative duty to disclose material information to the public employer. When an official fails to disclose a personal interest in a matter over which she has decision-making power, the public is deprived of its right either to disinterested decision making itself or, as the case may be, to full disclosure as to the official's potential motivation. Id. (citing United States v. Silvano, 812 F.2d 754, 759 (1st Cir.1987)). Thus,

undisclosed, biased decision making for personal gain, whether or not tangible loss to the public is shown, constitutes a deprivation of honest services. Id. The Sawyer case expanded category (1) from quid pro quo bribery, to include a more generalized pattern of gratuities to coax ongoing favorable official action. Id. at 730; see infra. The broad scope of the mail fraud statute, however, does not encompass every instance of official misconduct, even of reprehensible misconduct, that results in the official's personal gain. Sawyer, 85 F.3d at 725. The government must prove that the defendant intended to deprive the public of its right to the honest services of its legislators. Id. at 725, 730.FN6 FN6. The intent to deprive the public of honest services is distinct from the intent to deceive the public, which also must be proven (or some equivalent deceptive intent) as part of mail fraud's scheme to defraud. See Sawyer, 85 F.3d at 729 n. 12. This intent could be shown in a number of ways. For example, a briberylike, corrupt intent to influence official action necessarily is an intent to deprive the public of an official's honest services. A person might not, however, give an unlawful gratuity with the intent to effect a specific quid pro quo. Rather, as the government contends here, a person with continuing and long-term interests before an official might engage in a pattern of repeated, intentional gratuity offenses in order to coax ongoing favorable official action in derogation of the public's right to impartial official services. Sawyer, 85 F.3d at 730 (noting that [s]uch conduct would be akin to (although not a classic case of) the conflict of interest cases noted previously). Applying this principle to the facts adduced, we stated that, while Sawyer may not have provided the legislators with direct kickbacks or commissions arising out of the specific official action, **he may have intended the legislators generally to treat preferentially Hancock's interests, knowing that the free meals, entertainment, and golf would continue so long as favorable official acts were, at some point, taken. Id. We reversed the mail and wire fraud convictions, nevertheless, because we could not be sure that the jury convicted Sawyer based upon the Massachusetts gift statute (as a basis for the federal scheme to defraud) or the Massachusetts gratuity statute, and the former had been improperly charged in the court's instructions to the jury. We mandated a protective instruction to be used in cases such as this, which would help the jury understand the difference between reprehensible misconduct which is not a violation of federal law, and misconduct which does form the basis for a federal conviction. Id. at 741. Noting that prior cases usually involved quid pro quo bribery or blatant conflict of interest, which was clearly illegal, we distinguished Sawyer's gratuities to Woodward (and other legislators) as involving conduct which itself may not be very different, except in degree, from routine cultivation of friendship in a lobbying context, which does not violate federal criminal law. Id. We noted that [t]he practice of using hospitality, including lavish hospitality, to cultivate business or political relationships is longstanding and pervasive. Id. Because the difference between lawful and unlawful turns primarily on intent, we held that the court must instruct the jury that a lobbyist does not commit honest services fraud or violate the Travel Act if his intent was limited to the cultivation of business or political friendship. Id. He commits those violations only if instead or in addition, there is an intent to cause the recipient to alter her official

acts. Id. III Sufficiency of the Evidence Woodward's principal argument on appeal is that there was insufficient evidence for the jury to find beyond a reasonable doubt that *56 he had the requisite intent on any of the four counts at issue here. We will focus our discussion here on the mail and wire fraud counts. We held in Sawyer that the intent required for a Travel Act violation is the same as that for mail and wire fraud. 85 F.3d at 741. Woodward argues that the conspiracy count must fall because there is insufficient evidence to support the substantive counts that served as its objects. Because theft of honest services constitutes a scheme or artifice to defraud within the meaning of the mail and wire fraud statutes, see Sawyer, 85 F.3d at 723-24, the question becomes whether the jury could reasonably have found that Woodward intended to steal his honest services from the public. As Woodward phrased it in his brief, [t]he central question is whether by accepting his friend's largesse Woodward intended to be influenced to support Hancock's legislative interests. [3][4] In determining the evidentiary sufficiency of a guilty verdict, the relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979). The scope of review is over the totality of the evidence, both direct and circumstantial. United States v. Czubinski, 106 F.3d 1069, 1073 (1st Cir.1997). [5] Woodward bear[s] a heavy burden in arguing insufficiency of the evidence, even with respect to this intent element. United States v. Biaggi, 853 F.2d 89, 99 (2d Cir.1988). An appellate court plays a very circumscribed role in gauging the sufficiency of the evidentiary foundation upon which a criminal conviction rests. The court of appeals neither weighs the credibility of the witnesses nor attempts to assess whether the prosecution succeeded in eliminating every possible theory consistent with the defendant's innocence. United States v. Noah, 130 F.3d 490, 494 (1st Cir.1997). We defer, within reason, to inferences formulated by the jury in the light of its collective understanding of human behavior in the circumstances revealed by the evidence. United States v. Guerrero 114 F.3d 332, 339 (1st Cir.1997) (internal quotation marks omitted), cert. denied sub nom. Pilco v. United States, 522 U.S. 870, 118 S.Ct. 184, 139 L.Ed.2d 124 (1997). [6] In reviewing Woodward's contention, we must view the evidence in the light most favorable to the government, crediting every inference that could have been drawn in the government's favor, and we must affirm the convictions so long as, from the inferences reasonably drawn, the jury might fairly have found the requisite connection beyond a reasonable doubt. Biaggi, 853 F.2d at 99 (citations omitted); see Sawyer, 85 F.3d at 731. As we stated in Sawyer (in the context of intent to deceive): The evidence need not compel an intent-to-deceive finding; rather, it is only required that a reasonable jury could be persuaded, beyond a

reasonable doubt, that [Woodward] had such intent. And we are mindful that a jury may choose among the reasonable alternatives posed by the evidence. Finally, the specific intent to deceive may be proven (and usually is) by indirect and circumstantial evidence. Sawyer, 85 F.3d at 733 (citations omitted). [7][8] Despite the deference that characterizes appellate review of jury verdicts, juries do not have carte blanche. The appellate function ... requires the reviewing court to take a hard look at the record and to reject those evidentiary interpretations and illations that are unreasonable, insupportable, or overly speculative. This function is especially important in criminal cases, given the prosecution's obligation to prove every element of an offense beyond a reasonable *57 doubt. United States v. Spinney, 65 F.3d 231, 234 (1st Cir.1995) (citations omitted). [A]n appellate court must reverse a conviction on the grounds of evidentiary insufficiency where an equal or nearly equal theory of guilt[ ] and a theory of innocence is supported by the evidence viewed in the light most favorable to the verdict. Guerrero 114 F.3d at 344 (quoting United States v. Andujar, 49 F.3d 16, 20 (1st Cir.1995)). In such cases, a reasonable jury must necessarily entertain a reasonable doubt. Andujar, 49 F.3d at 20. Viewed in this context, we find that the government has met its burden of proof beyond a reasonable doubt. B Intent (Counts 1, 4, 9, 14) In Sawyer, we noted two of the ways that a public official can steal his honest services from his public employer: (1) the official can be influenced or otherwise improperly affected in the performance of his duties, 85 F.3d at 724, 729; or (2) the official can fail to disclose a conflict of interest, resulting in personal gain, id. at 724. The government asserts that the evidence supports the jury's finding that Woodward had the requisite intent to deprive the public of his honest services in both of these ways. We agree. 1. Influence in Official Action [9][10] As Woodward states in his brief, the government must [have] demonstrate[d] that there was sufficient evidence for a rational jury to conclude that Woodward accepted the free meals and entertainment from Sawyer with the intent to perform official acts to favor Hancock's legislative interests. Def. Br. at 19. Identical standards apply in determining the scheme to defraud element under the mail and wire fraud statutes. Czubinski, 106 F.3d at 1076 n. 10. [11][12] The jury was entitled to infer [the defendant's] intent from the circumstances surrounding his actions, from indirect, as opposed to direct, evidence. United States v. Fulmer, 108 F.3d 1486, 1493 (1st Cir.1997); see United States v. Taylor, 54 F.3d 967, 975 (1st Cir.1995) (noting that a showing of criminal intent may be made wholly on the basis of circumstantial evidence). Nor are juries required to examine the evidence in isolation; individual pieces of evidence, insufficient in themselves to prove a point, may in cumulation prove it. The sum of an evidentiary presentation may well be greater than its constituent parts. United States v. Ortiz, 966 F.2d 707, 711 (1st Cir.1992) (quoting Bourjaily v. United States, 483 U.S. 171, 179-80, 107 S.Ct. 2775, 97 L.Ed.2d 144 (1987)); see also United States v. Montminy, 936 F.2d 626,

627-28 (1st Cir.1991). In Sawyer, we reviewed much of the same evidence that was presented to the jury here, and determined that the evidence was sufficient to prove [Sawyer's] intent to influence the legislators' official acts. 85 F.3d at 731. We noted that Sawyer continually gave gifts for the purposes of gaining access and developing a relationship with Woodward and other legislators. From this, the jury could have inferred that Sawyer intended to induce official actions favorable to Hancock's interests. Id.; see also id. at 739 (noting that Sawyer gave items of substantial value to legislators like Woodward who had the ability to take official action favorable to Hancock, that those gifts ceased after the legislators left office, and that Sawyer had long-term ongoing interests in official actions and knew the gratuities were illegal; and concluding that the jury could rationally have inferred that the gratuities were motivated by the legislators' performance of official duties, i.e., that they were given for or because of any official act, within the meaning of the Massachusetts gratuity statute, Mass. Gen. L. ch. 268A, 3.). The same inferences regarding Woodward's intent can be drawn from the evidence here, based upon the nature and sequences of events, certain explicit statements, and the suggestions of a cover-up. In Sawyer, of course, the jury was assessing the motivation of the donor of the gratuity, Sawyer, not that of the donee, Woodward. But it is an equally valid inference, from the foregoing evidence coupled with the fact that Sawyer and Woodward spent a good amount of time *58 together, that Woodward understood the gratuities and their purpose in the same way that his close friend Sawyer did. Woodward knew that Sawyer was giving him items of substantial value, continuing over a long period of time; he knew that Sawyer had a long-term ongoing interest in his official acts; and that he had the ability to take official action favorable to Hancock. Woodward also knew that his relationship with Sawyer began after he became a member of the Insurance Committee and that the gifts increased substantially shortly after he became chair of the committee that handled insurance legislation. Finally, Woodward knew that, at many of the same entertainment events that he enjoyed, Sawyer also wined and dined other legislators in a similar manner, and those legislators had only a business relationship, not a friendship, with Sawyer. In light of all this, the jury could have inferred that Woodward knew what the deal was-that the gratuities would continue as long as he voted favorably to Hancock's interests, see Sawyer, 85 F.3d at 730-and that he intended to be influenced by the gratuities. Moreover, the jury had additional evidentiary bases for drawing the inference that Woodward's intent included an illegal element rather than being solely based on friendship. After entertaining Woodward for several days at the Scottsdale COIL conference in 1991, Sawyer left the conference early, but left his credit card to be used for paying Woodward's golf and meal expenses during the remainder of the conference. This is not consistent with mere friendship as the sole purpose of the payments, but rather is more consistent with the theory of a gratuity made because of Woodward's potential official actions. In addition, Woodward received some gratuities from Sawyer (although in lesser amounts) at events where other legislators-mostly members of the Insurance Committee, who could also influence legislative acts in favor of Hancock-were also present. This too indicates an illegal gratuity more than the camaraderie of close friends. Similarly, some of Woodward's gratuities came from LIAM, through its president, Carroll, who was not a

personal friend of Woodward's. The same inference can be drawn from the fact that the expenditures were not mutual but rather operated in one direction only. The standard operating procedure was for Sawyer to pay for meals, drinks and golf for Woodward; Woodward did not make similar payments for Sawyer. **If the reason Sawyer picked up the tab for Woodward on some occasions was simply because the two men were close friends, one would expect there to be a roughly equal number of occasions on which Woodward picked up the tab for Sawyer. But that was not the case. Indeed, the only evidence in the record as to Woodward performing some reciprocal acts of treating his close friend Sawyer were the weekends spent on Cape Cod. On those occasions, Woodward invited the Sawyers to stay at the Woodward family's house on the Cape, where the Woodwards cooked some meals. In return, according to Woodward, Sawyer would pay for a group dinner at a nearby restaurant. Significantly, the jury returned not guilty verdicts on all indictments alleging such reciprocal expenditures. In contrast, the jury weighed the evidence differently as to four counts charging Woodward with accepting gratuities in a non-mutual, non-reciprocal way. As to these, the jury apparently viewed Sawyer's expenditures and Woodward's acceptance of them as not being based on the two men's friendship but rather based on a business relationship: i.e., insurance industry lobbyist and Chair of the Legislature's Insurance Committee. The jury recognized-and this recognition is supported by the evidence of record-that the two men had two types of relationships, a personal friendship and a business relationship. Woodward's acceptance of expenditures that were part of their friendship was not illegal, but his acceptance of expenditures in the context of their business relationship constituted theft of the honest services that Woodward owed to his constituents. We think the evidence was sufficient for a reasonable juror to so conclude beyond a reasonable doubt. The jury was free to choose among the *59 reasonable alternatives posed by the evidence, Sawyer, 85 F.3d at 733, and we will not secondguess the jury's conclusion in this regard. Another reason the jury could have rejected Woodward's contention that Sawyer picked up his tab solely because of friendship rather than as an attempt to influence is the direct statements showing how Woodward expected to receive gratuities from Sawyer (and, through him, from Hancock). In 1989, at a COIL conference in Florida, Lorraine Bohannon, the former staff director of the Insurance Committee, who reported directly to Woodward, went out to dinner with Woodward, Sawyer, and their spouses. There is no evidence that Bohannon had any kind of personal friendship with Sawyer. After dinner, Bohannon offered to Woodward to pay a portion of the bill, and Woodward's response was: Don't worry about it; it's taken care of. Sawyer picked up the tab and was reimbursed by Hancock for the bill. The government presented evidence of another direct statement to demonstrate Woodward's illegal intent. After Woodward left the legislature, he expressed interest in working for Hancock as a lobbyist. He asked Sawyer to help him obtain the job. Sawyer told Woodward he was not qualified for the job, and Woodward was very hurt. Subsequently when he talked to Committee research director Robert Smith about the Hancock job, Woodward said, in effect, After all I did for Bill Sawyer, you know, I can't believe he's not-he can't get me a job or he's not getting me a job. The prosecutor asked Smith whether Woodward told him what he felt

he had done for Bill Sawyer, and Smith replied, Not specifically, just generally. After all these years as Chairman of the committee and trying to do the right thing and being willing to take on tough issues, I would-I expected, you know, more assistance than I received. Woodward argues that this conversation does not demonstrate any illegal intent on Woodward's part. He points out that, at trial, Smith could not recall Woodward saying after all I've done for Sawyer, but only after all I've done. Woodward also notes that trying to do the right thing could have meant following his own conscience, not necessarily doing the right thing for Sawyer and Hancock. Similarly, taking on tough issues did not necessarily mean taking on tough issues for Sawyer or Hancock. At trial, Smith testified that he did not interpret these phrases in an illegal manner. But Woodward's argument is belied by the totality of Smith's testimony about the conversation, or at least a reasonable jury could have so inferred. In his grand jury testimony, which was used by the government at trial, Smith testified to the more directly inculpatory language: after all I did for Bill Sawyer. And Smith's trial testimony covered additional incriminating evidence that Smith had revealed to the grand jury but did not include in his direct testimony at trial. When asked (at the grand jury session) to repeat the whole conversation, Smith testified: [Woodward] said that he had spoken to Bill Sawyer and that Bill Sawyer had been reluctant to help him, and Representative Woodward at that timeas many legislators do, they don't remember the specific bill numbers or subject matter, but they'll remember in general if they were favorable towards someone or not-said to me you would think after all the years and everything I've done I would be treated better than I have been treated. This juxtaposition of the everything I've done language with the notion of legislators remember[ing] in general if they were favorable towards someone or not carries a strong implication that, at least in Smith's mind as he heard Woodward make the quoted statements, Woodward's reference to all he had done was meant in the sense of taking action in the legislature to favor Sawyer and Hancock's interests. Smith's grand jury testimony, elicited after an inconsistent statement at the trial, constitutes substantive evidence under Fed.R.Evid. 801(d)(1) (A). The jury, in assessing Smith's credibility in the context of all his testimony, could well have believed that Smith's grand jury testimony-with its incriminating inferences-was true; and the jury could have concluded that Smith's trial testimony was not believable to the extent it undercut the *60 grand jury testimony. On appeal, of course, we view the evidence in the light most favorable to the verdict, not the light most favorable to Woodward. Credibility assessments are properly left to the jury. United States v. Mangual-Corchado, 139 F.3d 34, 43 n. 20 (1st Cir.1998). And juries are not required to evaluate the evidence in isolation; individual pieces of evidence, insufficient in themselves to prove a point, may in cumulation prove it. Bourjaily, 483 U.S. at 179-80, 107 S.Ct. 2775. The inference of illegal intent grows even stronger when we consider another aspect of what Woodward told Smith about his attempt to persuade Sawyer to help him get a job at Hancock. According to Smith's trial testimony, Woodward said: If he [Woodward] could not get the job himself he'd like to see his son Brian get the job. Smith testified that he was unaware of any experience that Woodward's son, Brian, had in insurance

matters. This, too, carries the implication that Woodward was expecting some kind of reward from Sawyer/Hancock for all his years of favoring the industry's position in the legislature. In addition, as Woodward recognizes, [i]ntent can be inferred from a defendant's conduct, viewed in light of all the surrounding circumstances. Def. Br. at 19; see, e.g., Gaunt v. United States, 184 F.2d 284, 290-91 (1st Cir.1950). Thus [t]he best evidence of Woodward's intent to perform official acts to favor Hancock's (and LIAM's) interests is the evidence of Woodward's actions on bills which were important to Hancock. Id. Unfortunately for Woodward, the evidence supports the jury's verdict, rather than undermining it as he contends. [13] It is not necessary for the government to link a particular gratuity with a specific act in order to obtain a conviction. Sawyer, 85 F.3d at 738-39; see discussion supra at p. 55. Nevertheless, Woodward disputes the extent to which, in his official capacity as chair of the Insurance Committee, he took action that served the interests of his benefactors. The evidence does not support his contention. According to Robert Smith, Woodward was the most pro-life-insurance-industry chair of the Committee, of the seven House and Senate chairs with whom Smith worked during the ten years that Smith served as the Committee's research director. Woodward even took pro-industry positions in opposition to his own committee. As an example, in each year from 1985 through 1990, the legislature considered a bill proposing mandatory discounts on life insurance for non-smokers. Hancock and LIAM opposed the bill. In 1989, the bill received favorable recommendation from the Insurance Committee based on support from Senator Linda Melconian, Woodward's co-chair of the Committee. But despite the Committee's favorable report, Woodward led the opposition to the bill in debate before the full House of Representatives, and was successful in defeating the so-called non-smoker's bill for that session. Hancock's vice-president, who directly supervised Sawyer, called the bill's defeat a significant victory for the industry. Woodward also led the Insurance Committee to support and report favorably bills proposed by the industry. Among these were bills allowing life insurance companies to change the ways in which they valued real estate assets, to adjust pension funds, to provide financial services, and to be flexible in corporate governance and finance. In addition, more than any other co-chair from 1985-95, Woodward carried bills sought by the life insurance industry. This means that, after the bill left the committee, Woodward served as the point person to push these bills through the legislative process. Woodward challenges this characterization of the meaning of carrying a bill after it leaves committee. Woodward contends that carrying is merely a ministerial function, that it simply refers to the fact that the chair of any committee of the Massachusetts legislature sign[s] the paperwork recommending a bill favorably and [is] available to answer questions from non-committee legislators when [the bill is] presented to the House or Senate floor. Woodward relies on Robert Smith's testimony for the proposition that carrying legislation does not necessarily mean advocating or leading the debate for the bill on the House floor, that that role is *61 normally reserved for the legislator who sponsors the bill. Smith's testimony to this effect, however, was impeached with his grand jury testimony in which he had testified that carrying meant actively

guiding bills through the legislative process. As we noted in discussing the conversations about getting Woodward a job at Hancock, the jury was entitled to believe this portion of Smith's testimony (i.e., introduction at trial of his prior grand jury testimony)-that carrying means actively guiding a bill through the process; it is not merely ministerial-and the jury was entitled to disbelieve other parts of his trial testimony that supported Woodward's interpretation to the contrary. Woodward points to thirty-one (31) bills that he supported despite opposition on the part of Hancock and the insurance industry. But, as the government notes, the proper analysis is to examine all bills considered by the Committee in context, not to isolate a relatively small number of bills in an effort to show that Woodward was not 100% in the industry's pocket. The record reflects that, during his six years as co-chair of the Insurance Committee, there were approximately one hundred bills per year that were of interest to the life insurance industry, for a total of six hundred bills during his tenure. Woodward opposed the industry's position on only thirty-one of those bills. Moreover, at least ten of the opposed bills were duplicates of previously filed bills. Of the remainder, only three actually related to life insurance. The rest concerned mandated benefits for health insurance which were of less importance to the life insurance industry, in particular to Hancock. This is because, as Hancock's attorney testified, life insurance was Hancock's big money earner in terms of profit. The company's group health insurance business was [o]ne of the lesser profit earners. As already noted, several of the bills where Woodward's position conformed to the life insurance industry's positions were of great importance to the industry in that the bills significantly improved the industry's profitability. Woodward relies heavily on Czubinski, 106 F.3d at 1076, where we cited Sawyer for the most important[ ] proposition that the government must do more than merely indicate wrongdoing by a public official, but must also demonstrate that the wrongdoing at issue [was] intended to prevent or call into question the proper or impartial performance of that public servant's official duties. Czubinski, 106 F.3d at 1076 (citing Sawyer, 85 F.3d at 725). In Czubinski, we explained that Czubinski's case falls outside of the core of honest services fraud precedents, in that he was not bribed or otherwise influenced in any public decisionmaking capacity. Id. at 1077. We also distinguished Czubinski's relatively straightforward jobresponding to information requests from the public-from a discretionary, decision-making role, which raise[s] the specter of secretive, selfinterested action.. Id.FN7 We found no evidence that Congress intended to create what amounts to a draconian personnel regulation, by transforming governmental workplace violations into [federal] felonies. Id. FN7. Cf. United States v. Rabbitt, 583 F.2d 1014, 1026 (8th Cir.1978) (finding no deprivation of honest services where state representative introduced friend's firm to public officials responsible for awarding city contracts, where defendant played no role in such awards and did not otherwise fail to fulfill his official duties, and where government cited no standard requiring defendant to disclose his interest in the contracts); United States v. McNeive, 536 F.2d 1245, 1246 (8th Cir.1976) (finding no deprivation of honest services of city plumbing inspector despite acceptance of unsolicited gratuities, where inspector's administrative duties were non-discretionary and no evidence that gratuities deterred McNeive from conscientiously performing duties). The instant case is very different from Czubinski. As Woodward recognizes,

Czubinski did not receive or intend to receive any tangible benefit from his conduct, whereas Woodward did. Additionally, Czubinski's official duties did not involve the discretionary, decision-making role of a legislator. Notwithstanding these factual differences, Woodward asserts, Czubinski and the instant case are similarly flawed by the failure of proof on the critical fraudulent intent element. We disagree. As discussed supra, the jury in the present case could justifiably have inferred the fraudulent intent element. *62 Woodward did receive tangible benefits here, as Czubinski had not. And the connection between the gratuities and Woodward's official acts could have been justifiably inferred from the fact that Woodward had discretion to act or not act in ways that would further the insurance industry's interests; this discretion extended both to the bottom line (support of or opposition to the industry's position on legislation) and to the degree of vigor with which Woodward championed the industry's positions. 2. Failure to Disclose Conflicts of Interest [14] In addition to demonstrating Woodward's intent by that he was influenced or otherwise improperly affected duties, the government argues that Woodward's intent is by his failure to disclose his conflict of interest required to do so. We agree. evidence showing in performing his also demonstrated although he was

[15] Massachusetts law mandates such disclosure on his Statements of Financial Interest (SFIs). Mass. Gen. Laws ch. 268B, 5 (West 1990). In addition, separate and apart from the state statute, [t]he obligation to disclose material information inheres in the legislator's general fiduciary duty to the public. Sawyer, 85 F.3d at 733 n. 17. We recognized in Sawyer that the nondisclosure of a conflict of interest is a second way in which a public official can steal his honest services. 85 F.3d at 724; cf. id. at 728 ([U]nlike the honest services fraud cases, noted above, in which an official was bribed or took official action based on a secret conflict of interest, a gift statute violation, even if intentional, does not itself amount to honest services fraud. (Emphasis added)). The evidence of Woodward's non-disclosure is also probative of Woodward's intent; it supports the jury's finding that he had the requisite intent. As we stated in Sawyer: A public official has an affirmative duty to disclose material information to the public employer. When an official fails to disclose a personal interest in a matter over which she has decision-making power, the public is deprived of its right either to disinterested decision making itself or, as the case may be, to full disclosure as to the official's potential motivation behind an official act. Sawyer, 85 F.3d at 724 (citing Silvano, 812 F.2d at 759).FN8 FN8. In United States v. Margiotta, 688 F.2d 108 (2d Cir.1982), the court upheld the conviction for theft of honest services of a defendant who was not even an elected public official (he was the Republican Committee Chairman for Nassau County and for the Town of Hempstead). The defendant's liability was based in part on the grounds that he had a fiduciary duty to the public, and part of that duty was to disclose any personal interest in a matter over which he might have to make a decision, including bribes by interested parties.

In addition to the general affirmative duty to disclose discussed in Sawyer, Woodward had a specific statutory duty each year to file a Statement of Financial Interests with the Massachusetts State Ethics Commission. See Mass. Gen. Laws ch. 268B, 5. Woodward was required to disclose on his SFI forms all gifts he or his immediate family received, aggregating more than $100 per year, from lobbyists or businesses that had a direct interest in legislation. He had to sign the forms under oath. Woodward did not report the gratuities he received from Hancock or LIAM on any of his SFI forms submitted for the years 1984 through 1992. Woodward contends that his failure to comply with the Massachusetts reporting statute, while reprehensible, is not relevant here. We disagree. In Czubinski, we listed the failure of public decision-makers to disclose certain conflicts of interest as one of three examples of serious corruption on the part of public officials that would typically justify an honest services conviction. 106 F.3d at 1076. Woodward's failure to report supports the implication that Woodward was aware that these gratuities were improper, especially in light of the fact that [m]uch of his entertainment ... took place out-of-state-usually at industry and legislative conferences-where members of the Massachusetts citizenry generally would not observe the questionable activities. Sawyer, 85 F.3d at 733. Woodward had every incentive to keep these questionable activities *63 secret from the public by not disclosing them on his SFIs. The SFIs are public documents, which are frequently scrutinized by the press and political opponents during election years. In fact, the only gift Woodward ever reported was a local, public golf tournament sponsored by Massachusetts Candy & Tobacco Distributors, Inc., which he reported after learning that the tournament was under investigation by the State Ethics Commission. [16] We agree with the government that Woodward's intentional failure to disclose the Hancock and LIAM gifts in itself provides a solid basis for the jury to find that Woodward had the requisite intent to deprive the public of his honest services. This same evidence also supports the finding that Woodward had the intent to deceive necessary for a mail and wire fraud conviction. See supra at 55, n. 6. [A]n official's intentional violation of the duty to disclose provides the requisite deceit. Sawyer, 85 F.3d at 732 (quoting Silvano, 812 F.2d at 760).FN9 FN9. In the Sawyer case, SFI forms were not available to the government as proof of illegal intent, because, unlike Woodward, Sawyer had no obligation under Mass. Gen. Laws ch. 268B, 5 to report the gratuities in a publicly filed document that protects against conflicts of interest. Viewing the record in the light most favorable to the verdict, a rational jury could have found the requisite intent from the trial evidence. The evidence was sufficient for a rational juror to find, beyond a reasonable doubt, that Woodward accepted gratuities from Sawyer with the intent to defraud the public of its right to his honest services, and that he had the specific intent to deceive. See also Sawyer, 85 F.3d at 742 (finding that the evidence adduced there would be adequate to infer improper intent). C Other Elements of Wire Fraud (Count 9) [17] As noted supra, to support a conviction for mail or wire fraud, the

government must prove beyond a reasonable doubt: **(1) the defendant's knowing and willing participation in a scheme or artifice to defraud with the specific intent to defraud, and **(2) the use of the mails or interstate wire communications in furtherance of the scheme. Sawyer, 85 F.3d at 723; see 18 U.S.C. 1341, 1343. Woodward also challenges his convictions based on the second requirement. He argues that the government offered insufficient evidence to prove either that Woodward caused the wiring or that the wiring was for the purpose of executing [the] scheme to defraud. See 18 U.S.C. 1343. The wire fraud count relates to a COIL conference in Orlando, Florida, in November, 1990. The indictment alleged that on November 21, 1990, a call was placed from Boston, Massachusetts, to Lake Buena Vista, Florida, and that its purpose involved [a]rrangements related to entertainment in Florida. [18][19] Woodward claims that he did not cause this telephone call to be made, and that it was not made for the purpose of executing a scheme for Woodward to defraud the public of its right to his honest services. We disagree on both points. As we stated in Sawyer, Woodward need not personally use the wires as long as such use was a reasonably foreseeable part of the scheme in which [he] participated. 85 F.3d at 723 n. 6 (quoting United States v. Boots, 80 F.3d 580, 585 n. 8 (1st Cir.1996), cert. denied, 519 U.S. 905, 117 S.Ct. 263, 136 L.Ed.2d 188 (1996)). In addition, [t]he use of the mails or wires to further the fraudulent scheme need only be incidental. Id. (quoting United States v. Grandmaison, 77 F.3d 555, 566 (1st Cir.1996)). Here, Woodward concedes that the jury could reasonably have inferred from the evidence that Hancock's Functions Coordinator called the Florida hotel on or about November 21, 1990, for the purpose of reserving a room, so Sawyer could attend the COIL conference in Orlando. Nevertheless, Woodward claims that he could not have reasonably foreseen that a Hancock employee would make a room reservation for Sawyer at this COIL conference, nor that she would use the telephone to do so. According to Woodward, Sawyer's presence [at the conference]*64 could have been ensured by many means other than the fortuity of an interstate telephone call to reserve his hotel room. We disagree. Woodward knew full well that Sawyer would need a hotel room in Florida for the COIL conference, and that Sawyer's office was located in Massachusetts. Woodward could reasonably have foreseen that the hotel reservations in Florida would be made by phone either by Sawyer or by someone acting on his behalf. That Sawyer could conceivably have made his room reservation in person or by mail does not undermine the foreseeability of a telephone call. The jury was entitled to use its common sense to infer that a reasonable person would have foreseen a telephonic reservation, as a means commonly employed in the business world for transactions of this type. Thus, the jury was entitled to conclude, based on the evidence presented, that Woodward caused the wiring. [20] Woodward further argues that the evidence presented was insufficient to show that the purpose of this call was to execute a scheme by Woodward to deprive the public of its right to his honest services by receiving gratuities from Sawyer with the intent to favor unlawfully Hancock's legislative interests. Def. Br. at 27. We disagree. The jury could reasonably have concluded that the call was made in furtherance of the scheme to defraud. Sawyer would not have been able to give Woodward the

illegal gratuities during the COIL conference if Sawyer did not have a hotel room in which to stay for the four days of the conference. The call in question secured that room, and thus played an essential role in the scheme. Our conclusion is buttressed by decisions involving mail fraud, which is analogous to wire fraud for these purposes. The focus of our inquiry on this question ought to be concerned less with the precise contents of the particular mailings than with the role those mailings played in the execution of the scheme to defraud. United States v. Serino, 835 F.2d 924, 928 (1st Cir.1987). In Silvano, we upheld a mail fraud conviction of government officials, where the defendants neither placed nor received any of the mailings. (The mailings consisted of the payment of premiums and commissions, all incidental to, but related to, commission of the fraud.) We held that these mailings were sufficiently in furtherance of the fraud. 812 F.2d at 760. We reasoned that the federal mail fraud statute sweeps broadly and its prohibitions extend to the use of the mails by corrupt local government officials. It is similarly settled that use of the mails need be no more central to the illegal scheme than were the mailings supporting the counts upon which [the defendants] were convicted. Id. The evidence was sufficient to support Woodward's wire fraud conviction. D Mail Fraud (Count 4) [21] With respect to the mail fraud count, Woodward concedes that, because the evidence showed he was at events for which Sawyer paid with his credit card, it was reasonably foreseeable to him that Sawyer would be billed by mail for these credit card expenditures on his behalf. Def. Br. at 28. Therefore he does not contest the fact that he may be said to have caused the mailing alleged in Count 4 when he let Sawyer pick up the tab. Id. But he contends that the purpose of the mailing strays far from the execution of a scheme by Woodward to defraud the public. Id. at 29. He argues that the scheme had already reached fruition by the time the mails were used. He points to United States v. Maze, 414 U.S. 395, 94 S.Ct. 645, 38 L.Ed.2d 603 (1974), where the Supreme Court noted that Congress could have drafted the mail fraud statute so as to require only that the mails be in fact used as a result of the fraudulent scheme. But it did not do this; instead, it required that the use of the mail be for the purpose of executing such scheme or artifice. Id. at 405, 94 S.Ct. 645 (footnote omitted) (emphasis added). In the present case, the mailing in question was sent by Citibank Visa to Sawyer, billing him for charges arising from Sawyer's use of his Visa card to pay for illegal gratuities given to Woodward. According to Woodward,*65 because the mailing took place some three to four weeks after Sawyer purchased the meals and entertainment for Woodward, the use of the mail was a result of the fraudulent scheme but not for the purpose of executing the scheme. Id. We disagree. Woodward's argument focuses too narrowly, on each gratuity individually. His contention assumes a new fraudulent scheme began and ended every time Sawyer used his credit card to pick up the tab for Woodward. On the contrary, the evidence supported the conclusion that the fraudulent scheme in which Woodward and Sawyer participated was an ongoing scheme, lasting

for years and involving Sawyer's use of his credit card. Every month, Visa would use the mails to bill Sawyer for his charges; if Sawyer did not pay those bills, his credit line would have been terminated and the gratuities could not have continued as Woodward and Sawyer expected. It was thus a necessary part of the ongoing scheme that Sawyer pay his bill after receiving it in the mail. See Sawyer, 85 F.3d at 730 ([A] person with continuing and long-term interests before an official might engage in a pattern of repeated, intentional gratuity offenses in order to coax ongoing favorable official action in derogation of the public's right to impartial official services.) This case is therefore distinguishable from Maze, where the mailing involved only a post-fraud accounting among victims, after the defendant's fraudulent use of credit cards was already completed. See Maze, 414 U.S. at 402, 94 S.Ct. 645; Schmuck v. United States, 489 U.S. 705, 714, 109 S.Ct. 1443, 103 L.Ed.2d 734 (1989) (distinguishing and limiting Maze to cases in which the fraudulent scheme has come to fruition).FN10 FN10. Woodward also points to United States v. Cross, 128 F.3d 145 (3d Cir.1997), cert. denied, 523 U.S. 1076, 118 S.Ct. 1519, 140 L.Ed.2d 672 (1998), but that case is also distinguishable. In Cross, the defendants had conspired to fix the outcomes of various judicial proceedings, and the mailings alleged as the basis for the mail fraud conviction were simply the official notices sent by the court to notify the parties of the outcomes of their cases. The court held that such legally required mailings ... cannot be deemed to have been made for the purpose of executing a fraudulent scheme. Id. at 152; see also id. at 152 n. 4 (distinguishing Schmuck, 489 U.S. at 713 n. 7, 109 S.Ct. 1443, where the mailings were a direct result of and would not have occurred but for the fraudulent scheme). In the present case, Sawyer's Visa bills were certainly not legally required mailings that simply informed people of the already completed outcome of the scheme. Nor would those Visa bills have been mailed but for the fraudulent scheme. Cross, 128 F.3d at 152 n. 4. Woodward cursorily argues that the wiring and mailing are merely a pretext to manufacture federal jurisdiction over a local offense. Def. Br. at 30 (mail fraud); see id. at 28 (wire fraud). We have already rejected such a federalism claim: Congress may protect the integrity of the interstate mails and wires by forbidding their use in furtherance of schemes to defraud a state and its citizens, whether or not it can forbid the scheme itself. Sawyer, 85 F.3d at 722-23 (citations omitted). The evidence was sufficient to support the mail fraud conviction. E Travel Act (Count 14) [22] The elements of a Travel Act violation include: (1) interstate travel or the use of an interstate facility; (2) with the intent to promote, manage, establish, carry on, or facilitate an unlawful activity (here, violation of the Massachusetts gratuity statute, Mass. Gen. Laws ch. 268A, 3 (West 1990)); and (3) followed by performance or attempted performance of acts in furtherance of the unlawful activity. See 18 U.S.C. 1952; United States v. Arruda, 715 F.2d 671, 681 (1st Cir.1983). [23] Woodward conviction was argues that deficient in the evidence supporting the Travel Act four respects. First, he argues that the

evidence was insufficient to establish the requisite criminal intent to violate 18 U.S.C. 1952. We disagree, for the same reasons discussed in Part III(B), supra, in relation to his intent under the mail and wire fraud statutes. See Sawyer, 85 F.3d at 741 (equating intent requirements of mail and wire fraud statutes with that required under Travel Act). *66 [24] Second, Woodward maintains that, in order to prove a violation of the Travel Act, the government had to prove that Woodward violated the bribery laws of Florida. The Travel Act punishes traveling in interstate commerce for the purpose of carrying on any unlawful activity; such activity encompasses the commission of bribery in violation of the laws of the state in which committed or of the United States. 18 U.S.C. 1952(b)(2). The indictment incorporates the Massachusetts gratuity statute, Mass. Gen. Laws ch. 268A, 3, as the underlying bribery offense. Woodward contends that the bribery, if any, took place only in Florida, and therefore, without evidence of any Florida bribery statute, the Travel Act conviction must be reversed. This argument is unavailing. [25] The Travel Act does not require the government to prove that the alleged unlawful activity violates the laws of the state ultimately traveled to, or of the state where money actually changed hands. United States v. Walsh, 700 F.2d 846, 854-55 (2d Cir.1983) (mayor of city in New Jersey agreed in New Jersey to accept bribe and traveled to New York to collect it); see United States v. Jones, 642 F.2d 909, 913 (5th Cir.1981). A conviction may be sustained where the evidence demonstrates unlawful activity in violation of the laws of the state where the effects of the fraudulent scheme are felt, in this case, the state whose citizens are defrauded of their legislator's honest services. See Walsh, 700 F.2d at 854-55. Here, Woodward is a legislator from Massachusetts, and the jury could have concluded that the gratuity, though paid in Florida, was paid for the purpose of influencing legislative activities in and affecting Massachusetts. As we discuss below, that is sufficient. [26] Woodward's third challenge to his Travel Act conviction involves timing. He asserts that there was no evidence that Woodward performed any acts in furtherance of the unlawful activity after the interstate travel on November 24, 1990, as alleged in the indictment. Woodward notes that, although the Travel Act requires such, the Massachusetts gratuity statute does not require any subsequent activity to be taken in Massachusetts after the Florida bribe. As evidence of Woodward's post-gratuity activity, the government points to Woodward's action with respect to S. 641, which proposed premium reductions in life insurance for policyholders who were non-smokers. The bill was originally reported favorably out of the Insurance Committee on May 7, 1990. Then on July 24, 1990, just before becoming law, the House of Representatives recommitted the bill to the Insurance Committee. The effect of a bill's recommittal is that both chairs would have to act in order for the bill to be released. The bill languished in the Insurance Committee with no further action taken through January 1, 1991, after Woodward received the Florida gratuities and prior to his removal as co-chair. Woodward's co-chair, Senator Melconian, had actively supported the 1989 bill by requesting a favorable recommendation from the Insurance Committee. The jury could, therefore, reasonably have inferred that Woodward prevented any further action on S. 641, because in the previous year he led the floor debate, on behalf of Hancock and LIAM, against a similar non-smokers bill. Woodward's receipt of the gratuities in Florida and the subsequent recommittal of S. 641 through January 1991 provided sufficient evidence to allow the jury to find that Woodward performed an act in furtherance of

the unlawful activity after the travel to Florida on November 24, 1990. Arruda, 715 F.2d at 682. Woodward's timing argument thus fails. [27][28][29] Woodward's fourth argument against his Travel Act conviction is that the payment of the bribe in Florida has such an attenuated relationship to Massachusetts that it would violate the effects doctrine. Def. Br. at 32. Under this doctrine, a sovereign only possesses jurisdiction to prosecute a crime where, inter alia, the effect within the territory is substantial. FN11 *67 Id. (quoting Commonwealth v. Beneficial Fin. Co., 360 Mass. 188, 275 N.E.2d 33, 57 n. 8 (1971)). Because acts that might otherwise be gratuities could be performed outof-state without any corresponding effect in Massachusetts, Woodward maintains that Massachusetts would lack jurisdiction to prosecute purely out-of-state expenditures. Def. Br. at 32 (citing Heath v. Jones, 941 F.2d 1126, 1139 (11th Cir.1991) (no due process violation when state prosecutes crime that started within its borders and concluded in another state); Commonwealth v. Levin, 11 Mass.App.Ct. 482, 417 N.E.2d 440, 451 (1981) (state may prosecute acts performed outside of its jurisdiction where acts are intended to produce and actually produce detrimental effects within the state)). FN11. The effects doctrine originated in international law, where it held that a country may regulate conduct occurring outside its territory which causes harmful results within its territory. See, e.g., Strassheim v. Daily, 221 U.S. 280, 285, 31 S.Ct. 558, 55 L.Ed. 735 (1911); United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir.1945). Under the territorial effects doctrine, jurisdiction exists only when significant effects were intended within the prescribing territory. Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 923 (D.C.Cir.1984); Aluminum Co. of America, 148 F.2d at 444. This jurisdictional concept of international law has been applied to jurisdiction by one state over criminal activities of out-of-state entities which affect the forum state. See Beneficial Fin. Co., 275 N.E.2d at 57 n. 8; cf. FTC v. Compagnie de Saint-GobainPont-a-Mousson, 636 F.2d 1300, 1317 n. 93 (D.C.Cir.1980). The effects doctrine has also been applied in determining whether a forum state's courts may exercise personal jurisdiction over a non-resident defendant, via the forum's long-arm statute, without violating the due process clause of the Fourteenth Amendment. See Calder v. Jones, 465 U.S. 783, 788-90, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984); Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 776, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984); but see Resolution Trust Corp. v. First of America Bank, 796 F.Supp. 1333, 1337-38 (C.D.Cal.1992) (refusing to extend the effects doctrine from the field of intentional torts to a contract claim). Woodward asserts that the government failed to produce any evidence of detrimental effect actually resulting from the out-of-state expenditures; the mere possibility of future action favorable to Hancock is not an effect, let alone one that is substantial. Nor would alteration of official acts be the direct or foreseeable result of lobbyists entertaining legislators at out-of-state conferences. Def. Br. at 33 (citing Sawyer, 85 F.3d at 741). We disagree. The Massachusetts gratuity statute prohibits public employees from receiving anything of substantial value ... for or because of any official act ... performed or to be performed by him. Mass. Gen. Laws ch. 268A, 3. The concern behind the gratuity statute, like the bribery statute, is the potential undermining of official integrity. Sawyer, 85

F.3d at 735 (emphasis added). Indeed, when someone gives a stream of illegal gratuities to a public official, a sense of being beholden to the giver's interests is exactly the kind of influence that the giver is trying to develop. See id. at 730. The potential effect on Massachusetts when one of its own legislators accepts gratuities out-of-state paid by someone with an interest in Massachusetts legislation is a sufficient nexus to satisfy the effects test and give Massachusetts jurisdiction to prohibit such conduct. [30] Besides this potential effect, of course, Woodward's receipt of gratuities in Florida was linked also to his official acts in Massachusetts. Among these acts is his recommittal of a particular bill, Senate Bill 641 (S.641), shortly after he returned from Florida, as already discussed. And they also included his prior acts to champion the insurance industry's positions in the Legislature.FN12 Woodward violated the Massachusetts gratuity statute, a prerequisite for his Travel Act violation, because he received something of substantial value ... for or because of any official act ... performed or to be performed by him. Mass. Gen. Laws ch. 268A, 3. We have already discussed our view that the evidence was sufficient to establish the linkage beyond a reasonable doubt. FN12. For these prior acts, the gratuity was a reward, which is cognizable under the Massachusetts Gratuities Act even though it is not a violation of federal law. We note that, in order to violate the Travel Act, a gratuity need not be motivated by a specifically identified official act. Sawyer, 85 F.3d at 735-38. Woodward's Florida gratuity was closely enough related to Massachusetts that his effects doctrine argument must fail. See Strassheim, 221 U.S. at 284-85, 31 S.Ct. 558 (holding that, when an individual's criminal acts were intended to and did produce detrimental effects within a state, the state may *68 prosecute that individual even if he commits the act in another jurisdiction; applying this rule to an attempt to bribe a Michigan official who was in charge of making state purchases, even though defendant never entered Michigan); Heath, 941 F.2d at 1138-39. As the district court noted, to hold otherwise would be at odds with the idea of official bribery or corruption.... [It would] provide a series of safe havens for those who wish to be bribed or [to be] the recipients of gratuities. [It would be] at odds with the statute itself [and] with the larger purposes of the Travel Act. F Conspiracy (Count 1) [31][32][33][34] In order to convict Woodward of conspiracy, the government had to prove **that a conspiracy existed, **that Woodward knew of and voluntarily participated in it, and that an overt act took place in furtherance of it. See United States v. Frankhauser, 80 F.3d 641, 653 (1st Cir.1996). The agreement need not be explicit; a tacit agreement will suffice. See id.; Direct Sales Co. v. United States, 319 U.S. 703, 712-13, 63 S.Ct. 1265, 87 L.Ed. 1674 (1943). To establish Woodward's voluntary participation in the conspiracy, the evidence must establish both his intent to agree and his intent to effectuate the object of the conspiracy. Frankhauser, 80 F.3d at 653; see also United States v. Piper, 35 F.3d 611, 615 (1st Cir.1994). Neither the agreement nor Woodward's participation in it need be proven with direct evidence. See Glasser v. United States, 315

U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942); Frankhauser, 80 F.3d at 653. Woodward's challenge to his conspiracy conviction is that it depends on the three substantive counts on which he was convicted, and he maintains that those counts suffered from sufficiency of the evidence infirmities that compel acquittal. Because these infirmities extend to the conspiracy count, he argues, Count 1 must fall for the same reasons as the three substantive counts of which it is comprised. Def. Br. at 34. Woodward's argument is unavailing, because we have concluded that none of the three substantive counts comprising the conspiracy count was infirm. Therefore, the evidence is sufficient to support the conspiracy conviction for the same reasons discussed supra concerning the substantive counts, and Woodward's conspiracy conviction must stand.FN13 FN13. As we found in Sawyer, regarding the conspiracy alleged between Sawyer and his supervisor at Hancock (who obviously was further removed from the alleged deprivation of honest services than Woodward is), **the jury could reasonably infer that both men knew that the expenditures were unlawful, and from this, **that the reason for the repeated illegal gifts and gratuities to key legislators was to secretly influence legislative action. 85 F.3d at 743. Given the evidence of repeated expenditures, a jury could rationally find that [the defendant and his co-conspirators] agreed, at least tacitly, to the pattern of unlawful conduct. Finally, the jury could also infer that [the defendant and his co-conspirators] knew that the mails and wires would be used to facilitate the entertainment ... (e.g., the mailing of bills related to, and the making of telephone calls to arrange, the entertainment), and that interstate travel in connection with the entertainment (e.g., [expenditures for] out-of-state golf) would or had to occur. Id. Among the overt acts, we found the evidence sufficient to establish Sawyer's giving of illegal gratuities to, among others, Woodward. Id. Based on the evidence in this record, we conclude that a reasonable jury could have found, beyond a reasonable doubt, that Woodward committed all elements of the four offenses of which he was convicted. Evans v. U.S., 504 U.S. 255, 112 S.Ct. 1881, 119 L.Ed.2d 57, 60 USLW 4411 (U.S.Ga.,May 26, 1992)

Evans v. U.S. 504 U.S. 255 The Criminal Offense Of Extortion only requires the passive receipt of bribes, affirmative act of inducement by public official, such as a demand was not element of offense of extortion under color of official right prohibited by the Hobbs Act; government was only required to show that payment was made in return for official acts, overruling U.S. v. OGrady 742 F.2d 682; U.S. v. Aguon 801 F.2d 1158.

U.S. v. LeFevour, 798 F.2d 977, 21 Fed. R. Evid. Serv. 391 (7th Cir.(Ill.),Aug 14, 1986) Defendant, a former state court judge, was convicted in the United States District Court for the Northern District of Illinois, Eastern Division, Charles R. Norgle, Sr., J., of having violated Racketeer Influence and Corrupt Organizations Act, committed mail fraud, and filed false income tax returns, and he appealed. The Court of Appeals, Posner, Circuit Judge, held that: (1) trial judge did not err in refusing admission of evidence showing that defendant sometimes dismissed cases for other reasons; (2) there was no danger of misleading impression, warranting admission of portion of tape recording; (3) note was admissible as statement of coconspirator; (4) given misleading impression created by cross-examination of witness, government evidence was admissible; (5) fact of immunity agreements was relevant to putting essential circumstances of government

witnesses' testimony before jury; and (6) there was no evidence of partisanship by judge warranting reversal. Affirmed. [10] Criminal Law 110 1170.5(1) 110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1170.5 Witnesses 110k1170.5(1) k. In General. Most Cited Cases (Formerly 110k11701/2(1)) Evidence that cars and copiers were bribes for defendant judge and not promotions was so overwhelming that any error in admission of immunity agreements for witnesses employed by auto leasing company or copier company was harmless. Fed.Rules Cr.Rule 52(a), 18 U.S.C.A. After a seven-week trial, a jury convicted Richard LeFevour, a former state court judge in Chicago, of having violated the RICO statute (Racketeer Influenced and Corrupt Organizations), 18 U.S.C. 1962(d), committed mail fraud, 18 U.S.C. 1341, and filed false income tax returns, 26 U.S.C. 7206(1), during a 14-year career of bribe taking. He was sentenced to 12 years in prison. Long the chief judge of the Cook County traffic court, LeFevour is a principal figure in the Greylord scandal that has engulfed a number of judges, lawyers, and policemen in Chicago. See, e.g., United States v. Devine, 787 F.2d 1086 (7th Cir.1986); United States v. Murphy, 768 F.2d 1518 (7th Cir.1985); United States v. Conn, 769 F.2d 420 (7th Cir.1985). The Murphy opinion describes some of his schemes , see 768 F.2d at 1524-27, thus allowing us to be brief. They fall in three periods. In the first, which lasted from 1969 to the beginning of 1981, he accepted bribes to dismiss drunk-driving cases. His cousin, Jimmy LeFevour (the principal witness for the prosecution), a policeman assigned to the traffic court, was his bagman for these bribes. Lawyers gave Jimmy cash to get their cases dismissed (or the defendant placed on supervision, the mildest sanction for drunk driving), and Jimmy would turn the cash over to the judge after deducting a small pourboire for himself. In the second (and overlapping) period covered by the charges, 1976 to 1982, the judge accepted bribes for quashing parking tickets. Some of the bribes took the form of free use of leased cars in exchange for dismissing parking tickets for which the leasing company was liable; others, of free use of copying machines supplied by a copier seller whose service personnel had received many parking tickets. In this period the judge also took cash bribes for dismissing charges against scofflaws. The practice in Cook County is to issue an arrest warrant to anyone who has ten or more unpaid parking tickets. Arthur McCauslin and Lawrence McLain, who, like Jimmy LeFevour, were policemen attached to the traffic court, would serve these warrants. According to their testimony Judge LeFevour proposed and they acceded to a scheme whereby they offered to settle the scofflaw's case for half the fine. If the scofflaw agreed to settle, the money was paid over to the judge, who dismissed the charges and recalled the warrant. The last period, which ran from 1981 to 1983, began with LeFevour's promotion to chief judge of the first municipal district. A magazine reported hustling at two of the courts under the judge's new jurisdiction. A hustler is a lawyer who hangs around the courthouse waiting for persons who have been arrested and have posted a cash bond to arrive for an appearance in the case. The hustler accosts the person and offers to represent him in exchange for the bond refund to which an arrested person is entitled at the end of the case. Judge LeFevour sent Jimmy to these courts to put an end to hustling, but once there Jimmy was approached by lawyers who offered to pay the judge to be allowed to continue. The offer was relayed to the judge, who accepted it, and the Club was *980 formed, whose five members paid a total of $2,500 a month ($500 to Jimmy, the rest to the judge) for the privilege of hustling. Apart from testimony by the bagmen and other witnesses to the alleged bribes, the prosecution relied heavily on a reconstruction of Judge LeFevour's finances, showing that he spent much more money than he received from all known legitimate sources.

UTILIZE PREDICATES THAT HAVE THE STRONGEST NINTH CIRCUIT CASE LAW SUPPORT. 18 U.S.C. 1961 definitions

17. Predicate acts Debtors met particularity requirement for pleading mail fraud and wire fraud as predicate acts, in civil Racketeer Influenced and Corrupt Organizations Act (RICO) claim against lender and others, where the complaint alleged that defendants used the mails and interstate telephone system in furtherance of a pattern of racketeering activity and collection of unlawful debt and to otherwise defraud plaintiffs, and the complaint outlined the alleged scheme to defraud them of their home and pled a time frame for the scheme, specific persons, entities, and times connected with the fraud, and the general contents of the alleged fraudulent communications between defendants and the debtors. Williams v. Equity Holding Corp., E.D.Va.2007, 498 F.Supp.2d 831. Federal Civil Procedure 636

RACKETEERING ACTIVITY. WHAT CRIMINAL ACTS CONSTITUTE PREDICATE ACTS UNDER 18 U.S.C. Section 1961.
See, criminal_rico_what_state_law_offenses_constitute_predicate_offenses.doc

18 U.S.C. Section 1961 Definitions

As used in this chapter-(1) racketeering activity means (A) any act or threat involving murder, kidnapping, gambling, arson, robbery, **bribery, extortion, dealing in obscene matter, or dealing in a controlled substance or listed chemical (as defined in section 102 of the Controlled Substances Act), which is chargeable under State law and punishable by imprisonment for more than one year; (B) any act which is indictable under any of the following provisions of** title 18, United States Code: Section 201 (relating to bribery), section 224 (relating to sports bribery), sections 471, 472, and 473 (relating to counterfeiting), section 659 (relating to theft from interstate shipment) if the act indictable under section 659 is felonious, section 664 (relating to embezzlement from pension and welfare funds), sections 891-894 (relating to extortionate credit transactions), section 1028 (relating to fraud and related activity in connection with identification documents), section 1029 (relating to fraud and related activity in connection with access devices), section 1084 (relating to the transmission of gambling information), section 1341 (relating to mail fraud), section 1343 (relating to wire fraud), section 1344 (relating to financial institution fraud), section 1425 (relating to the procurement of citizenship or nationalization unlawfully), section 1426 (relating to the reproduction of naturalization or citizenship papers), section 1427 (relating to the sale of naturalization or citizenship papers), sections 1461-1465 (relating to obscene matter), section 1503 (relating to obstruction of justice), section 1510 (relating to obstruction of criminal investigations), section 1511 (relating to the obstruction of State or local law enforcement), section 1512 (relating to tampering with a witness, victim, or an informant), section 1513 (relating to retaliating against a witness, victim, or an informant), section 1542 (relating to false statement in application and use of passport), section 1543 (relating to forgery or false use of passport), section 1544 (relating to misuse of passport), section 1546 (relating to fraud and misuse of visas, permits, and other documents), sections 15811592 (relating to peonage, slavery, and trafficking in persons)., [FN1]section 1951 (relating to interference with commerce, robbery, or extortion), section 1952 (relating to racketeering), section 1953 (relating to interstate transportation of wagering paraphernalia), section 1954 (relating to unlawful welfare fund payments), section 1955 (relating to the prohibition of illegal gambling businesses), section 1956 (relating to the laundering of monetary instruments), section 1957 (relating to engaging in monetary transactions in property derived from specified unlawful activity), section 1958 (relating to use of interstate commerce facilities in the commission of murder-for-hire), section 1960 (relating to illegal money transmitters), sections 2251, 2251A, 2252, and 2260 (relating to sexual exploitation of children), sections 2312 and 2313 (relating to interstate transportation of stolen motor vehicles), sections 2314 and 2315 (relating to interstate transportation of stolen property), section 2318 (relating to trafficking in counterfeit labels for phonorecords, computer programs or computer program documentation or packaging and copies of motion pictures or other audiovisual works), section 2319 (relating to criminal infringement of a copyright), section 2319A (relating to

unauthorized fixation of and trafficking in sound recordings and music videos of live musical performances), section 2320 (relating to trafficking in goods or services bearing counterfeit marks), section 2321 (relating to trafficking in certain motor vehicles or motor vehicle parts), sections 2341-2346 (relating to trafficking in contraband cigarettes), sections 2421-24 (relating to white slave traffic), sections 175-178 (relating to biological weapons), sections 229-229F (relating to chemical weapons), section 831 (relating to nuclear materials), (C) any act which is indictable under title 29, United States Code, section 186 (dealing with restrictions on payments and loans to labor organizations) or section 501(c) (relating to embezzlement from union funds), (D) any offense involving fraud connected with a case under title 11 (except a case under section 157 of this title), fraud in the sale of securities, or the felonious manufacture, importation, receiving, concealment, buying, selling, or otherwise dealing in a controlled substance or listed chemical (as defined in section 102 of the Controlled Substances Act), punishable under any law of the United States, (E) any act which is indictable under the Currency and Foreign Transactions Reporting Act, (F) any act which is indictable under the Immigration and Nationality Act, section 274 (relating to bringing in and harboring certain aliens), section 277 (relating to aiding or assisting certain aliens to enter the United States), or section 278 (relating to importation of alien for immoral purpose) if the act indictable under such section of such Act was committed for the purpose of financial gain, or (G) any act that is indictable under any provision listed in section 2332b(g)(5)(B); (2) State means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United States, any political subdivision, or any department, agency, or instrumentality thereof; (3) person includes any individual or entity capable of holding a legal or beneficial interest in property; (4) enterprise includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity; (5) pattern of racketeering activity requires at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity; (6) unlawful debt means a debt (A) incurred or contracted in gambling activity which was in violation of the law of the United States, a State or political subdivision thereof, or which is unenforceable under State or Federal law in whole or in part as to principal or interest because of the laws relating to usury, and (B) which was incurred in connection with the business of gambling in violation of the law of the United States, a State or political subdivision thereof, or the business of lending money or a thing of value at a rate usurious under State or Federal law, where the usurious rate is at least twice the enforceable rate; (7) racketeering investigator means any attorney or investigator so designated by the Attorney General and charged with the duty of enforcing or carrying into effect this chapter; (8) racketeering investigation means any inquiry conducted by any racketeering investigator for the purpose of ascertaining whether any person has been involved in any violation of this chapter or of any final order, judgment, or decree of any court of the United States, duly entered in any case or proceeding arising under this chapter; (9) documentary material includes any book, paper, document, record, recording, or other material; and (10) Attorney General includes the Attorney General of the United States, the Deputy Attorney General of the United States, the Associate Attorney General of the United States, any Assistant Attorney General of the United States, or any employee of the Department of Justice or any employee of any department or agency of the United States so designated by the Attorney General to carry out the powers conferred on the Attorney General by this chapter. Any department or agency so designated may use in investigations authorized by this chapter either the investigative provisions of this chapter or the investigative power of such department or agency otherwise conferred by law.

89. Obstruction of justice, racketeering activity Failed attempt of wife's attorneys to serve subpoena on husband's client to testify in California divorce proceeding did not constitute grounds for charge of obstruction of justice and did not establish Racketeer Influenced and Corrupt Organizations Act (RICO) predicate act. Streck v. Peters, D.Hawai'i 1994, 855 F.Supp. 1156. Obstructing Justice 3; Racketeer Influenced And Corrupt Organizations 7 RICO defendants' continuous pattern of obstructionous conduct was sufficiently related to other alleged RICO predicates so that statute of limitations did not bar prosecution; obstruction of justice predicates were part of continuing pattern to conceal securities and mail predicates. U.S. v. Cannistraro, D.N.J.1992, 800 F.Supp. 30. Racketeer Influenced And Corrupt Organizations 32 91. Perjury, racketeering activity Alleged perjury which took place in state court, not federal court, could not qualify as Racketeer Influenced and Corrupt Organizations Act (RICO) predicate act; only perjury in federal court falls under obstruction of justice which is a predicate act under RICO. Streck v. Peters, D.Hawai'i 1994, 855 F.Supp. 1156. Racketeer Influenced And Corrupt Organizations 7 Perjury can be a predicate act for purposes of a RICO action, through obstruction of justice statute, where plaintiffs allege the perjury was part of the pattern of racketeering activity. C & W Const. Co. v. Brotherhood of Carpenters and Joiners of America, Local 745, AFL-CIO, D.Hawai'i 1988, 687 F.Supp. 1453. Racketeer Influenced And Corrupt Organizations 7 Perjury is not a predicate act to permit civil RICO liability. Rand v. Anaconda-Ericsson, Inc., E.D.N.Y.1985, 623 F.Supp. 176, affirmed 794 F.2d 843, certiorari denied 107 S.Ct. 579, 479 U.S. 987, 93 L.Ed.2d 582. Racketeer Influenced And Corrupt Organizations 7 101. State law violation, racketeering activity--Generally Wyoming statute prohibiting blackmail clearly established that it was unlawful to accuse or threaten to accuse a person of a crime with intent to obtain that person's property or compel some other action or inaction, and thus ranch owner who claimed that Bureau of Land Management (BLM) employees accused owner of various crimes to obtain right-of-way across owner's property stated violation of clearly established statutory rights under Wyoming law, as required to defeat employees' defense of qualified immunity to owner's claim that employees' violations of statute constituted predicate acts supporting owner's claim under Racketeer Influenced and Corrupt Organizations Act (RICO). Robbins v. Wilkie, C.A.10 (Wyo.) 2006, 433 F.3d 755, certiorari granted 127 S.Ct. 722, 549 U.S. 1075, 166 L.Ed.2d 559, reversed and remanded 127 S.Ct. 2588, 551 U.S. 537, 168 L.Ed.2d 389, on remand 497 F.3d 1122. Extortion And Threats 9 Although state offenses are incorporated into this chapter, violation of state law is not sole element of charged federal offenses; this chapter serves independent federal purposes and is not merely an attempt to enforce state law. U. S. v. Zemek, C.A.9 (Wash.) 1980, 634 F.2d 1159, certiorari denied 101 S.Ct. 1359, 450 U.S. 916, 67 L.Ed.2d 341, certiorari denied 101 S.Ct. 1525, 450 U.S. 985, 67 L.Ed.2d 821, certiorari denied 101 S.Ct. 3031, 452 U.S. 905, 69 L.Ed.2d 406. Commerce 82.10 There is no requirement that a state conviction be obtained where a state offense is part of racketeering activity charged under this chapter. U. S. v. Malatesta, C.A.5 (Fla.) 1978, 583 F.2d 748, on rehearing 590 F.2d 1379, certiorari denied 99 S.Ct. 1508, 440 U.S. 962, 59 L.Ed.2d 777, certiorari denied 100 S.Ct. 91, 444 U.S. 846, 62 L.Ed.2d 59. Commerce 82.10 This chapter forbids racketeering, not state offenses per se; the state offenses referred to are definitional only, and racketeering, the federal crime, is defined as matter of legislative draftsmanship by reference to state law crimes. U. S. v. Frumento, C.A.3 (Pa.) 1977, 563 F.2d 1083, certiorari denied 98 S.Ct. 1256, 434 U.S. 1072, 55 L.Ed.2d 775, certiorari denied 98 S.Ct. 1258, 434 U.S. 1072, 55 L.Ed.2d 776. Commerce 82.10

Under this chapter, state offenses are included by generic designation, and test for determining whether charged acts fit into generic category of predicate offense is whether indictment charges type of activity generally known or characterized in the proscribed category. U.S. v. Forsythe, C.A.3 (Pa.) 1977, 560 F.2d 1127. Commerce 82.10 Reference to state law in par. (1)(A) of this section is for purpose of defining conduct prohibited and is not meant to incorporate state statute of limitations or procedural rules. U. S. v. Brown, C.A.5 (Ga.) 1977, 555 F.2d 407, rehearing denied 559 F.2d 29, certiorari denied 98 S.Ct. 1448, 435 U.S. 904, 55 L.Ed.2d 494. Criminal Law 147; Gaming 63(2) District Court lacked jurisdiction pursuant to Rooker-Feldman doctrine, to consider plaintiff's action alleging violations of Racketeer Influenced and Corrupt Organizations Act (RICO), Fair Debt Collection Practices Act (FDCPA), and claims under 1983, and his request as relief that multiple state judgments be declared void and their execution enjoined, where all of plaintiff's allegations concerned specific grievances that the state court incorrectly applied the law in underlying debt collection actions, and were clearly predicated on his belief that the state court was mistaken in rendering its decisions against him. McGee v. Moon, N.D.Ohio 2010, 685 F.Supp.2d 737. Courts 509 Alleged scheme to defraud in violation of state law did not fall within definition of racketeering activity for purposes of civil Racketeer Influenced and Corrupt Organizations Act (RICO) violation. Kirk v. Heppt, S.D.N.Y.2006, 423 F.Supp.2d 147. Racketeer Influenced And Corrupt Organizations 10 Racketeer Influenced and Corrupt Organizations Act (RICO) did not require government to plead state law crimes in accordance with specific pleading requirements of state law. U.S. v. Galasso, E.D.N.Y.2000, 118 F.Supp.2d 322. Racketeer Influenced And Corrupt Organizations 70 New York's coercion statute does not provide basis for liability under Racketeer Influenced and Corrupt Organizations Act (RICO). Center Cadillac, Inc. v. Bank Leumi Trust Co. of New York, S.D.N.Y.1992, 808 F.Supp. 213, affirmed 99 F.3d 401. Racketeer Influenced And Corrupt Organizations 8 Racketeering activity within meaning of Racketeer Influenced and Corrupt Organizations Act (RICO) includes state law crimes such as murder, bribery and extortion, and federal crimes such as mail fraud, wire fraud and securities fraud. Wiley v. Hughes Capital Corp., D.N.J.1990, 746 F.Supp. 1264. Racketeer Influenced And Corrupt Organizations 7 Suit by operators of shopping mall project against general contractor's bonding company based on allegation that bonding company had exercised bad faith in investigating claims for payment made by general contractor and its subcontractors was not an extortionate act under Maryland law on ground that it caused, or threatened to cause, economic injury to general contractor, and could not serve as predicate act for general contractor's civil RICO claim against operators. J.A. Moore Const. Co. v. Sussex Associates Ltd. Partnership, D.Del.1988, 688 F.Supp. 982. Extortion And Threats 25.1 State offenses referred to in subsec. (1) (A) of this section are definitional only and racketeering, the federal crime, is defined as a matter of legislative draftsmanship by reference to state law crimes; thus, state procedural defenses are not available in this chapter's prosecution. U.S. v. Joseph, E.D.Pa.1981, 526 F.Supp. 504. Commerce 82.10 An offense which, when committed, would have been indictable under state law is within definition of racketeering activity as used in this section. U. S. v. Fineman, E.D.Pa.1977, 434 F.Supp. 189. Commerce 82.10 102. ---- Chargeable under state law, state law violation, racketeering activity Defendant's acquittal on state court murder charge did not mean that the murder was no longer chargeable under state law under Racketeer Influenced and Corrupt Organizations Act (RICO) and thus that murder could

not serve as a predicate act of racketeering; definitional section merely described the type of generic conduct which would serve as RICO predicate and satisfy RICO's pattern requirement, regardless of whether further state prosecution would be barred by double jeopardy clause. U.S. v. Coonan, C.A.2 (N.Y.) 1991, 938 F.2d 1553, certiorari denied 112 S.Ct. 1486, 503 U.S. 941, 117 L.Ed.2d 628. Racketeer Influenced And Corrupt Organizations 19 Under this chapter, Congress intended to permit federal indictment within time specified in federal statute of limitation, section 3282 of this title, for offenses which, when committed, were chargeable under state law and punishable for more than one year; words chargeable under state law in this section mean chargeable under state law at the time the offense was committed. U. S. v. Davis, C.A.3 (Pa.) 1978, 576 F.2d 1065, certiorari denied 99 S.Ct. 119, 439 U.S. 836, 58 L.Ed.2d 132. Criminal Law 147 103. ---- Bribery, state law violation, racketeering activity Conduct of city's public works commissioner in granting comp time and overtime pay to employees to perform political activities could not serve as predicate offense supporting conviction under Racketeer Influenced and Corrupt Organizations Act (RICO), under theory that using public funds to pay municipal employees for political labor was bribery under Illinois law; no state-court decision supported such a view, and putting bribery statute to such a novel use to secure RICO conviction would deprive commissioner of fair warning. U.S. v. Genova, C.A.7 (Ill.) 2003, 333 F.3d 750, rehearing denied. Racketeer Influenced And Corrupt Organizations 9 As defendant acted in good faith, he was not guilty of commercial bribery under Texas law, as required to support Racketeer Influenced and Corrupt Organizations Act (RICO) claim based on bribery. C & B Sales & Service, Inc. v. McDonald, C.A.5 (La.) 1996, 95 F.3d 1308, modified on denial of rehearing 111 F.3d 27. Bribery 1(1) Under Indiana law, former deputy sheriff accepted bribes in violation of Racketeer Influenced and Corrupt Organization Act, despite contention that payments from illegal poker machine vendors were political contributions, given that vendors expected and deputy agreed that vendors would receive police protection and other favors in exchange for payment. U.S. v. Mokol, C.A.7 (Ind.) 1992, 957 F.2d 1410, rehearing denied, certiorari denied 113 S.Ct. 284, 506 U.S. 899, 121 L.Ed.2d 210. Bribery 1(1) Violation of Florida unauthorized compensation statute may constitute bribery within federal Racketeer Influenced and Corrupt Organizations (RICO) statute and thus form predicate act. U.S. v. Kotvas, C.A.11 (Fla.) 1991, 941 F.2d 1141, rehearing denied 966 F.2d 1463, certiorari denied 113 S.Ct. 982, 506 U.S. 1055, 122 L.Ed.2d 135. Racketeer Influenced And Corrupt Organizations 9 The labels placed on a state statute do not determine whether that statute proscribes bribery for purposes of the RICO statute and thus any statute prohibiting conduct which can be generically defined as bribery could be the basis for a RICO predicate act. U.S. v. Garner, C.A.7 (Ill.) 1987, 837 F.2d 1404, certiorari denied 108 S.Ct. 2022, 486 U.S. 1035, 100 L.Ed.2d 608, certiorari denied 108 S.Ct. 2914, 487 U.S. 1240, 101 L.Ed.2d 945, certiorari denied 109 S.Ct. 244, 488 U.S. 898, 102 L.Ed.2d 232. Racketeer Influenced And Corrupt Organizations 9 Violations of state antibribery statute, Code Ann. 97-11-53, constituted predicate offense needed to establish pattern of racketeering activity under this chapter. Alcorn County, Miss. v. U.S. Interstate Supplies, Inc., C.A.5 (Miss.) 1984, 731 F.2d 1160. Commerce 82.6 Defendants who sought help of licensed groom in drugging horses that were competing with those under his care did not ask groom to refrain from giving his best efforts, and therefore defendants did not violate McKinney's N.Y. Penal Law 180.40, 180.50 providing, that a person is guilty of sports bribing when he confers, offers or agrees to confer any benefit upon a sports participant with intent to influence him not to give his best efforts in a sports contest; therefore, defendants' conviction under this chapter, could not be based on that offense. U.S. v. Malizia, C.A.2 (N.Y.) 1983, 720 F.2d 744. Bribery 1(1)

Since government had not shown that defendant, while a special bailiff for county circuit court, conferred any pecuniary benefit upon or directed any communication to a judge, government failed to prove that defendant violated Kentucky bribery statute, KRS 521.020, and therefore, those alleged acts of bribery could not serve as predicate offenses for defendant's conviction under this chapter. U.S. v. Cissell, C.A.6 (Ky.) 1983, 700 F.2d 338. Commerce 82.10 Defendant's action in furnishing services of prostitute free of charge to peace officers constituted predicate crime of bribery under Texas law, for purposes of prosecution under this chapter, as evidence established economic value of services of prostitute, so that such services constituted benefit within meaning of Texas law. U.S. v. Tunnell, C.A.5 (Tex.) 1982, 667 F.2d 1182. Bribery 1(2) Although proof of defendant's involvement in alleged acts of bribery was not necessary in order to affirm his racketeering conviction, acts charged in indictment against defendant, who alleged that charged acts actually were acts of official misconduct and that such acts, since misdemeanors, could not serve as predicate crimes for his racketeering conviction, did appear to fall within provisions of V.T.C.A. Penal Code 36.02(a), 39.01 and 39.01(a) (1-4), even if offenses were acts of official misconduct, inclusion of such charges in indictment and the evidence produced at trial to support these charges was not so prejudicial as to require reversal of defendant's racketeering conviction. U. S. v. Welch, C.A.5 (Tex.) 1981, 656 F.2d 1039, rehearing denied 663 F.2d 101, certiorari denied 102 S.Ct. 1767, 456 U.S. 915, 72 L.Ed.2d 173, certiorari denied 102 S.Ct. 1768, 456 U.S. 915, 72 L.Ed.2d 173. Bribery 1(1); Criminal Law 1165(1) Action of South Carolina policeman in accepting money and services of prostitutes in return for protecting illegally operated clubs and gambling establishments constituted violation of state statute making it a felony for an executive officer to corruptly accept a gift or gratuity under an agreement that his judgment in a particular manner should be made in a particular way and thus permitted conviction for interstate racketeering despite contention that the only South Carolina statute violated was statute imposing a fine of not more than $300 on sheriffs and other officers who accept a bribe for delaying or failing to arrest a person. U. S. v. Burnsed, C.A.4 (S.C.) 1977, 566 F.2d 882, certiorari denied 98 S.Ct. 1270, 434 U.S. 1077, 55 L.Ed.2d 784. Bribery 1(1) Whether Connecticut bribery statutes required specific intent to influence official conduct was irrelevant in determining sufficiency of indictment charging defendants with violations of Racketeer Influenced and Corrupt Organizations (RICO) statute in connection with bribery scheme, where indictment alleged that campaign contributions were offered and received in exchange for official state acts. U.S. v. Triumph Capital Group, Inc., D.Conn.2002, 260 F.Supp.2d 444. Racketeer Influenced And Corrupt Organizations 91 Defendant's repeated commission of acts constituting New York crime of second-degree bribery established predicate act under Racketeer Influenced and Corrupt Organization Act (RICO); defendant asserted privilege against self-incrimination in response to questions about bribe payments to town officials, and United States produced independent corroborative evidence that defendant made payments to officials to have his company's waste disposal fees reduced. U.S. v. Private Sanitation Industry Ass'n of Nassau/Suffolk, Inc., E.D.N.Y.1994, 899 F.Supp. 974, appeal granted 44 F.3d 1082, affirmed 47 F.3d 1158, certiorari denied 116 S.Ct. 50, 516 U.S. 806, 133 L.Ed.2d 15. Racketeer Influenced And Corrupt Organizations 9 Predicate acts of racketeering, concerning alleged bribery of New York state officials in order to influence votes on proposed rate increase for carting, were acts involving bribery that were chargeable under New York law and were punishable by more than one year of imprisonment and thus were properly pleaded as racketeering acts. U.S. v. Private Sanitation Industry Ass'n of Nassau/Suffolk, Inc., E.D.N.Y.1992, 793 F.Supp. 1114. Racketeer Influenced And Corrupt Organizations 9 State law offense in which bribery is alleged to have played major role, and which is punishable by more than one year's imprisonment, is act * * * involving * * * bribery which may serve as one of predicate acts required to establish pattern of racketeering activity under this chapter. Beth Israel Medical Center v. Smith, S.D.N.Y.1983, 576 F.Supp. 1061. Commerce 82.6

Violation of 18 P.S. 4701(a) in effect prior to bribery statute which took effect on June 1, 1973, cannot constitute racketeering activity for purposes of this chapter if the Pennsylvania statute of limitations applicable to such offenses has run before the date of the federal indictments. U.S. v. Forsythe, W.D.Pa.1977, 429 F.Supp. 715, reversed 560 F.2d 1127. Criminal Law 157
7. Relationship to State law Racketeer Influenced and Corrupt Organizations Act (RICO) is federal law proscribing various racketeering acts which have effect on interstate or foreign commerce, and certain of those racketeering, or predicate acts violate state law, and RICO incorporates elements of those state offenses for definitional purposes, but state law offenses are not gravamen of RICO offenses, since RICO was not designed to punish state law violations but to punish impact on commerce caused by conduct which meets statute's definition of racketeering activity. United States v Forsythe (1977, CA3 Pa) 560 F2d 1127. 18 USCS 1961 et seq. of Federal Racketeering Act forbids "racketeering," not state offenses per se; state offenses referred to in federal act are definitional only; racketeering, which is federal crime, is defined as matter of legislative draftsmanship by reference to state law crimes but this does not mean that federal statute punishes same conduct as reached by state law. United States v Frumento (1977, CA3 Pa) 563 F2d 1083, cert den (1978) 434 US 1072, 55 L Ed 2d 775, 98 S Ct 1256 and cert den (1978) 434 US 1072, 55 L Ed 2d 776, 98 S Ct 1258. By incorporating state substantive law as predicate for federal racketeering charge, Congress did not incorporate state procedural and evidentiary rules into RICO statute (18 USCS 1961). United States v Paone (1986, CA2 NY) 782 F2d 386, 20 Fed Rules Evid Serv 577, cert den (1986) 479 US 882, 93 L Ed 2d 246, 107 S Ct 269 and cert den (1987) 483 US 1019, 97 L Ed 2d 761, 107 S Ct 3261. Trial court was not required to remand shareholder's case to state court after shareholder dismissed his claim under Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961-1968, because remaining holder claims under California law arose from same transactions that underlay RICO claim, so under 28 USCS 1367(a), trial court had supplemental jurisdiction. Anderson v Aon Corp. (2010, CA7 Ill) 614 F3d 361. 12. "Involving" Word "involving" in 18 USCS 1961(1)(A) is broad enough to reach conduct of owners and employees of corrupt enterprise. United States v Forsythe (1977, CA3 Pa) 560 F2d 1127. Phrase, "any offense involving," in 18 USCS 1961 is broad enough to include conspiracy to commit offenses enumerated in 1961, and "aiding and abetting" such offenses, including securities fraud, as predicate acts of racketeering. First Federal Sav. & Loan Asso. v Oppenheim, Appel, Dixon & Co. (1986, SD NY) 629 F Supp 427, CCH Fed Secur L Rep P 92505. 13. Relationship to State offenses 18 USCS 1961 et seq. of Federal Racketeering Act forbids "racketeering," not state offenses per se; state offenses referred to in federal act are definitional only; racketeering, which is federal crime, is defined as matter of legislative draftsmanship by reference to state law crimes but this does not mean that federal statute punishes same conduct as reached by state law. United States v Frumento (1977, CA3 Pa) 563 F2d 1083, cert den (1978) 434 US 1072, 55 L Ed 2d 775, 98 S Ct 1256 and cert den (1978) 434 US 1072, 55 L Ed 2d 776, 98 S Ct 1258. Essential element of racketeering activity, defined in 18 USCS 1961(1)(A), is proof that defendant violated state law involving bribery punishable by

imprisonment for more than 1 year. United States v Burnsed (1977, CA4 SC) 566 F2d 882, cert den (1978) 434 US 1077, 55 L Ed 2d 784, 98 S Ct 1270. Offense which, when committed, would have been indictable under state law is within statutory designation of "racketeering activity" under 18 USCS 1961(1). United States v Fineman (1977, ED Pa) 434 F Supp 189. Court rejected argument of defendants, corporation and others, that all of plaintiffs' predicate acts failed because they were not "chargeable" under state law because Racketeer Influenced and Corrupt Organization Act (RICO) statute, 18 USCS 1961(1), defined "racketeering activity" as any act or threat involving murder, kidnapping, gambling, etc., which was chargeable under State law and punishable by imprisonment for more than one year; plaintiffs' RICO claim was based on predicate acts of murder, arson, and extortion, as defined by California Penal Code; fact that acts occurred in Nigeria and could not have been prosecuted in California based on Cal. Penal Code 27 was of no consequence; RICO statute only required that act be criminal under state law. Bowoto v Chevron Corp. (2007, ND Cal) 481 F Supp 2d 1010. Unpublished Opinions Unpublished: Evidence was sufficient to show defendant committed three racketeering acts, pursuant to 18 USCS 1961(1), (5), underlying Racketeer Influenced and Corrupt Organization (RICO) verdict for violations of 18 USCS 1962(c), (d); government proved he sold motorcycle knowing vehicle identification number (VIN) had been removed in violation of state law and thus in violation of 18 USCS 2321(a); he knowingly obtained money and methamphetamine from victim on threat of death to prove first-degree extortion under Wash. Rev. Code 9A.56.120; and government proved defendant committed mail fraud by sending false motorcycle receipts through commercial interstate carrier contrary to 18 USCS 1341; finally, defendant did not challenge sufficiency of evidence establishing other elements of RICO and RICO conspiracy charges. United States v Fabel (2009, CA9 Wash) 312 Fed Appx 932, decision reached on appeal by on other grounds (2009, CA9 Wash) 320 Fed Appx 797, reh, en banc, den, amd (2009, CA9 Wash) 2009 US App LEXIS 13393 and cert den (2009, US) 130 S Ct 445, 175 L Ed 2d 287 and cert den (2009, US) 129 S Ct 2451, 174 L Ed 2d 241. 23. Bankruptcy fraud RICO complaint alleging that shareholders of subcontractor filed fraudulent petition to have general contractor declared involuntary bankrupt for sole purpose of harming general contractor's business, falsely included other subcontractors as creditors on petition, gave false testimony under oath at bankruptcy hearing, falsely publicized that general contractor was bankrupt, and used mails to transmit threatening letters and to further false bankruptcy scheme did not show requisite "continuity" of acts to state claim under RICO; complaint alleged single victim, single injury, and single, short-lived scheme with only 2 active perpetrators, which did not constitute pattern of racketeering activity. Marshall-Silver Constr. Co. v Mendel (1987, CA3 Pa) 835 F2d 63, vacated (1989) 492 US 913, 106 L Ed 2d 582, 109 S Ct 3233. Claim against defendant bank charged in civil RICO action in connection with involuntary bankruptcy petition must be dismissed where allegation that defendant bank engaged in loan negotiations and filed petition, without notice, disavowing these negotiations, does not describe pattern of racketeering activity by bank. Paradise Hotel Corp. v Bank of Nova Scotia (1988, CA3 VI) 842 F2d 47, 17 BCD 599, 18 CBC2d 838, CCH Bankr L Rptr P 72241 (criticized in Stone Crushed P'ship v Jackson (2006) 589 Pa 296, 908 A2d 875).

Plaintiffs failed to state valid RICO claim where they claimed only that defendant engaged in fraud connected to bankruptcy case in sale of securities, but failed to allege that such acts amount to continued criminal activity, nor alleged that defendant derived income from such acts. Lane v Peterson (1990, CA8 Ark) 899 F2d 737, cert den (1990) 498 US 823, 112 L Ed 2d 48, 111 S Ct 74. It is sufficient to sustain conviction under RICO statute where affairs of theatre are conducted by engaging in securities fraud during initial sale of share interest in theatre and in bankruptcy fraud when theatre was brought into Chapter XI. Engl v Berg (1981, ED Pa) 511 F Supp 1146, CCH Fed Secur L Rep P 97990. Creditor established pattern of racketeering activity where complaint alleged that officer and shareholder of debtor corporation fraudulently conveyed debtor's stock to third party to avoid bankruptcy proceedings, made false statements in furtherance of conveyance, and attorney of officer and shareholder bribed judge, because such acts constituted bankruptcy fraud and were clearly connected. Bankers Trust Co. v Feldesman (1986, SD NY) 648 F Supp 17, dismd, on reh (1987, SD NY) 676 F Supp 496, revd on other grounds (1988, CA2 NY) 859 F2d 1096, cert den (1989) 490 US 1007, 104 L Ed 2d 158, 109 S Ct 1642. District court dismissed claims under brought Racketeer Influenced and Corrupt Organizations Act, 18 USCS 1961, et seq., that alleged predicate offense of bankruptcy fraud, in absence of specific allegations of scienter and allegations of long term criminal racketeering activity. First Capital Asset Mgmt. v Brickellbush, Inc. (2002, SD NY) 219 F Supp 2d 576, RICO Bus Disp Guide (CCH) P 10328, affd (2004, CA2 NY) 385 F3d 159 (criticized in JSC Foreign Econ. Ass'n Technostroyexport v Weiss (2007, SD NY) 2007 US Dist LEXIS 28954) and (criticized in United States v Int'l Longshoremen's Ass'n (2007, ED NY) 518 F Supp 2d 422, 182 BNA LRRM 3205, 155 CCH LC P 10940) and (criticized in Friedman v 24 Hour Fitness USA, Inc. (2008, CD Cal) 580 F Supp 2d 985). Motion to dismiss Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961 et seq., claim against individual was denied because fraudulent transfer of assets to others to shield them from bankruptcy estate constituted predicate act under 18 USCS 152 to support RICO claim. Cadle Co. v Flanagan (2003, DC Conn) 271 F Supp 2d 379. 24. Bribery Where complaint alleges that at different times over course of at least 6-year period, telephone company and other individuals and corporations gave numerous bribes, in several forms, to members of state public utilities commission with objective of causing such members to approve unfair and unreasonable telephone rates, remand is necessary because it may be possible to prove that multiple predicates alleged constitute "pattern of racketeering activity" within meaning of RICO. H. J., Inc. v Northwestern Bell Tel. Co. (1989) 492 US 229, 106 L Ed 2d 195, 109 S Ct 2893. Separate acts of bribery are not considered as installments of one overall bribe when determining whether there have been 2 acts of racketeering activity required to constitute "pattern of racketeering activity." United States v Karas (1980, CA4 W Va) 624 F2d 500, cert den (1981) 449 US 1078, 66 L Ed 2d 800, 101 S Ct 857. Complaint that corporation paid bribe to obtain subcontracts failed to allege pattern of racketeering for purposes of civil RICO action; even though bribe was paid in 3 installments and defendants exchanged several letters and telephone calls

in executing payment, bribe was paid to one person in connection with one set of subcontracts. Roeder v Alpha Industries, Inc. (1987, CA1 Mass) 814 F2d 22, CCH Fed Secur L Rep P 93187. Multiple bribes given by real estate developers to town officials over long period of time, involving at least two bribery schemes which victimized taxpayers and resident of town, were part of related pattern of municipal corruption for benefit of common participants, and therefore constituted RICO pattern of racketeering activity. Kearny v Hudson Meadows Urban Renewal Corp. (1987, CA3 NJ) 829 F2d 1263. Evidence that defendant paid 3 separate bribes to village officials over period of several years in connection with award and performance of garbage collection contract satisfied "continuity plus relationship" test and permitted conclusion that defendant engaged in RICO pattern of racketeering activity. United States v Horak (1987, CA7 Ill) 833 F2d 1235. Factual allegations in corporation's amended complaint satisfy RICO's pattern requirement, where, inter alia, amended complaint alleges "upon information and belief" that certain defendants have engaged in improper actions similar to particularly pled bribery payments through Panamanian entities to Nigerian officials in exchange for award of contract to construct aeromedical facility in Nigeria. Environmental Tectonics v W.S. Kirkpatrick, Inc. (1988, CA3 NJ) 847 F2d 1052, 1988-1 CCH Trade Cases P 67994, 25 Fed Rules Evid Serv 1021, affd (1990) 493 US 400, 110 S Ct 701, 107 L Ed 2d 816, 1990-1 CCH Trade Cases P 68894. Two separate attempts to decertify union through bribery constitute 2 predicate acts of bribery as separate and independent wrongs sufficient to establish pattern of racketeering under RICO, where acts were separate in time, and involved different individual employees, despite fact that they may be part of single general purpose to get rid of union. Hospital Employees' Div. of Local 79 v MercyMemorial Hosp. Corp. (1988, CA6 Mich) 862 F2d 606, 130 BNA LRRM 2022, 110 CCH LC P 10855, vacated, remanded (1989) 492 US 914, 109 S Ct 3236, 106 L Ed 2d 584, 131 BNA LRRM 3072, 112 CCH LC P 11266. RICO conviction, which requires two separate predicate acts, cannot be based on single act of using telephone to promote bribery and extortion, even though act encompassed two criminal offenses. United States v Walgren (1989, CA9 Wash) 885 F2d 1417. Defendant's willingness to facilitate corruption in city parking violations bureau amplified 2 predicate acts of bribery and entailed sufficient threat of continuity to constitute RICO pattern. United States v Kaplan (1989, CA2 NY) 886 F2d 536, cert den (1990) 493 US 1076, 107 L Ed 2d 1033, 110 S Ct 1127. Where plaintiff manufacturer sued defendants(two suppliers and one of supplier's salesmen) alleging defendants bribed manufacturer's buyer, claim under 18 USCS 1961(1) of Racketeer Influenced and Corrupt Organizations Act (RICO), was properly dismissed because, while bribery was one of offenses upon which RICO claim could be based, bribe itself was not RICO offense; it was predicate act of RICO enterprise and no enterprise was shown. Williams Elecs. Games, Inc. v Garrity (2004, CA7 Ill) 366 F3d 569, 2004-1 CCH Trade Cases P 74390. Single, ongoing scheme to defraud by obtaining bribes or kickbacks, which involves series of unlawful acts, can establish "pattern" for purposes of 18 USCS 1962, and it is not necessary to establish two or more totally independent criminal

acts. United States v Salvitti (1978, ED Pa) 451 F Supp 195, affd without op (1978, CA3 Pa) 588 F2d 822 and affd without op (1978, CA3 Pa) 588 F2d 824. Numerous payoffs constitute pattern of racketeering activity as defined by 18 USCS 1961(5) despite fact that they are related to one overall bribery scheme. United States v Mazzio (1980, ED Pa) 501 F Supp 340, affd without op (1982, CA3 Pa) 681 F2d 810, cert den (1982) 457 US 1134, 73 L Ed 2d 1351, 102 S Ct 2960, 102 S Ct 2961. For purposes of establishing pattern of racketeering activity under 18 USCS 1961, accepting contributions which are alleged to be bribes will not constitute pattern of racketeering activity where such acceptance takes place at single fund raising occasion. Teleprompter of Erie, Inc. v Erie (1981, WD Pa) 537 F Supp 6 (criticized in Independent Enters. v Pittsburgh Water & Sewer Auth. (1997, CA3 Pa) 103 F3d 1165) and (criticized in Hi-Tech Rockfall Constr., Inc. v County of Maui (2009, DC Hawaii) 2009 US Dist LEXIS 15917). Attorney who makes bribery payments to fix 10 separate cases, involving as many different criminal defendants, has engaged in pattern of racketeering activity. United States v Yonan (1985, ND Ill) 622 F Supp 721. Pattern requirement under 18 USCS 1961(5) is met where defendant company is charged with overall goal of increasing profits through allegedly illicit means by (1) bribing school district employees in order to procure lunch program contract and ensure higher profit return, (2) mail fraud, and (3) obstruction of justice. United States v Freshie Co. (1986, ED Pa) 639 F Supp 442. Government alleged and proved pattern of racketeering activity in RICO prosecution where defendants, over two and a half year period, made bribes and offers of bribes to IRS agent, because even multiple payments pursuant to one extortionate demand constitute pattern of racketeering activity. United States v Persico (1986, SD NY) 646 F Supp 752, affd in part and revd in part (1987, CA2 NY) 832 F2d 705, 24 Fed Rules Evid Serv 137, 89 ALR Fed 857, cert den (1988) 486 US 1022, 100 L Ed 2d 227, 108 S Ct 1995, 108 S Ct 1996 and cert den (1988) 488 US 982, 102 L Ed 2d 564, 109 S Ct 532. Towing service's RICO claim against president of rival towing service is dismissed with leave to amend within 30 days, where complaint alleges that president conducted affairs of rival towing service in part through bribing mayor of village to obtain towing contract, which caused plaintiff to lose identifiable source of business, but fails to plead enough facts--period of time over which bribes occurred, how many bribes, how many contracts, other victims, distinct injuries--to allege "pattern" of racketeering activity. H.G. Gallimore, Inc. v Abdula (1987, ND Ill) 652 F Supp 437. Complaint fails to state pattern of racketeering activity where telephone customers alleged telephone company committed numerous acts of bribery and improper influence over extended period of time illegally to influence members of state public utilities commission in setting of rates, because all alleged acts were in furtherance of single scheme to influence commission members to detriment of ratepayers. H.J., Inc. v Northwestern Bell Tel. Co. (1987, DC Minn) 653 F Supp 908. Manufacturer fails to state claim under 18 USCS 1961(5), where complaint alleges manufacturer's president was bribed several times by distributor, because "pattern" of racketeering activity is not alleged; payments were part of single criminal episode and not sufficiently distinct. Four Star Corp. v Clink (1987, ED Mich) 702 F Supp 617.

Former mayor is entitled to judgment of acquittal as to 3 racketeering acts, where his conduct in this regard solely involved acts committed to conceal bribery, because his violation of state official misconduct statute by not disclosing source of income on his statements of economic interest does not constitute requisite act of bribery under 18 USCS 1961. United States v Genova (2002, ND Ill) 187 F Supp 2d 1015, affd in part and revd in part, remanded, vacated, in part (2003, CA7 Ill) 333 F3d 750, reh den (2003, CA7 Ill) 2003 US App LEXIS 16935. Former mayor is entitled to judgment of acquittal as to 3 racketeering acts, where his conduct in this regard solely involved acts committed to conceal bribery, because his violation of state official misconduct statute by not disclosing source of income on his statements of economic interest does not constitute requisite act of bribery under 18 USCS 1961. United States v Genova (2002, ND Ill) 187 F Supp 2d 1015, affd in part and revd in part, remanded, vacated, in part (2003, CA7 Ill) 333 F3d 750, reh den (2003, CA7 Ill) 2003 US App LEXIS 16935. Unpublished Opinions Unpublished: Debtor's claim that bribery, as defined in O.C.G.A. 16-10-2, had been committed by bank and its director and was therefore predicate act for purposes of debtor's civil Racketeer Influenced and Corrupt Organizations Act claims, was without merit; debtor contended that bank bribed his ex-wife to file for divorce and to write check from his account, but there was no evidence that exwife was state official or representative. Tucker v Morris State Bank (2005, CA11 Ga) 154 Fed Appx 183. 25. Contract-related fraud Pattern of racketeering activity under RICO (18 USCS 1961 et seq.) is not shown by single scheme against single victim, where defendant director of corporation never intended to abide by terms of contract, despite allegations pointing to fraudulent acts spanning 7 years depriving plaintiff of money properly due to it on many distinct occasions, given unity and narrow focus of scheme. Flip Mortgage Corp. v McElhone (1988, CA4 Va) 841 F2d 531. Repeated criminal acts may constitute pattern notwithstanding fact that they all affect single victim, involve same or similar purpose, and utilize identical means, and fact that fraudulent promises all took place within 6 month period was not basis on which to dismiss complaint where plaintiffs alleged that 5 separate escrow agreements were executed on 4 separate occasions, each of which related to separate public contract, each alleged mailing instigated new diversion of public funds, and separate diversions could be characterized as new criminal acts, not simply constituent mailings performed in execution of single transaction. Heritage Ins. Co. v First Nat'l Bank (1986, ND Ill) 629 F Supp 1412. Pattern of racketeering activity requirement under 18 USCS 1961 is not satisfied where creditors allege that debtor fraudulently borrowed money without intending to pay it back because conduct of debtor in borrowing money amounts to acts in furtherance of only one scheme--not to pay back creditors. Zahra v Charles (1986, ED Mich) 639 F Supp 1405, CCH Fed Secur L Rep P 92883. Borrowers' RICO action against lender is dismissed for failure to allege pattern of racketeering activity where complaint stated (1) lender tried to force borrowers out of business and take over their assets, and (2) lender made misrepresentations resulting in loss of one borrower's property, because complaint only alleges single scheme of lenders to renege on promises concerning loans in

effort to obtain borrowers' collateral. Colo) 692 F Supp 1271.

In re Palombo Farms of Colorado (1988, DC

In action by tenant partners against landlord and its partners alleging, inter alia, breach of contract, fraud, and violations of Racketeer Influenced and Corrupt Organizations Act, 18 USCS 1961 et seq. (RICO), investigatory report sought by tenant partners was relevant under Fed. R. Civ. P. 26(b)(1) to issue of overcharging or problematic charging of tenants, which was basis of tenant partners' RICO claim, and investigatory report was relevant in that it might lead to other admissible evidence regarding culpability and degree of culpability. Lugosch v Congel (2003, ND NY) 218 FRD 41. 39. Mail or wire fraud, generally Evidence that defendant engaged in at least 13 acts of fraud, which were clearly related, and had similar purposes, results, participants, victims, and methods of commission, established pattern of racketeering activity for purposes of civil RICO action. TeleVideo Systems, Inc. v Heidenthal (1987, CA9 Cal) 826 F2d 915, 8 FR Serv 3d 989. Absent basis for inferring threat of ongoing illegal conduct, complaint alleging merely that defendant engaged in common law fraud and deceit, and used mails and wires more than twice in course of their conduct, failed adequately to state pattern of racketeering activity for purposes of civil RICO action. Condict v Condict (1987, CA10 Wyo) 826 F2d 923. Owner of company failed to explain how each of defendants' acts furthered scheme to defraud or was incident to essential part of mail and wire fraud scheme; RICO required specifics in charging paragraphs rather than mere incorporation of multitude of facts alleged in prior 37 pages of complaint. Gintowt v TL Ventures (2002, ED Pa) 226 F Supp 2d 672, RICO Bus Disp Guide (CCH) P 10372. While it was reasonable to infer that mails or wires might be used to further kind of conspiracy alleged by plaintiffs, plaintiffs had to begin by alleging that at least some individually-identified communications were substantively fraudulent in nature and were also transmitted through mail or wire communication in violation of 18 USCS 1341 and/or 1343, and plaintiffs had not yet done so; thus, their Racketeering Influenced and Corrupt Organization Act, 18 USCS 1961 et seq., claims were dismissed without prejudice and with leave to refile. Limpert v Cambridge Credit Counseling Corp. (2004, ED NY) 328 F Supp 2d 360 (criticized in Polacsek v Debticated Consumer Counseling (2005, DC Md) 413 F Supp 2d 539). Plaintiff failed to state civil claim under RICO Act where plaintiff's complaint failed to properly allege racketeering activity because plaintiff failed to identify purpose of wire frauds in alleged scheme. Bondi v Bank of Am. Corp. (In re Parmalat Sec. Litig.) (2005, SD NY) 383 F Supp 2d 587 (criticized in OHC Liquidation Trust v Credit Suisse First Boston (In re Oakwood Homes Corp.) (2006, BC DC Del) 340 BR 510) and (criticized in Global Crossing Estate Representative v Winnick (2006, SD NY) 2006 US Dist LEXIS 53785). 40.--Single scheme or goal Alleged acts of mail fraud by investment advisor whereby advisor, on 2 occasions 4 months apart, caused monthly bank statements and canceled checks from 2 of victim's bank accounts to be mailed to advisor's address were sufficient to constitute "pattern" for purposes of "pattern of racketeering activity" requirement for civil RICO action; 2 acts were designed to defraud victim twice by concealing advisor's

conversion of her funds from 2 separate bank accounts, acts showed necessary continuity, yet were sufficiently separate in time to constitute separate transactions, and while both acts were part of same scheme to defraud, mere fact that predicate acts relate to same overall scheme or involve same victim does not mean that acts automatically fail to satisfy pattern requirement. Appley v West (1987, CA7 Ill) 832 F2d 1021, 4 UCCRS2d 1495 (ovrld in part as stated in CIB Bank v Esmail (2004, ND Ill) 2004 US Dist LEXIS 26817). Pattern of racketeering activity requires at least two acts of racketeering, and critical features of pattern of racketeering are continuity and relationship; since two acts of mail fraud that related to single business transaction constitute pattern of racketeering activity, sufficient pattern of racketeering activity was alleged where complaint stated that numerous acts of mail and wire fraud were parts of single, otherwise lawful corporate merger not constituting pattern of racketeering. Delta Truck & Tractor, Inc. v J.I. Case Co. (1988, CA5 La) 855 F2d 241, cert den (1989) 489 US 1079, 103 L Ed 2d 836, 109 S Ct 1531. Defendant may be convicted of engaging in pattern of racketeering activity even though he was charged with defrauding only one victim, since pattern of activity hinges on acts, and indictment charged him with 6 incidents of wire fraud over 4week period, even though only one victim was alleged to have been defrauded. United States v Chovanec (1979, SD NY) 467 F Supp 41. Separate acts of mail and wire fraud arising out of common nucleus of facts can be considered separate predicate RICO acts to fulfill pattern of racketeering activity requirement. Beth Israel Medical Center v Smith (1983, SD NY) 576 F Supp 1061. Lender's RICO complaint is dismissed, where pleading alleges plaintiff made $ 5,000 loan to one brother who ran his own company, other brother's separate company cashed loan check and its employee reviewed loan agreement, and now original borrower has defaulted after paying only $ 300, because alleged predicate acts of mail and wire fraud to dupe plaintiff out of his money occurred over short period of time, victimized only plaintiff, resulted in only one injury, and related to only one loan transaction, and these acts clearly do not constitute "pattern" of racketeering activity. Barlow v McLeod (1986, DC Dist Col) 666 F Supp 222, affd without op (1988, App DC) 274 US App DC 70, 861 F2d 303. Tenants' RICO action against landlord of storage facility for damage because of roof leaks is dismissed, where leaks pre-dated lease agreement but were not disclosed by landlord, and where complaint alleged pattern of activity including phone calls during lease negotiations and calls and letters after negotiations, all of which were intended to obtain money fraudulently from tenants, because all predicate acts alleged were in furtherance of single scheme of leasing premises, and Eleventh Circuit separate violation approach was specifically rejected. Bros v Culver (1987, DC Dist Col) 650 F Supp 874. Borrower's RICO claim against lender must fail, despite allegations of at least 13 predicate acts of mail fraud in conjunction with "curious" loan transaction, because complaint setting forth single scheme to defraud one victim of money in single loan transaction does not meet RICO pattern requirement. Perkins v Nash (1988, DC Dist Col) 697 F Supp 527. Because, in order to establish claim under Racketeer Influenced and Corrupt Organizations Act, 18 USCS 1961 et seq., based on mail or wire fraud, telephone calls or mailings need not have contained misrepresentations themselves, magistrate judge erred in finding that summary judgment was not appropriate simply because there was no evidence that conversations touched upon anything but availability and prices of used vehicles; since alleged scheme involved purchase of used vehicles,

such "routine" conversations could very well have contributed to fraudulent scheme. Adee Motor Cars, LLC v Amato (2005, SD NY) 388 F Supp 2d 250. Consumers who brought action alleging violations of Racketeer Influenced and Corrupt Organizations Act (RICO) by companies and individuals who sold debt management plans sufficiently alleged pattern of racketeering activity under 18 USCS 1961 because complaint alleged more than two predicate acts of mail and wire fraud with regard to each individual plaintiff, and also that these acts were related, as they had similar purposes, participants, victims, results, and methods of commission; complaint also alleged predicate acts lasting over period of almost 24 months which posed threat of continued criminal activity. Baker v Family Credit Counseling Corp. (2006, ED Pa) 440 F Supp 2d 392. Civil racketeering claim fails under 18 USCS 1961(5) where complaint alleges single scheme to defraud single victim through multiple acts of mail and wire fraud over 3-year period but not that fraudulent activities occurred in past or are threatened in future. Cross v Simons (1989, ND Ill) 729 F Supp 588, amd (1989, ND Ill) 1989 US Dist LEXIS 5712. Home purchasers made sufficient showing at summary judgment stage that developer and various corporate entities engaged in pattern of predicate acts of mail and wire fraud within meaning of 18 USCS 1961(1), part of Racketeer Influenced and Corrupt Organizations Act, and 18 USCS 1341 and 1343; developer and entities allegedly enticed purchasers through advertisements that misrepresented terms upon which purchasers could buy homes, and developer and entities allegedly sold homes to purchasers in excess of market value by arranging for inflated appraisals and granting improper purchase incentives. Lester v Percudani (2008, MD Pa) 556 F Supp 2d 473. 46.--Continuity Civil RICO action fails to allege facts evidencing continuity sufficient to form pattern of racketeering activity, where seller of shares of corporation claims predicate acts on part of buyer, financing institutions, and seller's accountants, which are related to one another and arise out of same transaction, but fails to allege facts demonstrating that any combination of defendants had ever engaged in racketeering activity before or after allegedly fraudulent business deal or were engaged in criminal activities elsewhere. Kovian v Fulton County Nat'l Bank & Trust Co. (1986, ND NY) 647 F Supp 830. Financial institution alleged sufficient pattern of racketeering activity by brokerage firm defendants, where complaint states defendants implemented scheme to defraud institution in its equity investments by numerous acts of mail, wire, and securities fraud, because although only single scheme is alleged, it is open-ended, ongoing scheme comprised of many "episodes," and as such, there was at least threat of continuity. Wichita Fed. Sav. & Loan Ass'n v Landmark Group, Inc. (1987, DC Kan) 674 F Supp 321, CCH Fed Secur L Rep P 93623. Pattern requirement for securities fraud RICO claim is met, where complaint alleges numerous fraudulently induced stock transactions over period of almost 3 years involving only one investor who lost at least $ 60,000 thereby, because predicate acts alleged were closely related and sufficiently continuous and ongoing to satisfy pattern requirement even though single scheme/single victim scenario may eventually not support RICO claim. Filloramo v Johnston, Lemon & Co. (1988, DC Dist Col) 697 F Supp 517, CCH Fed Secur L Rep P 95286. 47.--Number of predicate acts

Complaint alleging numerous uses of mails and telephone in furtherance of allegedly fraudulent scheme, constituting multiple acts of mail, wire, and securities fraud indictable under federal statutes, states allegations sufficient to support "pattern" to make out RICO claim. Smith v Cooper/T. Smith Corp. (1988, CA5 La) 846 F2d 325, CCH Fed Secur L Rep P 93794, remanded (1989, CA5) 883 F2d 357 and reinstated, in part (1989, CA5 La) 886 F2d 755, mod on other grounds (1989, CA5) 1989 US App LEXIS 19530. While defendants may have committed numerous related predicate acts, all of those acts arose from single, isolated event, i.e., distribution of one misleading statement in connection with single issuance of bonds, and plaintiffs therefore failed to allege "pattern" of racketeering activity. Durning v Citibank, Int'l (1993, CA9 Wash) 990 F2d 1133, 93 CDOS 2568, 93 Daily Journal DAR 4412, RICO Bus Disp Guide (CCH) P 8269. Complaint states pattern of racketeering activity where shareholder alleged corporate defendants made numerous mailings of fraudulent test data over 3-year period in furtherance of scheme to defraud government, because each mailing is separate offense and together mailings constitute pattern. Lewis on behalf of National Semiconductor Corp. v Sporck (1986, ND Cal) 646 F Supp 574. Pattern of racketeering requirement is not satisfied in action against bank for blocking transfer of its stock where complaint alleges predicate acts of mail and wire fraud committed pursuant to single scheme within relatively short and limited time period; predicate acts are not diverse and number of acts is so indeterminate that they cannot be characterized as being continuous in sense that they were committed in separate transactions somewhat separate in time and place. Gianakas v Siensa (1986, ND Ill) 649 F Supp 1033. No pattern of racketeering activity is alleged by claimants who artificially divide negotiation and implementation of Stock Sale Agreement into 5 segments they denominate "schemes," and plead facts supporting only single RICO predicate act of extortion. Castle v Cohen (1987, ED Pa) 676 F Supp 620, affd in part and remanded in part (1988, CA3 Pa) 840 F2d 173. RICO complaint sufficiently alleges "pattern" of racketeering activity, where investors allege broker committed predicate acts of mail, wire, and securities fraud on numerous occasions between February 1983 and March 1984, because complaint cites specific misrepresentations which could constitute more than one statutory predicate act committed "within 10-year period." Wing v J.C. Bradford & Co. (1987, ND Miss) 678 F Supp 622, CCH Fed Secur L Rep P 93404. RICO plaintiffs sufficiently plead pattern of racketeering activity by defendants, even though nature of defendants' scheme by necessity required them to act within limited time frame of 5 months, because scheme involved multiple fraudulent stock transactions, multiple fraudulent uses of wires and mail and multiple victims. Sheridan v Weinberger (1987, MD Pa) 687 F Supp 152. RICO plaintiffs adequately plead pattern of racketeering activity under 18 USCS 1961(5) by alleging defendants' involvement in 3 separate predicate acts in connection with cattle feeder investment program scheme, because binding Fifth Circuit precedent adopted definition of pattern including merely 2 related predicate acts. Babst v Morgan Keegan & Co. (1988, ED La) 687 F Supp 255, CCH Fed Secur L Rep P 94066. RICO claim is adequately pled where shareholder alleges corporate principals failed to inform him of corporation's move and merger, or of his dissenter's and preemptive stock rights, and gives time, place and content of all fraudulent misrepresentations and omissions, because complaint meets specificity requirement

of Rule 9 and pattern requirement of RICO by alleging at least 4 separate acts of fraud in connection with purchase and sale of securities. Philippe v Shape, Inc. (1988, DC Me) 688 F Supp 783, CCH Fed Secur L Rep P 94035. There are sufficient allegations of RICO "pattern" under 18 USCS 1961 in complaint alleging that sellers committed fraud by charging buyer excessive markups in sale of securities, even if buyer is single victim, where essence of what has been alleged is pattern of fraudulent overcharges which have occurred repeatedly over course of 2 years. Elysian Federal Sav. Bank v First Interregional Equity Corp. (1989, DC NJ) 713 F Supp 737, CCH Fed Secur L Rep P 95217 (criticized in In re Prudential Ins. Co. of Am. Sales Practices Litig. (1996, DC NJ) 975 F Supp 584, CCH Fed Secur L Rep P 99237). 48.--Single scheme Corporation failed to allege pattern of racketeering activity in civil RICO action against individuals who issued one allegedly misleading stock prospectus to 10 investors in initial stock offering, as conduct comprised only single, limited fraudulent scheme. International Data Bank v Zepkin (1987, CA4 Va) 812 F2d 149, CCH Fed Secur L Rep P 93160. fact that predicate acts arose out of single scheme provides sufficient relationship as to purposes, victims, and methods of commission to constitute pattern. First Federal Sav. & Loan Asso. v Oppenheim, Appel, Dixon & Co. (1986, SD NY) 629 F Supp 427, CCH Fed Secur L Rep P 92505. Three letters mailed by corporation to foundation offering to purchase its stock in corporation do not constitute "pattern of racketeering activity" under RICO because letters all pertained to same securities transaction, notwithstanding that each letter might constitute separately indictable mail fraud offense under 18 USCS 1341. In re Evening News Asso. Tender Offer Litigation (1986, ED Mich) 642 F Supp 860. Allegations of churning and consequent claims of mail fraud, wire fraud and securities fraud are sufficient for "pattern of racketeering" in RICO action against broker, despite argument that churning only involves one fraudulent scheme, though with multiple acts. Bergen v Rothschild (1986, DC Dist Col) 648 F Supp 582, CCH Fed Secur L Rep P 93143. Investor adequately alleges "pattern" of racketeering activity, where he states that insurance company, insurance broker and insurance consultants committed at least 2 acts of mail fraud and/or securities fraud by promising to insure investors' money and metals placed in precious metals marketer's "Buy Back, Redelivery, Rebate Program," because in Second Circuit two acts may satisfy "related and continuous" requirement, even though acts are both in furtherance of single, continuous scheme to defraud. Connors v Lexington Ins. Co. (1987, ED NY) 666 F Supp 434, CCH Fed Secur L Rep P 93384. Investors failed to allege sufficiently pattern of racketeering activity in suit against security firm and employee for failure to place trading orders in timely fashion, because this case involves 2 victims, 2 injuries, and short-lived scheme lasting less than 2 months perpetrated by one named individual and 3 corporations, and complaint does not describe type of criminal activity RICO was designed to arrest. Schwartz v Philadelphia Nat'l Bank (1988, ED Pa) 701 F Supp 92, CCH Fed Secur L Rep P 94309, affd without op (1989, CA3 Pa) 879 F2d 859. 53. Miscellaneous

Pattern of racketeering activity can be ascribed to situation of two isolated sales where such 2 violations fit plain language of 18 USCS 1962. United States v Gottesman (1984, CA11 Fla) 724 F2d 1517, 222 USPQ 206, 15 Fed Rules Evid Serv 98, reh den (1984, CA11 Fla) 729 F2d 1468. "Pattern of racketeering activity" is not established where it is not alleged that defendants defrauded victims other than plaintiff with similar racketeering activity and did not allege that plaintiff had been defrauded more than once by defendants through similar racketeering acts. Marks v Pannell Kerr Forster (1987, CA7 Ill) 811 F2d 1108. Evidence that defendant engaged in at least 13 acts of fraud, which were clearly related, and had similar purposes, results, participants, victims, and methods of commission, established pattern of racketeering activity for purposes of civil RICO action. TeleVideo Systems, Inc. v Heidenthal (1987, CA9 Cal) 826 F2d 915, 8 FR Serv 3d 989. "Pattern" of racketeering activity may include forbearance; defendant police officer's forbearance from arresting drug dealers in return for cocaine constituted predicate acts within meaning of RICO. United States v Ruiz (1990, CA1 Mass) 905 F2d 499. Even assuming that filing of frivolous lawsuits may constitute RICO extortion in some instances, plaintiffs did not make out kind of pattern that posed threat of continued criminal activity where all suits arose from single dispute; mere fact that separate proceedings were instituted does not convert what amounts to single episode into pattern. Gonzalez-Morales v Hernandez-Arencibia (2000, CA1 Puerto Rico) 221 F3d 45. District court erred in granting fungicide manufacturer's Fed. R. Civ. P. 12(c) motion for judgment on pleadings in civil action under 18 USCS 1962(c), 1964(c), which was filed by commercial nurserymen who alleged that manufacturer fraudulently withheld evidence in underlying product liability litigation in order to induce settlement; claims were not based on immune litigation conduct because 18 USCS 1961(1)(B) provided that conduct relating to prior litigation might constitute racketeering activity, including act indictable under 18 USCS 1512, which related to tampering with witness, victim, or informant. Living Designs, Inc. v E.I. DuPont de Nemours & Co. (2005, CA9 Hawaii) 431 F3d 353, 35 ELR 20246, cert den (2006) 547 US 1192, 126 S Ct 2861, 165 L Ed 2d 895 and motions ruled upon (2006, DC Hawaii) 2006 US Dist LEXIS 68909. Dismissal of Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961 et seq., action based on defendants alleged hiring and/or harboring undocumented workers was affirmed because county could not rely on expenditures alone to establish civil RICO standing, and there was no indication that county held property interest in law enforcement or health care services that it provided to public and could not show that alleged RICO violations proximately caused its injuries. Canyon County v Syngenta Seeds, Inc. (2008, CA9 Idaho) 519 F3d 969 (criticized in City of New York v Smokes-Spirits.com, Inc. (2008, CA2 NY) 541 F3d 425) and cert den (2008, US) 129 S Ct 458, 172 L Ed 2d 327. Plaintiffs sufficiently alleged "pattern of racketeering activity" under RICO (18 USCS 1961 et seq.) where they alleged that defendants engaged in numerous acts of "racketeering activity" which were continuous over identified period of time and which were related to one another in furtherance of alleged fraudulent scheme, satisfying continuity plus relationship standard. Trak Microcomputer Corp. v Wearne Bros., Inc. (1985, ND Ill) 628 F Supp 1089 (criticized in Morrow v

Reminger & Reminger Co. LPA (2009, Franklin Co) 183 Ohio App 3d 40, 2009 Ohio 2665, 915 NE2d 696). "Pattern of racketeering" is alleged where 5 sham corporations were established to defraud complainant and others. United Air Lines, Inc. v CEI Industries, Inc. (1987, ND Ill) 664 F Supp 1216. RICO claims against 4 transit authority police officers will not be dismissed, where claims are part of civil rights class action arising out of apparent pattern of seemingly race-based false arrests, because claim adequately alleges fraudulent use of mails and wires in furtherance of scheme to obtain money and property in form of job promotions, benefits and other rewards. Yeadon v New York City Transit Authority (1989, SD NY) 719 F Supp 204. Civil racketeering claim fails under 18 USCS 1961 where investors claim only that 3 alleged predicate acts were committed by financial advisor and acts were not related to each other in common scheme, because pattern of racketeering activity does not exist. Halperin v Jasper (1989, ED Pa) 723 F Supp 1091. Claims under Racketeer Influenced and Corrupt Organizations Act, 18 USCS 1961 et seq. were dismissed where plaintiff, whose ex-husband's forged note and mortgage on plaintiff's home, failed to allege predicate acts or pattern of continuing of racketeering activity with sufficient particularity pursuant to Fed. R. Civ. P. 9(b) against various defendants who were allegedly involved with securing note and mortgage on home. Welch v Centex Home Equity Co., L.L.C. (2004, DC Kan) 323 F Supp 2d 1087. Where arrestees were arrested for obstructing police officers' legal duties and where arrestees alleged that they were kidnapped and robbed on two occasions and that defendants committed "extortion" by threatening to arrest them, arrestees' claims under Racketeer Influenced Corrupt Organizations Act, 18 USCS 1961 et seq., failed to survive summary judgment because allegations were insufficient to constitute pattern of racketeering activity. McCormick v City of Lawrence (2004, DC Kan) 325 F Supp 2d 1191, affd (2005, CA10) 130 Fed Appx 987 and (criticized in Osborne v Lohr-Robinette (2006, SD W Va) 2006 US Dist LEXIS 92275). Allegations of racketeering--namely, money laundering and transportation of stolen goods--are subject to more lenient pleading requirements of Fed. R. Civ. P. 8(a). Rosner v Bank of China (2007, SD NY) 528 F Supp 2d 419. Property owner adequately alleged pattern of criminal activity under 18 USCS 1961 where complaint included allegations of racketeering behavior over course of almost three years and property owner provided examples of relevant criminal behavior with respect to three properties, which, if found credible by jury, would have amounted to pattern of criminal activity; however, under Racketeer Influenced and Corrupt Organizations Act's, 18 USCS 1961 et seq., four year statute of limitations, because property owner filed his complaint on September 14, 2007, any claim based on injury that could have been discovered prior to September 14, 2003, was time barred. Dickey v Kennedy (2008, DC Mass) 583 F Supp 2d 183. California Highway Patrol (CHP) and its manager's motion to dismiss on ground that employee failed to sufficiently allege pattern of racketeering activity under Racketeer Influenced and Corrupt Organization Act, 18 USCS 1961 et seq., was denied because employee alleged at least two predicate acts within 10 year period, witness tampering and retaliation, employee alleged predicate acts were related insofar as both acts sought to advance criminal conspiracy to defraud state and to

conceal nature and extent of their criminal activities, and employee alleged that CHP, manager, State Compensation Insurance Fund (SCIF), and attorney engaged in pattern of activity, posing threat of continued activity, because their actions were part of pattern of similar acts, which were committed against other employees, done with intent to protect SCIF from being linked to fraud as form of bribery for SCIF thefts. Vierria v Cal. Highway Patrol (2009, ED Cal) 644 F Supp 2d 1219. Unpublished Opinions Unpublished: Appellant's civil RICO action under 18 USCS 1964 against attorney for third party who filed quiet-title action involving appellant was properly dismissed upon summary judgment; appellant did not show, as required under 18 USCS 1961, that attorney engaged in pattern of racketeering activity where appellant only alleged one predicate act by attorney, and that act--intentional service by publication--was actually attributable to attorney. Wilson v Bush (2006, CA11 Ga) 196 Fed Appx 796. Unpublished: To extent that defendants, attorneys and law firm, were overly zealous or malicious, remedy lay in state law action for malicious prosecution or abuse of process, not in federal Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961 et seq., claim; plaintiffs' assertion of predicate acts in their complaint was merely legal conclusion couched as factual allegation, and thus not sufficient to survive motion to dismiss. Melton v Blankenship (2009, CA6 Tenn) 2009 FED App 25N. 54.--Continuity Continuity necessary for RICO pattern of racketeering activity does not require showing that defendant engaged in more than one scheme or criminal episode, but circumstances of case must suggest that predicate acts indicate threat of continuing activity; thus, alleged misrepresentations by television broadcaster which induced competitor to enter into joint venture to acquire rights to and sell telecast to pay and cable television stations did not constitute pattern of racketeering activity sufficient to support civil RICO claim, since all of broadcaster's alleged assertions were part of its single effort to induce competitor to form joint venture to obtain broadcast rights from promoters. Medallion Television Enters. v SelecTV of Cal. (1987, CA9 Cal) 833 F2d 1360, cert den (1989) 492 US 917, 109 S Ct 3241, 106 L Ed 2d 588 and (criticized in Odom v Microsoft Corp. (2004, WD Wash) 2004 US Dist LEXIS 30622). District court properly granted motion to dismiss action under Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961 et seq., arising from actions of individuals and attorney to levy execution on antecedent state-court tort judgment against physician; complaint failed to allege any threat of continuing illegal activity involving allegedly fraudulent mail, fax, and telephone communications and actions were finite in nature because they would cease when outstanding tort judgment was collected. Turner v Cook (2004, CA9 Cal) 362 F3d 1219, cert den (2004) 543 US 987, 125 S Ct 498, 160 L Ed 2d 371. Airline's RICO action arising out of defendants' refusal to return airline's security deposits on aircraft under aircraft lease agreements is dismissed, where airline made only generalized, not factual, allegations upon information and belief that alleged racketeering activity was continuous, airline specified no actions that appeared to be criminal, and alleged scheme to defraud airline of its security deposits was accomplished once funds were commingled with lessor's general funds, because airline failed to alleged facts showing threat of continuing racketeering

activity and facts that support inference that acts of racketeering activity were neither isolated nor sporadic. Thai Airways Int'l v United Aviation Leasing B.V. (1994, SD NY) 842 F Supp 1567, RICO Bus Disp Guide (CCH) P 8492. In action in which juvenile and his father alleged that police officer who obtained warrant for minor's arrest influenced testimony of minor victim and conspired with detectives to influence testimony of other minor witnesses, claims that juvenile and his father filed under 18 USCS 1962(c) and (d) and 1964(c), part of RICO Act, suffered from number of fatal flaws because (1) there was no evidence that officer engaged in predicate act by improperly influencing or attempting to improperly influence anyone within meaning of 18 USCS 1512(b), (2) there was no evidence that officer and detectives entered into agreement to violate RICO Act's substantive provisions, (3) pattern of racketeering, as defined in 18 USCS 1961, was not established where there were no other victims of alleged racketeering activity, officer had retired from police department, and there was no allegation of continued threat to constitutional rights of others, and (4) alleged damage to reputation and emotional well-being did not constitute injury to business or property; accordingly, officer was entitled to summary judgment. Justin F. v Maloney (2007, DC Conn) 476 F Supp 2d 141. 55.--Single scheme or episode Claim that former officers and owners of defunct corporation engaged in check kiting scheme, diverted corporate assets, and defrauded creditors by distributing false financial statements failed to allege pattern of racketeering activity for purposes of civil RICO action, even though predicate acts were sufficiently related to form pattern, since acts constituted mere subdivisions of one fraudulent scheme to keep corporation afloat in order to loot it. Madden v Gluck (1987, CA8 Mo) 815 F2d 1163, cert den (1987) 484 US 823, 98 L Ed 2d 48, 108 S Ct 86. Existence of RICO pattern is matter of criminal dimension and degree to be dealt with by reference to facts and circumstances of each particular case, and particular scheme, limited in scope to accomplishment of single discrete objective--forcing out minority in single corporate structure--does not pose sufficient threat of continuing criminal activity to justify imposition of RICO's extraordinary penalties, since activity engendered by scheme was spread out over time, it was undertaken merely as means to accomplishment of that single end, and there is nothing to suggest that it would have continued longer than was necessary to accomplish it. Walk v Baltimore & O. R.R. (1988, CA4 Md) 847 F2d 1100, vacated, remanded (1989) 492 US 914, 106 L Ed 2d 583, 109 S Ct 3235. Attorney's RICO claim that co-counsel diverted settlement proceeds was properly dismissed, since there was only one scheme, one victim, and one distinct economic injury, and, most important, there was no threat of continuing illegal activity. Sutherland v O'Malley (1989, CA7 Ill) 882 F2d 1196, reh den (1989, CA7) 1989 US App LEXIS 13761. Former wife fails to show pattern of racketeering activity in civil RICO action against former husband alleging scheme to defraud her of her interest in real property where multiple predicate acts are single scheme to defraud single victim and inflict single injury, deprivation of former wife's property interest in lodge. Abernathy v Erickson (1987, ND Ill) 657 F Supp 504. Investment company fails to state valid RICO claim, where company has merely alleged that numerous telephone calls and letters from alleged pipe bender machine makers fraudulently induced it to finance defendant, because although company has

alleged separate criminal acts, those acts were all in furtherance of one alleged scheme and do not constitute "pattern" of racketeering. National Business Funding, Inc. v Custom Muffler Specialists, Inc. (1987, ED Mich) 675 F Supp 1080. Dismissal was granted where plaintiff failed to properly plead that defendants engaged in "pattern of racketeering activities", 18 USCS 1961(5), where plaintiff's alleged single-victim, limited-purpose scheme was not type of ongoing threat to which Congress intended to extend liability under RICO. Leung v Law (2005, ED NY) 387 F Supp 2d 105. Client failed to state claim under Racketeer Influenced and Corrupt Organizations Act (RICO) against attorney and law firm based on attorney's alleged failure to disclose conflict of interest and attorney's alleged inducement of client to plead guilty to false accusations; client did not sufficiently allege pattern of racketeering activity or enterprise under 18 USCS 1962. Claimed RICO offense began and ended with attorney's alleged undisclosed conflict of interest, so there was no showing of continuity, and client did not sufficiently allege that attorney was carrying out affairs of unlawful enterprise. Tenamee v Schmukler (2006, SD NY) 438 F Supp 2d 438. Plaintiffs, who believed they were targets of foreclosure rescue scam, could not maintain claim under RICO Act; plaintiff's case did not satisfy continuity prong of RICO as it only involved two victims (a married couple) and transaction that took place over matter of few weeks. Johnson v Wheeler (2007, DC Md) 492 F Supp 2d 492, 44 ALR6th 595. 3.Enterprise 56. Generally From terms of Racketeer Influenced and Corrupt Organizations Act, 18 USCS 1961 et seq., it is apparent that association-in-fact enterprise must have at least three structural features: purpose, relationships among those associated with enterprise, and longevity sufficient to permit those associates to pursue enterprise's purpose; such group need not have hierarchical structure or "chain of command," and members of group need not have fixed roles. Boyle v United States (2009, US) 129 S Ct 2237, 173 L Ed 2d 1265, 21 FLW Fed S 893. Government must establish that members of group share common purpose of engaging in course of conduct, produce evidence of ongoing organization, formal or informal, and must show that various associates function as continuing unit, and that enterprise exists "separate and apart from pattern of activity in which it engages." United States v Feldman (1988, CA9 Cal) 853 F2d 648, cert den (1989) 489 US 1030, 109 S Ct 1164, 103 L Ed 2d 222 and (criticized in Odom v Microsoft Corp. (2007, CA9 Wash) 486 F3d 541). Enterprise can be any enterprise, not necessarily one engaged in pattern of racketeering, and enterprise itself may be villain, conducting its affairs through pattern of racketeering; in many cases, however, enterprise is vehicle for racketeering activity. United States v Porcelli (1989, CA2) 865 F2d 1352, cert den (1989) 493 US 810, 107 L Ed 2d 22, 110 S Ct 53. Conspiracy amounts to "enterprise" where there is structure, where structure is more than ad hoc and persists as identifiable entity through time. Burdett v Miller (1992, CA7 Ill) 957 F2d 1375, 22 FR Serv 3d 189, amd, reh, en banc, den (1992, CA7) 1992 US App LEXIS 8723.

**Evidence of changes in membership of enterprise as, for example, before defendant's incarceration and after his release, does not compel finding that there existed 2 operations that were unrelated as matter of law. United States v Mauro (1996, CA2 NY) 80 F3d 73. United States Court of Appeals for Ninth Circuit joins circuits that hold that associated-in-fact enterprise under 18 USCS 1961(4) part of Racketeer Influenced and Corrupt Organizations Act, does not require any particular organizational structure, separate or otherwise. Odom v Microsoft Corp. (2007, CA9 Wash) 486 F3d 541, cert den (2007) 552 US 985, 128 S Ct 464, 169 L Ed 2d 325 and (criticized in Limestone Dev. Corp. v Vill. of Lemont (2008, CA7 Ill) 520 F3d 797). Government is not required to choose between charging individual or corporation on one hand, and association-in-fact on other hand to establish "enterprise" under RICO (18 USCS 1961 et seq.); since RICO enterprise is defined as "including" various specified entities, list of entities is not meant to be exhaustive, and such limitation would improperly result in allowing RICO to reach only criminals who failed to form corporate shells to aid illicit schemes. United States v Perholtz (1988, App DC) 268 US App DC 347, 842 F2d 343, 25 Fed Rules Evid Serv 425, cert den (1988) 488 US 821, 102 L Ed 2d 42, 109 S Ct 65 and (criticized in Lockheed Martin Corp. v Boeing Co. (2005, MD Fla) 357 F Supp 2d 1350, 18 FLW Fed D 381). If association-in-fact has common purpose, continuity of structure and personnel, and structure distinct from pattern of racketeering, it is RICO enterprise. Instituto Nacional de Comercializacion Agricola (Indeca) v Continental Illinois Nat'l Bank & Trust Co. (1983, ND Ill) 576 F Supp 991. To establish "enterprise" under 18 USCS 1961 and 1962, there must first be evidence of ongoing organization, formal or informal, and evidence that various associates function as continuing unit, and second, enterprise must have existence separate and apart from pattern of activity in which it engaged. Medallion TV Enters. v SelecTV of Cal. (1986, CD Cal) 627 F Supp 1290, affd (1987, CA9 Cal) 833 F2d 1360, cert den (1989) 492 US 917, 109 S Ct 3241, 106 L Ed 2d 588 and (criticized in Odom v Microsoft Corp. (2004, WD Wash) 2004 US Dist LEXIS 30622) and (criticized in Webster v Omnitrition Int'l (1996, CA9 Cal) 79 F3d 776, 96 CDOS 1419, 96 Daily Journal DAR 2427, CCH Fed Secur L Rep P 99071, RICO Bus Disp Guide (CCH) P 9274). Congress intended liability under Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1962(c), to extend to situations where one entity directs formation of RICO enterprise, as defined in 18 USCS 1961(4), and then makes use of association to further pattern of unlawful activity, even where portions of unlawful activity do not issue directly from RICO enterprise. Young v Wells Fargo & Co. (2009, SD Iowa) 671 F Supp 2d 1006. 57. Discrete existence apart from racketeering activity In definition of enterprise phrase "a group of individuals associated in fact although not a legal entity" encompasses only association having ascertainable structure which exists for purpose of maintaining operations directed toward economic goal that can be defined apart from commission of predicate acts constituting "pattern of racketeering activity". United States v Anderson (1980, CA8 Ark) 626 F2d 1358, 6 Fed Rules Evid Serv 581 (criticized in United States v Zemek (1980, CA9 Wash) 634 F2d 1159, 7 Fed Rules Evid Serv 216) and cert den (1981) 450 US 912, 101 S Ct 1351, 67 L Ed 2d 336 and (criticized in United States v Rogers (1996, CA7 Ill) 89 F3d 1326) and (criticized in United States v Morrow (2005, DC

Dist Col) 2005 US Dist LEXIS 11753) and (criticized in JSC Foreign Econ. Ass'n Technostroyexport v Weiss (2007, SD NY) 2007 US Dist LEXIS 28954). Corporation meets definition of "enterprise" where it engaged in activities other than fraudulent sales of partnership interests and where effect of enterprise was to aid in sale of partnerships from which it reaped substantial income. Akin v Q-L Invest., Inc. (1992, CA5 Tex) 959 F2d 521, CCH Blue Sky L Rep P 73630, CCH Fed Secur L Rep P 96641, RICO Bus Disp Guide (CCH) P 8013 (criticized in System Mgmt., Inc. v Loiselle (2000, DC Mass) 91 F Supp 2d 401, RICO Bus Disp Guide (CCH) P 9859). In prosecution of former Federal Bureau of Investigations agent under Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961 et seq., fact that other members of criminal enterprise in which defendant was involved were also members of another criminal organization did not preclude them from being members of separate criminal enterprise involving defendant. United States v Connolly (2003, CA1 Mass) 341 F3d 16, 62 Fed Rules Evid Serv 474. RICO enterprise must have ascertainable structure distinct from that inherent in conduct of pattern of racketeering activity. Allington v Carpenter (1985, CD Cal) 619 F Supp 474 (ovrld as stated in Young v Hamilton (2003, CA9 Cal) 92 Fed Appx 389). To establish "enterprise" under 18 USCS 1961 and 1962, there must first be evidence of ongoing organization, formal or informal, and evidence that various associates function as continuing unit, and second, enterprise must have existence separate and apart from pattern of activity in which it engaged. Medallion TV Enters. v SelecTV of Cal. (1986, CD Cal) 627 F Supp 1290, affd (1987, CA9 Cal) 833 F2d 1360, cert den (1989) 492 US 917, 109 S Ct 3241, 106 L Ed 2d 588 and (criticized in Odom v Microsoft Corp. (2004, WD Wash) 2004 US Dist LEXIS 30622) and (criticized in Webster v Omnitrition Int'l (1996, CA9 Cal) 79 F3d 776, 96 CDOS 1419, 96 Daily Journal DAR 2427, CCH Fed Secur L Rep P 99071, RICO Bus Disp Guide (CCH) P 9274). 58.--Financial institutions RICO complaints filed by corporate escrow agent for and trustee of mortgage pool, acting for itself and as assignee of 19 savings banks and savings and loan associations who invested in pool, fail sufficiently to allege "enterprise" where only "continuing unit" to engage in conspiracy to defraud is alleged; "enterprise" must have "ascertainable structure distinct from that inherent in conduct of pattern of racketeering," but facts here only allege conspiracy. In re National Mortg. Equity Corp. Mortg. Pool Certificates Sec. Litigation (1986, CD Cal) 636 F Supp 1138; In re National Mortg. Equity Corp. Mortg. Pool etc. (1989, CD Cal) 723 F Supp 497, CCH Fed Secur L Rep P 95374. Investors' conclusory allegation that their accountant, bank, its loan officer, and shell entities constituted association in fact for purpose of soliciting investors in fraudulent schemes was insufficient to plead enterprise distinct from pattern of racketeering activity as required by 18 USCS 1962(b); argument that investors thought evidence would show that bank, accountant, and loan officer had long-standing symbiotic referral relationships did not show enterprise distinct from individuals who associated to commit sporadic crime. Schuster v Anderson (2005, ND Iowa) 378 F Supp 2d 1070. Borrowers could not allege that lenders were distinct enterprise since they were in fact same entity; consequently, borrowers had not properly pled enterprise

element of Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961 et seq., claim. Ayala v World Sav. Bank, FSB (2009, CD Cal) 616 F Supp 2d 1007. In class action suit by mortgagors alleging that mortgagees that managed their mortgages schemed to charge improper property inspection fees and late fees, Racketeer Influenced and Corrupt Organizations Act, 18 USCS 1962(c) claim was properly pleaded because mortgagees and property inspection vendors formed association-in-fact enterprise that fulfilled statutory requirements of "enterprise" under 18 USCS 1961(4). Young v Wells Fargo & Co. (2009, SD Iowa) 671 F Supp 2d 1006. 59.--Other particular cases Enterprise was separate and distinct from pattern of racketeering activity, where individual corporate entities had legal existence separate from participation in racketeering and functioned to achieve legal objectives, and where illegal purposes to which individual defendant put them were subsidiary to legitimate goal of making money. United States v Feldman (1988, CA9 Cal) 853 F2d 648, cert den (1989) 489 US 1030, 109 S Ct 1164, 103 L Ed 2d 222 and (criticized in Odom v Microsoft Corp. (2007, CA9 Wash) 486 F3d 541). Association-in-fact enterprise must have existence separate and apart from pattern of racketeering, must be ongoing organization, and its members must function as continuing unit as shown by hierarchical or consensual decision-making structure, and enterprise must not be one that briefly flourishes and fades; thus, District Court properly dismissed claim alleging multiple acts of fraud that were part of single, discrete and otherwise lawful commercial transaction, because pleadings do not assert that corporate defendants posed continuous threat as RICO person. Delta Truck & Tractor, Inc. v J.I. Case Co. (1988, CA5 La) 855 F2d 241, cert den (1989) 489 US 1079, 103 L Ed 2d 836, 109 S Ct 1531. Although 2 racetracks were owned by separate corporations, shareholders of corporations were identical, and corporations were therefore single economic unit serving common interest and could not conspire with each other and could not constitute separate entities for purpose of RICO claim charging fixing of horse races. Guzowski v Hartman (1992, CA6 Mich) 969 F2d 211, RICO Bus Disp Guide (CCH) P 8044, 1992-1 CCH Trade Cases P 69890, reh den (1992, CA6) 1992 US App LEXIS 19268 and cert den (1993) 506 US 1053, 113 S Ct 978, 122 L Ed 2d 132. Allegation that plaintiff and his attorney, the defendant, associated in fact to operate farming venture sufficiently alleges association-in-fact enterprise; venture existed separate from pattern of racketeering activity and extended beyond defendant's alleged acts of fraud and theft. Crowe v Henry (1995, CA5 La) 43 F3d 198, RICO Bus Disp Guide (CCH) P 8743, reh den (1995, CA5 La) 1995 US App LEXIS 4950 and appeal after remand, remanded (1997, CA5 La) 115 F3d 294, RICO Bus Disp Guide (CCH) P 9288. Government is not required, under 18 USCS 1961 et seq., to prove existence of "enterprise" and "pattern of racketeering activity" by separate evidence, and "organization" element of proving that enterprise exists may be inferred from pattern of racketeering activity, since different conclusions may be inferred from proof of same predicate acts; thus, District Court properly instructed jury concerning elements of association-in-fact enterprise. United States v Perholtz (1988, App DC) 268 US App DC 347, 842 F2d 343, 25 Fed Rules Evid Serv 425, cert den (1988) 488 US 821, 102 L Ed 2d 42, 109 S Ct 65 and (criticized in Lockheed Martin Corp. v Boeing Co. (2005, MD Fla) 357 F Supp 2d 1350, 18 FLW Fed D 381).

Doctors sufficiently pleaded that commercial property owner and real estate agent constituted enterprise under 18 USCS 1961(4) of RICO because doctors pleaded that owner and agent, along with owner's various different corporate entities formed enterprise and it was feasible that entities existed and were associated together separate from any pattern of racketeering activity. Trevino v Pechero (2008, SD Tex) 592 F Supp 2d 939. 60. Continuity Structural continuity of enterprise exists where unchanging pattern of roles is necessary and is utilized to carry out predicate acts of racketeering and **requirement of continuity may be met even where some changes in personnel occur; where different individuals manage affairs of enterprise at different times and different places, determinative factor is whether associational ties of those charged with RICO violation amount to organization pattern or system of authority. United States v Lemm (1982, CA8 Neb) 680 F2d 1193, 10 Fed Rules Evid Serv 1185, cert den (1983) 459 US 1110, 103 S Ct 739, 74 L Ed 2d 960 and (criticized in United States v Morrow (2005, DC Dist Col) 2005 US Dist LEXIS 11753). Continuity of structure, for purposes of RICO enterprise requirement, exists where there is organizational pattern or system of authority providing mechanism for directing group's affairs on continuing, rather than ad hoc, basis; that some changes occur in structure and personnel does not mean that there is no mechanism for continuing direction of group affairs, since both structure and personnel of enterprise may undergo alteration without loss of enterprise's identity as such. United States v Kragness (1987, CA8 Minn) 830 F2d 842, 23 Fed Rules Evid Serv 1151 (criticized in United States v Baker (1995, CA9 Mont) 63 F3d 1478, 95 CDOS 7886, 95 Daily Journal DAR 13531) and (criticized in United States v Morrow (2005, DC Dist Col) 2005 US Dist LEXIS 11753). RICO enterprise need not consist of multiple ventures or plans, and if enterprise is long and elaborate enough to be considered "continuing," RICO "enterprise" requirement is satisfied. United States v Benevento (1987, CA2 NY) 836 F2d 60, cert den (1988) 486 US 1043, 100 L Ed 2d 620, 108 S Ct 2035, postconviction relief den (2000, SD NY) 81 F Supp 2d 490 and (ovrld in part by United States v Indelicato (1989, CA2) 865 F2d 1370) and subsequent app (1992, CA2 NY) 963 F2d 1522 and (criticized in United States v Jelinek (1995, CA8 Iowa) 57 F3d 655). Existence of enterprise whose illicit activities or unlawful goals are continuing ones must be established to satisfy requirement of pattern of racketeering activity under RICO (18 USCS 1961 et seq.). Creative Bath Products, Inc. v Connecticut General Life Ins. Co. (1988, CA2 NY) 837 F2d 561, 10 FR Serv 3d 199 (ovrld in part by United States v Indelicato (1989, CA2) 865 F2d 1370) and cert den (1989) 492 US 918, 106 L Ed 2d 588, 109 S Ct 3241. Evidence of formal or informal "ongoing organization" and evidence that various associates "function as continuing unit" must be shown to establish association in fact enterprise under 18 USCS 1961(4). Foval v First Nat'l Bank of Commerce (1988, CA5 La) 841 F2d 126, 10 FR Serv 3d 1085. Requirement that RICO (18 USCS 1961 et seq.) enterprise must exhibit some continuity of structure and personnel was met, where individual defendants participated in nearly all criminal acts of group, and were members of group during entire period of racketeering events. United States v Leisure (1988, CA8 Mo) 844 F2d 1347, 25 Fed Rules Evid Serv 487, reh den, en banc (1988, CA8) 1988 US App LEXIS 9370 and cert den (1988) 488 US 932, 102 L Ed 2d 342, 109 S Ct 324 and cert den (1988) 488 US 960, 102 L Ed 2d 392, 109 S Ct 403, post-conviction relief den (1992, Mo) 828 SW2d 872, cert den (1992) 506 US 923, 121 L Ed 2d 259, 113 S Ct 343.

Enterprise in criminal RICO action was ongoing, and substitution of one individual defendant for another did not cause termination of one conspiracy and commencement of another. United States v Stern (1988, CA7 Ill) 858 F2d 1241. Plaintiffs failed to state valid RICO claim where they claimed only that defendant engaged in fraud connected to bankruptcy case in sale of securities, but failed to allege that such acts amount to continued criminal activity, nor alleged that defendant derived income from such acts. Lane v Peterson (1990, CA8 Ark) 899 F2d 737, cert den (1990) 498 US 823, 112 L Ed 2d 48, 111 S Ct 74. There was sufficient evidence of single racketeering enterprise where evidence supported jury's finding that, **although cast of characters changed over time there was nevertheless one overarching conspiracy. United States v Shea (2000, CA1 NH) 211 F3d 658, 53 Fed Rules Evid Serv 1353, cert den (2001) 531 US 1154, 121 S Ct 1101, 148 L Ed 2d 973 and cert den (2001) 531 US 1154, 121 S Ct 1101, 148 L Ed 2d 973 and cert den (2001) 531 US 1154, 121 S Ct 1101, 148 L Ed 2d 973, reh den (2001) 532 US 990, 121 S Ct 1647, 149 L Ed 2d 504 and cert den (2001) 531 US 1154, 121 S Ct 1101, 148 L Ed 2d 973 and cert den (2001) 531 US 1154, 121 S Ct 1102, 148 L Ed 2d 973 and post-conviction relief den, motion den (2002, DC NH) 2002 DNH 185, app den, motion den (2005, CA1 NH) 137 Fed Appx 373, cert den (2005) 546 US 971, 126 S Ct 506, 163 L Ed 2d 383 and cert den (2006) 546 US 1194, 126 S Ct 1386, 164 L Ed 2d 91 and cert den (2006) 546 US 1197, 126 S Ct 1392, 164 L Ed 2d 95. Existence of continuing core of personnel motivated by common interest is sufficient to constitute association-in-fact enterprise, and continuity requirement does not mean individuals cannot leave group or that new members cannot join at later time. United States v Perholtz (1988, App DC) 268 US App DC 347, 842 F2d 343, 25 Fed Rules Evid Serv 425, cert den (1988) 488 US 821, 102 L Ed 2d 42, 109 S Ct 65 and (criticized in Lockheed Martin Corp. v Boeing Co. (2005, MD Fla) 357 F Supp 2d 1350, 18 FLW Fed D 381). 18 USCS 1961 does not require "enterprise" made up of individuals "associated in fact" to have identical associates throughout its existence, so "enterprise" does not cease to exist when some leave or others join provided those charged are associated in fact at times alleged. United States v Dellacroce (1986, ED NY) 625 F Supp 1387. RICO claims are insufficient to provide subject matter jurisdiction where complaint contains mere general assertion of enterprise but provides no evidence of existing and ongoing functioning unit. International Paint Co. v Grow Group, Inc. (1986, SD NY) 648 F Supp 729. Racketeering enterprise is not properly alleged under 18 USCS 1962 in civil action, where complaint alleges (1) "short-lived" goals not meeting "continuity" requirement and (2) no acquaintance between alleged racketeers and thus insufficient "relationship" among them. Ris v Bedell (1988, SD NY) 699 F Supp 429. Accounts purchaser's RICO claim against individuals and entities involved in supplying goods to home shopping network adequately alleges existence of RICO "enterprise," because purchaser cites group associated in fact which operated separate and apart from predicate acts of money laundering, fraud, and conversion, which had some continuity of structure and personnel despite departure of 2 individuals and which had common goal of defrauding purchaser out of its money for personal enrichment throughout 3-year period of racketeering activity. American

Trade Partners, L.P. v A-1 Int'l Importing Enterprises, Ltd. (1991, ED Pa) 757 F Supp 545. Two factors are particularly relevant to determination of continuity (either closed-ended or open-ended): duration of related predicate acts, and extensiveness of scheme of Racketeer Influenced and Corrupt Organizations Act, 18 USCS 1961 et seq., enterprise; to determine "extensiveness" of alleged scheme, court considers number of victims, number and variety of racketeering acts, whether injuries caused were distinct, complexity and size of scheme, and nature or character of enterprise or unlawful activity. Waddell & Reed Fin., Inc. v Torchmark Corp. (2004, DC Kan) 223 FRD 566, findings of fact/conclusions of law, judgment entered (2004, DC Kan) 337 F Supp 2d 1243. Plaintiffs failed to present evidence from which reasonable jury would find either closed-ended or open-ended continuity under Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961 et seq.; while plaintiffs may have alleged closed-ended series of predicate acts, they constituted single scheme to accomplish one discrete goal, which was directed solely at plaintiffs, with no credible potential to extend to other persons or entities; likewise, plaintiffs did not establish open-ended continuity because predicates themselves did not involve distinct threat of long-term racketeering activity, either implicit or explicit, and predicates were not regular way of conducting defendant's ongoing legitimate business or RICO enterprise. Waddell & Reed Fin., Inc. v Torchmark Corp. (2004, DC Kan) 223 FRD 566, findings of fact/conclusions of law, judgment entered (2004, DC Kan) 337 F Supp 2d 1243. Plaintiff homeowner's allegations that consumers were induced into mortgages by misrepresentations and omissions as to their obligations or as to defendant title company's and its principals' benefit and that fraudulent documents were sent by mail or interstate telecommunications carriers were sufficient to allege enterprise under 18 USCS 1961(4). Beard v Worldwide Mortg. Corp. (2005, WD Tenn) 354 F Supp 2d 789. Plaintiff homeowner's allegations that consumers were induced into mortgages by misrepresentations and omissions as to their obligations or as to defendant title company's and its principals' benefit and that fraudulent documents were sent by mail or interstate telecommunications carriers were sufficient to allege enterprise under 18 USCS 1961(4). Beard v Worldwide Mortg. Corp. (2005, WD Tenn) 354 F Supp 2d 789. Where farmers alleged that sellers, processor, appraiser, and bank made misrepresentations to convince them to buy chicken farm at inflated price, Racketeering Influence and Corrupt Organization Act (RICO), 18 USCS 1961 et seq., claims failed to survive summary judgment because farmers did not produce evidence of continuity needed to support RICO enterprise since there was no evidence that these disparate entities all acted with shared purpose of consolidating processor's control over its farmers. Do v Pilgrim's Pride Corp. (2007, ED Tex) 512 F Supp 2d 764. 62. Corporations 62. Corporations Existence of corporation fulfills requirements of ascertainable structure apart from predicate racketeering activity; thus, government sufficiently proved enterprise separate and apart from pattern of racketeering activity, where it presented evidence of several lawful corporate entities existing separately from

racketeering activities. United States v Kirk (1988, CA9 Hawaii) 844 F2d 660, 25 Fed Rules Evid Serv 683, cert den (1988) 488 US 890, 102 L Ed 2d 213, 109 S Ct 222. Finding of control under Racketeering Act is determined by circumstances of each case and does not require formal control such as holding of minority stock or actual designation as officer or director. Ikuno v Yip (1990, CA9 Wash) 912 F2d 306 (criticized in Word of Faith World Outreach Ctr. Church v Sawyer (1996, CA5 Tex) 90 F3d 118, 24 Media L R 2209, RICO Bus Disp Guide (CCH) P 9093). Individuals, corporations, and other entities may constitute association-infact, and government is not required to choose between charging individual or corporation on one hand, and association-in-fact on other hand to establish "enterprise" under RICO (18 USCS 1961 et seq.), since RICO enterprise is defined as "including" various specified entities, list of entities is not meant to be exhaustive, and such limitation would improperly result in allowing RICO to reach only criminals who failed to form corporate shells to aid illicit schemes. United States v Perholtz (1988, App DC) 268 US App DC 347, 842 F2d 343, 25 Fed Rules Evid Serv 425, cert den (1988) 488 US 821, 102 L Ed 2d 42, 109 S Ct 65 and (criticized in Lockheed Martin Corp. v Boeing Co. (2005, MD Fla) 357 F Supp 2d 1350, 18 FLW Fed D 381). Corporation, such as bank, may be member of "individuals associated in fact" enterprise; corporation may be held liable if it is "associated with" enterprise even if it is not "member" of "individual associated in fact" enterprise. General Acci. Ins. Co. v Fidelity & Deposit Co. (1984, ED Pa) 598 F Supp 1223, 40 UCCRS 566. 63.--As both person and enterprise Corporation which engages in racketeering activities and is direct or indirect beneficiary of pattern of racketeering activity may be both "person" and "enterprise" under 18 USCS 1962(a), prohibiting use of money derived from pattern of racketeering activity to acquire interest in, establish, or operate enterprise, and 18 USCS 1962(b), prohibiting engagement in racketeering activity to acquire or maintain interest in or control of enterprise; hence, claims by wholesale appliance distributor against corporate competitors in civil RICO action that defendants engaged in predicate acts of racketeering, received income from such activities, and used such income in their operations sufficiently alleged that defendants were beneficiaries of pattern of racketeering activity, and District Court erred in dismissing claims for failure to allege a "person" separate from "enterprise." Schreiber Distrib. Co. v Serv-Well Furniture Co. (1986, CA9 Cal) 806 F2d 1393. Corporation engaging in racketeering activities which is direct or indirect beneficiary of pattern of racketeering activity can be both "person" and "enterprise" under 18 USCS 1962(a) and (d), but not (c); thus, plaintiffs have properly pleaded that certain defendants as corporations were enterprises under 1962(a) and (d), even if they are same as persons involved as defendants, although such allegations do not support claim under 1962(c). United Energy Owners Committee, Inc. v United States Energy Management Systems, Inc. (1988, CA9 Cal) 837 F2d 356, 10 FR Serv 3d 253 (criticized in Odom v Microsoft Corp. (2004, WD Wash) 2004 US Dist LEXIS 30622). Although enterprise may not be held liable under 18 USCS 1962(c), because person and enterprise may not be same entity, 1962(a) does not contain any language suggesting that liable person and enterprise must be separate, and so long as enterprise does in fact benefit from challenged racketeering activity, there is no reason to ignore corporation's role, and no reason why injured third party may

not recover from 666, 9 EBC 2623, 576, 10 EBC 2000 Northeastern Pa.

enterprise. Saporito v Combustion Eng'g (1988, CA3 NJ) 843 F2d vacated, remanded (1989) 489 US 1049, 109 S Ct 1306, 103 L Ed 2d and (Overruled as stated in Leuthner v Blue Cross & Blue Shield of (2006, CA3 Pa) 454 F3d 120, 38 EBC 1449).

Finding of control under Racketeering Act is determined by circumstances of each case and does not require formal control such as holding of minority stock or actual designation as officer or director. Ikuno v Yip (1990, CA9 Wash) 912 F2d 306 (criticized in Word of Faith World Outreach Ctr. Church v Sawyer (1996, CA5 Tex) 90 F3d 118, 24 Media L R 2209, RICO Bus Disp Guide (CCH) P 9093). District court erred in granting fungicide manufacturer's Fed. R. Civ. P. 12(c) motion for judgment on pleadings in civil action under 18 USCS 1962(c), 1964(c), which was filed by commercial nurserymen who alleged that manufacturer fraudulently withheld evidence in underlying product liability litigation in order to induce settlement; nurserymen properly alleged "enterprise" within meaning of 18 USCS 1961(4), and enterprise formed by group of fungicide manufacturer, its law firms, and its expert witnesses was separate and distinct from fungicide manufacturer as RICO "person." Living Designs, Inc. v E.I. DuPont de Nemours & Co. (2005, CA9 Hawaii) 431 F3d 353, 35 ELR 20246, cert den (2006) 547 US 1192, 126 S Ct 2861, 165 L Ed 2d 895 and motions ruled upon (2006, DC Hawaii) 2006 US Dist LEXIS 68909. Corporation's alleged conduct of distributing counterfeit hair care products to retailers and being involved in alleged counterfeit and diversion enterprise satisfied separate structure requirement of 18 USCS 1961(4), and, thus, enterprise element was satisfied for RICO claim asserted by hair care product designer. Sebastian Int'l, Inc. v Russolillo (2000, CD Cal) 186 F Supp 2d 1055, RICO Bus Disp Guide (CCH) P 10123. 64.--Association of corporations Group of corporations may United States v Huber (1979, Ed 2d 759, 100 S Ct 1312 and (2005, MD Fla) 357 F Supp 2d be "enterprise" within meaning of 18 USCS 1961. CA2 NY) 603 F2d 387, cert den (1980) 445 US 927, 63 L (criticized in Lockheed Martin Corp. v Boeing Co. 1350, 18 FLW Fed D 381).

Intentional or "purposeful" behavior by corporations charged as members of association-in-fact is not required under RICO, rather, showing of common purpose must be proved by evidence of **ongoing organization, formal or informal, and evidence that various associates function as continuing unit; furthermore, although corporations and individuals are not so interconnected as to constitute single business operated under various names, they nevertheless possess organization and continuity required of RICO associated-in-fact enterprise, where there is overlap in personnel and organizational structure among businesses, various corporations shared financial connections, and individual defendant was principal in each venture. United States v Feldman (1988, CA9 Cal) 853 F2d 648, cert den (1989) 489 US 1030, 109 S Ct 1164, 103 L Ed 2d 222 and (criticized in Odom v Microsoft Corp. (2007, CA9 Wash) 486 F3d 541). **In putative class action filed by consumers who alleged that computer corporation and retail store chain established mechanisms for transferring customers' personal and financial information from retail stores to computer corporation in order to fraudulently charge for Internet access and cell phone accounts, district court erred in finding that consumers did not sufficiently allege existence of associated-in-fact enterprise within meaning of 18 USCS 1961(4) and 1962(c)part of Racketeer Influenced and Corrupt Organizations Act; associated-in-fact enterprise did not require any ascertainable separate structure, and consumers sufficiently alleged common purpose, ongoing organization, and continuing unit. Odom v Microsoft Corp. (2007, CA9 Wash) 486 F3d 541, cert den

(2007) 552 US 985, 128 S Ct 464, 169 L Ed 2d 325 and (criticized in Limestone Dev. Corp. v Vill. of Lemont (2008, CA7 Ill) 520 F3d 797). Nine cigarette manufacturers were properly found liable under Racketeer Influenced and Corrupt Organizations Act of joining in 50-year conspiracy to deceive American public about health effects and addictiveness of cigarettes because definitions of "persons" and "enterprise" in 18 USCS 1961(3), (4), embraced mixed group of individuals and corporations associated in fact. United States v Philip Morris USA, Inc. (2009, App DC) 386 US App DC 49, 566 F3d 1095, 73 FR Serv 3d 896. Complaint sufficiently alleges "enterprise" under 18 USCS 1961(4), in action by developer against corporate manufacturers and sellers of mortar additive, by identifying "persons" as corporate defendants and "enterprise" as association of these entities because association of corporations may form enterprise separate and distinct from each member of that association and, at pleading stage of proceedings, developer is not required to show that enterprise is separate from pattern of racketeering activity. Moravian Dev. Corp. v Dow Chemical Co. (1986, ED Pa) 651 F Supp 144. 65.--Association within corporation 66.--Professional corporations Law firm, as professional corporation organized to practice law, constitutes enterprise for RICO purposes under 18 USCS 1961(4), where firm's attorneys were involved in fraudulent automobile accident insurance scheme; law firm's activities have requisite nexus with interstate commerce where attorney utilized United States mails in perpetrating scheme. State Farm Mut. Auto. Ins. Co. v Rosenfield (1988, ED Pa) 683 F Supp 106. 69. Governmental agencies or officers Term "enterprise" as used in RICO includes governmental agencies or offices; "enterprise" encompasses any legal entity and does not differentiate between government or public legal entities and private legal entities. United States v Clark (1981, CA8 Ark) 646 F2d 1259. Pennsylvania Bureau of Cigarette and Beverage Taxes is "enterprise" that affects interstate or foreign commerce because Congress intended to protect state operated commercial ventures engaged in interstate commerce or other governmental agencies regulating commercial and utility operations affecting interstate commerce. United States v Frumento (1977, CA3 Pa) 563 F2d 1083, cert den (1978) 434 US 1072, 55 L Ed 2d 775, 98 S Ct 1256 and cert den (1978) 434 US 1072, 55 L Ed 2d 776, 98 S Ct 1258. Term "enterprise" as used in RICO includes governmental agencies or offices; "enterprise" encompasses any legal entity and does not differentiate between government or public legal entities and private legal entities. United States v Clark (1981, CA8 Ark) 646 F2d 1259. 18 USCS 1962 should be construed to include public entities as enterprises. United States v Long (1981, CA4 SC) 651 F2d 239, 8 Fed Rules Evid Serv 630, cert den (1981) 454 US 896, 70 L Ed 2d 212, 102 S Ct 396. Language of 18 USCS 1961, defining enterprise, unambiguously encompasses governmental units, and purpose and history of 1961 demonstrate clear Congressional intent that RICO be interpreted to apply to activities that corrupt

public or governmental entities. United States v Angelilli (1981, CA2 NY) 660 F2d 23, 9 Fed Rules Evid Serv 83, cert den (1982) 455 US 910, 71 L Ed 2d 449, 102 S Ct 1258, reh den (1982) 456 US 951, 72 L Ed 2d 476, 102 S Ct 2024 and cert den (1982) 455 US 945, 71 L Ed 2d 657, 102 S Ct 1442, reh den (1982) 456 US 939, 72 L Ed 2d 460, 102 S Ct 1998 and reh den (1982) 456 US 939, 72 L Ed 2d 460, 102 S Ct 1999. Office of governor of state may be enterprise and may be so alleged in indictment under 18 USCS 1961 et seq. United States v Thompson (1982, CA6 Tenn) 685 F2d 993, cert den (1982) 459 US 1072, 74 L Ed 2d 635, 103 S Ct 494. Evidence supported finding of single RICO conspiracy, where enterprise was municipal agency rife with corruption, and individual defendant knew that he was not simply participating in isolated bribery conspiracies but rather in broader conspiracy to operate municipal agency for private gain through pattern of racketeering activity. United States v Friedman (1988, CA2 NY) 854 F2d 535, 26 Fed Rules Evid Serv 444, cert den (1989) 490 US 1004, 104 L Ed 2d 153, 109 S Ct 1637 and (criticized in United States v Richards (2000, ED NY) 94 F Supp 2d 304) and (criticized in United States v Saada (2000, CA3 NJ) 212 F3d 210, 53 Fed Rules Evid Serv 1377). District Court properly instructed jury that state department of transportation is "enterprise" within reach of 18 USCS 1962(c), since governmental or public entities fit within definition of "enterprise" for purposes of RICO. United States v Hocking (1988, CA7 Ill) 860 F2d 769, reh, en banc, den (1988, CA7) 1988 US App LEXIS 17682. Claim that group of individuals associated in fact for purpose of illegally investing fruits of fraud and illegally using mails and wire and allegedly transporting fruits of fraud in interstate commerce, sufficiently alleges RICO enterprise; accordingly, plaintiff Republic of Philippines sufficiently alleged RICO enterprise in civil RICO action claiming that defendants, former president of Philippines and his wife, arranged to get fraudulently-obtained property out of Philippines into United States. Republic of Philippines v Marcos (1988, CA9 Cal) 862 F2d 1355, cert den (1989) 490 US 1035, 104 L Ed 2d 404, 109 S Ct 1933. City fire department is legitimate governmental entity possessing clear organizational structure and qualifies as "enterprise" under RICO. United States v Balzano (1990, CA7 Ill) 916 F2d 1273. RICO enterprise which is not legal entity need not be group of formerly associated individuals but may be "association in fact;" thus, law firm, police department, and sheriff's department may constitute "enterprise." United States v Masters (1991, CA7 Ill) 924 F2d 1362, 32 Fed Rules Evid Serv 408, reh den (1991, CA7) 1991 US App LEXIS 4949 and cert den (1991) 500 US 919, 114 L Ed 2d 105, 111 S Ct 2019 and cert den (1991) 502 US 823, 116 L Ed 2d 58, 112 S Ct 86 and (criticized in United States v Bauer (1997, CA7 Ill) 129 F3d 962) and (criticized in United States v DeFries (1997, App DC) 327 US App DC 181, 129 F3d 1293, 156 BNA LRRM 2999). State representative's office consisting of employees performing various duties constituted "enterprise" for purposes of RICO charge of extortion in bribe-taking scheme; predicate acts of taking money from lobbyists extending over 6-year period constituted "pattern of racketeering". United States v Blandford (1994, CA6 Ky) 33 F3d 685, 1994 FED App 312P, reh, en banc, den (1994, CA6 Ky) 1994 US App LEXIS 34101 and cert den (1995) 514 US 1095, 115 S Ct 1821, 131 L Ed 2d 743 and (criticized in United States v Collins (1996, CA6 Ky) 78 F3d 1021, 44 Fed Rules Evid Serv 144, 77 AFTR 2d 1274, 1996 FED App 82P) and (criticized in United States v Vigil (2006, DC NM) 2006 US Dist LEXIS 97295).

District court did not err by identifying State as legal entity and allowing State to be enterprise for purposes of Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961, in RICO conspiracy prosecution, given that scheme revolved around elected official throughout his tenure in office of Secretary of State and during time he was candidate for Governor's office. United States v Warner (2007, CA7 Ill) 498 F3d 666, reh den, reh, en banc, den (2007, CA7 Ill) 506 F3d 517 and cert den (2008, US) 128 S Ct 2500, 171 L Ed 2d 786. Developer's action under Racketeer Influenced & Corrupt Organizations Act (RICO), 18 USCS 1961 et seq., failed to state claim because complaint failed to sufficiently allege existence of enterprise structure among defendant village and other defendants. Nowhere in complaint did one find anything to indicate structure of any kind; there was no reference to system of governance, administrative hierarchy, joint planning committee, board, manager, staff, headquarters, personnel having differentiated functions, budget, records, or any other indicator of legal or illegal enterprise. Limestone Dev. Corp. v Vill. of Lemont (2008, CA7 Ill) 520 F3d 797. West Virginia Alcohol Beverage Control Commissioner is "enterprise" within meaning of 18 USCS 1961; general words defining "enterprise" were intended to go beyond specific reference to private business or labor organization. United States v Barber (1979, SD W Va) 476 F Supp 182. Political entity or governmental agency may be "enterprise" within meaning of 18 USCS 1961; thus, state governor's office was enterprise. United States v Sisk (1979, MD Tenn) 476 F Supp 1061. Louisiana department of agriculture is enterprise within meaning of 18 USCS 1961(4). United States v Dozier (1980, MD La) 493 F Supp 554. Term "enterprise" in 18 USCS 1961(4) does not exclude governmental organizations. Maryland v Buzz Berg Wrecking Co. (1980, DC Md) 496 F Supp 245. Board of Tax Appeals is enterprise within meaning of 18 USCS 1961(4). States v Lavin (1981, ND Ill) 504 F Supp 1356. United

RICO action by customers of utility against utility, its electric company subsidiary, and its former and present employees is dismissed, where complaint alleged that (1) plaintiffs were damaged by having paid higher electric and gas rates than they otherwise would have paid by reason of defendants' scheme to defraud and acts of mail and wire fraud, and (2) defendants misused funds obtained from ratepayers as result of electric and gas rate billing allowed by state public service commission for illegal, improper, and unreported purpose of making campaign and political payments and contributions to various public officials and politicians, because claim is barred by filed rate doctrine. Feiner v Orange & Rockland Utils. (1994, SD NY) 862 F Supp 1084, RICO Bus Disp Guide (CCH) P 8672. Association-in-fact enterprise may consist of both group of individuals who join together for common criminal purpose and otherwise legitimate entities, including governmental entities, that are controlled and used by those individuals to achieve that purpose. United States v Cianci (2002, DC RI) 210 F Supp 2d 71. Where defendants, city mayor, city official, and businessperson, were accused of conspiracy and substantive violations under 18 USCS 1962(c) and (d) of Racketeer Influenced and Corrupt Organizations Act (RICO) for awarding city contracts and jobs in exchange for bribes, fact that alleged RICO association-infact enterprise included city and city departments did not cause enterprise to lack common criminal purpose; it was sufficient that defendants controlled and used legitimate entities to achieve criminal objectives. United States v Cianci (2002, DC RI) 210 F Supp 2d 71.

Tenant failed to state RICO claim based on ex-parte meeting of two municipal housing agencies and three judges because tenant failed to set fourth any "predicate acts" or allege existence of RICO "enterprise." Dibbs v Roldan (2005, SD NY) 356 F Supp 2d 340, affd (2007, CA2 NY) 258 Fed Appx 381, cert den (2008, US) 128 S Ct 2969, 171 L Ed 2d 888, reh den (2008, US) 129 S Ct 25, 171 L Ed 2d 928. Where property owner alleged that city officials engaged in common scheme to force owners to sell their property which would be acquired for development, defendants' categorical argument that governmental entity could not constitute Racketeer Influenced and Corrupt Organizations Act, 18 USCS 1961 et seq., enterprise was without merit. Ferluga v Eickhoff (2006, DC Kan) 408 F Supp 2d 1153.

70.--Judiciary Philadelphia traffic court is "enterprise" within meaning of 18 USCS 1961. United States v Bacheler (1979, CA3 Pa) 611 F2d 443, 79-2 USTC P 9695, 45 AFTR 2d 400. Florida's Third Judicial Circuit properly constitutes enterprise under Rico. United States v Stratton (1981, CA5 La) 649 F2d 1066. Term "enterprise" as defined in 18 USCS 1961 is broad enough to include municipal court which is one part of city government. United States v Sutherland (1981, CA5 Tex) 656 F2d 1181, 9 Fed Rules Evid Serv 278, reh den (1981, CA5 Tex) 663 F2d 101 and cert den (1982) 455 US 949, 71 L Ed 2d 663, 102 S Ct 1451 and cert den (1982) 455 US 991, 71 L Ed 2d 852, 102 S Ct 1617. Circuit Court of Cook County, Illinois, is enterprise affecting commerce under RICO (18 USCS 1961). United States v Murphy (1985, CA7 Ill) 768 F2d 1518, 18 Fed Rules Evid Serv 981, cert den (1986) 475 US 1012, 89 L Ed 2d 304, 106 S Ct 1188. Court may be enterprise within meaning of RICO (18 USCS 1961 et seq.) where participants engaged in patterns of activity designed to corrupt operation of court's own process; however, where false answers to interrogatories are given which mislead **only litigants, such conduct is not equivalent to participation in enterprise's affairs which is required by 18 USCS 1962(c). Averbach v Rival Mfg. Co. (1987, CA3 Pa) 809 F2d 1016, 6 FR Serv 3d 1144, cert den (1987) 482 US 915, 107 S Ct 3187, 96 L Ed 2d 675 and cert den (1987) 484 US 822, 108 S Ct 83, 98 L Ed 2d 45 and (criticized in LinkCo, Inc. v Naoyuki Akikusa (2009, SD NY) 2009 US Dist LEXIS 17129) and (criticized in LinkCo, Inc. v Naoyuki Akikusa (2009, SD NY) 615 F Supp 2d 130). Requirement that criminal activity have effect on "enterprise" for RICO conviction was established where defendant attorney's scheme of fixing drunk driving tickets by bribing deputy prosecutor to destroy files of defendants had effect on enterprise, which was prosecutor's office; court rejects defendant's contention that his acts affected his clients only and not prosecutor's office. United States v Goot (1990, CA7 Ind) 894 F2d 231, cert den (1990) 498 US 811, 112 L Ed 2d 22, 111 S Ct 45. Philadelphia traffic court is "enterprise" within meaning of 18 USCS 1961. United States v Vignola (1979, ED Pa) 464 F Supp 1091, affd without op (1979, CA3 Pa) 605 F2d 1199, cert den (1980) 444 US 1072, 62 L Ed 2d 753, 100 S Ct 1015. Whether or not state circuit court is enterprise whose activities affect interstate commerce, bailiff charged with taking bribes in fraudulent scheme to influence judges in divorce actions did not participate in affairs of enterprise within meaning of 18 USCS 1962, where bailiff never actually tried to pass money

to judges or influence their decisions. Supp 1395.

United States v Kaye (1984, ND Ill) 586 F

Supreme Court of New York in Queens was enterprise as defined by RICO statute, since statute requires only that enterprise be organization, not that it be criminal in nature. United States v Brennan (1986, ED NY) 629 F Supp 283, affd (1986, CA2 NY) 798 F2d 581, 21 Fed Rules Evid Serv 358. Although Racketeering Influenced and Corrupt Organizations Act definitions do not expressly include governmental entities, such as state courts, in definition of "enterprise," courts have consistently held that term "enterprise" does encompass such entities. Castro v United States (2003, SD Fla) 248 F Supp 2d 1170, 16 FLW Fed D 221. Unpublished Opinions Unpublished: Defendants' convictions for violating 18 USCS 1962(c) based on their using their influence as elected state court judges to direct money to a bail bonds company in exchange for bribe, was affirmed because (1) the Government proved venue by a preponderance of the evidence; (2) the Government proved continuity to show a pattern of racketeering as it presented evidence of 10 acts occurring over a two-and-a-half month period, from which a jury could reasonably infer that defendants' actions would project in to the future with a threat of repetition; (3) RICO's pattern requirement was not unconstitutionally vague as applied to defendants; (4) the judicial branch of Louisiana qualified as an "enterprise" under 18 USCS 1961(4); (5) a witness was properly allowed to testify that he bribed defendant two with Oxycontin instead of cash as the district court weighed the probative value against the prejudicial effect under Fed. R. Evid. 403 and gave several instructions limiting the jury's ability to consider the evidence; (6) a reasonable jury could find that defendant one was a judge through circumstantial evidence presented and that he was bribed; and (7) the Government met RICO's interstate commerce requirement under 1962(c) as it presented evidence that the company wrote bonds through a company in California. United States v Walker (2009, CA5 La) 348 Fed Appx 910, cert den (2010, US) 130 S Ct 1536, 176 L Ed 2d 115 and cert den (2010, US) 130 S Ct 1551, 176 L Ed 2d 142. 71.--Law enforcement Definition of "enterprise" in 18 USCS 1961(4) is broad enough to include public as well as private entities; city police department is "enterprise" since it consists of group of individuals associated in fact. United States v Brown (1977, CA5 Ga) 555 F2d 407, reh den (1977, CA5 Ga) 559 F2d 29 and cert den (1978) 435 US 904, 55 L Ed 2d 494, 98 S Ct 1448. Municipal police department is "enterprise" within meaning of 18 USCS 1961(4) where former members of police department engaged in conspiracy to violate RICO statute by using their official position to solicit and accept bribes from business establishments in exchange for acquiescence and protection of illegal activities by such establishments; public entities and individuals may constitute enterprises through which racketeering is conducted. United States v Grzywacz (1979, CA7 Ill) 603 F2d 682, 4 Fed Rules Evid Serv 1240, 52 ALR Fed 800, cert den (1980) 446 US 935, 64 L Ed 2d 788, 100 S Ct 2152. County sheriff's department was "enterprise" within meaning of 18 USCS 1961. United States v Baker (1980, CA4 NC) 617 F2d 1060. Public entity such as prosecutor's office may be "enterprise" within coverage of 18 USCS 1962. United States v Altomare (1980, CA4 W Va) 625 F2d 5.

County Sheriff is public entity sufficient to constitute enterprise within meaning of 18 USCS 1961. United States v Lee Stoller Enterprises, Inc. (1981, CA7 Ill) 652 F2d 1313, cert den (1981) 454 US 1082, 70 L Ed 2d 615, 102 S Ct 636. City police department may be enterprise for purposes of 18 USCS 1962. United States v Kovic (1982, CA7 Ill) 684 F2d 512, 11 Fed Rules Evid Serv 854, cert den (1982) 459 US 972, 74 L Ed 2d 284, 103 S Ct 304. County sheriff's department constitutes "enterprise" for purposes of 18 USCS 1962(c). United States v Davis (1983, CA6 Ohio) 707 F2d 880, 13 Fed Rules Evid Serv 121. In prosecution of former Federal Bureau of Investigations agent under Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961 et seq., defendant's organization-in-fact with others to carry out criminal enterprise was sufficient to support RICO conviction, as there was no requirement that enterprise have ascertainable structure, nor was there restriction on associations embraced by statute's definition, and defendant and other members of enterprise worked together in association-in-fact enterprise over period of almost two decades, joining forces to protect themselves from prosecution and to further other criminal activities. United States v Connolly (2003, CA1 Mass) 341 F3d 16, 62 Fed Rules Evid Serv 474. RICO claims against FBI by decedent's estate and survivors were subject to dismissal, since (1) RICO Act did not waive sovereign immunity of United States, and (2) federal agencies are immune from state or federal criminal prosecution, and thus cannot satisfy the "racketeering activity" requirement for civil RICO liability, because they are not "chargeable," "indictable," or "punishable" for the offenses listed in 18 USCS 1961(1). Donahue v FBI (2002, DC Mass) 204 F Supp 2d 169. 73. Individuals Jury's associated-in-fact Racketeering Influenced and Corrupt Organizations Act (RICO) enterprise, 18 USCS 1961(4), finding was sustainable where there was sufficient evidence that individual defendants exercised substantial control over municipal entities named as members of enterprise--notably one defendant was city's mayor and second defendant was its chief of administration--where both were shown to have used their positions and influence to sell municipal favors on continuing basis, and where defendants' illegal schemes could function only with cooperation, witting or unwitting, of certain city agencies and officials; fact that some racketeering schemes did not go as planned, and that certain elements within city may not have completely complied with defendants' wishes, did not defeat integrity of charged enterprise. United States v Cianci (2004, CA1 RI) 378 F3d 71, cert den (2005) 546 US 935, 126 S Ct 421, 163 L Ed 2d 321.

"Enterprise" within meaning of 18 USCS 1961 includes "group of individuals associated in fact with various corporations". United States v Thevis (1979, ND Ga) 474 F Supp 134, affd (1982, CA5 Ga) 665 F2d 616, 9 Fed Rules Evid Serv 1025, reh den (1982, CA5 Ga) 671 F2d 1379 and reh den (1982, CA5 Ga) 671 F2d 1379 and cert den (1982) 456 US 1008, 102 S Ct 2300, 73 L Ed 2d 1303 and cert den (1982) 458 US 1109, 102 S Ct 3489, 73 L Ed 2d 1370 and cert den (1982) 459 US 825, 103 S Ct 57, 74 L Ed 2d 61 and (criticized in United States v White (1997, App DC) 325 US App DC 282, 116 F3d 903, 47 Fed Rules Evid Serv 472) and (criticized in Yuma Petroleum Co. v Thompson (1998, La App 1st Cir) 709 So 2d 824) and (criticized in Magouirk v Warden (2001, CA5 La) 237 F3d 549, 56 Fed Rules Evid Serv 274) and (superseded by statute on other grounds as stated in United States v Zlatogur (2001, CA11 Ga) 271 F3d 1025, 58 Fed Rules Evid Serv 929, 15 FLW Fed C 31) and

(criticized in United States v Rivera (2003, ED Va) 292 F Supp 2d 827) and (ovrld on other grounds as stated in Commonwealth v Edwards (2005) 444 Mass 526, 830 NE2d 158) and (criticized in State v Jensen (2007) 2007 WI 26, 299 Wis 2d 267, 727 NW2d 518) and (criticized in People v Giles (2007) 40 Cal 4th 833, 55 Cal Rptr 3d 133, 152 P3d 433, 2007 CDOS 2360, 2007 Daily Journal DAR 3017) and (criticized in Gatlin v United States (2007, Dist Col App) 925 A2d 594) and (criticized in State v Clopten (2009) 2009 UT 84, 223 P3d 1103, 645 Utah Adv Rep 51) and (criticized in State v Poole (2010) 2010 UT 25) and (superseded by statute on other grounds as stated in In re Timbers of Inwood Forest Associates, Ltd. (1987, CA5 Tex) 808 F2d 363, 15 BCD 494, 16 CBC2d 1, CCH Bankr L Rptr P 71584). Enterprise is entity and associates thereof, who commit requisite number of racketeering acts, and may properly be charged in RICO indictment; enterprise can consist of one person. United States v Joseph (1981, ED Pa) 526 F Supp 504. Complaint made no allegation that all doctors who prescribed pharmaceutical company's drug had associated together with each other and drug company as entity with common fraudulent purpose, or that there was any common communication network, decision-making process, or organizational structure; allegation that each provider was aware that there were likely other providers engaged in parallel schemes was insufficient to establish association-in-fact Racketeer Influenced and Corrupt Organizations Act (RICO) enterprise. In re Pharm. Indus. Average Wholesale Price Litig. (2003, DC Mass) 263 F Supp 2d 172, remanded (2004, DC Mass) 307 F Supp 2d 190. 75. Sole proprietorship Sole proprietorship can be "enterprise" with which proprietor can be associated. McCullough v Suter (1985, CA7 Ill) 757 F2d 142. 77. Illegitimate associations Wholly illegitimate enterprises are not outside scope of Racketeer Influenced and Corrupt Organizations Act. United States v Zemek (1980, CA9 Wash) 634 F2d 1159, 7 Fed Rules Evid Serv 216, cert den (1981) 450 US 916, 67 L Ed 2d 341, 101 S Ct 1359 and cert den (1981) 450 US 985, 67 L Ed 2d 821, 101 S Ct 1525 and cert den (1981) 452 US 905, 69 L Ed 2d 406, 101 S Ct 3031 and cert den (1981) 452 US 905, 69 L Ed 2d 406, 101 S Ct 3031 and cert den (1981) 452 US 905, 69 L Ed 2d 406, 101 S Ct 3031 and (criticized in United States v Woodruff (1996, ND Cal) 941 F Supp 910) and (criticized in United States v Sherwood (1996, CA9 Nev) 98 F3d 402, 96 Daily Journal DAR 13022). 82.--Miscellaneous Claim that group of individuals associated in fact for purpose of illegally investing fruits of fraud and illegally using mails and wire and allegedly transporting fruits of fraud in interstate commerce, sufficiently alleges RICO enterprise; accordingly, plaintiff Republic of Philippines sufficiently alleged RICO enterprise in civil RICO action claiming that defendants, former president of Philippines and his wife, arranged to get fraudulently-obtained property out of Philippines into United States. Republic of Philippines v Marcos (1988, CA9 Cal) 862 F2d 1355, cert den (1989) 490 US 1035, 104 L Ed 2d 404, 109 S Ct 1933. Sufficient evidence supported finding of "enterprise" under 18 USCS 1961(4) for purposes of defendants' convictions under 18 USCS 1962(c), (d), part of RICO; evidence showed hierarchical decision-making structure and division of labor among various players who committed arson, bank fraud, mail fraud, and murder; there was also evidence of common purpose to make money, business relationship, and

continuity. United States v Johnson (2006, CA6 Ky) 440 F3d 832, 69 Fed Rules Evid Serv 783, 2006 FED App 97A. In action in which defendants appealed from judgment of district court convicting them of racketeering, racketeering conspiracy, conspiracy to distribute controlled substances, murder and drug trafficking and sentencing four of defendants to life imprisonment and one defendant to prison term of 262 months, there was no reason to disturb jury's verdict on RICO counts where (1) government had established at trial that defendants functioned as informal organizational unit of larger organization to enforce collection of drug debts upon orders given to them by others in larger organization; and (2) jury was well within its province to ignore any temporary gaps in leadership or splintering of subgroups in finding that single criminal enterprise existed during time period alleged in Indictment. United States v Olson (2006, CA7 Wis) 450 F3d 655, 70 Fed Rules Evid Serv 166. Physician's RICO claims are dismissed because there is no "enterprise" despite allegations of "association in fact" because there is little indication of any decisionmaking structure nor evidence of ongoing organization where mayor/attorney and others allegedly shared common purpose of harming physician; additionally, no facts are alleged to show how enterprise is separate from parties and racketeering activity engaged in. Manax v McNamara (1987, WD Tex) 660 F Supp 657, affd (1988, CA5 Tex) 842 F2d 808, 15 Media L R 1655. 83. Other entities Real estate business formed by plaintiff was "enterprise" separate from defendants, who ran business while plaintiff was incarcerated and allegedly used illicit means to obtain ownership interests in enterprise. Jacobson v Cooper (1989, CA2 NY) 882 F2d 717. Evidence is sufficient to permit jury to find that "enterprise" existed and that members of enterprise were all linked together by network of contracts, transactions, and payoffs where evidence showed enterprise consisted of defendants, other conspirators, partnerships and corporations which defendants and coconspirators controlled or used for purpose of obtaining unjust enrichment from government contracts for computer services and equipment. United States v Perholtz (1986, DC Dist Col) 657 F Supp 603. RICO action charging defendant's real estate business as enterprise which employed several persons and included partners and corporations sufficiently alleges "enterprise." United States v Weinberg (1987, ED NY) 656 F Supp 1020. Although manager claimed that employee failed to allege sufficient facts to establish that he was involved in Racketeer Influenced and Corrupt Organization Act (RICO), 18 USCS 1961 et seq., enterprise, employee sufficiently alleged that manager, State Compensation Insurance Fund, and attorney associated for common purpose of engaging in course of conduct, that manager was involved in formal, or informal, ongoing organization, and that facts, if proved, provided sufficient evidence that various associates functioned as continuing unit; employee also alleged predicate acts were not isolated activities because actions were part of ongoing pattern of similar acts, which were committed against other employees who they believed could have leaked damaging information and did not assist in cover up; therefore, manager's motion to dismiss on ground that employee had not alleged facts to establish RICO enterprise was denied. Vierria v Cal. Highway Patrol (2009, ED Cal) 644 F Supp 2d 1219.

Unpublished Opinions Unpublished: There was no information in complaint, nor could any be inferred, as to any hierarchy, organization or activities of alleged enterprise, beyond single fraudulent loan transaction; such allegations were necessary to properly allege that enterprise functioned in ongoing manner as unit; conclusory pleading that defendants each played part in perpetrating fraud on lender was not enough to satisfy Racketeer Influenced and Corrupt Organizations Act's requirement of organized, separate enterprise. Ferri v Berkowitz (2009, ED NY) 2009 US Dist LEXIS 77620. 4.Person 84. Generally Political party committee of town is "person" for purpose of RICO claims involving scheme to coerce contribution; proof of participation by every member is not required. Jund v Hempstead (1991, CA2 NY) 941 F2d 1271. Court dismissed driver's claims against village under Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961 et seq., in driver's action against village and 48 of its present and former officials employees, including mayors and two judges, alleging that they created scheme under which they purported to enforce traffic and other laws and collect fines even though village's police power had been transferred to county, because municipality was incapable of forming requisite criminal intent for RICO liability. Wood v Inc. Vill. of Patchogue (2004, ED NY) 311 F Supp 2d 344. Plaintiffs' separately identified each defendant in their amended complaint, and through their factual allegations and information contained in document package, they sufficiently demonstrated how each defendant was integrally involved in establishing trust, subject of this civil action; thus, there could be no serious doubt that defendants met "person" definition contained in 18 USCS 1961(3). Williams v Equity Holding Corp. (2007, ED Va) 498 F Supp 2d 831, motion gr, count dismd, motion to strike gr (2007, ED Va) 245 FRD 240. 85. Corporation Corporation may be a "person" under RICO. Liquid Air Corp. v Rogers (1987, CA7 Ill) 834 F2d 1297, 24 Fed Rules Evid Serv 254, cert den (1989) 492 US 917, 106 L Ed 2d 588, 109 S Ct 3241 and (ovrld in part as stated in CIB Bank v Esmail (2004, ND Ill) 2004 US Dist LEXIS 26817) and (ovrld as stated in Equity Residential v Kendall Risk Mgmt. (2005, ND Ill) 2005 US Dist LEXIS 8273). Corporation can be held liable under 18 USCS 1962(a) when it is actually perpetrator or beneficiary, direct or indirect, of pattern of racketeering activity. B.F. Hirsch, Inc. v Enright Refining Co. (1985, DC NJ) 617 F Supp 49. 86. Governmental unit Republic of the Philippines has standing to assert civil RICO claims, since, as governmental body, it is "person" under 18 USCS 1961(3), and "foreign nature" of Republic does not deprive it of "statutory personhood." Republic of Philippines v Marcos (1988, CA9 Cal) 862 F2d 1355, cert den (1989) 490 US 1035, 104 L Ed 2d 404, 109 S Ct 1933. City is not person for purposes of RICO suit, and therefore discharged police officer's suit for wrongful discharge under RICO may be maintained only against individual police officials, because city is incapable of forming mens rea necessary to perform act of racketeering and cannot be liable for punitive damages, applying same policy considerations of 42 USCS 1983 cases to RICO actions. Massey v Oklahoma City (1986, WD Okla) 643 F Supp 81 (criticized in Fox v Maulding (1997, CA10 Okla) 112 F3d 453, RICO Bus Disp Guide (CCH) P 9263).

United States does not have standing to sue for monetary damages under 18 USCS 1964(c), even though United States technically falls within definition of RICO "person" under 18 USCS 1961(3) and 1964(c) and seeks recovery for damages to its own commercial interests, because damage provision of 1964(c) was closely modeled on that of 15 USCS 15 and legislative history of and case law interpreting 15 indicate intent that "carrot" of treble damages remedy be extended only to private parties as incentive to bring civil RICO suits. United States v Bonanno Organized Crime Family of La Cosa Nostra (1988, ED NY) 683 F Supp 1411, affd (1989, CA2 NY) 879 F2d 20. Civil racketeering claim is not stated under 18 USCS 1961(3), where complaint alleges county committed racketeering, because county is "quasi-municipal" corporation and thus, like municipal corporations, not "person"; such corporations are artificial persons unable to form requisite mens rea. Smallwood v Jefferson County Government (1990, WD Ky) 743 F Supp 502, 54 BNA FEP Cas 1420. Civil RICO claim against U.S. arising out of judge's 1999 alleged misrepresentation of record, as well as claim alleging U.S., acting through bankruptcy court, engaged in pattern of conduct that included, inter alia, money laundering, obstruction of justice, bribery, racketeering, theft, fraud, and misrepresentation, is dismissed, because U.S. is not considered "person" that can be sued under 18 USCS 1961(3), 1962, and 1964. Peia v United States Bankr. Courts (2001, DC Conn) 152 F Supp 2d 226, affd (2003, CA2 Conn) 62 Fed Appx 394, cert den (2003) 540 US 875, 157 L Ed 2d 137, 124 S Ct 223. Unpublished Opinions Unpublished: Patent holder's suit against United States Patent and Trademark Office and Food and Drug Administration, alleging unlawful conspiracies in violation of Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961 et seq., was properly dismissed because these government agencies could not be liable under RICO as United States did not fall within definition of "person" capable of violating RICO under 18 USCS 1961(3). Pieczenik v Domantis (2005, CA FC) 120 Fed Appx 317, reh den, reh, en banc, den (2005, CA FC) 125 Fed Appx 283 and cert den (2005) 546 US 873, 126 S Ct 382, 163 L Ed 2d 168. Unpublished: U.S.'s motion for summary affirmance of trial court's dismissal of plaintiff's Racketeer Influenced and Corrupt Organizations Act (RICO) claims against U.S. and government agencies was granted because established case law under RICO made it clear that agency of U.S. could not commit crime actionable under RICO, so U.S., as government, could not be liable for criminal acts under RICO, and thus, it could not be liable for damages under civil RICO provisions. Wolf v United States (2005, CA FC) 127 Fed Appx 499, cert den (2005) 546 US 853, 126 S Ct 119, 163 L Ed 2d 127, reh den (2005) 546 US 1056, 126 S Ct 720, 163 L Ed 2d 617. 88. Relation to "enterprise" Although solitary entity can not, as matter of law, simultaneously constitute both RICO "person," whose conduct is prohibited, and entire RICO "enterprise," whose affairs are impacted by RICO person, no reason exists why single entity could not be both RICO "person" and one of number of members of RICO "enterprise," as term "person," as defined at 18 USCS 1961(3), includes any individual or entity capable of holding legal or beneficial interest in property. Cullen v Margiotta (1987, CA2 NY) 811 F2d 698, 22 Fed Rules Evid Serv 877, 7 FR Serv 3d 785, cert den (1987) 483 US 1021, 97 L Ed 2d 764, 107 S Ct 3266 and (ovrld as stated in Cruz v Kennedy (1998, SD NY) 1998 US Dist LEXIS 15599) and (ovrld in part as stated in Toys "R" Us, Inc. v Feinberg (1999, CA2 NY) 1999 US App LEXIS 29833) and (criticized in Weston v AmeriBank (1999, WD Mich) 1999 US Dist LEXIS 20287). RICO claims fail against National Bank because bank which was "person" subject to liability cannot also be "enterprise" through which two corporations allegedly

effected fraudulent goals. Satellite Financial Planning Corp. v First Nat'l Bank (1986, DC Del) 646 F Supp 118. 89.--Under 18 USCS 1962(a), (c), or (d) Corporation engaging in racketeering activities which is direct or indirect beneficiary of pattern of racketeering activity can be both "person" and "enterprise" under 18 USCS 1962(a) and (d), but not (c); thus, plaintiffs properly plead that certain defendants as corporations were enterprises under 1962(a) and (d), even if they are same as persons involved as defendants, although such allegations do not support claim under 1962(c). United Energy Owners Committee, Inc. v United States Energy Management Systems, Inc. (1988, CA9 Cal) 837 F2d 356, 10 FR Serv 3d 253 (criticized in Odom v Microsoft Corp. (2004, WD Wash) 2004 US Dist LEXIS 30622). 90.--Particular cases Savings and loan association was proper plaintiff in civil RICO action against its former president, even though savings and loan alleged itself to be "enterprise" whose affairs president conducted through pattern of racketeering activity, since 18 USCS 1964(c) provides that any person injured in his business or property by reason of RICO violation may sue therefor, and 18 USCS 1961(3) defines "person" to include any individual or entity capable of holding a legal or beneficial interest in property. Sun Sav. & Loan Ass'n v Dierdorff (1987, CA9 Cal) 825 F2d 187, 8 FR Serv 3d 808. Group of corporations and individuals charged as RICO enterprise was properly found to exist separate and apart from defendant individual, and it is immaterial to proof of separate enterprise that only one individual was named as defendant, since associated-in-fact enterprise need not be conspiracy, with its members sharing as common objective commission of crime. United States v Feldman (1988, CA9 Cal) 853 F2d 648, cert den (1989) 489 US 1030, 109 S Ct 1164, 103 L Ed 2d 222 and (criticized in Odom v Microsoft Corp. (2007, CA9 Wash) 486 F3d 541). Under RICO, enterprise itself cannot also be person plaintiff charges with conducting illegal enterprise; therefore bank charged with selling plaintiff's defective housing must be dismissed from suit where complaint does not allege that bank conducted any other enterprise harmful to plaintiff. Arzuaga-Collazo v Oriental Federal Sav. Bank (1990, CA1 Puerto Rico) 913 F2d 5. Bank is not liable under 18 USCS 1962(c) and doctrine of respondeat superior for alleged conduct of its employee in RICO action by borrowers who claim bank delivered fraudulent notices overcharging them for interest where bank is alleged "enterprise," because "person" and "enterprise" must be distinct and bank cannot be liable, as "person," for conducting itself as "enterprise." Haroco, Inc. v American Nat'l Bank & Trust Co. (1986, ND Ill) 647 F Supp 1026. Bank is not liable under 18 USCS 1962(c) and doctrine of respondeat superior for alleged conduct of its employee in RICO action by borrowers who claim bank delivered fraudulent notices overcharging them for interest where bank is alleged "enterprise," because "person" and "enterprise" must be distinct and bank cannot be liable, as "person," for conducting itself as "enterprise." Haroco, Inc. v American Nat'l Bank & Trust Co. (1986, ND Ill) 647 F Supp 1026. Bank is not liable under 18 USCS 1962(c) and doctrine of respondeat superior for alleged conduct of its employee in RICO action by borrowers who claim bank delivered fraudulent notices overcharging them for interest where bank is alleged "enterprise," because "person" and "enterprise" must be distinct and bank cannot be liable, as "person," for conducting itself as "enterprise." Haroco, Inc. v American Nat'l Bank & Trust Co. (1986, ND Ill) 647 F Supp 1026. Doctors sufficiently pleaded RICO claim against commercial property owner and real estate agent because by alleging multiple acts of wrongdoing at direction of owner, owner and agent were persons under 18 USCS 1961(3), in that they could pose continuous threat to doctors. Trevino v Pechero (2008, SD Tex) 592 F Supp 2d 939.

92. Interest Proof of civil liability for collection of "unlawful debt" under RICO (18 USCS 1961 et seq.) requires showing that debt was unenforceable because of state or federal laws relating to usury, debt was incurred in connection with business of lending money at usurious rate, usurious rate was at least twice enforceable rate, and that as a result plaintiff was injured in its business or property; thus, loan transaction by savings and loan association alleged to violate laws and regulations addressing only method of loan collection or kind of credit or property that may be given for loan, but not amount of interest that can be charged, does not violate 18 USCS 1962 because such transaction does not violate law relating to usury, and even assuming collection of unlawful debt, claim must fail where there is no allegation that association was in business of making usurious transactions or that it received rate on loan over twice permissible rate. Sundance Land Corp. v Community B.Predicate Acts 93. Generally Because violation of state law was only class A misdemeanor permitting one year maximum sentence, it does not fall within RICO's definition of racketeering activity, which requires that predicate state law violation be punishable by imprisonment for more than one year. United States v Malizia (1983, CA2 NY) 720 F2d 744. CCH Trade Cases P 67924. Where objective of conspiracy is not RICO substantive offense, government must prove that defendant agreed to commission of at least two predicate acts of racketeering, and such acts need not actually occur; defendant need only agree to commission of such acts. United States v Beale (1991, CA11 Fla) 921 F2d 1412, 32 Fed Rules Evid Serv 783, cert den (1991) 502 US 829, 112 S Ct 99, 112 S Ct 100, 116 L Ed 2d 71 and cert den (1991) 502 US 894, 112 S Ct 264, 116 L Ed 2d 217 and decision reached on appeal by (2009, CA11 Fla) 329 Fed Appx 874. RICO proscribes use, as predicate act, of any conduct that would be actionable as securities fraud and, where such claims are unrelated to other predicate acts and share only some participants, claims are insufficient to establish relatedness. Howard v America Online, Inc. (2000, CA9 Cal) 208 F3d 741, 2000 CDOS 2454, 2000 Daily Journal DAR 3307, RICO Bus Disp Guide (CCH) P 9872, cert den (2000) 531 US 828, 121 S Ct 77, 148 L Ed 2d 40. Witness tampering is actionable under 18 USCS 1512 only if it takes place in official proceeding, which is defined in 18 USCS 1515(a)(1) to include only federal proceedings; accordingly, tampering with witness in state judicial proceeding is not predicate act under Racketeer Influenced and Corrupt Organizations Act, 18 USCS 1961-1968. Deck v Engineered Laminates (2003, CA10 Kan) 349 F3d 1253, 20 BNA IER Cas 1138 (criticized in Imperial Capital Bank v Sussex Group, LLC. (2009, WD Okla) 2009 US Dist LEXIS 73116). Civil RICO plaintiffs fail to make out prima facie showing of pattern of racketeering activity where plaintiffs did not prove by preponderance of evidence that defendant managing partner committed at least two federal crimes and that those crimes together formed "pattern" of criminal conduct, since plaintiffs failed to show that defendant committed any of alleged predicate acts. Stainton v Tarantino (1986, ED Pa) 637 F Supp 1051. Government successfully showed that civil RICO defendant committed 2 predicate racketeering acts where government showed defendant's guilty pleas in state court to first-degree coercion and fifth-degree conspiracy, because state-court judgments have collateral estoppel effect in subsequent federal proceeding. United States v Private Sanitation Indus. Ass'n (1992, ED NY) 811 F Supp 808, affd (1993, CA2 NY)

995 F2d 375, RICO Bus Disp Guide (CCH) P 8311. Corporation's 42 USCS 1983 action against several municipalities alleging violations of Racketeer Influenced and Corrupt Organizations Act was dismissed for failure to state cause of action because municipalities could not have formed requisite criminal intent to satisfy predicate offense requirement. Interstate Flagging, Inc. v Town of Darien (2003, DC Conn) 283 F Supp 2d 641. 95. Bribery Generic description of bribery is conduct which is intended, at least by alleged briber, as assault on integrity of public office or official action; test for determining whether charged acts fit into generic category of predicate offense is whether indictment charges type of activity generally known or characterized in proscribed category, namely, any act or threat involving bribery (18 USCS 1961(1) and 1962(c)). United States v Forsythe (1977, CA3 Pa) 560 F2d 1127. "Bribery" within meaning of 18 USCS 1961 is limited to payment given in exchange for exercise of governmental power. United States v Sisk (1979, MD Tenn) 476 F Supp 1061. Mayor's violation of Illinois official misconduct statute in failing to disclose lawyer fee kickback scheme with city prosecutor's law firm as source of income on his statements of economic interest involved solely acts committed to conceal bribery, thus they did not constitute act of bribery under either Illinois or federal law and, as such, could not serve as RICO predicate act; mere filing of false statements concerning mayor's statements of economic interest also did not constitute bribery for RICO purposes. United States v Genova (2002, ND Ill) 187 F Supp 2d 1015, affd in part and revd in part, remanded, vacated, in part (2003, CA7 Ill) 333 F3d 750, reh den (2003, CA7 Ill) 2003 US App LEXIS 16935. 96.--State law Any state statute proscribing conduct which could be generically defined as bribery can be basis for predicate act under 18 USCS 1961, and state statute proscribing unlawful acceptance of payment knowing that it was given to reward past or future favors constitutes statute proscribing bribery under RICO despite fact that state statute does not require corrupt intent or agreement to perform quid pro quo, and despite evidence of separate state statute explicitly prohibiting "bribery"; furthermore, parenthetical clause "relating to bribery" in 18 USCS 1961(1)(B) describes 18 USCS 201 but does not limit incorporation of acts indictable under that section as RICO predicate acts. United States v Garner (1987, CA7 Ill) 837 F2d 1404, 24 Fed Rules Evid Serv 476, cert den (1988) 486 US 1035, 100 L Ed 2d 608, 108 S Ct 2022 and cert den (1988) 487 US 1240, 101 L Ed 2d 945, 108 S Ct 2914 and cert den (1988) 488 US 898, 102 L Ed 2d 232, 109 S Ct 244. District Court did not commit reversible error by instructing jury in connection with conspiracy count under RICO (18 USCS 1961 et seq.) on definition and elements of Florida bribery statute but refusing to deliver additional instruction setting out specific elements required to prove state violation when defendant is public official accused of accepting bribe rather than person charged with offering bribe, since references to state law only serve definitional purpose of generally identifying kind of activity made illegal by federal statute. United States v Casamayor (1988, CA11 Fla) 837 F2d 1509, 24 Fed Rules Evid Serv 1001, cert den (1989) 488 US 1017, 102 L Ed 2d 803, 109 S Ct 813. State commercial bribery statute, which prohibits enumerated classes of people from knowingly violating or agreeing to violate duty of fidelity, and requires

proof that accused accepted benefit as consideration for violating such duty, provides sufficient notice that conduct contemplated by alleged conspiracy, involving agreement to accept money in exchange for awarding public service contracts to certain suppliers, was prohibited so as to serve as predicate acts for RICO prosecution. United States v Gaudreau (1988, CA10 Colo) 860 F2d 357. In order to find defendant guilty of underlying act of bribery as proscribed by state statute, it was not necessary for jury to determine that contractors who paid money to him actually received benefit; it was only necessary to prove that defendant was public employee, that contractors paid money to him with intent of influencing act related to his public employment, and that he accepted money knowing that contractors paid it to him in order to influence performance by him of any act relating to his public employment; accordingly District Court's instruction to jury accurately reflected elements of state bribery offense, and District Court did not err by failing to direct verdict of acquittal on 18 USCS 1962(c) racketeering charge. United States v Hocking (1988, CA7 Ill) 860 F2d 769, reh, en banc, den (1988, CA7) 1988 US App LEXIS 17682. County employees' allegations that criminal proceedings were conducted against them with no legitimate law enforcement purpose by county employees who were members of particular political party at behest of other county employees who were members of party through **offers of benefit to political careers and threats to careers are sufficient bribery allegations under RICO (18 USCS 1961 et seq.) since they constitute conduct proscribed under state law. Rose v Bartle (1989, CA3 Pa) 871 F2d 331, 13 FR Serv 3d 430 (criticized in Goren v New Vision Int'l (1998, CA7 Ill) 156 F3d 721, RICO Bus Disp Guide (CCH) P 9555) and (criticized in Montgomery v De Simone (1998, CA3 NJ) 159 F3d 120) and (criticized in Northern Ind. Gun & Outdoor Shows v City of S. Bend (1998, CA7 Ind) 163 F3d 449). 720 Ill. Comp. Stat. 5/33-3(c) does not read like definition of bribery, and therefore, may not be used as predicate offense under Racketeer Influenced and Corrupt Organizations Act, 18 USCS 1961 et seq. United States v Genova (2003, CA7 Ill) 333 F3d 750, reh den (2003, CA7 Ill) 2003 US App LEXIS 16935. Indictment properly alleges 19 separate predicate acts of racketeering against judge under 18 USCS 1962(c) where complaint alleges (1) one predicate act consisting of instructing attorney to lie to law enforcement officials about bribery scheme and (2) 18 other specific acts of bribery and official misconduct that track language of applicable state statutes; additional act is improperly alleged and thus dismissed where act is "catchall" offense spanning 3 years and multiple acts of bribery by unnamed attorney on unnamed cases. United States v McDonnell (1988, ND Ill) 696 F Supp 356. Former owner asserted sufficient predicate acts under 18 USCS 1961(1) to permit claims under 18 USCS 1962(c) against certain village officials to survive summary judgment; claim that officials violated 720 ILCS 5/33-3(d) of Illinois Official Misconduct Statute by taking part in kickback scheme related to bribery and could constitute Racketeer Influenced and Corrupt Organizations Act predicate act; owner also alleged acts of mail fraud and honest services fraud under 18 USCS 1341 and 1346. LaFlamboy v Landek (2008, ND Ill) 2008 US Dist LEXIS 93368, corrected (2008, ND Ill) 587 F Supp 2d 914. Former owner of sports facility could assert Racketeer Influenced and Corrupt Organizations Act (RICO) claims against village officials to extent that claims were based on alleged violation of 720 ILCS 5/33-3(d), which sounded in bribery; however, alleged violations of 33-3(c) did not relate to bribery and could not constitute predicate acts under 18 USCS 1961(1) of RICO. LaFlamboy v Landek (2008, ND Ill) 587 F Supp 2d 914. 97. Conspiracy

Under Racketeer Influenced and Corrupt Organizations Act (RICO) (18 USCS 1961 et seq.)--which (1) makes it unlawful to engage in certain activities through pattern of racketeering (18 USCS 1962(a)-(c)), (2) makes it unlawful for person to conspire to violate any of provisions of 1962(a)-(c) (18 USCS 1962(d)), (3) states that cause of action is available to anyone injured by reason of violation of 1962 (18 USCS 1964(c)), and (4) contains exhaustive list of acts of "racketeering" (18 USCS 1961(1))--person injured by overt act done in furtherance of RICO conspiracy does not have cause of action under 1964(c) where overt act is not act of racketeering or otherwise unlawful under statute, as (1) obvious source in common law for combined meaning of 1964(c) and 1962(d) is law of civil conspiracy; (2) principle that plaintiff could bring suit for civil conspiracy only if he or she had been injured by act that was itself tortious was so widely accepted at time of RICO's enactment in 1970 as to be incorporated in common understanding of "civil conspiracy"; (3) when Congress established civil cause of action in RICO for person injured by reason of conspiracy, Congress meant to adopt these well-established common-law civil conspiracy principles; (4) consistency with common law requires that RICO conspiracy plaintiff allege injury from act that is analogous to act of tortious character; and (5) this interpretation of 1962(d) does not render provision meaningless or superfluous because, under such interpretation, plaintiff could, through 1964(c) suit for violation of 1962(d), sue coconspirators who might not themselves have violated one of substantive provisions of 1962. Beck v Prupis (2000) 529 US 494, 120 S Ct 1608, 146 L Ed 2d 561, 2000 CDOS 3177, 2000 Daily Journal DAR 4285, 16 BNA IER Cas 271, RICO Bus Disp Guide (CCH) P 9869, 2000 Colo J C A R 2188, 13 FLW Fed S 261. Series of conspiracies and failed attempts constitute pattern of racketeering activity within meaning of 18 USCS 1961 even if no racketeering offense is completed. United States v Brooklier (1982, CA9 Cal) 685 F2d 1208, 11 Fed Rules Evid Serv 703, cert den (1983) 459 US 1206, 103 S Ct 1194, 103 S Ct 1195, 75 L Ed 2d 439 and (criticized in United States v Rudaj (2005, SD NY) 2005 US Dist LEXIS 23150) Conspiracy to violate state law constitutes act of racketeering; racketeering activity includes conspiracy to commit murder in violation of state law; gambling conspiracy cannot serve as act of "racketeering activity" where substantive offense is not indictable under 18 USCS 1955. United States v Ruggiero (1984, CA2 NY) 726 F2d 913, 14 Fed Rules Evid Serv 1484, cert den (1984) 469 US 831, 105 S Ct 118, 83 L Ed 2d 60 and (criticized in United States v Marmolejo (1996, CA5 Tex) 86 F3d 404) and (criticized in Salinas v United States (1997) 522 US 52, 118 S Ct 469, 139 L Ed 2d 352, 97 CDOS 8996, 97 Daily Journal DAR 14512, RICO Bus Disp Guide (CCH) P 9382, 1997 Colo J C A R 3054, 1997 Colo J C A R 3209, 11 FLW Fed S 251) and (ovrld in part on other grounds as stated in United States v Battle (2006, SD Fla) 473 F Supp 2d 1185, 20 FLW Fed D 395). Conspiracy to commit racketeering offense listed in 18 USCS 1961(1)(A) may serve as predicate act required to establish violation of 18 USCS 1962(c). United States v Manzella (1986, CA5 La) 782 F2d 533, 20 Fed Rules Evid Serv 196, cert den (1986) 476 US 1123, 90 L Ed 2d 672, 106 S Ct 1991 and reh den, clarified (1986, CA5 La) 790 F2d 1260 and cert den (1986) 479 US 961, 93 L Ed 2d 403, 107 S Ct 457. District court erred in sentencing defendant based on single "underlying racketeering offense" when jury had to have found that defendant agreed to commit at least two predicate acts under Racketeer Influenced and Corrupt Organizations Act, and case was remanded for resentencing. United States v Corrado (2002, CA6 Mich) 304 F3d 593, 2002 FED App 309P, reh, en banc, den (2002, CA6) 2002 US App LEXIS 23969 and cert den (2003) 537 US 1238, 155 L Ed 2d 207, 123 S Ct 1366. Conspiracy can properly be charged as predicate act of racketeering under 18 USCS 1962. United States v Napolitano (1982, SD NY) 564 F Supp 951.

Indictment is sufficient that alleges that conspiracies can be charged as racketeering acts in RICO conspiracy and are proper predicates under RICO statute, regardless of organized crime family members' argument that Hobbs Act conspiracies to obstruct commerce by robbery or extortion cannot be charged as racketeering acts in RICO conspiracy indictment, because Hobbs Act conspiracy predicate falls under 18 USCS 1961(1)(B), which defines racketeering activity to include "any act which is indictable under 18 USCS 1951." United States v Santoro (1986, ED NY) 647 F Supp 153, revd on other grounds, remanded sub nom United States v Davidoff (1988, CA2 NY) 845 F2d 1151 and affd without op (1989, CA2 NY) 880 F2d 1319. Individuals' motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(2), (6), action for alleged violations of Racketeering Influenced and Corrupt Organizations Act (RICO), 18 USCS 1962(c), was denied because investors' complaint sufficiently alleged pattern or racketeering activity involving predicate acts of money laundering to maintain 18 USCS 1962(c) action; further, case warranted discovery and subsequent leave to amend with respect to mail and wire fraud allegations that failed to meet specificity requirements of Fed. R. Civ. P. 9(b) despite fact that investors' 18 USCS 1962(c) claim could not have been premised on alleged predicate acts of securities fraud under 18 USCS 1964(c), since complaint did not allege that either individual had ever been convicted of securities fraud, or on conspiracy since conspiracy did not constitute racketeering activity as defined by 18 USCS 1961(1). Uviles v RYS Int'l Corp. (2006, DC Puerto Rico) 443 F Supp 2d 233. 98. Contract fraud Congress intended federal penalties under RICO (18 USCS 1961 et seq.) to combat extended, widespread, or particularly dangerous pattern of racketeering, and heightened RICO civil and criminal penalties are reserved for schemes whose scope and persistence set them above routine; thus, ordinary business contract or fraud disputes will not lightly be transformed into federal RICO claims. Flip Mortgage Corp. v McElhone (1988, CA4 Va) 841 F2d 531. Pattern of racketeering activity is not properly alleged under 18 USCS 1961(1), because claim appears to be one of ordinary common law contract fraud. Fleet Credit Corp. v Sion (1988, DC RI) 699 F Supp 368, revd on other grounds, remanded (1990, CA1 RI) 893 F2d 441. 101. Extortion Direct threats to property or employees of bus company alleged to violate state laws punishing extortion, including threats against property and threats of bodily harm, qualify as offenses listed in definition of racketeering activity under 18 USCS 1961(1). Yellow Bus Lines v Drivers, Chauffeurs & Helpers Local Union 639 (1988, App DC) 268 US App DC 103, 839 F2d 782, 127 BNA LRRM 2607, 108 CCH LC P 10311, 10 FR Serv 3d 423, reh den, en banc (1988, App DC) 108 CCH LC P 10439 and cert den (1988) 488 US 926, 109 S Ct 309, 102 L Ed 2d 328, 129 BNA LRRM 2672, 110 CCH LC P 10836 and vacated, remanded (1989) 492 US 914, 109 S Ct 3235, 106 L Ed 2d 583, 131 BNA LRRM 3072, 132 BNA LRRM 2160, 112 CCH LC P 11265. Demand for 10-percent interest in newspaper by attorney representing bank that called in newspaper's loan as retribution for newspaper's failure to cede control to bank loan officer and another person is violation of RICO Act and illegal interference with commerce by violence or threats, regardless of fact that demand was later reduced to only 5 percent interest. Joseph v Algemene Bank Nederland, N.V. (1984, WD Pa) 592 F Supp 141. Extortion allegation alleging threat communicated through conduct can be considered as predicate act for civil RICO claim where under state law threat can be as effectively communicated through conduct as by language. Tryco Trucking Co. v Belk Store Services, Inc. (1985, WD NC) 608 F Supp 812.

Debtors failed to prove predicate acts of fraud and extortion in action against bank where debtors alleged bank misrepresented prime rate and extorted new letter of credit agreement, because bank never made affirmative representation about its prime rate and had no duty to do so, and bank did not pressure or threaten to induce economic loss if debtors did not sign new agreement. Pappas v NCNB Nat'l Bank (1987, MD NC) 653 F Supp 699. Former deputy sheriff's RICO claims against prosecutors and other government officials are dismissed where deputy alleged officials demanded he raise money for political party, because demand to raise money, "macing" under state law, is not racketeering activity. Rose v Bartle (1988, ED Pa) 692 F Supp 521, affd in part and revd in part on other grounds, vacated, in part on other grounds, remanded (1989, CA3 Pa) 871 F2d 331, 13 FR Serv 3d 430 (criticized in Goren v New Vision Int'l (1998, CA7 Ill) 156 F3d 721, RICO Bus Disp Guide (CCH) P 9555) and (criticized in Montgomery v De Simone (1998, CA3 NJ) 159 F3d 120) and (criticized in Northern Ind. Gun & Outdoor Shows v City of S. Bend (1998, CA7 Ind) 163 F3d 449). **Predicate acts of racketeering are alleged under 18 USCS 1961(1), where complaint alleges landlord caused tenants to be billed for amounts not owed and then attempted to coerce payment or lease extensions on terms more favorable to landlord through vandalism, interference with tenants' ingress and egress, and threats to retaliate, because actions can be viewed as extortionate. Jordan v Berman (1991, ED Pa) 758 F Supp 269.

**Support for extortion predicate for billing for amounts that are not owed and then attempting to coerce payment through the threat of trustee sale.
Defendant's motion to dismiss or strike RICO charge was denied when there was no basis for dismissing money laundering or extortion charges against defendant, and these readily sufficed as RICO predicate acts. United States v Warner (2003, ND Ill) 292 F Supp 2d 1051. Where property owner alleged that city officials engaged in common scheme to force owners to sell their property, which would be acquired for development, property owner sufficiently alleged factual basis for predicate acts of extortion under Hobbs Act, 18 USCS 1951, based on alleged attempts to extort property; defendants' argument that fraud and conspiracy allegations were not pleaded with sufficient particularity was rejected because property owner did not allege conspiracy and alleged predicate acts involved extortion, not fraud; however, claim was dismissed for failure to allege pattern of racketeering activity. Ferluga v Eickhoff (2006, DC Kan) 408 F Supp 2d 1153.

105. Litigation threat In plaintiff's action alleging that police officers and others were liable under civil provisions of Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961-1968, because they fabricated evidence against him to obtain false conviction, plaintiff had standing to bring action because (1) he sufficiently alleged injury to "business or property" within meaning of 18 USCS 1964(c) where harms that he alleged--intentional interference with contract and interference with prospective business relations--were established torts under state law and where his claimed financial loss was that he could not fulfill his employment contract or pursue employment opportunities while he was unjustly incarcerated; and (2) plaintiff properly alleged that his injuries were "by reason of violation of 18 USCS 1962" because his complaint tracked language of 18 USCS 1962, he alleged that police department and various subdivisions were "enterprises"

within meaning of 18 USCS 1961(4), and he alleged acts that seemed to fall within definition of "racketeering activity," pursuant to 1961(1), and seem to form "pattern," pursuant to 1961(5). Diaz v Gates (2005, CA9 Cal) 420 F3d 897 (criticized in Evans v City of Chicago (2006, CA7 Ill) 434 F3d 916) and cert den, motion gr (2006) 546 US 1131, 126 S Ct 1069, 163 L Ed 2d 928, reh den (2006) 546 US 1226, 126 S Ct 1459, 164 L Ed 2d 153 and (criticized in Cannon v Burge (2007, ND Ill) 2007 US Dist LEXIS 57650). Neither threat of litigation nor use of mails in ordinary course of business are criminal acts which would constitute predicate acts for RICO purposes. American Nursing Care, Inc. v Leisure (1984, ND Ohio) 609 F Supp 419, CCH Fed Secur L Rep P 91978 (criticized in Stanich v Travelers Indem. Co. (2008, ND Ohio) 249 FRD 506). 106. Mail or wire fraud, generally Under 18 USCS 1961(1)(B), racketeering activity is any act indictable under mail fraud statute; "scheme to defraud" is not "act" indictable under mail fraud statute, for though offense of mail fraud has genesis in scheme to defraud, very gist of crime is use of mails in executing scheme; for this reason each mailing in furtherance of scheme to defraud is separate offense under mail fraud statute even if there is but one scheme involved; defendant, therefore, has engaged in five acts of "racketeering activity" as defined in 18 USCS 1961(1)(B) because defendant committed five separate acts of mail fraud. United States v Weatherspoon (1978, CA7 Ill) 581 F2d 595 (criticized in Truck Ins. Exch. v Kafka (1995, ND Ill) RICO Bus Disp Guide (CCH) P 8873). Telephone call and act of wiring money are 2 separate activities which constitute pattern of racketeering activity as defined in 18 USCS 1961 where such is part of ongoing scheme to defraud and extract further cash from person. United States v Morelli (1981, CA6 Mich) 643 F2d 402, cert den (1981) 453 US 912, 69 L Ed 2d 994, 101 S Ct 3143.

"Racketeering activity" is stated at 18 USCS 1961(1)(B) to specifically encompass any act which is indictable under 18 USCS 1341, relating to mail fraud, and thus where evidence was sufficient to convict defendants on four separate counts of mail fraud, it is obvious that defendants committed series of acts indictable under 18 USCS 1341 and participated in pattern of racketeering activity. United States v Garver (1987, CA7 Ind) 809 F2d 1291, 22 Fed Rules Evid Serv 464.

Government may show that two predicate acts constitute pattern of racketeering activity under 18 USCS 1962(c) although they are pleaded in only one count, but two acts of racketeering activity were not shown by allegations that two phone calls made on same day constituted two violations of statute prohibiting use of communication facility in furtherance of felony, since defendant neither placed nor answered second phone call, but was merely mentioned during phone conversation. United States v Jennings (1988, CA6 Ohio) 842 F2d 159. Fraudulent intent is necessary element to establishing mail or wire fraud as predicate acts of civil RICO action. Blu-J, Inc. v Kemper C.P.A. Group (1990, CA11 Fla) 916 F2d 637, 31 Fed Rules Evid Serv 653. Wire and mail fraud claims fail as predicate acts for RICO cause of action where plaintiffs failed to produce evidence that defendant had requisite specific intent to deceive or defraud, that he commingled funds, or that he used mails or

interstate wire communications. Stitt v Williams (1990, CA9 Cal) 919 F2d 516, CCH Fed Secur L Rep P 95647, 18 FR Serv 3d 1320. Each of 14 separate mailings alleged in mail fraud indictment is separate racketeering offense, and 2 or more such mailings can qualify as pattern of racketeering. United States v Beatty (1984, ED NY) 587 F Supp 1325. False statements made in correspondence mailed between attorneys in context of pending litigation which is outside scope of mail fraud statute (18 USCS 1341) may not be predicate for civil RICO action under 18 USCS 1964. Spiegel v Continental Illinois Nat'l Bank (1985, ND Ill) 609 F Supp 1083, affd (1986, CA7 Ill) 790 F2d 638, 4 FR Serv 3d 1190, cert den (1986) 479 US 987, 93 L Ed 2d 582, 107 S Ct 579. Distinguished by U.S. v. Phillip Morris USA Inc. 566 F.3d 1095 Whatever the merit of that proposition, it has nothing to do with the question before us. Altria makes a very different claijm-that mailings sent in furtherance of a separately-proven scheme to defraud somehow fall outside the mail fraud stqatutes coverage because they are drafted and physically sent by lawyers who themselves have no fraudulent intent. This claim is without merit. Nothing in the mail fraud statute requires a mailing to be fraudulent at all, as long as the mailing is in the furtherance of a fraudulent scheme. Under 18 USCS 1961 et seq. mailing must be "in furtherance of the scheme," meaning it must be at least "incidental to an essential part of the scheme," and mailings, such as regular, accurate, and truthful reports of transactions, which conflict with purposes of scheme do not meet this test; under 1964, use of telephone constitutes wire fraud if use is for "purpose of executing" scheme to defraud, or at least "in furtherance of the scheme." Evanston Bank v ContiCommodity Services, Inc. (1985, ND Ill) 623 F Supp 1014.

(instructive on what are state law predicate offenses)Substantive civil RICO and RICO conspiracy claims survive but alleged violation of New York's prohibition on schemes to defraud does not constitute RICO predicate act, because plain language of 18 USCS 1961(1)(A) does not include generic fraud offenses prohibited by state statute. State Wide Photocopy, Corp. v Tokai Fin. Servs. (1995, SD NY) 909 F Supp 137, RICO Bus Disp Guide (CCH) P 8889.

Shareholder alleged that corporate officers and directors engaged in pattern of racketeering conduct in alleged looting scheme, and other practices, including more than two predicate acts of mail fraud, consisting of payments to insiders, and at least one predicate act of obstruction of justice committed by one individual defendant in allegedly making false statements to instant court in related salvage action; shareholder also alleged that corporation and its shareholders were injured by Racketeering Influenced and Corrupt Organizations Act (RICO) violation because mail fraud was being used to loot company and misrepresentation to court thwarted court's administration of salvor rights and its ability to act as guardian to ensure artifacts would be properly handled; accordingly, RICO claim was close enough to what was required that it could not be said to be "wholly insubstantial and immaterial," and it was at least arguable and nonfrivolous, even if shareholder ultimately could not prevail on merits; thus corporate officers and directors could not defeat service of process under RICO's nationwide service of process provisions. D'Addario v Geller (2003, ED Va) 264 F Supp 2d 367, subsequent app, remanded (2005, CA4 Va) 129 Fed Appx 1, magistrate's recommendation (2005, ED Va) 2005 US Dist LEXIS 37065.

Non-disclosure of material fact by itself is insufficient to establish fraudulent intent under Racketeer Influenced and Corrupt Organizations Act, 18 USCS 1961 et seq. Waddell & Reed Fin., Inc. v Torchmark Corp. (2004, DC Kan) 223 FRD 566, findings of fact/conclusions of law, judgment entered (2004, DC Kan) 337 F Supp 2d 1243.

Defendant's indictment for violation of Racketeer Influenced and Corrupt Organizations Act (RICO) was not subject to dismissal based on defendant's argument that honest services fraud under 18 USCS 1346 was not RICO predicate act; **section 1346 effectively operates as "definitional clause" for mail and wire fraud violations under 18 USCS 1341 and 1343, and 18 USCS 1961(1) identifies mail and wire fraud statutes as predicate acts. United States v Black (2006, ND Ill) 469 F Supp 2d 513. Reliance is not requirement in order to demonstrate mail fraud (or, by logical extension, wire fraud) under Racketeer Influenced and Corrupt Organization Act. AMA v United Healthcare Corp. (2008, SD NY) 588 F Supp 2d 432. Investors' claims under Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961 et seq., were dismissed where there was no indication as to who were proper RICO defendants, what exactly was RICO enterprise, and predicate acts alleged were generic violations of mail and wire fraud statutes; RICO plaintiff had to state time, place and content of alleged mail and wire communications perpetrating fraud. Smith v Jenkins (2009, DC Mass) 626 F Supp 2d 155.

107.--Aiding and abetting Aiding and predicate act is not itself under 18 USCS (1985, ED NY) abetting mail fraud is indictable under 18 USCS 1341, and hence is under 18 USCS 1961(1)(b), although conspiracy to commit mail fraud indictable under 18 USCS 1341, and so is not itself predicate act 1961(1)(b). Fireman's Fund Ins. Co. v Plaza Oldsmobile, Ltd. 600 F Supp 1452.

108.--Intrastate communication Purely intrastate communication is beyond reach of wire-fraud statute and cannot therefore constitute RICO predicate act; thus, RICO claim must be dismissed, where 2 phone calls described in complaint were made between telephones within one city and there was no allegation that interstate communications occurred in connection with issuance of securities. Smith v Ayres (1988, CA5 Tex) 845 F2d 1360, CCH Fed Secur L Rep P 93784, 11 FR Serv 3d 580.

109.--Specificity of pleadings Civil RICO complaint which alleges mail fraud as predicate offense but does not charge that defendant made any representation to plaintiff known at time to be false falls short of specificity requirements for pleading of fraud. Flowers v Continental Grain Co., Wayne Poultry Div. (1985, CA8 Ark) 775 F2d 1051. Rule requiring party to allege fraud with particularity requires specificity in pleading RICO predicate acts of mail and wire fraud, but dismissal should not be automatic once District Court determines that rule was not satisfied; if, for

example, it appears likely from specific allegations that defendant used interstate mail or telecommunications facilities and particular information as to such use is likely in defendant's exclusive control, court should make second determination whether claim as presented warrants allowance of discovery and, if so, should thereafter provide opportunity to amend defective complaint. New England Data Services, Inc. v Becher (1987, CA1 RI) 829 F2d 286, 9 FR Serv 3d 312.

Civil RICO actions establishing fraud must be pleaded with greater particularity than other pleadings, since FRCP 9(b) requires detailed allegations of that offense, and allegations regarding mail and wire fraud that did not indicate identity of speakers who made certain representations, or of persons who received information, were insufficient to meet particularity requirement. Saporito v Combustion Eng'g (1988, CA3 NJ) 843 F2d 666, 9 EBC 2623, vacated, remanded (1989) 489 US 1049, 109 S Ct 1306, 103 L Ed 2d 576, 10 EBC 2000 and (Overruled as stated in Leuthner v Blue Cross & Blue Shield of Northeastern Pa. (2006, CA3 Pa) 454 F3d 120, 38 EBC 1449).

Allegations forming basis of RICO claim that correspondence and other communications concerning particular scheme took place through means or instrumentalities of interstate commerce, including without limitation, the mails, together with affidavit showing that defendants corresponded by mail with investors with regard to scheme, sufficiently plead mail fraud and satisfy Rule 9(b) of FRCP requiring fraud to be pleaded with particularity. Durham v Business Management Associates (1988, CA11 Ala) 847 F2d 1505, CCH Fed Secur L Rep P 93808, 11 FR Serv 3d 713 (criticized in United States ex rel. Wilkins v North Am. Constr. Corp. (2000, SD Tex) 101 F Supp 2d 500). Pleadings under 18 USCS 1964 must be sufficiently particular to show indictability of alleged offender, since RICO (18 USCS 1961 et seq.) statute is based upon criminality, making plaintiff's complaint wholly inadequate where allegations of mail and wire fraud did not specify dates or contents of alleged mail and wire transmissions, and otherwise did not show with sufficient particularity indictability of defendants. Grant v Union Bank (1986, DC Utah) 629 F Supp 570. Amended complaint sufficiently pleads elements of mail and wire fraud RICO claim against individual defendant, regardless of whether or not plaintiff could charge civil fraud on these facts, where complaint alleges in great detail that defendant knowingly used mails and wires to obtain financing, to send contracts and checks, and to distribute proceeds of schemes to defraud plaintiff of real estate opportunities, because allegations set forth all elements necessary under 18 USCS 1341 and 1343 with particularity required by Rule 9(b). GLM Corp. v Klein (1988, SD NY) 684 F Supp 1242.

Minority shareholders' mail and wire fraud claims under 18 USCS 1961 et seq. against corporate entities and executive who created them were facially insufficient as they gave insufficient details of who sent allegedly fraudulent communications, how and when they were sent, who received them, or how they furthered fraudulent scheme, nor were predicate acts meeting pattern requirement of Racketeer Influenced and Corrupt Organizations Act, 18 USCS 1961 et seq., pled with particularity. Kirwin v Price Communs. Corp. (2003, MD Ala) 274 F Supp 2d 1242, CCH Fed Secur L Rep P 92490, affd in part and revd in part (2004, CA11 Ala) 391 F3d 1323, 18 FLW Fed C 67 (questioned in criticized in United States v Gwinn (2008, SD W Va) 2008 US Dist LEXIS 26361).

Consumers who brought action alleging violations of Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961, by companies and individuals who sold debt management plans met pleading specificity requirements for predicate acts of mail and wire fraud because allegations gave specific or approximate date of communication, name of defendant or defendant's employee communicating with plaintiff, and described in some detail contents of communication. Baker v Family Credit Counseling Corp. (2006, ED Pa) 440 F Supp 2d 392. Former client failed to state claim against defendants, including attorney who represented client in employment contract negotiations, under 18 USCS 1962(b) or (c), as client did not adequately allege predicate acts of mail fraud, wire fraud, or money laundering under 18 USCS 1341, 1343, or 1956(a)(1); alleged mailings and wirings either did not further alleged scheme or were not pleaded with sufficient particularity; defendants' alleged failure to register under Illinois Private Employment Agency Act would have been misdemeanor under 225 ILCS 515/1 and therefore could not be basis for money laundering violation. Meier v Musburger (2008, ND Ill) 2008 US Dist LEXIS 98470, corrected (2008, ND Ill) 588 F Supp 2d 883. Plaintiff failed to allege fraud with particularity as required for Racketeer Influenced and Corrupt Organizations Act (RICO), 18 USCS 1961 et seq., claim predicated on mail fraud and failed to cite any specific incidents of suspected cookie-stuffing activity by any defendant in order to establish pattern of activity. eBay Inc. v Digital Point Solutions, Inc. (2009, ND Cal) 608 F Supp 2d 1156.

110.--Particular cases District Court did not err in denying defendant's motion to dismiss money laundering counts on ground that money laundering statute (18 USCS 1957) requires money to have been derived from "specified unlawful activity" and that this phrase does not include offense of wire fraud with which he was charged; 18 USCS 1961 specifically lists wire fraud as "specified unlawful activity" within meaning of money laundering statute. United States v Hare (1995, CA8 Mo) 49 F3d 447, 41 Fed Rules Evid Serv 1009, reh den (1995, CA8 Mo) 1995 US App LEXIS 7619 and cert den (1995) 516 US 879, 133 L Ed 2d 143, 116 S Ct 211 and (criticized in United States v Stein (2005, ED Pa) 2005 US Dist LEXIS 11141). Complaint properly states predicate offense for RICO claim where bond buyers allege conspiracy to commit fraud, commission of fraud by use of telephone and mail, and intent to commit fraud, because even though no specifics were alleged about individual telephone or mail communications, complaint sufficiently apprised defendants of predicate offense of mail fraud which is basis of civil RICO claim. Kronfeld v First Jersey Nat'l Bank (1986, DC NJ) 638 F Supp 1454, CCH Fed Secur L Rep P 92898 (criticized in United States ex rel. Atkinson v Pa. Shipbuilding Co. (2000, ED Pa) 2000 US Dist LEXIS 12081). Allegations by automobile manufacturer against dealer, charging check-kiting scheme and bankruptcy fraud, state sufficient predicate acts under 18 USCS 1343 and RICO. Stamps v Ford Motor Co. (1986, ND Ga) 650 F Supp 390. University has sufficiently alleged at least two predicate acts of racketeering activity where (1) university alleged that defendants unlawfully used mail to send false and fraudulent bids, invoices and bills in violation of 18 USCS 1341 and (2) university alleged defendants violated Travel Act (18 USCS 1952) by placing false and fraudulent invoices in mail depositories. Temple University v Salla Bros., Inc. (1986, ED Pa) 656 F Supp 97.

Civil RICO counterclaim is dismissed with prejudice after 2 amendments to attempt to state claim, where alleged predicate acts of mail and wire fraud are insufficiently pled under Rule 9(b), since particular use of wires to further or conceal anticompetitive acts is not specified, and alleged obstruction of Bureau of Alcohol, Tobacco and Firearms investigation by destroying or concealing documents lacks allegation of bribery necessary to plead predicate act of 18 USCS 1510 violation, because remaining, doubtful allegation of money-laundering in violation of 18 USCS 1956, which probably did not become effective until after alleged criminal activity took place, is insufficient to constitute "pattern" of racketeering activity required by 18 USCS 1961(5). Pearlstine Distributors, Inc. v Freixenet USA, Inc. (1988, DC SC) 678 F Supp 133. Wire fraud claim by plaintiffs, who alleged they were defrauded with regard to loans to and investments in defendant corporation, was insufficient to serve as predicate act under RICO Act because plaintiffs did not allege that any wire communications occurred in interstate commerce; all parties were residents of state. Defazio v Wallis (2007, ED NY) 500 F Supp 2d 197. In action in which plaintiffs, successors of subsidiaries of parent company, asserted claims against defendants, banks and accounting firms, for aiding and abetting fraud by parent company insiders and violating federal and New Jersey Racketeer Influenced and Corrupt Organizations Acts based on predicate acts of mail and wire fraud, plaintiffs failed to adequately plead proximate cause because even if defendants helped to conceal parent company's true financial condition plaintiffs did not adequately allege that it was foreseeable that proceeds paid to subsidiary as part of sale-leaseback transaction would be looted by parent company insiders; plaintiffs' allegation that accounting firm had knowledge of insiders' fraud did not satisfy Fed. R. Civ. P. 9(b) because plaintiffs did not allege that accounting firm stood to benefit from aiding insiders' fraud and allegations that accounting firm failed to confirm that parent company would pay reimbursement credits did not raise inference that firm recklessly disregarded substantial possibility that parent company was being looted. In re Parmalat Sec. Litig. (2007, SD NY) 501 F Supp 2d 560.

111.--Financial institutions Plaintiffs' amended complaint in civil RICO action is sufficiently detailed to satisfy particularity requirement of FRCP, Rule 9(b), purpose of which is to provide defendant with notice of substance of plaintiff's claim in order that defendant may prepare responsive pleading, where fraud count specifies parties and participants to alleged fraud, representations made, nature in which statements are alleged to be misleading or false, time, place, and content of representations, fraudulent scheme, fraudulent intent of defendants, reliance on fraud, and injury resulting from fraud, and where plaintiffs also identified fraudulent loan documents and attached copies of them to complaint, although plaintiffs omitted identities of borrowers who received sub-prime loans, which information was in hands of the defendant. Michaels Bldg. Co. v Ameritrust Co., N.A. (1988, CA6 Ohio) 848 F2d 674, 1988-1 CCH Trade Cases P 68013. Borrowers failed to show that lenders violated Racketeer Influenced and Corrupt Organizations Act, 18 USCS 1961, based on allegedly false and misleading representations made to induce them to convert their fixed rate home mortgage into adjustable rate mortgage because borrowers were unable to show justifiable or reasonable reliance to support predicate act of wire or mail fraud as to any of lenders' representations since borrowers, who had refinanced their home 12 times in 28 years, were knowledgeable and sophisticated regarding loan transactions. Biggs v

Eaglewood Mortg. LLC (2008, DC Md) 582 F Supp 2d 707, affirmed on other grounds by (2009, CA4 Md) 353 Fed Appx 864. Unpublished Opinions Unpublished: Bank customer's Racketeer Influenced and Corrupt Organizations Act (RICO) claims were properly dismissed because antitrust violations could not be basis of RICO claim since they were not on list of predicate acts in 18 USCS 1961(1); customer failed to state bank fraud claim because he alleged bank was perpetrator of fraud not victim; customer's mail fraud claim failed because he did not allege that defendants misrepresented any details regarding overdraft fees in any communications mailed to him; and customer's claim that defendants used extortion to collect overdraft charges in violation of Hobbs Act, 18 USCS 1951, failed because defendants were not state actors since they were not listed as financial institutions in 31 USCS 9101, as government corporations, or mixedownership government corporations. St. Clair v Citizens Fin. Group (2009, CA3 NJ) 340 Fed Appx 62, 2009-2 CCH Trade Cases P 76688. 116. Malicious prosecution Plaintiff's allegation of malicious prosecution by defendants does not constitute predicate act for purposes of RICO violation because recognizing it is predicate act would severely undermine settled state policy of discouraging such actions and provide malicious prosecution plaintiffs with unprecedented access to federal courts. Von Bulow v Von Bulow (1987, SD NY) 657 F Supp 1134 (criticized in Livingston Downs Racing Ass'n v Jefferson Downs Corp. (2002, MD La) 257 F Supp 2d 819, RICO Bus Disp Guide (CCH) P 10410, 2003-1 CCH Trade Cases P 73946). 117. Murder Murder and conspiracy to murder may both be predicate acts under 18 USCS 1961 and, although state law precludes conviction on both counts, defendant is "chargeable" under state law with 2 separate predicate acts and thus with engaging in racketeering activity under 18 USCS 1961. United States v Licavoli (1984, CA6 Ohio) 725 F2d 1040, 14 Fed Rules Evid Serv 1782, cert den (1984) 467 US 1252, 82 L Ed 2d 840, 104 S Ct 3535. 119. Obstruction of justice Obstruction of justice consisting of alleged erasure of tape-recorded telephone meeting and submission of altered tape in state-court proceedings could not constitute predicate act for claim under 18 USCS 1961(1), as act did not relate to proceeding in federal court. Bologna v Allstate Ins. Co. (2001, ED NY) 138 F Supp 2d 310, RICO Bus Disp Guide (CCH) P 10051, 2001-1 CCH Trade Cases P 73253. Partial judgment on pleadings was granted to defendants because there was no "predicate act" to constitute racketeering activity on which to base plaintiff's claims for violations of 18 USCS 1962(c),(d); allegations that amounted to runof-the-mill litigation disputes did not rise to level of obstruction of justice. Nolan v Galaxy Sci. Corp (2003, ED Pa) 269 F Supp 2d 635. Former owner of sports facility could not establish predicate acts under 18 USCS 1961(1)(B) based on village mayor's alleged violations of 18 USCS 1503 and 1512, as there was no showing of obstruction of justice; owner's allegations that mayor took part in scheme to deprive owner of owner's interest in facility did not involve any allegations of interference with federal proceedings. LaFlamboy v Landek (2008, ND Ill) 2008 US Dist LEXIS 93368, corrected (2008, ND Ill) 587 F Supp 2d 914. 121. Perjury

Although there may be tension between congressional decision to omit perjury as RICO predicate act, but to include mail fraud which has been furthered by perjury, court will not carve out new exception for mail fraud involving state court perjury. United States v Eisen (1992, CA2 NY) 974 F2d 246, 36 Fed Rules Evid Serv 580, cert den (1993) 507 US 998, 123 L Ed 2d 178, 113 S Ct 1619 and cert den (1993) 507 US 1029, 123 L Ed 2d 467, 113 S Ct 1840, application den sub nom United States v Napoli (1993, ED NY) 1993 US Dist LEXIS 9149. Perjury is not RICO (18 USCS 1961 et seq.) predicate act, and claim must be dismissed where perjury was only predicate act properly alleged. Rand v AnacondaEricsson, Inc. (1985, ED NY) 623 F Supp 176, CCH Fed Secur L Rep P 92330, affd (1986, CA2 NY) 794 F2d 843, CCH Fed Secur L Rep P 92827, 1986-1 CCH Trade Cases P 67183, cert den (1986) 479 US 987, 107 S Ct 579, 93 L Ed 2d 582. 122. Robbery "Racketeering activity" as defined in 18 USCS 1961 includes state crime of robbery. United States v Aleman (1979, CA7 Ill) 609 F2d 298, cert den (1980) 445 US 946, 63 L Ed 2d 780, 100 S Ct 1345.

Defendant police officers' acts of taking drugs and money from drug dealers was properly considered robbery, which constitutes RICO predicate offense, rather than larceny, which is not predicate offense, where defendants handcuffed their victims and detained them in police cars, sufficient acts to satisfy force element of robbery under state law. United States v Gonzalez (1994, CA11 Fla) 21 F3d 1045, 40 Fed Rules Evid Serv 1134, 8 FLW Fed C 251. 127. Other Pro se litigant who filed suit against multiple defendants alleging improprieties in foreclosure sale and enforcement of tax liens on piece of real property does not allege fraud, type of injury and pattern to invoke 18 USCS 1961, 1962, and 1964. Elmore v McCammon (1986, SD Tex) 640 F Supp 905, 86-2 USTC P 9668, 58 AFTR 2d 5520. Neither of alleged predicate acts alleged (mail fraud and scheming to defraud) amounted to properly pleaded violation of 18 USCS 1962; while "scheming to defraud" was element of cause of action for mail fraud, it was not among state law acts that fell within definition of "racketeering activity" in 18 USCS 1961(1) (A), and plaintiffs were unable to demonstrate that defendant's mailing of fraudulent invoices was proximate cause of their alleged injuries (damages claimed by plaintiffs arose from defendant's alleged negligence in handling their litigation). Kirk v Heppt (2006, SD NY) 423 F Supp 2d 147.

17. Predicate acts City mayor's failure to disclose bribery funds received on statements of economic interest that he was required to file annually could not serve as predicate offense under Racketeer Influenced and Corrupt Organizations Act (RICO); it was questionable whether, as alleged, mayor's conduct violated Illinois statute proscribing public official's performance of act in excess of his lawful authority with intent to obtain personal advantage for himself or another, such offense did not set forth bribery offense for purposes of predicate offense under RICO, and penalty clause in statute requiring statements to be filed provided for only misdemeanor conviction, which could not qualify as racketeering activity. U.S. v. Genova, C.A.7 (Ill.) 2003, 333 F.3d 750, rehearing denied. Racketeer Influenced And Corrupt Organizations 9 Defendant's criminal acts committed before he reached age of eighteen constituted racketeering activity for

purposes of Racketeer Influenced and Corrupt Organization Act (RICO), even though the government did not move to transfer defendant's case to adult status, and acts were acts of juvenile delinquency for which defendant would have avoided incarceration, where all of defendant's preeighteen predicate acts were felonies punishable under New York law by imprisonment for more than one year, except for extortion, which was charged under federal law. U.S. v. Wong, C.A.2 (N.Y.) 1994, 40 F.3d 1347, certiorari denied 115 S.Ct. 1968, 514 U.S. 1113, 131 L.Ed.2d 858, certiorari denied 115 S.Ct. 2568, 515 U.S. 1137, 132 L.Ed.2d 820, certiorari denied 116 S.Ct. 190, 516 U.S. 870, 133 L.Ed.2d 127. Racketeer Influenced And Corrupt Organizations 7 Former California Highway Patrol (CHP) employee alleged Racketeer Influenced and Corrupt Organizations Act (RICO) claims based on predicate act of witness tampering regarding an official proceeding; employee alleged an institutionalized theft of state funds between CHP, a state agency and State Compensation Insurance Fund (SCIF), a business of insurance which affected interstate commerce, that CHP and SCIF engaged in criminal conspiracy to conceal nature and extent of their criminal activities, and that they acted with intent to intimidate, threaten and corruptly dissuade plaintiff and other CHP employees from testifying or informing grand jury of identity of CHP high level officials who were fraudulently making workers' compensation claims and to protect SCIF from being linked to fraud as form of bribery for SCIF thefts. Vierria v. California Highway Patrol, E.D.Cal.2009, 644 F.Supp.2d 1219. Torts 302 Allegations by homeowner that homeowners' association and members of association's board of directors engaged in various fraudulent acts, including backdating a letter approving his application for permission to build a fence in his back yard, placing improperly addressed, unstamped correspondence in homeowner's mailbox, failing to prevent a board member from embezzling association funds, and filing a fraudulent insurance claim resulting in a check paid to the association, did not properly allege wire fraud or mail fraud, as required predicate acts to state claim for Racketeer Influenced and Corrupt Organizations Act (RICO) claim, absent allegations as to how homeowner was injured by the alleged conduct, how he relied on the alleged fraud to his detriment, or how the defendants used the mail or interstate wires to commit the fraud. Durso v. Summer Brook Preserve Homeowners Ass'n, M.D.Fla.2008, 641 F.Supp.2d 1256. Fraud 41; Racketeer Influenced And Corrupt Organizations 75; Telecommunications 1014(12) Allegations that landlord obtained money from commercial tenants for phony construction and for rent above their contracted amount by threatening tenants sufficiently alleged two occasions of attempted extortion and, thus, two predicate acts constituting a pattern of racketeering activity under Racketeer Influenced and Corrupt Organizations Act (RICO), as required for tenants' RICO claim. Trevino v. Pechero, S.D.Tex.2008, 592 F.Supp.2d 939. Racketeer Influenced And Corrupt Organizations 26 Where all parties are residents of same state, all telephone calls are presumed to be intrastate and, absent any indication otherwise, predicate act of wire fraud is not stated for purposes of Racketeer Influenced and Corrupt Organizations Act (RICO) claim. DeFazio v. Wallis, E.D.N.Y.2007, 500 F.Supp.2d 197. Telecommunications 1014(12) Debtors met particularity requirement for pleading mail fraud and wire fraud as predicate acts, in civil Racketeer Influenced and Corrupt Organizations Act (RICO) claim against lender and others, where the complaint alleged that defendants used the mails and interstate telephone system in furtherance of a pattern of racketeering activity and collection of unlawful debt and to otherwise defraud plaintiffs, and the complaint outlined the alleged scheme to defraud them of their home and pled a time frame for the scheme, specific persons, entities, and times connected with the fraud, and the general contents of the alleged fraudulent communications between defendants and the debtors. Williams v. Equity Holding Corp., E.D.Va.2007, 498 F.Supp.2d 831. Federal Civil Procedure 636 Immigrant workers stated a claim of money laundering, as a predicate act under the Racketeer Influenced and Corrupt Organizations Act (RICO), by alleged employer and others that allegedly used the proceeds of mail fraud with the intent to promote the carrying on of mail fraud, the intent to violate Internal Revenue Code, and the intent to avoid a transaction reporting requirement under state and/or federal law. Choimbol v. Fairfield Resorts, Inc., E.D.Va.2006, 428 F.Supp.2d 437. United States 34

Bidder for government contract did not commit mail or wire fraud, which were alleged as predicate acts supporting claim that bidder violated Racketeer Influenced and Corrupt Organizations Act (RICO) in connection with obtaining contract for satellite launch services; there were no allegations that bidder made any material misrepresentations or omissions, as required for mail or wire fraud. Lockheed Martin Corp. v. Boeing Co., M.D.Fla.2005, 357 F.Supp.2d 1350. Postal Service 35(10); Telecommunications 1014(8) Manufacturer's alleged fraudulent concealment of discoverable data in prior products liability case could serve as predicate act in support of subsequent federal civil claim under Racketeer Influenced and Corrupt Organizations Act (RICO) to extent it involved actionable wire or mail fraud, obstruction of justice, or tampering with witnesses, even if manufacturer was absolutely immune from civil liability under state law. Florida Evergreen Foliage v. E.I. Du Pont De Nemours, Co., S.D.Fla.2001, 135 F.Supp.2d 1271, affirmed 341 F.3d 1292, rehearing and rehearing en banc denied 87 Fed.Appx. 716, 2003 WL 22670882, certiorari denied 124 S.Ct. 2094, 541 U.S. 1037, 158 L.Ed.2d 723. Racketeer Influenced And Corrupt Organizations 10 Pilot' conclusory statement that Retirement Systems of Alabama (RSA) committed bankruptcy fraud was insufficient to adequately state Racketeer Influenced and Corrupt Organizations Act (RICO) predicate act, absent facts to explain how RSA committed the alleged criminal act. Vaughn v. Air Line Pilots Ass'n, Intern., E.D.N.Y.2008, 395 B.R. 520, affirmed 2010 WL 1932388, affirmed 604 F.3d 703. Racketeer Influenced And Corrupt Organizations 70 Former prisoner who was wrongfully convicted of state offenses based upon false evidence failed to allege that police chief and various police officers obstructed justice in a federal proceeding, as would constitute a predicate act for purposes of the Racketeer Influenced and Corrupt Organizations Act (RICO), where prisoner alleged in complaint that police chief and officers tampered with and retaliated against witnesses, victims, and informants in state court proceedings. Slade v. Gates, C.D.Cal.2003, 2003 WL 21149840, Unreported. Racketeer Influenced And Corrupt Organizations 70 II. RACKETEERING ACTIVITY 41. Generally, racketeering activity Racketeering activity is any act that is chargeable and punishable under certain state law felony classifications or indictable under specific federal criminal provisions, and any act that does not fall within purview of RICO definition is not an act of racketeering activity. U.S. v. Private Sanitation Industry Ass'n of Nassau/Suffolk, Inc., E.D.N.Y.1992, 793 F.Supp. 1114. Racketeer Influenced And Corrupt Organizations 6 Racketeering activity is any act that is chargeable and punishable under certain state law felony classifications or indictable under specific federal criminal provisions, and any act that does not fall within purview of RICO definition is not an act of racketeering activity. U.S. v. Private Sanitation Industry Ass'n of Nassau/Suffolk, Inc., E.D.N.Y.1992, 793 F.Supp. 1114. Racketeer Influenced And Corrupt Organizations 6 42. Aiding and abetting, racketeering activity Defendant's aiding and abetting commission of a predicate act of racketeering activity that is indictable under enumerated federal criminal provision may constitute a predicate act itself for purposes of RICO. U.S. v. Private Sanitation Industry Ass'n of Nassau/Suffolk, Inc., E.D.N.Y.1992, 793 F.Supp. 1114. Racketeer Influenced And Corrupt Organizations 21 43. Accessory after fact, racketeering activity Crime of accessory after fact to murder is Racketeer Influenced and Corrupt Organizations Act (RICO) predicate. U.S. v. Patriarca, D.Mass.1995, 912 F.Supp. 596. Racketeer Influenced And Corrupt Organizations 7

55. Extortion, racketeering activity--Generally Alleged violations of Wyoming's blackmail statute by employees of the Bureau of Land Management (BLM) in their efforts to obtain an easement against ranch owner's property did not qualify as a predicate offense for a Racketeer Influenced and Corrupt Organizations Act (RICO) suit, given that the alleged conduct did not fit the traditional definition of extortion. Wilkie v. Robbins, U.S.2007, 127 S.Ct. 2588, 551 U.S. 537, 168 L.Ed.2d 389, on remand 497 F.3d 1122. Racketeer Influenced And Corrupt Organizations 8 Each payment by undercover business operated by Federal Bureau of Investigation agents resulted from defendants' initial threats in ongoing extortion scheme and thus each payment was separate act of racketeering under this chapter. U. S. v. Brooklier, C.A.9 (Cal.) 1982, 685 F.2d 1208, certiorari denied 103 S.Ct. 1194, 459 U.S. 1206, 75 L.Ed.2d 439, certiorari denied 103 S.Ct. 1195, 459 U.S. 1206, 75 L.Ed.2d 439. Racketeer Influenced And Corrupt Organizations 8 Wife's sending letter to husband in which she claimed to have third-party financier who was going to assure husband would be totally wiped out forever upon divorce if he did not agree to divulge his secret holdings did not constitute Racketeer Influenced and Corrupt Organizations Act (RICO) predicate act of extortion or attempted extortion under either federal or state law; husband neither alleged nor supplied any evidence that wife obtained or exerted control over any of his property as a result of letter and wife believed she had a right to property she was seeking to obtain. Streck v. Peters, D.Hawai'i 1994, 855 F.Supp. 1156. Extortion And Threats 26 Government made sufficient showing of nexus between sheriff's extortion (a predicate act) and operation of sheriff's department (the RICO enterprise) to defeat motion to strike extortion count from RICO indictment, where sheriff received phone calls and held meetings pertaining to extortion at office in sheriff's department, and where sheriff mailed out communications pertaining to extortion on stationery with office address; Government's proffer provided sufficient showing to meet relatedness and continuity tests. U.S. v. Thomas, M.D.Tenn.1990, 749 F.Supp. 847. Indictment And Information 137(1) 56. ---- Hobbs Act violations, extortion, racketeering activity Although conduct proscribed under state law must be generically classified as extortionate to qualify as a predicate act under Racketeer Influenced and Corrupt Organizations Act (RICO), Bureau of Land Management (BLM) employees' alleged lawful authority to require reciprocal right-of-way from ranch owner who held various BLM preference rights did not give them authority to use any means necessary to extort right-of-way under the Hobbs Act, and such lawful authority did not provide defense to blackmail under Wyoming law, for purposes of owner's claim that acts of blackmail were predicate acts under RICO. Robbins v. Wilkie, C.A.10 (Wyo.) 2006, 433 F.3d 755, certiorari granted 127 S.Ct. 722, 549 U.S. 1075, 166 L.Ed.2d 559, reversed and remanded 127 S.Ct. 2588, 551 U.S. 537, 168 L.Ed.2d 389, on remand 497 F.3d 1122. Extortion And Threats 25.1 Racketeering convictions under Racketeer Influenced and Corrupt Organizations Act were supported by evidence of Hobbs Act violations where lobbyists met with state legislator to discuss specific legislative action, legislator refused to discuss legislation and reviewed record of campaign contributions, and legislator ended each meeting without giving lobbyist a chance to discuss legislative matter. U.S. v. Carpenter, C.A.9 (Cal.) 1992, 961 F.2d 824, certiorari denied 113 S.Ct. 332, 506 U.S. 919, 121 L.Ed.2d 250. Racketeer Influenced And Corrupt Organizations 8 Defendant's guilty plea in state court to coercion in the first degree established that he had committed predicate racketeering act in Racketeer Influenced and Corrupt Organization Act (RICO) action; guilty plea in state action precluded defendant from litigating facts underlying that plea, defendant was fully aware of consequences of guilty plea, and conviction established elements of Hobbs Act violation. U.S. v. Private Sanitation Industry Ass'n of Nassau/Suffolk, Inc., E.D.N.Y.1994, 899 F.Supp. 974, appeal granted 44 F.3d 1082, affirmed 47 F.3d 1158, certiorari denied 116 S.Ct. 50, 516 U.S. 806, 133 L.Ed.2d 15. Judgment 828.8 To extent RICO defendants were charged with conspiring to commit certain acts indictable under enumerated

federal criminal provisions, they were alleged to have committed acts that were indictable under Hobbs Act and, as such, were alleged to have committed acts cognizable as racketeering activity. U.S. v. Private Sanitation Industry Ass'n of Nassau/Suffolk, Inc., E.D.N.Y.1992, 793 F.Supp. 1114. Racketeer Influenced And Corrupt Organizations 70 Alleged violation of Hobbs Act by securities firm and stock exchange could not serve as predicate racketeering activity to support RICO cause of action by market trader who alleged that defendants conspired to obtain millions of dollars from him under threat, by refusing him admission to stock exchange unless he paid outstanding debts owed securities firm by corporation of which he had been officer; application of stock exchange's membership procedures to trader's application and securities firm's attachment and arbitration actions involving debts were legal proceedings and were not wrongful within meaning of Hobbs Act. Peterson v. Philadelphia Stock Exchange, E.D.Pa.1989, 717 F.Supp. 332, on reconsideration. Extortion And Threats 25.1 57. False pretenses, racketeering activity Obtaining money under false pretenses is not a racketeering activity within meaning of Racketeer Influence Corrupt Organizations Act. Disandro-Smith & Associates, P.C., Inc. v. Edron Copier Service, Inc., D.R.I.1989, 722 F.Supp. 912. Racketeer Influenced And Corrupt Organizations 7 58. Falsification of records, racketeering activity Neither larceny by embezzlement nor larceny by false promise falls within the Racketeering Influenced and Corrupt Organization Act (RICO) statutory definition of racketeering activity, nor does false procurement of documents constitute a RICO predicate act. Weizmann Institute of Science v. Neschis, S.D.N.Y.2002, 229 F.Supp.2d 234. Racketeer Influenced And Corrupt Organizations 7 One defendant's attempt to falsify records subpoenaed by federal grand jury in order to cover up completed predicate crimes alleged in indictment under this chapter and to prolong illegal activities allegedly engaged in was properly included as a predicate act in counts charging conspiracy under this chapter and substantive violations of this chapter regardless of whether any of the other defendants participated in or were aware of the actual preparation of the false records. U. S. v. Boffa, D.C.Del.1980, 513 F.Supp. 444. Conspiracy 40.1 59. Fraud, racketeering activityGenerally As predicate acts under Racketeer Influenced and Corrupt Organizations Act (RICO), mail fraud and wire fraud require, inter alia, evidence of intent to defraud, that is, evidence of scheme to defraud by false or fraudulent pretenses, representation, or promises; circumstantial evidence can be sufficient. Crowe v. Henry, C.A.5 (La.) 1997, 115 F.3d 294. Postal Service 49(11); Telecommunications 1018(4) Intentional filing of false insurance claims or false completed work forms in order to obtain payments from insurer constituted scheme to defraud the insurer as a predicate act for RICO claim. Aetna Cas. Sur. Co. v. P & B Autobody, C.A.1 (Mass.) 1994, 43 F.3d 1546. Racketeer Influenced And Corrupt Organizations 10 Allegations of mail fraud, replete with examples of fraudulent statements, explanations for why the statements were fraudulent and the identity of the particular fraudulent statements provided, and each defendant's role in those statements, alleged fraud under Racketeer Influenced and Corrupt Organizations Act (RICO) with sufficient particularity. State Farm Mut. Auto. Ins. Co. v. Grafman, E.D.N.Y.2009, 655 F.Supp.2d 212. Federal Civil Procedure 636 Mortgagors did not justifiably or reasonably rely on representation of mortgagee to their detriment, as required for mortgagors' claims challenging mortgagee's presentation of payment option adjustable rate mortgage (ARM) to mortgagors under Racketeer Influenced and Corrupt Organizations Act (RICO); mortgagors had held several ARMs in the past, mortgagors were active and continuous shoppers of mortgage financing and possessed obvious and extensive experience with fixed-rate and ARM loans, mortgagors received substantial benefits in connection with ARMs complained of, and there was no evidence that mortgagee misrepresented interest

payments due under ARM. Biggs v. Eaglewood Mortg., LLC, D.Md.2008, 582 F.Supp.2d 707, motion to amend denied 636 F.Supp.2d 477, affirmed 353 Fed.Appx. 864, 2009 WL 4250577, certiorari denied 130 S.Ct. 3360. Mortgages 216 Amendment to Racketeer Influenced and Corrupt Organizations Act (RICO) removing securities fraud claims as RICO predicate acts barred investors' claim that hedge fund manager and broker-dealers participated in fraudulent RICO scheme to induce them to purchase securities issued by hedge funds. ABF Capital Management v. Askin Capital Management, L.P., S.D.N.Y.1997, 957 F.Supp. 1308. Racketeer Influenced And Corrupt Organizations 11 Under Racketeer Influenced and Corrupt Organizations Act (RICO) definition of racketeering as including offense involving fraud in the sale of securities, fraud in the sale of securities did not extend only to actual seller, but also applied to nonsellers who willfully violated federal securities fraud laws. In re Colonial Ltd. Partnership Litigation, D.Conn.1994, 854 F.Supp. 64. Racketeer Influenced And Corrupt Organizations 11 Under Racketeer Influenced and Corrupt Organizations Act (RICO) definition of racketeering as including offense involving fraud in the sale of securities, fraud in the sale of securities did not extend only to actual seller, but also applied to nonsellers who willfully violated federal securities fraud laws. In re Colonial Ltd. Partnership Litigation, D.Conn.1994, 854 F.Supp. 64. Racketeer Influenced And Corrupt Organizations 11 As a predicate RICO act, fraud in the sale of securities does not require that the defendant have participated in the actual sale. In re American Continental Corporation/Lincoln Sav. and Loan Securities Litigation, D.Ariz.1992, 794 F.Supp. 1424. Securities Regulation 60.40 Evidence did not support Racketeer Influenced and Corrupt Organizations Act (RICO) fraud claims against bank alleged to have lent money based upon announced prime rate that was higher than its actual prime rate; only 1.03% of bank's 90-day unsecured commercial loans were claimed to have been below announced prime rate, bank offered explanation in some cases of clerical errors or rate change intervening between preparation of note and its inception date, some of loans in question were participation loans, others were secured, and London Interbank Offered Rate (LIBOR) loans were peculiar financial arrangements. Haroco, Inc. v. American Nat. Bank and Trust Co. of Chicago, N.D.Ill.1992, 793 F.Supp. 783, reconsideration granted 814 F.Supp. 655, on reconsideration 814 F.Supp. 656, affirmed 38 F.3d 1429. Racketeer Influenced And Corrupt Organizations 79 Borrower failed to present evidence, such as scheme to defraud, to support claim that lender and other entities conspired to engage in pattern of racketeering activity for purpose of effectuating takeover of borrower and to defraud borrower's guarantors of their personal assets; borrower failed to establish predicate acts necessary to support RICO claim, or any competent evidence of damages it allegedly suffered as proximate result of allegedly wrongful conduct. Okura & Co. (America), Inc. v. Careau Group, C.D.Cal.1991, 783 F.Supp. 482. Conspiracy 19 Fact that bank officers have made mistakes, approved bad loans, obtained less than adequate security, committed errors of business judgment, misapplied the law, or acted on poor or mistaken legal advice cannot be equated with fraud or, in turn, racketeering activity under Racketeer Influenced and Corrupt Organizations Act (RICO). Blue Line Coal Co., Inc. v. Equibank, E.D.Pa.1991, 769 F.Supp. 891. Banks And Banking 54(1); Racketeer Influenced And Corrupt Organizations 10 Allegations of multiple fraudulent acts with respect to each of several investments, together with allegations that each defendant was agent of every other defendant, might adequately establish continuity plus relationship needed to allege pattern of racketeering activity under Racketeer Influenced and Corrupt Organizations Act, but plaintiff would have to specify which subsections under which he was proceeding. Washington v. Baenziger, N.D.Cal.1987, 656 F.Supp. 1176. Racketeer Influenced And Corrupt Organizations 72 Allegations of mail fraud, wire fraud and extortion on part of bank and others fell within definition of racketeering activity contained in the Racketeer Influenced and Corrupt Organizations Act. Millonzi v. Bank of Hillside, N.D.Ill.1985, 605 F.Supp. 140. Racketeer Influenced And Corrupt Organizations 10 Omission of material fact can constitute fraud for purposes of Racketeer Influenced and Corrupt

Organizations (RICO) Act if either there exists duty to disclose information or defendant makes statements of half-truths or affirmative misrepresentations. Katzman v. Victoria's Secret Catalogue, S.D.N.Y.1996, 167 F.R.D. 649, reargument denied 939 F.Supp. 274, affirmed 113 F.3d 1229. Fraud 16 In absence of allegation of existence of Racketeer Influenced and Corrupt Organizations Act enterprise distinct from creditor, allegations that creditor violated Act by falsely representing to debtor's principals that interest on loans would be based upon rate for prime commercial loans and by repeatedly mailing to principal fraudulent statements of interest and fees due failed to state RICO claim. In re Rubin Bros. Footwear, Inc., S.D.N.Y.1987, 73 B.R. 346. Racketeer Influenced And Corrupt Organizations 39 60. ---- Common law, fraud, racketeering activity A fraud claim under this chapter is not identical to a state common law fraud claim; there must be an enterprise, there must be an effect upon interstate commerce before its provisions can come into effect, and there must also be two predicate offenses. Ralston v. Capper, E.D.Mich.1983, 569 F.Supp. 1575. Racketeer Influenced And Corrupt Organizations 10 Sweep of this chapter does not embrace ordinary violators charged in common law fraud actions or with federal securities law violations as predicate offenses for relief under this chapter, although use thereof to accomplish one of enumerated felonies in section 1961 of this title may be element of and lead to liability under this chapter if organized criminals engage in prohibited activity. Moss v. Morgan Stanley Inc., S.D.N.Y.1983, 553 F.Supp. 1347, affirmed 719 F.2d 5, certiorari denied 104 S.Ct. 1280, 465 U.S. 1025, 79 L.Ed.2d 684. Commerce 80; Racketeer Influenced And Corrupt Organizations 11 62. Grand larceny, racketeering activity Issues of whether criminal defense attorney attempted to garner unearned payments from client by unjustifiably threatening to withdraw from case, and whether attorney engaged in interstate commerce involved fact questions that could not be resolved on motion to dismiss client's claim that attorney violated Hobbs Act as predicate act in his action against attorney under Racketeer Influenced and Corrupt Organizations Act (RICO). Wade v. Gaither, D.Utah 2009, 623 F.Supp.2d 1277. Federal Civil Procedure 1831 Neither larceny by embezzlement nor larceny by false promise falls within the Racketeering Influenced and Corrupt Organization Act (RICO) statutory definition of racketeering activity, nor does false procurement of documents constitute a RICO predicate act. Weizmann Institute of Science v. Neschis, S.D.N.Y.2002, 229 F.Supp.2d 234. Racketeer Influenced And Corrupt Organizations 7 Acts of racketeering activity that were predicated on offense of grand larceny * * * involving bribery under New York law were insufficient as matter of law. U.S. v. Private Sanitation Industry Ass'n of Nassau/Suffolk, Inc., E.D.N.Y.1992, 793 F.Supp. 1114. Racketeer Influenced And Corrupt Organizations 9 67. Mail and wire fraud, racketeering activity--Generally Wire and mail fraud may be considered predicate acts under Racketeer Influenced and Corrupt Organizations Act (RICO). District 65 Retirement Trust for Members of Bureau of Wholesale Sales Representatives v. Prudential Securities, Inc., N.D.Ga.1996, 925 F.Supp. 1551. Racketeer Influenced And Corrupt Organizations 10 RICO plaintiff need not rely on predicate acts of mail or wire fraud. In re American Continental Corporation/Lincoln Sav. and Loan Securities Litigation, D.Ariz.1992, 794 F.Supp. 1424. Racketeer Influenced And Corrupt Organizations 10 Although plaintiff could allege mail fraud as predicate act for Racketeer Influenced and Corrupt Organizations Act claim, mail fraud allegations themselves did not state a separate cause of action. Delta Educ., Inc. v. Langlois, D.N.H.1989, 719 F.Supp. 42. Action 5

68. ---- Elements, mail and wire fraud, racketeering activity

Ninth Circuit does not require that the the U.S. or plaintiff prove that the scheme to defraud was reasonably calculated to deceive persons of ordinary prudence and comprehension,

to

U.S. v. Ciccone, 219 F.3d 1078, 00 Cal. Daily Op. Serv. 5995, 2000 Daily Journal D.A.R. 7929 (9th Cir. (Nev.),Jul 19, 2000) Defendant was convicted in the United States District Court for the District of Nevada, Lloyd D. George, J., of, inter alia, wire fraud and money laundering in connection with purported charitable fund-raising scheme, and he appealed. The Court of Appeals, Ferguson, Circuit Judge, held that: (1) district court did not abuse its discretion in excluding evidence of satisfied charities and of donors, proffered to support defendant's good faith defense; (2) the government was not required to prove that the scheme to defraud was reasonably calculated to deceive persons of ordinary prudence and comprehension; (3) evidence was sufficient to show that defendant participated in conspiracy or scheme to defraud; (4) there was no Brady violation; (5) two-level increase in offense level was warranted based on victim vulnerability; and (6) there was no error in loss calculation. Affirmed. [3] Telecommunications 372 1014(8)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(8) k. Nature of Scheme or Device in General. Most Cited Cases (Formerly 372k362) In wire fraud prosecution, the government was not required to prove that the scheme to defraud was reasonably calculated to deceive persons of ordinary prudence and comprehension; it is immaterial whether only the most gullible would have been deceived by defendant's scheme. 18 U.S.C.A. 1343. [4] Telecommunications 372 1014(2)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(2) k. Nature and Elements of Offense in General. Most Cited Cases (Formerly 372k363) Telecommunications 372 1018(4)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1015 Prosecutions 372k1018 Evidence 372k1018(4) k. Weight and Sufficiency. Most Cited Cases (Formerly 372k363) To convict a person of wire fraud, the government must prove beyond a reasonable doubt that the accused: (1) participated in a scheme with intent to defraud; and (2) used the wires to further the scheme. 18 U.S.C.A.

1343. B. The Government Was Not Required to Prove that the Scheme Was Reasonably Calculated to Deceive Persons of Ordinary Prudence and Comprehension. [3] Ciccone argues that we must reverse his conviction because the government failed to prove that the scheme to defraud was reasonably calculated to deceive persons of ordinary prudence and comprehension. He relies on language in one of our opinions, in which we explained that to prove the existence of a fraudulent scheme, [ t]he government proves specific intent if it proves that the scheme was reasonably calculated to deceive persons of ordinary prudence and comprehension. United States v. Bohonus, 628 F. 2d 1167, 1172 ( 9th Cir. 1980) (internal quotation marks omitted). We have repeated this definition in other cases. See, e.g., United States v. Mason, 902 F.2d 1434, 1442 (9th Cir.1990) (Specific intent is established by the existence of a scheme which was reasonably calculated to deceive persons of ordinary prudence and comprehension, and this intention is shown by examining the scheme itself.) (internal quotation marks omitted); United States v. Green, 745 F.2d 1205, 1209 (9th Cir.1984) (same). Although this definition of specific intent appears to support Ciccone's contention that the government must prove that the scheme was reasonably calculated to deceive persons of ordinary prudence and comprehension, we have previously rejected this argument. In United States v. Hanley, 190 F.3d 1017, 1023 (9th Cir.1999), the appellant presented the same argument Ciccone does here. Id. Specifically, Hanley urged this court to reverse his wire-fraud conviction because the government failed to prove that they had devised a scheme reasonably calculated to deceive persons of ordinary prudence and comprehension. Id. We disagreed, holding that the law of this circuit does not require such a showing. In this circuit, [i]t is immaterial whether only the most gullible would have been deceived by the defendants' scheme. Id. (quoting Lemon v. United States, 278 F.2d 369, 373 (9th Cir.1960)) (alteration in original). Our decision in Hanley followed our earlier holding in Lemon. There, the appellants argued that they were not guilty of the crime because their scheme could only have deceived the gullible and not those of ordinary prudence and comprehension. Lemon, 278 F.2d at 373. We held that the offense of which the appellants had been convicted did not require such a showing, reasoning that the wire-fraud statute protects the naive as well as the worldly-wise, and the former are more in need of protection than the latter. As a matter of fact, ... the lack of guile on the part of those solicited may itself point with persuasion to the fraudulent character of the artifice. Hanley, 190 F.3d at 1023 (quoting Lemon, 278 F.2d at 373) (omission in original). Thus, we reject Ciccone's argument that the government had to prove that the scheme was calculated to deceive persons of ordinary prudence and comprehension.

For ninth circuit authority see, postal_service_use_of_mails_to_defraud_nature_and_elements_of_offens e_in_general_digest.doc postal_service_use_of_mails_to_defraud_nature_and_knowledge_and_inte nt_in_general_digest.doc 18 U.S.C. 1341 issue of element of use of mail requiring interstate or intrastate communications.

GENERALLY
13. State regulation or control

Use of this section to prosecute a state governor and other persons for using the mails to defraud the citizens of the state of their right to the conscientious, loyal, and faithful services of the governor free from bribery, corruption, partiality, and dishonesty and to defraud the citizens of the state of the right to have available and be

made aware of all relevant and pertinent facts and circumstances when legislation is being considered did not constitute an impermissible federal intrusion into the political affairs of the state. U. S. v. Mandel, C.A.4 (Md.) 1979, 591 F.2d 1347, on rehearing 602 F.2d 653, rehearing denied 609 F.2d 1076, certiorari denied 100 S.Ct. 1647, 445 U.S. 961, 64 L.Ed.2d 236. III. USE OF MAILS 114. Interstate or intrastate, use of mails Jurisdictional basis of mail fraud statute is grounded in postal power and therefore necessarily encompasses all items passing through United States mails even if their passage is purely intrastate. U.S. v. Elliott, C.A.8 (Mo.) 1996, 89 F.3d 1360, certiorari denied 117 S.Ct. 963, 519 U.S. 1118, 136 L.Ed.2d 849. Postal Service 35(2) In prosecution for mail fraud and conspiracy to commit mail fraud arising out of alleged scheme to defraud insurance companies by submitting false and inflated medical reports, it was irrelevant that all of the mailings may have been interstate in nature or that the mailings were very localized in their scope. U. S. v. Cady, C.A.8 (Mo.) 1977, 567 F.2d 771, certiorari denied 98 S.Ct. 1526, 435 U.S. 944, 55 L.Ed.2d 541.

Streck v. Peters, 855 F.Supp. 1156, RICO Bus.Disp.Guide 8622 (D.Hawai'i Jun 07, 1994) Ex-husband brought action against ex-wife and her attorneys alleging violation of Racketeer Influenced and Corrupt Organizations Act (RICO) in connection with conduct of divorce proceedings. Defendants moved for summary judgment. The District Court, Kay, Chief Judge, held that: (1) ex-husband failed to establish any predicate acts, and (2) ex-husband failed to establish continuity required to establish RICO pattern. Motion granted. [4] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk25 k. In General. Most Cited Cases Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk34 k. In General. Most Cited Cases Element of Racketeer Influenced and Corrupt Organizations Act (RICO) claim are conduct of enterprise through pattern of racketeering activity, and failure to establish any of those elements is fatal to RICO claim. 18 U.S.C.A. 1961 et seq. [5] Racketeer Influenced and Corrupt Organizations 319H 26 34 25

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk26 k. Number of Predicate Acts. Most Cited Cases

Racketeer Influenced and Corrupt Organizations 319H

28

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk28 k. Continuity or Relatedness; Ongoing Activity. Most Cited Cases Determination of whether Racketeer Influenced and Corrupt Organizations Act (RICO) plaintiff is able to establish a pattern of racketeering activity entails initial determination of whether defendants committed two or more predicate acts within meaning of RICO statute and, if so, whether predicate acts were related in a manner such that they created threat of continued unlawful activity. 18 U.S.C.A. 1961(5). [6] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk4 Racketeering or Criminal Activity 319Hk7 k. Particular Acts. Most Cited Cases **Because acts of perjury are indictable under obstruction of justice statute and Racketeer Influenced and Corrupt Organizations Act (RICO) statute specifies that acts indictable under obstruction of justice statute are RICO predicate acts, acts of perjury may, under appropriate circumstances, constitute RICO predicate acts. 18 U.S.C.A. 1503, 1621, 1961(1)(B). [7] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk4 Racketeering or Criminal Activity 319Hk7 k. Particular Acts. Most Cited Cases Alleged perjury which took place in state court, not federal court, could not qualify as Racketeer Influenced and Corrupt Organizations Act (RICO) predicate act; only perjury in federal court falls under obstruction of justice which is a predicate act under RICO. 18 U.S.C.A. 1503, 1621, 1961(1)(B). [8] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk4 Racketeering or Criminal Activity 319Hk7 k. Particular Acts. Most Cited Cases Actions wife and her attorneys allegedly took to cause husband's attorney to delay representation of husband during divorce proceedings did not constitute Racketeer Influenced and Corrupt Organizations Act (RICO) predicate acts; even if letter to husband's attorney undermined her trust in husband and caused her to fail to challenge improper jurisdiction of California divorce court constituted obstruction of justice, the acts could not be RICO predicate acts as they took place in connection with state court proceeding, and in any event there was insufficient evidence to support the allegations. 18 U.S.C.A. 1501, 1503, 1961(1). [9] Obstructing Justice 282 3 7 7 7

282 Obstructing Justice 282k3 k. Resisting or Obstructing Execution of Process. Most Cited Cases Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk4 Racketeering or Criminal Activity 319Hk7 k. Particular Acts. Most Cited Cases Failed attempt of wife's attorneys to serve subpoena on husband's client to testify in California divorce proceeding did not constitute grounds for charge of obstruction of justice and did not establish Racketeer Influenced and Corrupt Organizations Act (RICO) predicate act. 18 U.S.C.A. 1961(1). [10] Extortion and Threats 165 25.1 7

165 Extortion and Threats 165II Threats 165k25 Nature and Elements of Offenses 165k25.1 k. In General. Most Cited Cases Elements of Hobbs Act violation are extortion and nexus with interstate commerce. 18 U.S.C.A. 1951. [11] Extortion and Threats 165 4

165 Extortion and Threats 165I Official Extortion 165k3 Elements of Offenses 165k4 k. In General. Most Cited Cases To prove extortion by wrongful use of force or fear, one must establish that extortionist induced someone to part with money, property, or other valuable right by wrongful use or threat of force or fear; extortionist acted with intent to obtain money or property that extortionist knew he or she was not entitled to receive; and commerce from one state to another was or would have been affected in some way. 18 U.S.C.A. 1951. [12] Extortion and Threats 165 26

165 Extortion and Threats 165II Threats 165k25 Nature and Elements of Offenses 165k26 k. Threatening Letters. Most Cited Cases Wife's sending letter to husband in which she claimed to have third-party financier who was going to assure husband would be totally wiped out forever upon divorce if he did not agree to divulge his secret holdings did not constitute Racketeer Influenced and Corrupt Organizations Act (RICO) predicate act of extortion or attempted extortion under either federal or state law; husband neither alleged nor supplied any evidence that wife obtained or exerted control over any of his property as a result of letter and wife believed she had a right to property she was seeking to obtain. 18 U.S.C.A. 1951, 1961(1)(A, B). [13] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 28

319HI(A) In General 319Hk24 Pattern of Activity 319Hk28 k. Continuity or Relatedness; Ongoing Activity. Most Cited Cases To establish Racketeer Influenced and Corrupt Organizations Act (RICO) pattern, it must be shown that predicate acts themselves amount to, or that they otherwise constitute a threat of, continuing racketeering activity. 18 U.S.C.A. 1961 et seq. [14] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk29 k. Time and Duration. Most Cited Cases Predicate acts alleged by husband in connection with conduct of wife and her attorneys in divorce proceeding did not support closed-ended continuity, for purposes of establishing Racketeer Influenced and Corrupt Organizations Act (RICO) where predicate acts allegedly occurred over a four-month period. 18 U.S.C.A. 1961 et seq. [15] Racketeer Influenced and Corrupt Organizations 319H 28 29

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk28 k. Continuity or Relatedness; Ongoing Activity. Most Cited Cases Continuity of predicate acts required for Racketeer Influenced and Corrupt Organizations Act (RICO) claim may be demonstrated if predicate acts constitute threat of continuing racketeering activity; past conduct that by its nature projects into the future with threat of repetition. 18 U.S.C.A. 1961 et seq. [16] Racketeer Influenced and Corrupt Organizations 319H 28

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk28 k. Continuity or Relatedness; Ongoing Activity. Most Cited Cases Husband failed to establish open-ended continuity required for Racketeer Influenced and Corrupt Organizations Act (RICO) claim against his wife and her attorneys in connection with her conduct in divorce action; all of predicate acts arose from single event of allegedly attempting to ruin husband's law practice so that he would be forced to divulge secret funds and incomes that wife and her attorneys believed he had, and predicate acts were thus isolated and did not form a pattern. 18 U.S.C.A. 1961 et seq. [17] Racketeer Influenced and Corrupt Organizations 319H 35

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk35 k. What Constitutes Enterprise in General. Most Cited Cases

Racketeer Influenced and Corrupt Organizations 319H

38

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk38 k. Separateness from Predicate Acts, Pattern, or Persons. Most Cited Cases To establish an enterprise under Racketeer Influenced and Corrupt Organizations Act, plaintiff must establish enterprise having an existence separate and apart from pattern of racketeering activity in which it is engaged, and plaintiff must also demonstrate existence of ongoing organization in which various associates function as a continuing unit. 18 U.S.C.A. 1961(4), 1962(c). The Ninth Circuit has established that [n]o longer can it be argued that any disagreement about a material issue of fact precludes the use of summary judgment. California Architectural Bldg. Prod., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir.1987), cert. denied, 484 U.S. 1006, 108 S.Ct. 698, 98 L.Ed.2d 650 (1988). Moreover, the Supreme Court has stated that [w]hen the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). Indeed, if the factual context makes the nonmoving party's claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue for trial. Franciscan Ceramics, 818 F.2d at 1468 (emphasis original) (citing Matsushita, 475 U.S. at 587, 106 S.Ct. at 1356). Of course, all evidence and inferences to be drawn therefrom must be construed in the light most favorable to the nonmoving party. T.W. Elec. Serv., 809 F.2d at 630-31. IV. DISCUSSION A. MOTION FOR SUMMARY JUDGMENT ON STRECK'S RICO COMPLAINT This Court finds that summary judgment must be granted in favor of all defendants. Streck invokes this Court's jurisdiction by alleging subject matter jurisdiction pursuant to the RICO statute. FN2 Complaint 1 at 1. If Streck cannot legally maintain a RICO claim against any of the defendants, then no jurisdiction exists in this Court. Frey and the Coates firm's motion reveals that a RICO claim cannot be maintained against any of the defendants, and therefore, because it lacks jurisdiction over the RICO complaint, this Court GRANTS summary judgment as to all defendants. During the May 23, 1994 hearing on the motion for summary judgment, Streck agreed that, if summary judgment should be granted as to Frey and the Coates firm, then it should be granted as to all defendants. FN2. Streck does not and cannot assert diversity jurisdiction. Generally, in order for diversity jurisdiction to exist, none of the plaintiffs may be citizens of the same state as any of the defendants. 28 U.S.C. 1332(a) (1994). Complete diversity is not present in this case because Plaintiff Streck and Defendants Frey and the Coates firm are citizens of Hawaii. [4] The elements of a RICO claim are (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496, 105 S.Ct. 3275, 3285, 87 L.Ed.2d 346 (1985). The failure to establish any of these elements is fatal to a RICO claim. See Rae v. Union Bank, 725 F.2d 478, 480-81 (9th Cir.1984) (affirming Rule 12(b) dismissal of RICO claim where plaintiff failed to meet the enterprise requirement). Summary judgment must be granted in defendants' favor because Streck cannot establish a pattern of racketeering activity. [5] RICO defines the term pattern of racketeering activity as requiring at least two acts of racketeering activity ... the last of which occurred within ten years ... after the commission of a prior act of racketeering activity. RICO, 18 U.S.C. 1961(5) (1994). Aside from the minimal requirement of showing two predicate acts existed, RICO nowhere addresses the meaning of the term pattern as used throughout the statute. In H.J. Inc. v. Northwestern Bell Telephone Company, the Supreme Court sought to develop a meaningful concept of that term. 492 U.S. 229, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989). Drawing on dicta from a previous opinion in which the issue was considered, Sedima, 473 U.S. at 496 n. 14, 105 S.Ct. at 3285 n. 14, the Supreme Court divined from *1161 RICO's legislative history a two-prong framework for analysis: [T]o prove a pattern of racketeering activity a plaintiff or prosecutor must show that the racketeering predicates are related, and that

they amount to or pose a threat of continued criminal activity. Northwestern Bell, 492 U.S. at 239, 109 S.Ct. at 2900. Thus, the determination of whether a RICO plaintiff is able to establish a pattern of racketeering activity necessarily entails an initial determination of whether the defendants committed two or more predicate acts within the meaning of the RICO statute, see 18 U.S.C. 1961(5) (1994), and, if so, whether the predicate acts were related in a manner such that they created a threat of continued unlawful activity, Northwestern Bell, 492 U.S. at 239-43, 109 S.Ct. at 2900-03. 1. Predicate Acts Congress has enumerated the predicate acts which may form a basis for a RICO claim in 18 U.S.C. 1961(1). Section 1961(1) lists five different categories of criminal offenses that could potentially constitute predicate acts. Subsection (A) provides that any act or threat involving a variety of criminal offenses which is chargeable under state law may serve as a RICO predicate . 18 U.S.C. 1961(1)(A) (1994) (emphasis added). Subsection (B) provides that any act which is indictable under any of a variety of enumerated federal criminal statutes may serve as a RICO predicate. 18 U.S.C. 1961(1)(B) (1994) (emphasis added). Streck relies on both subsection (A) and (B) to establish RICO predicates. As to subsection (A), Streck claims defendants committed acts or threats that are chargeable under state criminal law involving extortion. As to subsection (B), Streck claims defendants committed various acts in violation of the following statutes delineated in subsection (B): **(1) obstruction of justice under 18 U.S.C. 1503, (2) extortion under 18 U.S.C. 1951, (3) mail fraud under 18 U.S.C. 1341, and (4) wire fraud under 18 U.S.C. 1343. a. Obstruction of Justice Title 18 U.S.C. 1503 provides that anyone who corruptly ... influences, obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice is guilty of obstruction of justice. In his complaint and his opposition, Streck asserts that defendants violated the RICO obstruction of justice statute through the following predicate acts: (1) Sometime around March or April 1993, Peters committed perjury when she sent a letter to the Hawaii divorce court falsely stating that she had no money to hire an attorney, that she was not represented by counsel, and that jurisdiction in the Hawaii court was improper. (2) Also sometime around March or April 1993, Smith had Peters send a letter to Streck's Hawaii divorce attorney, Ellen Politano (Politano), in which Peters falsely stated that Streck and his law partners were conspiring to hide funds and divert billings to keep Peters from obtaining the property to which she was entitled. The letter undermined Politano's trust in Streck and caused her to fail to challenge the improper jurisdiction of the California court. (3) Smith had Frey arrange for persons unknown to cause Politano or an agent of Politano to delay the filing of a response to the California divorce petition. (4) Streck served Smith with Streck's financial statements. Smith suppressed these statements and filed a false declaration, committing the act of perjury, which alleged that Streck had substantially more income than revealed through his financial statements. As a result, the California court awarded Peters temporary spousal support in an amount more than Streck's income could sustain. (5) Smith filed with the Hawaii divorce court a motion to dismiss, or, alternatively, to transfer the case to California. In support of the motion, Smith and Peters submitted perjured testimony, repeating the perjury they had made earlier with regard to how jurisdiction was improper in Hawaii as well as making additional untruths. (6) During the divorce proceedings, Smith and Peters harassed Streck's clients. *1162 For example, Smith unsuccessfully attempted to serve a subpoena on one of Streck's clients in an effort to force the client to testify in the California divorce proceedings. As a result, Streck lost the client's business and an estimated $1 million. In sum, Streck claims defendants obstructed justice by committing perjury, causing Politano to not pursue his case, and attempting to serve a subpoena on one of his clients.

1. Perjury [6][7] The federal criminal statute prohibiting perjury, 18 U.S.C. 1621, does not appear among the statutes listed in 1961(1)(B), which lists the federal statutory violations which may constitute the necessary predicate acts to support a RICO claim. Nonetheless, some authority exists for the position that perjury may qualify as a RICO predicate act. C & W Constr. Co. v. Brotherhood of Carpenters & Joiners of Am., 687 F.Supp. 1453, 1467 (D.Haw.1988). Other courts, however, had concluded that perjury alone is not racketeering activity. E. g., Rand v. Anaconda, Inc., 623 F.Supp. 176, 182 (E.D.N.Y.1985) (Perjury ... is not a RICO predicate act.), aff'd, 794 F.2d 843 (2d Cir.), cert. denied, 479 U.S. 987, 107 S.Ct. 579, 93 L.Ed.2d 582 (1986); Lewis v. Sporck, 612 F.Supp. 1316, 1325 (N.D.Cal.1985) (Bad acts, alone, do not qualify as predicate acts for RICO purposes; only those activities set forth in 18 U.S.C. 1961(1) may serve as the basis for a RICO claim.). Because acts of perjury are indictable under the obstruction of justice statute, see United States v. Mayer, 775 F.2d 1387, 1391 (9th Cir.1985) (stating that a false statement to the magistrate is properly charged under 1503 as this was consistent with a scheme in which frauds perpetrated upon a court in its adjudicative capacity must be prosecuted as perjury, obstruction of justice, or contempt), and because the RICO statute specifies that acts indictable under the obstruction of justice statute are RICO predicate acts, see 18 U.S.C. 1961(1)(B), this Court believes the better reasoned position is that acts of perjury may, under the appropriate circumstances, constitute RICO predicate acts. Nevertheless, this Court finds that the acts of perjury which the defendants in the case at bar are alleged to have committed do not constitute RICO predicate acts. Section 1503 applies only to perjury offered in federal court proceedings. See O'Malley v. New York City Transit. Auth., 896 F.2d 704, 708 (2d Cir.1990) (finding that plaintiff failed to state a violation of 1503 where the alleged acts took place in state judicial or administrative courts, not in a federal court as required by 1503). Here, all of the alleged perjury took place in state court, not federal court. Thus, 1503 is not implicated by Streck's perjury allegations.FN3 FN3. Even if 1503 had been implicated, this Court would have found that Streck has presented insufficient evidence in support of his perjury allegations, and, on this basis, held that the perjury did not constitute RICO predicate acts. **The only evidence Streck provides in support of his perjury allegations is his own affidavit testimony, which contains only the most conclusory assertions of perjury and provides no specific facts supporting the assertions. Streck cannot rely on conclusory allegations unsupported by factual data to create an issue of material fact which regard to the perjury allegations. See Hansen v. United States, 7 F.3d 137, 138 (9th Cir.1993). 2. Politano [8] As to Streck's assertions that Peters' letter to Politano undermined Politano's trust in Streck and caused her to fail to challenge the improper jurisdiction of the California divorce court and that persons unknown actively delayed Politano's filing of a response in the California proceeding, this Court has found no case supporting a finding that such acts constitute obstruction of justice. Even if such a case existed, this Court would hold as it did with regard to the perjury allegations that the act could not be a RICO predicate act because it took place in connection with a state court proceeding. See O'Malley, 896 F.2d at 708. Finally, this Court finds Streck has presented insufficient evidence in support of his allegations regarding Politano. In his affidavit, Streck admits he has no factual evidence to support these allegations. Affidavit of Donald A. Streck in Support of Opposition to Motion for Summary Judgment 8 at 8 (filed April 25, 1994). Consequently, this Court finds that the actions defendants allegedly took to cause Politano*1163 to delay her representation of Streck during the divorce proceedings do not constitute RICO predicate acts. 3. Subpoena [9] The only specific act that Streck offers in support of his assertion that Smith and Peters harassed his clients is that Smith attempted, but failed, to serve a subpoena on one of his clients to testify in the California divorce proceeding. While failing to respond to a valid subpoena issued in connection with a federal judicial proceeding constitutes grounds for an obstruction of justice charge, see, e.g., United States v. Rasheed, 663 F.2d 843 (9th Cir.1981), cert. denied, Phillips v. United States, 454 U.S. 1157, 102 S.Ct. 1031, 71 L.Ed.2d 315 (1982), this Court has found no case holding that a failed attempt to serve a subpoena constitutes grounds for such a charge. Streck's allegations with regard to the subpoena do not establish a RICO predicate act. 4. Conclusion None of the acts alleged by Streck constitute a RICO predicate act under the obstruction of justice statute.

Hence, to maintain his RICO action, Streck must establish predicate acts under the other statutes he asserts. b. Extortion Streck claims Peters committed the predicate act of extortion under 18 U.S.C. 1961(1)(A) & (B) when she sent an August 30, 1993 letter to Streck in which she claimed to have a third party financier who was going to assure that Plaintiff would be totally wiped out forever if Plaintiff did not agree to divulge his secret holdings. Section 1961(1)(A) involves extortion or attempted extortion under state law and Section 1961(1) (B) involves extortion or attempted extortion under federal law, the Hobbs Act, 18 U.S.C. 1951 (1994). [10][11] As to extortion under federal law, [t]he elements of a Hobbs Act violation are extortion and a nexus with interstate commerce. United States v. Zemek, 634 F.2d 1159, 1173 (9th Cir.1980), cert. denied, Carbone v. United States, 450 U.S. 916, 101 S.Ct. 1359, 67 L.Ed.2d 341, and cert. denied, Caliguri v. United States, 450 U.S. 985, 101 S.Ct. 1525, 67 L.Ed.2d 821, and cert. denied, Janovich v. United States, 452 U.S. 905, 101 S.Ct. 3031, 69 L.Ed.2d 406, and cert. denied, Williams v. United States, 452 U.S. 905, 101 S.Ct. 3031, 69 L.Ed.2d 406, and cert. denied, Mazzuca v. United States, 452 U.S. 905, 101 S.Ct. 3031, 69 L.Ed.2d 406 (1981). Section 1951 defines extortion as the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. 18 U.S.C. 1951(b)(2). To prove extortion by wrongful use of force or fear, one must establish that (1) the extortionist induced someone to part with money, property, or other valuable right by the wrongful use or threat of force or fear; (2) the extortionist acted with the intent to obtain money or property that the extortionist knew he or she was not entitled to receive; and (3) commerce from one state to another was or would have been affected in some way. United States v. Dischner, 974 F.2d 1502, 1516 (9th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 1290, 122 L.Ed.2d 682 (1993). As to the 1951's term wrongful, the Supreme Court has reasoned that wrongful must be read as limiting the statute's coverage to instances where the extortionist's obtaining of the property was wrongful because he or she lacked a lawful claim to it. United States v. Enmons, 410 U.S. 396, 400 & n. 3, 93 S.Ct. 1007, 1009-10 & n. 3, 35 L.Ed.2d 379 (1973). Hawaii law regarding extortion is essentially the same as federal law. In pertinent part, Haw.Rev.Stat. 707-764 provides that a person commits extortion if he or she obtains, or exerts control over, the property ... of another with intent to deprive [the other] of the property ... by threatening by word or conduct to cause bodily injury to a person or cause damage to property. Haw.Rev.Stat. 707-764(1)(a) & (b) (1994). Furthermore, Haw.Rev.Stat. 707-769 specifies that it is a defense to a prosecution for extortion as defined by [ 707764(1) ] that the defendant believed he or she was entitled to the property ... under a claim of right. Haw.Rev.Stat. 707-769(1)(b) (1994). *1164 [12] Streck neither alleges nor supplies any evidence that Peters obtained or exerted control over any of his property as a result of the August 30, 1993 letter, and therefore Streck has not satisfied an essential element of extortion under both federal and state law. Streck has also failed to establish attempted extortion. Streck's evidence reveals that Peters believed she had a right to the property she was seeking to obtain through the letter. The California state court had awarded Peters spousal support, which Streck failed to pay. Peters was attempting to obtain the spousal support through the letter. Thus, under federal law, Peters' attempt to obtain Streck's property was not wrongful, and, under state law, Peters' attempt was made under a claim of right. Thus, Peters did not commit attempted extortion when she sent the letter to Streck. Based on the foregoing, the letter cannot establish the RICO predicate act of extortion. c. Mail and Wire Fraud Streck claims defendants used the mails and wires in connection with their acts of obstruction of justice and extortion. Streck, however, has failed to establish the obstruction of justice and extortion predicates, and therefore cannot establish mail and wire fraud in connection with these predicates. d. Conclusion As shown above, Streck has not established any predicate act under RICO. This alone is sufficient for this Court to grant summary judgment against him. Even if Streck had established the necessary predicate acts, this Court would still grant summary judgment because Streck has not satisfied the continuity requirement needed to prove a pattern of racketeering activity. 2. Continuity

[13] According to Northwestern Bell, [t]o establish a RICO pattern it must ... be shown that the predicates themselves amount to, or that they otherwise constitute a threat of, continuing racketeering activity. 492 U.S. at 240, 109 S.Ct. at 2901. The Northwestern Bell Court also explained that there are two alternative ways to satisfy the continuity prong: Continuity is both a closed- and open-ended concept, referring either to a closed period of repeated conduct, or to past conduct that by its nature projects into the future with a threat of repetition. Id. at 241, 109 S.Ct. at 2902. a. Closed-ended continuity A party alleging a RICO violation may demonstrate continuity over a closed period by proving a series of related predicates extending over a substantial period of time. Northwestern Bell, 492 U.S. at 241, 109 S.Ct. at 2902. This formulation raises the question of how long a substantial period of time is. The Supreme Court has declined to draw a bright line of substantiality. Id. at 243, 109 S.Ct. at 2902-03. The Supreme Court did state however that a few weeks or months is not enough. Id. at 242, 109 S.Ct. at 2902. Lower courts have followed the Supreme Court's lead in defining substantiality: while declining to draw bright lines, in deference to the fact that substantiality depends to a great extent on the nature of the underlying conduct, numerous courts have announced minimum durations coalescing around a consensus period of one year, short of which closed-ended continuity cannot exist. See 1 Civil RICO Litigation 4.03[E][2][a][i], at 479 to 4-85 & nn. 217-18 (collecting cases): [A]fter more than 500 courts have considered the issue, there is widespread agreement that conduct occurring over a period of less than 12 months is insufficient. On the other hand, the courts finding the period of conduct sufficient have involved acts continuing over a period of one to ten years. As the Third Circuit recently noted: Since [Northwestern Bell ], we, along with other courts, have defined a substantial period of time without setting any bright line test.... [W]e have never found such a period to exist where the racketeering activity occurred over a period of one year or less.... On the other hand, most courts that have found continuity in a closed period did so in cases involving periods of several years. *1165 United States v. Pelullo, 964 F.2d 193, 209 (3d Cir.1992) (citation omitted); see also Hughes v. Consol-Pennsylvania Coal Co., 945 F.2d 594, 609-10 (3d Cir.); cert. denied, --- U.S. ----, 112 S.Ct. 2300, 119 L.Ed.2d 224 (1992). The one post-Northwestern Bell case decided by the Ninth Circuit that specifically addressed closed-ended continuity is in accord: We have found no case in which a court has held the requirement to be satisfied by a pattern of activity lasting less than a year. A pattern of activity lasting only a few months does not reflect the long term criminal conduct to which RICO was intended to apply. Religious Technology Ctr. v. Wollersheim, 971 F.2d 364, 366-67 & n. 7 (9th Cir.1992) (collecting cases). [14] The predicate acts alleged by Streck do not support closed-ended continuity. The divorce proceedings between the parties started in December 1992 when Streck filed the Hawaii divorce petition and ended in November 1993 when the California court granted Peters' divorce petition. Streck alleges that the first predicate act occurred in April or May 1993 and the last occurred in August 1993. Thus, the predicate acts alleged here occurred over about a four month period. Four months is not a substantial period of time under Northwestern Bell or Religious Technology Center; therefore, Streck has not met his burden under a closed-ended continuity theory. b. Open-Ended Continuity [15] Continuity may also be demonstrated if the predicate acts constitute a threat of continuing racketeering activity: past conduct that by its nature projects into the future with a threat of repetition. Northwestern Bell, 492 U.S. at 240-41, 109 S.Ct. at 2901-02. This enables a RICO plaintiff to establish a pattern in instances in which the action is brought before the racketeering activity has extended over a period

long enough to constitute closed-ended continuity. In such cases, liability depends on whether the threat of continuity is demonstrated. Id. at 242, 109 S.Ct. at 2902. In Northwestern Bell, the Supreme Court overturned as too restrictive the Eighth Circuit's multiple scheme test, which held that under no circumstances could a RICO pattern be shown when the alleged predicate acts all arose from a single fraudulent effort or scheme. 492 U.S. at 240, 109 S.Ct. at 2901 (quoting H.J. Inc. v. Northwestern Bell Tel. Co., 829 F.2d 648, 560 (8th Cir.1987), cert. granted, 485 U.S. 958, 108 S.Ct. 1219, 99 L.Ed.2d 420 (1988), rev'd, 492 U.S. 229, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989)). The Supreme Court however was careful to point out that the existence of only one scheme, episode or event remains highly relevant. Id. The Ninth Circuit, among others, reasoned that the inability of a single scheme to constitute a pattern is because predicate acts designed to bring about a single event ... [do] not pose a threat of continuity. Sever v. Alaska Pulp Corp., 978 F.2d 1529, 1536 (9th Cir.1992); see also Religious Technology Ctr., 971 F.2d at 366 (conduct with singular goal poses no threat of continuation beyond attainment of the goal). Durning v. Citibank, International, a recent Ninth Circuit opinion, clarifies the standard for open-ended continuity. 990 F.2d 1133 (9th Cir.1993). In Durning, defendants issued $75 million in single-family mortgage revenue bonds. In connection with the bond issue, defendants circulated an Official Statement, a disclosure document akin to a prospectus. Plaintiffs purchased four bonds, believing that the bonds were not subject to redemption prior to 1991. Plaintiffs based their belief on the Official Statement. One of plaintiffs' bonds was redeemed in 1985. Plaintiffs brought suit, alleging violations of federal and state securities laws and RICO. Plaintiffs based their RICO claim on numerous predicate acts of mail and wire fraud in connection with defendants' initial dissemination of the Official Statement. The Ninth Circuit held that these predicate acts did not constitute a pattern of racketeering activity because all of the acts arose from a single, isolated event: the distribution of the misleading Official Statement. The Durning court relied on the following rule of law: The test for pattern in *1166 the Ninth Circuit inquires whether the predicate acts are sporadic or isolated. If they are isolated and sporadic, then they cannot form a pattern. ' Id. at 1138 (quoting Ikuno v. Yip, 912 F.2d 306, 309 (9th Cir.1990)). [16] In the case at bar, all of the predicate acts allegedly committed by defendants arose from the single event of attempting to ruin Plaintiff's law practice so that he would be forced to divulge the secret funds and incomes that they believed he had. Complaint 16 at 6. Thus, the predicate acts here are isolated and fail to form a pattern. Pursuant to Durning, Streck has failed to establish open-ended continuity. [17] Streck cannot establish a pattern of racketeering under RICO. Consequently, the Court hereby GRANTS summary judgment in favor of all defendants on Streck's RICO claim.FN4 FN4. Streck's RICO claim is also fatally deficient in that it fails to establish the existence of a RICO enterprise. There are two elements necessary to establish an enterprise under 18 U.S.C. 1961(4) & 1962(c). First, plaintiff must establish an enterprise having an existence separate and apart from the pattern of racketeering activity in which it is engaged. United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 2528-29, 69 L.Ed.2d 246 (1981). Second, plaintiffs must also demonstrate the existence of an ongoing organization in which the various associates function as a continuing unit. Id. Here, Streck has not even attempted to define the parameters of the enterprise. This alone is fatal to his RICO claim. See Otto v. Variable Annuity Life Ins., 814 F.2d 1127, 1136 (7th Cir.1986) (We affirm the dismissal of the RICO count for failure to identify the enterprise), cert. denied, 486 U.S. 1026, 108 S.Ct. 2004, 100 L.Ed.2d 235 (1988); Richter v. Sudman, 634 F.Supp. 234, 240 (S.D.N.Y.1986) (failure to identify the enterprise provide[s] an independent basis for dismissing RICO claims).

U.S. v. Elliott, 89 F.3d 1360 (8th Cir.(Mo.) Jul 22, 1996)

Use of mails can be intra or interstate to support conviction for 18 U.S.C. 1341 mail fraud.

Defendant was convicted in the United States District Court for the Eastern District of Missouri, Jean C. Hamilton, Chief Judge, of mail fraud and conspiracy to commit mail fraud. Defendant appealed. The Court of Appeals, Bowman, Circuit Judge, held that: (1) mail fraud statute applies to purely intrastate mailings; (2) no Batson violation occurred; (3) evidentiary rulings were proper; and (4) defendant was not entitled to downward departure. Affirmed. [1] Postal Service 306 35(2)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(2) k. Nature and Elements of Offense in General. Most Cited Cases Jurisdictional basis of mail fraud statute is grounded in postal power and therefore necessarily encompasses all items passing through United States mails even if their passage **is purely intrastate. U.S.C.A. Const. Art. 1, 8, cl. 7; 18 U.S.C.A. 1341. Before BOWMAN, BEAM, and MORRIS SHEPPARD ARNOLD, Circuit Judges. BOWMAN, Circuit Judge. Forriss D. Elliott was convicted of seven counts of mail fraud in violation of 18 U.S.C. 1341 (1988 & Supp. V 1993) and one count of conspiracy to commit mail fraud in violation of 18 U.S.C. 371 (1988) for submitting fraudulent legal bills to the state of Missouri in connection with his work as a special assistant attorney general. The District Court FN1 sentenced him to a term of sixty months of imprisonment. Elliott appeals his conviction and sentence. For reversal, Elliott raises four issues. First, he contends that the mail fraud statute does not apply to purely intrastate mailings. Second, Elliott, who is black, raises an equal-protection challenge to the racial composition of the all-white jury that convicted him. Third, he claims that the District Court made a number of evidentiary errors. Fourth, he challenges the length of his sentence as calculated under the sentencing guidelines. We affirm Elliott's conviction and sentence. FN1. The Honorable Jean C. Hamilton, Chief Judge, United States District Court for the Eastern District of Missouri. I. In the fall of 1989, Elliott, an attorney in private practice in the St. Louis area, was appointed a part-time special assistant attorney general to represent the Second Injury Fund (the Fund) and the State of Missouri in workers' compensation cases where either the Fund or the state was being sued. In limited circumstances, the Fund provides additional compensation to previously compensated employees who suffer a second job-related injury. The goal of the Fund is to encourage employers to hire the partially disabled by limiting the employer's liability in the event that the employee receives a subsequent compensable injury resulting in additional permanent partial disability. Mo.Rev.Stat. 287.220.1 (1994). As a special assistant attorney general, Elliott was authorized to bill the state for legal services rendered and expenses incurred in his work on *1363 behalf of the state. Elliott mailed his bills to the state on a monthly basis. The bills he submitted, however, turned out to be grossly inflated. After the state discovered the fraudulent billing scheme, Elliott was indicted for mail fraud. He was convicted after a third trial by an all-white jury. The first two trials, both of which had black jury members, resulted in hung juries.FN2 At trial, the government presented a mountain of documentary evidence that mapped out Elliott's fraudulent billing scheme. Thirty-six billing entries showed that Elliott or one of his employees worked more than twenty-four hours a day, sometimes in excess of fifty hours. On forty occasions, Elliott claimed that he or his associate, Steve Lewis, had appeared at a Workers' Compensation Division trial, court hearing, or deposition on behalf of the Fund when, in fact, minute sheets and deposition transcripts revealed that no one from his law firm was present. Elliott also billed the state for settlement negotiations supposedly done on case files that had been closed months or years earlier, some of which Elliott had closed himself. Numerous

times the billing entries showed Elliott, who billed himself out at seventy dollars an hour, as the person doing the legal work when, in fact, the work was done by his paralegal or his associate, both of whom had lower billable rates. The documents indicated that, on many occasions, instead of billing the thirty-dollar flat fee that is allowed for handling a partial disability case, Elliott billed partial disability cases at the much more lucrative hourly rate reserved for total disability cases. The documentary evidence also demonstrated that Elliott had grossly exaggerated copying and postage expenses. FN2. After the first two cases ended with hung juries, a third attempt at trial a few weeks later was unsuccessful when a mistrial was declared during the first day of jury selection because reference was made to the fact that Elliott had been tried twice previously. Although the substantial documentary evidence was probably enough to convict Elliott, the government also presented witness testimony that showed Elliott was the mastermind of the fraudulent billing scheme. While representing the Fund, Elliott employed two paralegals at different times to assist him in preparing the bills that he sent to the state. Elliott first hired Brenda Leake in August 1990. Leake testified that Elliott ordered her to make bogus entries on his billing statements. She worked for Elliott for about twelve months until she was fired in September 1991. Elliott then hired Connie O'Bryant as a new paralegal to assist in bill preparation. Even though O'Bryant was called as a defense witness, she acknowledged that Elliott gave her false entries to put in the bills. Mary Reinhardt, who worked for the state and received all the bills, also testified. She stated that while Leake was still employed by Elliott, Leake telephoned her to warn her about the false entries and recommended that someone look at the inflated bills. Elliott's former accountant, Brian Cox, also testified. In December 1992, after Elliott saw his picture splashed across the front page of the Sunday edition of the St. Louis Post-Dispatch accompanied by a story accusing him of billing fifty-hour work days, Elliott telephoned Cox. Elliott asked Cox to review his billing statements. Cox spent two weeks comparing the bills with Elliott's case files. Cox testified that the bills could not be substantiated. Finally, the government put on the previous sworn testimony of Elliott himself. Although denying criminal culpability, Elliott admitted certain bills were inflated or false and that the state was billed for work not done. Trial Trans. (Dec. 1, 1994) at 23-25 (testimony of court reporter regarding Elliott's sworn statements). II. [1] **Elliott first argues that the mail fraud statute, 18 U.S.C. 1341, does not apply to purely intrastate mailings. Although the evidence shows that Elliott used the United States mails to send his bills to the state, all were sent and received in Missouri. Relying on United States v. Lopez, 514U.S. 549, 115 S.Ct. 1624, 131 L.Ed.2d 626 (1995), Elliott insists that mail fraud requires some sort of interstate connection. We disagree. Lopez is a Commerce Clause case and therefore has no application whatsoever to the mail fraud *1364 statute, which is based on the Postal Power found in Article I, Section 8, Clause 7 of the Constitution. The Postal Power, of course, gives the federal government the power to deliver mail intrastate. In Lopez, the Supreme Court struck down the Gun-Free School Zones Act of 1990, which made it a federal offense for any individual knowingly to possess a firearm in a school zone. Congress had used the Commerce Clause as the source of its authority to enact the Gun-Free School Zones Act. The Lopez Court determined that Congress exceeded its Commerce Clause authority when it passed the Gun-Free School Zones Act because mere possession of a gun in a school zone did not substantially affect interstate commerce. Unlike the Gun-Free School Zones Act, the jurisdictional basis of the mail fraud statute is grounded in the Postal Power and therefore necessarily encompasses all items passing through the United States mails, even if their passage is purely intrastate. It is irrelevant that all of the mailings in this case may have been intrastate in nature, United States v. Cady, 567 F.2d 771, 776 n. 7 (8th Cir.1977), cert. denied, 435 U.S. 944, 98 S.Ct. 1526, 55 L.Ed.2d 541 (1978), because [t]he focus of the statute is upon the misuse of the Postal Service ... and Congress clearly has the authority to regulate such misuse of the mails, United States v. States, 488 F.2d 761, 767 (8th Cir.1973), cert. denied, 417 U.S. 909, 94 S.Ct. 2605, 41 L.Ed.2d 212 (1974). See also United States v. Minkin, 504 F.2d 350, 353 (8th Cir.1974) (affirming mail fraud conviction where fraudulent mailing made only twelve-mile intrastate journey), cert. denied, 420 U.S. 926, 95 S.Ct. 1122, 43 L.Ed.2d 396 (1975); United States v. Mirabile, 503 F.2d 1065, 1067 (8th Cir.1974) (affirming mail fraud conviction for intrastate mailing), cert. denied, 420 U.S. 973, 95 S.Ct. 1395, 43 L.Ed.2d 653 (1975). U.S. v. Cady, 567 F.2d 771, 2 Fed. R. Evid. Serv. 848 (8th Cir.(Mo.),Dec 09, 1977) Defendant was convicted in the United States District Court for the Eastern District of Missouri, James H.

Meredith, Chief Judge, on **eight counts of mail fraud and **one count of conspiracy to commit mail fraud. Defendant appealed, and the Court of Appeals, Webster, Circuit Judge, held that: (1) the evidence was sufficient to establish beyond a reasonable doubt that defendant participated in a scheme to defraud insurance companies; (2) evidence was sufficient to prove beyond a reasonable doubt that the mails were used in furtherance of the fraudulent scheme; (3) evidence that the mailings charged in the indictment and proved at trial were intended to induce, without litigation, a larger settlement of insurance claims than the facts justified was sufficient to establish that the mailings were in furtherance of a scheme to defraud and occurred prior to the fruition of the scheme, and (4) defendant was not deprived of his due process rights by the fact that evidence was presented to the grand jury from which the grand jury might have drawn an incorrect inference concerning defendant's professional practices as an attorney. Affirmed. [1] Postal Service 306 35(2)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(2) k. Nature and Elements of Offense in General. Most Cited Cases To establish a violation of the mail fraud statute, the Government must prove the existence of a scheme to defraud and the mailing of a letter for the purpose of executing the scheme. 18 U.S.C.A. 1341. [4] Criminal Law 110 568

110 Criminal Law 110XVII Evidence 110XVII(V) Weight and Sufficiency 110k568 k. Elements of Offenses in General. Most Cited Cases Because the element of knowledge is rarely capable of direct proof, the fact finder must view all pertinent circumstances to determine whether there was criminal intent or guilty knowledge. [5] Fraud 184 69(5)

184 Fraud 184III Criminal Responsibility 184k69 Prosecution and Punishment 184k69(5) k. Weight and Sufficiency of Evidence. Most Cited Cases Evidence including testimony of chiropractor who took part in scheme and testimony of several accident victims was sufficient to support finding that defendant participated in scheme to defraud insurance companies by submitting medical reports which inflated the number of times the accident victims visited the chiropractor's office and contained other false claims. 18 U.S.C.A. 371, 1341. [4] Criminal Law 110 568 110 Criminal Law 110XVII Evidence 110XVII(V) Weight and Sufficiency 110k568 k. Elements of Offenses in General. Most Cited Cases Because the element of knowledge is rarely capable of direct proof, the fact finder must view all pertinent circumstances to determine whether there was criminal intent or guilty knowledge. [5] Fraud 184 69(5)

184 Fraud 184III Criminal Responsibility 184k69 Prosecution and Punishment 184k69(5) k. Weight and Sufficiency of Evidence. Most Cited Cases Evidence including testimony of chiropractor who took part in scheme and testimony of several accident victims was sufficient to support finding that defendant participated in scheme to defraud insurance companies by submitting medical reports which inflated the number of times the accident victims visited the chiropractor's office and contained other false claims. 18 U.S.C.A. 371, 1341. [8] Criminal Law 110 369.15

110 Criminal Law 110XVII Evidence 110XVII(F) Other Offenses 110k369 Other Offenses as Evidence of Offense Charged in General 110k369.15 k. Evidence of Other Offenses to Prove Identity. Most Cited Cases Criminal Law 110 370

110 Criminal Law 110XVII Evidence 110XVII(F) Other Offenses 110k370 k. Acts Showing Knowledge. Most Cited Cases Criminal Law 110 371(1)

110 Criminal Law 110XVII Evidence 110XVII(F) Other Offenses 110k371 Acts Showing Intent or Malice or Motive 110k371(1) k. In General. Most Cited Cases Criminal Law 110 372(1)

110 Criminal Law 110XVII Evidence 110XVII(F) Other Offenses 110k372 Acts Part of Series Showing System or Habit 110k372(1) k. In General. Most Cited Cases Evidence of other similar crimes or acts is admissible to prove opportunity, intent, plan, knowledge, identity, or absence of mistake or accident. Federal Rules of Evidence, rule 404(b), 28 U.S.C.A. [10] Postal Service 306 35(2)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(2) k. Nature and Elements of Offense in General. Most Cited Cases To establish the mailing element of the offense of mail fraud, Government must prove that the accused used or caused the use of the mail and that the use was for the purpose of executing the deceptive scheme. 18 U.S.C.A. 1341.

[11] Conspiracy 91

45

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence 91k45 k. Admissibility in General. Most Cited Cases Postal Service 306 49(5)

306 Postal Service 306III Offenses Against Postal Laws 306k49 Evidence 306k49(2) Admissibility 306k49(5) k. Use of Mails to Defraud. Most Cited Cases Evidence including well-corroborated testimony that date receipt stamp appearing on matter described in indictment was routinely affixed in respective mail rooms of the recipients and that the recipient companies did not process hand-delivered mail in this manner was strong circumstantial evidence that the matter had been mailed and, therefore, trier of fact was entitled to consider such evidence, in prosecution for mail fraud and conspiracy to commit mail fraud. 18 U.S.C.A. 371, 1341, 1342. [12] Postal Service 306 35(1)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(1) k. Statutory Provisions. Most Cited Cases The mail fraud statute is written to apply to any scheme to defraud in which the mails are used and, therefore, it is to be read expansively to effectuate that purpose. 18 U.S.C.A. 1341. [13] Postal Service 306 35(2)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(2) k. Nature and Elements of Offense in General. Most Cited Cases **To fall within the mail fraud statute, a mailing must be for the purpose of executing a fraudulent scheme and must be employed before the scheme reaches fruition; however, mailing need not be an essential element of the scheme. 18 U.S.C.A. 1341. [14] Postal Service 306 35(8)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(8) k. Effectiveness of Matter Mailed to Further Fraud. Most Cited Cases In order to convict under the mail fraud statute, there must be evidence that the mailings charged were sufficiently closely related to a fraudulent scheme. 18 U.S.C.A. 1341. [15] Postal Service 306 35(11.1)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(11) False Pretenses or Representations 306k35(11.1) k. In General. Most Cited Cases (Formerly 306k35(11)) Where mailings charged in indictment for mail fraud and conspiracy to commit mail fraud contained false information relating to special damages such as medical treatment and loss of earnings and were intended to induce, without litigation, a larger settlement than the facts justified, mailings were in furtherance of scheme to defraud insurance companies and where mailings occurred prior to the fruition of the scheme, mailings were within the scope of the mail fraud statute. 18 U.S.C.A. 1341. [16] Postal Service 306 35(11.1)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(11) False Pretenses or Representations 306k35(11.1) k. In General. Most Cited Cases (Formerly 306k35(11)) In prosecution for mail fraud and conspiracy to commit mail fraud arising out of alleged scheme to defraud insurance companies by submitting false and inflated medical reports, it was irrelevant that all of the mailings may have been interstate in nature or that the mailings were very localized in their scope. 18 U.S.C.A. 371, 1341, 1342. [18] Constitutional Law 92 4576

92 Constitutional Law 92XXVII Due Process 92XXVII(H) Criminal Law 92XXVII(H)4 Proceedings and Trial 92k4572 Grand Jury 92k4576 k. Evidence and Witnesses. Most Cited Cases (Formerly 92k265, 92k257) Defendant, who was an attorney, was not denied due process of law by fact that prosecutor presented to grand jury certain evidence from which grand jury might have drawn adverse inference that defendant's clients received only about $1,500 in a case that was settled for $4,500. WEBSTER, Circuit Judge. Appellant George W. Cady appeals his conviction on eight counts of mail fraud and one count of conspiracy to commit mail fraud. The case was tried to the District Court.[FN1] On appeal appellant contends the evidence supporting his conviction was insufficient in three respects: (1) failure to prove beyond reasonable doubt that appellant was a party to the scheme to defraud; (2) failure to prove beyond a reasonable doubt that the mails were used in furtherance of a scheme to defraud; and (3) failure to prove beyond reasonable doubt that the mailings were of the quality required to invoke the federal statute. Additionally, he contends that erroneous and prejudicial information furnished to the grand jury deprived him of his Fifth Amendment due process rights. We reject these contentions and affirm the judgment of conviction. FN1. The Honorable James H. Meredith, Chief Judge, United States District Court for the Eastern District of Missouri. Appellant was originally indicted on fifteen counts charging violation of the mail fraud statutes, 18 U.S.C. ss 1341, 1342, and one count of conspiracy to violate the same in violation of 18 U.S.C. s 371. At the close of its case, the government moved for dismissal of seven of the mail

fraud counts. The trial judge convicted Cady on all of the remaining counts and sentenced him to a prison term of five years on each of the substantive counts, the terms to run concurrently, and a term of five years on the conspiracy count. Execution of the latter sentence, however, was suspended and a three-year term of probation, to follow the prison term on the other counts, was imposed. In addition, Cady was fined a total of $18,000 on the various counts. Viewed in the light most favorable to the government, the evidence establishes the following facts. Appellant Cady is an attorney with an active personal injury practice. Together with Dr. A. Jesse Wolff, a chiropractor, he carried out a scheme in which medical reports showing an inflated number of office visits to Dr. Wolff by accident victims were submitted to insurance companies in support of claims for injuries incurred in automobile accidents. Some of these persons were referred to Dr. Wolff by Cady, while others retained Cady's services only after they had previously consulted Dr. Wolff. There is also evidence that documents indicating time lost from employment in excess of that actually lost were submitted by Cady to the insurance companies. These inflated claims caused insurance company adjusters to pay larger sums in settlement of the claims than might otherwise have been necessary. I. The Scheme to Defraud [1][2][3] To establish a violation of s 1341 the government must prove: (1) the existence of a scheme to defraud, and (2) the mailing of a letter for the purpose of executing the scheme. Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 98 L.Ed. 435 (1954); United States v. Brown, 540 F.2d 364, 373 (8th Cir. 1976). Appellant's initial attack challenges the sufficiency of the evidence to establish his knowing participation *774 in a scheme to defraud. In matters other than the ultimate question of guilt, factual findings made by a trial judge in a trial to the court without a jury must stand unless they are clearly erroneous. United States v. Marley, 549 F.2d 561, 563 (8th Cir. 1977); United States v. Rischard, 471 F.2d 105, 107 (8th Cir. 1973). When the determination of a question of fact is also determinative of the ultimate question of guilt, it is the duty of the appellate court to determine whether there is substantial evidence, taking the view most favorable to the government, to support the fact determination by the trial court. United States v. Marley, supra, 549 F.2d at 563. This standard is the same as that used to review a determination made by a jury. United States v. Rischard, supra, 471 F.2d at 107. [4][5] Because the element of knowledge is rarely capable of direct proof, the fact-finder must view all of the pertinent circumstances to determine criminal intent or guilty knowledge. United States v. Marley, supra, 549 F.2d at 563. The government's evidence, viewed under the proper standard, is sufficient to establish Cady's role in the scheme and the use of the mails in furtherance thereof. In conjunction with the circumstantial evidence, the testimony of Dr. Wolff and several of the accident victims supports Judge Meredith's finding that Cady was a participant in the fraudulent scheme.[FN2] FN2. In its brief the government argues that knowledge, or its equivalent, can be established as a result of reckless disregard of, or indifference to, the truth, United States v. Marley, 549 F.2d 561, 563-64 (8th Cir. 1977), and that Cady's activities here support, at the very least, a finding that he was recklessly indifferent to the truth. This Court need not reach this issue since there is sufficient independent evidence of his knowing and intentional participation in the scheme. [6][7] Dr. Wolff's testimony directly implicated Cady in the scheme. The testimony of an accomplice, even if uncorroborated by other evidence, is competent evidence. United States v. Micciche, 525 F.2d 544, 546 (8th Cir. 1975); United States v. Montgomery, 503 F.2d 55, 57 (8th Cir. 1974), cert. denied, 420 U.S. 910, 95 S.Ct. 830, 42 L.Ed.2d 839 (1975). In this case there was abundant corroboration. The credibility of that testimony was for the trier of fact. Dr. Wolff testified that he prepared inflated medical reports for Cady. While he prepared some false medical reports without special instructions, he testified that on many occasions he received instructions from Cady over the telephone as to what information or treatment duration to show on the medical reports. One of these situations involved the claim of Susan Lehman, who at the time of her settlement was employed as a legal secretary in Cady's law office. She testified that after notifying Cady of her accident, he suggested that she consult with Dr. Wolff. She never went to Dr. Wolff for treatment or for any other reason, but a copy of a medical bill signed by Dr. Wolff showing twenty-eight visits was sent by Cady to MFA

Insurance Co. in support of a claim on behalf of Miss Lehman. Dr. Wolff testified that he received information with respect to the details of her accident and instructions as to number of visits to report from Mr. Cady by telephone. The record also reveals testimony by one Jill Remaly, who feigned injury after she and three other persons were involved in an accident. She consulted with Cady and told him of the accident and the feigning of injuries. He sent Miss Remaly to Dr. Wolff; she talked to Wolff but was not treated by him. No claim was ever filed in this matter because soon thereafter Miss Remaly was involved in a second accident. The claim for personal injury in the first case was dropped, and although Miss Remaly was only slightly injured in the second accident and received no medical treatment, Cady urged her to claim an injury and filed a claim for her which included a medical bill from Dr. Wolff's clinic in the amount of $175. Cady also submitted a lost work statement even though Miss Remaly was not unable to work and did not miss any time from her job. This claim was ultimately settled for $1,987. *775 [8][9] These are merely the clearest examples of extensive evidence from which the trier of the fact could find beyond reasonable doubt that Cady knowingly and intentionally participated in the fraudulent scheme. [FN3] FN3. It was argued that evidence admitted in connection with counts dismissed at the close of the government's case unfairly prejudiced Cady's case. Evidence of other similar crimes or acts is admissible to prove opportunity, intent, plan, knowledge, identity, or absence of mistake or accident. Fed.R.Evid. 404(b); United States v. Davis, 557 F.2d 1239, 1246 (8th Cir. 1977); United States v. Maestes, 554 F.2d 834, 836-38 (8th Cir. 1977); United States v. Jardan, 552 F.2d 216, 218 (8th Cir.), cert. denied, 433 U.S. 912, 97 S.Ct. 2982, 53 L.Ed.2d 1097 (1977). This evidence was probative on the issue of Cady's knowledge and the existence of a common scheme, and there has been no showing that its value was substantially outweighed by the danger of prejudice. See Fed.R.Evid. 403. II. Use of the Mails [10] Cady also challenges the sufficiency of the government's evidence to establish the use of the mails in furtherance of the scheme. Establishing the mailing element of the offense requires proof that: (1) the accused used or caused the use of the mails, and (2) the use was for the purpose of executing the deceptive scheme. United States v. Brown, 540 F.2d 364, 375-76 (8th Cir. 1976). A. Proof of Mailing. [11] Our examination of the record convinces us that there was **substantial testimony by those who received the mail matter described in the surviving counts [FN4] that it came in the mails from Cady. This testimony was based upon personal knowledge, or the fact that the date receipt stamp appearing on the mail matter was routinely affixed in the respective mail rooms of the recipients, and that these companies did not process hand-delivered mail, if there was any, in this manner.[FN5] This testimony was well corroborated. These practices are strong circumstantial evidence of mailing and the trier of the fact was entitled to consider them.[FN6] See, e. g., United States v. Minkin, 504 F.2d 350, 352-53 (8th Cir. 1974); United States v. Joyce, 499 F.2d 9, 17 (8th Cir. 1974); United States v. Brickey, 426 F.2d 680 (8th Cir.), cert. denied, 400 U.S. 828, 91 S.Ct. 55, 27 L.Ed.2d 57 (1970); United States v. Leathers, 135 F.2d 507 (2d Cir. 1943). FN4. See note 1 supra. FN5. Dr. Wolff testified that he mailed the documents described in Count 4 of the indictment, as well as other documents, to Cady. All of the mailings described in the other counts of the indictment were from Cady's office to the various claims offices, and there was substantial evidence in the record from which the trier of the fact could find that Cady caused such mailings. FN6. In United States v. Joyce, 499 F.2d 9 (7th Cir.), cert. denied, 419 U.S. 1031, 95 S.Ct. 512, 42 L.Ed.2d 306 (1974), the court found the use of date stamps to be insufficient proof of receipt through the mails. In that case, however, the company date stamped all incoming matter, including handdelivered correspondence, which it regularly received. In contrast, the evidence in this case was that

almost no correspondence was hand delivered and only mailed matter would have been date stamped upon receipt. B. Purpose of the Mailings. Appellant also contends that the mailings set forth in the indictment were merely incidental to the scheme alleged and intrastate in character. From this he argues that a federal offense under s 1341 has not been established. [12][13][14] Because the mail fraud statute is written to apply to any scheme to defraud in which the mails are used, it is to be read expansively to effectuate that purpose. United States v. Mirabile, 503 F.2d 1065, 1066 (8th Cir. 1974), cert. denied, 420 U.S. 973, 95 S.Ct. 1395, 43 L.Ed.2d 653 (1975). To fall within the mail fraud statute the mailing must be for the purpose of executing the scheme, must be employed before the scheme reaches fruition, but need not be an essential element of the scheme. Id. at 1067. Nonetheless, there must be evidence that the mailings were sufficiently *776 closely related to (the) scheme to bring (the defendant's) conduct within the statute. United States v. Brown, supra, 540 F.2d at 376 (brackets in original), citing United States v. Maze, 414 U.S. 395, 399, 94 S.Ct. 645, 38 L.Ed.2d 603 (1974). [15][16] The mailings charged in the indictment and proved at trial meet these requirements in all particulars. The false information related to special damages, such as medical treatment and loss of earnings, and were intended to induce, without litigation, a larger settlement than the facts justified. The mailings were thus all in furtherance of the scheme to defraud and occurred prior to the fruition of the scheme. See United States v. Perkal, 530 F.2d 604 (4th Cir. 1976) (mailing of fraudulent reports to insurance companies was use of the mails to defraud).[FN7] FN7. It is irrelevant that all of the mailings in this case may have been intrastate in nature, see United States v. Mirabile, 503 F.2d 1065 (8th Cir. 1974) (involving mailing of understated gross sales figures to the state tax authority), or that the mailings were very localized in their scope, see United States v. Minkin, 504 F.2d 350, 353 (8th Cir. 1974), cert. denied, 420 U.S. 926, 95 S.Ct. 1122, 43 L.Ed.2d 396 (1975) (mailings went a distance of twelve miles). As we said in United States v. States, 488 F.2d 761, 767 (8th Cir. 1973), cert. denied, 417 U.S. 909, 94 S.Ct. 2605, 41 L.Ed.2d 212 (1974), The focus of the statute is upon the misuse of the Postal Service . . . .

Steiner v. Superior Court, 50 Cal.App.4th 1771, 58 Cal.Rptr.2d 668, 96 Cal. Daily Op. Serv. 8615, 96 Daily Journal D.A.R. 14,224 (Cal.App. 4 Dist. Nov 26, 1996) District attorney instituted grand jury proceedings under Government Code seeking to unseat two county supervisors for their alleged role in events leading to county's bankruptcy as result of county treasurer's speculative investments. After grand jury issued substantially identical accusations, supervisors filed objections. The Superior Court of Orange County, John W. Ouderkirk, J., overruled objections, and supervisors sought writs of mandate/prohibition. The Court of Appeal, Wallin, J., held that: (1) allegations against supervisors did not establish willful misconduct within meaning of pertinent provision of Code, and (2) even if allegations were sufficient to invoke provision, they would be barred by immunity conferred by doctrine of separation of powers. Writs granted. [1] Counties 104 45

104 Counties 104II Government 104II(C) County Board 104k45 k. Removal. Most Cited Cases

Counties 104

67

104 Counties 104III Officers and Agents 104k67 k. Removal. Most Cited Cases Willful misconduct under provision of Government Code authorizing presentment of accusation to grand jury based on willful misconduct of county official, for purpose of removing official from office, requires something more than neglect; procedure must be reserved for serious misconduct that involves criminal behavior or, at least, a purposeful failure to carry out mandatory duties of office. West's Ann.Cal.Gov.Code 3060. Penal Code 15. Crime and public offense defined A crime or public offense is an act committed or omitted in violation of a law forbidding or commanding it, and to which is annexed, upon conviction, either of the following punishments: 1. Death; 2. Imprisonment; 3. Fine; 4. Removal from office; or, 5. Disqualification to hold and enjoy any office of honor, trust, or profit in this State.

People v. Superior Court (Gevorgyan), 91 Cal.App.4th 602, 612, 110 Cal.Rptr.2d 668, 00 Cal. Daily Op. Serv. 7006, 2001 Daily Journal D.A.R. 8546 (Cal.App. 2 Dist.,Aug 10, 2001) [5] Grand Jury 193 1 193 Grand Jury 193k1 k. Nature and Functions in General. Most Cited Cases Under the general law, grand juries have independent authority to investigate public offenses and return indictments. West's Ann.Cal.Penal Code 917, 940. [6] Indictment and Information 210 10.3

210 Indictment and Information 210II Finding and Filing of Indictment or Presentment 210k10 Finding of Grand Jury 210k10.3 k. Other Matters. Most Cited Cases Indictment does not contain allegations made by the prosecutor; rather, the allegations are made by the grand jury, albeit with the prosecutor's assistance. West's Ann.Cal.Gov.Code 26502; West's Ann.Cal.Penal Code 917, 940, 944. [5] *612 Under the general law, grand juries have independent authority to investigate public offenses and return indictments. (Pen.Code, 917, 940.) In practice, grand juries almost exclusively confine their consideration of public offenses to those matters presented to them by the district attorney. (Bradley v. Lacy (1997) 53 Cal.App.4th 883, 893, 61 Cal.Rptr.2d 919.) The indictment does not require the district attorney's signature [citation]. While it is the district attorney's duty to draw all indictments' ([Gov.Code,] 26502), [t]he obvious intendment is that the district attorney must draw all indictments only when requested **676 by the grand jury for ... advice and assistance. [Citation.] (Bradley v. Lacy, supra, 53 Cal.App.4th at p. 893, fn. 4, 61 Cal.Rptr.2d 919.) An indictment found by a properly constituted grand jury, shall be endorsed, A true bill, and the endorsement shall be signed by the foreman of the grand jury. (Pen.Code, 940.) An indictment,

when found by the grand jury, must be presented by their foreman, in their presence, to the court, and must be filed with the clerk. (Pen.Code, 944.) [6][7] Thus, an indictment does not contain allegations made by the prosecutor. Rather, the allegations are made by the grand jury, albeit with the prosecutor's assistance. In contrast, an information shall be in the name of the people of the State of California and subscribed by the district attorney. (Pen.Code, 739.) The information is filed following a preliminary hearing initiated upon a felony criminal complaint made under oath subscribed by the complainant. (Pen.Code, 806.) People v. Aguirre, 227 Cal.App.3d 373, 378, 277 Cal.Rptr. 771 (Cal.App. 4 Dist.,Jan 30, 1991) Jan. 30, 1991. As Modified on Denial of Rehearing Feb. 26, 1991. Defendant was convicted, pursuant to guilty plea, of 15 felony charges arising out of nighttime assault on two victims, in the Superior Court, Orange County, No. C-58619,Francisco P. Briseno, J., and defendant appealed. The Court of Appeal, Dickey, J., assigned, held that: (1) defendant could be initially charged by grand jury indictment, even though he was 16 years of age at time of offense, and (2) grand jury indictment tolled six-year statute of limitations applicable to defendant's offenses, even though he had not been subject of juvenile court petition and had not been found unfit to be handled under juvenile court law. Affirmed. [2] Infants 211 68.1

211 Infants 211VI Crimes 211k68 Rights and Privileges as to Prosecutions 211k68.1 k. In General. Most Cited Cases Grand jury may indict persons of any age, including infants, provided that offense has been committed or is triable within county. West's Ann.Cal.Penal Code 888, 917. [2] Aguirre cites no case authority for his contention that a grand jury has no jurisdiction to indict a minor, and our own research has not found any cases in California or any other state which support that conclusion. The grand jury has its origins in the early English common law and remains an established part of the American federal and state systems of criminal administration. (4 Witkin, Cal.Criminal Law (2d ed. 1989) Proceedings Before Trial, 1797, p. 2125.) A grand jury is a body of the required number of persons returned from the citizens of the county before a court of competent jurisdiction, and sworn to inquire of public offenses committed or triable within the county. (Pen.Code, 888.) The grand jury may inquire into all public offenses committed or triable within the county and present them to the court by indictment. (Pen.Code, 917.) An indictment is an accusation in writing, presented by the grand jury to a competent court, charging a person with a public offense. (Pen.Code, 889; see also Pen.Code, 691, subd. (d).) As we have noted, no cases limit the authority of the grand jury to indict persons of any age, providing the offense has been committed or is triable within the county.

3. Indictment An indictment by de facto grand jury which acted under color of lawful authority is as regular and valid as one found by de jure grand jury. In re Application of Hatch (1908, Cal App) 9 Cal App 333, 99 P 398, 1908 Cal App LEXIS 126. Indictment is merely accusation, presented by grand jury to competent court, charging person with public offense. People v. Olf (1961, Cal App 2d Dist) 195 Cal App 2d 97, 15 Cal Rptr 390, 1961 Cal App LEXIS 1429. 5. Offenses Within County A grand jury is authorized to investigate charges of lobbying or bribery of state legislators that occur within the county, or a

charge of conspiracy to commit such crimes, when an overt act in performance thereof is accomplished within the county. Samish v. Superior Court of Sacramento County (1938, Cal App) 28 Cal App 2d 685, 83 P2d 305, 1938 Cal App LEXIS 611. 18_usc_1341_nature_of_scheme_or_device_in_general_digest.doc
[Cited 2 times for this legal issue] U.S. v. Shewfelt, 455 F.2d 836 C.A.9.Cal.,1972 With regard to realty which had been deeded to state because of delinquency in payment of taxes, holders of privilege of redemption had an interest that was of value, and thus actions of such holders in executing disclaimers were not without legal significance, and scheme by defendants to succeed to interests held by such persons by making them defendants in groundless lawsuits could serve as basis for a prosecution for mail fraud. 18 U.S.C.A. 1341 . [Cited 1 times for this legal issue] U.S. v. Woods, 335 F.3d 993 C.A.9.Cal.,2003 Mail or wire fraud can take form of: (1) scheme or artifice to defraud, or (2) obtaining money or property by means of false or fraudulent pretenses, representations or promises. 18 U.S.C.A. 1341 , 1343 . [Cited 1 times for this legal issue] U.S. v. Bagnariol, 665 F.2d 877 C.A.9.Wash.,1981 Defendant, a state legislator, who expressed his intention to withhold from his campaign committee the disclosure of a contribution received as part of illegal activity, who was responsible for reporting the contribution either personally or through his committee, and who did neither caused his committee to mail a disclosure report which was inaccurate and could be convicted of mail fraud. 18 U.S.C.A. 1341 . [Cited 0 times for this legal issue] U.S. v. McDonald, 178 Fed.Appx. 643 C.A.9.Cal.,2006 That defendant's duty to disclose source of campaign contribution arose from state law did not preclude nondisclosure from forming basis of scheme to defraud supporting federal mail fraud conviction. 18 U.S.C.A. 1341 , 1346 . [Cited 0 times for this legal issue] U.S. v. McDonald, 178 Fed.Appx. 643 C.A.9.Cal.,2006 Defendant's failure to disclose true source of campaign contribution, in violation of state law, and his conduct in instructing another to create fake invoice for entity's receipt of payment and issue him false federal tax form indicating that payment was for his consulting service demonstrated scheme to defraud supporting conviction for mail fraud depriving public of right of honest services of public official. 18 U.S.C.A. 1341 , 1346 .

Penal Code Section 93. Bribes; judicial officer, juror, etc.; asking or receiving; punishment (a) Every judicial officer, juror, referee, arbitrator, or umpire, and every person authorized by law to hear or determine any question or controversy, who asks, receives, or agrees to receive, any bribe, upon any agreement or understanding that his or her vote, opinion, or decision upon any matters or question which is or may be brought before him or her for decision, shall be influenced thereby, is punishable by imprisonment in the state prison for two, three, or four years and, in cases where no bribe has been actually received,

by a restitution fine of not less than two thousand dollars ($2,000) or not more than ten thousand dollars ($10,000) or, in cases where a bribe was actually received, by a restitution fine of at least the actual amount of the bribe received or two thousand dollars ($2,000), whichever is greater, or any larger amount of not more than double the amount of any bribe received or ten thousand dollars ($10,000), whichever is greater. (b) In imposing a restitution fine under this section, the court shall consider the defendant's ability to pay the fine.
6. Future or potential actions A bribe intended to influence a case or decision not yet on a judge's docket, or intended to influence the assigning of cases, or intended to influence, generally, a judge's future actions with respect to matters that may come before him, falls within prohibitions of California bribery statutes. U.S. v. Frega, C.A.9 (Cal.)1999, 179 F.3d 793, certiorari denied 120 S.Ct. 1247, 528 U.S. 1191, 146 L.Ed.2d 105, certiorari denied 120 S.Ct. 1443, 529 U.S. 1029, 146 L.Ed.2d 331. Bribery 1(2)

Lexis Linkage between a payment and a specific official decision is not required under California bribery law (Pen C 7, 92, 93). A bribe intended to influence a case or decision not yet on a judge's docket, or intended to influence the assigning of cases, or intended to influence, generally, a judge's future actions with respect to matters that "may" come before him or her, falls within the statutory prohibitions. The law does not require any specific action to be pending on the date the bribe is received. The use of the word "may" suggests that payments designed to alter the outcome of any matter that could conceivably come before the official are within the prohibition. United States v. Frega (1999, 9th Cir Cal) 179 F3d 793, 1999 US App LEXIS 11774, cert den (2000) 528 US 1191, 146 L Ed 2, 120 S Ct 1247, 2000 US LEXIS 1627, cert den (2000) 528 US 1191, 146 L Ed 2, 120 S Ct 1247, 2000 USse LEXIS 1628, cert den (2000) 529 US 1029, 146 L Ed 2, 120 S Ct 1443, 2000 US LEXIS 2074. 2nd Floor Manager, Michelle Norhausen bribery_nature_elements_of_offense_digest_12_23_2010.doc
[Cited 5 times for this legal issue] People v. Gaio, 97 Cal.Rptr.2d 392 Cal.App.2.Dist.,2000 Bribery does not require that a specific official action was pending when the bribe was given, or proof that the bribe was intended to influence any particular such act; rather, it is sufficient that the evidence reflect that there existed subjects of potential action by the recipient, and that the bribe was given or received with the intent that some such action be influenced. West's Ann.Cal.Penal Code 67.5 , 68 . [Cited 4 times for this legal issue] U.S. v. Kincaid-Chauncey, 556 F.3d 923 C.A.9.Nev.,2009 When the government's theory in a prosecution for honest services fraud is that a public official accepted money in exchange for influence, an implicit quid pro quo is required in order to ensure that defendant had the requisite intent to defraud and to avoid convicting people for having the mere intent to curry favor. 18 U.S.C.A. 1343 . [Cited 4 times for this legal issue] U.S. v. Alessio, 528 F.2d 1079

C.A.9.Cal.,1976 For conviction under bribery statute, it was not necessary to show agreements between defendant and officer regarding particular acts which officer had performed or would perform; it was necessary only to show that something of value was given the officer for or because of any official act performed or to be performed. 18 U.S.C.A. 201(a, f) . [Cited 0 times for this legal issue] U.S. v. Kincaid-Chauncey, 556 F.3d 923 C.A.9.Nev.,2009 Quid pro quo necessary for a bribery honest services fraud conviction need not be explicit, and the district court need not use the words quid pro quo when it instructs the jury so long as the essential idea of give-and-take is conveyed. 18 U.S.C.A. 1343 . [Cited 0 times for this legal issue] People v. Gaio, 97 Cal.Rptr.2d 392 Cal.App.2.Dist.,2000 Bribery involves a payment designed to alter the outcome of any matter that could conceivably come before the official, and a large number of such matters may provide alternative predicates for the offense. West's Ann.Cal.Penal Code 67.5 , 68 . [Cited 0 times for this legal issue] People v. Gaio, 97 Cal.Rptr.2d 392 Cal.App.2.Dist.,2000 In a bribery prosecution, it is the payment, or the agreement to provide payment, that constitutes the criminal act, and it is that payment or agreement, not the possible object of influence, that must be found unanimously. West's Ann.Cal.Penal Code 67.5 , 68 . [Cited 0 times for this legal issue] People v. John, 12 Cal.Rptr. 696 Cal.App.1.Dist.,1961 Law punishes both offer and giving of bribe. West's Ann.Pen.Code, 67 . [Cited 0 times for this legal issue] People v. John, 12 Cal.Rptr. 696

Cal.App.1.Dist.,1961
Both proscriptions of offering and giving of bribe are violated if single act constitutes both offer to and delivery of bribe or if course of conduct is not divisible transaction. West's Ann.Pen.Code, 67 .

52 alr 3d 1274 Criminal liability of corporation for bribery or conspiracy to bribe public official
Evidence that president and sole shareholder of lending institution, functioning as mortgage lender with respect to mortgages approved by means of bribery, aided and abbetted in bribery was sufficient to support conviction of lending institution of aiding and abbetting bribery. United States v Bernstein (CA2 NY) 533 F2d 775, cert den (US) 50 L Ed 2d 608, 97 S Ct 523 and cert den (US) 50 L Ed 2d 608, 97 S Ct 523.

The matter to come before Tony Rackauckas is the prosecution of Wells

U.S. v. Bryant, 556 F.Supp.2d 378, 234 Ed. Law Rep. 741 (D.N.J.,Jun 05, 2008) People v. Keyes, 103 Cal.App. 624, 284 P. 1096 (Cal.App. 2 Dist.,Jan 31, 1930)

Detailed discussion of U.S. v. Kemp Prosecution of district attorney for bribery

People v. Griffin, 98 Cal.App.2d 1, 219 P.2d 519 (Cal.App. 3 Dist. Jun 10, 1950)

Bribery of sheriff U.S. v. Coyne (1993) 4 F.3d 100

Loan as bribe

People v. Gaio, 81 Cal.App.4th 919, 97 Cal.Rptr.2d 392, 00 Cal. Daily Op. Serv. 5037, 2000 Daily Journal D.A.R. 6709 (Cal.App. 2 Dist. Jun 22, 2000) Defendants were convicted in the Superior Court, Los Angeles County, No. BA109661,Curtis B. Rappe, J., respectively, of three counts of receiving a bribe and three counts of giving a bribe of value in excess of $400. One defendant received a five-year sentence, the second was sentenced to a term of three years and four months, and both were assessed restitution fines and direct victim restitution. Defendants appealed. The Court of Appeal, Cooper, J., held that: (1) bribery does not require that a specific official action was pending when the bribe was given, or proof that the bribe was intended to influence any particular such act; (2) evidence supported convictions; (3) it is the payment or agreement in a bribery prosecution, not the possible object of influence, that must be found unanimously; (4) consecutive sentences were not statutorily prohibited; and (5) there was sufficient evidence of intent to provide probable cause supporting indictment. Affirmed. [1] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Bribery does not require that a specific official action was pending when the bribe was given, or proof that the bribe was intended to influence any particular such act; rather, it is sufficient that the evidence reflect that there existed subjects of potential action by the recipient, and that the bribe was given or received with the intent that some such action be influenced. West's Ann.Cal.Penal Code 67.5, 68. [2] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Reference in bribery statute to the recipient's agreement or understanding to be influenced does not connote an extrinsic agreement with the giver, but rather, the recipient's own intent; the corrupt intent of the recipient (or of the giver, in the case of giving a bribe) need not be reciprocated. West's Ann.Cal.Penal Code 68. [3] Bribery 63 11

63 Bribery 63k8 Evidence 63k11 k. Weight and Sufficiency. Most Cited Cases Bribery convictions of a broker/salesman and an official within a county sheriff's department's food services department were supported by evidence; throughout the period during which the broker/salesman, working on commission for several food companies, made payments to or for the benefit of the official, the official occupied positions that enabled him to assist the broker/salesman's client, both to obtain prompt payment of its invoices under a contract with the county, and to make substitutions for specific foodstuffs that the contract required. West's Ann.Cal.Penal Code 67.5, 68. [4] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Bribery involves a payment designed to alter the outcome of any matter that could conceivably come before the official, and a large number of such matters may provide alternative predicates for the offense. West's Ann.Cal.Penal Code 67.5, 68. [5] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases In a bribery prosecution, it is the payment, or the agreement to provide payment, that constitutes the criminal act, and it is that payment or agreement, not the possible object of influence, that must be found unanimously. West's Ann.Cal.Penal Code 67.5, 68. [8] Indictment and Information 210 10.2(8)

210 Indictment and Information 210II Finding and Filing of Indictment or Presentment 210k10 Finding of Grand Jury 210k10.2 Evidence Supporting Indictment 210k10.2(8) k. Particular Offenses in General. Most Cited Cases There was sufficient evidence of bribery defendant's intent to provide probable cause supporting an indictment; the grand jury received evidence of payments to or on behalf of the defendant, an official in the food services department of a county sheriff's department, their source, a broker/salesman for food companies, the official's participation in coffee and cookie food purchasing transactions, and his false statements to investigators. [9] Indictment and Information 210 10.2(1)

210 Indictment and Information 210II Finding and Filing of Indictment or Presentment 210k10 Finding of Grand Jury 210k10.2 Evidence Supporting Indictment 210k10.2(1) k. In General. Most Cited dCases Indictment must be supported by probable cause, as traditionally defined. West's Ann.Cal.Penal Code 995. [10] Indictment and Information 210 10.2(1)

210 Indictment and Information 210II Finding and Filing of Indictment or Presentment 210k10 Finding of Grand Jury 210k10.2 Evidence Supporting Indictment 210k10.2(1) k. In General. Most Cited Cases For purposes of determining whether an indictment is supported by the requisite probable cause, elements of the offense may be established circumstantially. West's Ann.Cal.Penal Code 995. Frederick Gaio, Jr., and Rick Lynn Hodgin appeal from judgments imposed after a jury convicted them, respectively, of three counts each of receiving a bribe (Pen.Code, 68; undesignated section references are to that code) and giving a bribe with a value in excess of $400 ( 67.5, subd. (b)). Gaio received a five-year sentence, and Hodgin was sentenced to a term of three years and four months. Appellants also were assessed restitution fines of $1,000 for Gaio and $600 for Hodgin, and direct victim restitution of $21,479.84, payable jointly and severally to Los Angeles County ( 1202.4, subds. (a), (b), (f)). Appellants primarily raise contentions of insufficiency of evidence and instructional error, all of which derive from the premise that bribery under sections 67.5 and 68 requires that the bribe have been paid with intent to influence a specific, particular, official act. This premise does not correctly reflect California law, and appellants' contentions to that extent accordingly fail. Nor is there merit in appellants' remaining contentions, that their consecutive sentences violated section 654, and that reversal is required as to Gaio because of erroneous denial of his motion under section 995. We therefore affirm the judgments. FACTS Viewed in accordance with the governing rules of appellate review (People v. Ochoa (1993) 6 Cal.4th 1199,

1206, 26 Cal.Rptr.2d 23, 864 P.2d 103), the evidence at trial showed that between January 1995 and at least February 1996, Hodgin was a broker and salesman, working on commission for several food companies that sold provisions to the County of Los Angeles (county), for meals consumed by prisoners at jail facilities administered by the county's sheriff's department (LASD). During the same period, Gaio held a series of highranking positions in the Food Services Department of LASD (food services), which was responsible daily for providing meals to over 21,000 inmates, as well as 5,000 LASD staff meals. Food service's annual budget to purchase food for these meals exceeded $22 million. From January until mid-March of 1995 (and for many years previously), Gaio was Food Manager III, in charge of food services at the Men's Central Jail. In mid-March, Betty Starr, food services' new director, elevated him to acting assistant director, just below her. Gaio was formally promoted to that position, after a competitive examination, on July 6, 1995. Under Starr's administration, commencing in January 1995, Gaio participated in preparing *923 requisitions for food product contracts, to be let out for bid by the county through the purchasing and stores division of its Internal Services Department (purchasing and stores). He also assisted vendors with getting their invoices paid, and received presentations from them about new products they proposed to sell. In addition, Gaio and Starr supervised facility managers'**395 monitoring of suppliers' compliance with contract specifications. The indictment charged that Hodgin had paid Gaio, and Gaio had received from Hodgin, three bribes: $5,000 in January 1995; $1,500 in March 1995; and a 1995 Ford Taurus automobile between July 5 and September 7, 1995. There was no dispute that Hodgin paid Gaio the first two sums, and also made a down payment of $1,500 and two monthly payments of $561.66 each for the lease of a new Taurus for him. The testimonial and documentary evidence further established without question that the funds for these payments emanated from related companies, represented by Hodgin, which sold and sought to sell foodstuffs to the county for LASD. Testifying under grants of use and transactional immunity, respectively, Larry Solomon, president of Joy Foods and vice president of Infinity Sales in Florida, and Nunzio Moriscato, Las Vegas general manager of Infinity Sales until June 1995 and owner of Infinity Foods and Sundance Foods, described providing Hodgin the funds. Moriscato, who had known Gaio since 1993, employed Hodgin as a liaison with LASD. In December 1994, Moriscato provided Gaio with a weekend in Las Vegas, at corporate expense. Solomon testified that Moriscato had asked him to pay for the visit, in order to continue selling to the county. The following month, Hodgin asked Moriscato for $5,000, as an advance against commissions. Hodgin stated he needed the money either to permit him to continue working or to get a deal done with the county.FN1 Moriscato, in turn, asked Solomon to provide him that sum, for family medical expenses, to be repaid. Solomon wired Moriscato $5,100, of which Moriscato retained $100 for expenses due, and sent Hodgin a check for the remaining $5,000. Hodgin exchanged that check at his bank (American Savings Bank, in Huntington Beach) for a cashier's check payable to Gaio, which Gaio deposited. FN1. At trial, Moriscato gave the first stated reason, although before the grand jury he had recounted the second one. Moriscato was a recovering alcoholic, and he admitted that heavy drinking had impaired his memory. In March 1995, Moriscato testified, Hodgin asked him for $1,500, supposedly to buy a computer for someone at the county. Moriscato provided this payment from his own company, Infinity Foods (which he had incorporated to obtain a Nevada business license, Joy Foods and Infinity Sales being *924 Florida corporations). On April 4, 1995, Hodgin exchanged the check for one to Gaio. Gaio presented a $1,500 check at his credit union the following day. When Moriscato later became suspicious and told Hodgin he intended to inquire whether the county had received the computer, Hodgin volunteered to repay the $1,500, and did so. In May or June of 1995, Hodgin informed Moriscato that he needed to get a Ford Taurus for Gaio, in order to get either the bologna deal or the coffee deal done.FN2 Moriscato approached Solomon about acquiring the car for Gaio. Solomon was displeased, but Moriscato said it was necessary in order to continue selling to the county. Hodgin also called Solomon, and said he needed $1,500 to lease a Taurus for Gaio, to take care of him. According to Solomon, Hodgin said this was necessary to continue the relationship, to get our bills paid in a proper time and to continue selling cold cuts and product.

FN2. At both the grand jury and the trial, Moriscato admitted uncertainty about which deal was mentioned. However, while Infinity Sales' 1995 contract to supply the county cold cuts had already been made by this time, a coffee deal for LASD indeed was impending in June 1995, as discussed below. Solomon spoke to Hodgin about the matter more than once, and Hodgin was insistent, stating, I'm really going to do this for Fred. We're going to get him a leased car. Solomon agreed to provide the car, **396 so as to continue selling his products to the county [a]nd to get paid on my open invoices. At that time, Solomon had numerous invoices pending with the county; they were being paid slowly, causing delays for both Infinity Foods' income and its payments to its own suppliers. Solomon testified he needed the payments to be facilitated quickly. FN3 FN3. On cross-examination, Solomon further testified: Q You felt that maybe if you continued this relationship where you got this relationship going with Mr. Gaio, that perhaps those invoices could get paid more promptly? [] A That would be correct. **Accordingly, Solomon issued Hodgin an Infinity Sales check for $1,500, for the initial payment on the lease of the Taurus. On July 5, 1995, Hodgin exchanged the check at American Savings for a cashier's check in the same amount, payable to Ed Butts Ford, in La Puente. On the same day, Gaio delivered the check to that dealership, as the initial payment on his lease of a new 1995 Taurus.FN4 FN4. The salesperson who arranged the lease testified that she had known Hodgin for years, and that he had referred numerous customers to her. Hodgin subsequently phoned Solomon and requested another $560, for the August lease payment. Solomon sent the check. Hodgin cashed it at American Savings and obtained two cashier's checks, for $500 and $61.66, *925 payable to Ford Motor Credit Company, the payee of the lease, on which the monthly payment was $561.66. On August 24, 1995, Solomon issued Hodgin another $560 check, for the September payment. On August 30, Hodgin again obtained $500 and $61.66 cashier's checks payable to Ford Motor Credit. Solomon listed the three payments on his books as reimbursement for broker expenses. These three lease payments collectively comprised the last of the charged bribes. Thereafter, Solomon testified, he was unwilling to continue paying for the lease, in that the county had awarded a new cold cuts contract to another company, Harvest Farms, which Solomon believed should assume the responsibility. According to Solomon, at a meeting between himself, Hodgin, and Harvest Farms' owner George Callas, Hodgin stated that the lease was his own responsibility, and he would handle it.FN5 FN5. Callas testified that after Hodgin in September 1995 became a representative for Harvest Farms, he asked Callas to lease cars for both himself and Gaio. Solomon recounted that from January 1995 until his company's contract with the county expired that summer, Gaio assisted them in walking through the invoices to get paid on a quick basis. Gaio also assisted by authorizing substitutions of cold cuts different from those called for by the existing contract (e.g., turkey salami for turkey breast), such substitutions being occasioned by shortages from Harvest Farms, which was then Solomon's own supplier. The evidence also indicated that Gaio sought to assist Infinity Sales and Harvest Farms, as represented by Hodgin, with respect to two transactions for the purchase of coffee and cookies for LASD. First, in June 1995 food services presented purchasing and stores a requisition for approximately $800,000 in coffee. The coffee was to be supplied in large flow-through bags, rather than in drums as before. Christine Varnes, manager of purchasing and stores, testified that Gaio told her that the only vendor that could supply the coffee in this form was Coffee Connection, a company from and for which Moriscato and Infinity Sales bought and sold. LASD's requisition listed Coffee Connection, represented by Hodgin, as a reference vendor, i.e., one to which purchasing and stores could look. It also bore Gaio's name as contact person. The contract was let out for bid and was won by another company, after the bid submitted by Coffee Connection and Infinity Sales came in

**397 substantially higher, and their product failed a comparison test. The cookie transaction arose from an emergency, after the LASD's bakery's ovens failed in the beginning of January 1996. Cookies, ordinarily produced by that bakery, were an important part of the caloric menu content *926 for inmate lunches. Food services director Starr accordingly decided to requisition an outside purchase of Keebler cookies for the rest of the fiscal year, in the amount of $200,000. A purchase of that size, however, required bidding. Purchasing and stores directed food services to provide a requisition, for formal bidding, and to obtain three oral bids, based on which an interim, emergency purchase could be made through LASD's various vendors authority. The initial requisition, which showed Gaio as the contact person, listed Harvest Farms as the low bidder at $17.20 a case, and Joy Foods and Sundance Foods (Moriscato's company), both at $17.50. Moriscato testified that he hadn't had access to the cookies, but had provided a bid in order to assist the county. Solomon testified that neither he nor his company had been asked to supply a quote (although he had sold Keebler cookies to the county the year before). At this time Hodgin was working for Harvest Farms. Starr testified she had called him for its bid, while telling Gaio or another subordinate (who denied receiving the assignment) to get the other two bids. The $200,000 cookie purchase ultimately was abandoned. However, purchasing and stores did authorize the emergency interim purchase, for two weeks in January 1996. Several such purchases were made, from Harvest Farms, but they continued to mid-February of 1996, beyond the authorized term. Harvest Farms invoiced over $67,000 for these orders. In December 1996 and again in November 1997, Gaio was interviewed by investigators from LASD's Internal Criminal Investigations Bureau. The second interview occurred after search warrants had been executed at his home, car, and office. On each occasion, he denied having received anything of value from Hodgin. Interviewed in December 1997, Hodgin similarly denied giving any gifts or money to Gaio.FN6 Hodgin's telephone records showed 239 after-hours and weekend calls to Gaio's home during 1995, and 34 in 1996, 21 of them in January (the month of the cookie emergency). FN6. These false statements were admitted only with respect to the respective declarants. In addition, in 1997 Solomon encountered Gaio at a food show, after LASD investigators had interviewed Solomon's employees. Solomon asked if Gaio was aware of the investigation, and Gaio responded, There is nothing here. They have nothing. There is no evidence. Just keep your mouth shut. Hodgin did not present an affirmative defense. Gaio was the principal witness in his own defense. He testified that as of 1994 he had been in financial straits, his wages having been garnished to pay income tax arrears stemming from his withdrawal of retirement funds for a failed restaurant venture. Unable to borrow commercially, he sought to do so from Salvador *927 Garcia, a food services cook, and from Hodgin, a friend.FN7 Gaio accounted for the $5,000 payment of January 1995, which his bank records showed had been quickly spent, as a loan, to cover bills and to entertain his visiting daughters. He claimed to have signed and given Hodgin a document in the nature of a promissory note, but it was not produced. FN7. Garcia confirmed that on various occasions Gaio had borrowed, and repaid, as much as $2,000 from him. Gaio also admitted accepting the March 1995 payment and the car payments, which he claimed were added to the loan amount. He had not repaid any of the loan as of the time of trial (June 1998). He denied doing anything special for Hodgin, and specifically denied telling Varnes that Coffee Connection was the only available source for the bagged coffee. With respect to the cookie bids, Gaio insisted he **398 had spoken to Solomon about the county's need, and had obtained prospective prices from him and from Moriscato. Gaio admitted helping Hodgin expedite payments for his vendors, but stated, Not any more than I helped anybody else who needed it. He acknowledged allowing Infinity Sales in 1995 to substitute various cold cuts for those required under its contract with the county, but averred that the substituted goods were paid for at their own prices. He also acknowledged that even before Starr became director of food services, he would review sample products provided by Hodgin, and sometimes would bring them to Starr's predecessor and explore their potential utility and pricing. Gaio testified he had lied to the investigators about Hodgin's payments out of fear

and shame. [2] *928 Section 68, under which Gaio was charged and convicted, makes it a felony for any state, county, or city officer or employee to ask, receive, or agree to receive, any bribe, upon any agreement or understanding that his vote, opinion, or action upon any matter then pending, or which may be brought before him in his official capacity, shall be influenced thereby.... Section 67.5, under which Hodgin was convicted, criminalizes the giving or offering of a bribe to any state, city, or county ministerial officer or employee, the offense being either a misdemeanor or a felony, depending on whether theft of the thing given as the bribe would be petty or grand theft. Section 7, subdivision 6, further defines bribe as anything of value ..., asked, given, or accepted, with a corrupt intent to influence, unlawfully, the person to whom it is given, in his or her action, vote, or opinion, in any public or official capacity. This definition applies to both section 67.5 and, somewhat redundantly, section 68. (See People v. Longo (1953) 119 Cal.App.2d 416, 417-418, 259 P.2d 53; cf. People v. Diedrich (1982) 31 Cal.3d 263, 272, fn. 5, 182 Cal.Rptr. 354, 643 P.2d 971. (Diedrich ).) Collectively, then, the statutes thus define bribery as the giving or receipt of something of value, with the intent that the recipient be influenced in his or her vote, action, or opinion, in an official capacity (and in the case of the recipient with respect to any matter then pending or which may be brought before him ... ( 68)).FN8 FN8. Although section 68 speaks of the recipient's agreement or understanding to be influenced, that language connotes not an extrinsic agreement with the giver but rather the recipient's own intent. The corrupt intent of the recipient (or of the giver, in the case of giving a bribe) need not be reciprocated. (See Diedrich, supra, 31 Cal.3d at pp. 273-274, 182 Cal.Rptr. 354, 643 P.2d 971; 2 Witkin & Epstein, Cal.Criminal Law (2d ed. 1988) Crimes Against Governmental Authority 1163, p. 1343.) Diedrich, supra, 31 Cal.3d 263, 182 Cal.Rptr. 354, 643 P.2d 971, establishes that these proscriptions are not dependent on identification of a specific official act as the object of the bribe. Diedrich involved convictions of a county supervisor on two counts of bribery, in violation of section **399 165, by a developer that was seeking to have its property released from an agricultural preserve agreement.FN9 The proof on count I showed that in March 1974, the developer had indirectly provided the supervisor with benefits, and the supervisor contemporaneously had prepared a resolution and agreement by which the board of supervisors released the property from the agricultural preserve, but with the proviso that the developer later dedicate an easement to certain unspecified acreage, to be *929 approved by the board in the future. Count II charged that the supervisor had received another bribe on December 31, 1974, and the evidence showed that on that date he had received $20,000, indirectly from the developer. The supervisor contended that the evidence on count II was insufficient because no specific action regarding the developer's land had been pending before the board of supervisors on December 31, 1974. FN9. Section 165 addresses bribery of county supervisors, city council members, and similar members of local elective bodies. Its explicit terms closely resemble those of section 68 and section 67.5, as read in conjunction with section 7, subdivision 6. Moreover, the latter definition of bribe applies to section 165 as well. (Diedrich, supra, 31 Cal.3d at p. 272, fn. 5, 182 Cal.Rptr. 354, 643 P.2d 971.) The several statutes merit a like construction. Indeed, in the portion of Diedrich discussed immediately below, the Supreme Court when applying section 165 relied heavily on a case that had been brought under section 68 (People v. Markham (1883) 64 Cal. 157, 30 P. 620). Rejecting this contention, the Supreme Court stated: The law does not require any specific action to be pending on the date the bribe is received. Penal Code section 165 prohibits asking or receiving a bribe to effect the consideration ... of any question or matter, upon which [a person named by the statute] may be required to act in his official capacity, ... (Italics added.) The use of the word may suggests that payments designed to alter the outcome of any matter that could conceivably come before the official are within the prohibition of the statute.'' (Diedrich, supra, 31 Cal.3d at p. 276, 182 Cal.Rptr. 354, 643 P.2d 971.) The court proceeded to explain that In this case, there is ample evidence of matters that might have come before the board of supervisors: (1) zoning approvals for housing tracts to be developed, (2) allocation of gas tax for building roads in the area, (3) use of open space for orchards, and (4) sale of land needed for a flood plain to the county. Evidence concerning each of these issues was received at trial. (Diedrich, supra, 31 Cal.3d at p. 276, 182 Cal.Rptr. 354, 643 P.2d 971.) Furthermore, the court observed, the developer was obligated to dedicate acreage to the county in 100-acre lots, annually between 1976 and 1981, and the supervisors retained

discretion to decide the suitability of the land the developer would in the future so offer. This approval too-as to which the board had not taken action at the time of trial-also was a matter that might come before Diedrich in his official capacity. (Id. at p. 277, 182 Cal.Rptr. 354, 643 P.2d 971.) Diedrich thus both declares and demonstrates that bribery does not require that a specific official action be pending when the bribe is given, or that there be proof that the bribe was intended to influence any particular such act. Rather, it is sufficient that the evidence reflect that there existed subjects of potential action by the recipient, and that the bribe was given or received with the intent that some such action be influenced. Essentially the same point was made, albeit to a different end, in People v. Megladdery (1940) 40 Cal.App.2d 748, 106 P.2d 84, a decision much cited by Hodgin. Rejecting a contention that the subject of the bribe need be specifically imposed by law as a duty of the official, the court stated, It is sufficient to charge and prove that the subject matter upon which the bribe was to operate existed and could be brought before the public officer in his *930 official capacity. **400(Id. at p. 782, 106 P.2d 84.) A standard jury instruction-presently CALJIC No. 7.10 (6th ed.1996)-restates this principle, and in People v. Finkelstin (1950) 98 Cal.App.2d 545, 560, 220 P.2d 934, the court approved its rendition, in context, with the general pronouncement that Whether a chief of police will enforce the law against social vices is always before him. Appellants' contention that a bribe must be tied to a specific official action derives from an entirely different and distinguishable source, namely the United States Supreme Court's recent interpretation of a federal gratuity statute. In United States v. Sun-Diamond Growers (1999) 526 U.S. 398, 119 S.Ct. 1402, 143 L.Ed.2d 576 (Sun-Diamond ), the court construed Title 18 United States Code section 201(c)(1)(A), which criminalizes the giving of a thing of value for or because of any official act performed or to be performed by a federal public official. The court held that to establish a violation of [the statute], the Government must prove a link between a thing of value conferred upon a public official and a specific official act for or because of which it was given. (Sun-Diamond, supra, at p. 414, 119 S.Ct. 1402.) In so ruling, the court rejected the argument that the statute reaches any effort to buy favor or generalized goodwill from an official who either has been, is, or may at some unknown, unspecified later time, be in a position to act favorably to the giver's interests. (Id. at p. 405, 119 S.Ct. 1402.) The court based its conclusions primarily on an analysis of the statutory structure and text. Title 18 United States Code section 201(a)(3) sets forth a definition of official act, for purposes of the federal statute, that is itself particularized-the term official act means any decision or action on any question, matter, cause, suit, proceeding or controversy.... This definition intrinsically indicates a specific nexus for the prohibited payment, and the court reflected that The insistence on an official act, carefully defined, seems pregnant with the requirement that some particular official act be identified and proved. (Sun-Diamond, supra, 526 U.S. at p. 406, 119 S.Ct. 1402.) Moreover, the court somewhat conclusionally perceived the statutory phrase for or because of any official act performed or to be performed (18 U.S.C. 201(c)(1)(A)) to signify for or because of some particular official act of whatever identity, as opposed to for or because of official acts in general, without specification as to which one .... (Sun-Diamond, supra, at p. 406, 119 S.Ct. 1402.) We perceive no compulsion to rule, by analogy to Sun-Diamond, that the subject of a bribe under the California statutes at issue in this case must be a specific official act. Contrary to Gaio's analysis, the federal and California *931 bribery statutes are not nearly identical. Like the gratuity subpart that was at issue in Sun-Diamond, the bribery provisions of Title 18 United States Code section 201 incorporate the focused definition of official action on which the Sun-Diamond court placed emphasis, but which nowhere appears in sections 7, 67.5, or 68. (Cf. State v. Lopez (Fla.App.1988) 522 So.2d 997, 998-1000.) Moreover, as explained above, Diedrich, supra, 31 Cal.3d 263, 182 Cal.Rptr. 354, 643 P.2d 971, compels the opposite conclusion. Although the United States Supreme Court in Sun-Diamond perceived a requirement of specific official action in the statutory language any official action (Sun-Diamond, supra, 526 U.S. at p. 406, 119 S.Ct. 1402), the California Supreme Court in Diedrich focused on [t]he use of the word may, and concluded that payments designed to alter the outcome of any matter that could conceivably come before the official are within the prohibition of the statute. (Diedrich, at p. 276, 182 Cal.Rptr. 354, 643 P.2d 971.) The United States Court of Appeals for the Ninth Circuit recently reached a like conclusion regarding the requisites of California bribery law, as contrasted with the federal elements discerned in **401Sun-Diamond,

supra, 526 U.S. 398, 119 S.Ct. 1402, 143 L.Ed.2d 576. In U.S. v. Frega (9th Cir.1999) 179 F.3d 793, an attorney had been convicted of a violation of Title 18 United States Code section 1962(c), predicated on bribery of judges, as proscribed by sections 92 and 93 in language similar to that of sections 7, 67.5, and 68. He contended that the indictment had been defective because it failed to identify specific decisions or acts that he corruptly intended to influence by his financial generosity to the judges. (Frega, supra, 179 F.3d at p. 805.) The court disagreed. Drawing on the analysis in Diedrich, supra, 31 Cal.3d at p. 276, 182 Cal.Rptr. 354, 643 P.2d 971, the court declared, Linkage between a payment and a specific official decision is not required under California bribery law. (Frega, at p. 805, fn. omitted.) In an accompanying footnote, the court distinguished Sun-Diamond, supra, 526 U.S. 398, 119 S.Ct. 1402, 143 L.Ed.2d 576, and the federal statute it had interpreted. Accordingly, notwithstanding appellants' contentions, proof of the offenses in this case did not require that each bribe have been given and received with intent to influence a specific official act by Gaio. The evidence was sufficient if it established that Gaio received Hodgin's payments, and Hodgin made them, with the intent (or agreement or understanding, see fn. 8, ante ) that Gaio be influenced in any one or more instances, types, or courses of official action. And the evidence did establish that, albeit necessarily circumstantially (neither appellant having owned up to the corrupt intent). (See People v. Matson (1974) 13 Cal.3d 35, 41, 117 Cal.Rptr. 664, 528 P.2d 752.) [3] The evidence showed that throughout the period in which Hodgin made the payments to him or for his benefit, Gaio occupied positions that enabled *932 him to assist Hodgin's client, Infinity Sales, both to obtain prompt payment of its invoices under a contract with the county for LASD, and to make substitutions for specific foodstuffs that contract required. Solomon testified that Hodgin proposed, and he agreed to, the car lease for the purpose of obtaining Gaio's expediting Infinity Sales' invoices, and that Gaio had performed that service beginning at least in January of 1995. Gaio did not deny, and in fact admitted, that he had assisted Hodgin and Infinity in this way, as well as with the product substitutions. It is plainly inferable that appellants engaged in the various payments with the intent that Gaio be influenced to do so. Another matter within the potential contemplation of Gaio, Hodgin, and Hodgin's principals was the so-called coffee deal, LASD's $800,000 requisition of specially bagged coffee in June 1995. As previously noted, Moriscato testified that Hodgin may have requested the Taurus for Gaio in order to get this deal done. In addition, Moriscato testified that for several years before the June 1995 coffee requisition, he and Coffee Connection had been working to develop the flow-through bag for presentation to LASD, and also that he and Hodgin had been attempting for several years to secure a contract for Coffee Connection to supply coffee to LASD. The jury therefore could have concluded that not only the auto lease, but also one or both of the other two payments, provided by Hodgin and facilitated by Moriscato, were given with the intent to influence Gaio with respect to that matter in 1995.FN10 FN10. On cross-examination and before the grand jury, Moriscato testified that Hodgin's request for the January 1995 payment could not have been for the coffee deal, because that deal did not arise until later in the year. This testimony does not foreclose the possibility that Hodgin made the payment to Gaio, and Gaio accepted it, with a view toward, among other things, LASD's forthcoming coffee requisitions. (Cf. Diedrich, supra, 31 Cal.3d at pp. 276-277, 182 Cal.Rptr. 354, 643 P.2d 971.) Finally, it was established that Gaio's duties included ordering food for the central jail, and participation in the preparation of product specifications and requisitions for purchasing and stores' food **402 purchases for LASD. During the cookie crunch of early 1996, Gaio accordingly was involved in a purchase of cookies, much of it unauthorized, from Harvest Farms, to which Hodgin had then moved. The cookie purchase arose from an unanticipated emergency in 1996, and so the 1995 payments cannot be specifically linked to it. However, the relationship between Gaio and Hodgin, as well as the latter's knowledge of the former's position and capacities, would justify an inference that one or more of the payments was made and accepted with the intent that Gaio be influenced to favor Hodgin and his principals with respect to specifications, requisitions, and other recommendations for bidding and purchasing, such as on this occasion. *933 We conclude that the evidence was amply sufficient to justify appellants' convictions on all of the counts. [4][5] At bottom, this contention too derives from the premise that the offense of bribery requires, and includes as an element, that a specific, identified act, be the intended subject of influence by the bribe. Once more, that is incorrect. Bribery involves a payment[ ] designed to alter the outcome of any matter that could conceivably

come before the official.... (Diedrich, supra, 31 Cal.3d at p. 276, 182 Cal.Rptr. 354, 643 P.2d 971.) A large number of such matters may provide alternative predicates for the offense. (See id. at pp. 276-277, 182 Cal.Rptr. 354, 643 P.2d 971.) It is the payment, or the agreement to provide payment, that constitutes the criminal act, and that, not the possible object of influence, is what must be found unanimously.

Yellow flag U.S. v. Kemp, 500 F.3d 257 (3rd Cir.(Pa.) Aug 27, 2007) (NO. 05-3477, 05-3561)
A loan or loans on terms not generally available to the public received by a public official constitutes violation of Penal Code Section 70,the public offense of bribery, and mail and wire fraud constitutes the public offense of bribery, violation of Penal Code Section 70, constitutes the crime of bribery, in violation of Penal Code Section 70 **Congress has clarified that the term scheme or artifice to defraud includes a scheme or artifice to deprive another of the intangible right of honest services. 18 U.S.C. 1346.

1 Witkin, Cal. Crim. Law 3d (2000) Elements, 87, p. 302 Supplement Copyright (c) 2000, 2008 B.E. Witkin Article Sixth Testamentary Trust Witkin California Criminal Law, Third Edition B.E. Witkin, Norman L. Epstein, and Members of the Witkin Legal Institute Chapter II. Elements V. CONSPIRACY E. Objects of Conspiracy. 3. [ 87] False Charge, False Suit, and Fraud. The following objects contain some element of fraud:<<* p.303>> (1) Conspiracy To Cause Charge of Crime. (P.C. 182(a)(2) [Falsely and maliciously to indict another for any crime, or to procure another to be charged or arrested for any crime].) This provision was held to refer to a conspiracy to bring a formal charge by indictment or information. Hence a conviction was reversed where the evidence showed that the alleged conspirators intended merely to threaten public disclosure of immoral conduct. (People v. Shawn (1932) 125 C.A. 55, 59, 13 P.2d 866; see 7 So. Cal. L. Rev. 113.) (2) Conspiracy To Bring False Suit. (P.C. 182(a)(3) [Falsely to move or maintain any suit, action or proceeding]; see In re Nichols (1927) 82 C.A. 73, 74, 255 P. 244.) (3) Conspiracy To Defraud. (P.C. 182(a)(4) [To cheat and defraud any person of any property, by any means which are in themselves criminal, or to obtain money or property by false pretenses or by false promises with fraudulent intent not to perform such promises].) (See People v. George (1925) 74 C.A. 440, 445, 241 P. 97; People v. Moran (1958) 166 C.A.2d 410, 412, 333 P.2d 243; People v. Proctor (1993) 18 C.A.4th 1055, 1060, 22 C.R.2d 888 [conspiracy to defraud established by Jamaican Switch fraud; P.C. 332, proscribing fraudulent games (2 Cal. Crim. Law (3d), Crimes Against Public Peace and Welfare, 273), did not apply because scheme was not a game]; People v. Superior Court (Shamis) (1997) 58 C.A.4th 833, 844, 68 C.R.2d 388, 1 Cal. Crim. Law (3d), Crimes Against the Person, 154 [staged collision between automobile and truck to defraud insurance company]; 68 Harv. L. Rev. 1066.) ****SUPPLEMENT**** 1 Witkin, Cal. Crim. Law 3d (2010 supp.) Elements, 87, p. 119 3. [ 87] False Charge, False Suit, and Fraud. p. 303: (3) Conspiracy To Defraud. P.C. 182(a)(4) was amended in 2001 to change such to those in the language quoted in the text.

1 Witkin, Cal. Crim. Law 3d (2000) Elements, 88, p. 303 Supplement Copyright (c) 2000, 2008 B.E. Witkin Article Sixth Testamentary Trust Witkin California Criminal Law, Third Edition B.E. Witkin, Norman L. Epstein, and Members of the Witkin Legal Institute Chapter II. Elements V. CONSPIRACY E. Objects of Conspiracy. 4. [ 88] Injury to Public or Obstruction of Justice. P.C. 182(a)(5) contains the loose and obscure statement: To commit any act injurious to the public health, to public morals, or to pervert or obstruct justice, or the due administration of the laws. (1) Obstruction of Justice. Lorenson v. Superior Court (1950) 35 C.2d 49, 216 P.2d 859, upheld the constitutionality of this provision against a claim of fatal uncertainty. The court looked to the common law and to Title 7 of the Penal Code (P.C. 92 et seq.), dealing with such offenses as bribery, escapes, rescues, perjury, falsifying evidence, and said: Generally speaking, conduct which constitutes an offense against public justice, or the administration of law includes both malfeasance and nonfeasance by an officer in connection with the administration of his public duties, and also anything done by a person in hindering or obstructing an officer in the performance of his official obligations A conspiracy with or among public officials not to perform their official duty to<<* p.304>> enforce criminal laws is an obstruction of justice and an indictable offense at common law . .. In the same category is a conspiracy to obtain the release of a person charged with a felony by presenting a worthless and void bail bond. (35 C.2d 59, 60.) (See Calhoun v. Superior Court (1955) 46 C.2d 18, 31, 291 P.2d 474 [conspiracy to commit acts in violation of Elections Code]; People v. Sullivan (1952) 113 C.A.2d 510, 519, 248 P.2d 520 [following Lorenson]; People v. Hardeman (1966) 244 C.A.2d 1, 12, 18, 53 C.R. 168 [defendant judge not prejudiced by indictment charging offense in language of statute, where indictment also alleged 24 overt acts and defendant was furnished copy of grand jury transcript]; 68 Harv. L. Rev. 1061.) In Davis v. Superior Court (1959) 175 C.A.2d 8, 345 P.2d 513, supra, 86, the court observed that Lorenson, Sullivan, and Calhoun have charted boundaries to its otherwise limitless sea of criminality. (175 C.A.2d 14.) But the opinion adds that the scope of the statute is not confined to crimes listed in Title 7 of the Penal Code (Crimes Against Public Justice); it includes others of the same type, e.g., corrupt conduct of attorneys (formerly in Title 7, now B. & P.C. 6128, 6129), and unauthorized communication with a prisoner (formerly in Title 7, now P.C. 4570). (175 C.A.2d 16.) In People v. Martin (1982) 135 C.A.3d 710, 185 C.R. 556; judge M and attorney B were convicted of conspiracy to obstruct justice. The evidence showed that, in cases involving clients of attorney B, judge M disposed of the cases contrary to his normal practices and without the participation, consent, or knowledge of the district attorneys office. The defendants appealed. Held, judgments affirmed. (a) P.C. 182(5) (now P.C. 182(a)(5)) is not unconstitutionally vague. (135 C.A.3d 720.) (b) It is not necessary to prove an intent to obstruct justice as such; the evidence is sufficient if it shows an intent to do acts constituting an obstruction of justice as such acts are described in the accusatory pleading. No motive is required, and the failure to show that judge M received money or other thing of value was therefore irrelevant. The unlawful end was that cases were disposed of in the district attorneys absence and without his knowledge or consent. (135 C.A.3d 722.) (2) Injury to Public. Although the phrase referring to an act injurious to public health or morals has occasionally been cited as the basis of a conviction, it is doubtful whether it serves any significant purpose. The object of the conspiracy will almost invariably be within the terms of some specific criminal statute, and therefore can be charged under the more inclusive provision on conspiracy to commit any crime. (See People v. Benenato

(1946) 77 C.A.2d 350, 356, 175 P.2d 296 [conspiracy to commit<<* p.305>> pandering]; People v. Galway (1953) 120 C.A.2d 45, 49, 260 P.2d 212 [conspiracy to advertise false cure in violation of statute]; People v. Califro (1953) 120 C.A.2d 504, 512, 261 P.2d 332 [conspiracy to commit abortion]; People v. Rehman (1967) 253 C.A.2d 119, 149, 61 C.R. 65 [conspiracy involving unlawful operation of hospital; indictment charged conspiracy to commit acts injurious to public health and to violate numerous specific provisions of various codes]; 75 Harv. L. Rev. 1652; 12 Stanf. L. Rev. 290.) In Rehman, the court rejected a contention that the phrase any act injurious to the public health is unconstitutionally vague. The phrase was well defined at common law, and was directed at quarantine violations, unnecessary operations, and unlicensed practice of medicine for improper purposes. (253 C.A.2d 149, 151, 154.) ****SUPPLEMENT**** 1 Witkin, Cal. Crim. Law 3d (2010 supp.) Elements, 88, p. 119 4. [ 88] Injury to Public or Obstruction of Justice. Wests Key Number Digest, Conspiracy 34 1 Witkin, Cal. Crim. Law 3d (2000) Elements, 89, p. 305 Supplement Copyright (c) 2000, 2008 B.E. Witkin Article Sixth Testamentary Trust Witkin California Criminal Law, Third Edition B.E. Witkin, Norman L. Epstein, and Members of the Witkin Legal Institute Chapter II. Elements V. CONSPIRACY E. Objects of Conspiracy. 5. [ 89] Conspiracy To Commit Any Crime. P.C. 182(a)(1), the catch-all section (conspiracy to commit any crime), applies to all crimes, including misdemeanors, whether in the Penal Code or some other code (People v. Osslo (1958) 50 C.2d 75, 97, 323 P.2d 397; People v. Severino (1953) 122 C.A.2d 172, 183, 264 P.2d 656; People v. Saugstad (1962) 203 C.A.2d 536, 547, 21 C.R. 740; People v. Jones (1964) 228 C.A.2d 74, 82, 39 C.R. 302, 1 Cal. Crim. Law (3d), Introduction to Crimes, 61 [lottery laws]), or in a municipal ordinance (People v. Malotte (1956) 46 C.2d 59, 66, 292 P.2d 517). (See 68 Harv. L. Rev. 1065; 91 A.L.R.2d 1148 [gambling].) This rule is subject to an exception where a special statute prevails over the general language of P.C. 182(a)(1). (In re Williamson (1954) 43 C.2d 651, 654, 276 P.2d 593, 1 Cal. Crim. Law (3d), Introduction to Crimes, 60.) In People v. Farina (1963) 220 C.A.2d 291, 33 C.R. 794, defendants F and G entered a car in an airport parking lot, with keys capable of operating it. The conviction of burglary (P.C. 459) was sustained, but the conviction of conspiracy to violate Veh.C. 10852 (unlawful tampering) was reversed. Veh.C. 10852 by its terms applies to a person acting either individually or in association with one or more other persons; the word association as used therein means the same as agreement in conspiracy; thus the Legislature intended the Vehicle Code section to reach those who conspire to violate it. Hence, defendant was not subject to the felony charge of conspiracy under P.C. 182, but only to the misdemeanor charge under Veh.C. 10852. (220 C.A.2d 293, 294, citing the text.) (On other situations in which provisions of special statute preclude prosecution under general conspiracy statute, see supra, 70, 84.)<<* p.306>> P.C. 182(a)(6) proscribes a conspiracy [t]o commit any crime against the person of the President or Vice President of the United States, the governor of any state or territory, any United States Justice or Judge, or the secretary of any

of the executive departments of the United States. ****SUPPLEMENT**** 1 Witkin, Cal. Crim. Law 3d (2010 supp.) Elements, 89, p. 119 5. [ 89] Conspiracy To Commit Any Crime. p. 306: (New) Distinction: Any crime does not include federal crimes: The term any crime in P.C. 182(a)(1) refers only to crimes created by California law. In People v. Zacarias (2007) 157 C.A.4th 652, 69 C.R.3d 81, defendant and T were involved in transporting undocumented aliens. After picking up two undocu-<<*Supp. p.120>> mented aliens for delivery to relatives, defendant, accompanied by T, drove them in his van to a meeting place in a restaurant parking lot. Once there, T started arguing with a relative of the aliens about the amount of money owed for the delivery. The argument turned violent, and defendant and T, with the aliens still in the van, sped away. After a short chase, they were caught by the relative, who then shot and killed T and left with the aliens. Defendant was convicted of kidnaping for financial gain, based on holding the aliens in the van without their consent when defendant and T refused to release them without being paid additional money, and again when defendant drove away with the aliens. The jury was instructed on three alternative theories to support the conviction. The theory at issue here was that defendant was guilty of kidnaping for financial gain as a natural and probable consequence of a conspiracy between defendant and T to commit the federal crime of alien transportation. Held, conviction reversed. (a) California case law has not specifically addressed whether any crime, as used in P.C. 182(a)(1), includes federal crimes. The statute has been interpreted to include all crimes punishable by the Penal Code or by any other California law or statute, not crimes defined by another jurisdiction. (157 C.A.4th 659, 660.) (b) We conclude that the vicarious liability doctrine applicable to conspiracies exists to extend the liability of those who are guilty of conspiracies to commit California crimes and not to commit federal crimes. (157 C.A.4th 660.) Although it is not necessary to charge conspiracy in order to convict a defendant of a crime as the natural and probable consequence of a conspiracy, the underlying conspiracy must be proved. There is no support for the proposition that the conspiracy can be one that could not be charged and proved under P.C. 182. It would be odd for a defendant to be vicariously liable for a serious California crime based on an agreement that is not criminal under California law. (157 C.A.4th 660.) (c) Because it could not be determined whether the jury convicted defendant based on one of the two legally viable theories, or on the legally defective conspiracy theory, defendants conviction would be reversed. (157 C.A.4th 661.) In re Nichols, 82 Cal.App. 73, 255 P. 244 (Cal.App. 2 Dist.,Mar 26, 1927) Application by Gladys Nichols for writ of habeas corpus to be directed to the sheriff of Los Angeles County, to secure release of petitioner after conviction of conspiracy. Writ discharged, and petitioner remanded. Habeas corpus. In the first count of the information, petitioner was charged with the crime of conspiracy to commit the crime of extortion; and in **the second count of the information with the crime of conspiracy to falsely move and maintain a suit, action, and proceeding. On the trial of the action, petitioner herein was convicted on each of such counts. Under the first count, by order of the trial court, petitioner was placed on probation, and under the second count she was sentenced to a term in the state prison. In this proceeding it is the contention of petitioner that, notwithstanding the fact that the information formally contained two counts, as a matter of law, but one offense was stated therein, that the order made by the trial court on the so-called first count of the information in granting probation to petitioner exceeded the jurisdiction of said court, and that the sentence imposed on petitioner under the second count of the information was in excess of the jurisdiction of said court and consequently was a nullity. The prosecution of petitioner in the criminal action was authorized by section 182 of the Penal Code, wherein,

among other things, it is provided that, if two or more persons conspire (1) to commit any crime; *** (3) falsely to move or maintain any suit, action**245 or proceeding ***-they shall be punishable as in said section prescribed. [1] In the first count of the information, as hereinbefore set forth, petitioner was charged with the crime of conspiracy to commit the crime of extortion, in that she and two other persons named thereindid willfully, unlawfully, and feloniously, wickedly, and fraudulently conspire, combine, confederate, and agree with Carl H. Marks and Hilda E. Daws, and each with the other, to commit a felony, to wit, the crime of extortion, in the county of Los Angeles, state of California; that thereafter, and in furtherance of the conspiracy aforesaid, the said defendant Gladys Nichols, together with Carl H. Marks and Hilda E. Daws, did call up the said R. J. Johnson on the telephone and make an appointment *75 for a demonstration of an automobile, and did go out with said R. J. Johnson for a demonstration, and did rent a room in the Crawford Apartments at No. 941 South Georgia street, in which the said R. J. Johnson was to be trapped with Hilda E. Daws, and did make an appointment with the said R. J. Johnson to go to said room with Hilda E. Daws, and did watch the said Hilda E. Daws and R. J. Johnson go up to said apartment, and did thereafter enter the said room and surprise the said R. J. Johnson therein in company with the said Hilda E. Daws, and did demand money from the said R. J. Johnson, and did threaten to sue the said R. J. Johnson for alienation of affections, and did hire and employ an attorney for the purpose of suing the said R. J. Johnson, and for the purpose of thereby and therein, as aforesaid, of extorting and obtaining money from the said R. J. Johnson, contrary to the form, force, and effect of the statute in such cases made and provided, and against the peace and dignity of the people of the state of California. Without setting forth the language of the second count of the information, it may suffice to state that thereby petitioner was charged with the commission of the crime of conspiracy to falsely move and maintain a suit, action, and proceeding by doing and performing substantially the same acts as were set forth in the first count, together with the additional allegation that petitioner and her confederates did falsely pretend and represent that Carl H. Marks was married to Hilda E. Daws, and did thereby and therein conspire to falsely maintain a suit for alienation of the affections aforesaid. The act alleged to have been committed by the defendant in the first count of the criminal action by which a conspiracy to commit one criminal act was charged was therefore substantially restated in the second count by which the defendant was charged with having committed a different offense. The only difference between the allegations in the two counts was that in the second count the falsity of the pretension of the conspirators that Hilda E. Daws was the wife of Carl H. Marks was alleged, which allegation was omitted from the first count. By section 518 of the Penal Code, extortion is defined as the obtaining of property from another, with his consent, *76 induced by a wrongful use of force or fear. *** And the fear which will constitute extortion may be induced by a threat to do an unlawful injury to the property of the individual who is threatened. Section 519, Pen. Code. In the count on conspiracy to commit extortion, the only injury with which the intended victim was threatened was that he would be sued for alienation of affections of Hilda E. Daws. Neither count of the information contains an allegation that the affections of Hilda E. Daws had been alienated by the intended victim; nor apparently, at least so far as may be determined from the information, had he committed any unlawful act. Had Hilda E. Daws been an unmarried woman, her affections could not have been alienated so as to create a cause of civil action in Marks or any other person. As specifically stated in the statute (section 519, Pen. Code), in order that the criminal act may amount to extortion, in effect the threat must be that, unless the intended victim comply with such demands as may be made of him, an unlawful injury will result to his property. It is plain that ordinarily, and in the absence of collusion, no unlawful injury would ensue to a man who was sued, or threatened to be sued, because he had alienated the affections of a married woman, and that, in the circumstances, **the threatened unlawful injury to the intended victim in the criminal action here being considered arose solely because Hilda E. Daws was not the wife of Carl H. Marks; **in other words, on the assumed facts herein, there could be an unlawful injury only in the event that no cause of action existed with reference to the feature of alienated affections. The gist of the offense was that money was demanded by the alleged conspirators for the purpose of preventing the bringing of an action that could not be maintained-which constituted the threatened unlawful injury to which reference is made in the statute.

In the case of People v. Schmitz, 7 Cal. App. 330, 369, 370, 94 P. 407, 419, 420 ( 15 L. R. A. [N. S.] 717), in denying an application for hearing in the Supreme Court after decision by the District Court of Appeal, the following language occurs: It is very clear that to constitute the crime of extortion committed by means of any threat to injure property of the *77 person threatened, the injury threatened, as was, in effect, said by the learned district court, must be, in itself, unlawful, irrespective of whether or not the purpose with which the threat is made is to obtain money to which the person threatening is not entitled. *** The word unlawful, as used in this statute, qualifies the word injury alone. If the injury threatened to property is one which the person threatening has an absolute legal right to do, he cannot be held to have threatened to do an unlawful injury to the **246 property, even though his motive in making the threat is to obtain from the person threatened money to which he is not entitled, and, consequently, it cannot be held to be an injury within the provisions of sections 519 and 520 of the Penal Code. *** What is meant by the term unlawful injury? Giving to such term the broadest meaning possible under the authorities, it can include no injury that is not of such a character that, if it had been committed as threatened, it would have constituted an actionable wrong, an injury for which an action for the resultant damages could be maintainable against the defendant, or which, if merely threatened, could be enjoined in equity if the remedy at law were deemed inadequate. In the later case of People v. Sanders, 188 Cal. 744, 756, 757, 207 P. 380, 385, the ruling in the Schmitz Case was reaffirmed. In commenting thereon, it is said: This court in that case decided that the term unlawful injury as used in section 519, subd. 1, of the Penal Code, had reference to injuries of such a character that if committed as threatened would have constituted an actionable wrong, and further held that the indictment in that case did not sufficiently show that the acts threatened, as stated therein, were not such as could and would have been lawfully done; and that in order to render an act which a person might lawfully do an unlawful injury to the person or property of another, such act must be threatened to be done by means which the law denounces as unlawful. *** It may therefore be taken as established law that, considering the first count of the information herein, one of the essential allegations was that an unlawful injury was threatened as to the property of the intended victim. The *78 only unlawful injury which, solely from the context of such count, could possibly result to the intended victim was that a civil action would be brought against him for alienating the affections of Hilda E. Daws, not from her husband, because she had none, but from her coconspirator Carl H. Marks. If it be possible (which point is unnecessary of decision here) that said first count stated the commission of a criminal offense, it does so only by considering that it contains a sufficient averment of fact that Hilda E. Daws was not a married woman, and therefore that, by reason of the threatened civil action for the alienation of the affection of Hilda E. Daws, an unlawful injury was threatened as against the intended victim. So considered, in substance, the first count of the information would be identical with the second count thereof.

Keycite
People v. Wallace, 78 Cal.App.2d 726, 178 P.2d 771 (Cal.App. 1 Dist. Mar 25, 1947)

Attempted grand theft.

People v. Daniels, 105 Cal. 262, 38 P. 720 (Cal. Dec 26, 1894)

Falsely move to matain slander suit

California Jurisprudence 3d Database updated May 2010 Criminal Law: Miscellaneous Offenses Glenda K. Harnad, J.D., of the staff of the National Legal Research Group, Inc., Robert F. Koets, J.D., and William Lindsley, J.D.

IV. Conspiracy D. Conspiracies Prohibited 1. Statutory Offenses Topic Summary Correlation Table References 89. Conspiracy to falsely maintain action or proceeding West's Key Number Digest West's Key Number Digest, Conspiracy 34

It is a criminal offense for two or more persons to conspire falsely to move or maintain any suit, action, or proceeding.[1] A prosecution under this provision may be maintained by proving a conspiracy to commence an action without cause, knowing that no cause of action exists, or where one does exist, using false testimony or other unlawful means to maintain it.[2]

[FN1] Pen. Code, 182, subd. (a)(3). [FN2] People v. Daniels, 105 Cal. 262, 38 P. 720 ( 1894). Westlaw. 2010 Thomson Reuters. No Claim to Orig. U.S. Govt. Works. California Civil Practice Procedure Database updated October 2010

Justice Eileen C. Moore, Michael Paul Thomas, Esq. Chapter 1. Preliminary Steps III. Claims Against Public Entities A. Legal Principles 5. Late Claims Summary 1:72. Circumstances requiring court to grant petition for judicial relief Under Gov. Code, 946.6, subd. (c), the court must relieve the petitioner from the requirement of presenting a claim pursuant to Gov. Code, 945.4, if the court finds that the application to the public entity to file a late claim [Gov. Code, 911.4] was made within a reasonable time not exceeding one year after the accrual of the cause of action [Gov. Code, 911.4, subd. (b)] and was denied or deemed denied pursuant to Gov. Code, 911.6, and that one or more of the following is applicable: (1) the failure to present the claim was through mistake, inadvertence, surprise, or excusable neglect unless the public entity establishes that it would be prejudiced in the defense of the claim if the court relieves the petitioner from the requirement of presenting a claim pursuant to Gov. Code, 945.4; (2) the person who sustained the alleged injury, damage, or loss was a minor during all of the time specified in Gov. Code, 911.2 for presentation of the claim;

(3) the person who sustained the alleged injury, damage, or loss was physically or mentally incapacitated during all of the time specified in Gov. Code, 911.2 for the presentation of the claim and by reason of that disability failed to present a claim during that time; (4) the person who sustained the alleged injury, damage, or loss died before the expiration of the time specified in Gov. Code, 911.2 for the presentation of the claim. Incapacitation may be a basis for excusing the filing of a claim with the incorrect entity. [Draper v. City of Los Angeles, 52 Cal. 3d 502, 276 Cal. Rptr. 864, 802 P.2d 367, 64 Ed. Law Rep. 846 (1990)] Westlaw. 2010 Thomson Reuters. No Claim to Orig. U.S. Govt. Works.

Cause of action for RICO against ADORNO & YOSS, ALAVARADO & ASSOCIATES; AKA ALVARADO & SMITHY; STEVEN MICHAEL LAWRENCE; MIGUEL A. DUARTE. From, 2 Legal Malpractice 12:5 (2009 ed.), Chapter 12. Racketeer Influenced And Corrupt Organizations Act (RICO), 12:5. Attorneys' exposure under RICO Related Criminal Convictions. If the attorney's conduct violates a criminal law, the attorney may face exposure under RICO's criminal provisions.77 When convictions result from criminal RICO claims against attorneys, the conduct usually includes bribery.78 An example is United States v. Frega.79 In that case, an attorney was convicted on several RICO-related counts arising from bribes paid by the attorney to several judges to influence cases in which the attorney was involved. Bribery may be only one facet of a criminal enterprise, which may also involve perjury. Perjury, however, is not a predicate act under RICO.80 As one New York court observed, the existence of perjury, although not a predicate act, does not preclude a plaintiff from stating a claim upon which relief can be granted under RICO.81 The lawyers-defendants previously had been convicted of conducting a criminal enterprise under RICO based on their involvement in fraudulently creating and litigating personal injury claims. In addition to perjury, the conviction and pattern of conduct were based on bribing actual witnesses as well as bribing phony witnesses.82 77 E.g.,U.S. v. Eisen, 1990 WL 164681 (E.D. N.Y. 1990), aff'd, 974 F.2d 246, 36 Fed. R. Evid. Serv. 580 (2d Cir. 1992); U.S. v. Ianniello, 808 F.2d 184, 190192, R.I.C.O. Bus. Disp. Guide (CCH) P 6482 (2d Cir. 1986) (abrogated on other grounds by, U.S. v. Indelicato, 865 F.2d 1370, R.I.C.O. Bus. Disp. Guide (CCH) P 7113 (2d Cir. 1989)); U.S. v. Teitler, 802 F.2d 606, R.I.C.O. Bus. Disp. Guide (CCH) P 6395 (2d Cir. 1986).

U.S. v. Eisen, 1990 WL 164681 (E.D.N.Y. Oct 19, 1990) *1 The two count indictment in this case charges eight defendants with conducting and participating in the affairs of the law firm of Morris J. Eisen, P.C. (the Eisen Firm) through a pattern of racketeering in violation of 18 U.S.C. 1962(c) (RICO) and with conspiring to do so in violation of 18 U.S.C. 1962(d). The case is now before the Court on pretrial motions submitted by the defendants. In connection with the foregoing charges, the third superseding indictment, filed on August 1, 1990, sets forth twenty-six predicate acts of racketeering, including allegations of mail fraud in violation of 18 U.S.C. 1341, allegations of bribery of witnesses in violation of New York Penal Law 215.00, and an allegation of bribery of a public servant in violation of New York Penal Law 200.00, relating to twenty-three personal injury lawsuits said

to have been handled by the Eisen Firm and one legal malpractice case brought against the firm. **The mail fraud predicate acts relating to the personal injury lawsuits allege that defendants engaged in schemes to defraud the civil defendants in those lawsuits to obtain monetary judgments against them in order to deprive them and their liability insurance companies of money and to obtain contingency fees from the Eisen Firm's clients. MAIL FRAUD PREDICATE ACTS Defendants argue that the mail fraud predicate acts must be dismissed because they fail to allege deprivation of property as required under McNally v. United States, 483 U.S. 350 (1987). In McNally, the United States Supreme Court held that the mail fraud statute was limited in scope to the protection of property rights and that it does not proscribe schemes to defraud individuals or entities of intangible rights. Id. at 360. A mail fraud charge must, accordingly, allege that the defendants used the mails in furtherance of a scheme to deprive an individual or entity of money or other property. Defendants argue that, in essence, they are accused of depriving their adversaries in civil litigation of the right to a judgment in a civil proceeding obtained free of fraud and perjury, which, they note, is not cognizable under the mail fraud statute since such a right does not constitute property. **However, the indictment does not charge the defendants with a scheme to deprive anyone of such a right but alleges instead that the object of each fraud was to ensure that the Eisen Firm would recover large damage awards or settlements from civil defendants and their liability insurance companies. Thus, while it may be inferred that it was part of the scheme's objective of the various schemes to deprive the civil litigants of a fair trial, **it is also expressly alleged to be an objective to deprive them of the money which they would have to pay subsequent to losing an unfair trial. No legal precedent requires that an illegal mail fraud scheme have only one objective. Defendants next argue that a money judgment against a civil defendant does not constitute property. Be that as it may, the indictment alleges that defendants' ultimate objective was to recover money from the civil defendants by means of the judgments they obtained. **Again, if one of the multiple objectives of the fraudulent scheme was to obtain money, that is all the statute requires. *2 Defendants also contend that there was no significant potential for loss of money by the adversaries in a substantial number of the underlying civil cases, because any judgment would, as a practical matter, be paid by an insurance company, not by the civil defendant. Such a fact-based argument as to the contemplated victim of any scheme to defraud cannot be resolved in advance of trial. In any event, the third superseding indictment renders this point less than dispositive. The new indictment charges the defendants with attempting to defraud both the civil defendants and their insurance companies. Defendants next argue that, whether they intended to obtain money from the civil defendants or their insurance carriers, the mail fraud allegations fail to satisfy the convergence theory approved by the Second Circuit in dictum in United States v. Evans, 844 F.2d 36, 39 (2d Cir.1988),FN1 because any deceit was practiced on the juries and judges from whom no money was sought. The principle referred to requires that the party that defendants intended to deceive and the party intended to be injured be the same. Defendants claim that, because the allegedly false testimony at the civil trials was presented to the jury, the civil defendants and insurance carriers did not rely on the truth of the testimony but in fact contested it at trial. Thus, they argue only the jury was deceived, if anyone was. The argument is frivolous. Nothing in logic or common sense excludes the possibility that a defendant might intend to deceive both the jury and the adversary. Civil defendants and insurance companies, acting through their attorneys, may indeed have objected to evidence and cross-examined witnesses presented by a plaintiff's law firm but nevertheless relied on the oath, the rules of evidence, and canons of ethics as the basic ground rules for the litigation. Where judgments were paid by civil defendants' insurance companies, these insurance companies would similarly have assumed that these judgments were awarded after ethically conducted trials. The convergence theory is satisfied where defendants make the fraudulent misrepresentations to the party injured and intend that that party rely upon them. A fraudulent scheme need not succeed in defrauding an intended victim to fall within the mail fraud statute. See United States v. Starr, 816 F.2d 94, 98 (2d Cir.1987). Assuming the

applicability of the convergence theory, its requirements are satisfied by an indictment such as this one which alleges that defendants intended to injure and to deceive the civil defendants and their insurance companies. Defendants also argue that the connection between the alleged fraud and the potential loss of money by a civil litigant is, as a matter of law, too attenuated to constitute property. Essentially, they argue that the actual effect of perjury would be difficult to determine in most cases. In making this argument, defendants elaborate on language that appears in United States v. Eckhardt, 843 F.2d 989 (7th Cir.), cert. denied, 109 S.Ct. 106 (1988), in which the Seventh Circuit held that the connection between the charged conduct [perjury] and the loss of revenue here is too tenuous and speculative to constitute an actual deprivation of money or property under the mail fraud statute. Id. at 997. The case, for what it is worth, is far different from the one alleged here. In Eckhardt, the indictment did not allege that defendants deprived the government of money or intended such a deprivation. Rather, the indictment charged Eckhardt simply with interfering with the IRS's proper ascertainment and collection of income taxes. Id. at 996-97. It was this objective that the Seventh Circuit found to have too tenuous a connection with defendant's activities to warrant prosecution. In the instant case, by way of contrast, defendants are charged with scheming to defraud for the purpose of obtaining money. Certainly, assuming that defendants can be shown to have done what they are alleged to have done, a jury should be permitted to consider the proposition that it was done with the concrete objective of obtaining recovery from the civil defendants. *3 Defendants challenge on related grounds the twentieth racketeering act in the third superseding indictment, which alleges a scheme to defraud Alan Hochberg, a former client of the Eisen Firm who is said to have brought a malpractice action against the firm arising from the dismissal of a civil action. The indictment alleges a scheme to defraud Hochberg by concealing from him a private investigator's report for the purpose of depriving Hochberg of (i) his cause of action for malpractice against the Eisen Firm and (ii) the actual report and the confidential information it contained. Defendants challenge the first object as defective under McNally and argue that reference to it should be stricken. They do not challenge the validity of the second objective. Defendants argue that Hochberg was nothing more than a creditor owed money by the Eisen Firm and that such a person does not have a property interest in the assets of its debtor for purposes of the mail fraud statute. However, the thrust of the accusation is that the Eisen Firm intended to deprive Hochberg of his cause of action against it. In United States v. Porcelli, 865 F.2d 1352 (2d Cir.), cert. denied, 110 S.Ct. 53 (1989), **the Second Circuit held that a fraudulent scheme to deprive a victim of a chose in action is cognizable under the mail fraud statute. Id. at 1361. The false representations on Porcelli's tax returns deprived the state of its intangible property right in the civil right, or chose in action, to obtain [the sales tax] proceeds. Id. at 1360. Under New York law, a cause of action is a chose in action. In re Walton's Estate, 247 N.Y.S.2d 21, 25 (App.Div. 1st Dep't 1964). Moreover, New York caselaw has long held that a cause of action is property. Thus, the New York Court of Appeals has stated: [A] cause of action, as we know, is property. In re Washington Square Slum Clearance, 5 N.Y.2d 300, 308 (1959). See also In re Walton's Estate, supra, at 25 (New York law recognizes a right of action as property or a right to property.). Because a cause of action is property, it is protected by the mail fraud statutes. In McNally v. United States, 483 U.S. 350 (1987), the Court did not limit the mail fraud statute to deprivation of physical property. Rather, it excluded from the act's scope such amorphous rights as the right to good government. In McNally, the Court ruled that the mail fraud statute does not encompass fraudulent schemes that merely violate the intangible right of the citizenry to good government. State of New York v. Hendrickson Bros., 840 F.2d 1065 (2d Cir.1988) (citations omitted). A cause of action is property under New York law. Whether the government will be able to show that any fraudulent activities by the defendants were so crucial to the establishment of Hochberg's case that a rational juror could find beyond a reasonable doubt that the defendants' objective was to torpedo Hochberg's lawsuit cannot, of course, be determined in advance of trial. DUE PROCESS *4 Defendants contend that Count One of the indictment, alleging a violation of 18 U.S.C. 1962(c), should be dismissed because it violates due process in the manner in which the predicate acts are pled in that the indictment includes (i) improper allegations of nonqualifying criminal conduct, (ii) duplicitous allegations of multiple RICO

predicates within a single racketeering act and (iii) allegations which raise the spectre that one defendant may be found guilty of racketeering activity based upon the conduct of a different defendant. Additionally, defendants argue that, since all of the allegations of Count One have been incorporated by reference in Count Two, the RICO conspiracy count, Count Two must also be dismissed. Defendants first argue that, in an effort to prejudice the defendants, the indictment improperly refers to other criminal conduct not qualifying as predicate acts within the meaning of the RICO statute. In support of their applications to strike these references, defendants argue that there is a potential that the jury would conclude that a defendant had committed a predicate act upon a finding that he had committed non-qualifying conduct. The allegations of other misconduct not qualifying as a RICO predicate act are, on their face, relevant to the issue of the continuity of the RICO enterprise. United States v. Kaplan, 886 F.2d 536 (2d Cir.1989). Accordingly, they may not be stricken as surplusage. Whether to admit proof of this conduct at trial should be decided following the usual procedures for weighing probative value against prejudice. Federal Rule of Evidence 403. Risk of jury misuse of properly admitted proof of other misconduct can be removed by appropriate jury instructions. Kaplan, supra. Defendants also argue that the racketeering acts set forth in Count One and incorporated by reference in Count Two contain duplicitous allegations of multiple RICO predicates within a single Racketeering Act. For example, the ninth racketeering act includes **one charge of bribery and one charge of mail fraud, either of which would suffice as a predicate act. The indictment charges the predicate acts relating to any particular civil lawsuit in the alternative. In response to this concern, the prosecution has agreed that it will not argue that two predicate acts involving the same civil suit can constitute a pattern. The Court will also, on appropriate written request, so instruct the jury. On this understanding, defendants have withdrawn this objection to the manner of pleading the predicate acts. Defendants raise a related claim that the indictment impermissibly suggests that an individual defendant may be liable for a Racketeering Act on the basis of conduct which he or she did not individually participate in or aid and abet. The alternative predicate offenses charged within each racketeering act include different combinations of defendants. For example, while defendants Eisen, Fishman, and Weinstein are charged with both bribery and mail fraud in the ninth racketeering act, defendant Morganti is charged only with bribery, and defendant Rella is charged only with mail fraud. Defendants argue that the jury might convict defendant Rella based in part on the ninth racketeering act even if it found that others had committed bribery and nobody had committed mail fraud. The solution to this problem lies in appropriate jury instructions. The parties are invited to submit them at the pretrial conference. SUFFICIENCY OF PLEADING OF MATERIALITY *5 Defendants argue that the indictment fails to plead materiality in the mail fraud predicate acts and must be dismissed because materiality is required to sustain a mail fraud charge. To support a mail fraud conviction, the deceit must have gone to the nature of the bargain; that is, any nondisclosures or affirmative misrepresentations must have been material. United States v. Von Barta, 635 F.2d 999, 1005-06 n. 14 (2d Cir.1980) (citations omitted), cert. denied, 450 U.S. 998 (1981). [A]n indictment is sufficient if it, first, contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend and, second, enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense. Hamling v. United States, 418 U.S. 87, 117 (1974). The elements of mail fraud are (1) a scheme to defraud and (2) the mailing of a letter, etc., for the purpose of executing the scheme. Pereira v. United States, 347 U.S. 1, 8-9 (1954); see also United States v. Pisani, 773 F.2d 397, 409 (2d Cir.1985). The mail fraud charges in the indictment allege those two elements and are sufficient to inform defendants of the charges against them and to bar any new prosecution of them for the same crime. At trial, the government must prove the materiality of any misrepresentations, but materiality need not be pled specifically in the indictment. See, e.g., United States v. Turoff, 652 F.Supp. 707, 709 (E.D.N.Y.1987). The mail fraud predicate acts in this case contain the required allegations. Defendants also argue that the the twenty-fourth act of the third superseding indictment, involving the case of

Ippolito v. Pizzi, should be dismissed as a matter of law for lack of materiality. That act charges that, in furtherance of a scheme to defraud the civil defendant, defendant Joseph Napoli suborned perjury by preparing and causing an expert witness, Jodie Weitz, to testify falsely and to conceal the fact that she was the sister of Morris Eisen's son-inlaw, Perry Weitz, an attorney who worked at the Eisen Firm. Defendants argue that, assuming a misrepresentation or concealment occurred, it was immaterial to the outcome of the trial or the subsequent settlement by the parties. However, the materiality of such a misrepresentation, if it occurred, cannot be evaluated in advance of trial. On the face of it, it seems implausible that someone would take such steps without some such objective in mind, and evidence that it was in the mind of an experienced legal practitioner is in itself some substantial proof that it mattered what the woman said. In all events, proof of such a relationship might well have a bearing on the witness' credibility. CONSPIRACY CHARGE Defendants argue that Count Two of the first superseding indictment should have been dismissed because it fails to charge a violation of 18 U.S.C. 1962(d) since it does not charge each defendant with conspiring to commit at least two racketeering acts. This challenge is mooted by the second and third superseding indictments. Count Two, as it now reads, charges that defendants conspired to violate RICO in that each of them conspired with others to commit those predicate acts with which he or she is charged. This amendment satisfies the requirements set forth in United States v. Bonanno Organized Crime Family, 683 F.Supp. 1411, 1440 (E.D.N.Y.1988), aff'd on other grounds, 879 F.2d 20 (2d Cir.1989), that a RICO conspiracy charge defendants with conspiring to commit, rather than with simply committing on his or her own the underlying predicates. CONSPIRACY PREDICATE ACTS *6 Defendants argue that the fourteenth racketeering act of the first superseding indictment improperly charges the state law offense of conspiring to bribe a witness as a RICO predicate. In contrast to the state law felony of bribery of a witness, the state law conspiracy charge is not punishable by imprisonment for more than a year, as required by 18 U.S.C. 1961(1). The second and third superseding indictments moot this argument by omitting that predicate from the substantive RICO count. However, the RICO conspiracy count has been amended to include the alleged bribery as one of the predicate acts that defendants conspired to commit. Defendants argue, in essence, that paragraph 70(ii) of the third superseding indictment thus continues to charge conspiracy to commit bribery, not bribery, as a predicate act under the RICO conspiracy and that this state law offense cannot be a predicate act. Section 1962(d) provides: It shall be unlawful for any person to conspire to violate [subsection (c) ] of this section. Thus, it is unlawful to conspire to conduct or participate ... in the conduct of [a RICO] enterprise's affairs through a pattern of racketeering activity. A pattern under 1961(5) requires at least two predicate acts. In the Second Circuit, a required element of a RICO conspiracy is that the defendant himself have agreed to commit two or more predicate acts. United States v. Bonanno Organized Crime Family, supra, 683 F.Supp. at 1440. Section 19161(b) does now, however, require that a defendant commit an overt act in furtherance of the conspiracy to commit a particular offense. See United States v. Teitler, 802 F.2d 606, 613 (2d Cir.1986). Paragraph 70(ii) of the new indictment charges that defendants Eisen, Fishman, and Morganti conspired, confederated and agreed to bribe a witness, in violation of New York Penal Law, Section 215.00(b). Unlike the predicate act deleted from Count One, this charge does not refer to New York Penal Law 105.05, the relevant state conspiracy statute, because it is referring to the objectives of the RICO conspiracy rather than any overt acts committed pursuant to it. **Bribery of a witness under that provision is a sufficient predicate act under RICO, and the allegation that these defendants agreed to bribe a witness is sufficient to establish one of the predicate acts that they agreed to commit under section 1962(d), the RICO conspiracy statute. CONSTITUTIONALITY OF PATTERN REQUIREMENT Defendants argue that 18 U.S.C. 1962(c) is unconstitutional since the phrase pattern of racketeering activity is

too vague to apprise people what is prohibited and because it cannot be consistently applied. They rely on Justice Scalia's concurring opinion in H.J. Inc. v. Northwestern Bell, 109 S.Ct. 2893, 2909 (1989). In that case, the majority stated that a prosecutor must show that the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity. Id. at 2900. In advancing their due process challenge, defendants reiterate Justice Scalia's complaint that this interpretation of pattern makes it more rather than less difficult for a potential defendant to know whether his conduct is covered by RICO. Id. at 2908 (Scalia, J., concurring). No doubt, Justice Scalia is right that the outer reaches of the statute could do with further clarification, but the core meaning of the statute seems clear, and it is that meaning, if any, that applies in this case. No court in this circuit, or any other of which this Court is aware, has found the pattern requirement of RICO unconstitutional. Defendants advance no reason why this is a case that particularly invites such a conclusion, and, given the defendants' occupations and the notoriety of RICO among both civil and criminal practitioners, this Court declines to adopt it in this case.

Factual allegations as to the crime of perversion obstruction of justice as to ADORNO & YOSS, Alvarado & Associates, as to who?; what?; when?; where? the reporters transcripts hearing on the motion for summary Summary judgment. Reporters Transcript of the Motion For Relief From Stay. Where Duarte stated that title was determined. Where Duarte stated that WELLS FARGO was the owner of the Equity One Lenders Trust Deed. Where Duarte stated that he didnt know that Soon Chey and David Chey resided at their residence of 3741 Avenue Sausalito. Yellow Flag. U.S. v. Porcelli, 865 F.2d 1352, 1360, 57 USLW 2443 (2nd Cir.(N.Y.),Jan 11, 1989) (NO. 813,
814, 87-1440, 87-1451) held that a fraudulent scheme to deprive a victim of a chose in action is cognizable under the mail fraud statute, 18 U.S.C. 1341, and wire fraud 1343.

County of Orange perpetrated the fraudulent scheme to conceal the deprivation of liberty without due process of law, by deliberate indifference to the serious medical needs of the Victim, Killed, Murdered, Deprived Of Life without Due Process Of Law, Henry Chey by stating that he had passed away because of cancer. Autoposy stated cause of death because of infection. Soon Chey is legally adjudicated as mentally incompetent so this tolls the statute of limitation as to her being the plaintiff.

Further, the New York tax law here involved states that [e]very person required to collect the tax shall collect the *1361 tax from the customer when collecting the price ... to which it applies.... The tax shall be paid to the person required to collect it as trustee for and on account of the state. N.Y.Tax Law 1132(a) (McKinney 1987). It also provides that the amount so payable to the tax commission for the period for which a return is required to be filed shall be due and payable to the tax commission on the date limited for the filing of the return for such period, without regard to whether a return is filed or whether the return which is filed correctly shows the amount of receipts ... or the value of property or services sold or purchased or the taxes due thereon. Id. 1137(e)(1). In reference to the analogous New York City sales tax law which declared that the tax shall be paid by the purchaser to the vendor as trustee for and on account of the city and the vendor shall be liable for the collection thereof and for the tax, the New York Court of Appeals held that

[w]hile the incidence of the tax is, in the first instance, placed on the consumer, this court has flatly held that vendors ... are to be deemed taxpayers under this legislation, Fifth Ave. Building Co. v. Joseph, 297 N.Y. 278, 283, 79 N.E.2d 22, 24 [ (1948) ], that the obligation imposed upon the vendor is in the nature of a tax which is not measured by the amount collected nor dependent upon failure to exercise the diligence in collection which would be required of an agent. Matter of Atlas Television Co., 273 N.Y. 51, 57-58, 6 N.E.2d 94, 96 [ (1936) ]. W.T. Grant Co. v. Joseph, 2 N.Y.2d 196, 203, 140 N.E.2d 244, 247-48, 159 N.Y.S.2d 150, 154 (1957). The W.T. Grant Co., court stated that it was a necessary corollary that one measure of the vendor's obligation as a taxpayer is the tax which his customers were required to pay on individual sales, and that obligation may not be discharged by payment of any lesser amount, irrespective of the vendor's exercise of reasonable diligence in collection. 2 N.Y.2d at 203, 140 N.E.2d at 248, 159 N.Y.S.2d at 154. The court then went on to quote Merchants Refrigerating Co. v. Taylor, 275 N.Y. 113, 124, 9 N.E.2d 799, 803 (1937), for the proposition that the vendor is under a duty to pay the tax ... regardless of whether or not ... [he] collects it from the purchaser. 2 N.Y.2d at 203, 140 N.E.2d at 248, 159 N.Y.S.2d at 154-55. We do not think that Porcelli was in any different situation vis-a-vis the State here. He was obliged to pay the tax whether or not he collected it from the customers. By virtue of his scheme to defraud, i.e., the false sales tax returns, he was in a very real sense depriving the State of its property. The fact that the State has a claim, a chose in action, for the difference between what was paid and the tax shown on the false return may mean that it has not finally been deprived of that chose in action. However, the fact remains that until the fraud was discovered it had been deprived of its property. [7] Porcelli's conduct, in short, was aimed at depriving the State of its property, **the choses in action represented generally in the state tax law as above stated, and specifically in the state tax law providing for an action at law and authorizing the tax commissioner to issue a warrant and to obtain a lien upon the property of the person failing to pay the tax. N.Y.Tax Law 1141(a)-(b) (McKinney 1987).FN2 FN2. This is not, as suggested by the dissent, an alternative theory upon which to uphold Porcelli's conviction. Our analysis shows, first, that New York had a property interest, which we label a chose in action, in Porcelli's tax obligations. We then show that Porcelli deprived New York of that property when he carried out a scheme (in the words of the indictment and the jury charge) to defraud the State of New York ... of sales tax due on the retail sale of gasoline by underreporting the gross sales, taxable sales, and sales tax due. Thus, Porcelli's indictment and the charge to his jury remain satisfactory; they required proof that he knowingly and willfully defrauded the State of money due from sales taxes. Proof of that was proof that he intentionally deprived the State of its property, in violation of the mail fraud statute as construed by McNally. U.S. v. Ianniello, 808 F.2d 184, 55 USLW 2352, RICO Bus.Disp.Guide 6482 (2nd Cir.(N.Y.),Dec 04, 1986)

8th Amendment, incorporated under 14th Amendment as applicable to the States; Pretrial Detainee; Cruel And Unusual Punishment; Deliberate Indifference to serious medical needs resulting in Deprivation Of Life Without Due Process Of Law. 18 U.S.C. 1962 Count; Against Michael S. Carona; County Of Orange; Mail and Wire Fraud 18 U.S.C. 1341, 1343, fraudulent scheme to deprive a victim of a chose in action is cognizable under the mail fraud statute, 18 U.S.C. 1341, and wire fraud 1343. **Document writ of coram vobis contains documentary evidence against Irvine Police Officer, Williams, Judge Connelly, and declarations of Cancer physician Dr. Pandit; Dr. Rackower;

Circumstantial evidence judge engaging in acts in complete absence of jurisdiction. Engaging in the act of treason. Failure to take action against attorney misconduct with which he or she becomes aware of. Failing to take action against judicial misconduct with which he or she becomes aware of. Engaging in the perversion obstruction of justice. Judge was aware that Wells Fargo claim that it owned the Equity One Lenders trust deed was false and constituted a fraud upon the court. In the exhibit was the public record of the full reconveyance of the Equity One Lenders trust deed. Judge engaged in conspiracy against rights under color of state law. Judge participated in conspiracy to defraud property P.C. 182 (a)(5) .. participated in conspiracy to pervert and obstruct justice. RICO U.S. U.S. U.S. Conspiracy between judge and attorney to fix cases v. Maloney (1995) 71 F.3d 645 v. Shenberg (1996) 89 F.3d 1461 v. Qaoud (1985) 777 F.2d 1105

U.S. v. Shenberg, 89 F.3d 1461, 45 Fed. R. Evid. Serv. 58 (11th Cir.(Fla.) Jul 12, 1996) Application of circumstantial evidence in proving an agreement on an overall objective, with circumstantial evidence, to show that each defendant must necessarily have known that the others were also conspiring to participate in the same enterprise through a pattern of racketeering activity.

At p. 1471,
[4][5][6] To establish a RICO conspiracy violation under 18 U.S.C. 1962(d), the government must prove that a defendant objectively manifested, through words or actions, an agreement to participate in the conduct of the affairs of the enterprise. The government can prove the existence of a RICO conspiracy agreement in one of two ways. United States v. Russo, 796 F.2d 1443, 1455 (11th Cir.1986). The government may either prove **(1) that a defendant agreed to the overall objective of the conspiracy or **(2) that the defendant personally committed two predicate acts, thereby participating in a single objective conspiracy. United States v. Starrett, 55 F.3d 1525, 1543 (11th Cir.1995); Church, 955 F.2d at 693. In proving an agreement on an overall objective, the government can use circumstantial evidence to show that each defendant must necessarily have known that the others were also conspiring to participate in the same enterprise through a pattern of racketeering activity. United States v. Gonzalez, 921 F.2d 1530, 1540 (11th Cir.) (quoting United States v. Valera, 845 F.2d 923, 929 (11th Cir.1988)), cert. denied, 502 U.S. 860, 112 S.Ct. 178, 116 L.Ed.2d 140 (1991). If the government proves an agreement on an overall objective, then it is not necessary that the defendant agree to personally commit two predicate acts. Starrett, 55 F.3d at 1544 (quoting Gonzalez, 921 F.2d at 1540).

At p. 1461,
Circuit court judge and a lawyer were convicted in the United States District Court for the Southern District of Florida, No. 91-708-CR-JAG, Jose A. Gonzalez, Jr., J., of conspiracy to violate Racketeer Influenced and Corrupt Organizations Act (RICO), and judge was also convicted of attempted extortion. Defendants appealed and government cross-appealed sentences and district court's ruling barring reprosecution on acquitted counts. The Court of Appeals, Hatchett, Circuit Judge, held that: (1) evidence was sufficient to support RICO conspiracy convictions; (2) district court acted within its discretion in denying defendants' request for special verdict on RICO conspiracy count; (3) district court acted within its discretion when it failed to replace pregnant juror after dismissing her for

cause during deliberations; (4) juror's presentation to court security officer of cocaine-laced bag she found in jury bathroom was not a communication that court was required to disclose; (5) district court, in sentencing defendant judge, erred in applying two-point enhancement for more than minimal planning; (6) district court, in sentencing defendant lawyer, properly applied special skill enhancement; (7) collateral estoppel applied to bar use of acquitted counts as predicate acts in substantive RICO counts in retrial on mistried counts; but (8) collateral estoppel did not bar government from using predicate acts that mirrored acquitted substantive counts to prove RICO conspiracy. Convictions affirmed and resentencing ordered. [4] Conspiracy 91 28(3)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k28 Conspiracy to Commit Crime 91k28(3) k. Particular crimes. Most Cited Cases **To establish conspiracy to violate Racketeer Influenced and Corrupt Organizations Act (RICO), government must prove that defendant objectively manifested, through words or actions, agreement to participate in conduct of affairs of enterprise. 18 U.S.C.A. 1962(d). [5] Conspiracy 91 28(3)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k28 Conspiracy to Commit Crime 91k28(3) k. Particular crimes. Most Cited Cases Government can prove existence of agreement, as required to support conviction of conspiracy to violate Racketeer Influenced and Corrupt Organizations Act (RICO), by proving either that defendant agreed to overall objective of conspiracy, or **that defendant personally committed two predicate acts, thereby participating in a single objective conspiracy. 18 U.S.C.A. 1962(d). [6] Conspiracy 91 47(3.1)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence 91k47 Weight and Sufficiency 91k47(3) Particular Conspiracies 91k47(3.1) k. In general. Most Cited Cases To prove that defendant agreed to overall objective of conspiracy, as would support proof of conspiracy to violate Racketeer Influenced and Corrupt Organizations Act (RICO), government can use circumstantial evidence to show that each defendant must necessarily have known that others were also conspiring to participate in same enterprise through pattern of racketeering activity. 18 U.S.C.A. 1962(d). [7] Conspiracy 91 47(13)

91 Conspiracy 91II Criminal Responsibility

91II(B) Prosecution 91k44 Evidence 91k47 Weight and Sufficiency 91k47(3) Particular Conspiracies 91k47(13) k. Obstructing justice, bribery, and perjury. Most Cited Cases Finding that circuit court judge agreed to corruptly utilize circuit court system, in conspiracy to violate Racketeer Influenced and Corrupt Organizations Act (RICO), was supported by evidence of defendant's participation with another judge in acceptance of kickbacks on court appointments, defendant's counseling of other judge on how to conduct illegal transactions, defendant's disclosure of confidential informant's name and defendant's holding, concealing and disbursing of proceeds derived from court appointments and case fixing. 18 U.S.C.A. 1962(d). [8] Conspiracy 91 47(13)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence 91k47 Weight and Sufficiency 91k47(3) Particular Conspiracies 91k47(13) k. Obstructing justice, bribery, and perjury. Most Cited Cases Finding that lawyer agreed to overall objective of conspiracy to violate Racketeer Influenced and Corrupt Organizations Act (RICO) by corruptly utilizing circuit court system was supported by evidence that defendant agreed to act as bag man for circuit judge, that defendant arranged with that judge to fix case, that defendant agreed to arrange and arranged with judge to fix another case, and that defendant attempted to bribe another judge. 18 U.S.C.A. 1962(d). [9] Conspiracy 91 28(3)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k28 Conspiracy to Commit Crime 91k28(3) k. Particular crimes. Most Cited Cases To sustain conviction for conspiracy to violate Racketeer Influenced and Corrupt Organizations Act (RICO) based upon commission of two predicate acts, government must show that predicate acts are related and amount to or pose threat of continued criminal activity. 18 U.S.C.A. 1962(d). [10] Conspiracy 91 34

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k34 k. Conspiracy to obstruct or pervert justice or hinder the execution of law. Most Cited Cases Lawyer's six-month involvement in case fixing posed threat of continued criminal activity sufficient to support his conviction for conspiracy to violate Racketeer Influenced and Corrupt Organizations Act (RICO). 18 U.S.C.A. 1962(d). [19] Sentencing and Punishment 350H 653(2)

350H Sentencing and Punishment 350HIV Sentencing Guidelines 350HIV(A) In General 350Hk653 What Guideline Applies; Choice of Guideline 350Hk653(2) k. Offenses against the person. Most Cited Cases (Formerly 110k1237) In sentencing circuit court judge for conspiracy to violate Racketeer Influenced and Corrupt Organizations Act (RICO) and extortion induced under color of official right, district court properly applied cross referencing provision and borrowed applicable guidelines for conviction for conspiracy to commit murder, finding that, in government sting operation in which government created fictitious confidential informant and drug trafficker, judge disclosed confidential informant's name for payment with knowledge that trafficker intended to murder informant and that judge participated in planning of the murder in requiring that murder not occur for at least 45 days. 18 U.S.C.A. 1951, 1962(d); U.S.S.G. 2A2.1, 2C1.1(c)(1), 18 U.S.C.A. [21] Sentencing and Punishment 350H 754

350H Sentencing and Punishment 350HIV Sentencing Guidelines 350HIV(C) Adjustments 350HIV(C)2 Factors Increasing Offense Level 350Hk754 k. Vulnerability of victim. Most Cited Cases (Formerly 110k1254) In sentencing circuit court judge for conspiracy to violate Racketeer Influenced and Corrupt Organizations Act (RICO) and extortion induced under color of official right, district court properly applied vulnerable victim enhancement, despite fact that confidential informant who was victim of alleged murder conspiracy was fictitious, where judge disclosed informant's name in exchange for payment, knowing that state requested that his name remain under seal and knew that drug trafficker, who was also fiction created by government, intended to murder informant. 18 U.S.C.A. 1951, 1962(d); U.S.S.G. 3A1.1, 18 U.S.C.A. [40] Conspiracy 91 28(3)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k28 Conspiracy to Commit Crime 91k28(3) k. Particular crimes. Most Cited Cases Actual commission of underlying crime does not constitute essential element of Racketeer Influenced and Corrupt Organizations Act (RICO) conspiracy. 18 U.S.C.A. 1962(d). HATCHETT, Circuit Judge: In these Operation Court Broom appeals, we affirm the convictions and order resentencing of one of the appellants. The facts that follow are either undisputed or represent factual inferences that the jury was entitled to draw. FACTS In November 1988, the citizens of Dade County, Florida, elected judicial candidate Roy T. Gelber to the Circuit Court of the Eleventh Judicial Circuit of Florida. Gelber, prior to taking office, arranged with his former law partner, Stephen Glass, to appoint Glass as special assistant public defender (SAPD). In return for SAPD appointments, Glass agreed to give Gelber one-third of the fees received.FN1 Gelber made similar kickback arrangements with other lawyers in Miami while in office.FN2 Also in 1988, Gelber became close friends with Dade County Court judicial

candidate Harvey N. Shenberg. Shenberg, who also won his bid for election, advised Gelber regarding the acceptance of kickbacks and other illegal schemes. During one of Shenberg's conversations with Gelber, Shenberg suggested that Gelber add one of Shenberg's former law partners, Manny Casabielle, to the court appointment list *1466 in exchange for kickbacks of twenty-five percent . Gelber agreed. Thereafter, Shenberg periodically gave Gelber money in amounts ranging from $500 to $1,200 on Casabielle's behalf. Oftentimes, Gelber directed Shenberg to hold the money for safekeeping. During this same time period, Circuit Judge Alfonso C. Sepe talked with Gelber about appointing Arthur Massey, a private lawyer, as SAPD. Gelber appointed Massey in two cases for which Massey paid Gelber $1,000 in cash. Gelber eventually grew concerned that his repeated appointments of the same lawyers would raise suspicion; thus, in an attempt to avoid detection, Judge Sepe began appointing lawyers from Gelber's court appointment list. FN1. As a circuit judge in the criminal division, Gelber had authority to appoint private attorneys as SAPDs to represent indigent defendants when a conflict of interest arose with the Public Defender's Office. Gelber, however, never received any kickbacks from the Glass appointments. FN2. Miami attorneys William Castro, Kent Wheeler, Arthur Luongo, Randolph Ferguson, Harry Boehme, and Nancy Lechtner all paid Gelber twenty to twenty-five percent of the SAPD fees they received. State and federal officials (the government) eventually learned of the kickback scheme, and in 1989, the government launched a sting operation called Operation Court Broom to investigate corruption in the Circuit Court of Dade County. The government employed Raymond Takiff, a lawyer and a longtime friend of Gelber, to work undercover and tape-record telephone conversations and meetings with Gelber and others suspected of corruption. In August 1989, Takiff, posing as a corrupt lawyer with ties to a fictitious South American drug trafficker named Peter, approached Gelber requesting Gelber's assistance in influencing criminal cases pending against Peter's employees. Gelber accepted $11,000 from Takiff and gave Shenberg $5,000 of the money to place in Shenberg's home safe. The next month, Takiff asked Gelber to investigate whether Peter's employee, Jose Angel Rapard, cooperated with authorities in exchange for the dismissal of an attempted murder charge pending against him. During their meeting, Takiff disclosed to Gelber that Peter believed that Rapard informed the police of a pending cocaine deal in exchange for the dismissal of the charge. Gelber and Shenberg, after reviewing Rapard's court file, agreed that the circuit judge handling the case dismissed it after the victim failed to appear. Gelber subsequently reported to Takiff that the circuit judge dismissed the attempted murder charges against Rapard for legitimate reasons. Several months later, in March 1990, Takiff informed Gelber that the police searched one of Peter's employee's hotel room pursuant to a warrant Gelber signed.FN3 Takiff told Gelber that Peter wanted the $143,000 in cash and jewelry seized in the search returned and information regarding the identity of the confidential informant. Gelber initially told Takiff that he could not assist him because he placed the warrant affidavit under seal. Gelber, however, subsequently agreed to hear Takiff's motion to return property and unseal the affidavit. After Gelber's meeting with Takiff, Gelber discussed Takiff's latest request with Shenberg. Gelber told Shenberg that he intended to receive a portion of the seized jewelry and money as payment for granting the motion. Shenberg responded stating that he did not believe that the request would raise any red flags. FN3. As part of the undercover sting operation, officers presented Gelber with a fictitious search warrant affidavit seeking authorization to search a motel room for narcotics and cash. The warrant affidavit contained the name of a confidential informant who provided the information supporting the warrant. Gelber signed the warrant and ordered that the affidavit remain sealed to protect the name of the informant. On March 20, 1990, Gelber conducted a hearing on Takiff's motion to return property and to unseal the affidavit. Gelber deferred ruling on the motion until March 22, 1990, and ordered the prosecutor to provide him with a copy of the sealed affidavit for in camera review. The following day, after Gelber had made a photocopy of the affidavit, he met with Takiff intending to provide Takiff with the name of the informant. Before Gelber divulged the name, Takiff informed Gelber that Peter intended to kill the informant. After learning of the murder plot, Gelber refused to disclose to Takiff the name of the informant. The next morning, Gelber ruled on the motion to return property ordering that the state return the seized jewelry to the defendant, that the state file a forfeiture action within

ten days or return the seized cash, and that the warrant affidavit remain under seal to protect the informant's identity. Later that evening, Gelber met with Shenberg to inform him that Peter *1467 intended to kill the informant. Shenberg responded to this news stating, I don't know what the big deal is. He's just a drug dealer. Subsequently, Shenberg decided to disclose the informant's name to Takiff, and on March 24, 1990, Shenberg met with Takiff for the first time. Shenberg, identifying himself as Gelber's best friend, stated that he had the information Takiff requested from Gelber. Shenberg then told Takiff that he would provide him with the name of the informant upon three conditions: **(1) that Peter not murder the informant for forty-five days; **(2) that Peter pay Shenberg $50,000; and **(3) that Gelber receive a portion of the seized money and jewelry. Takiff agreed to Shenberg's terms, and Shenberg provided him with the name of the informant and facts contained in the affidavit. FN4 In return, Takiff gave Shenberg $25,000 on April 2, 1990, as a partial payment for the informant's name and paid the remaining $25,000 on May 15, 1990. On May 16, 1990, Takiff gave Gelber $20,000 for his share of the seized money and property. Due to the success of this transaction, Shenberg and Gelber agreed that Takiff would deal directly with Shenberg in the future. FN4. Shenberg told Takiff that the name of the informant was Dionesio Jose Gajera. The actual name contained in the affidavit was Dionesio Jose Guerajo. On July 5, 1990, Takiff telephoned Shenberg at his home requesting that Shenberg expedite a bond hearing for another one of Peter's employees. While on the telephone, Takiff stated that he had $10,000 to $12,000 available and that the level of gratitude will at least be equal to that shown in the past. Shenberg told Takiff that he was unable to assist him but consented to meet with Takiff the next day. At their meeting the following morning, Shenberg angrily stated, thanks to the phone call, we're dead meat. I mean, we're never going to be able to do anything again ... I'm never going to talk on the phone with someone who talks that way ... if you would have heard the conversation, God forbid it was recorded, it was the worse conversation that I ever, ever heard. Shenberg met with Gelber later that morning and discussed the possibility that Takiff was an informant. Although Gelber did not believe Takiff was an informant and tried to alleviate Shenberg's concern, Shenberg told Gelber that Shenberg would not resume his dealings with Takiff. In September 1990, Takiff approached Circuit Judge Phillip Davis seeking his assistance with case-fixing. Davis told Takiff that he, Gelber, and Shenberg intended to join up with him, stating that we want to make some money, man. The following week, Takiff gave Davis a list of four names and asked Davis to determine whether these persons had any outstanding warrants against them. Davis provided the information. After learning that two of the persons had outstanding warrants, Takiff asked Gelber to fix the outstanding warrants against them. Gelber informed Takiff that he could only fix the warrant for the individual's case assigned to Circuit Judge Arthur Snyder. Following this discussion, Gelber conferred with Shenberg to discuss the possibility of influencing the case pending before Snyder. Shenberg, still expressing distrust for Takiff, stated that he believed Sepe should approach Snyder. Sepe agreed to approach Snyder on Takiff's behalf. Sepe, however, later informed Gelber that Snyder would not agree to fix the warrant. Consequently, Gelber reported to Takiff that he could not assist him on this matter. In December 1990, the government assigned two fictitious drug trafficking cases to Sepe's criminal docket. A short time later, Takiff informed Gelber that outstanding warrants existed against Peter's sister-in-law, Bonnie Carrillo, and her husband, Hector Penna. Takiff also informed Gelber that Peter wished to obtain low bail on Carrillo and the dismissal of the charges against her through a motion to suppress the evidence. Gelber conferred with Shenberg and discussed his conversation with Takiff. Again, Shenberg stated that he had bad feelings about Takiff and cautioned Gelber about dealing with Takiff. Gelber then attended a meeting with Sepe. At this meeting, Sepe stated he had no problem with complying with Takiff's request. Following this meeting, Gelber met with Takiff requesting $325,000*1468 in advance. Takiff complained about Gelber's terms and inquired whether the $325,000 figure included the dismissal of the charges against both Carrillo and Penna. Sepe and Gelber subsequently agreed that they would fix the cases for $200,000 for each person. On December 19, 1990, Gelber told Takiff that Sepe wanted the transaction completed on that day or not at all. Takiff failed to comply with the deadline, and Sepe cancelled the deal.

On December 28, 1990, Gelber again approached Sepe about the Carrillo case, informing him that Takiff could now proceed with the transaction. Sepe agreed to resume the negotiations with Takiff on the condition that David Goodhart, a lawyer, receive the bribery payment from Takiff. Goodhart agreed to act as bag man in return for $25,000 of Gelber's share of the bribery payment. Thereafter, Takiff conducted all future dealings with Goodhart. Takiff first met with Goodhart on January 8, 1991, and explained to Goodhart that the outstanding warrant against Carrillo concerned Peter most because of their relation and that Peter would pay any amount within reason to get the matter solved. Goodhart at that point wrote $150,000, $150,000 on a legal pad stating that the transaction involved two different things. In response, Takiff asked whether Sepe could fix the case for $200,000, and Goodhart responded that he had to discuss the new terms with Sepe. The following weeks, Takiff and Goodhart had several conversations concerning the Carrillo case; finally, on February 11, 1991, during a meeting, Takiff attempted to give Goodhart $75,000 in cash agreeing to pay another $75,000 upon dismissal of Carrillo's charges. Goodhart refused to accept the money noting that Sepe expected full payment. Approximately two weeks later, Takiff gave Goodhart $150,000 in cash. The following afternoon, Takiff brought Carrillo to Sepe's courtroom so that the state could arrest her. Sepe, over the state's objection, released Carrillo on $50,000 bail. Takiff subsequently filed a motion to suppress the cocaine that had been seized. On April 2, 1991, Sepe conducted an evidentiary hearing and granted Carrillo's motion to suppress. The next day, Takiff gave Goodhart a proposed order suppressing the evidence in the Carrillo case. After reviewing the order, Goodhart discussed the Penna case. Both Takiff and Goodhart concluded that Penna, unlike Carrillo, did not have standing to contest the legality of the seizure. Consequently, they agreed to find alternative grounds to dismiss the charges against Penna. A few weeks later, Sepe gave Gelber a folder containing $50,000 in cash stating that these are the papers that you've been waiting for. Gelber then gave $10,000 to Shenberg to place in Shenberg's safe admitting that he obtained the money from fixing Carrillo's case. On May 2, 1991, Takiff discussed with Goodhart a case pending before Circuit Judge Ellen Morphonios stating that Peter also wished to secure the release and the dismissal of that case. Goodhart, believing that Judge Morphonios would fix the case for $75,000, approached Morphonios on Takiff's behalf. On May 14, 1991, Goodhart met with Takiff and told him that Morphonios refused to fix the case. The state, on June 3, 1991, dismissed the case against Carrillo because it lacked sufficient evidence to prosecute. The next day, Goodhart told Takiff to surrender Penna in Sepe's courtroom during the week of June 19. On June 8, 1991, the government ended Operation Court Broom and executed search warrants at the homes and offices of Gelber, Shenberg, Sepe, Goodhart, and Davis. During the execution of the search warrant, government agents seized monies matching the serial numbers of Takiff's April 2, 1990 and February 26, 1991 bribery payments to Gelber, Sepe, Shenberg, and Goodhart. Shortly after the seizure, Gelber agreed to cooperate with the government in its investigation of corruption in the Dade County Circuit Court. PROCEDURAL HISTORY On May 27, 1992, a grand jury in the Southern District of Florida returned a 106-count superseding indictment against Shenberg, Goodhart, Sepe, Davis, and five other defendants. Count 1 charged all of them with conspiring to violate the Racketeer Influenced and Corrupt Organization Act *1469 (RICO) in violation of 18 U.S.C. 1962(d); Count 2 charged Shenberg, Goodhart, Sepe, Davis, and one codefendant with violation of RICO provisions 18 U.S.C. 1962(c) and 1963(a).FN5 The indictment also charged Shenberg with attempted extortion, in violation of 18 U.S.C. 1951 and 2 (Counts 87, 90, 97, 98); conspiracy to commit extortion, in violation of 18 U.S.C. 1951 (Count 92); and money laundering, in violation of 18 U.S.C. 1956(a)(1)(A)(i) and (a)(1)(B)(i) (Counts 88 and 91). The indictment charged Goodhart with attempted extortion, in violation of 18 U.S.C. 1951 and 2 (Counts 97, 104, and 106); conspiracy to commit extortion, in violation of 18 U.S.C. 1951 (Count 103); and money laundering, in violation of 18 U.S.C. 1956(a)(1)(A)(1) (Counts 98 through 100). The indictment charged Sepe with conspiracy to commit extortion, in violation of 18 U.S.C. 1951 (Counts 95 and 103); attempted extortion, in violation of 18 U.S.C. 1951 and 2 (Counts 3, 4, 89, 96, 97, and 104); mail fraud, in violation of 18 U.S.C. 1341, 1346, and 2 (Counts 61 through 80); and money laundering, in violation of 18 U.S.C. 1956(a)(1)(A)(i) and (a)(1)(B)(i) (Counts 98 and 100 through 102). FN5. The grand jury also indicted Arthur Massey, William Castro, Arthur Luongo, Harry Boehme, and Nancy Lechtner. Gelber, an unindicted coconspirator, pleaded guilty to RICO conspiracy and testified for

the government against Shenberg, Goodhart, Sepe, Davis, and the other codefendants. On May 13, 1993, the district court severed the trial of Shenberg, Goodhart, Sepe, and Davis from the trial of the remaining defendants. On September 21, 1992, the trial commenced. Approximately fifteen weeks into the trial a juror discovered a cocaine-laced baggie in the jury room bathroom. The district court did not inform the parties of the juror's discovery or conduct a hearing at that time. At the close of the evidence, the defense requested a special verdict on Counts 1 and 2 requiring the jury to identify which predicate acts each defendant committed. The district court required a special verdict on Count 2; however, it denied their request with respect to Count 1. The defense also requested the district court to replace a pregnant juror prior to jury deliberations. The district court also denied this request. The jury began deliberating on March 11, 1993. On April, 15, 1993, the pregnant juror went into labor causing the district court to stay deliberations until April 26. On April 26, the district court dismissed the pregnant juror for cause because her physician would not authorize her return on that date. Then, the district court instructed the remaining eleven jurors to continue deliberations. Later that day, the jury returned the following verdicts: Shenbergguilty of Counts 1 and 90, not guilty of Counts 87, 88, 97, 98, and the jury could not reach a verdict on Counts 2, 91, and 92; Goodhart-guilty on Count 1, not guilty on Count 99, and the jury could not reach a verdict as to Counts 2, 97, 98, 103, and 104; Sepe-not guilty on Counts 4, 61 through 80, 89, 95 through 98, 101, and the jury could not reach a verdict on Counts 1 through 3, 103, and 104. The jury acquitted Davis on all counts. On May 6, 1993, the district court conducted an evidentiary hearing on the discovery of the cocaine-laced baggie in the jury room. Following the evidentiary hearing, Shenberg and Goodhart filed motions for new trial. On May 24, 1993, Shenberg, Goodhart, and Sepe filed motions for acquittal. They also filed a motion to bar the government from using acquitted counts as predicate acts in Counts 1 and 2. On July 14, 1993, the district court denied Shenberg and Goodhart's motions for new trial. The court granted the motion for judgment of acquittal in part, and denied it in part, dismissing Count 104 against Goodhart and Sepe. On July 15, 1993, the district court granted motions to bar reprosecution on acquitted counts. Thereafter, the court sentenced as follows: Shenberg to 188 months imprisonment and 3 years supervised release for RICO conspiracy and extortion; Goodhart to 99 months imprisonment, 3 years supervised release, and a $100 assessment for RICO conspiracy. The government wishes to retry Shenberg and Sepe on the mistried counts. The government does not wish to retry Goodhart as to Counts 2, 97, 98, and 103. Shenberg and Goodhart appeal *1470 their convictions and sentences, and the government cross-appeals. CONTENTIONS Appellants Shenberg and Goodhart raise several contentions on appeal. First, appellants contend that insufficient evidence supports their RICO conspiracy convictions claiming that the government failed to prove that they agreed to personally commit or agreed to have others commit two predicate acts. Second, appellants contend that the district court's denial of their request for a special verdict on the RICO conspiracy count denied them their Sixth Amendment right to a fair trial. Third, appellants contend that the district court abused its discretion in continuing jury deliberations with only eleven jurors after dismissing the twelfth juror for cause. Fourth, appellants contend that the juror's discovery of a cocaine-laced baggie constituted a communication, and the court erred in failing to disclose the discovery to the appellants. Finally, appellants contend that the district court improperly calculated Shenberg's sentence under the 1989 Sentencing Guidelines and Goodhart's sentence under the 1990 Sentencing Guidelines. On cross-appeal, the government contends that the district court erroneously applied the 1989 Sentencing Guidelines in sentencing Shenberg, claiming that Shenberg's racketeering activity continued past the date that the 1990 Sentencing Guidelines took effect. The government also contends on cross appeal that the district court erred in ruling that the doctrine of collateral estoppel bars the use of acquitted counts as predicate acts for substantive RICO and RICO conspiracy charges in a retrial of mistried counts. ISSUES The following issues presented are: (1) whether sufficient evidence supports appellants' convictions; (2) whether the district court acted within its discretion in denying appellants' request for a special verdict on the RICO

conspiracy count; (3) whether the district court abused its discretion in continuing jury deliberations with an elevenmember jury; (4) whether the district court erred in failing to inform appellants that a juror found a cocaine-laced baggie in the jury room; (5) whether the district court properly sentenced appellants under the Sentencing Guidelines; and (6) whether the doctrine of collateral estoppel bars the government from introducing evidence of acquitted conduct at retrial. DISCUSSION A. Sufficiency of the evidence [1][2] We review sufficiency of the evidence claims in the light most favorable to the government drawing all reasonable inferences and credibility choices made in favor of the jury's verdict. United States v. Gilbert, 47 F.3d 1116, 1118 (11th Cir.1995). If a reasonable person could find that the evidence establishes guilt beyond a reasonable doubt, the jury's verdict must stand. United States v. Jones, 933 F.2d 1541, 1546 (11th Cir.1991). Appellants contend on appeal that insufficient evidence supports their RICO conspiracy convictions arguing that the government failed to prove that appellants each either agreed to personally commit two predicate acts or agreed to have others commit two or more such acts. Shenberg asserts that his acquittal on Counts 87, 88, 97, and 98, which mirrored predicate acts 4 and 10 of the substantive RICO count, and the jury's inability to reach a verdict on Count 92, which mirrored predicate act 7, subjected him to liability for only one predicate act, act 6. FN6 Similarly, Goodhart asserts that his acquittal on Count 99 only subjected him to liability for his actions in the Carrillo case as set forth in predicate act 10. FN6. The indictment charged Shenberg with predicate acts 4, 6, 7, and 10 and charged Goodhart with acts 10, 11, and 13. [3] We first note that neither the acquittal of appellants nor their codefendants on other counts alleging similar or related conduct is relevant to the issue of whether sufficient evidence supports appellants' RICO conspiracy convictions. *1471United States v. Church, 955 F.2d 688, 695 (11th Cir.), cert. denied, 506 U.S. 881, 113 S.Ct. 233, 121 L.Ed.2d 169 (1992). These verdicts though seemingly inconsistent could [have] easily [been] the result of mistake or lenity by the jury in acquittal as they could be proof of lack of evidence to support the conviction. Church, 955 F.2d at 695. For this reason, we insulate acquittal verdicts from our review of the sufficiency of the evidence. [4][5][6] To establish a RICO conspiracy violation under 18 U.S.C. 1962(d), the government must prove that a defendant objectively manifested, through words or actions, an agreement to participate in the conduct of the affairs of the enterprise. The government can prove the existence of a RICO conspiracy agreement in one of two ways. United States v. Russo, 796 F.2d 1443, 1455 (11th Cir.1986). The government may either prove **(1) that a defendant agreed to the overall objective of the conspiracy or **(2) that the defendant personally committed two predicate acts, thereby participating in a single objective conspiracy. United States v. Starrett, 55 F.3d 1525, 1543 (11th Cir.1995); Church, 955 F.2d at 693. In proving an agreement on an overall objective, the government can use circumstantial evidence to show that each defendant must necessarily have known that the others were also conspiring to participate in the same enterprise through a pattern of racketeering activity. United States v. Gonzalez, 921 F.2d 1530, 1540 (11th Cir.) (quoting United States v. Valera, 845 F.2d 923, 929 (11th Cir.1988)), cert. denied, 502 U.S. 860, 112 S.Ct. 178, 116 L.Ed.2d 140 (1991). If the government proves an agreement on an overall objective, then it is not necessary that the defendant agree to personally commit two predicate acts. Starrett, 55 F.3d at 1544 (quoting Gonzalez, 921 F.2d at 1540). [7][8] In this case, the government presented sufficient evidence to support the finding that appellants agreed to corruptly utilize the Dade County Circuit Court system: in other words, that the appellants agreed to the overall objective of the enterprise with the knowledge that others were also conspiring to participate through a pattern of racketeering. The following evidence supports this conclusion with respect to Shenberg's conviction: Shenberg's participation with Gelber in Gelber's acceptance of kickbacks on court appointments; Shenberg's counseling of Gelber on how to conduct illegal transactions with Takiff; Shenberg's disclosure of the confidential informant's name; and Shenberg's holding, concealing, and disbursing of the proceeds derived from court appointments and case fixing. Similarly, the following evidence supports the finding that Goodhart agreed to the overall objective of the

conspiracy: Goodhart's agreement to act as a bag man for Sepe; Goodhart's arrangement with Sepe to fix the Carrillo case for Takiff; Goodhart's agreeing to arrange and arranging with Sepe to fix the Penna case; and Goodhart's attempt to bribe Morphonios. Moreover, our review of the record convinces us that a reasonable person could conclude beyond a reasonable doubt that each appellant committed or agreed to have others commit at least two predicate acts. [9][10] Goodhart next challenges the sufficiency of the evidence supporting his conviction contending that his six-month involvement at the end of the conspiracy does not constitute a sufficiently continuous RICO conspiracy pattern. **To sustain a RICO conspiracy conviction based upon the commission of two predicate acts, the government must show **that the predicate acts are 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, 109 S.Ct. 2893, 2900-01, 106 L.Ed.2d 195 (1989). In this case, Goodhart engaged in case fixing from the time he joined the enterprise until the end of the government's undercover investigation. Based on Goodhart's active involvement in fixing the Carrillo and Penna cases and the duration of his coconspirators' previous pattern of racketeering activity, we conclude that Goodhart's six-month involvement posed a threat of continued criminal activity sufficient to support his RICO conspiracy conviction.FN7 Accordingly, we affirm the appellants' convictions. FN7. Because we conclude that sufficient evidence supports the finding that Goodhart agreed to the overall objective of the enterprise, we do not address Goodhart's argument that racketeering act 10 involving the Carrillo case and act 11 involving the Penna case are multiplicitous. U.S. v. Qaoud, 777 F.2d 1105 (6th Cir.(Mich.),Nov 21, 1985)

Associated in fact enterprise which made use of office of district judge, sufficiently alleged an enterprise and that defendants conducted racketeering activity, particularly in view of further allegations that the affairs of the enterprise were conducted through pattern of racketeering activity consisting of bribery, mail fraud, and obstruction of criminal investigation. 18 U.S.C.A. 1962(c).
Defendants were convicted in the United States District Court for the Eastern District of Michigan, Horace W. Gilmore, J., of conspiracy to violate RICO and substantive violations of RICO, one defendant was additionally convicted of **making false declarations before grand jury, **obstructing criminal investigation, and of **three counts of mail fraud, and another defendant was additionally convicted on **one count of mail fraud. Defendants appealed. The Court of Appeals, Wellford, Circuit Judge, held that: (1) conduct of federal officials in undercover investigation was not so outrageous as to require dismissal of indictments; (2) any error in trial judge's remarks concerning lack of purported noises on government surveillance tape was remedied by curative instructions; (3) admission of evidence of alleged illicit activity of defendant judge for which he was not indicted was not an abuse of discretion; (4) acquittal of defendant judge on charges of mail fraud did not preclude conviction of other defendant on mail fraud charges arising from same scheme; (5) evidence sustained mail fraud and RICO convictions; (6) under Michigan law, private citizen could be charged with aiding and abetting bribery of a public official, which thus was proper RICO predicate offense; and (7) case would be remanded for possible vacation of concurrent RICO sentences. Affirmed and remanded. [1] States 360 4.16(1)

360 States 360I Political Status and Relations 360I(A) In General 360k4.16 Powers of United States and Infringement on State Powers 360k4.16(1) k. In General. Most Cited Cases (Formerly 360k4.16)

**Defendants in federal prosecution arising from alleged schemes in which kickbacks were made in exchange for judicial favors from state judge could not assert right to dismissal of indictments on ground of interference with state judicial process, where state officials were aware of federal investigation of state judge and his associates but demonstrated absence of concern about interference with state judicial processes by failing to intervene in the federal suit or to pursue separate injunctive relief against federal manipulation. 18 U.S.C.A. 1961 et seq. [2] Constitutional Law 92 4523

92 Constitutional Law 92XXVII Due Process 92XXVII(H) Criminal Law 92XXVII(H)3 Law Enforcement 92k4521 Conduct of Police and Prosecutors in General 92k4523 k. Investigative Activity in General. Most Cited Cases (Formerly 92k257.5) Criminal Law 110 36.6

110 Criminal Law 110II Defenses in General 110k36.5 Official Action, Inaction, Representation, Misconduct, or Bad Faith 110k36.6 k. In General. Most Cited Cases (Formerly 92k257.5) Government's actions which included use of informant as undercover agent and criminal in state court in course of investigation of scheme in which kickbacks were made in exchange for judicial favors from state judge were neither so shocking nor constituted such unwarranted interference with state judicial process that verdicts in federal prosecution against the judge and his associates should be set aside on due process grounds, though the state itself or the alleged crime victim may have had grounds for complaint. 18 U.S.C.A. 1961 et seq.; U.S.C.A. Const.Amends. 5, 14. [3] Constitutional Law 92 4671

92 Constitutional Law 92XXVII Due Process 92XXVII(H) Criminal Law 92XXVII(H)5 Evidence and Witnesses 92k4671 k. Other Particular Kinds or Items of Evidence. Most Cited Cases (Formerly 92k266(1)) Defendant judge's due process rights were not violated in RICO prosecution arising from alleged scheme in which kickbacks were made in exchange for judicial favors from the state judge, by trial court's refusal to allow evidence of another influence peddler who failed to receive help from the judge on another matter; the evidence proffered was not crucial to the charges and involved a totally different incident which demonstrated little or nothing about the judge's intent on the charges made in this indictment. 18 U.S.C.A. 1961 et seq.; U.S.C.A. Const.Amends. 5, 14. [4] Witnesses 410 277(4)

410 Witnesses 410III Examination 410III(B) Cross-Examination

410k277 Cross-Examination of Accused in Criminal Prosecutions 410k277(2) Particular Subjects of Inquiry 410k277(4) k. Limitation to Subjects of Direct Examination. Most Cited Cases Defendant judge's assertions, made on direct examination in RICO prosecution arising from alleged schemes in which kickbacks were made in exchange for judicial favors from the state judge, that he could not schedule his own cases, served as foundation for Government's cross-examination inquiring about mechanics of judge-shopping. 18 U.S.C.A. 1961 et seq. [5] Criminal Law 110 1166.22(4.1)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1166.5 Conduct of Trial in General 110k1166.22 Remarks and Conduct of Judge 110k1166.22(4) Comments on Evidence or Witnesses 110k1166.22(4.1) k. In General. Most Cited Cases (Formerly 110k1166.22(4)) Any error in trial judge's remarks in RICO prosecution that he didn't hear any purported rustling noises on government surveillance tape allegedly caused when undercover agent repocketed money which he had testified he used to bribe defendant judge was remedied by trial judge's curative instructions. 18 U.S.C.A. 1961 et seq. [6] Witnesses 410 337(4)

410 Witnesses 410IV Credibility and Impeachment 410IV(B) Character and Conduct of Witness 410k334 Witnesses Who May Be Impeached as to Character 410k337 Accused as Witness in Criminal Prosecution 410k337(4) k. Particular Acts or Facts. Most Cited Cases Admission, for impeachment purposes on cross-examination of defendant judge, of evidence about unindicted activities of defendant judge in which he allegedly illicitly used judicial defendant-bond funds at a party store for his own purposes was not an abuse of discretion in RICO prosecution. 18 U.S.C.A. 1961 et seq.; Fed.Rules Evid.Rule 608(b), 28 U.S.C.A. [7] Criminal Law 110 877

110 Criminal Law 110XX Trial 110XX(K) Verdict 110k877 k. Codefendants. Most Cited Cases Acquittal of state judge on charges of mail fraud arising from alleged scheme in which kickbacks were made in exchange for judicial favors did not preclude conviction of the judge's son on mail fraud charges arising from the scheme; jury could have concluded that the judge neither caused nor knew of the particular mailings at issue. 18 U.S.C.A. 1341. [8] Postal Service 306 306 Postal Service 49(11)

306III Offenses Against Postal Laws 306k49 Evidence 306k49(8) Weight and Sufficiency 306k49(11) k. Use of Mails to Defraud. Most Cited Cases Evidence that defendant, an attorney, sent notice, which disguised fact of his representation of client in criminal matter before judge who was the attorney's father by naming another attorney in the firm as lawyer of record, if deemed by jury as an attempt to avoid detection of unlawful scheme, was sufficient to sustain conviction for mail fraud. 18 U.S.C.A. 1341. [9] Obstructing Justice 282 16

282 Obstructing Justice 282k13 Evidence 282k16 k. Weight and Sufficiency. Most Cited Cases Evidence of defendant attorney's cover-up activities regarding silence of undercover agent concerning federal investigation into alleged scheme in which kickbacks were made in exchange for judicial favors from judge who was the attorney's father sustained the attorney's conviction for obstructing a criminal investigation. 18 U.S.C.A. 1510. [10] Perjury 297 24

297 Perjury 297II Prosecution 297k18 Indictment or Information 297k24 k. Setting Forth Testimony or Affidavit or Other Writing. Most Cited Cases Indictment for false declarations before grand jury, which listed simple questions to which defendant answered yes or no was in substantial compliance with the governing statute, 18 U.S.C.A. 1623. [11] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(C) Criminal Remedies and Proceedings 319Hk92 Evidence 319Hk94 k. Admissibility. Most Cited Cases (Formerly 83k82.74) Enterprise and pattern of racketeering activity may be proved by same evidence in RICO prosecution, although they are separate elements. 18 U.S.C.A. 1962(c). [12] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk46 k. Governmental Entities. Most Cited Cases (Formerly 83k82.73) A state or local government office or organization may properly be charged as a RICO enterprise. 18 46 94

U.S.C.A. 1962(c). [13] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(C) Criminal Remedies and Proceedings 319Hk91 k. Indictment and Information. Most Cited Cases (Formerly 83k82.74) **Indictment in RICO case alleging that the enterprise was a group of individuals **associated in fact, although not a legal entity, which made use of office of district judge, sufficiently alleged an enterprise and that defendants conducted racketeering activity, particularly in view of further allegations that the affairs of the enterprise were conducted through pattern of racketeering activity consisting of bribery, mail fraud, and obstruction of criminal investigation. 18 U.S.C.A. 1962(c). [14] Conspiracy 91 40.1 91

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k39 Persons Liable 91k40.1 k. Knowledge, Intent, and Participation. Most Cited Cases There is no requirement that all conspirators charged under RICO be involved in each of the underlying acts of racketeering, or that the predicate acts be interrelated in any way; all that is necessary is that the acts are connected to the affairs of the enterprise. 18 U.S.C.A. 1962(c, d). [15] Conspiracy 91 47(3.1)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence 91k47 Weight and Sufficiency 91k47(3) Particular Conspiracies 91k47(3.1) k. In General. Most Cited Cases (Formerly 91k47(3)) Racketeer Influenced and Corrupt Organizations 319H 95

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(C) Criminal Remedies and Proceedings 319Hk92 Evidence 319Hk95 k. Weight and Sufficiency. Most Cited Cases (Formerly 83k82.74) Evidence sustained convictions of conspiracy to violate RICO and substantive violations of RICO arising from alleged scheme in which kickbacks were made in exchange for judicial favors from state judge. 18 U.S.C.A. 1341, 1510, 1961(1, 4, 5), 1962(c, d); Organized Crime Control Act of 1970, 904(a), 18 U.S.C.A. 1961 note. [16] Racketeer Influenced and Corrupt Organizations 319H 91

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(C) Criminal Remedies and Proceedings 319Hk91 k. Indictment and Information. Most Cited Cases (Formerly 83k82.74) RICO indictment gave adequate notice that defendant was to be tried as an aider and abettor in respect to alleged bribery activity, even though aiding and abetting was not explicitly mentioned as predicate RICO violation in count 1 of the indictment, where the indictment referred to acts involving the giving and receipt of bribes and where count 2 of the indictment stated that codefendant, sitting as state court judge and aided and abetted by defendant, did corruptly request and solicit money for the benefit of themselves. 18 U.S.C.A. 1962(c, d); M.C.L.A. 750.117, 750.118, 767.39. [17] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Under Michigan law, private citizen could be charged with aiding and abetting bribery of a public official. M.C.L.A. 750.118, 767.39. [18] Criminal Law 110 620(6)

110 Criminal Law 110XX Trial 110XX(A) Preliminary Proceedings 110k620 Joint or Separate Trial of Separate Charges 110k620(3) Severance, Relief from Joinder, and Separate Trial in General 110k620(6) k. Particular Cases. Most Cited Cases Federal district court possessed discretion for allowing joinder of directly false declaration charge with RICO conspiracy charges under Fed.Rules Cr.Proc.Rules 8(b), 13, 18 U.S.C.A., where defendant's alleged false declaration pertained to RICO conspiracy and its concealment and much of the evidence was applicable to both charges. 18 U.S.C.A. 1962(c, d). WELLFORD, Circuit Judge. Defendants, Sam Qaoud, Evan Callanan, Sr. and Evan Callanan, Jr., appeal their convictions on various counts charged in a seven count indictment after a jury trial in the Eastern District of Michigan. The charges stemmed from evidence of the defendants' improper kickback schemes in exchange for judicial favors from state judge **Callanan (Evan Callanan, Sr.). Qaoud was presented at trial as the bag man for Judge Callanan. The younger Callanan allegedly served as an informal negotiator for his father and also directed a case through his own law firm. All of these defendants were convicted of conspiracy to violate RICO (Count I) and substantive violations of RICO (Count II). Callanan, Jr. was convicted of three counts *1108 of mail fraud (Counts IV-VI) and Callanan, Sr. was convicted on one count (Count VI). Callanan, Jr. was also convicted of obstructing a criminal investigation (Count VII). In a separate indictment joined for trial with the RICO charges. Callanan, Jr. was also convicted of making false declarations before a grand jury. Callanan, Sr. received concurrent sentences of ten years each on the RICO charges and five years on the mail

fraud charge. Callanan, Jr. received concurrent sentences of eight years each on the RICO charges and five years on the other counts. Qaoud received concurrent sentences of three years on the RICO counts. The evidence produced at trial may be placed in separate categories. The first five categories concerned five separate criminal matters which, according to the government, were fixed through the abuse of Callanan Sr.'s power as a judge of the 18th District Court for the State of Michigan. The sixth category involved the attempted cover-up once the defendants became suspicious of the government's investigation. The government was initially tipped off by an informer about kickback scheme fixes dealing with liquor and traffic offenses in Judge Callanan's court. The government arranged for the informant (Hanna Judeh) to contact defendants and introduce them to people who might desire to arrange fixes within Judge Callanan's jurisdiction, including some involved in cases from the outstanding warrants file of Callanan, Sr.'s judicial district. The plan also sometimes required government agents to assume the identity of these persons in legal difficulties. Many of the conversations with members of the conspiracy were electronically monitored and/or tape recorded. The defendants do not challenge the use of the electronic evidence on appeal. They also do not seriously dispute the various government recitations of evidence from these sources, which are outlined herein. 1. KAROL GOLOB The first sting operation that the government arranged after learning from informant Judeh about the alleged fix-kickback scheme concerning Judge Callanan involved Karol Golob (Golob). The local police department cooperated with the federal investigation by providing information about a seven-year old drunk driving charge still outstanding against Golob. An FBI agent then assumed the fictitious identity of Golob's purported brother-in-law, John Izzy. Judeh connected undercover agent Izzy with the defendant Qaoud to fix the ticket. On October 8, 1980, at a tape recorded meeting, Qaoud stated that the matter could be fixed for $500 and part of this sum would go to the judge. Qaoud demanded that half be paid in advance and half after Golob's record was cleared and the case dismissed. A week later Izzy met with Qaoud and paid him $250. Qaoud appeared at Judge Callanan's court a few days later on October 21. The judge dismissed the citation that day, and the warrant was recalled two days later. On October 22, Izzy paid Qaoud the balance of the $500. Qaoud gave Izzy a document that would clear Golob's record at the Michigan Secretary of State's office. 2. FAHEL ABDEL-HAMID MAKKI During his conversation with agent Izzy on October 21, Qaoud mentioned an actual criminal matter that he was also going to fix at Judge Callanan's court that day. This involved the case of Reda Makki, who had received a citation for furnishing alcohol to a minor. Surveillance revealed that Qaoud met with Reda Makki's brother, Hussein Makki, as they entered the court that day. Through another contact, Reda Makki had passed $200 on to Qaoud. As they entered the court, Makki presented the ticket to Qaoud. He reported back to Makki that he had taken care of the situation. Judge Callanan apparently took a guilty plea under advisement on October 28, 1980. The judge subsequently dismissed the citation on April 30, 1981. *1109 3. HANNA JUDEH In June 1981 the government informant Judeh was actually charged by the state of Michigan with criminal sexual conduct in the third degree. His offense involved the alleged molestation of a retarded fourteen year old girl. Judeh first unsuccessfully attempted to pass a $2,000 bribe through a court employee. Qaoud told Judeh that it would cost $3,000 to $5,000 to fix the sexual conduct charge. Qaoud explained that the judge would either promptly dismiss the charge for lack of probable cause or bind it over for another date when he was serving as a visiting circuit judge with jurisdiction over such a felony charge. At the government's prompting, Judeh also placed a call to Richard Debs, a local union official and probation officer. Debs was another associate of Judge Callanan, a defendant acquitted in this case. Debs subsequently

appeared with Evan Callanan, Jr. at the gas station where Judeh was employed. They agreed to help Judeh if he would fire his present lawyer and hire Callanan, Jr.'s firm. After Judeh retained Callanan's firm, Callanan, Jr. assured Judeh of receiving probation once his father heard Judeh's case as a circuit judge. Judeh paid him $2,500, in cash, accordingly. Judeh was sentenced by Judge Callanan on November 22, 1981 to three years probation. The judge based the probation on a psychiatric analysis of Judeh arranged by Callanan, Jr. Another member of Callanan's firm (Barbara Miller) represented Judeh in court. Judeh eventually paid $3,500 more to Debs. 4. MITCHELL GOLOFIT After sentencing Judeh, Judge Callanan began stopping by his gas station. Callanan, Sr. apparently obtained free services from Judeh. Judeh approached the judge directly about the actual case involving Mitchell Golofit, the brother of a gas station employee, and Callanan, Sr. indicated that he would review the file. On December 15, 1981, Judge Callanan returned to the gas station with the file, stating he would try to work something out for Golofit if Judeh brought him to court. This conversation was recorded and the government photographed Judge Callanan with file in hand. Judeh subsequently appeared in court with Golofit. Before the proceeding, Callanan told Judeh that Golofit should plead guilty and he would take the case under advisement. Golofit followed this instruction, but the ultimate disposition of the case by Judge Callanan is unclear, apparently because local police officials became suspicious of Judge Callanan's handling of the case. Judge Callanan told Judeh not to say anything about the case to inquiring police officials and stated that he could not trust Golofit. 5. JAMES SIRES In the spring of 1982 the government arranged one more sting operation involving Judeh and another alleged friend who assumed the identity of James Sires, a purported friend of the undercover agent known as Izzy. Callanan, Sr. and Qaoud had many meetings with Judeh at the service station concerning this matter. Concern was expressed that Sires was charged with two felonies. The judge eventually agreed to get the charges reduced to misdemeanors and assume jurisdiction in exchange for $3,000. He testified at trial that although he counted the money, he then returned it to Judeh. This operation involving Sires eventually ran into serious problems. A court clerk sent official correspondence to the Sires' residence (his parents' home). The local police department learned about the apparent mistake, and this information eventually came to Judge Callanan's attention. The FBI subsequently approached Callanan, Sr. about the case. He denied any knowledge or participation in a kickback scheme for judicial favors. 6. THE COVER-UP Soon thereafter Judge Callanan and Debs contacted Judeh and discussed matters while riding together in a car. The judge demanded Judeh's silence if he were approached by the FBI. Debs kept in frequent contact with Judeh. *1110 On July 6, 1982 Callanan, Jr. appeared before the federal grand jury. He denied telling Judeh that the other member of his firm would only be the attorney of record in his sex conduct case. Callanan, Jr. also denied telling Judeh that he had talked to his father about the case. This conversation in which Callanan, Jr. made these statements was tape recorded. Callanan, Jr. and other associates subsequently had a meeting with Judeh at the service station. Callanan, Jr. threatened more legal problems for Judeh on his probation unless he kept quiet. 1. DEFENSE MOTIONS TO DISMISS THE INDICTMENTS DUE TO A) INTERFERENCE WITH STATE JUDICIAL PROCESS AND B) GENERALLY OUTRAGEOUS FEDERAL MISCONDUCT DURING THE INVESTIGATION The government first allowed the manipulation of normal state processes in Judeh's particular case for evidentiary purposes. State judicial officials, however, were apprised of the investigation. For example, on May 7,

1982-months after Judeh's sex conduct case-U.S. Attorney Gilman wrote to the office of state intermediary, Joseph F. Regnier, Executive Director of the State Judicial Commission, confirming that they had discussed the entire investigation and all relevant evidence uncovered. There is no explicit indication that the government contacted the state officials before using the Judeh charge in its sting operation. Neither Mr. Regnier nor State Supreme Court Chief Justice Coleman, however, apparently registered a complaint. Chief Justice Coleman registers surprise in a May 27, 1982 letter about the use of an undercover agent as a criminal in state court. Yet the whole correspondence as well as Mr. Regnier's subsequent letter to her on the matter suggests that such use should have been expected. [1] Actual knowledge on the part of state officials regarding the federal investigation of Judge Callanan and his associates reduces the substantive weight of the defendants' argument expressing federalism concerns. The absence of the state's intervention in this suit or their pursuit of separate injunctive relief against federal manipulation indicates an absence of state concern about interference with state judicial processes. Defendants are not permitted to speak for the state and to claim the benefits of the state's possible complaint which was never expressly set out to federal investigators. [2] The defendants argue that an independent ground for dismissing the case is our inherent supervisory power, which may be exercised to prevent outrageous investigative conduct. **We are not persuaded by either of defendants' arguments as to federalism concerns, or of outrageous conduct by federal officials. We address defendants' contentions of due process deprivations under the circumstances. See United States v. Robinson, 763 F.2d 778 (6th Cir.1985). In United States v. Russell, 411 U.S. 423, 93 S.Ct. 1637, 36 L.Ed.2d 366 (1973) , the Supreme Court indicated that it had not yet encountered a level of outrageous government investigative conduct that constituted a per se deprivation of due process. 411 U.S. at 431-32, 93 S.Ct. at 1642-43; see also Hampton v. United States, 425 U.S. 484, 96 S.Ct. 1646, 48 L.Ed.2d 113 (1976). Similarly, in United States v. Brown, 635 F.2d 1207, 1212 (6th Cir.1980), this court refused to find a due process violation even though the government acquiesced in an informant's participation in over forty burglaries. This court has emphasized four key factors in such a determination: **the need for that type of police conduct, **the impetus for the scheme, **the control exerted by the government over the criminal enterprise, and **the impact of police activity on the crime. See, e.g., United States v. Norton, 700 F.2d 1072, 1075 (6th Cir.), cert. denied, 461 U.S. 910, 103 S.Ct. 1885, 76 L.Ed.2d 814 (1983); Brown, supra; see also Robinson, supra. The key factual points emphasized by the government are **1) that it did not know of or encourage Judeh's commission of a sex *1111 crime and **2) did not provide him with kickback money on this occasion. The defendants do not dispute these points. Judeh's guilt, moreover, has never been established, but the government acquiesced in preventing such a genuine determination in state court. Although we do not necessarily countenance the government's participation in this circumvention of genuine state process, we conclude that the government's actions under the circumstances are neither so shocking nor such an unwarranted interference that we should set aside the verdicts. The state itself or the alleged sex conduct victim may have grounds for complaint, but we do not translate this into a constitutional due process violation which may be claimed by wrongdoers willing to subvert the state judicial process. While we note the argument that the defendants procedurally waived this issue at trial, we have chosen to deal with it on the merits. 4. CROSS-EXAMINATION REGARDING CRIMINAL CONDUCT OF JUDGE CALLANAN FOR WHICH HE WAS NOT INDICTED [6] The question raised by Callanan, Sr. is whether the prejudicial nature of the cross-examination in question outweighed its probative value upon his credibility under F.R.E. 608(b). On direct examination the government attempted to introduce evidence about Judge Callanan's illicit use of judicial defendant-bond funds at a party store for his own purposes, involving Judeh and others unrelated to the indictment charges. The trial judge refused to allow the government to introduce evidence of unindicted activities on direct examination, but Judge Callanan then took the stand and denied all improper conduct. The government then was allowed to introduce the bond checks for purposes of impeachment under 608(b).

Defendant relies on United States v. Pintar, 630 F.2d 1270, 1284-85 (8th Cir.1980), in support of his contention that introduction of alleged kickback checks involving other offenses on cross examination was unduly prejudicial, but Pintar involved no kickback or bribery charges. We find the Pintar case therefore readily distinguishable. It is well settled that past conduct of a witness can be probative of truthfulness or untruthfulness. United States v. McClintic, 570 F.2d 685, 690 (8th Cir.1978); see also United States v. Brown, 547 F.2d 438, 444 (8th Cir.), cert. denied, 430 U.S. 937, 97 S.Ct. 1566, 51 L.Ed.2d 784 (1977). Moreover, in the instant case, Judge Callanan actually admitted that he had negotiated bond checks to Judeh on cross examination, but he denied the other transactions at a party store. The government reinforced in the jury's eye the bond check connection between Judeh and Judge Callanan by the evidence in question. There was no demonstrated abuse of discretion in the court's evidentiary rulings in respect to these matters. 5. EFFECT ON CALLANAN, JR.'S CONVICTION ON TWO COUNTS OF MAIL FRAUD (COUNTS 4 AND 5); JUDGE CALLANAN'S ACQUITTAL ON THESE TWO COUNTS Count 4 concerns the mailing to Judeh's previous counsel in the sex conduct case his *1113 decision to switch attorneys and to retain Callanan's law firm. The letter stated that an attorney in the Callanan firm, Barbara Miller, would now serve as Judeh's counsel. After Judeh expressed reluctance to take the notice to his old counsel, Callanan, Jr. agreed to cause it to be sent. Count 5 stemmed from Judeh's former counsel's transmission of the notice with his signature affixed. The mail fraud charged under 18 U.S.C. 1341 (1976) in both counts was a scheme involving the mails to defraud the public of the honest extended and objective services of Judge Callanan. Callanan, Jr. argues that his convictions cannot stand since Judge Callanan was acquitted of these charges. Callanan, Jr. relies on United States v. Freedman, 568 F.Supp. 450 (N.D.Ill.1983), in support of this argument, also involving a mail fraud scheme involving the bribery of judges. The government in Freedman, however, failed to allege any connection between the defendants and a judge. Their scheme was apparently to collect monies but not actually to pay it over to public officials for bribery purposes. The Freedman court held that the mail fraud theory alleged could not stand under the pleading. Yet, the Freedman court also stated that there is no doubt a private attorney who uses the mails to defraud including the actual bribery of public officials is indictable under Section 1341. 568 F.Supp. at 453. In this case, unlike Freedman, a particular judge was named and indicted. [7] Callanan, Jr.'s contention boils down to argument that inconsistent verdicts were rendered as to his father and him. Yet the verdicts are not necessarily inconsistent. The jury could have simply come to the conclusion that the judge neither caused nor knew of these particular mailings within the meaning of Section 1341. This would not prevent a consistent finding on other counts that the Callanans, father and son, were involved in a larger scheme as charged. We find no merit in this assertion of error. 6. DID THE TRIAL COURT GIVE ADEQUATE INSTRUCTIONS ON MAIL FRAUD CRIME INVOLVING A PUBLIC OFFICIAL? Upon examination of defendants' argument in this respect, we conclude that the district court sufficiently instructed the jury on the relevant elements of the offense of mail fraud. Defendants, moreover, may have waived this objection under Federal Rule of Criminal Procedure 30 by failing to make any objections about the instructions to the trial judge. Indeed, the prosecution points to evidence that the defense counsel agreed to the judge's proposed brief instructions on elements of mail fraud. On either basis, we overrule defendants' contentions on the content and adequacy of the instructions to the jury. 7. MAILING UNDER 18 U.S.C. 1341 [8] Both Callanans challenge their convictions on Count VI which involved the notice from Callanan's law firm to Judeh about his sentencing. They argue that this was an innocent mailing not devised for the purpose of carrying out an unlawful scheme. They do not dispute, however, that the notice sent by Callanan, Jr. disguised the fact of his representation of Judeh by naming another attorney in the firm as lawyer of record. If deemed by the jury an attempt to avoid detection, this would be a sufficient basis for conviction under the statute. See United States v. Hopkins, 357 F.2d 14, 17 (6th Cir.), cert. denied, 385 U.S. 858, 87 S.Ct. 107, 17 L.Ed.2d 84 (1966) (the mailings do not have to contain fraudulent matters). Cf. United States v. Tarnopol, 561 F.2d 466 (3d Cir.1977), and Parr v. United States,

363 U.S. 370, 80 S.Ct. 1171, 4 L.Ed.2d 1277 (1960). We find that the change was adequate under the law, and that there was sufficient evidence upon which to base a conviction for mail fraud. *1114 8. THE ELEMENTS OF CALLANAN, JR.'S ALLEGED VIOLATION OF OBSTRUCTING A CRIMINAL INVESTIGATION, 18 U.S.C. 1510, (COUNT VII) [9] Callanan, Jr. argues, without citing any supporting case law, that in order to sustain a conviction on this charge, the government must prove that he was aware of a violation of federal criminal law before he can be convicted of obstruction. Callanan, Jr.'s cover-up activities regarding Judeh's silence sufficiently constituted a basis for an obstruction of justice charge and there was sufficient evidence of the intent required. The jury instruction in respect to this charge was a standard one. No error was demonstrated by defendants in respect to Count VII. 9. INDICTMENT OF CALLANAN, JR. FOR FALSE DECLARATIONS BEFORE A GRAND JURY, 18 U.S.C. 1623 [10] The government's indictment precisely identified Callanan, Jr.'s alleged falsehoods before the grand jury. The indictment listed simple questions to which Callanan answered yes or no. Callanan cites passages from two opinions stating the indictment must set out ... objective truth, United States v. Tonelli, 577 F.2d 194, 195 (3d Cir.1978), and the grand jury must charge specifically what it believes are the true factors, United States v. Slawik, 548 F.2d 75 (3d Cir.1977). These cases involved insufficient indictments that failed to identify the specific falsity in statements made by the defendants. This circuit's recent opinion in United States v. Eddy, 737 F.2d 564 (6th Cir.1984), however, upheld essentially the same form of indictment in an action for false statements influencing a federal bank under 18 U.S.C. 1014 (1976 & Supp. IV 1980). By analogy to Eddy, the indictment here is upheld as being in substantial compliance with the statute. 10. CONTINUING CRIMINAL ENTERPRISE AND CONSPIRACY Count two of the indictment charged all defendants with violating the substantive offense set forth in 18 U.S.C. 1962(c) (1976) (the RICO statute).FN2 Count one charges the defendants with violating 18 U.S.C. 1962(d) (1976) by conspiracy to violate 1962(c). FN2. Section 1962(c) provides: 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 or collection of unlawful debt. The government must prove these elements to establish a violation of 1962(c): **1) the defendant engaged in an enterprise; **2) the enterprise affected interstate commerce; **3) the enterprise's affairs were conducted through a pattern of racketeering activity; and **4) the conduct of those affairs involved two or more of the racketeering offenses set forth in the statute. United States v. Sutton, 642 F.2d 1001, 1008 (6th Cir.1979) (en banc), cert. denied, 453 U.S. 912, 101 S.Ct. 3144, 69 L.Ed.2d 995 (1981). The defendants present a number of arguments that the government failed to establish these four elements under 1962(c) as a matter of law. Thus, in their view, neither the substantive RICO charge in count two nor the RICO conspiracy charge in count one can stand because the indictment failed to allege a RICO enterprise which was distinct from the pattern of racketeering activity in which they engaged, and because the indictment failed to properly allege a RICO conspiracy. Defendants also argue insufficient evidence either to establish a distinct RICO

enterprise or to show that the enterprise affected interstate commerce. *1115 The RICO statute, it must be remembered, had the broad purpose of providing new means of combatting organized and/or continuing patterns of criminal activity. Congress itself specified: [t]he provisions of this title shall be liberally construed to effectuate its remedial purposes. Pub.Law No. 91-452, Title IX 904(a), 84 Stat. 947 (1970). See Russello v. United States, 464 U.S. 16, 21, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983); United States v. Licavoli, 725 F.2d 1040 (6th Cir.), cert. denied, 104 S.Ct. 3535, 82 L.Ed.2d 840 (1984). RICO applies both to legitimate enterprises conducted through racketeering operations as well as illegitimate enterprises. United States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981). [E]nterprise includes any individual, partnership, corporation, association, or other legal activity, and **any union or group of individuals associated in fact although not a legal entity.... 18 U.S.C. 1961(4) (1976). The government must establish, in a RICO prosecution, a pattern of racketeering activity, which as defined in 18 U.S.C. 1961(5) (1976), consists of at least two acts of racketeering activity ... the last of which occurred within ten years ... after the commission of a prior act of racketeering activity. Under 18 U.S.C. 1961(1) (Supp. IV 1980), racketeering activity includes a wide array of federal and state crimes; in the case at bar, the racketeering activity charged in the indictment is bribery under Michigan law, mail fraud in violation of 18 U.S.C. 1341, and obstruction of a criminal investigation in violation of 18 U.S.C. 1510. To establish that an enterprise's affairs have been conducted through a pattern of racketeering activity, there must be a nexus between the enterprise and the racketeering activity. United States v. Cauble, 706 F.2d 1322, 1331-33 (5th Cir.1983), cert. denied, 465 U.S. 1005, 104 S.Ct. 996, 79 L.Ed.2d 229 (1984); United States v. Robinson, 763 F.2d 778 (6th Cir.1985). [11] Although enterprise and pattern of racketeering activity are separate elements, they may be proved by the same evidence. In United States v. Mazzei, 700 F.2d 85 (2d Cir.), cert. denied, 461 U.S. 945, 103 S.Ct. 2124, 77 L.Ed.2d 1304 (1983), construing United States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981), the court rejected the defendant's contention that a RICO conviction requires proof that the enterprise and pattern of racketeering activity were distinct. We agree that Turkette requires the government to prove both the existence of an enterprise and a pattern of racketeering activity. We do not, however, read Turkette to hold that proof of these separate elements be distinct and independent, as long as the proof offered is sufficient to satisfy both elements. There is nothing in the language or legislative history of the Act to support the appellant's view. Moreover, it does not make sense to impose a distinctness requirement in RICO cases. The appellant would have us rule that his actions are beyond the purview of RICO because he engaged only in point shaving and did not commit criminal acts other than those specifically contemplated in the conspiracy. Mazzei's interpretation would lead to the anomalous result that a large scale underworld operation which engaged solely in trafficking of heroin would not be subject to RICO's enhanced sanctions, whereas small-time criminals jointly engaged in infrequent sale of contraband drugs and illegal handguns arguably could be prosecuted under RICO. The Court will not place its imprimatur on such a counter-productive interpretation. Id. at 89. Other courts have likewise rejected the position that there must be proof of an enterprise distinct from proof of a pattern of racketeering. See, e.g., United States v. Cagnina, 697 F.2d 915, 920-21 (11th Cir.1983) (citing United States v. DeRosa, 670 F.2d 889, 895-96 (9th Cir.1982)), cert. denied, 464 U.S. 856, 104 S.Ct. 175, 78 L.Ed.2d 157 (1983); *1116**United States v. Bagnariol, 665 F.2d 877, 890-91 (9th Cir.1981), cert. denied, 456 U.S. 962, 102 S.Ct. 2040, 72 L.Ed.2d 487 (1982); United States v. Griffin, 660 F.2d 996, 1001 (4th Cir.1981) , cert. denied, 454 U.S. 1156, 102 S.Ct. 1029, 71 L.Ed.2d 313 (1982); United States v. Diecidue, 603 F.2d 535, 545 (5th Cir.1979), cert. denied 445 U.S. 946, 100 S.Ct. 1345, 63 L.Ed.2d 781, 446 U.S. 912, 100 S.Ct. 1842, 64 L.Ed.2d 266 (1980).

[12] The office of the Michigan District Court of the 18th District served by Judge Callanan is, in effect, the RICO enterprise charged in this case. A state or local government office or organization may properly be charged as a RICO enterprise. United States v. Davis, 707 F.2d 880, 883 (6th Cir.1983); United States v. Thompson, 685 F.2d 993, 994-95 (6th Cir.1982) (en banc), cert. denied, 459 U.S. 1072, 103 S.Ct. 494, 74 L.Ed.2d 635 (1982).

**[13][14] The indictment in the case at bar alleges that the RICO enterprise was a group of individuals associated in fact, although not a legal entity, which made use of the Office of the District Judge of the 18th District Court. (Count One, 1, Count Two, 2). This form of indictment was employed because of language used in United States v. Thompson. It is sufficient in this case particularly in view of the further allegation that the affairs of this enterprise were conducted through a pattern of racketeering activity consisting of bribery, mail fraud, and obstruction of a criminal investigation. There is no requirement, as urged by defendants, that all conspirators be involved in each of the underlying acts of racketeering, or that the predicate acts be interrelated in any way; all that is necessary is that the acts are connected to the affairs of the enterprise. United States v. Sinito, 723 F.2d 1250, 1261 (6th Cir.1983), cert. denied, 469 U.S. 817, 105 S.Ct. 86, 83 L.Ed.2d 53 (1984); United States v. Sutton, 642 F.2d at 1017.
[15] Because we conclude that evidence was sufficient to indicate that defendants conducted racketeering activity through the 18th District Court of Michigan, and that the defendant Judge and his co-defendants were associated in fact, and that bribes and mail frauds were made possible through official and illegal conduct of Judge Callanan, together with his co-defendant associates, which deprived the public of the expectation of honest services, we reject the defendants' arguments about the sufficiency of proof of the RICO elements above specified. Evidence was presented to show, if believed, that each of the defendants convicted under Counts One and Two were engaged in an enterprise and/or a conspiracy within the meaning of the Act and that it affected interstate commerce through its nexus with the court and the judge who corrupted the court processes. See United States v. Sutherland, 656 F.2d 1181, 1198 (5th Cir.1981), cert. denied, 455 U.S. 949, 102 S.Ct. 1451, 71 L.Ed.2d 663 (1982); United States v. Robinson, 763 F.2d 778, 785 (6th Cir.1985) . There was sufficient proof also that the enterprise, conducted by defendants in Counts One and Two as associates-in-fact, involved a pattern of racketeering activity centered around bribes and efforts to conceal these bribes involving two or more persons as charged in the indictment. See United States v. Long, 651 F.2d 239 (4th Cir.), cert. denied, 454 U.S. 896, 102 S.Ct. 396, 70 L.Ed.2d 212 (1981); United States v. Altomare, 625 F.2d 5, 8 n. 8 (4th Cir.1980); United States v. Cauble, supra, at 1332, 1333; United States v. Dozier, 672 F.2d 531 (5th Cir.), cert. denied, 459 U.S. 943, 103 S.Ct. 256, 74 L.Ed.2d 200 (1982); United States v. Robinson, 763 F.2d 778 (6th Cir.1985). The law is well settled that for purposes of 1962(c) the criminal enterprise need only have a minimal impact upon interstate commerce. Robinson, 763 F.2d at 781 (emphasis added). The interstate commerce impact in this case involving the misuse of the office of Judge of the 18th District Court, although insubstantial, was sufficient in light of Robinson. It is not the conduct of each individual defendant that must affect interstate commerce, rather the criminal enterprise itself. *1117United States v. Groff, 643 F.2d 396, 400 (6th Cir.) , cert. denied, 454 U.S. 828, 102 S.Ct. 121, 70 L.Ed.2d 103 (1981). The defendants argue that the evidence fails to show that these individuals acted in sufficient concert to constitute an enterprise. They attempt to isolate Judge Callanan from Qaoud's acceptance of money by emphasizing the lack of direct proof that Judge Callanan received money. They also portray Callanan, Jr. as not acting as part of the enterprise. The coordinated nature of the defendants' activity, however, was clearly shown in the Judeh matter and the cover-up. The jury could have inferred other connections by the substantial amount of circumstantial evidence concerning the defendants' enterprise. Accordingly, we sustain the RICO and separate RICO conspiracy convictions regarding all the contentions made by defendants as to adequacy of proof on the requisite RICO elements. 11. THE TRIAL COURT'S CHARGE ON THE GOVERNMENT'S BRIBERY THEORY ON THE RICO COUNTS

[16] The defendants argue that count one of the indictment identified as RICO predicates acts including bribery chargeable under Michigan state law as found in M.C.L.A. Sections 750.117 and 750.118. Section 750.117 specifically punishes the giving of a bribe; Section 750.118, on the other hand, punishes receipt of the bribe. The defendants object to the district court's instruction on the Michigan Aider and Abettor statute (M.C.L.A. 767.39) in regard to the alleged participation of Qaoud because aiding and abetting was not explicitly mentioned as a predicate RICO violation in the above-cited passage from the indictment. Judge Callanan complains that this wrongful aiding and abetting instruction impermissively allowed the jury to see Qaoud as his conduit or bag man despite a lack of direct evidence that Qaoud, in turn, passed the money he received to Callanan, Sr. Read in the light of the relatively liberal construction usually given RICO pleadings, the indictment gave adequate notice that Qaoud was to be tried as an aider and abettor in respect to the bribery activity. The indictment did not suggest proof of violations by defendants concerning Section 750.117, which concerns giving of a bribe. It merely refers to acts involving the giving ( 750.117) and receipt ( 750.118) of a bribe. Moreover, the substantive RICO count (count two) of the indictment clearly states the theory that Evan H. Callanan, Sr., sitting as Judge of the 18th Judicial District Court and aided and abetted by Sam Qaoud, defendants herein, did corruptly request and solicit money for the benefit of themselves. We find no merit in this contention about the instructions of the court relative to bribery as related to the RICO offenses. 12. THE RICO PREDICATE VIOLATIONS OF STATE BRIBERY LAW AGAINST DEFENDANT QAOUD [17] Charging a private citizen with aiding and abetting the bribery of a public official under Michigan law is the basis for Qaoud's contention of an insufficient RICO predicate in this case. The bribery statute ( 750.118) designates a specified class of executive public officials as capable of being principal violators of the statute. The issue arises out of the fact that the Michigan Aider and Abettor statute, M.C.L.A. 767.39, M.S.A. 28.979, abolished the old common law distinction between accessory and principal. Whether Qaoud, not a public official, could be considered a principal violator under Michigan law ( 750.118) is the contention raised. He relies on old Michigan case holding that where an offense can be committed only by a specified class, aider and abettors cannot be charged as principals if they are outside the statute designation. People v. Meisner, 178 Mich. 115, 144 N.W. 490, 491 (1913) (emphasis added). Meisner was cited in In Re Vickers' Petition, 371 Mich. 114, 123 N.W.2d 253, 254 (1963). Qaoud argues Meisner implies that the reach of the Michigan bribery statute simply does not cover him. In People v. Jacoboni, 34 Mich.App. 84, 190 N.W.2d 720, 722 (1971) , however, the Michigan Court of Appeals did not challenge a trial court's view in a public official bribery case that an *1118 aiding and abetting instruction should be submitted against a private citizen involved in such bribery. In United States v. Licavoli, 725 F.2d 1040 (6th Cir.), cert. denied, 467 U.S. 1252, 104 S.Ct. 3535, 82 L.Ed.2d 840 (1984), we considered the key RICO language that a predicate Act must be chargeable under state law. See 18 U.S.C. 1961(1)(A) (Supp. IV 1980). The court found that the defendant was still guilty or chargeable with the offense despite state procedural law. 725 F.2d at 1047. It is not clear, however, whether Michigan substantive law of bribery does pertain to Qaoud's being charged in this indictment as an aider and abettor. Conceding that the question is not free from doubt, we hold that the RICO predicate charges of aiding and abetting bribery can be upheld against Qaoud. Licavoli counsels that the construction under RICO of chargeability under state law should not be interpreted in a formalistic fashion. Jacoboni suggests that the status of a private aider and abettor in a public official bribery case is unclear. The abolition of a distinction between an accessory and a principal set out in 28.979 [ 767.39] is a part of Michigan Statutes Annotated, Title 28, Vol. 25 Code of Criminal Procedure. The purpose of this section, a part of the procedural law, was not only to abolish the common law distinction, but also to enable an aider or abettor of a substantive criminal offense (such as bribery) to be tried and convicted as if he had directly committed the criminal offense. People v. Palmer, 392 Mich. 370, 372, 220 N.W.2d 393, 396 (1974); People v. Gould, 384 Mich. 71, 77, 179 N.W.2d 617 (1970).

We hold that there is a substantive predicate for the state bribery charges asserted and supported by adequate proof against Qaoud in this case. 13. JOINDER OF THE CALLANAN, JR. FALSE DECLARATION INDICTMENT WITH THE RICO INDICTMENT [18] The district court clearly possessed discretion for allowing joinder of the directly related false declaration charge with the RICO conspiracy charges under Federal Rules of Criminal Procedure 8(b) and 13. Callanan, Jr.'s alleged false declaration pertained to the RICO conspiracy and its concealment, and much of the evidence was applicable to both charges. We find no merit to this issue raised here by Callanan, Jr. See United States v. Bibby, 752 F.2d 1116 (6th Cir.1985); United States v. O'Connell, 703 F.2d 645 (1st Cir.1983). 14. DID THE RICO CONSPIRACY COUNT (COUNT 1) CHARGE A SEPARATE CRIMINAL ACT FROM THE COUNT 2 RICO COUNT? The Supreme Court has recognized that as a general principle conspiracy and the substantive offense that is the object of conspiracy are separately punishable crimes. See Iannelli v. United States, 420 U.S. 770, 777, 95 S.Ct. 1284-1289, 43 L.Ed.2d 616 (1975). This court has also specifically held that Ianelli allows separate charges for RICO conspiracy and substantive offenses. See United States v. Sutton, 642 F.2d 1001, 1040 (6th Cir.1979) (en banc), (It is apparent to us that 1962 and 1962(d) [the RICO conspiracy and substantive offense provisions] under the holdings of Iannelli, [supra ] ... validate the indictment of these appellants under both sections), cert. denied, 453 U.S. 912, 101 S.Ct. 3143, 69 L.Ed.2d 995 (1981). In Sutton, however we considered the RICO charges for purposes of sentencing and vacated certain nonconsecutive sentences due to the close identity of proofs. The government does not deny an identity of proofs between the RICO conspiracy and substantive offense charges. Yet the government argues that no formal vacation of sentence needs to take place here due to the presence of consecutive sentences. Id. In light of the Supreme Court's recent opinion in Ball v. United States, 470 U.S. 856, 105 S.Ct. 1668, 1673, 84 L.Ed.2d 740 (1985), however, we believe that the district court *1119 should consider the question of vacating these concurrent RICO sentences. Without expressing any opinion on the merits of this issue, we remand the case only for the limited purpose of considering possible vacation of concurrent RICO sentences under Ball. Accordingly, we AFFIRM the judgment of the district court in all respects except for the limited REMAND to reconsider defendants' claim that a part of the sentences should be vacated in light of Ball v. United States, 470 U.S. 856, 105 S.Ct. 1668 (1985). U.S. v. Maloney, 71 F.3d 645 (7th Cir.(Ill.) Nov 29, 1995) Defendant, a former county circuit court judge, was charged with**racketeering conspiracy, **racketeering, extortion under color of official right, and **obstruction of justice. Following grant of government's motions for reciprocal discovery and production of witness statements, 1992 WL 133202, and following resolution of various pretrial motions, 1992 WL 137588, defendant was convicted in the United States District Court for the Northern District of Illinois, Harry D. Leinenweber, J., on all counts. Defendant appealed. The Court of Appeals, Eschbach, Circuit Judge, held that: (1) county judge was not entitled to new trial based on prosecutor's alleged failure to disclose exculpatory evidence; (2) county judge was not entitled to conspiracy withdrawal instruction; (3) evidence was sufficient to support determination that judicial proceeding was pending against county judge, for purposes of obstruction of justice charge; (4) district court committed harmless error when, for purposes of charge of obstructing justice, it instructed jury that government was not required to prove that official proceedings actually were pending against county judge; (5) witness tampering was actionable under obstruction of justice statute; (6) county judge's acts constituting obstruction of justice extended conspiracy, for purposes of Racketeer Influenced and Corrupt Organizations Act's (RICO) statute of limitation; (7) jury instruction, that government was required to prove that county court engaged in interstate commerce or that its activity affected interstate commerce, did not impermissibly broaden RICO indictment; and (8) fact that bribery which occurred in one criminal case before county judge

involved some individuals who did not participate in briberies in other criminal cases before county judge did not compel finding that first bribery could not be included in RICO conspiracy. Affirmed. Ripple, Circuit Judge, dissented and filed opinion.

Sun Sav. and Loan Ass'n v. Dierdorff, 825 F.2d 187, 56 USLW 2110, 8 Fed.R.Serv.3d 808, RICO Bus.Disp.Guide 6710 (9th Cir.(Cal.),Aug 07, 1987)

9th Circuit Instructions on pattern of racketeering, continuity, and elements of mail fraud. That to establish pattern, it is not necessary to show more than one fraudulent scheme or criminal episode, but rather continuity exists if the predicate acts are not isolated. To allege violation of mail fraud statute as predicate for RICO claim, plaintiff must show that **defendant devised scheme or artifice to defraud; **defendant used mail in furtherance of scheme; and **defendant did so with specific intent to deceive or defraud. 18 U.S.C.A. 1341. Savings and loan's complaint against former president fulfilled criteria required to allege violation of mail fraud statute, as predicate acts for RICO liability, **where complaint alleged that president devised scheme to defraud savings and loan by receiving kickbacks and making various misrepresentations, **complaint set forth four uses of mails that were allegedly in furtherance of fraudulent scheme, and though complaint did not expressly allege requisite specific intent, **complaint conveyed by implication allegation that president intended to deceive or defraud through scheme which was reasonably calculated to deceive persons of ordinary prudence and comprehension. 18 U.S.C.A. 1341, 1962. Savings and loan's complaint alleged mail fraud by former president with sufficient particularity, as predicate acts for RICO liability; complaint described **dates on which letters were written, **by whom and to whom letters were sent, **content of letters, and **role of letters in fraudulent scheme to benefit former president at expense of savings and loan. 18 U.S.C.A. 1341, 1962; Fed.Rules Civ.Proc., Rule 9(b), 28 U.S.C.A.

Savings and loan brought action against former president, alleging that president violated federal RICO statute. The United States District Court for the Southern District of California, Edward J. Schwartz, J., dismissed complaint without leave to amend and savings and loan appealed. The Court of Appeals, Pregerson, Circuit Judge, held that: (1) savings and loan was proper party to bring action; (2) in order to establish required pattern for RICO liability, it is not necessary to show more than one fraudulent scheme or criminal episode, but rather, continuity exists if predicate acts are not isolated; (3) continuity requirement for RICO liability was properly alleged; and (4) predicate acts of mail fraud were sufficiently alleged.

Reversed and remanded. [2] Racketeer Influenced and Corrupt Organizations 319H 3 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk3 k. Elements of Violation in General. Most Cited Cases (Formerly 83k82.71) Liability under federal RICO statute requires conduct of enterprise through pattern of racketeering activity. 18 U.S.C.A. 1962(c). [3] Racketeer Influenced and Corrupt Organizations 319H 31 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk31 k. Multiple Mailings or Communications; Mail or Wire Fraud. Most Cited Cases (Formerly 83k82.71) For purposes of relationship requirement for federal RICO liability, former savings and loan president's alleged predicate acts of mail fraud met definition of relationship; all letters which he wrote were part of scheme that victimized savings and loan and enriched president. 18 U.S.C.A. 1962(c). [4] Racketeer Influenced and Corrupt Organizations 319H 28 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk28 k. Continuity or Relatedness; Ongoing Activity. Most Cited Cases (Formerly 83k82.71) For purposes of establishing continuity of acts for RICO liability, it is not necessary to demonstrate more than one fraudulent scheme or criminal episode to establish **pattern; rather, **continuity exists if predicate acts are not isolated or sporadic. 18 U.S.C.A. 1962(c). [5] Racketeer Influenced and Corrupt Organizations 319H 31 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk31 k. Multiple Mailings or Communications; Mail or Wire Fraud. Most Cited Cases (Formerly 83k82.71) Bank president's predicate acts in mailing four letters to third parties met continuity requirement for RICO liability, though only single scheme was involved, where predicate acts constituting racketeering activity, through which bank president allegedly received numerous kickbacks, and through which he concealed practice from his employer, were not isolated or sporadic events, but were continuous. 18 U.S.C.A. 1962(c). [6] Racketeer Influenced and Corrupt Organizations 319H 59 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk56 Persons Entitled to Sue or Recover

319Hk59 k. Business, Property, or Proprietary Injury; Personal Injuries. Most Cited Cases (Formerly 83k82.72) In RICO action brought by savings and loan against former president, savings and loan, which alleged itself to be enterprise, was nevertheless proper plaintiff in action, pursuant to statute which permitted action by any person injured in business or property by reason of violation of RICO statute. 18 U.S.C.A. 1961(3), 1962, 1962(c), 1964(c). [7] Racketeer Influenced and Corrupt Organizations 319H 49 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk49 k. Nexus Between Enterprise and Acts. Most Cited Cases (Formerly 83k82.71) In order to make sufficient allegation of conduct of enterprise to support RICO claim, alleged racketeering conduct need not be the conduct of alleged enterprise, but instead, defendant must directly or indirectly conduct or participate in enterprise's affairs through pattern of racketeering activity; thus, rather than requiring that enterprise itself conduct racketeering activity, RICO simply requires nexus between enterprise and racketeering activity. 18 U.S.C.A. 1962(c). [8] Racketeer Influenced and Corrupt Organizations 319H 49 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk49 k. Nexus Between Enterprise and Acts. Most Cited Cases (Formerly 83k82.72) Complaint by savings and loan alleged acquired nexus between savings and loan enterprise and former president's racketeering activity sufficient to meet enterprise requirement under civil RICO statute; **when former president committed alleged predicate acts of mail fraud, he acted in his capacity as president, and acts of mail fraud were all related to activities of savings and loan. 18 U.S.C.A. 1962(c). [9] Racketeer Influenced and Corrupt Organizations 319H 10 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk4 Racketeering or Criminal Activity 319Hk10 k. Fraud in General. Most Cited Cases (Formerly 83k82.72) To allege violation of mail fraud statute as predicate for RICO claim, plaintiff must show that **defendant devised scheme or artifice to defraud; **defendant used mail in furtherance of scheme; and **defendant did so with specific intent to deceive or defraud. 18 U.S.C.A. 1341. [10] Racketeer Influenced and Corrupt Organizations 319H 10

ton
319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk4 Racketeering or Criminal Activity 319Hk10 k. Fraud in General. Most Cited Cases (Formerly 83k82.72) Savings and loan's complaint against former president fulfilled criteria required to allege violation of mail fraud statute, as predicate acts for RICO liability, **where complaint alleged that president devised scheme to defraud

savings and loan by receiving kickbacks and making various misrepresentations, **complaint set forth four uses of mails that were allegedly in furtherance of fraudulent scheme, and though complaint did not expressly allege requisite specific intent, **complaint conveyed by implication allegation that president intended to deceive or defraud through scheme which was reasonably calculated to deceive persons of ordinary prudence and comprehension. 18 U.S.C.A. 1341, 1962. [11] Federal Civil Procedure 170A 636 170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases Savings and loan's complaint alleged mail fraud by former president with sufficient particularity, as predicate acts for RICO liability; complaint described **dates on which letters were written, **by whom and to whom letters were sent, **content of letters, and **role of letters in fraudulent scheme to benefit former president at expense of savings and loan. 18 U.S.C.A. 1341, 1962; Fed.Rules Civ.Proc., Rule 9(b), 28 U.S.C.A. [12] Racketeer Influenced and Corrupt Organizations 319H 49 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk49 k. Nexus Between Enterprise and Acts. Most Cited Cases (Formerly 83k82.72) Complaint by savings and loan adequately alleged that former president's mailings were in furtherance of fraudulent scheme against savings and loan, under mail fraud statute, as predicate acts for RICO liability, though letters were all sent to third parties rather than to savings and loan, where effect of mailings was to prevent development of any suspicion about president's special account and thus to keep bank ignorant of president's alleged kickback activities. 18 U.S.C.A. 1341, 1961. [1] Appellant Sun Savings & Loan Association (Sun) brought an action against appellee Daniel Dierdorff (Dierdorff), Sun's former president, alleging that Dierdorff violated the federal Racketeering Influenced and Corrupt Organizations Act (RICO).FN1 The alleged racketeering activity consisted of four letters written by Dierdorff to various entities. In the letters, Dierdorff allegedly sought to cover up *190 a scheme in which he received kickbacks from Sun's loan customers. Dierdorff moved to dismiss for lack of subject matter jurisdiction, arguing that Sun's RICO claims were invalid. The district court dismissed the complaint without leave to amend. Sun appeals that ruling. We reverse on the ground that the complaint adequately alleges a RICO cause of action. FN1. Sun's only other basis for federal jurisdiction was the alleged violation of Federal Home Loan Bank Board (FHLBB) regulations. The district court found no violation of the regulations, and Sun does not appeal from the district court's ruling on this issue. The action also raised numerous pendent state claims against appellee Daniel Dierdorff and against Mary Dierdorff. Because the district court dismissed the action for lack of federal subject matter jurisdiction based on the failure of the RICO and FHLBB claims, the court also dismissed the pendent state claims. Dismissal of the state claims was proper under United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966). Because we hold that the RICO claims should not have been dismissed for lack of federal subject matter jurisdiction, the district court on remand should reexamine its ruling with respect to the exercise of pendent jurisdiction over the state claims. See Hirst v. Gertzen, 676 F.2d 1252, 1265 (9th Cir.1982). I. BACKGROUND Dierdorff served as Sun's president and chief executive officer from June 1980 until October 1984. Sun asserts that during his tenure Dierdorff solicited and received kickbacks from Sun's customers for whom he approved large

loans. On February 3, 1983, Dierdorff allegedly created a secret checking account at Sun under the fictitious name of Dan Danzer. Between February 3, 1983, and March 15, 1984, Dierdorff allegedly made cash deposits of $209,324 into the Danzer account. Sun avers that the money Dierdorff deposited was the money he received through the fraudulent kickback scheme. Sun bases its RICO claim on four predicate acts of mail fraud. Dierdorff allegedly sent letters to certain state and federal agencies and to Sun's outside auditor. In these letters, Dierdorff allegedly attempted to conceal his wrongdoings from the letters' recipients and from Sun. Specifically Sun alleges: 1. On or about April 30, 1984, Dierdorff caused a letter to be produced and mailed by Sun's Assistant Operations Administrator to the Internal Revenue Service. The letter falsely represented that Dierdorff properly provided a tax identification number for the Danzer account. 2. On or about September 26, 1984, Dierdorff caused letters to be produced and mailed to both the Federal Home Loan Bank Board and the California Savings and Loan Commissioner. These letters represented that Dierdorff had done nothing improper or illegal. 3. On or about June 15, 1984, Dierdorff caused a letter to be produced and mailed to Arthur Young Company, outside auditors for Sun. The letter represented that proper loan committee approval was not obtained for loans in some instances and blamed this failure on irregular committee meetings and not enough members on the committee. 4. On or about June 20, 1984, Dierdorff caused a letter to be produced and mailed by Sun's Vice President/Financial Manager to the California Department of Savings and Loan. The letter transmitted a copy of the June 15 letter to Arthur Young Company and thereby represented to the Department of Savings and Loan that proper loan committee approval was not obtained in some instances and that this failure was due to irregular committee meetings and an insufficient number of committee members. Dierdorff resigned from his position with Sun effective October 22, 1984. As part of the termination agreement, Sun agreed not to bring any action against Dierdorff arising out of the employment agreement after October 21, 1985. Sun filed this action on October 21, 1985. On December 6, 1985, Sun filed an amended complaint that added additional parties. On January 8, 1986, Dierdorff filed a motion to dismiss. The district court granted the motion and dismissed the action without leave to amend on the ground that no federal claim had been stated and that federal subject matter jurisdiction was therefore lacking. The district court found plaintiff's RICO allegations insufficient on two grounds. **First, the court held that plaintiff failed to allege a pattern of racketeering activity. **Second, the court held that the predicate acts were not conducted by an enterprise. Sun appeals both of these rulings and, in the alternative, argues that even if the district court was correct in dismissing the complaint, it should have allowed Sun leave to amend. Dierdorff argues on appeal that the district court's rulings on the pattern and enterprise issues were correct and that, in any case, the complaint failed to allege the predicate acts of mail fraud. A. Rico Generally RICO, at 18 U.S.C. 1962(c), provides: 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 or collection of unlawful debt. (Emphasis added.) [2] The Supreme Court has stated that RICO is to be read broadly. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S.Ct. 3275, 3286, 87 L.Ed.2d 346 (1985). Liability under 1962(c) requires (1) the conduct (2) of an enterprise

(3) through a pattern (4) of racketeering activity. Id. at 3285. Racketeering activity is any act indictable under several provisions of Title 18 of the United States Code, see 18 U.S.C. 1961, and includes the predicate act alleged in this case of mail fraud under 18 U.S.C. 1341. B. Pattern of Racketeering Activity In Sedima, 105 S.Ct. 3275, the Supreme Court in a footnote explored the contours of RICO's pattern requirement: As many commentators have pointed out, the definition of a pattern of racketeering activity differs from the other provisions in 1961 in that it states that a pattern requires at least two acts of racketeering activity, 1961(5)(emphasis added), not that it means two such acts. The implication is that while two acts are necessary, they may not be sufficient. Indeed, in common parlance two of anything do not generally form a pattern. The legislative history supports the view that two isolated acts of racketeering activity do not constitute a pattern. As the Senate Report explained: The target of [RICO] is thus not sporadic activity. The infiltration of legitimate business normally requires more than one racketeering activity and the threat of continuing activity to be effective. It is this factor of continuity plus relationship which combines to produce a pattern. S.Rep. No. 91-617, p. 158 (1969) (emphasis added). Similarly, the sponsor of the Senate bill, after quoting this portion of the Report, pointed out to his colleagues that [t]he term pattern itself requires the showing of a relationship.... So, therefore, proof of two acts of racketeering activity, without more, does not establish a pattern.... 116 Cong.Rec. 18940 (1970) (statement of Sen. McClellan). See also id., at 35193 (statement of Rep. Poff) (RICO not aimed at the isolated offender.); House Hearings, at 665. Significantly, in defining pattern in a later provision of the same bill, Congress was more enlightening: criminal conduct forms a pattern if it embraces criminal acts that have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events. 18 U.S.C. 3575(e). This language may be useful in interpreting other sections of the Act. Cf. Iannelli v. United States, 420 U.S. 770, 789, 95 S.Ct. 1284, 1295, 43 L.Ed.2d 616 (1975). Sedima, 105 S.Ct. 3275, 3285 n. 14.FN2 FN2. Although footnote 14 contains no explicit reference to section 1962(c), the Court provided footnote 14 to clarify the pattern requirement of that section. See Sedima, 105 S.Ct. at 3285. Footnote 14 in Sedima has generated a plethora of differing views. Focusing on *192 the Court's use of the continuity plus relationship language from S.Rep. No. 91-617, see Sedima, 105 S.Ct. at 3285 n. 14, various circuit and district courts have arrived at significantly different analyses of when a pattern does and does not exist. See, e.g., Morgan v. Bank of Waukegan, 804 F.2d 970, 975 (7th Cir.1986) (predicate acts must constitute separate transactions to form pattern); Superior Oil Co. v. Fulmer, 785 F.2d 252, 257 (8th Cir.1986) (where all predicate acts were committed in furtherance of single scheme, pattern requirement is not met); Bank of America Nat'l Trust & Sav. Ass'n v. Touche Ross & Co., 782 F.2d 966, 971 (11th Cir.1986) (rejecting requirement of more than one criminal scheme for pattern requirement); R.A.G.S. Couture, Inc. v. Hyatt, 774 F.2d 1350, 1355 (5th Cir.1985) (one criminal scheme is sufficient for pattern requirement); Volckmann v. Edwards, 642 F.Supp. 109, 111-14 (N.D.Cal.1986) (predicate acts occurring during one criminal scheme constitute pattern); Northern Trust Bank/O'Hare v. Inryco, Inc., 615 F.Supp. 828, 833 (N.D.Ill.1985) (no pattern when predicate acts furthered one criminal scheme). It is important to recognize that in footnote 14 the Supreme Court does not enshrine continuity plus relationship as a determinative two-pronged test. Rather, the Court quotes this language to demonstrate how the pattern requirement should be interpreted to prevent the application of RICO to the perpetrators of isolated or sporadic criminal acts. See Note, Reconsideration of Pattern in Civil RICO Offenses, 62 Notre Dame L.Rev. 83, 96 (1986). By citing language from 18 U.S.C. 3575(e) FN3 in the penultimate sentence of footnote 14, the Court suggests that for purposes of 18 U.S.C. 1962(c), a relationship exists among acts that have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics.... Sedima, 105 S.Ct. at 3285 n. 14.

FN3. 18 U.S.C. 3575 provides for an increased sentence for dangerous special offenders. Special offenders include persons who participate in a pattern of criminal conduct. 18 U.S.C. 3575(e)(2) and (3). The statute states: For purposes of paragraphs (2) and (3) of this subsection, criminal conduct forms a pattern if it embraces criminal acts that have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events. 18 U.S.C. 3575(e). [3] The case at hand easily satisfies section 3275(e)'s definition of relationship, as well as a common sense understanding of the term. Dierdorff's alleged predicate acts of mail fraud were designed to further his scheme of receiving and using kickbacks. The letters were all part of a scheme that victimized Sun and enriched Dierdorff. Thus, a relationship exists among the alleged predicate acts of mail fraud in the present case. In many RICO cases involving the pattern issue, it is the continuity requirement that raises a substantial question. See, e.g., Morgan v. Bank of Waukegan, 804 F.2d at 975; Superior Oil Co. v. Fulmer, 785 F.2d at 257. Such is the case here. Dierdorff allegedly committed four predicate acts in connection with his ongoing scheme of receiving kickbacks and other favors from loan customers. The critical question is whether these four acts of mail fraud, all relating to Dierdorff's underlying kickback scheme, satisfy Sedima 's continuity requirement. The post-Sedima courts that have considered this issue have taken two positions. One group of courts, including the Eighth Circuit, has held that a series of predicate acts related to one fraudulent scheme or criminal episode does not constitute a pattern. See, e.g., Fulmer, 785 F.2d at 257. Another group, including the Seventh and Eleventh Circuits, has held that a series of predicate acts related to one fraudulent scheme or criminal episode can constitute a pattern, so long as the predicate acts are continuous. See, e.g., Bank of America v. Touche Ross, 782 F.2d at 971; Illinois Dep't of Revenue v. Phillips, 771 F.2d 312, 313 (7th Cir.1985). *193 [4] We agree with the Seventh and Eleventh Circuits that it is not necessary to show more than one fraudulent scheme or criminal episode to establish a pattern under Sedima. See California Architectural Bldg Prods., Inc. v. Franciscan Ceramics, Inc., Nos. 818 F.2d 1466, 1469 (9th Cir.1987). As stated in Schreiber Distrib. Co. v. ServWell Furniture Co., 806 F.2d 1393, 1399 (9th Cir.1986), continuity exists if the predicate acts are not isolated, i.e., if the predicate acts posed a threat of continuing activity. Accord California Architectural, At 1469. We see no sound basis for the view taken by some courts that a pattern requires more than one fraudulent scheme or criminal episode. See, e.g., Fulmer, 785 F.2d at 257; Medallion TV Enterprises v. SelecTV, Inc., 627 F.Supp. 1290, 1297 (C.D. Cal. 1986); Northwest Trust Bank/O'Hare v. Inryco, Inc., 615 F.Supp. 828, 832 (N.D.Ill.1985). The explanation these courts offer for the requirement of more than one criminal scheme or episode is that the word pattern connotes a multiplicity of events: Surely the continuity inherent in the term presumes repeated criminal activity, not merely repeated acts to carry out the same criminal activity. It places a real strain on the language to speak of a single fraudulent effort, implemented by several fraudulent acts, as a pattern of racketeering activity. Inryco, 615 F.Supp. at 831 (emphasis in original). As another court has stated, a pattern of racketeering must include racketeering acts sufficiently unconnected in time and substance to warrant consideration as separate criminal episodes. The key to demonstrating a pattern is not merely the number of predicate acts, or the time span in which they occur, see Inryco, 615 F.Supp. at 833, but also whether they related to separate criminal episodes. Medallion TV, 627 F.Supp. at 1297 (emphasis in original). We are hard put to understand the significance of the semantical distinction embodied in the Inryco district court's

pronouncement that RICO requires repeated criminal activity rather than repeated criminal acts. The statement overlooks the clear language of section 1961 stating that a pattern requires at least two acts of racketeering activity. 18 U.S.C. 1961(5). RICO requires repeated acts, not repeated activity. Thus, if a defendant commits two or more predicate acts that are not isolated events, are separate in time, and are in furtherance of a single criminal scheme, then RICO's pattern requirement is satisfied. Medallion TV 's concept of continuity as involving acts that are sufficiently unconnected in time and substance to warrant consideration as separate criminal episodes, 627 F.Supp. at 1297, arguably places the continuity requirement into direct tension with the relationship requirement. See Morgan v. Bank of Waukegan, 804 F.2d 970, 975 (7th Cir.1986). Under the Inryco/Medallion TV standard, to meet the pattern requirement, a plaintiff must somehow show that predicate acts were both related and sufficiently unconnected in time and substance. Requiring temporal unconnectedness, i.e., separate acts, makes sense, but neither RICO's language nor Sedima 's interpretation of it supports a requirement of substantive unconnectedness, i.e., separate episodes or schemes.FN4 FN4. Medallion TV's requirement of separate criminal episodes is not necessarily inconsistent with this court's holding on the pattern issue. If an episode is considered to be a single act, event, or transaction, then Medallion TV's requirement of more than one episode squares with our interpretation of the continuity requirement. However, one could read Medallion TV to include within its concept of episode a series of acts, events, or transactions, so long as those acts, events, or transactions are substantively related. Such a reading unreasonably limits the ambit of RICO and overlooks the Supreme Court's admonition that RICO be broadly read. See Sedima, 105 S.Ct. at 3286. The continuity requirement set forth in Sedima is aimed only at eliminating RICO actions against perpetrators of isolated or sporadic acts and is not an attempt to limit RICO to complicated systems or multiple *194 schemes of criminal activity. Requiring a showing of a delicate equilibrium between relatedness and unconnectedness, while arguably in accord with the Supreme Court's statement that sporadic or isolated acts should be protected from RICO claims, will forestall RICO claims that are legitimate under the RICO Act itself, its legislative history, and the Supreme Court's interpretation of the Act. Although RICO cases may be pesky, courts should not erect artificial barriers-metaphysical or otherwise-as a means of keeping RICO cases off the federal dockets. See Sedima, 105 S.Ct. at 3287. Rather than employing a circuitous method of eliminating isolated or sporadic acts from RICO's purview, we prefer simply to examine the predicate acts to see whether they are in fact isolated or sporadic. **If the acts are not isolated or sporadic, then the racketeering activity is continuous. As indicated in Schreiber, 806 F.2d at 1393, the test for establishing whether acts are isolated is whether the acts posed a threat of continuing activity.

**[5] In the case before us, the continuity requirement is satisfied. Dierdorff's predicate acts could be said to be part
of a single scheme, the scheme whereby Dierdorff received numerous kickbacks and concealed the practice from his employer. Even though a single scheme was involved, the predicate acts constituting the racketeering activity were continuous. They occurred separately over time, and they are not isolated or sporadic events because they posed a threat of continuing activity. The meaning of threat of continuing activity can best be understood through a comparison of the facts of the case at hand and those of Schreiber, 806 F.2d at 1393. The two predicate acts in Schreiber did not pose a threat of continuing activity because they furthered the diversion of a single shipment of goods and appear to have occurred at nearly the same time, and because once those acts were complete, defendant had no further need to commit predicate acts. **The four predicate acts in this case did pose a threat of continuing activity because they covered up a whole series of alleged kickbacks and receipts of favors, occurred over several months, and in no way completed the criminal scheme.FN5 FN5. The fact that the last of a series of predicate acts may have completed the criminal scheme does not necessarily preclude a finding of continuity. As long as a threat of continuing activity exists at some point during the racketeering activity, the continuity requirement is satisfied.

**Because Dierdorff's four alleged predicate acts of mail fraud were related and continuous, we hold that Sun's complaint satisfies the pattern requirement as established in Sedima. C. Conduct of an Enterprise [6] To state a cause of action under 18 U.S.C. 1962(c), Sun must allege that Dierdorff conducted or participated directly or indirectly, in the conduct of [the] enterprise's affairs through a pattern of racketeering activity.... 18 U.S.C. 1962(c). The enterprise that Sun has alleged in its complaint is Sun itself.FN6 FN6. Sun, as the enterprise for purposes of section 1962(c), is also the plaintiff in this action. The enterprise here is a proper plaintiff because 18 U.S.C. 1964(c) provides that [a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor. 18 U.S.C. 1961(3) defines person to include any individual or entity capable of holding a legal or beneficial interest in property. Hence, Sun is a proper plaintiff. The district court found that because the alleged mailings were not the conduct of the bank's affairs, but were instead conduct of Dierdorff's affairs, the RICO claim was deficient in alleging the conduct of an enterprise. This conclusion misinterprets section 1962(c). [7] RICO does not require that the alleged racketeering conduct be the conduct of the alleged enterprise. **Instead, RICO requires that the defendant directly or indirectly conduct or participate in the enterprise's affairs through a pattern of racketeering activity. Thus, rather than requiring that the enterprise itself conduct the racketeering activity, RICO simply requires a nexus between the enterprise and the racketeering activity. As the Supreme *195 Court stated in Sedima, the essence of a violation of section 1962(c) is the commission of those acts [of racketeering] in connection with the conduct of an enterprise. Sedima, 105 S.Ct. 3286 (emphasis added). This connection or nexus requirement entails a relationship between the enterprise and the racketeering activity. This does not require some benefit to accrue to the enterprise because of the racketeering activity. One of the principal purposes of RICO was to deal with the infiltration of legitimate businesses by organized crime. United States v. Turkette, 452 U.S. 576, 593, 101 S.Ct. 2524, 2534, 69 L.Ed.2d 246 (1981). A fundamental premise of a program designed to curtail racketeering is that racketeering can harm rather than benefit legitimate businesses. See, e.g., 115 Cong.Rec. 827 (1969) (remarks of Sen. McClellan) (Organized crime ... uses its ill-gotten gains ... to infiltrate and secure control of legitimate business and labor union activities.); 116 Cong.Rec. 35193 (1970) (remarks of Rep. Poff) ([T]itle IX ... will deal not only with individuals, but also with the economic base through which those individuals constitute such a serious threat to the economic well-being of the Nation.) Thus, to satisfy the nexus requirement, plaintiff must merely allege some relationship between the racketeering activity and Sun. Under this connection or nexus requirement, the racketeering activity must in some way stem from the enterprise's activities or otherwise have some relationship to the enterprise. As stated by the Second Circuit in United States v. Scotto, 641 F.2d 47 (2d Cir.1980), cert. denied, 452 U.S. 961, 101 S.Ct. 3109, 69 L.Ed.2d 971 (1981), a nexus exists when **(1) one is enabled to commit the predicate offenses solely by virtue of his position in the enterprise or involvement in or control over the affairs of the enterprise, or **(2) the predicate offenses are related to the activities of that enterprise. Id. at 54. In the present case, the connection requirement is satisfied if Dierdorff was able to commit the fraud by virtue of his position with or work for Sun or if the fraud was related to Sun's business. [8] Sun's complaint alleges the required nexus. When he committed the alleged predicate acts of mail fraud, Dierdorff acted in his capacity as Sun's president. The acts of mail fraud were all related to the activities of Sun. Therefore, the complaint adequately alleges that Dierdorff conducted or participated in the conduct of Sun's affairs through a pattern of racketeering activity. D. Mail Fraud Appellee contends that appellant's RICO allegations are deficient because they fail successfully to allege the

predicate acts of mail fraud. According to appellee, the ten fraud allegations in the complaint were not pled with sufficient particularity, pled no fraud or deceit, or were unrelated to Dierdorff's mailings. [9] The mail fraud statute, 18 U.S.C. 1341, imposes criminal liability upon anyone who devises any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations or promises, and uses the United States mails for the purpose of executing such scheme or artifice or attempting so to do. To allege a violation of the mail fraud statute, plaintiff must show that (1) defendant devised a scheme or artifice to defraud, (2) defendant used the mails in furtherance of the scheme; and (3) defendant did so with the specific intent to deceive or defraud. Schreiber, 806 F.2d at 1399, 1400. [10] Sun's complaint fulfills these criteria. The complaint alleges that Dierdorff devised a scheme to defraud Sun by receiving kickbacks and by making various misrepresentations. The complaint sets forth four uses of the mails that are allegedly in furtherance of Dierdorff's fraudulent scheme. Thus, the first two elements are properly alleged. Nowhere in its complaint does Sun allege that Dierdorff harbored a specific intent to deceive or defraud. We have held, however, that this allegation need not be made expressly. The requirement of specific intent*196 under the mail fraud statute is satisfied by the existence of a scheme which was reasonably calculated to deceive persons of ordinary prudence and comprehension and this intention is shown by examining the scheme itself. United States v. Green, 745 F.2d 1205, 1207 (9th Cir.1984), cert. denied, 474 U.S. 925, 106 S.Ct. 259, 88 L.Ed.2d 266 (1985), quoting United States v. Bohonus, 628 F.2d 1167, 1172 (9th Cir.), cert. denied, 447 U.S. 928, 100 S.Ct. 3026, 65 L.Ed.2d 1122 (1980); see also Schreiber, 806 F.2d at 1400. Under this standard, Sun's complaint has sufficiently alleged the specific intent necessary for mail fraud. The scheme in which Dierdorff allegedly was engaged, involving quiet kickbacks, secret bank accounts, and cover-up letters, seems designed to deceive or defraud. While the complaint falls short of expressly alleging the requisite specific intent, the complaint clearly conveys by implication that Dierdorff intended to deceive or defraud. [11] Dierdorff is also incorrect in his contention that several of Sun's allegations fail to set forth fraud with the required particularity and that several other allegations are conclusory. Federal Rule of Civil Procedure 9(b) requires that all averments of fraud ... be stated with particularity. The time, place, and manner of each act of fraud must be alleged so as to enable the defendant to prepare an adequate answer. Bosse v. Crowell Collier & MacMillan, 565 F.2d 602, 611 (9th Cir.1977); Walling v. Beverly Enterprises, 476 F.2d 393, 397 (9th Cir.1973). Sun's complaint describes **the dates on which the letters were written, **by whom and to whom the letters were sent, **the letters' content, and the letters' role in the fraudulent scheme. Because this information enables Dierdorff to file a meaningful answer, Sun's allegations of mail fraud are sufficiently specific to satisfy Rule 9(b). Appellee incorrectly argues that even if Sun had adequately pled a scheme to defraud, the mail fraud allegations are inadequate because they do not allege that the mailings were in furtherance of the scheme to defraud. Title 18 U.S.C. 1341 requires that the mailings alleged in a mail fraud complaint have been made for the purpose of executing the fraudulent scheme. United States v. Mitchell, 744 F.2d 701, 703 (9th Cir.1984). This does not mean that the mailings need be an essential part of the scheme. Id. Likewise, this does not mean that the mailings need occur concurrently with the fraudulent acts. United States v. Sampson, 371 U.S. 75, 80, 83 S.Ct. 173, 175, 9 L.Ed.2d 136 (1962); see Mitchell, 744 F.2d at 703. The requirement that the mailings be in furtherance of the scheme is satisfied if the completion of the scheme or the prevention of its detection is in some way dependent upon the mailings. Id. [12] The complaint adequately alleges that Dierdorff's mailings were in furtherance of the fraudulent scheme. **All four mailings apparently were part of Dierdorff's attempts to evade detection so that he could continue in his alleged practice of accepting kickbacks. While the letters were all sent to third parties rather than to Sun, the effect of the mailings was to prevent the development of any suspicion about the Danzer account and thus keep Sun ignorant of Dierdorff's activities. **Thus, the mailings as alleged were in furtherance of Dierdorff's alleged scheme to defraud. We therefore reject appellee's argument that the district court's dismissal is justified by appellant's failure properly to allege mail fraud.

We hold that the complaint adequately alleges **a pattern of racketeering activity, the required nexus between the enterprise and the racketeering activity, and the predicate acts of mail fraud. Therefore, we REVERSE the district court's dismissal of the case and REMAND for further proceedings consistent with this opinion. Reves v. Ernst & Young, 507 U.S. 170, 113 S.Ct. 1163, 122 L.Ed.2d 525, 61 USLW 4207, Fed. Sec. L. Rep. P 97,357, RICO Bus.Disp.Guide 8227 (U.S.Ark. Mar 03, 1993) Purchasers of demand notes from farmer's cooperative brought securities fraud and RICO (Racketeer Influenced and Corrupt Organizations) action against cooperative's accountants. The United States District Court for the Western District of Arkansas, H. Franklin Waters, Chief Judge, entered judgment in favor of purchasers, and accountants appealed. The Court of Appeals, 856 F.2d 52, reversed. On certiorari, the Supreme Court, 494 U.S. 56, 110 S.Ct. 945, 108 L.Ed.2d 47, vacated and remanded. On remand, the Court of Appeals, Magill, Circuit Judge, 937 F.2d 1310, affirmed in part, reversed in part and remanded. Again on certiorari, the Supreme Court, Justice Blackmun, held that accountants hired to perform audit of cooperative's records did not participate in operation or management of cooperative's affairs, as required to impose liability on accountants under RICO for **failing to inform cooperative's Board of Directors that cooperative was arguably insolvent. Affirmed. Justice Souter dissented and filed opinion, in which Justice White joined. [3] Racketeer Influenced and Corrupt Organizations 319H 50

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases Term conduct, as used in statute prohibiting any person associated with enterprise from conducting or participating in conduct of such enterprise's affairs through pattern of racketeering activity, necessarily implies some degree of direction over enterprise's affairs. 18 U.S.C.A. 1962(c). [4] Racketeer Influenced and Corrupt Organizations 319H 50

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases In order to participate, directly or indirectly, in conduct of enterprise's affairs, within meaning of federal RICO statute, one must have some part in directing enterprise's affairs. 18 U.S.C.A. 1962(c).

**[5] Racketeer Influenced and Corrupt Organizations 319H

64

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk64 k. Persons Liable. Most Cited Cases RICO liability is not limited to those with primary responsibility for enterprise's affairs, with formal positions in enterprise, or with significant control over or within enterprise. 18 U.S.C.A. 1962(c). [6] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 50

319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases One is not liable under RICO statute prohibiting the conduct of enterprise's affairs through pattern of racketeering activity, unless he or she has participated in operation or management of enterprise itself. 18 U.S.C.A. 1962(c). [9] Racketeer Influenced and Corrupt Organizations 319H 64

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk64 k. Persons Liable. Most Cited Cases Liability under RICO statute prohibiting the conduct of enterprise's affairs through pattern of racketeering activity is not limited to **upper management, but may extend to lower-rung participants in enterprise who are under direction of upper management. 18 U.S.C.A. 1962(c). [10] Racketeer Influenced and Corrupt Organizations 319H 50

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases Enterprise may be operated or managed, within meaning of federal RICO statute, by those not employed by enterprise, who exert control over it as, for example, by bribery. 18 U.S.C.A. 1962(c). [11] Racketeer Influenced and Corrupt Organizations 319H 1

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk1 k. In General. Most Cited Cases RICO's major purpose is to attack infiltration of organized crime and racketeering into legitimate organizations. 18 U.S.C.A. 1962-1968. [12] Racketeer Influenced and Corrupt Organizations 319H 50

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases Although professional standards adopted by accounting profession may be relevant, they do not define what constitutes management of enterprise within meaning of federal RICO provision. 18 U.S.C.A. 1962(c). [13] Racketeer Influenced and Corrupt Organizations 319H 50

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases Accounting firm which was hired to perform audit of cooperative's records, and which reviewed a series of completed transactions and certified that cooperative's records fairly portrayed its financial status as of date three or four months proceeding the meetings at which it presented its reports, did not thereby participate in management or operation of cooperative, and could not be held liable under federal RICO provision for failing to tell cooperative's board that it was insolvent if one of cooperative's assets was given its fair market value and not valued based on cooperative's investment therein. 18 U.S.C.A. 1962(c).

A provision of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(c), makes it unlawful for any person employed by or associated with [an interstate] enterprise ... to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity.... After respondent's predecessor, the accounting firm of Arthur Young and Company, engaged in certain activities relating to valuation of a gasohol plant on the yearly audits and financial statements of a farming cooperative, the cooperative filed for bankruptcy, and the bankruptcy trustee brought suit, alleging, inter alia, that the activities in question rendered Arthur Young civilly liable under 1962(c) to petitioner holders of certain of the cooperative's notes. Among other things, the District Court applied Circuit precedent requiring, in order for such liability to attach, some participation in the operation or management of the enterprise itself; ruled that Arthur Young's activities failed to satisfy this test; and granted summary judgment in its favor on the RICO claim. Agreeing with the lower court's analysis, the Court of Appeals affirmed in this regard. Held: One must participate in the operation or management of the enterprise itself in order to be subject to 1962(c) liability. Pp. 1169-1174. (a) Examination of the statutory language in the light of pertinent dictionary definitions and the context of 1962(c) brings the section's meaning unambiguously into focus. Once it is understood that the word conduct requires some degree of direction, and that the word participate requires some part in that direction, it is clear that one must have some part in directing an enterprise's affairs in order to participate, directly or indirectly, in the conduct of such ... affairs. The operation or management test expresses this requirement in a formulation that is easy to apply. Pp. 1169-1170. **1166 (b) The operation or management test finds further support in 1962's legislative history. Pp. 1170-1172. (c) RICO's liberal construction clause-which specifies that the provisions of this title shall be liberally construed to effectuate its remedial purposes-does not require rejection of the operation or management test. The clause obviously seeks to ensure that Congress' *171 intent is not frustrated by an overly narrow reading of the statute, but it is not an invitation to apply RICO to new purposes that Congress never intended. It is clear from the statute's language and legislative history that Congress did not intend to extend 1962(c) liability beyond those who participate in the operation or management of an enterprise through a pattern of racketeering activity. P. 1172. (d) The operation or management test is consistent with the proposition that liability under 1962(c) is not limited to upper management. Outsiders having no official position with the enterprise may be liable under 1962(c) if they are associated with the enterprise and participate in the operation or management of the enterprise. Pp. 11721173. (e) This Court will not overturn the lower courts' findings that respondent was entitled to summary judgment upon application of the operation or management test to the facts of this case. The failure to tell the cooperative's board that the gasohol plant should have been valued in a particular way is an insufficient basis for concluding that Arthur Young participated in the operation or management of the cooperative itself. Pp. 1173-1174. 937 F.2d 1310, affirmed. This case requires us once again to interpret the provisions of the Racketeer Influenced and Corrupt Organizations (RICO) chapter of the Organized Crime Control Act of 1970, Pub.L. 91-452, Title IX, 84 Stat. 941, as amended, 18 U.S.C. 1961-1968 (1988 ed. and Supp.II). Section 1962(c) makes it 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.... The question presented is whether one must participate in the operation or management of the enterprise itself to be subject to liability under this provision. I

The Farmer's Cooperative of Arkansas and Oklahoma, Inc. (Co-op), began operating in western Arkansas and eastern Oklahoma in 1946. To raise money for operating expenses, the Co-op sold promissory notes payable to the holder on demand. Each year, Co-op members were elected to serve on its board. The board met monthly but delegated actual management of the Co-op to a general manager. In 1952, the board appointed Jack White as general manager. In January 1980, White began taking loans from the Co-op to finance the construction of a gasohol plant by his company, *173 White **1167 Flame Fuels, Inc. By the end of 1980, White's debts to the Co-op totaled approximately $4 million. In September of that year, White and Gene Kuykendall, who served as the accountant for both the Co-op and White Flame, were indicted for federal tax fraud. At a board meeting on November 12, 1980, White proposed that the Co-op purchase White Flame. The board agreed. One month later, however, the Co-op filed a declaratory action against White and White Flame in Arkansas state court alleging that White actually had sold White Flame to the Co-op in February 1980. The complaint was drafted by White's attorneys and led to a consent decree relieving White of his debts and providing that the Co-op had owned White Flame since February 15, 1980. White and Kuykendall were convicted of tax fraud in January 1981. See United States v. White, 671 F.2d 1126 (CA8 1982) (affirming their convictions). Harry Erwin, the managing partner of Russell Brown and Company, an Arkansas accounting firm, testified for White, and shortly thereafter the Co-op retained Russell Brown to perform its 1981 financial audit. Joe Drozal, a partner in the Brown firm, was put in charge of the audit and Joe Cabaniss was selected to assist him. On January 2, 1982, Russell Brown and Company merged with Arthur Young and Company, which later became respondent Ernst & Young.FN2 FN2. In order to be consistent with the terminology employed in earlier judicial writings in this case, we hereinafter refer to the respondent firm as Arthur Young. One of Drozal's first tasks in the audit was to determine White Flame's fixed-asset value. After consulting with White and reviewing White Flame's books (which Kuykendall had prepared), Drozal concluded that the plant's value at the end of 1980 was $4,393,242.66, the figure Kuykendall had employed. Using this figure as a base, Drozal factored in the 1981 construction costs and capitalized expenses and concluded that White Flame's 1981 fixed-asset value was approximately*174 $4.5 million. Drozal then had to determine how that value should be treated for accounting purposes. **If the Co-op had owned White Flame from the beginning of construction in 1979, White Flame's value for accounting purposes would be its fixed-asset value of $4.5 million. **If, however, the Co-op had purchased White Flame from White, White Flame would have to be given its fair market value at the time of purchase, which was somewhere between $444,000 and $1.5 million. If White Flame were valued at less than $1.5 million, the Co-op was insolvent. Drozal concluded that the Co-op had owned White Flame from the start and that the plant should be valued at $4.5 million on its books. On April 22, 1982, Arthur Young presented its 1981 audit report to the Co-op's board. In that audit's Note 9, Arthur Young expressed doubt whether the investment in White Flame could ever be recovered. Note 9 also observed that White Flame was sustaining operating losses averaging $100,000 per month. See Arthur Young & Co. v. Reves, 937 F.2d 1310, 1318 (CA8 1991). Arthur Young did not tell the board of its conclusion that the Co-op always had owned White Flame or that without that conclusion the Co-op was insolvent. On May 27, the Co-op held its 1982 annual meeting. At that meeting, the Co-op, through Harry C. Erwin, a partner in Arthur Young, distributed to the members condensed financial statements. These included White Flame's $4.5 million asset value among its total assets but omitted the information contained in the audit's Note 9. See 937 F.2d, at 1318-1319. Cabaniss was also present. Erwin saw the condensed financial statement for the first time when he arrived at the meeting. In a 5-minute presentation, he told his audience that the statements were condensed and that copies of the full audit were available at the Co-op's office. In response to questions, Erwin explained that the Co-op owned White Flame and that the plant had incurred approximately*175 $1.2 million**1168 in losses but he revealed no other information relevant to the Co-op's true financial health. The Co-op hired Arthur Young also to perform its 1982 audit. The 1982 report, presented to the board on March 7, 1983, was similar to the 1981 report and restated (this time in its Note 8) Arthur Young's doubt whether the

investment in White Flame was recoverable. See 937 F.2d, at 1320. The gasohol plant again was valued at approximately $4.5 million and was responsible for the Co-op's showing a positive net worth. The condensed financial statement distributed at the annual meeting on March 24, 1983, omitted the information in Note 8. This time, Arthur Young reviewed the condensed statement in advance but did not act to remove its name from the statement. Cabaniss, in a 3-minute presentation at the meeting, gave the financial report. He informed the members that the full audit was available at the Co-op's office but did not tell them about Note 8 or that the Co-op was in financial difficulty if White Flame were written down to its fair market value. Ibid. In February 1984, the Co-op experienced a slight run on its demand notes. On February 23, when it was unable to secure further financing, the Co-op filed for bankruptcy. As a result, the demand notes were frozen in the bankruptcy estate and were no longer redeemable at will by the noteholders. II On February 14, 1985, the trustee in bankruptcy filed suit against 40 individuals and entities, including Arthur Young, on behalf of the Co-op and certain noteholders. The District Court certified a class of noteholders, petitioners here, consisting of persons who had purchased demand notes between February 15, 1980, and February 23, 1984. Petitioners settled with all defendants except Arthur Young. The District Court determined before trial that the demand notes were securities under both federal and state law. See Robertson v. White, 635 F.Supp. 851, 865 (WD Ark., 1986). *176 **The court then granted summary judgment in favor of Arthur Young on the RICO claim. See Robertson v. White, Nos. 85-2044, 85-2096, 85-2155, and 85-2259 (WD Ark. Oct. 15, 1986), App. 198-200. The District Court applied the test established by the Eighth Circuit in Bennett v. Berg, 710 F.2d 1361, 1364 (en banc), cert. denied sub nom. Prudential Ins. Co. of America v. Bennett, 464 U.S. 1008, 104 S.Ct. 527, 78 L.Ed.2d 710 (1983), that 1962(c) requires some participation in the operation or management of the enterprise itself. App. 198. The court ruled: Plaintiffs have failed to show anything more than that the accountants reviewed a series of completed transactions, and certified the Co-op's records as fairly portraying its financial status as of a date three or four months preceding the meetings of the directors and the shareholders at which they presented their reports. We do not hesitate to declare that such activities fail to satisfy the degree of management required by Bennett v. Berg. Id., at 199-200. The case went to trial on the state and federal securities fraud claims. The jury found that Arthur Young had committed both state and federal securities fraud and awarded approximately $6.1 million in damages. The Court of Appeals reversed, concluding that the demand notes were not securities under federal or state law. See Arthur Young & Co. v. Reves, 856 F.2d 52, 55 (CA8 1988). On writ of certiorari, this Court ruled that the notes were securities within the meaning of 3(a)(10) of the Securities Exchange Act of 1934, 48 Stat. 882, as amended, 15 U.S.C. 78c(a)(10). Reves v. Ernst & Young, 494 U.S. 56, 70, 110 S.Ct. 945, 953, 108 L.Ed.2d 47 (1990). On remand, the Court of Appeals affirmed the judgment of the District Court in all major respects except the damages award, which it reversed and remanded for a new trial. See 937 F.2d, at 1339-1340. The only part of the Court of Appeals' decision that is at issue here is its affirmance of summary **1169 judgment in favor of Arthur Young on the RICO claim. Like the District Court, the Court of Appeals applied the operation or management test articulated in *177Bennett v. Berg and held that Arthur Young's conduct did not rise to the level of participation in the management or operation of the Co-op. See 937 F.2d, at 1324. The Court of Appeals for the District of Columbia Circuit also has adopted an operation or management test. See Yellow Bus Lines, Inc. v. Drivers, Chauffeurs & Helpers Local Union 639, 286 U.S.App.D.C. 182, 188, 913 F.2d 948, 954 (1990) (en banc), cert. denied, 501 U.S. 1222, 111 S.Ct. 2839, 115 L.Ed.2d 1007 (1991). We granted certiorari, 502 U.S. 1090, 112 S.Ct. 1159, 117 L.Ed.2d 407 (1992), to resolve the conflict between these cases and Bank of America National Trust & Savings Assn. v. Touche Ross & Co., 782 F. 2d 966, 970 ( CA11 1986) (rejecting requirement that a defendant participate in the operation or management of an enterprise). III [1][2] In determining the scope of a statute, we look first to its language. If the statutory language is unambiguous, in the absence of a clearly expressed legislative intent to the contrary, that language must ordinarily be regarded as

conclusive. United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524, 2527, 69 L.Ed.2d 246 (1981) , quoting Consumer Product Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980). See also Russello v. United States, 464 U.S. 16, 20, 104 S.Ct. 296, 299, 78 L.Ed.2d 17 (1983) . Section 1962(c) makes it unlawful for any person employed by or associated with any enterprise ... to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity.... [3] The narrow question in this case is the meaning of the phrase to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs. The word conduct is used twice, and it seems reasonable to give each use a similar construction. See Sorenson v. Secretary of Treasury, 475 U.S. 851, 860, 106 S.Ct. 1600, 1606-1607, 89 L.Ed.2d 855 (1986). As a verb, conduct means to lead, run, manage, or direct. Webster's Third New International Dictionary 474 (1976). Petitioners urge us to read conduct as carry on, Brief for Petitioners 23, so that almost*178 any involvement in the affairs of an enterprise would satisfy the conduct or participate requirement. But context is important, and in the context of the phrase to conduct ... [an] enterprise's affairs, the word indicates some degree of direction.FN3 FN3. The United States calls our attention to the use of the word conduct in 18 U.S.C. 1955(a), which penalizes anyone who conducts, finances, manages, supervises, directs, or owns all or part of an illegal gambling business. See Brief for United States as Amicus Curiae 13, n. 11; Tr. of Oral Arg. 24-25. This Court previously has noted that the Courts of Appeals have interpreted this statute to proscribe any degree of participation in an illegal gambling business, except participation as a mere bettor. Sanabria v. United States, 437 U.S. 54, 70-71, n. 26, 98 S.Ct. 2170, 2182, n. 26, 57 L.Ed.2d 43 (1978). We may assume, however, that conducts has been given a broad reading in this context to distinguish it from manages, supervises, [or] directs. The dissent agrees that, when conduct is used as a verb, it is plausible to find in it a suggestion of control. Post, at 1174. The dissent prefers to focus on conduct as a noun, as in the phrase participate, directly or indirectly, in /the conduct of [an] enterprise's affairs. But unless one reads conduct to include an element of direction when used as a noun in this phrase, the word becomes superfluous. Congress could easily have written participate, directly or indirectly, in [an] enterprise's affairs, but it chose to repeat the word conduct. We conclude, therefore, that as both a noun and a verb in this subsection conduct requires an element of direction. **1170 The more difficult question is what to make of the word participate. This Court previously has characterized this word as a ter [m] ... of breadth. Russello, 464 U.S., at 21-22, 104 S.Ct., at 299-300. Petitioners argue that Congress used participate as a synonym for aid and abet. Brief for Petitioners 26. That would be a term of breadth indeed, for aid and abet comprehends all assistance rendered by words, acts, encouragement, support, or presence. Black's Law Dictionary 68 (6th ed. 1990). But within the context of 1962(c), participate appears to have a narrower meaning. We may mark *179 the limits of what the term might mean by looking again at what Congress did not say. On the one hand, to participate ... in the conduct of ... affairs must be broader than to conduct affairs or the participate phrase would be superfluous. On the other hand, as we already have noted, to participate ... in the conduct of ... affairs must be narrower than to participate in affairs or Congress' repetition of the word conduct would serve no purpose. It seems that Congress chose a middle ground, consistent with a common understanding of the word participate-to take part in. Webster's Third New International Dictionary 1646 (1976). [4][5] **Once we understand the word conduct to require some degree of direction and the word **participate to require some part in that direction, the meaning of 1962(c) comes into focus. In order to participate, directly or indirectly, in the conduct of such enterprise's affairs, one must have some part in directing those affairs. Of course, the word participate makes clear that RICO liability is not limited to those with primary responsibility for the enterprise's affairs, just as the phrase directly or indirectly makes clear that RICO liability is not limited to those with a formal position in the enterprise,FN4 but some part in directing the enterprise's affairs is required. The operation or management test expresses this requirement in a formulation that is easy to apply. FN4. For these reasons, we disagree with the suggestion of the Court of Appeals for the District of

Columbia Circuit that 1962(c) requires significant control over or within an enterprise. Yellow Bus Lines, Inc. v. Drivers, Chauffeurs & Helpers Local Union 639, 286 U.S.App.D.C. 182, 188, 913 F.2d 948, 954 (1990) (en banc) (emphasis added), cert. denied, 501 U.S. 1222, 111 S.Ct. 2839, 115 L.Ed.2d 1007 (1991). IV A This test finds further support in the legislative history of 1962. The basic structure of 1962 took shape in the spring of 1969. On March 20 of that year, Senator Hruska *180 introduced S. 1623, 91st Cong., 1st Sess., which combined his previous legislative proposals. See Lynch, RICO: The Crime of Being a Criminal, Parts I & II, 87 Colum.L.Rev. 661, 676 (1987); Blakey & Gettings, Racketeer Influenced and Corrupt Organizations (RICO): Basic Concepts-Criminal and Civil Remedies, 53 Temp.L.Q. 1009, 1017 (1980). Senate bill 1623 was titled the Criminal Activities Profits Act and was directed solely at the investment of proceeds derived from criminal activity. FN5 It was 2(a) of this bill that ultimately became 1962(a). FN5. Senate bill 1623 provided in relevant part: SEC. 2. (a) Whoever, being a person who has received any income derived directly or indirectly from any criminal activity in which such person has participated as a principal within the meaning of section 2, title 18, United States Code applies any part of such income or the proceeds of any such income to the acquisition by or on behalf of such person of legal title to or any beneficial interest in any of the assets, liabilities, or capital of any business enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce shall be guilty of a felony and shall be fined not more than $10,000, or imprisoned not more than ten years, or both. On April 18, Senators McClellan and Hruska introduced S. 1861, 91st Cong., 1st Sess., which recast S. 1623 and added provisions **1171 that became 1962(b) and (c).FN6 See Blakey, The *181 RICO Civil Fraud Action in Context: Reflections on Bennett v. Berg, 58 Notre Dame L.Rev. 237, 264, n. 76 (1982). The first line of S. 1861 reflected its expanded purpose: to prohibit the infiltration or management of legitimate organizations by racketeering activity or the proceeds of racketeering activity (emphasis added). FN6. Senate bill 1861 provided in relevant part: 1962. Prohibited racketeering activities (a) It shall be unlawful for any person who has knowingly received any income derived, directly or indirectly, from a pattern by [sic] racketeering activity to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce. (b) It shall be unlawful for any person to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce, through a pattern of racketeering activity or through collection of unlawful debt. (c) 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. On June 3, Assistant Attorney General Will Wilson presented the views of the Department of Justice on a number of bills relating to organized crime, including S. 1623 and S. 1861, to the Subcommittee on Criminal Laws and

Procedures of the Senate Committee on the Judiciary. Wilson criticized S. 1623 on the ground that it is too narrow in that it merely prohibits the investment of prohibited funds in a business, but fails to prohibit the control or operation of such a business by means of prohibited racketeering activities. Measures Related to Organized Crime: Hearings before the Subcommittee on Criminal Laws and Procedures of the Senate Committee on the Judiciary, 91st Cong., 1st Sess., 387 (1969) (emphasis added). He praised S. 1861 because the criminal provisions of the bill contained in Section 1962 are broad enough to cover most of the methods by which ownership, control and operation of business concerns are acquired. Ibid. (emphasis added). See Blakey, supra, at 258, n. 59. With alterations not relevant here, S. 1861 became Title IX of S. 30. The House and Senate Reports that accompanied S. 30 described the three-part structure of 1962: (1) making unlawful the receipt or use of income from racketeering activity or its proceeds by a principal in commission of the activity to acquire an interest in or establish an enterprise engaged in interstate commerce; (2) prohibiting the acquisition of any enterprise engaged in interstate commerce through a pattern of racketeering activity; and (3) proscribing the operation of any enterprise engaged in interstate commerce through a pattern of racketeering*182 activity. H.R.Rep. No. 91-1549, p. 35 (1970); S.Rep. No. 91-617, p. 34 (1969) (emphasis added). U.S.Code Cong. & Admin.News pp. 4007, 4010. In their comments on the floor, Members of Congress consistently referred to subsection (c) as prohibiting the operation of an enterprise through a pattern of racketeering activity and to subsections (a) and (b) as prohibiting the acquisition of an enterprise.FN7 Representative Cellar, who was chairman of **1172 the House Judiciary Committee that voted RICO out in 1970, described 1962(c) as proscribing the conduct of the affairs of a business by a person acting in a managerial capacity, through racketeering activity. 116 Cong.Rec. 35196 (1970) (emphasis added). FN7. See, e.g., 116 Cong.Rec. 607 (1970) (remarks of Sen. Byrd of West Virginia) (to acquire an interest in businesses ..., or to acquire or operate such businesses by racketeering methods); id., at 36294 (remarks of Sen. McClellan) (to acquire an interest in a business ..., to use racketeering activities as a means of acquiring such a business, or to operate such a business by racketeering methods); id., at 36296 (remarks of Sen. Dole) (using the proceeds of racketeering activity to acquire an interest in businesses engaged in interstate commerce, or to acquire or operate such businesses by racketeering methods); id., at 35227 (remarks of Rep. Steiger) (the use of specified racketeering methods to acquire or operate commercial organizations). Of course, the fact that Members of Congress understood 1962(c) to prohibit the operation or management of an enterprise through a pattern of racketeering activity does not necessarily mean that they understood 1962(c) to be limited to the operation or management of an enterprise. Cf. Turkette, 452 U.S., at 591, 101 S.Ct., at 2533 (references to the infiltration of legitimate organizations do not requir[e] the negative inference that [RICO] did not reach the activities of enterprises organized and existing for criminal purposes). It is clear from other remarks, however, that Congress did not intend RICO to extend beyond the acquisition or operation of an enterprise.*183 While S. 30 was being considered, critics of the bill raised concerns that racketeering activity was defined so broadly that RICO would reach many crimes not necessarily typical of organized crime. See 116 Cong.Rec. 1891218914, 18939-18940 (1970) (remarks of Sen. McClellan). Senator McClellan reassured the bill's critics that the critical limitation was not to be found in 1961(1)'s list of predicate crimes but in the statute's other requirements, including those of 1962: The danger that commission of such offenses by other individuals would subject them to proceedings under title IX [RICO] is even smaller than any such danger under title III of the 1968 [Safe Streets] [A]ct, since commission of a crime listed under title IX provides only one element of title IX's prohibitions. 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 made subject to proceedings under title IX. 116 Cong.Rec., at 18940. [6] Thus, the legislative history confirms what we have already deduced from the language of 1962(c)-that one is not liable under that provision unless one has participated in the operation or management of the enterprise itself.

V [9][10] Petitioners argue that the operation or management test is flawed because liability under 1962(c) is not limited to upper management but may extend to any **1173 person employed by or associated with [the] enterprise. Brief for Petitioners 37-40. We agree that liability under 1962(c) is not limited to upper management, but we disagree that the operation or management test is inconsistent with this proposition. **An enterprise is operated not just by upper management but also by lower rung participants in the enterprise who are under the direction of upper management. FN9 **An enterprise also might be operated or managed by others associated with the enterprise who exert control over it as, for example, by bribery. FN9. At oral argument, there was some discussion about whether low-level employees could be considered to have participated in the conduct of an enterprise's affairs. See Tr. of Oral Arg. 12, 25-27. We need not decide in this case how far 1962(c) extends down the ladder of operation because it is clear that Arthur Young was not acting under the direction of the Co-op's officers or board. [11] The United States also argues that the operation or management test is not consistent with 1962(c) because it limits*185 the liability of outsiders who have no official position within the enterprise. Brief for United States as Amicus Curiae 12 and 15. The United States correctly points out that RICO's major purpose was to attack the infiltration of organized crime and racketeering into legitimate organizations, S.Rep. No. 91-617, at 76, but its argument fails on several counts. First, it ignores the fact that 1962 has four subsections. Infiltration of legitimate organizations by outsiders is clearly addressed in subsections (a) and (b), and the operation or management test that applies under subsection (c) in no way limits the application of subsections (a) and (b) to outsiders. FN10 Second, 1962(c) is limited to persons employed by or associated with an enterprise, suggesting a more limited reach than subsections (a) and (b), which do not contain such a restriction. Third, 1962(c) cannot be interpreted to reach complete outsiders because liability depends on showing that the defendants conducted or participated in the conduct of the enterprise's affairs, not just their own affairs. **Of course, outsiders may be liable under 1962(c) if they are associated with an enterprise and participate in the conduct of its affairs-that is, participate in the operation or management of the enterprise itself-but it would be consistent with neither the language nor the legislative history of 1962(c) to interpret it as broadly as petitioners and the United States urge. FN10. Subsection (d) makes it unlawful to conspire to violate any of the other three subsections. In sum, we hold that to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs, 1962(c), one must participate in the operation or management of the enterprise itself. VI [12] Both the District Court and the Court of Appeals applied the standard we adopt today to the facts of this case, and both found that respondent was entitled to summary judgment.*186 Neither petitioners nor the United States have argued that these courts misapplied the operation or management test. The dissent argues that by creating the Co-op's financial statements Arthur Young participated in the management of the Co-op because financial statements are management's responsibility. Post, at 1176, quoting 1 CCH AICPA Professional Standards, SAS No. 1, 110.02 (1982). Although the professional standards adopted by the accounting profession may be relevant, they do not define what constitutes management of an enterprise for the purposes of 1962(c). [13] In this case, it is undisputed that Arthur Young relied upon existing Co-op records in preparing the 1981 and 1982 audit reports. The AICPA's professional standards state that an auditor may draft financial statements in whole or in part based on information from management's accounting system. See 1 CCH AICPA Professional **1174 Standards, SAS No. 1, 110.02 (1982). It is also undisputed that Arthur Young's audit reports revealed to the Coop's board that the value of the gasohol plant had been calculated based on the Co-op's investment in the plant. See ibid. Thus, we only could conclude that Arthur Young participated in the operation or management of the Co-op itself if Arthur Young's failure to tell the Co-op's board that the plant should have been given its fair market value constituted such participation. We think that Arthur Young's failure in this respect is not sufficient to give rise to liability under 1962(c).

The judgment of the Court of Appeals is affirmed. U.S. v. Fernandez, 388 F.3d 1199, 04 Cal. Daily Op. Serv. 9577, 2004 Daily Journal D.A.R. 13,110 (9th Cir. (Cal.),Oct 27, 2004)

Yellow flag England v. Doyle, 281 F.2d 304, 3 Fed.R.Serv.2d 989 (9th Cir.
(Cal.) Aug 11, 1960) Proceedings by trustee in bankruptcy to set aside and vacate order of District Court authorizing and approving termination of agency relationship, between agent, who held cash and bonds belonging to bankrupt, and the bankrupt. The United States District Court for the Northern District of California, Southern Division, Oliver J. Carter, J., denied trustee's motion, and trustee appealed. The Court of Appeals, Koelsch, Circuit Judge, held that notice to creditor of bankrupt was not essential to validity of order of District Court terminating agency relationship, where such order was entered after involuntary bankruptcy proceedings had been commenced by creditor but before appointment of trustee. Affirmed. [7] Federal Civil Procedure 170A 2646 170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2646 k. Discretion of Court. Most Cited Cases Federal Civil Procedure 170A 2654 170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Federal Civil Procedure 170A 2657.1 170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2657 Procedure 170Ak2657.1 k. In General. Most Cited Cases (Formerly 170Ak2657) In order to set aside a judgment or order because of fraud upon the court, it is necessary to show **an unconscionable plan or scheme which is designed to improperly influence the court in its decision, a motion to set aside action of the court on this ground is addressed to the sound discretion of trial court, and the burden is on moving party to establish fraud by clear and convincing evidence. Fed.Rules Civ.Proc. rule 60(b), 28 U.S.C.A. * * * while an attorney has implied authority to make agreements and stipulations with respect to purely procedural matters during the regular course of litigation he has no such authority to enter into agreements which involve a waiver of any of his client's substantial rights or the imposition upon him of new liabilities or burdens.

[6] The promise in this case to hold and preserve the client's assets, being ancillary to the bankruptcy matter and seriously impairing the substantial rights of the client, was outside the permissible limits of Mr. Torregano's inherent or implied authority as attorney and could not therefore bind either Mrs. Mansfeldt or her agent.FN6 **The second major point urged by appellant is that appellee practiced a fraud upon the court in failing to disclose the alleged stipulation and the referee's notice of decision handed down more than one month prior to filing the application.FN7 [7] In order to set aside a judgment or order because of fraud upon the court under Rule 60(b), Federal Rules of Civil Procedure, 28 U.S.C.A., it is necessary to show an unconscionable plan or scheme which is designed to improperly influence the court in its decision. Hazel-Atlas Glass Co. v. Hartford Empire Co., 1944, 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250; Root Refining Co. v. Universal Oil Products Co., 3 Cir., 1948, 169 F.2d 514. The motion to set aside on this ground is addressed to the sound discretion of the trial court. Title v. United States, 9 Cir., 1959, 263 F.2d 28; Siberell v. United States, 9 Cir., 1959, 268 F.2d 61. And the burden is on the *310 moving party to establish fraud by clear and convincing evidence. Atchison, Topeka & Santa Fe Ry. Co. v. Barrett, 9 Cir., 1957, 246 F.2d 846. It is clear that appellee did not take any positive or affirmative action in attempting to obtain the district court's favorable ruling on his application. **The fraud urged by the trustee consists of appellee's failure to disclose, at the time the application was filed, the existence of either the above stipulation or the referee's notice of decision to declare Mrs. Mansfeldt a bankrupt. However, as shown above, the Torregano statement did not amount to a binding stipulation, and therefore appellee, if he remembered the statement at all, was not required to disclose it. Similarly, since there had been no final adjudication in bankruptcy, appellee was not bound to disclose the referee's notice of decision, for this had no effect on the existing rights of the parties, and the rights of the trustee do not vest until final adjudication. City of Long Beach v. Metcalf, 9 Cir., 1939, 103 F.2d 483. The application did disclose that the agency was terminable at the will of either party, and that appellee as agent was seeking to terminate the relationship and account for the assets under his control. At that moment, the only person with the right to possess those assets was the alleged bankrupt. Thus, no material fact was concealed from the court; the appellee had disclosed all that was necessary to effect a judicial termination of his agency. We cannot say as a matter of law that appellee's nondisclosure displayed an unconscionable plan or scheme which influenced the decision of the court. Under these circumstances, the District Court did not abuse its discretion in denying appellant's motion. See Atchison, T. & S. Fe Ry. v. Barrett, supra; Seismograph Service Corp. v. Offshore Raydist, 5 Cir., 1958, 263 F.2d 5; Independence Lead Mines Co. v. Kingsbury, 9 Cir., 1949, 175 F.2d 983. The order is affirmed.

7 ALR 1283
American Law Reports ALR The ALR databases are made current by the weekly addition of relevant new cases. Perjury in verifying pleadings G. J. C. One who makes affidavit of poverty in support of motion to proceed in forma pauperis in federal court exposes himself to pains of perjury in case of bad faith. 28 U.S.C.A. 1915. Jefferson v. U.S., 277 F.2d 723 (9th Cir. 1960). The making of a false statement in a pleading filed in a judicial proceeding is perjury. Pen.Code, 118, 118a, 125. People v. Agnew, 77 Cal. App. 2d 748, 176 P.2d 724 (2d Dist. 1947). 18 U.S.C. 1621. Perjury generally

Whoever-(1) having taken an oath before a competent tribunal, officer, or person, in any case in which a law of the United States authorizes an oath to be administered, that he will testify, declare, depose, or certify truly, or that any written testimony, declaration, deposition, or certificate by him subscribed, is true, willfully and contrary to such oath states or subscribes any material matter which he does not believe to be true; or (2) in any declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1746 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true; is guilty of perjury and shall, except as otherwise expressly provided by law, be fined under this title or imprisoned not more than five years, or both. This section is applicable whether the statement or subscription is made within or without the United States.

18. Affidavits If affidavit filed in connection with grave charges against judge was willfully false, action should be taken either under this section and section 1622 of this title relating to perjury or contempt of court or both. Ely Valley Mines, Inc. v. Lee, C.A.9 (Nev.) 1967, 385 F.2d 188. Contempt 8; Perjury 6 One falsely swearing, in affidavit supporting motion to order publication of summons, that he had received specific information showing that defendant could not with due diligence be found or was concealing himself to avoid service of summons, was liable for perjury in corruptly making positive false statements. Butler v. McKey, C.C.A.9 (Cal.) 1943, 138 F.2d 373, certiorari denied 64 S.Ct. 636, 321 U.S. 780, 88 L.Ed. 1073. Perjury 12 U.S. v. Stephens, 46 F.3d 587 (7th Cir.(Ind.) Jan 25, 1995)

Circumstantial evidence to show RICO Conspiracy. Convicted defendant Sidney Powell buying liquor from wife of similarly convicted defendant Stephens,Inspector, and supervisor of the Detective and Public Morals Bureau of Gary Indiana Police Department in exchange for Stephens attempting to discourage police officers from raiding his establishment.
Defendant was convicted in the United States District Court for the Northern District of Indiana, Allen Sharp, Chief Judge, of violating the Racketeer Influenced and Corrupt Organizations Act (RICO). Defendant appealed. The Court of Appeals, Coffey, Circuit Judge, held that: (1) evidence was sufficient to sustain finding that restaurant constituted enterprise for purposes of RICO; (2) evidence sustained finding that defendant agreed to participate in affairs of enterprise and agreed to commit predicate crime of bribery; and (3) statements made in tape recorded telephone conversation between owner and employee of RICO enterprise were admissible under coconspirator exception to hearsay rule. Affirmed. [3] Conspiracy 91 28(3)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses

91k28 Conspiracy to Commit Crime 91k28(3) k. Particular Crimes. Most Cited Cases To be convicted of conspiracy to violate Racketeer Influenced and Corrupt Organizations Act (RICO) there must be proof that individual, by his words or actions, objectively manifested agreement to participate, directly or indirectly, in affairs of enterprise, through commission of two or more predicate crimes. 18 U.S.C.A. 1962(c, d). [4] Racketeer Influenced and Corrupt Organizations 319H 95

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(C) Criminal Remedies and Proceedings 319Hk92 Evidence 319Hk95 k. Weight and Sufficiency. Most Cited Cases Evidence was sufficient to sustain finding that restaurant constituted enterprise for purposes of Racketeer Influenced and Corrupt Organizations Act (RICO) prosecution; restaurant was venue for illegal liquor sales, gambling, and drug dealing. 18 U.S.C.A. 1962(c, d). [5] Racketeer Influenced and Corrupt Organizations 319H 37

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk37 k. Legitimacy; Connection with Organized Crime. Most Cited Cases Racketeer Influenced and Corrupt Organizations Act's (RICO) definition of enterprise encompasses both legitimate and illegitimate businesses. 18 U.S.C.A. 1962(c, d). [6] Racketeer Influenced and Corrupt Organizations 319H 50

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk50 k. Association with or Participation in Enterprise; Control or Intent. Most Cited Cases Evidence in Racketeer Influenced and Corrupt Organizations Act (RICO) prosecution sustained finding that defendant agreed to participate in affairs of enterprise and agreed to commit predicate crime of bribery, even though there was no evidence of explicit agreement between defendant and owner of enterprise; defendant, who was high ranking police officer, discouraged other police officers from raiding restaurant which was conducting illegal gambling, drug dealing, and liquor sales, and restaurant was purchasing large quantities of liquor from liquor store owned by defendant's wife. 18 U.S.C.A. 1962(c, d). [7] Criminal Law 110 423(3)

110 Criminal Law 110XVII Evidence 110XVII(O) Acts and Declarations of Conspirators and Codefendants 110k423 Furtherance or Execution of Common Purpose 110k423(3) k. Character of Acts or Declarations. Most Cited Cases Statements made in tape recorded telephone conversation between owner and employee of Racketeer

Influenced and Corrupt Organizations Act (RICO) enterprise were made in furtherance of conspiracy with defendant and, thus, statements were admissible under co-conspirator exception to hearsay rule in RICO prosecution, where owner told employee that defendant, who was police officer, told owner that police were going to raid his business and that employee should remove drugs from business so that it would not be shut down. 18 U.S.C.A. 1962(c, d); Fed.Rules Evid.Rule 801(d)(2)(E), 28 U.S.C.A. [8] Criminal Law 110 1153.1

110 Criminal Law 110XXIV Review 110XXIV(N) Discretion of Lower Court 110k1153 Reception and Admissibility of Evidence 110k1153.1 k. In General. Most Cited Cases (Formerly 110k1153(1)) Trial court's evidentiary rulings are reviewed for abuse of discretion. [9] Criminal Law 110 427(2)

110 Criminal Law 110XVII Evidence 110XVII(O) Acts and Declarations of Conspirators and Codefendants 110k427 Preliminary Evidence as to Conspiracy or Common Purpose 110k427(2) k. Necessity in General. Most Cited Cases For hearsay statement to be admissible under co-conspirator exception to hearsay rule, government must prove that (1) conspiracy existed, (2) defendant and declarant were members of conspiracy, and (3) offered statement was made during course of and in furtherance of conspiracy. Fed.Rules Evid.Rule 801(d)(2)(E), 28 U.S.C.A. [10] Criminal Law 110 423(1)

110 Criminal Law 110XVII Evidence 110XVII(O) Acts and Declarations of Conspirators and Codefendants 110k423 Furtherance or Execution of Common Purpose 110k423(1) k. In General. Most Cited Cases Statement may be found to be in furtherance of conspiracy for purposes of co-conspirator exception to hearsay rule so long as some reasonable basis exists for concluding that statement furthered conspiracy. Fed.Rules Evid.Rule 801(d)(2)(E), 28 U.S.C.A. *588 Michael A. Thill, Asst. U.S. Atty., Andrew B. Baker, Jr., Asst. U.S. Atty. (argued), Dyer, IN, for plaintiffappellee. J. Michael Katz, Katz, Brenman & Angel, Merrillville, IN (argued), for defendant-appellant. Before COFFEY, PRATT,FN*** and FLAUM, Circuit Judges. FN*** The Honorable George C. Pratt, Circuit Judge for the United States Court of Appeals for the Second Circuit, is sitting by designation. COFFEY, Circuit Judge. Defendant Cleo D. Stephens, Sr. appeals his criminal conviction under the Racketeer Influenced and Corrupt

Organizations Act (RICO), 18 U.S.C. 1962(d), and (c). On June 12, 1992, a grand jury returned a thirty-three count indictment against Stephens, a former police officer of Gary, Indiana, and seventeen other defendants who were participating in gambling activities, drug dealing, and bribery at a liquor establishment operated by Sidney Powell in Gary, Indiana. On July 14, 1993, a superseding indictment was filed against Stephens and the other defendants. Count I of the superseding indictment charged Stephens with conducting and participating, directly and indirectly, in a pattern of racketeering activity involving Sidney Powell's illegal gambling and liquor sales operation, a RICO conspiracy in violation of 18 U.S.C. 1962(c) and (d). The predicate acts upon which the RICO conspiracy charge was based included seventy-five acts of bribery between August 1989 and January 1991, in violation of Indiana Code 35-44-1-1. Count II charged Stephens with conspiring to distribute and possess with intent to distribute cocaine and heroin, in violation of 21 U.S.C. 841(a)(1) and 846. Count III charged Stephens with violating 18 U.S.C. 1955 by conducting an illegal gambling business, and aiding and abetting the business. Stephens entered a plea of not guilty to all three counts, and a jury trial commenced on October 12, 1993. On October 25, 1993, at the close of the government's case, Stephens moved for a judgment of acquittal. The district court granted this motion with respect to counts II and III, but submitted count I to the jury. On October 26, 1993, the jury found Stephens guilty of count I, for violating 18 U.S.C. 1962(d). On November 2, 1993, Stephens renewed his motion for *589 acquittal of count I notwithstanding the verdict. The court denied his motion, and on January 21, 1994, sentenced Stephens to twenty-four months of imprisonment, to be followed by two years of supervised release, with a special assessment of $50.00. Stephens appeals. We AFFIRM. I. BACKGROUND Cleo Stephens, Sr. was a Gary, Indiana police officer until he retired from the department in October, 1991. In 1987, Stephens was named commander of the Traffic Division and, in January, 1988, he was promoted to the position of Deputy Inspector in which he supervised the Detective and Public Morals Bureau. The Public Morals Bureau investigated drug crimes, gambling, prostitution, and illegal liquor sales. In May, 1990, he was elevated to the position of Inspector, the third highest ranking officer in the Gary Police Department, and had increased supervisory responsibilities. The charges against him resulted from his involvement in a gambling and liquor establishment known as Sidney's or Sid's Corner, located in Gary, Indiana. This operation was owned by Sidney Powell, who began operating a restaurant at this location in 1969, and allowed illegal gambling, including card and dice games. Powell split the proceeds with those running the games, keeping sixty percent of the profits. In the late 1970s, Powell expanded his business and began to serve liquor without a license while continuing his gambling operation. At Stephens' trial, Powell testified that while operating Sidney's, he frequently gave Gary, Indiana, police officers free alcoholic beverages and money. He stated that he was of the opinion that if he had not done this, he would have been arrested for the illegal activities on his premises. He testified that it was the custom for owners of after-hours establishments in Gary, Indiana to give either money or alcohol or both to law enforcement officers. Powell stated that during this period he had provided money to at least twenty-five to thirty police officers, and free alcoholic beverages to at least ten or twelve officers since opening Sidney's in 1969. Stephens was associated with Sidney Powell on a business as well as social basis, having been friends for many years. Powell began purchasing his liquor from Madison Street Liquors, which was owned by Stephens' wife Barbara Stephens, and her sister-in-law. Officer Stephens told Powell that if he purchased his liquor from Madison Street Liquors, Stephens would provide him with a ten percent discount on his orders. Powell testified that from 1986 to 1990, he purchased his alcohol retail from Madison Street Liquors in amounts of approximately $1000.00 per week and that he had been operating his business since the 1970's without a liquor license. In 1990, he obtained his first liquor license, and began purchasing liquor from a wholesaler, but shortly thereafter, in January, 1991, the Federal Bureau of Investigations (FBI) confronted Powell regarding drug dealing and seized some $5000.00 which he was going to use to pay his wholesalers. Powell stated that after he got broke from the FBI seizing his money, he resumed purchasing liquor from Madison Street Liquors. Although Madison Street Liquors was owned by Stephens' wife, Stephens also actively participated in its operation. Arlene Washington, who worked as a clerk at Madison Street Liquors from 1988 until 1993, testified that Stephens frequently closed the store in the evening and on occasion opened it for business in the morning. He also frequently emptied the cash register, counted the money at night, withdrew a sum, and left an amount sufficient for

the next day's business. Stephens also assisted customers, including Powell, on a number of occasions. Stephens' association with Powell's liquor establishment involved far more than simply making liquor sales to Powell at the ten percent discount. Stephens, in his capacity as Deputy Inspector and Inspector of the Gary, Indiana Police Department, engaged in discussions on numerous occasions with other police officers who were either investigating or preparing to raid Powell's liquor establishment for gambling activities, illegal liquor sales, and drug dealings. Sergeant Lawrence Wright of the Patrol Division testified *590 that in 1986, he raided Powell's establishment a number of times because he was aware that Powell was selling liquor without a license. Some time during 1986, Sergeant Wright raided Sidney's and arrested Sidney Sledge for his participation in illegal activities at Sidney's. After this raid, Stephens suggested to Wright that he leave Powell and Sledge alone and further advised him that because of the frequency of the raids, his activities might be construed as harassment. In February, 1987, Wright arrested Powell for selling liquor without a license. Approximately two or three weeks thereafter, Stephens had another chat with Wright and suggested that raiding Powell was not a high priority for the department and that in the future he should leave Powell's business alone. Wright disregarded Stephens' advice and raided Powell on two occasions thereafter. William Hlas, who had been elevated to the position of Commander of the Public Morals Bureau (PMB), testified that on another occasion, in January, 1990, Inspector Stephens tried to dissuade him from taking action against Powell for his blatant disregard for the laws and ordinances of the State of Indiana and city of Gary. Hlas became aware of the fact that Powell was not cooperating with police officers who were investigating a homicide in the vicinity of Sidney's. Hlas stated that he advised Powell that if he did not cooperate, Hlas would be forced to raid his establishment because he knew Powell was operating without a license. The following day, not surprisingly, Stephens summoned Hlas into his office and told him that Sidney Powell was not the enemy. While having this discussion with Hlas, in an attempt to make a point, Stephens held phone messages in his hand referring to drug trafficking, and stated that [t]hese are your enemies, not Sidney. These are your enemy. The dope dealers are your enemy. You've got enough of them out there without being at Sidney's. On September 12, 1990, Powell's son was arrested by Officers Earls, Bauswell, Branson, and House for illegal gambling and selling liquor without a permit at Sidney's. Inspector Stephens later directed these officers to report to his office to discuss Sidney Powell's operation. As strange as it may seem, Powell attended this meeting with the officers, at which time Stephens again stated that Powell was not the enemy, but, rather, was an informant for the police department. Stephens instructed the officers to confine their activities to the street corner outside of Powell's establishment. Officer Earls stated that he understood this instruction to mean that he should cease and desist raiding Sidney's. Sergeant Carmella Green, a supervisor assigned to the Public Morals Bureau, testified at trial that she also had been told by Stephens that Powell was not the enemy. Sergeant Green testified that as a result of this direction, she did not feel free to raid Powell for any law violation within his establishment without seeking Stephens' prior approval. In 1990, the FBI, relying on information it received, commenced an undercover operation to investigate allegations that Gary Police officers were soliciting payoffs for protection of gambling operations. During this investigation, the FBI discovered that Sidney Powell was involved in the payoff scheme and that he was also distributing cocaine. As part of the investigation, the FBI installed pen registers on Powell's phones at his liquor establishment, in his car phone, and in his home.FN1 At this time, the Bureau also obtained court authorization to install wiretaps on Powell's car and home phones. The pen registers recorded a total of eighty-nine telephone calls made from Powell's car and home phones to Madison Street Liquors between May, 1990 and January 17, 1991. The pen registers also recorded several calls made to Inspector Stephens' office at the police department. One of the phone calls, intercepted on the wiretap, was made on December 18, 1990, by Sidney Powell to Gwendolyn Campbell, a bartender at Sidney's. During this wiretapped conversation, Powell told *591 Campbell that he spoke with Stephens regarding a robbery incident at Sidney's the previous night. Stephens related to Powell that he had heard that someone at Sidney's possessed drugs. Stephens warned Powell of an impending drug raid by stating that he was going to send the narcotics squad to Sidney's. In this recorded conversation, Powell described this to

Campbell by stating: FN1. A pen register is a device attached to a telephone which records all outgoing calls made from that particular phone. He say okay. He say well, I been gettin', uh, that there's a bag off a your place.... Okay. All right. So I said well, you know how that go Cleo. I say, uh ... he say no, not that you've got the bag. He said but maybe he got somebody with a bag up in there, but I been gettin' that ... there is a bag off in your place, and, well, I said well, I'll get through and check it out with a find ... he said but I'm gonna send the, I'm gonna send the narcotics squad down through there today. The testimony has established that the term bag, referred to in Powell's conversation, means drugs. In response to this warning by Stephens, Powell told Campbell that he was going to clear out all of the drug pushers from Sidney's. In reality, Stephens did send Officer Gordon to speak with Powell the next day, but Gordon did not raid Sidney's. As a result of the FBI investigation, Stephens was indicted for RICO conspiracy violations, and a jury, after an eight day trial, found Stephens guilty of violating the Racketeer Influenced and Corrupt Organizations Act (RICO). 18 U.S.C. 1962(d). II. ISSUES Stephens raises two issues on appeal. Initially, he argues that the district court erred by failing to grant his motion for judgment of acquittal on count I because there was insufficient evidence to sustain his conviction. Secondly, Stephens contends that the district court erred by admitting in evidence the December 18, 1990 court authorized recorded telephone conversation between Sidney Powell and Gwendolyn Campbell because it is inadmissible under the co-conspirator exception to the hearsay rule, Rule 801(d)(2)(E) of the Federal Rules of Evidence. III. DISCUSSION SUFFICIENCY OF EVIDENCE [1][2] The standard of review for considering whether there is sufficient evidence to support a conviction is set forth in Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979). Our inquiry is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. Id.; United States v. Howell, 37 F.3d 1197, 1201 (7th Cir.1994). Reversal of a conviction is warranted only when the record is devoid of any evidence, regardless of how it is weighed, from which the jury could find guilt beyond a reasonable doubt. United States v. Gutierrez, 978 F.2d 1463, 1468-69 (7th Cir.1992); see United States v. Rosalez-Cortez, 19 F.3d 1210, 1215 (7th Cir.1994). Stephens argues that the record is insufficient to establish that he was associated with Sidney Powell, or that he conspired with anyone to conduct or participate in the affairs of Powell's enterprise, or that he willfully agreed to commit acts of bribery. We disagree. Stephens, in count I, was charged with violating 18 U.S.C. 1962 which provides that: (c) 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 or collection of unlawful debt, and (d) [i]t shall be unlawful for any person to conspire to violate any of the provisions of subsections (a), (b), or (c) of this section. The federal RICO charges under 18 U.S.C. 1962 against Inspector Stephens of the Gary, Indiana police department resulted from Stephens' violations of the Indiana bribery statute, Ind.Code 35-44-1-1, which provides that: (a) A person who: ... (2) Being a public servant, solicits, accepts, or agrees to accept, either before or after he becomes appointed, elected, or qualified, any property, except property he is authorized by law to *592 accept, with intent to control the performance of an act related to his employment or function as a public servant; ... commits bribery, a Class C Felony.

[3] Proof of participation in a RICO conspiracy requires the following: [t]o be convicted of a conspiracy to violate RICO there must be proof that the individual, by his words or actions, objectively manifested an agreement to participate, directly or indirectly, in the affairs of an enterprise, through the commission of two or more predicate crimes. United States v. Balzano, 916 F.2d 1273, 1289 (7th Cir.1990) (quoting United States v. Neapolitan, 791 F.2d 489, 497 (7th Cir.), cert. denied, 479 U.S. 940, 107 S.Ct. 422, 93 L.Ed.2d 372 (1986)). In order to convict a defendant for conspiracy under the RICO act, it must be established that the defendant was aware of the scope of the enterprise and intended to participate in it. In Balzano, this court stated: To find a defendant guilty of conspiracy to violate RICO, the government must show that the defendant was aware of the essential nature and scope of the enterprise and intended to participate in it. United States v. Bruun, 809 F.2d [397, 410 (7th Cir.1987) ]. While there is no need to prove that the defendant intended personally to perform the two predicate acts required for RICO liability, United States v. Neapolitan, 791 F.2d 489, 498 (7th Cir.), cert. denied, 479 U.S. 940, 107 S.Ct. 422, 93 L.Ed.2d 372 (1986), the government does have to show more than mere association with conspirators, knowledge of a conspiracy, and presence during conspiratorial discussions....' United States v. Percival, 756 F.2d 600, 610 (7th Cir.1985); see also United States v. Williams, 798 F.2d 1024, 1028 (7th Cir.1986). The government has to show that there was an agreement between the members of the conspiracy. Of course, direct evidence of that agreement need not be shown, an agreement can be inferred from the circumstances. United States v. Neapolitan, 791 F.2d at 501. Balzano, 916 F.2d at 1289 (quoting United States v. Muskovsky, 863 F.2d 1319, 1324 (7th Cir.1988)). There are two aspects of the 1962(d) conspiracy that serve to limit the scope of the theory: (1) the nature of the agreement required and (2) the necessity of proving the existence of an enterprise. Neapolitan, 791 F.2d at 498. [4] Initially, we consider whether the government established the existence of an enterprise for purposes of RICO. The term enterprise is defined [in RICO] as including any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity. ... There is no restriction upon the associations embraced by the definition: an enterprise includes any union or group of individuals associated in fact. On its face, the definition appears to include both legitimate and illegitimate enterprises within its scope ... Balzano, 916 F.2d at 1289-90, quoting United States v. Turkette, 452 U.S. 576, 580-81, 101 S.Ct. 2524, 2527-28, 69 L.Ed.2d 246 (1981). [5] Stephens was charged with being associated with and participating in an enterprise which consisted of the group of people who participated in the illegal activities at Sidney's. The evidence demonstrated that Sidney's is the enterprise for purposes of the RICO statute, as this was the venue for illegal liquor sales, gambling, and drug dealing. RICO's definition of an enterprise encompasses both legitimate and illegitimate businesses. Turkette, 452 U.S. at 580-81, 101 S.Ct. at 2527-28; Russello v. United States, 464 U.S. 16, 24, 104 S.Ct. 296, 301, 78 L.Ed.2d 17 (1983); United States v. Blackwood, 768 F.2d 131, 137 (7th Cir.1985). [6] Next, we turn to the question of whether Stephens agreed to participate, directly or indirectly, in the affairs of Sidney's (the enterprise), through the commission of two or more predicate crimes. Stephens argues that he did not participate in the affairs of Sidney's, nor did he have any agreement with Powell which involved any illegal conduct on his part. Specifically, Stephens contends that there is insufficient evidence to establish that he committed acts of bribery with Powell so that it would influence the exercise of his judgment as a police officer, thus providing a benefit to Powell. *593 This argument lacks support in the record. The evidence demonstrates that Stephens solicited Powell's business for Madison Street Liquors, his wife's liquor store, by offering him a ten percent discount on his purchases. Between 1986 and 1991, Powell purchased approximately $1000.00 of liquor per week from Madison Street Liquors. During this time-frame, Inspector Stephens stated to several police officers, who in the course of their duties as police officers in the Gary, Indiana Police Department were investigating Powell for known violations of Indiana criminal statutes, that Powell was not the enemy, and further directed several officers to leave Powell alone, and to confine their law enforcement activities to the outside of Sidney's. **Even if Stephens and Powell did not explicitly enter into an agreement, in a RICO conspiracy, direct evidence of that agreement need not be shown,

an agreement can be inferred from the circumstances. Balzano, 916 F.2d at 1289 (quoting Neapolitan, 791 F.2d at 501). **[W]hen the evidence establishes that the defendants committed during a time period several acts of racketeering in furtherance of the affairs of the enterprise, an inference of an agreement to do so may be drawn. United States v. Melton, 689 F.2d 679, 683 (7th Cir.1982) (quoting United States v. Elliott, 571 F.2d 880, 903 (5th Cir.), cert. denied, 439 U.S. 953, 99 S.Ct. 349, 58 L.Ed.2d 344 (1978)). Because conspiracies are carried out in secret, direct proof of agreement is rare. Balzano, 916 F.2d at 1284 (quoting United States v. Koenig, 856 F.2d 843, 854 (7th Cir.1988)). Not only is the use of circumstantial evidence permissible, but circumstantial evidence may be the sole support for a conviction. Id. (internal quotations omitted). In Balzano, we described the agreement that must be proven in a RICO conspiracy: From a conceptual standpoint a conspiracy to violate RICO can be analyzed as composed of two agreements (in reality they would be encompassed by the same manifestations of the defendant): an agreement to conduct or participate in the affairs of an enterprise and an agreement to the commission of at least two predicate acts. Thus, a defendant who did not agree to the commission of crimes constituting a pattern of racketeering activity is not in violation of section 1962(d), even though he is somehow affiliated with a RICO enterprise, and neither is the defendant who agrees to the commission of two criminal acts but does not consent to the involvement of an enterprise. If either aspect of the agreement is lacking then there is insufficient evidence that the defendant embraced the objective of the alleged conspiracy. Thus, mere association with the enterprise would not constitute an actionable 1962(d) violation. **In a RICO conspiracy, as in all conspiracies, agreement is essential. Balzano, 916 F.2d at 1290 (citations omitted). Based on our review of the record, we hold that there was more than sufficient evidence for a rational jury to find that Stephens, by his acts and deeds, entered into an agreement with Powell to conduct or participate in the affairs of Sidney's, and that there was an agreement between Powell and Stephens to commit some seventy-five acts of bribery as defined by the Indiana bribery statute. Stephens directly and indirectly participated in the affairs of Sidney's. Stephens initiated the contact with Powell regarding selling liquor to Powell at a ten percent discount from Madison Street Liquors, which involved almost $1000.00 per week. At Stephens' trial, Powell, in response to the question [d]id you go to Cleo [Stephens] or did Cleo come to you?, replied: [w]ell, I didn't know that Cleo had a liquor store. He told me he had one, and he would give me a ten percent discount. Although this store was owned by Stephens' wife, Barbara, Stephens was directly involved in the operation of the liquor store, in that according to the testimony of Arlene Washington, a former clerk at Madison Street Liquors, Stephens would close the store at night, open it in the mornings, take the cash receipts at night, and leave a sufficient amount of money for opening the next day, and would on occasion wait on customers, including Sidney Powell. Obviously these liquor sales to Powell benefitted both Stephens and his wife. The jury could reasonably infer that these purchases from Madison Street Liquors at a ten percent*594 discount were made with the intent to control the exercise of Stephens' judgment as a law enforcement officer and formed the basis for the bribery charges against Stephens. The Indiana bribery statute provides that it is a felony for a public servant to accept ... any property ... with intent to control the performance of an act related to his employment or function as a public servant. Ind.Code 35-44-1-1(a)(2). Powell testified that at the time he started purchasing his liquor from Stephens, he knew that Stephens was a police officer with the Gary, Indiana Police Department, and thus, he was aware that Stephens was in a position to make judgments concerning the enforcement of the laws in Gary, Indiana, as they related to his tavern. Although Powell stated that he did not have any verbal or written agreement with Stephens, the jury could infer from Stephens' conduct that there was an agreement that Stephens would provide protection for Powell's illegal operation, in exchange for Powell purchasing his liquor from Madison Street Liquors at a ten percent discount. The record establishes that Powell did expect assistance or some benefit from Stephens in exchange for Powell purchasing liquor from his wife's store. The following is the testimony which Powell gave at Stephens' trial:

Q: Mr. Powell, did you have an expectation from Mr. Stephens that if you needed assistance, you could get it from him? A: Well, knowing him in person, I assumed I could. Q: How about your relationship of buying liquor from him? A: Well, yeah, that too. Q: So you expected something in return; is that right? A: If I needed it. Q: Did you get it? A: Well, no more than what I purchased from him, but I never got nothing for him to do anything. Q: Sending Perry Gordon down wasn't doing anything? A: That's different. He ordered that, not me. ... Q: Is that the type of activity that you expected in return? A: Yes. ... Q: Out of all the liquor stores in the city of Gary, why would you go to Cleo Stephens to buy your liquor? A: Well, I knew him personally, and I figured he had authority to do something about that. Stephens argues that Powell's only expectations were that he wanted someone with authority to provide legitimate assistance to Powell for keeping drug dealers away from his business. However, the evidence demonstrates otherwise. The record contains a number of instances where Stephens, a high ranking official in the police department, attempted to protect Powell's illegal liquor and gambling operation from police investigations and raids by police officers. Initially, in 1986, after Powell had started purchasing his liquor from Madison Street Liquors, Sergeant Wright of the Patrol Division, raided Sidney's because Powell was selling liquor without a license. At some point in 1986, Wright again raided Sidney's and arrested a person known as Sidney Sledge. After this arrest, Stephens advised Wright that he should leave Powell and Sledge alone.FN2 In February, 1987, Wright raided Sidney's and arrested Powell. After this arrest, Stephens reminded Wright about their previous discussion about Sidney's and told him that raiding Powell was not a high priority of the department, and that he should leave Powell alone. Wright testified that he understood this conversation to mean that he should leave Sidney's alone and not concern himself with the activities occurring inside of Sidney's. FN2. At the time of Stephens discussions with Wright, Stephens was a commander in the traffic division and was not Wright's immediate supervisor, although he was Wright's superior in the command structure of the police department. Another police officer who had occasion to discuss Powell with Stephens was Sergeant Carmella Green, supervisor of the narcotics unit. The record reflects that at some point in 1989 or 1990, Inspector Stephens had told

*595 her that Powell was not the enemy. She stated that this comment influenced her to the extent that she would not have raided Sidney's without checking first with Stephens. In January, 1990, Inspector Stephens had a discussion with William Hlas, Commander of the Public Morals Bureau (PMB), after Hlas told Powell that he would raid him if he did not cooperate with a police investigation which was taking place in the vicinity of his establishment. Stephens summoned Hlas to his office and suggested to him, as he had done to other officers in the police department, that Powell was not the enemy. Stephens stated, while referring to other drug dealers, [t]hese are your enemy ... [y]ou've got enough of them out there without being at Sidney's. In addition, Inspector Stephens had a meeting with Officers Bauswell, Branson, Earls, and House, of the PMB, concerning raids on Powell. Sidney Powell was also present at this meeting which took place in Stephens' office, after September 12, 1990, when officers in the PMB arrested Larry Powell, Sidney Powell's son, for illegal gambling and selling liquor without a license at Sidney's. Stephens advised those present at this meeting that Powell was not the enemy, and that he was, in fact, an informant for the police department. Stephens instructed the officers to confine their activities to the street corner outside of Sidney's. Thus, it seems rather obvious that the officers were not to concern themselves with enforcing the law within, and thus should not enforce the laws of the state of Indiana as applicable to, Sidney's. Corporal Derrick Earls testified that he did not consider this statement as a joke, and that he reported it to his supervisors, as well as the persons in the PMB. Earls further testified that he understood this statement to mean that he should stop raiding Sidney's. He said that after this meeting, until July, 1991, the time in which he was with the Public Morals Bureau, he had been involved in other arrests outside of Sidney's, but that the inside of Powell's establishment was out of bounds and never a target for a raid. Earls stated that Stephens' statements were a topic of frequent discussion among the police officers in the PMB, and that several officers were angry about them. Corporal John Jelks even posted a photograph of Powell on the bulletin board at the PMB, with the caption He is not the enemy. FN3 FN3. The photograph was taken of Powell sitting at a table gambling, with money in his hand. In addition, in 1991, Officer Anthony Stanley of the Lake County Task Force, a division of the Gary Police Department, discussed with Stephens whether anything had been done about Sidney's. Inspector Stephens replied that Powell was not doing anything wrong. All of these discussions demonstrate Stephens' intent to protect Powell's establishment from the enforcement of the Indiana statutes, i.e. gambling, illegal liquor sales, and drug sales. Stephens carried the title of Deputy Inspector and Inspector from 1988 through 1991, positions subordinate only to the Chief and Deputy Chief, and Officer David Wade testified that Stephens was responsible for overseeing the investigative services, supervising the detective division, auto division, juvenile division, and narcotic division (Public Morals Bureau). Because Stephens was responsible for supervising the PMB, which investigates drug crimes, illegal liquor sales, gambling, and prostitution, he was fully aware that Powell's business enterprise was frequently engaged in violations of the law. Officers Fazekas and Bauswell testified that between 1989 and 1991, the years in which they were assigned to the PMB, Sidney's was well known as a place for drug activity. Furthermore, the raids by Wright and Earls for illegal liquor sales and gambling prompted Stephens to direct several officers to leave Powell alone. This evidence also reflects upon Stephens' awareness of the illegal activities taking place at Sidney's. In spite of all this information, Stephens continued to have discussions with police officers and advised them not to raid Sidney's, and that Powell was not the enemy. Stephens argues that even if he said that Powell was not the enemy, and that the officers should confine their law enforcement activities to the outside of Sidney's, this did *596 not prevent officers from investigating Powell. However, it is obvious that Powell's discounted liquor purchases were intended to influence Stephens' judgment, as a high ranking police officer, causing him to instruct other officers that Powell was an informant of the department, and that they should look the other way with regard to the activities occurring inside of Sidney's. It is clear that Powell benefitted from Stephens' conduct of directing officers not to raid Sidney's, and advising them that he was

not the enemy, and to confine their activities to the outside of Sidney's. Under the Indiana bribery statute, it is the soliciting or the receiving of money by an official to influence him with respect to his official duties that is the gravamen of the offense of bribery. United States v. Forszt, 655 F.2d 101, 103 (7th Cir.1981) . Whether the public servant was actually controlled or influenced is irrelevant, so long as the payment was accepted or solicited with the intent to control the public servant. Stuckey v. Indiana, 560 N.E.2d 88, 92 (Ind.Ct.App.1990) (emphasis in original). The record demonstrates that Stephens solicited Powell's business, and that he objectively manifested an agreement with Powell to participate in his enterprise through selling him liquor at a ten percent discount, in exchange for Stephens attempting to discourage police officers from raiding his establishment. Based upon the overwhelming evidence of guilt, we hold that there was more than sufficient evidence to convict Stephens of violating 18 U.S.C. 1962(d) beyond a reasonable doubt. 11 Causes of Action 2d 627 (Originally published in 1998) CAUSE OF ACTION FOR TREBLE DAMAGES FOR VIOLATION OF THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT [ 18 U.S.C.A. 1961 et seq.]* Michael R. Flaherty, J.D.* 17. Associated in Fact EntitiesDefendant as Enterprise The RICO statute defines enterprise as including any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity. 18 U.S.C.A. 1961(4). The term person is defined as any individual or entity capable of holding a legal or beneficial interest in property. 18 U.S.C.A. 1961(3). Since these definitions overlap, an individual or entity may be both a person and an enterprise within the express terms of the statute. It is unclear, however, whether 18 U.S.C.A. 1962 prohibits activities by a person where the activities are described as occurring with any enterprise when there is identity between the person, on the one hand, and the enterprise, on the other. The weight of authority holds that the plaintiff must allege an enterprise distinct from the defendant in order to state a claim for a violation of 18 U.S.C.A. 1962(c), which proscribes conduct in which one party, the person subject to the statute, acts upon an entity, the enterprise, in such a manner that the enterprises affairs are conducted through a pattern of racketeering activity. [See 8]. In these jurisdictions, a cause of action cannot be stated against the corporate enterprise itself when the corporation is also alleged to be the person whose activities are proscribed by 18 U.S.C.A. 1962(c). Authority Courts holding that the complaint must distinguish the enterprise, as the vehicle for the pattern of racketeering activity, from the culpable person whose conduct RICO proscribes: Ninth Circuit: **Rae v. Union Bank, 725 F.2d 478, 74 A.L.R. Fed. 571 (9th Cir. 1984) Rae v. Union Bank, 725 F.2d 478, 74 A.L.R. Fed. 571, 1984-1 Trade Cases P 65,842 (9th Cir.(Ariz.),Feb 06, 1984) Plaintiff brought action against bank which foreclosed on plaintiff's property and certain bank employees, alleging various contract and tort theories. The United States District Court for the District of Arizona, Charles L. Hardy, J., dismissed the complaint, and plaintiff appealed. The Court of Appeals, Pregerson, Circuit Judge, held that: (1) plaintiff's complaint failed to state claim under antitying provision of Bank Holding Act, in absence of allegation that bank tied a loan to any other product, and in absence of allegation that bank would benefit in any way other than by getting additional protection for its loans, and (2) plaintiff's complaint failed to state claim under

Racketeer Influenced and Corrupt Organizations Act, in absence of allegations **that defendants were associated with or employed by an enterprise, in absence of allegations of collection of unlawful debt or **a pattern of racketeering activity, and **in absence of identification of a predicate offense. Affirmed. West Headnotes [1] Federal Courts 170B 755

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(K) Scope, Standards, and Extent 170BVIII(K)1 In General 170Bk754 Review Dependent on Whether Questions Are of Law or of Fact 170Bk755 k. Particular Cases. Most Cited Cases A ruling on a motion to dismiss for failure to state a claim upon which relief can be granted is a ruling on a question of law, freely reviewable by Court of Appeals. [2] Federal Civil Procedure 170A 1773

170A Federal Civil Procedure 170AXI Dismissal 170AXI(B) Involuntary Dismissal 170AXI(B)3 Pleading, Defects In, in General 170Ak1773 k. Clear or Certain Nature of Insufficiency. Most Cited Cases A motion to dismiss for failure to state a claim should not be granted unless it appears to a certainty that plaintiff can prove no set of facts in support of his claim that would entitle him to relief. [3] Banks and Banking 52 523

52 Banks and Banking 52XII Bank Holding Companies 52k521 Federal Regulation 52k523 k. Permitted Activities; Non-Banking Business. Most Cited Cases A plaintiff must plead and prove three things to recover under the antitying provision of the Bank Holding Company Act: **first, plaintiff must show that the banking practice in question was unusual in the banking industry; **second, plaintiff must show an anticompetitive tying arrangement; **third, plaintiff must demonstrate that the practice benefits the bank. Bank Holding Company Act Amendments of 1970, 106(b)(1), as amended, 12 U.S.C.A. 1972(1). [4] Banks and Banking 52 523

52 Banks and Banking 52XII Bank Holding Companies 52k521 Federal Regulation 52k523 k. Permitted Activities; Non-Banking Business. Most Cited Cases Plaintiff's complaint which contained various references to loan conditions and extension of credit accompanied by provisions designed to protect the bank's security was insufficient to state claim against bank under the antitying

provision of the Bank Holding Act, **in absence of allegations that bank tied a loan to any other product, service or benefit, and in absence of allegation that bank would benefit in any way other than by getting additional protection for its loans. Bank Holding Company Act Amendments of 1970, 106(b)(1), as amended, 12 U.S.C.A. 1972(1). [5] Banks and Banking 52 523

52 Banks and Banking 52XII Bank Holding Companies 52k521 Federal Regulation 52k523 k. Permitted Activities; Non-Banking Business. Most Cited Cases Antitying provision of the Bank Holding Company Act does not cover natural persons. Bank Holding Company Act Amendments of 1970, 106(b)(1), as amended, 12 U.S.C.A. 1972(1). [6] Banks and Banking 52 523

52 Banks and Banking 52XII Bank Holding Companies 52k521 Federal Regulation 52k523 k. Permitted Activities; Non-Banking Business. Most Cited Cases District court properly dismissed plaintiff's antitying claim under the Bank Holding Company Act without leave to amend, in view of its finding that the allegation of additional facts consistent with the complaint could not possibly cure the complaint's deficiencies. Bank Holding Company Act Amendments of 1970, 106(b)(1), as amended, 12 U.S.C.A. 1972(1). [7] Commerce 83 80

83 Commerce 83II Application to Particular Subjects and Methods of Regulation 83II(I) Civil Remedies 83k80 k. Remedies and Proceedings in General. Most Cited Cases Plaintiff's complaint against foreclosing bank and others failed to state claim under Racketeer Influenced and Corrupt Organizations Act, in absence of allegations that defendants were associated with or employed by an enterprise, in absence of allegations of collection of unlawful debt or a pattern of racketeering activity, and in absence of identification of a predicate offense. 18 U.S.C.A. 1961(4), 1962(a-c). [8] Federal Courts 170B 820

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(K) Scope, Standards, and Extent 170BVIII(K)4 Discretion of Lower Court 170Bk820 k. Depositions and Discovery. Most Cited Cases Trial court's decision to allow or deny discovery is reviewable only for abuse of discretion. [9] Federal Civil Procedure 170A 170A Federal Civil Procedure 170AX Depositions and Discovery 170AX(A) In General 1271

170Ak1271 k. Proceedings to Obtain. Most Cited Cases District court did not abuse its discretion in staying plaintiff's discovery pending resolution of defendant's motion to dismiss, because there were no factual issues and district court took all facts alleged in the complaint as true. Fed.Rules Civ.Proc.Rule 12(b), 28 U.S.C.A. PREGERSON, Circuit Judge: After a series of loans, extensions, and modifications, Union Bank foreclosed on certain property of the appellants, Joseph Rae, et al., (Rae). Rae brought suit in federal court against Union Bank and certain of its employees, alleging various contract and tort theories. The court dismissed the complaint for lack of diversity jurisdiction. Rae amended to add federal question claims under the Racketeer Influenced and Corrupt Organizations Act (RICO) and the Bank Holding Company Act. The district court found that the federal claims were wholly insubstantial and frivolous and dismissed them without leave to amend. The court also dismissed the remaining pendent state claims. We affirm. [1][2] A ruling on a motion to dismiss for failure to state a claim upon which relief can be granted is a ruling on a question of law, freely reviewable by the court of appeals. Alonzo v. ACF Property Management, Inc., 643 F.2d 578, 579 (9th Cir.1981). A motion to dismiss for failure to state a claim should not be granted unless it appears to a certainty that the plaintiff can prove no set of facts in support of his claims that would entitle him to relief. *480Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957). I. The Anti-Tying Claim [3] A plaintiff must plead and prove **three things to recover under the anti-tying provision of the Bank Holding Company Act, 12 U.S.C. 1972(1). **First, the plaintiff must show that the banking practice in question was unusual in the banking industry. **Second, the plaintiff must show an anti-competitive tying arrangement. **Third, the plaintiff must demonstrate that the practice benefits the bank. Parsons Steel, Inc. v. First Alabama Bank of Montgomery, 679 F.2d 242, 246 (11th Cir.1982). [4][5] Here, the anti-tying claim of Rae's complaint alleges only that Defendants' actions as recited above constituted a tying arrangement prohibited by 12 U.S.C. Section 1972(1)(A) and (C). Various references to loan conditions and extensions of credit accompanied by provisions designed to protect the bank's security are all that is recited above. That simply is not enough to state a claim. **There is no factual allegation in the complaint that the bank tied a loan to any other product, service, or benefit. Moreover, **there is no factual allegation that the bank would benefit in any other way than by getting additional protection for its loans. There is not even an allegation that the banking practice was unusual. Finally, no tying claim can be stated against the individual defendants. Section 1972 does not cover natural persons. See Nesglo, Inc. v. Chase Manhattan Bank, N.A., 506 F.Supp. 254, 265 (D.P.R.1980). [6] Given the very basic lack of an anti-competitive tie, the district court found that the allegation of additional facts consistent with the complaint could not possibly cure the deficiency. Rae had been given leave to amend one time already. Thus, the district court properly dismissed the anti-tying claim without leave to amend. See Bonanno v. Thomas, 309 F.2d 320, 322 (9th Cir.1962) (leave to amend should be granted unless allegations of other facts consistent with the challenged pleading cannot possibly cure the deficiency). II. The RICO Claim [7] The RICO claim in the first amended complaint alleges only **The scheme to defraud, false claims through fraud and activities by defendants as alleged in the facts of this Complaint, were in violation of the Federal Anti-racketeering Statute, 18 U.S.C. 1962. .... Pursuant to 18 U.S.C. 1964, plaintiffs are entitled to recovery of treble damages, costs of suit and reasonable attorney's fees.

All other allegations of the complaint are incorporated by reference. The portion of the RICO statute applicable here is 18 U.S.C. 1962(c) which provides: 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 or collection of unlawful debt.FN1 FN1. **The first amended complaint does not allege either (1) the investment of income from a racketeering activity in an enterprise engaged in or affecting interstate commerce, 18 U.S.C. 1962(a), or (2) the acquisition or maintenance of an interest in such enterprise through racketeering activities, 18 U.S.C. 1962(b). Therefore, subsection (c) of 1962 appears to be the relevant one. **Rae's complaint does not allege that any defendants were associated with or employed by an enterprise,FN2 nor does it identify*481 the requisite RICO enterprise. Rae apparently is now arguing that Union Bank was the enterprise with whom the individual appellees interacted. See Appellant's Brief at 25-26. If Union Bank is the enterprise, it cannot also be the RICO defendant. See United States v. Computer Sciences Corporation, 689 F.2d 1181, 1182, 1190 (4th Cir.1982), cert. denied, 459 U.S. 1105, 103 S.Ct. 729, 74 L.Ed.2d 953 (1983) (We conclude that enterprise was meant to refer to a being different from, not the same as or part of, the person whose behavior the act was designed to prohibit ....). Thus, Rae can state no RICO cause of action against Union Bank itself. [this principle of law has been subsequently limited in River City Markets, Inc. v. Fleming Foods West, Inc. 960 F.2d 1458 (9th Cir.(Cal.) April 3, 1992] FN2. According to 18 U.S.C. 1961(4), enterprise includes any **individual, **partnership, **corporation, **association, or **other legal entity, and **any union or **group of individuals associated in fact although not a legal entity. Nor does the first amended complaint allege collection of an unlawful debt or a pattern of racketeering activity. Not one word is said about collection of an unlawful debt anywhere in the complaint or the exhibits attached thereto. **A pattern of racketeering activity requires at least two predicate offenses within ten years. 18 U.S.C. 1961(5). **No predicate offenses are identified in the complaint or exhibits. Appellant's brief states that individual Appellees conducted or participated in Union Bank's affairs vis-a-vis the Appellants in a manner which involved **fraud in the sale of securities arising from the original SEC action against Appellant Rae. Appellant's Brief at 26. **An SEC action against appellant Rae can hardly be a predicate offense chargeable to appellees. Rae has been given several opportunities to specify predicate offenses and has failed. The district court was correct in dismissing his complaint without leave to amend. The district court was obviously also correct in dismissing the pendent state claims. United Mine Workers of America v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). III. The District Court's Decision to Stay Discovery. [8] The trial court's decision to allow or deny discovery is reviewable only for abuse of discretion. Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1285 n. 1 (9th Cir.1977). [9] Rae cites authorities holding that discovery relevant to issues raised by a Rule 12(b) motion should be allowed. The authorities are not applicable. As the district court correctly observed, discovery is appropriate where there are factual issues raised by the motion. Here, there were no factual issues. The district court took all the facts alleged in the complaint as true and decided that the facts as alleged did not add up to either an anti-tying claim or a civil RICO claim. Rae has failed to point to any specific information obtainable through discovery that would have enabled appellants to state a federal cause of action. Thus, the district court did not abuse its discretion in staying Rae's discovery pending resolution of the Rule 12(b) motion. AFFIRMED.

River City Markets, Inc. v. Fleming Foods West, Inc., 960 F.2d 1458, RICO Bus.Disp.Guide 7982 (9th Cir. (Cal.),Apr 03, 1992) Purchasers of retail grocery stores brought Racketeer Influenced and Corrupt Organizations (RICO) Act action against vendors and finance company, alleging that stores they bought failed to measure up to representations allegedly made by vendors and company. The United States District Court for the Eastern District of California, Milton L. Schwartz, J., dismissed the claims for failure to state a claim upon which relief could be granted, and purchasers appealed. The Court of Appeals, Goodwin, Circuit Judge, held that: (1) purchasers stated claim for association-in-fact enterprise under RICO; (2) Court of Appeals would determine summary judgment question; and (3) evidence was not sufficient to establish a RICO pattern. Affirmed. [1] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk39 k. Particular Enterprises. Most Cited Cases Allegations of purchasers of retail grocery stores **that vendors and finance company engaged in fraudulent scheme when they jointly induced plaintiffs to purchase the stores while the vendors were planning to raise prices and pursue draconian short-term cost-cutting strategies during interim between acceptance of the bids and transfer of the stores were **sufficient to state a claim for association-in-fact enterprise under Racketeer Influenced and Corrupt Organizations (RICO) Act; alleged racketeering activity consisted of acts indictable under the federal mail and wire fraud statute and constituted predicate acts of racketeering. 18 U.S.C.A. 1962(d); Fed.Rules Civ.Proc.Rule 12, 28 U.S.C.A. [2] Racketeer Influenced and Corrupt Organizations 319H 36

39

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk36 k. Informal Entities; Associations-In-Fact. Most Cited Cases **A group of individuals or corporations may together constitute a Racketeer Influenced and Corrupt Organizations (RICO) Act enterprise even though they do not incorporate or otherwise form a legal entity. 18 U.S.C.A. 1961-1968, 1962(d). [3] Racketeer Influenced and Corrupt Organizations 319H 38

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk38 k. Separateness from Predicate Acts, Pattern, or Persons. Most Cited Cases Two contracting business entities can form an enterprise for Racketeer Influenced and Corrupt Organizations (RICO) Act purposes and still be named as individual RICO defendants, provided enterprise otherwise falls within statutory prescriptions. 18 U.S.C.A. 1961-1968, 1962(d). [4] Racketeer Influenced and Corrupt Organizations 319H 38

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk38 k. Separateness from Predicate Acts, Pattern, or Persons. Most Cited Cases Single individual or entity cannot be both the Racketeer Influenced and Corrupt Organizations (RICO) Act enterprise and an individual RICO defendant. 18 U.S.C.A. 1961-1968. [5] Racketeer Influenced and Corrupt Organizations 319H 38

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk38 k. Separateness from Predicate Acts, Pattern, or Persons. Most Cited Cases An individual cannot associate or conspire with himself, for purposes of Racketeer Influenced and Corrupt Organizations (RICO) Act enterprise. 18 U.S.C.A. 1961-1968. [6] Racketeer Influenced and Corrupt Organizations 319H 38

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk38 k. Separateness from Predicate Acts, Pattern, or Persons. Most Cited Cases In multiple-defendant Racketeer Influenced and Corrupt Organizations (RICO) Act cases, some of the individual defendants may also be identified as members of the alleged association-in-fact enterprise. 18 U.S.C.A. 1961-1968. [7] Federal Civil Procedure 170A 1825

170A Federal Civil Procedure 170AXI Dismissal 170AXI(B) Involuntary Dismissal 170AXI(B)5 Proceedings 170Ak1825 k. Motion and Proceedings Thereon. Most Cited Cases District court, when dismissing claims for failure to state a claim upon which relief could be granted, should have addressed defendants' alternative motions for summary judgment. Fed.Rules Civ.Proc.Rule 12(b), 28 U.S.C.A. [8] Federal Courts 170B 930

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(L) Determination and Disposition of Cause 170Bk926 Affirmance 170Bk930 k. Motion to Affirm, Procedure and Effect of Affirmance. Most Cited Cases Court of Appeals would itself determine whether defendants were entitled to summary judgment, rather than

remanding to district court for consideration of motions for summary judgment; district court should have reached the summary judgment question when it dismissed for failure to state a claim upon which relief could be granted, parties invited Court of Appeals to review the record, and whole case was before Court of Appeals and it would be wasteful to remand it to trial court. Fed.Rules Civ.Proc.Rule 12(b), 28 U.S.C.A. [9] Federal Civil Procedure 170A 2544

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(C) Summary Judgment 170AXVII(C)3 Proceedings 170Ak2542 Evidence 170Ak2544 k. Burden of Proof. Most Cited Cases To survive motion for summary judgment, plaintiffs must produce sufficient evidence to establish existence of **every essential element of their case on which they will bear the burden of proof at trial. Fed.Rules Civ.Proc.Rule 56(c), 28 U.S.C.A. [10] Conspiracy 91 47(2)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence 91k47 Weight and Sufficiency 91k47(2) k. Circumstantial Evidence. Most Cited Cases **Conspiracies can be proved by circumstantial evidence. [11] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk29 k. Time and Duration. Most Cited Cases **Evidence failed to establish that seller of retail grocery stores and finance company engaged in a pattern of racketeering activity regarding sale of the stores to purchasers, where evidence indicated that sellers and company only engaged in approximately one month of breach of contract activity. 18 U.S.C.A. 1962(d). GOODWIN, Circuit Judge: Disappointed purchasers of certain Alpha Beta retail grocery stores sought treble damages under RICO for losses they incurred when the stores they bought failed to measure up to representations allegedly made by **Alpha Beta and American Stores (Alpha Beta) and by **Fleming Foods West, United Fairway, Fleming Companies, and **Fleming Finance (Fleming), Alpha Beta's alleged co-conspirator in a fraudulent scheme to unload unprofitable properties on unsuspecting purchasers. In this consolidated appeal, River City Markets, Inc., et al., and Wesley Fong, et al., challenge the district court's dismissal of their civil RICO claims. Though the *1460 district court erred in dismissing plaintiffs' complaints under Fed.R.Civ.P. 12(b)(6) for failure to state a claim, we affirm the result because we conclude that the district court should have granted defendants' summary judgment motions. I. BACKGROUND

29

The plaintiffs originally filed separate actions alleging state law tort, contract and antitrust claims against Alpha Beta and Fleming in Sacramento County Superior Court in 1987. After several amendments, plaintiffs finally attempted to plead violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-1968. Alpha Beta and Fleming promptly removed the cases to federal court pursuant to 28 U.S.C. 1441(c). After the River City plaintiffs filed their Third Amended Complaint and the Fong plaintiffs filed their Fourth Amended Complaint, the defendants filed separate, concurrent motions to dismiss and motions for summary judgment on the RICO claims and on most of the pendent state law claims. The district court dismissed both cases pursuant to Fed.R.Civ.P. 12(b)(6), without leave to amend, **on the ground that the plaintiffs had failed to plead the existence of a RICO enterprise separate and apart from the defendants themselves, as supposedly required by 18 U.S.C. 1962(c). The court also ruled that because plaintiffs had failed to allege an enterprise under section 1962(c), they also had failed to state a cause of action for conspiracy under section 1962(d). The district court then remanded plaintiffs' pendent state law claims to California superior court. II. THE MOTIONS TO DISMISS In their Ninth and Tenth Causes of Action, plaintiffs claim that Alpha Beta and Fleming conducted and conspired to conduct a pattern of mail and wire fraud activity through an association-in-fact enterprise, in violation of 18 U.S.C. 1962(c) & (d). **Section 1962(c) provides in pertinent part: It shall be unlawful for any persons ... associated with any enterprise ... the activities of which affect interstate commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity....

**Section 1962(d) makes it unlawful for any person to conspire to violate the provisions of subsection ... (c).
FN1

FN1. It is clear that the defendant corporations are persons within the meaning of RICO. **Section 1961(3) defines person to include any individual or entity capable of holding a legal or beneficial interest in property. [1] The RICO statute defines an enterprise to include any individual, partnership, corporation, association, or other legal entity, and any **union or **group of individuals associated in fact although not a legal entity. 18 U.S.C. 1961(4). The alleged racketeering activity here consists of acts indictable under the federal mail and wire fraud statutes, 18 U.S.C. 1341 & 1343, which constitute predicate acts of racketeering under 18 U.S.C. 1961(1). Plaintiffs allege that Alpha Beta and Fleming engaged in a fraudulent scheme when they jointly induced the plaintiffs to purchase certain Alpha Beta stores while Alpha Beta secretly planned to raise prices and pursue draconian short-term cost-cutting strategies during the interim between the acceptance of plaintiffs' bids and the transfer of the stores. According to plaintiffs, Alpha Beta drastically curtailed inventories, cut store hours and instore labor, reduced shelf stock by half, raised prices significantly, eliminated customer services, and transferred large quantities of unmerchantable goods to the new owners. These measures are alleged to have alienated customers and destroyed the business value of the stores. River City Complaint 15; Fong Complaint 15. [2] For Rule 12 purposes, plaintiffs' generalized allegations state a claim for which relief could be granted. See Republic of the Philippines v. Marcos, 862 F.2d 1355, 1358 (9th Cir.1989) (en banc). Plaintiffs allege that Alpha Beta and Fleming *1461 combined to form an association-in-fact enterprise under RICO . In United States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981), the Supreme Court held that RICO applied not only to the infiltration of legitimate businesses by racketeers but also to the activities of informal associations that did not constitute legal entities. After quoting section 1961(4), the Court observed that [t]here is no restriction upon the associations embraced by the definition: an enterprise includes any union or group of individuals associated in fact. Id. at 580, 101 S.Ct. at 2527. The Court later referred to the enterprise alleged in Turkette-an arson, narcotics and bribery ring-as a group of persons associated together for a common purpose of engaging in a course of conduct.

Id. at 583, 101 S.Ct. at 2528. Following Turkette, we have recognized that a group of individuals or corporations may together constitute a RICO enterprise even though they do not incorporate or otherwise form a legal entity. See, e.g., United States v. Bagnariol, 665 F.2d 877, 890-91 (9th Cir.1981), cert. denied, 456 U.S. 962, 102 S.Ct. 2040, 72 L.Ed.2d 487 (1982). [3] The district court dismissed the RICO counts under the mistaken belief that Rae v. Union Bank, 725 F. 2d 478 ( 9th Cir. 1984), requires that a RICO enterprise must be an entity separate and distinct from the defendants. Memorandum of Decision and Order at 7. Rae does not so hold, and we find nothing in our RICO case law which instructs that two contracting business entities cannot form an enterprise for RICO purposes and still be named as individual RICO defendants, provided the enterprise otherwise falls within the statutory proscriptions. [4][5] Rae does not control the case at bar. Rather, it stands for the proposition that a single individual or entity cannot be both the RICO enterprise and an individual RICO defendant. **Rae simply embodies the maxim that an individual cannot associate or conspire with himself, and in subsequent decisions we have adhered to this narrow reading of Rae. See United States v. Feldman, 853 F.2d 648, 656 (9th Cir.1988) (characterizing the Rae rule as providing that a defendant cannot be convicted of associating with himself); United States v. Benny, 786 F.2d 1410, 1415-16 (9th Cir.) (holding that although an individual defendant could not associate with himself for RICO purposes, he could associate with his own sole proprietorship), cert. denied, 479 U.S. 1017, 107 S.Ct. 668, 93 L.Ed.2d 720 (1986). Contrary to the district court's analysis, plaintiffs do not allege that either Alpha Beta or Fleming is simultaneously a RICO enterprise and a RICO defendant. Each of plaintiffs' complaints pleads the existence of a RICO enterprise as follows: During the period August 1, 1984 through January 14, 1985 and thereafter, said persons [Alpha Beta and Fleming] associated together to form an enterprise within the meaning of Section 1961(4) which devised a scheme to defraud Plaintiffs and other members of the public by inducing them to purchase ALPHA BETA stores based upon false information relating to the stores' sales volume, profits, leasehold interests and other elements as described herein. River City Complaint 68; Fong Complaint 68. What plaintiffs allege is that Alpha Beta and Fleming associated together in a business relationship akin to a joint venture to market the grocery stores, and that it was this enterprise with which each individual defendant interacted in conducting the alleged pattern of mail and wire fraud activities. [6] Logically, one can associate with a group of which he is a member, with the member and the group remaining distinct entities. As plaintiffs correctly point out, we consistently have held that in multiple-defendant RICO cases, some of the individual defendants may also be identified as members of the alleged association-in-fact enterprise. See, e.g., Feldman, 853 F.2d at 657; United Energy Owners Comm. v. United Energy Management Sys., Inc., 837 F.2d 356, 362-63 (9th Cir.1988); Benny, 786 F.2d at 1415. Defendants nevertheless ask us to extend Rae to effectively bar any action in which a RICO plaintiff *1462 attempts to name all the members of an alleged association-in-fact enterprise as defendants. All the circuits that have considered the question have concluded that a plaintiff is free to name all members of an association-in-fact enterprise as individual defendants. See Shearin v. E.F. Hutton Group, Inc., 885 F.2d 1162, 1165-66 (3d Cir.1989) (upholding a complaint alleging that three defendant corporations formed an association-infact enterprise); Fleischhauer v. Feltner, 879 F.2d 1290, 1292 n. 1, 1296-97 (6th Cir.1989) (holding that plaintiffs adequately alleged an enterprise consisting of all the defendants), cert. denied, 493 U.S. 1074, 110 S.Ct. 1122, 107 L.Ed.2d 1029 & 494 U.S. 1027, 110 S.Ct. 1473, 108 L.Ed.2d 611 (1990); see also Haroco, Inc. v. American Nat'l Bank & Trust Co., 747 F.2d 384, 401 (7th Cir.1984) (In the association in fact situation, each participant in the enterprise may be a person liable under RICO, but the association itself cannot be. ); United States v. Huber, 603 F.2d 387, 394 (2d Cir.1979) (holding before Turkette that a group of seven corporations could constitute a RICO enterprise), cert. denied, 445 U.S. 927, 100 S.Ct. 1312, 63 L.Ed.2d 759 (1980).FN2

FN2. Both the Shearin and Fleischhauer courts cited this circuit's Feldman decision as supportive of their holdings. See Shearin, 885 F.2d at 1165-66; Fleischhauer, 879 F.2d at 1297. III. SUMMARY JUDGMENT While the district court erred in dismissing plaintiffs' RICO claims on the ground that plaintiffs failed sufficiently to plead an enterprise as required by 18 U.S.C. 1962(c) & (d), our ruling on the pleadings does not decide the appeal. [7] The district court, having dismissed the RICO counts, did not reach the defendants' pending alternative motions for summary judgment based upon affidavits, depositions, contract documents and other evidence tending to show that no racketeering scheme had been perpetrated. These factual materials were not clearly excluded by the district court and are specifically mentioned in the court's memorandum order dismissing the RICO claims. Accordingly, the district court should have addressed the defendants' alternative motions for summary judgment. See Fed.R.Civ.P. 12(b); Rosales v. United States, 824 F.2d 799, 802 (9th Cir.1987); Ellis v. Cassidy, 625 F.2d 227, 229 (9th Cir.1980). [8] On appeal, both parties argue that in the interest of judicial economy we should reach the summary judgment question. We accept the invitation of the parties to review the record with the purpose of determining whether summary judgment would have been appropriate with reference to the dismissed counts. The whole case is before this court and it would be wasteful to remand it to the trial court for consideration of the motions for summary judgment. See Duggan v. International Ass'n of Machinists, 510 F.2d 1086, 1087 (9th Cir.1975); S & S Logging Co. v. Barker, 366 F.2d 617, 623 (9th Cir.1966). A. Standard of Review [9] Federal Rule of Civil Procedure 56(c) provides that summary judgment shall be entered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Summary judgment must be granted where there is not sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). To survive a motion for summary judgment, plaintiffs must produce sufficient evidence to establish the existence of every essential element of their case on which they will bear the burden of proof at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). B. Analysis Virtually every business contract can be called an association in fact. To constitute a proscribed RICO enterprise the associates*1463 must participate, directly or indirectly in the conduct of such enterprise's affairs through a pattern of racketeering activity. 18 U.S.C. 1962(c). After characterizing as fraudulent the master agreement between Fleming and Alpha Beta for the hoped-for profitable disposition of Alpha Beta's unwanted properties, the plaintiffs have pointed to nothing in the agreement that would, if carried out according to its terms, violate any federally protected rights of the plaintiffs. Wholly wanting is any evidence that the agreement between Alpha Beta and Fleming contemplated or permitted a course of conduct that would involve misconduct. The agreement was a routine business arrangement under which Fleming would look for buyers and either sell or lease designated Alpha Beta properties, hopefully at a profit to both parties. Nowhere is there evidence of any contemplated overreaching, deceit, nondisclosure, manipulation of inventory, or any other unethical conduct by Fleming or by Alpha Beta. [10][11] We recognize, however, that conspiracies rarely are memorialized in writing and often must be proved by circumstantial evidence. See United States v. Tille, 729 F.2d 615, 619 (9th Cir.), cert. denied, 469 U.S. 845, 848, 105 S.Ct. 156, 164, 83 L.Ed.2d 93, 100 (1984); United States v. Thomas, 887 F.2d 1341, 1347 (9th Cir.1989). Plaintiffs urge that the following evidence in the summary judgment record establishes that Alpha Beta and Fleming jointly engaged in a mail and wire fraud scheme: 1. In August of 1984, Alpha Beta and Fleming made a joint presentation to plaintiffs at which defendants distributed operating statements and five-year sales projections for the stores. Dewey Depo., ER 389, Ex. 4, 24:7-

17; Dugger Depo., ER 389, Ex. 9, 46:15-47:18. 2. In September of 1984, Alpha Beta and Fleming mailed the River City plaintiffs a bid form which contained the representation: The bidder understands that Alpha Beta Company, from and after the date this bid is accepted through the Closing, will, if the Store is currently open for business, operate the Store in its ordinary course and will continue to maintain the Store as is customary. ER 393, Ex. 2. 3. In October of 1984, Fleming mailed the Fong plaintiffs a bid form with the same representation. ER 392, Ex. 2. 4. Alpha Beta in fact had no formal, written procedures or customary procedures for closing its stores. LaTrace Depo., ER 390, Ex. 19, 85:1-8, 90:12-23. 5. Plaintiffs mailed their completed bid forms to Alpha Beta and Fleming in mid-November of 1984. Plaintiffs relied on the ordinary course representations and the sales projections and believed that if their bids were accepted the stores would be turned over to them in good operating condition. Fong Decl., ER 392 5, 7, 8; Perchaz Decl., ER 393 5, 7, 8. 6. Alpha Beta and Fleming notified plaintiffs by mail in early December that their bids had been accepted. Fong Decl., ER 392 9, Ex. 3; Perchaz Decl., ER 393 10, Ex. 4. 7. Beginning in early December 1984, Alpha Beta sent memoranda to its store managers directing them to cut store hours during the holiday period, to keep basic inventories at a minimum, to reduce in-store labor, and to eliminate check-cashing services for customers. ER 390, Ex. 22, 23, 24, 25; Moore Depo., ER 390, Ex. 27, 41:2742:4; Hart Depo., ER 389, Ex. 10, 350:15-358:6. 8. Beginning in December of 1984, Alpha Beta raised prices dramatically at its Valley stores, particularly on more expensive health and beauty products. Moore Depo., ER 390, Ex. 27, 39:11-12, 45:25-28, 48:25-49:3, 50:3-17. 9. During December and January, Alpha Beta transferred old and unmerchantable goods from other store locations to one of the stores plaintiffs had agreed to purchase. Moore Depo., ER 390, Ex. 27, 55:7-56:10, 59:260:10, 63:16-21, 66:20-67:18; Fong Decl., ER 392 14. 10. In December of 1984, Fleming received customer complaints regarding Alpha*1464 Beta's inventory, price increases, and elimination of check cashing services. Trimble Depo., ER 390, Ex. 32, 153:24-156:20, 275:1276:10. Fleming solicited responses from Alpha Beta store managers in regard to these issues and received reports that Alpha Beta had increased inventories of health and beauty products. Albertson Depo., ER 389, Ex. 1, 155:10-22. 11. Representatives from Alpha Beta and Fleming met with plaintiffs in mid-December of 1984. Neither Alpha Beta nor Fleming disclosed the existence or substance of the complaints from store managers. Fong Decl., ER 392 12; Perchaz Decl., ER 393 13, 14. 12. During the final weeks of operation, weekly sales volume at each of the stores decreased. Beck Depo., ER 389, Ex. 2, 90:21-24. 13. In the Purchase Agreements prepared jointly by Alpha Beta and Fleming, the ordinary course representation was modified to provide that: The parties acknowledge and agree that Alpha Beta may, in anticipation of the transactions herein, reduce, terminate and stop orders of and ordering of supplies and inventory pursuant to Alpha Beta's customary

procedures for closing an Alpha Beta store or business, it being understood that Alpha Beta shall seek to minimize the amount of perishable products, wine and beer located at the premises as of the closing date. ER 392, Ex. 5; ER 393, Ex. 4; Haslam Depo., ER 389, Ex. 12, 91:16-92:8. 14. Alpha Beta and Fleming orally represented to plaintiffs that this language confirmed that the stores would be operated in the ordinary course. Fong Decl., ER 392 12; Perchaz Decl., ER 393 14. 15. Alpha Beta's attorney conducted numerous interstate telephone conversations with representatives of the plaintiffs during December and January. ER 390, Ex. 13. This evidence, even when viewed in the light most favorable to plaintiffs, is not enough to survive defendants' motions for summary judgment. Plaintiffs allege that Alpha Beta and Fleming acted jointly to defraud potential store purchasers. Paragraph 68 of the respective complaints makes clear that plaintiffs contend that Alpha Beta and Fleming together devised a scheme to defraud Plaintiffs. When pressed at oral argument about the lack of evidence of fraudulent representations made by Fleming, plaintiffs' counsel responded by arguing that Fleming merely acquiesced in Alpha Beta's fraud by remaining silent after Fleming became aware that Alpha Beta was operating the stores in a manner contrary to its representations to the buyers. As counsel acknowledged at oral argument, the summary judgment record indicates that the earliest Fleming became aware of Alpha Beta's destructive operation of the stores-and thus the earliest Fleming would have had reason to believe that prior representations to the buyers were fraudulent-was in early December of 1984. Any joint scheme to defraud store buyers could not have come into existence until that time. The alleged scheme terminated no later than mid-January of 1985 when the individual store sales closed. At most, then, plaintiffs have presented circumstantial evidence of roughly a month's worth of broken promises by defendants. In H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989), the Supreme Court stated that a plaintiff may demonstrate a pattern of racketeering activity by proving a series of related predicates extending over a substantial period of time. The Court observed that predicate acts extending over a few weeks or months and threatening no future criminal activity do not satisfy this requirement. Id. at 242, 109 S.Ct. at 2902. Under H.J., evidence of a pattern of breach of contract activity spanning just one month, even when embellished by the familiar racketeering, is not sufficient to establish a violation of RICO. Plaintiffs' papers fail to meet their burden of producing evidence sufficient to establish all the elements of the substantive RICO claims they allege. See *1465Celotex, 477 U.S. at 322, 106 S.Ct. at 2552. Similarly, assuming Fleming's acquiescence constituted an agreement sufficient to support a conspiracy claim, the Alpha Beta/Fleming conspiracy could not have commenced prior to early December of 1984, and it likewise could not have extended beyond mid-January of 1985. Therefore, plaintiffs' conspiracy claim under 18 U.S.C. 1962(d) must also fail. IV. CONCLUSION The possibility of treble damages and attorney fees provides a powerful incentive to plead every commercial disappointment in terms of victimization by racketeers. But epithets in the pleadings, when tested by a motion for summary judgment, are no substitute for facts. Treating the district court's judgment as one granting the defendants' motions for summary judgment on the RICO claims, we affirm the result reached by the district court. AFFIRMED. Nordberg v. Trilegiant Corp., 445 F.Supp.2d 1082 (N.D.Cal.,Apr 04, 2006) Background: Individuals who were allegedly wrongfully enrolled in membership programs for goods and services brought action against program operator and its former parent corporation, alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), the Electronic Funds Transfer Act (EFTA), California's Consumers Legal Remedies Act (CLRA), and California's business practice laws, as well as claims for conversion,

unjust enrichment, and declaratory relief. Defendants moved to dismiss. Holdings: The District Court, Patel, J., held that: (1) defendants could not be both persons and the enterprise under RICO section prohibiting any person employed by or associated with enterprise affecting interstate commerce from conducting enterprise's affairs through pattern of racketeering activity; (2) plaintiffs failed to establish existence of an association-in-fact enterprise based on third party contracts between defendants and certain financial institutions; (3) plaintiffs' broad allegation that defendants failed to secure their authorization for electronic funds transfers was inadequate to state a claim for violation of the EFTA; (4) plaintiffs had cause of action for restitution based on a theory of unjust enrichment; and (5) parent corporation was not vicariously liable for actions of its subsidiary. Motion granted in part and denied in part. [4] Racketeer Influenced and Corrupt Organizations 319H 47

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk47 k. Professional, Business, or Trade Associations. Most Cited Cases Subsidiary and parent corporations could not be both persons and the enterprise under Racketeer Influenced and Corrupt Organizations Act (RICO) section prohibiting any person employed by or associated with enterprise affecting interstate commerce from conducting enterprise's affairs through pattern of racketeering activity. 18 U.S.C.A. 1962(c).

[1] Racketeer Influenced and Corrupt Organizations 319H

35

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk35 k. What Constitutes Enterprise in General. Most Cited Cases A Racketeer Influenced and Corrupt Organizations Act (RICO) enterprise must possess three essential characteristics: (1) a common or shared purpose; (2) continuity of structure and personnel; and (3) an ascertainable structure distinct from that in the pattern of racketeering activity. 18 U.S.C.A. 1961(4). [2] Federal Civil Procedure 170A 1832

170A Federal Civil Procedure 170AXI Dismissal 170AXI(B) Involuntary Dismissal 170AXI(B)5 Proceedings 170Ak1827 Determination 170Ak1832 k. Matters Considered in General. Most Cited Cases District Court would not consider new theory, raised in opposition to motion to dismiss, that subsidiary which marketed and sold membership programs for goods and services and its parent corporation satisfied enterprise requirement under the Racketeer Influenced and Corrupt Organizations Act (RICO) because they stood as separately incorporated entities, where claim was not evident in complaint filed by individuals who were allegedly wrongfully

enrolled in programs; although complaint stated that corporations were persons within the meaning of RICO, it did not also name corporations as the sole entities constituting the RICO enterprise. 18 U.S.C.A. 1961(4), 1962(c). [3] Federal Civil Procedure 170A 1832

170A Federal Civil Procedure 170AXI Dismissal 170AXI(B) Involuntary Dismissal 170AXI(B)5 Proceedings 170Ak1827 Determination 170Ak1832 k. Matters Considered in General. Most Cited Cases Courts are barred from considering new matter that is raised by a plaintiff in an opposition to dismiss. [4] Racketeer Influenced and Corrupt Organizations 319H 47

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk47 k. Professional, Business, or Trade Associations. Most Cited Cases Subsidiary and parent corporations could not be both persons and the enterprise under Racketeer Influenced and Corrupt Organizations Act (RICO) section prohibiting any person employed by or associated with enterprise affecting interstate commerce from conducting enterprise's affairs through pattern of racketeering activity. 18 U.S.C.A. 1962(c). [5] Racketeer Influenced and Corrupt Organizations 319H 38

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk38 k. Separateness from Predicate Acts, Pattern, or Persons. Most Cited Cases Racketeer Influenced and Corrupt Organizations Act (RICO) section prohibiting any person employed by or associated with enterprise affecting interstate commerce from conducting enterprise's affairs through pattern of racketeering activity requires a plaintiff to allege as a defendant the person or persons who are distinct from the enterprise and whose business the enterprise is conducting; in other words, a single individual or entity cannot be both the RICO enterprise and an individual RICO defendant, or person, since an individual cannot associate or conspire with himself. 18 U.S.C.A. 1962(c). [6] Racketeer Influenced and Corrupt Organizations 319H 47

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk47 k. Professional, Business, or Trade Associations. Most Cited Cases Individuals who were allegedly wrongfully enrolled in membership programs for goods and services failed to establish existence of an association-in-fact enterprise within meaning of Racketeer Influenced and Corrupt Organizations Act (RICO), based on third party contracts between program operator, its parent corporation, and

certain financial institutions, where third-party contractual agreements were not alleged to have formed a hierarchical or consensual structure which provided a mechanism for controlling affairs of alleged enterprise, and alleged improper billing scheme perpetuated through the third-party contracts was both the alleged racketeering activity and the enterprise. 18 U.S.C.A. 1962(c). [7] Racketeer Influenced and Corrupt Organizations 319H 36

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk36 k. Informal Entities; Associations-In-Fact. Most Cited Cases To establish an association-in-fact enterprise under Racketeer Influenced and Corrupt Organizations Act (RICO), a plaintiff must plead facts which show that: (1) there is an ongoing organization, formal or informal; (2) that the various associates function as a continuing unit; and (3) that the organization is an entity separate and apart from the pattern of racketeering activity in which it engages. 18 U.S.C.A. 1962(c). [8] Racketeer Influenced and Corrupt Organizations 319H 36

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk36 k. Informal Entities; Associations-In-Fact. Most Cited Cases To establish an association-in-fact enterprise under Racketeer Influenced and Corrupt Organizations Act (RICO), plaintiffs must allege some kind of structure independent of the racketeering or predicate acts, such as an independent decision-making structure or an independent proceed-distributing structure that was used to commit the predicate acts. 18 U.S.C.A. 1962(c). [9] Racketeer Influenced and Corrupt Organizations 319H 36

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk36 k. Informal Entities; Associations-In-Fact. Most Cited Cases Although contractual relationships may form the basis of an association-in-fact enterprise, they are not sufficient to establish a Racketeer Influenced and Corrupt Organizations Act (RICO) enterprise. 18 U.S.C.A. 1962(c). [10] Banks and Banking 52 226

52 Banks and Banking 52III Functions and Dealings 52III(H) Actions 52k226 k. Pleading. Most Cited Cases Broad allegation that subsidiary which marketed and sold membership programs for goods and services and its parent corporation failed to secure authorization for electronic funds transfers from individuals who were wrongfully enrolled in programs was inadequate to state a claim for violation of the Electronic Funds Transfer Act (EFTA),

where allegations did not refer specifically to portions of the EFTA upon which consumers intended to rely. Electronic Fund Transfer Act, 902 et seq., 15 U.S.C.A. 1693 et seq. [11] Antitrust and Trade Regulation 29T 141

29T Antitrust and Trade Regulation 29TIII Statutory Unfair Trade Practices and Consumer Protection 29TIII(A) In General 29Tk139 Persons and Transactions Covered Under General Statutes 29Tk141 k. Consumers, Purchasers, and Buyers; Consumer Transactions. Most Cited Cases Individuals who were allegedly wrongfully enrolled in membership programs for goods and services were consumers under California's Consumers Legal Remedies Act (CLRA) section defining a consumer as an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family or household purposes, although they did not seek services of program operator and its former parent corporation, where they acquired goods or services as a result of corporations' allegedly fraudulent practices. West's Ann.Cal.Civ.Code 1761(d). [12] Antitrust and Trade Regulation 29T 145

29T Antitrust and Trade Regulation 29TIII Statutory Unfair Trade Practices and Consumer Protection 29TIII(A) In General 29Tk139 Persons and Transactions Covered Under General Statutes 29Tk145 k. Goods or Services. Most Cited Cases Individuals who were allegedly wrongfully enrolled in membership programs for goods and services did not engage in a transaction for goods or services, within meaning of California's Consumers Legal Remedies Act (CLRA), where there was no underlying agreement between individuals and program operator; individuals alleged that they had no knowledge of being enrolled in the programs until they discovered unauthorized charges on their bank and credit card statements. West's Ann.Cal.Civ.Code 1761(e). [13] Antitrust and Trade Regulation 29T 358

29T Antitrust and Trade Regulation 29TIII Statutory Unfair Trade Practices and Consumer Protection 29TIII(E) Enforcement and Remedies 29TIII(E)5 Actions 29Tk356 Pleading 29Tk358 k. Particular Cases. Most Cited Cases Federal Civil Procedure 170A 636

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases Individuals who were allegedly wrongfully enrolled in membership programs for goods and services failed to plead violations of California's Consumers Legal Remedies Act (CLRA) with sufficient specificity to put program operator and its parent corporation on notice of charges against them, even though heightened pleading standard under rule requiring that allegations of fraud be pled with particularity was not applicable, since fraud was not an

essential element of CLRA claim, where individuals did not indicate how they were harmed as result of defendants' alleged misrepresentations. Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A.; West's Ann.Cal.Civ.Code 1770(a)(1), (3, 5, 9), 1780(a). [14] Federal Civil Procedure 170A 636

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases Requirement that allegations of fraud be pled with particularity applies to state-law causes of action before a federal court. Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. [15] Antitrust and Trade Regulation 29T 136

29T Antitrust and Trade Regulation 29TIII Statutory Unfair Trade Practices and Consumer Protection 29TIII(A) In General 29Tk133 Nature and Elements 29Tk136 k. Fraud; Deceit; Knowledge and Intent. Most Cited Cases Federal Civil Procedure 170A 636

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases For purposes of rule requiring that allegations of fraud be pled with particularity, fraud is not an essential element of a claim under California's Consumers Legal Remedies Act (CLRA). Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A.; West's Ann.Cal.Civ.Code 1750 et seq. [16] Antitrust and Trade Regulation 29T 358

29T Antitrust and Trade Regulation 29TIII Statutory Unfair Trade Practices and Consumer Protection 29TIII(E) Enforcement and Remedies 29TIII(E)5 Actions 29Tk356 Pleading 29Tk358 k. Particular Cases. Most Cited Cases Allegations that subsidiary which marketed and sold membership programs for goods and services and its parent corporation told individual who was wrongfully enrolled in program that she would be refunded any unauthorized charges stated claim for violation of California's Consumers Legal Remedies Act (CLRA) section prohibiting representations that a transaction involved rights, remedies, or obligations which it did not involve, where alleged statement to individual amounted to misrepresentation that she had right to a refund, and, after the alleged misrepresentation, further amounts were withdrawn from individual's checking account, resulting in an overdraft fee. West's Ann.Cal.Civ.Code 1770(a)(14). [17] Antitrust and Trade Regulation 29T 358

29T Antitrust and Trade Regulation 29TIII Statutory Unfair Trade Practices and Consumer Protection 29TIII(E) Enforcement and Remedies 29TIII(E)5 Actions 29Tk356 Pleading 29Tk358 k. Particular Cases. Most Cited Cases Individuals who were allegedly wrongfully enrolled in membership programs for goods and services failed to state claim for violation of California's Consumers Legal Remedies Act (CLRA) section prohibiting representations that subject of a transaction had been supplied in accordance with a previous representation when it had not, where individuals did not indicate what subject defendants represented that had already been supplied. West's Ann.Cal.Civ.Code 1770(a)(16). [18] Antitrust and Trade Regulation 29T 358

29T Antitrust and Trade Regulation 29TIII Statutory Unfair Trade Practices and Consumer Protection 29TIII(E) Enforcement and Remedies 29TIII(E)5 Actions 29Tk356 Pleading 29Tk358 k. Particular Cases. Most Cited Cases Individuals who were allegedly wrongfully enrolled in membership programs for goods and services failed to state claim for violation of California's Consumers Legal Remedies Act (CLRA) section prohibiting insertion of an unconscionable provision in a contract for sale or lease of goods or services, where individuals did not allege that they had ever signed or otherwise entered into a membership agreement or contract with defendants, let alone an agreement containing unconscionable provisions. West's Ann.Cal.Civ. Code 1770(a)(19). [19] Implied and Constructive Contracts 205H 205H Implied and Constructive Contracts 205HI Nature and Grounds of Obligation 205HI(A) In General 205Hk2 Constructive or Quasi Contracts 205Hk4 k. Restitution. Most Cited Cases Under California law, individuals who were allegedly wrongfully enrolled in membership programs for goods and services had cause of action for restitution, based on a theory of unjust enrichment, against program operator and its former parent corporation. [20] Federal Civil Procedure 170A 1827.1 4

170A Federal Civil Procedure 170AXI Dismissal 170AXI(B) Involuntary Dismissal 170AXI(B)5 Proceedings 170Ak1827 Determination 170Ak1827.1 k. In General. Most Cited Cases Issue of whether restitution claim based on theory of unjust enrichment, brought by individuals who were allegedly wrongfully enrolled in membership programs against program operator and its former parent corporation, was superfluous to restitution claim under statute prohibiting unfair competition could not be resolved at motion to

dismiss stage of action, since individuals could prevail on one cause of action and not the other. West's Ann.Cal.Bus. & Prof.Code 17200. [21] Antitrust and Trade Regulation 29T 381

29T Antitrust and Trade Regulation 29TIII Statutory Unfair Trade Practices and Consumer Protection 29TIII(E) Enforcement and Remedies 29TIII(E)7 Relief 29Tk380 Injunction 29Tk381 k. In General. Most Cited Cases Antitrust and Trade Regulation 29T 389(1)

29T Antitrust and Trade Regulation 29TIII Statutory Unfair Trade Practices and Consumer Protection 29TIII(E) Enforcement and Remedies 29TIII(E)7 Relief 29Tk387 Monetary Relief; Damages 29Tk389 Grounds and Subjects 29Tk389(1) k. In General. Most Cited Cases The California Unfair Competition Law (UCL) is equitable in nature, and plaintiffs that prevail under the UCL are generally limited to injunctive relief and restitution. West's Ann.Cal.Bus. & Prof.Code 17200. [22] Declaratory Judgment 118A 361.1

118A Declaratory Judgment 118AIII Proceedings 118AIII(F) Hearing and Determination 118Ak361 Dismissal Before Hearing 118Ak361.1 k. In General. Most Cited Cases District Court would not resolve, at motion to dismiss stage, issue of whether it would exercise its discretion to allow declaratory relief in action brought by individuals who were allegedly wrongfully enrolled in membership programs for goods and services against program operator and its former parent corporation, where claim for declaratory relief could be rendered superfluous and subject to dismissal if individuals succeeded in their cause of action for damages and restitution under California's Consumers Legal Remedies Act (CLRA). West's Ann.Cal.Civ.Code 1750 et seq. [23] Declaratory Judgment 118A 5.1

118A Declaratory Judgment 118AI Nature and Grounds in General 118AI(A) In General 118Ak5 Discretion of Court 118Ak5.1 k. In General. Most Cited Cases The Declaratory Judgment Act confers on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants. 28 U.S.C.A. 2201. [24] Corporations 101 1.5(3)

101 Corporations 101I Incorporation and Organization 101k1.5 Separate Corporations, Disregarding Separate Entities 101k1.5(3) k. Parent and Subsidiary Corporations. Most Cited Cases Under California law, parent corporation was not vicariously liable for actions of subsidiary, where subsidiary was neither undercapitalized nor a mere instrumentality of parent corporation. [25] Corporations 101 1.5(3)

101 Corporations 101I Incorporation and Organization 101k1.5 Separate Corporations, Disregarding Separate Entities 101k1.5(3) k. Parent and Subsidiary Corporations. Most Cited Cases Under California law, for a court to pierce the corporate veil it must determine that there is bad faith conduct on the part of the parent corporation that would otherwise remain without remedy. [26] Corporations 101 1.5(3)

101 Corporations 101I Incorporation and Organization 101k1.5 Separate Corporations, Disregarding Separate Entities 101k1.5(3) k. Parent and Subsidiary Corporations. Most Cited Cases Under California law, routine control of a subsidiary by a parent is insufficient to support the contention that a subsidiary is a mere instrumentality, for purposes of alter-ego liability. [27] Federal Civil Procedure 170A 834

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(E) Amendments 170Ak834 k. Injustice or Prejudice. Most Cited Cases Federal Civil Procedure 170A 839.1

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(E) Amendments 170Ak839 Complaint 170Ak839.1 k. In General. Most Cited Cases Leave to amend complaint was warranted, where plaintiffs only amended their pleadings once previously on their own initiative, and there was no indication that defendants would suffer any prejudice or undue delay from a second amendment. Fed.Rules Civ.Proc.Rule 15(a), 28 U.S.C.A. [28] Federal Civil Procedure 170A 834

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(E) Amendments 170Ak834 k. Injustice or Prejudice. Most Cited Cases

Federal Civil Procedure 170A

840

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(E) Amendments 170Ak839 Complaint 170Ak840 k. Time for Amendment. Most Cited Cases Federal Civil Procedure 170A 851

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(E) Amendments 170Ak851 k. Form and Sufficiency of Amendment. Most Cited Cases In determining whether it should grant leave to amend a complaint, the court must consider: (1) the plaintiff's bad faith; (2) undue delay; (3) prejudice to the defendant; (4) futility of amendment; and (5) whether the plaintiff has previously amended his or her pleadings. Fed.Rules Civ.Proc.Rule 15(a), 28 U.S.C.A. A. Enterprise [1] RICO defines an enterprise as including either (1) any individual, partnership, corporation, association, or other legal entity, or (2) any union or group of individuals associated in fact although not a legal entity (associated-in-fact). 18 U.S.C. 1961(4). A RICO enterprise must possess three essential characteristics: (1) a common or shared purpose; (2) continuity of structure and personnel; and (3) an ascertainable structure distinct from that in the pattern of racketeering activity. *1090 See Chang v. Chen, 80 F.3d 1293, 1296 (9th Cir.1996). Plaintiffs assert that they have properly alleged the existence of an enterprise under RICO. In opposition to defendants' motion to dismiss, plaintiffs offer two separate alternatives to satisfy the RICO enterprise requirement. First, plaintiffs contend that defendants, as the parent and subsidiary corporations, constitute both the enterprise and the person liable under RICO. In the alternative, plaintiffs assert that the contractual agreements between defendants and third parties granting defendants access to the consumer information of these third-parties constituted an association-in-fact enterprise for the purposes of RICO. 1. Parent and Subsidiary as Enterprise [2][3] Plaintiffs' first enterprise theory-that since Cendant and Trilegiant stand as separately incorporated entities, they satisfy the enterprise requirement-is not evident in their complaint and as a result this court may not consider it.FN3 Although the complaint states that [d]efendants, and each of them, are persons' within the meaning of ... [section] 1961(3), see FAC 58 (emphasis added), it does not also name defendants as the sole entities constituting the RICO enterprise. The complaint clearly specifies that [d]efendants, by and through agreements with third party entities ... constitute an enterprise. FAC 59 (emphasis added). Additionally, at a case management conference in December 2005, plaintiffs confirmed that the enterprise was Trilegiant with these unnamed third parties ... Posner Dec., Exh. A at 10: 20-21. As courts are barred from considering new matter that is raised by a plaintiff in an opposition to dismiss, see Broam v. Bogan, 320 F.3d 1023, 1026 n. 2 (9th Cir.2003), this court may not consider plaintiff's newly minted theory of a RICO enterprise. FN3. At oral argument, plaintiffs conceded that they were no longer advancing this theory. Rather, plaintiffs asserted, their RICO enterprise consists of an association-in-fact. [4][5] Not only are plaintiffs precluded from attempting to amend their complaint in opposition to a motion to dismiss, it is worth noting that their legal arguments lack merit and evidence a fundamental misapprehension of the applicable law. Section 1962(c) requires a plaintiff to allege as a defendant the person or persons who are distinct from the enterprise and whose business the enterprise is conducting. Sever v. Alaska Pulp Corp., 978 F.2d 1529, 1533 (9th Cir.1992). In other words, a single individual or entity cannot be both the RICO enterprise

and an individual RICO defendant [ or person as] ... an individual cannot associate or conspire with himself. River City Markets, Inc. v. Fleming Foods West, Inc., 960 F. 2d 1458, 1461 ( 9th Cir. 1992) (citing Rae v. Union Bank, 725 F.2d 478 (9th Cir.1984)). Furthermore, the Ninth Circuit has specifically held that for purposes of a single action, a single corporate defendant cannot be both the RICO person and the RICO enterprise under section 1962(c). Wagh v. Metris Direct, Inc., et al., No. C-01-01711 TEH, 2002 WL 257846 (N.D.Cal. Feb.20, 2002) (Henderson, J.) (quoting Sever, 978 F.2d at 1533-34), aff'd, 363 F.3d 821 (9th Cir.2003). As this enterprise theory rests on a misguided notion that defendants can be both the RICO person and enterprise, it must fail. 2. Association-in-Fact Enterprise [6][7][8] Plaintiffs' theory that the existence of third party contracts between defendants and certain financial institutions constitutes an association-in-fact enterprise is similarly unavailing. **The Ninth Circuit has held that for an entity to constitute*1091 an enterprise, [a]t a minimum ... [the] entity must exhibit some sort of structure ... for the making of decisions, whether it be hierarchical or consensual. [subsequently overruled by Odom v. Microsoft] Chang, 80 F.3d at 1299 (quoting U.S. v. Riccobene, 709 F.2d 214, 222 (3d Cir.), cert. denied, 464 U.S. 849, 104 S.Ct. 157, 78 L.Ed.2d 145 (1983)). Furthermore, the structure must provide a mechanism for controlling and directing the affairs of the group on an ongoing, rather than an ad hoc, basis. Id. (quoting Riccobene, 709 F.2d at 222). Thus, in order to establish an association-in-fact enterprise, a plaintiff must plead facts which show that **(1) there is an ongoing organization, formal or informal, **(2) that the various associates function as a continuing unit, and **(3) that the organization is an entity separate and apart from the pattern of racketeering activity in which it engages. Chang, 80 F.3d at 1297. Stated differently, plaintiffs must allege some kind of structure independent of the racketeering or predicate acts, such as an independent decision-making structure or an independent proceed-distributing structure that was used to commit the predicate acts. See Wagh, 2002 WL 257846, at *3. Not only have plaintiffs failed to identify any sort of independent structure, they have failed to demonstrate how their alleged enterprise is separate from the alleged racketeering acts. The complaint is devoid of any allegations that these third-party contractual agreements formed a hierarchical or consensual structure which provided a mechanism for controlling the affairs of the alleged enterprise.FN4 All that is alleged is that defendants entered into these agreements with numerous third-parties-who notably are unnamed in the complaint FN5-and through the information gained from these agreements, committed their fraudulent acts. Plaintiffs make no allegations that defendants and these unnamed third parties worked in concert to engage in the alleged racketeering activities or to distribute its proceeds.FN6 FN4. At oral argument, plaintiffs made an unpersuasive argument that the control mechanism is evidenced by the consent given by the parties in entering into the contractual arrangements. FN5. At oral argument, plaintiffs argued that the requirements for notice pleading under RICO are very broad and as such they are not required to identify the members of their association-in-fact. See, e.g. Richmond v. Nationwide Cassel L.P., 52 F.3d 640, 645 (7th Cir.1995) (where the court dismissed RICO claims for failure to name third-party enterprise members). Aside from a passing reference to Budget-RentA-Car as a possible third-party contractor, plaintiffs do not provide any detail on which entities comprise the enterprise-stating only that defendants enter into these agreements with **financial institutions, **retailers, **telephone service providers, **car rental companies, **mortgage lenders, **hotels, **cable companies, and **Internet service providers-many of whom are Fortune 500 companies. FAC 20. FN6. At orsal argument, plaintiffs made a new assertion that the unnamed partners and Trilegiant shared in the profits gained from the membership profits. However, it appears that this new argument is merely an attempt to recast plaintiffs' allegations that the consideration that was given by Trilegiant to these third parties for the financial information of their customers was not a routine business transaction but an improper distribution of assets procured through fraud. The complaint does not make any allegations that these unnamed partners were aware of or collaborated with Trilegiant in the allegedly tortious activitiesneither does it allege that any profits from these activities were shared by the parties. The mere receipt of consideration for the sale of financial information of customers does not establish that these unnamed

parties shared in the profits of the alleged enterprise. As currently pled, plaintiffs' RICO enterprise comprises nothing more than the *1092 agreements entered into by defendants and certain unnamed third parties to purchase consumer financial information. However, under Chang, an adequately pled enterprise must constitute more than the sum total of the predicate acts. In the instant action, the complaint does not allege that the contractual agreements are in any way separate from the alleged racketeering FN7 but rather alleges that these agreements formed a key basis of defendants' racketeering activities. See FAC 20. FN7. Case law from this District has held that an association-in-fact enterprise was adequately alleged where the plaintiff alleged that a proposal team was formed to compete for various contracts. NSI Tech. Serv. Corp. v. National Aeronautics, No. 95-20559 SW, 1996 WL 263646 at *2 (N.D. Cal. April 13, 1996) (Williams, J.) (citing Chang, 80 F.3d at 1300). The NSI Tech court further held that the teams had an existence apart from the pattern of racketeering activity because of their participation in the various extraneous activities of the two component corporations. However, the court based its decision on the fact that the teams were separate and distinct entities created out of a contractual relationship. That is not the case here. [9] Although contractual relationships may form the basis of an association-in-fact enterprise, they are not sufficient to establish a RICO enterprise. See Federal Reserve Bank v. HK Systems, Inc., No C-95-1190, 1997 WL 765952 (N.D.Cal. Nov.12, 1997) (Patel, J.) (where this court noted that merely demonstrating the existence of thirdparty contracts does not adequately allege an ascertainable structure separate from the racketeering activities). Plaintiffs' relies on the Ninth Circuit's decision in River City Markets, 960 F. 2d at 1461-62, for the proposition that the existence of contractual agreements between parties is sufficient to establish an enterprise; that case is inapposite. In River City Markets, the court found that routine business contracts between entities, although clearly associations-in-fact, cannot rise to the level of a RICO enterprise unless there is evidence of involvement of the different associates in some misconduct based upon these agreements. 960 F. 2d at 1461-62. Thus, the court found appellants' allegations insufficient to establish a RICO enterprise for summary judgment purposes as there was no evidence of any contemplated overreaching, deceit, non-disclosure, manipulation of inventory, or any other unethical conduct by [ the parties]. Id at 1463. See also Smith & Hawken, Ltd. v. Gardendance, Inc., No. C 041664, 2004 WL 2496163 at *8 (N.D.Cal. Nov.5, 2004) (Armstrong, J.) (finding a failure by defendants in their counterclaim to allege an enterprise pursuant to the numerous agreements that were negotiated and executed between the plaintiff and Chinese suppliers as well as through their course of conduct since there were no facts offered indicating how the enterprise is organized, explaining the chain of command or operation of the enterprise ); Does I v. The Gap, Inc., No. CV-01-0031, 2001 WL 1842389, at *3 (N. Mar. I.2001) (finding an association-infact enterprise consisting of various contracts and agreements between single retailers and single manufacturers where there were allegations of collusion between these retailers and manufacturers). In the present action, plaintiffs do not allege any wrongdoing on the part of the third-party contractors nor do they allege that these entities were aware of the allegedly fraudulent activities. Rather, plaintiffs' enterprise theory is based squarely upon the existence of routine contractual relationships between defendants and certain unnamed third-parties. Wagh, a recently decided and similarly postured case in this district, is on all fours with the current action. In Wagh, plaintiff *1093 asserted RICO violations for allegedly improper charges assessed for membership in defendants' credit protection program. In their first enterprise theory, the Wagh plaintiffs contended that defendants (comprising the parent and subsidiary company) constituted the enterprise. Plaintiffs also argued that an associationin-fact enterprise was evident from the contractual relationship between the parties. In rejecting both claims, the district court found that not only could plaintiffs not be both the RICO person and enterprise, but that plaintiffs did not allege any facts demonstrating the existence of either an independent decision-making structure or an independent proceed-distributing structure. Wagh, 2002 WL 257846 at *3. The court found that plaintiff was improperly attempting to impose RICO liability based [simply] upon Citibank's [-the third-party contractor in that case-] regular practices of receiving charges, paying charges and billing cardholders. Id. In affirming the district court decision, the Ninth Circuit held that plaintiff had failed to demonstrate that there was a a system of making decisions in furtherance of ... [defendants'] alleged criminal activities, independent from their respective regular business practices. Nor ha[d] plaintiff alleged that an independent system of distributing the proceeds of money ...

existed. Wagh, 363 F.3d 821, 831 (9th Cir.2003). Here, as in Wagh, the allegedly improper billing scheme perpetuated through the third-party contracts is both the alleged racketeering activity and the enterprise. The complaint does not allege that there is an independent structure which is separate from the predicate acts. Indeed, the predicate acts themselves are improperly pled. Plaintiffs simply allege with little precision that defendants have committed wire fraud hundreds of thousands or millions of times over the past four years ... FAC 61. Under governing Ninth Circuit law, plaintiffs have failed to adequately plead a RICO enterprise. Absent an underlying RICO violation, plaintiffs' conspiracy claim under 1962(d) is untenable. Therefore, defendants' motion to dismiss plaintiffs' RICO claims is GRANTED with leave to amend if plaintiffs can allege facts sufficient to identify an independent structure separate from the predicate acts, to more clearly specify the entities which comprise its association-in-fact enterprise and to plead with precision the predicate acts of their RICO claim. Odom v. Microsoft Corp., 486 F.3d 541, RICO Bus.Disp.Guide 11,290, 07 Cal. Daily Op. Serv. 4895, 2007 Daily Journal D.A.R. 6307 (9th Cir.(Wash.),May 04, 2007) 9th circuit holds that no structure is necessary for an associated in fact enterprise under RICO, unlike 7th Circuit.

RICO CONSPIRACY; UNDER 18 U.S.C. SECTION 1962(D)

See Criminal Rico, A Manual For Federal Prosecutors, 5th Ed. 2009,at p. 141, Or rico_conspiracy_18_usc_1962_c.doc Under the provisions of RICO conspiracy, what describes the sheriffs, Alan Carlson clerk of the Superior Court, County Counsel, Coldwell Bankers role, a member of the enterprise or a RICO conspirator. [Salinas v. US. 522 U.S. at p.64, **The RICO conspiracy statute, 1962(d), broadened conspiracy coverage by omitting the requirement of an overt act; it did not, at the same time, work the radical change of requiring the Government to prove each conspirator agreed that he would be the one to commit two predicate acts. Our recitation of conspiracy law comports with contemporary understanding. When Congress passed RICO in 1970, see Pub.L. 91-452, 901(a), 84 Stat. 941, the American Law 65*65 Institute's Model Penal Code permitted a person to be convicted of conspiracy so long as he agrees with such other person or persons that they or one or more of them will engage in conduct that constitutes such crime. Model Penal Code 5.03(1)(a) (1962). As the drafters emphasized, so long as the purpose of the agreement is to facilitate commission of a crime, the actor need not agree to commit the crime. American Law Institute, Model Penal Code, Tent. Draft No. 10, p. 117 (1960). The Model Penal Code still uses this formulation. See Model Penal Code 5.03(1)(a), 10 U.L.A. 501 (1974). [20][21][22][23] A conspirator must intend to further an endeavor which, if completed, would satisfy all of the elements of a substantive criminal offense, **but it suffices that he adopt the goal of furthering or facilitating the criminal endeavor. He may do so in any number of ways short of agreeing to undertake all of the acts necessary for the crime's completion. One can be a conspirator by agreeing to facilitate only some of the acts leading to the substantive offense. It is elementary that a conspiracy may exist and be punished whether or not the substantive crime ensues, for the conspiracy is a distinct evil, dangerous to the public, and so punishable in itself. See **478 Callanan v. United States, 364 U.S. 587, 594, 81 S.Ct. 321, 325, 5 L.Ed.2d 312 (1961). It makes no difference that the substantive offense under 1962(c) requires two or more predicate acts. The interplay between subsections (c) and (d) does not permit us to excuse from the reach of the conspiracy provision an actor who does not himself commit or agree to commit the two or more predicate acts requisite to the underlying offense. True, though an enterprise under 1962(c) can exist with only one actor to conduct it, in most instances it

will be conducted by more than one person or entity; **and this in turn may make it somewhat difficult to determine just where the enterprise ends and the conspiracy begins, or, on the other hand, whether the two crimes are coincident in their factual circumstances. In some cases the connection the defendant had to the alleged*66 enterprise or to the conspiracy to further it may be tenuous enough so that his own commission of two predicate acts may become an important part of the Government's case. Perhaps these were the considerations leading some of the Circuits to require in conspiracy cases that each conspirator himself commit or agree to commit two or more predicate acts. Nevertheless, that proposition cannot be sustained as a definition of the conspiracy offense, for it is contrary to the principles we have discussed. In the case before us, even if Salinas did not accept or agree to accept two bribes, there was ample evidence that he conspired to violate subsection (c). The evidence showed that Marmolejo committed at least two acts of racketeering activity when he accepted numerous bribes and that Salinas knew about and agreed to facilitate the scheme. **This is sufficient to support a conviction under 1962(d). An entity or person is a member of the Enterprise if it commits at least two criminal racketeering acts. Although a substantive RICO offense requires proof that each defendant committed at least two racketeering acts, Salinas v. U.S., 522 U.S. 52, 118 S.Ct. 469, 139 L.Ed.2d 352, 66 USLW 4011, RICO Bus.Disp.Guide 9382, 97 Cal. Daily Op. Serv. 8996, 97 Daily Journal D.A.R. 14,512, 97 CJ C.A.R. 3054, 97 CJ C.A.R. 3209, 11 Fla. L. Weekly Fed. S 251 (U.S.Tex.,Dec 02, 1997)

Former sheriff and deputy sheriff were convicted in the United States District Court for the Southern District of Texas, George P. Kazen, J., of conspiracy and bribery in connection with permitting contact visits to federal prisoner incarcerated in county jail, and sheriff was also convicted of racketeering. Sheriff and deputy appealed. The Fifth Circuit Court of Appeals, Emilio M. Garza, Circuit Judge, 89 F.3d 1185, affirmed. Certiorari was granted in part. The Supreme Court, Justice Kennedy, held that: (1) bribe need not affect federal funds to violate federal bribery statute; (2) federal bribery statute was constitutional as applied to sheriff and deputy; and (3) deputy could be convicted of conspiracy under Racketeer Influenced and Corrupt Organizations Act (RICO), even if he did not accept or agree to accept two bribes. Affirmed. [1] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Bribe need not affect federal funds before bribe violates federal bribery statute. 18 U.S.C.A. 666(a)(1)(B). [2] Statutes 361 241(1)

361 Statutes 361VI Construction and Operation 361VI(B) Particular Classes of Statutes 361k241 Penal Statutes 361k241(1) k. In General. Most Cited Cases Courts generally must follow plain and unambiguous meaning of statutory language in applying criminal laws. [3] Statutes 361 241(1)

361 Statutes 361VI Construction and Operation 361VI(B) Particular Classes of Statutes 361k241 Penal Statutes 361k241(1) k. In General. Most Cited Cases Only most extraordinary showing of contrary intentions in legislative history will justify departure from statutory language in applying criminal laws. [4] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Federal bribery statute was designed to extend federal bribery prohibitions to bribes offered to state and local officials employed by agencies receiving federal funds. 18 U.S.C.A. 666(a)(1)(B). [5] Statutes 361 241(1)

361 Statutes 361VI Construction and Operation 361VI(B) Particular Classes of Statutes 361k241 Penal Statutes 361k241(1) k. In General. Most Cited Cases No rule of construction requires that penal statute be strained and distorted to exclude conduct clearly intended to be within its scope [6] Constitutional Law 92 994

92 Constitutional Law 92VI Enforcement of Constitutional Provisions 92VI(C) Determination of Constitutional Questions 92VI(C)3 Presumptions and Construction as to Constitutionality 92k994 k. Avoidance of Constitutional Questions. Most Cited Cases (Formerly 92k48(1)) Constitutional Law 92 1026

92 Constitutional Law 92VI Enforcement of Constitutional Provisions 92VI(C) Determination of Constitutional Questions 92VI(C)3 Presumptions and Construction as to Constitutionality 92k1024 Limitations of Rules and Special Circumstances Affecting Them 92k1026 k. Rewriting to Save from Unconstitutionality. Most Cited Cases (Formerly 92k48(1), 92k70.1(2)) Statutes should be construed to avoid constitutional questions, but this interpretative canon is not license for judiciary to rewrite language enacted by legislature. [7] Constitutional Law 92 1025

92 Constitutional Law 92VI Enforcement of Constitutional Provisions 92VI(C) Determination of Constitutional Questions 92VI(C)3 Presumptions and Construction as to Constitutionality 92k1024 Limitations of Rules and Special Circumstances Affecting Them 92k1025 k. In General. Most Cited Cases (Formerly 92k48(8)) Court cannot press statutory construction to point of disingenuous evasion even to avoid constitutional question. [8] Statutes 361 190

361 Statutes 361VI Construction and Operation 361VI(A) General Rules of Construction 361k187 Meaning of Language 361k190 k. Existence of Ambiguity. Most Cited Cases Statute can be unambiguous without addressing every interpretive theory offered by party. [9] Statutes 361 190

361 Statutes 361VI Construction and Operation 361VI(A) General Rules of Construction 361k187 Meaning of Language 361k190 k. Existence of Ambiguity. Most Cited Cases For statute to be unambiguous, it need only be plain to anyone reading Act that statute encompasses conduct at issue. [10] Bribery 63 2

63 Bribery 63k2 k. Constitutional and Statutory Provisions. Most Cited Cases Federal bribery statute as applied to sheriff and deputy who permitted contact visits to federal prisoner incarcerated in county jail in exchange for money did not extend federal power beyond its proper bounds, and thus was constitutional as applied; preferential treatment threatened integrity and proper operation of federal program pursuant to which prisoner was incarcerated in county jail. 18 U.S.C.A. 666(a)(1)(B). [11] Conspiracy 91 40.1

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k39 Persons Liable 91k40.1 k. Knowledge, Intent, and Participation. Most Cited Cases Sheriff's deputy could be convicted of conspiracy under Racketeer Influenced and Corrupt Organizations Act (RICO), even if he did not accept or agree to accept two bribes, where evidence showed that sheriff committed at least two acts of racketeering activity, by accepting numerous bribes, and that deputy knew about and agreed to

facilitate scheme. 18 U.S.C.A. 1962(c, d). [12] Racketeer Influenced and Corrupt Organizations 319H 3

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk3 k. Elements of Violation in General. Most Cited Cases Predominant elements in substantive Racketeer Influenced and Corrupt Organizations Act (RICO) violation are: **(1) conduct **(2) of enterprise **(3) through pattern of racketeering activity. 18 U.S.C.A. 1962(c). [13] Conspiracy 91 27

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k27 k. Overt Act. Most Cited Cases **Racketeer Influenced and Corrupt Organizations Act (RICO) conspiracy conviction does not require overt or specific act. 18 U.S.C.A. 1962(d). [14] Statutes 361 212.6

361 Statutes 361VI Construction and Operation 361VI(A) General Rules of Construction 361k212 Presumptions to Aid Construction 361k212.6 k. Words Used. Most Cited Cases Congress' words are presumed to have their ordinary meaning and definition, when it uses well-settled terminology of criminal law. [15] Conspiracy 91 24(1)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k24 Combination or Agreement 91k24(1) k. In General. Most Cited Cases Conspiracy may exist even if conspirator does not agree to commit or facilitate each and every part of substantive offense. [16] Conspiracy 91 24(1)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k24 Combination or Agreement

91k24(1) k. In General. Most Cited Cases Conspiracy 91 41

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k39 Persons Liable 91k41 k. Acts of Coconspirators. Most Cited Cases **Under doctrine of conspiracy, partners in criminal plan must agree to pursue same criminal objective and may divide up work, yet each is responsible for acts of each other. [17] Conspiracy 91 41

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k39 Persons Liable 91k41 k. Acts of Coconspirators. Most Cited Cases If conspirators have plan which calls for some conspirators to perpetrate crime and others to provide support, **supporters are as guilty as perpetrators. [18] Conspiracy 91 28(1)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k28 Conspiracy to Commit Crime 91k28(1) k. In General. Most Cited Cases It is possible for person to conspire for commission of crime by third person. [19] Conspiracy 91 40.2

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k39 Persons Liable 91k40.2 k. Persons Incapable of Committing Substantive Offense. Most Cited Cases Person may be liable for conspiracy even though he was incapable of committing substantive offense. [20] Conspiracy 91 24.5

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k24.5 k. Knowledge and Intent. Most Cited Cases

**To be convicted of conspiracy, conspirator must intend to further endeavor which, if completed, would satisfy all of elements of substantive criminal offense, **but it suffices that he adopt goal of furthering or facilitating criminal endeavor. [21] Conspiracy 91 24(1)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k24 Combination or Agreement 91k24(1) k. In General. Most Cited Cases Conspirator can adopt goal of furthering or facilitating criminal endeavor as required for conspiracy conviction in any number of ways short of agreeing to undertake all of acts necessary for crime's completion [22] Conspiracy 91 24(1)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k24 Combination or Agreement 91k24(1) k. In General. Most Cited Cases **One can be conspirator by agreeing to facilitate only some of acts leading to substantive offense. [23] Conspiracy 91 28(2)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k28 Conspiracy to Commit Crime 91k28(2) k. Substantive Offense Distinguished. Most Cited Cases Conspiracy may exist and be punished whether or not substantive crime ensues, for conspiracy is distinct evil, dangerous to public, and so punishable in itself. [24] Statutes 361 241(1)

361 Statutes 361VI Construction and Operation 361VI(B) Particular Classes of Statutes 361k241 Penal Statutes 361k241(1) k. In General. Most Cited Cases Rule of lenity does not apply when statute is unambiguous or when invoked to engraft illogical requirement to its text. *52 This federal prosecution arose from a scheme in which a Texas county sheriff accepted money, and his deputy, petitioner Salinas, accepted two watches and a truck, in exchange for permitting women to make so-called contact visits to one Beltran, a federal prisoner housed in the county jail pursuant to an agreement with the Federal Government. **Salinas was charged with one count of violating the Racketeer Influenced and Corrupt

Organizations Act (RICO), 18 U.S.C. 1962(c), **one count of conspiracy to violate RICO, 1962(d), and two counts of bribery, 666(a)(1)(B). The jury convicted him on all but the substantive RICO count, and the Fifth Circuit affirmed. Held: 1. Section 666(a)(1)(B) does not require the Government to prove the bribe in question had a demonstrated effect upon federal funds. The enactment's plain language is expansive and unqualified, both as to the bribes forbidden and the entities covered, demonstrating by its reference to any business or transaction, 666(a)(1)(B), that it is not confined to transactions affecting federal funds; by its application to all cases in which an organization, government, or agency receives a specified amount of federal benefits, 666(b), that it reaches the scheme involved here; and by its prohibition on accepting anything of value, 666(a)(1)(B), that it encompasses the transfers of personal property to petitioner in exchange for his favorable treatment of Beltran. Given the statute's plain and unambiguous meaning, petitioner is not aided by the legislative history, see, e.g., United States v. Albertini, 472 U.S. 675, 680, 105 S.Ct. 2897, 2902, 86 L.Ed.2d 536, or by the plain-statement rule set forth in Gregory v. Ashcroft, 501 U.S. 452, 460-461, 111 S.Ct. 2395, 2400-2401, 115 L.Ed.2d 410, and McNally v. United States, 483 U.S. 350, 360, 107 S.Ct. 2875, 2881-2882, 97 L.Ed.2d 292, see, e.g., Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 57, n. 9, 116 S.Ct. 1114, 1124, n. 9, 134 L.Ed.2d 252. Moreover, the construction he seeks cannot stand when viewed in light of the pre- 666 statutory framework-which limited federal bribery prohibitions to public official[s], defined as officer[s] or employee[s] or person[s] acting for or on behalf of the United States, or any ... branch ... thereof, and which was interpreted by some lower courts not to include state and local officials-and the expansion prescribed by 666(a)(1)(B), which was designed to extend coverage to bribes offered to state and local officials employed by agencies receiving federal funds. Under this 53*53 Court's construction, 666 (a)(1)(B) is constitutional as applied in this case. Its application to petitioner did not extend federal power beyond its proper bounds, since the preferential treatment accorded Beltran was a threat to the integrity and proper operation of the federal program under which the jail was managed. See Westfall v. United States, 274 U.S. 256, 259, 47 S.Ct. 629, 629-630, 71 L.Ed. 1036. Pp. 472-476. 2. To be convicted of conspiracy to violate RICO under 1962(d), the conspirator need not himself have committed or agreed to commit the two or more predicate acts, such as bribery, requisite for a substantive RICO offense under 1962(c). Section 1962(d)-which forbids any person to conspire to violate 1962(c)-is even more comprehensive than the general conspiracy provision applicable to federal crimes, 371, since it contains no requirement of an overt or specific act to effect the conspiracy's object. Presuming Congress intended the to conspire phrase to have its ordinary meaning under the criminal law, see Morissette v. United States, 342 U.S. 246, 263, 72 S.Ct. 240, 249-250, 96 L.Ed. 288, well-established principles and contemporary understanding demonstrate that, although a conspirator must intend to further an endeavor which, if completed, would satisfy all of the elements of a substantive criminal offense, **it suffices **472 that he adopt the goal of furthering or facilitating the criminal endeavor, and he need not agree to undertake all of the acts necessary for the crime's completion. Salinas' contrary interpretation of 1962(c) violates the foregoing principles and is refuted by Bannon v. United States, 156 U.S. 464, 469, 15 S.Ct. 467, 469-470, 39 L.Ed. 494. Its acceptance, moreover, is not required by the rule of lenity, see United States v. Shabani, 513 U.S. 10, 17, 115 S.Ct. 382, 386, 130 L.Ed.2d 225. Even if Salinas did not accept or agree to accept two bribes, there was ample evidence that the sheriff committed at least two predicate acts when he accepted numerous bribes and **that Salinas knew about and agreed to facilitate the scheme, and **this is sufficient to support Salinas' conviction under 1962(d). Pp. 475-478. 89 F.3d 1185, affirmed. KENNEDY, J., delivered the opinion for a unanimous Court. Francisco J. Enriquez, McAllen, TX, for petitioner. Paul R.Q. Wolfson, Washington, DC, for respondent. For U.S. Supreme Court briefs, see:1997 WL 166081 (Pet.Brief)1997 WL 251469 (Resp. Brief)1997 WL 183929 (Resp. Brief)

54*54 Justice KENNEDY delivered the opinion of the Court. The case before us presents two questions: First, is the federal bribery statute codified at 18 U.S.C. 666 limited to cases in which the bribe has a demonstrated effect upon federal funds? Second, does the conspiracy prohibition contained in the Racketeer Influenced and Corrupt Organizations Act (RICO) apply only when the conspirator agrees to commit two of the predicate acts RICO forbids? Ruling against the petitioner on both issues, we affirm the judgment of the Court of Appeals for the Fifth Circuit. I This federal prosecution arose from a bribery scheme operated by Brigido Marmolejo, the Sheriff of Hidalgo County, Texas, and petitioner Mario Salinas, one of his principal deputies. In 1984, the United States Marshals Service and Hidalgo County entered into agreements under which the county would take custody of federal prisoners. In exchange, the Federal Government agreed to make a grant to the county for improving its jail and also agreed to pay the county a specific amount per day for each federal prisoner housed. Based on the estimated number of federal prisoners to be maintained, payments to the county were projected to be $915,785 per year. The record before us does not disclose the precise amounts paid. It is uncontested, however, that in each of the two periods relevant in this case the program resulted in federal payments to the county well in excess of the $10,000 amount necessary for coverage under 18 U.S.C. 666. (We denied certiorari on the question whether the moneys paid to the county were benefits under a Federal program *55 under 666(b), and we assume for purposes of this opinion that the payments fit those definitions.) Homero Beltran-Aguirre was one of the federal prisoners housed in the jail under the arrangement negotiated between the Marshals Service and the county. He was incarcerated there for two intervals, first for 10 months and then for 5 months. During both custody periods, Beltran paid Marmolejo a series of bribes in exchange for so-called contact visits in which he remained alone with his wife or, on other occasions, his girlfriend. Beltran paid Marmolejo a fixed rate of $6,000 per month and $1,000 for each contact visit, which occurred twice a week. Petitioner Salinas was the chief deputy responsible for managing the jail and supervising custody of the prisoners. When Marmolejo was not available, Salinas arranged for the contact visits and on occasion stood watch outside the room where the visits took place. In return for his assistance with the scheme, Salinas received from Beltran a pair of designer watches and a pickup truck. **473 Salinas and Marmolejo were indicted and tried together, but only Salinas' convictions are before us. **Salinas was charged with one count of violating RICO, 18 U.S.C. 1962(c), one count of conspiracy to violate RICO, 1962(d), and two counts of bribery in violation of 666(a)(1)(B). The jury acquitted Salinas on the substantive RICO count, but convicted him on the RICO conspiracy count and the bribery counts. A divided panel of the Court of Appeals for the Fifth Circuit affirmed, United States v. Marmolejo, 89 F.3d 1185 (1996), and we granted certiorari, 519 U.S. 1148, 117 S.Ct. 1079, 137 L.Ed.2d 214 (1997). To resolve the case, we consider first the bribery scheme, then the conspiracy.

At p. 475,
III [11] Salinas directs his second challenge to his conviction for conspiracy to violate **476 RICO. There could be no conspiracy offense, he says, unless he himself committed or agreed to commit the two predicate acts requisite for a substantive RICO offense under 1962(c). **Salinas identifies a conflict among the Courts of Appeals on the point. Decisions of the First, Second, and Tenth Circuits require that, under the RICO conspiracy provision, the defendant must himself commit or agree to commit two or more predicate acts. See United States v. Sanders, 929 F.2d 1466, 1473 (C.A.10), cert. denied, 502 U.S. 846, 112 S.Ct. 143, 116 L.Ed.2d 109 (1991); United States v. Ruggiero, 726 F.2d 913, 921(CA2), cert. denied sub nom. Rabito v. United States, 469 U.S. 831, 105 S.Ct. 118, 83 L.Ed.2d 60 (1984); *62United States v. Winter, 663 F.2d 62 1120, 1136 (C.A.1), cert. denied, 460 U.S. 1011, 103 S.Ct. 1249, 75 L.Ed.2d 479 (1983). Eight other Courts of Appeals, including the Fifth Circuit in this case, take a contrary view. See United States v. Pryba, 900 F.2d 748, 760 (C.A.4), cert. denied, 498 U.S. 924, 111 S.Ct. 305, 112 L.Ed.2d 258 (1990); United States v. Kragness, 830 F.2d 842, 860 (C.A.8 1987); United States v. Neapolitan, 791 F.2d 489, 494-500 (C.A.7), cert. denied, 479 U.S. 940, 107 S.Ct. 422, 93 L.Ed.2d 372 (1986); United States v. Joseph, 781 F.2d 549, 554 (C.A.6 1986); United States v. Adams, 759 F.2d 1099, 1115-1116 (C.A.3), cert. denied, 474 U.S. 971, 106 S.Ct. 336, 88 L.Ed.2d 321 (1985); **United States v. Tille, 729 F.2d 615, 619 (C.A.9), cert.

denied, 469 U.S. 845, 105 S.Ct. 156, 83 L.Ed.2d 93 (1984); United States v. Carter, 721 F.2d 1514, 1529-1531 (C.A.11), cert. denied sub nom. Morris v. United States, 469 U.S. 819, 105 S.Ct. 89, 83 L.Ed.2d 36 (1984). [12] Before turning to RICO's conspiracy provision, we note the substantive RICO offense, which was the goal of the conspiracy alleged in the indictment. It provides: 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 or collection of unlawful debt. 18 U.S.C. 1962(c). The elements predominant in a subsection (c) violation are: (1) the conduct (2) of an enterprise (3) through a pattern of racketeering activity. See Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 3285, 87 L.Ed.2d 346 (1985). Pattern of racketeering activity is a defined term and requires at least two acts of racketeering activity, the so-called predicate acts central to our discussion. 18 U.S.C. 1961(5). Racketeering activity, in turn, is defined to include any act ... involving ... bribery ... which is chargeable under State law and punishable by imprisonment for more than one year. 1961(1)(A). The Government's theory was that Salinas himself committed a substantive 1962(c) RICO violation by conducting the enterprise's*63 affairs through a pattern of racketeering activity that included **acceptance of two or more bribes, felonies punishable in Texas by more than one year in prison. See Tex. Penal Code Ann. 36.02(a)(1) (1994). The jury acquitted on the substantive count. Salinas was convicted of conspiracy, however, and he challenges the conviction because the jury was not instructed that he must have committed or agreed to commit two predicate acts himself. His interpretation of the conspiracy statute is wrong. [13] The RICO conspiracy statute, simple in formulation, provides: It shall be unlawful for any person to conspire to violate any of the provisions of subsection **(a), (b), or **(c) of this section. 18 U.S.C. 1962(d). **There is no requirement of some overt act or specific act in the statute before us, **unlike the general conspiracy provision applicable to federal crimes, which requires that at least one of the conspirators have committed an act to effect the object of the conspiracy. 371. The RICO conspiracy provision, then, is even more comprehensive than the general conspiracy offense in 371. [14] In interpreting the provisions of 1962(d), we adhere to a general rule: When Congress uses well-settled terminology of criminal law, its words are presumed to have their ordinary meaning and definition. **477 See Morissette v. United States, 342 U.S. 246, 263, 72 S.Ct. 240, 249-250, 96 L.Ed. 288 (1952). The relevant statutory phrase in 1962(d) is to conspire. We presume Congress intended to use the term in its conventional sense, and certain well-established principles follow. [15][16][17][18][19] A conspiracy may exist even if a conspirator does not agree to commit or facilitate each and every part of the substantive offense. See United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 253-254, 60 S.Ct. 811, 858-859, 84 L.Ed. 1129 (1940). **The partners in the criminal plan must agree to pursue the same criminal objective and may divide up the work, **yet each is responsible for the 64*64 acts of each other. See Pinkerton v. United States, 328 U.S. 640, 646, 66 S.Ct. 1180, 1183-1184, 90 L.Ed. 1489 (1946) (And so long as the partnership in crime continues, the partners act for each other in carrying it forward). If conspirators have a plan which calls for some conspirators to perpetrate the crime and others to provide support, **the supporters are as guilty as the perpetrators. As Justice Holmes observed: [P]lainly a person may conspire for the commission of a crime by a third person. United States v. Holte, 236 U.S. 140, 144, 35 S.Ct. 271, 272, 59 L.Ed. 504 (1915). A person, moreover, may be liable for conspiracy even though he was incapable of committing the substantive offense. United States v. Rabinowich, 238 U.S. 78, 86, 35 S.Ct. 682, 684, 59 L.Ed. 1211 (1915). The point Salinas tries to make is in opposition to these principles, and is refuted by Bannon v. United States, 156 U.S. 464, 15 S.Ct. 467, 39 L.Ed. 494 (1895). There the defendants were charged with conspiring to violate the

general conspiracy statute, id., at 464, 15 S.Ct. at 468, which requires proof of an overt act. See supra, at 476. One defendant objected to the indictment because it did not allege he had committed an overt act. See Bannon, supra, at 468, 15 S.Ct., at 469. We rejected the argument because it would erode the common-law principle that, so long as they share a common purpose, conspirators are liable for the acts of their co-conspirators. We observed in Bannon: To require an overt act to be proven against every member of the conspiracy, or a distinct act connecting him with the combination to be alleged, would not only be an innovation upon established principles, but would render most prosecutions for the offence nugatory. 156 U.S., at 469, 15 S.Ct., at 469. **The RICO conspiracy statute, 1962(d), broadened conspiracy coverage by omitting the requirement of an overt act; it did not, at the same time, work the radical change of requiring the Government to prove each conspirator agreed that he would be the one to commit two predicate acts. Our recitation of conspiracy law comports with contemporary understanding. When Congress passed RICO in 1970, see Pub.L. 91-452, 901(a), 84 Stat. 941, the American Law 65*65 Institute's Model Penal Code permitted a person to be convicted of conspiracy so long as he agrees with such other person or persons that they or one or more of them will engage in conduct that constitutes such crime. Model Penal Code 5.03(1)(a) (1962). As the drafters emphasized, so long as the purpose of the agreement is to facilitate commission of a crime, the actor need not agree to commit the crime. American Law Institute, Model Penal Code, Tent. Draft No. 10, p. 117 (1960). The Model Penal Code still uses this formulation. See Model Penal Code 5.03(1)(a), 10 U.L.A. 501 (1974). [20][21][22][23] A conspirator must intend to further an endeavor which, if completed, would satisfy all of the elements of a substantive criminal offense, **but it suffices that he adopt the goal of furthering or facilitating the criminal endeavor. He may do so in any number of ways short of agreeing to undertake all of the acts necessary for the crime's completion. One can be a conspirator by agreeing to facilitate only some of the acts leading to the substantive offense. It is elementary that a conspiracy may exist and be punished whether or not the substantive crime ensues, for the conspiracy is a distinct evil, dangerous to the public, and so punishable in itself. See **478 Callanan v. United States, 364 U.S. 587, 594, 81 S.Ct. 321, 325, 5 L.Ed.2d 312 (1961). It makes no difference that the substantive offense under 1962(c) requires two or more predicate acts. The interplay between subsections (c) and (d) does not permit us to excuse from the reach of the conspiracy provision an actor who does not himself commit or agree to commit the two or more predicate acts requisite to the underlying offense. True, though an enterprise under 1962(c) can exist with only one actor to conduct it, in most instances it will be conducted by more than one person or entity; **and this in turn may make it somewhat difficult to determine just where the enterprise ends and the conspiracy begins, or, on the other hand, whether the two crimes are coincident in their factual circumstances. In some cases the connection the defendant had to the alleged*66 enterprise or to the conspiracy to further it may be tenuous enough so that his own commission of two predicate acts may become an important part of the Government's case. Perhaps these were the considerations leading some of the Circuits to require in conspiracy cases that each conspirator himself commit or agree to commit two or more predicate acts. Nevertheless, that proposition cannot be sustained as a definition of the conspiracy offense, for it is contrary to the principles we have discussed. In the case before us, even if Salinas did not accept or agree to accept two bribes, there was ample evidence that he conspired to violate subsection (c). The evidence showed that Marmolejo committed at least two acts of racketeering activity when he accepted numerous bribes and that Salinas knew about and agreed to facilitate the scheme. **This is sufficient to support a conviction under 1962(d). [24] As a final matter, Salinas says his statutory interpretation is required by the rule of lenity. The rule does not apply when a statute is unambiguous or when invoked to engraft an illogical requirement to its text. See United States v. Shabani, 513 U.S. 10, 17, 115 S.Ct. 382, 386, 130 L.Ed.2d 225 (1994). The judgment of the Court of Appeals is Affirmed. Beck v. Prupis, 529 U.S. 494, 120 S.Ct. 1608, 146 L.Ed.2d 561, 68 USLW 4320, 171 A.L.R. Fed. 673, RICO

Bus.Disp.Guide 9869, 16 IER Cases 271, 00 Cal. Daily Op. Serv. 3177, 2000 Daily Journal D.A.R. 4285, 2000 CJ C.A.R. 2188, 13 Fla. L. Weekly Fed. S 261 (U.S.Fla.,Apr 26, 2000)

Former president of corporation asserted claims against former senior officers and directors of corporation alleging violations of Racketeer Influenced and Corrupt Organizations Act (RICO). The United States District Court for the Southern District of Florida, Norman C. Roettger, J., granted officers' and directors' motion for summary judgment. Former president appealed. The Eleventh Circuit Court of Appeals, Tjoflat, Circuit Judge, 162 F.3d 1090, affirmed. Certiorari was granted. The Supreme Court, Justice Thomas, held that president's termination, allegedly in furtherance of RICO conspiracy, was not independently wrongful under any substantive provision of RICO, and, thus, did not give rise to cause of action under RICO; abrogating Khurana v. Innovative Health Care Systems, Inc.; Schiffels v. Kemper Financial Services, Inc.; Shearin v. E.F. Hutton Group, Inc. Affirmed. Justice Stevens filed dissenting opinion in which Justice Souter joined. [1] Federal Courts 170B 460.1

170B Federal Courts 170BVII Supreme Court 170BVII(B) Review of Decisions of Courts of Appeals 170Bk460 Review on Certiorari 170Bk460.1 k. In General. Most Cited Cases On review of the Court of Appeals' affirmance of summary judgment for respondents, the Supreme Court accepts as true the evidence presented by petitioner. Fed.Rules Civ.Proc.Rule 56(c), 28 U.S.C.A. [2] Statutes 361 212.1

361 Statutes 361VI Construction and Operation 361VI(A) General Rules of Construction 361k212 Presumptions to Aid Construction 361k212.1 k. Knowledge of Legislature. Most Cited Cases Statutes 361 212.6

361 Statutes 361VI Construction and Operation 361VI(A) General Rules of Construction 361k212 Presumptions to Aid Construction 361k212.6 k. Words Used. Most Cited Cases Statutes 361 222

361 Statutes 361VI Construction and Operation 361VI(A) General Rules of Construction 361k222 k. Construction with Reference to Common or Civil Law. Most Cited Cases When Congress uses language with a settled meaning at common law, Congress presumably knows and adopts the cluster of ideas that were attached to each borrowed word in the body of learning from which it was taken and

the meaning its use will convey to the judicial mind unless otherwise instructed; in such case, absence of contrary direction may be taken as satisfaction with widely accepted definitions, not as a departure from them. [3] Conspiracy 91 5

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k1 Nature and Elements in General 91k5 k. Overt Act. Most Cited Cases Supreme Court would look to civil, rather than criminal, common-law principles to decide whether person injured by overt act done in furtherance of Racketeer Influenced and Corrupt Organizations Act (RICO) conspiracy had RICO cause of action even if overt act was not act of racketeering, inasmuch as case did not present simply question of what constituted RICO violation, but rather meaning of civil cause of action for private injury by reason of such violation. 18 U.S.C.A. 1962(d), 1964(c). [4] Conspiracy 91 6

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k1 Nature and Elements in General 91k6 k. Damage Caused. Most Cited Cases When Congress established in the Racketeer Influenced and Corrupt Organizations Act (RICO) a civil cause of action for a person injured by reason of a conspiracy, it meant to adopt the well-established common-law civil conspiracy principle that a plaintiff could bring suit for civil conspiracy only if he or she had been injured by an act that was itself tortious. 18 U.S.C.A. 1964(c); Restatement (Second) of Torts 876. [5] Conspiracy 91 5

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k1 Nature and Elements in General 91k5 k. Overt Act. Most Cited Cases **An injury caused by an overt act that is not an act of racketeering or otherwise wrongful under the Racketeer Influenced and Corrupt Organizations Act (RICO) is not sufficient to give rise to a RICO cause of action for a person injured by reason of a conspiracy. 18 U.S.C.A. 1962(d), 1964(c); Restatement (Second) of Torts 876. [6] Conspiracy 91 5

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k1 Nature and Elements in General 91k5 k. Overt Act. Most Cited Cases A civil conspiracy plaintiff cannot bring suit under the Racketeer Influenced and Corrupt Organizations Act (RICO) based on injury caused by any act in furtherance of a conspiracy that might have caused the plaintiff injury; **rather, the plaintiff must allege injury from an act that is analogous to an act of a tortious character, meaning an

act that is independently wrongful under RICO. 18 U.S.C.A. 1962(d), 1964(c); Restatement (Second) of Torts 876. [7] Conspiracy 91 5

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k1 Nature and Elements in General 91k5 k. Overt Act. Most Cited Cases Termination of corporation's president, allegedly in furtherance of Racketeer Influenced and Corrupt Organizations Act (RICO) conspiracy, was not independently wrongful under any substantive provision of RICO, and, thus, injury caused by such act was not sufficient to give rise to cause of action under RICO; abrogating Khurana v. Innovative Health Care Systems, Inc., 130 F.3d 143; Schiffels v. Kemper Financial Services, Inc., 978 F. 2d 344; Shearin v. E.F. Hutton Group, Inc., 885 F.2d 1162. 18 U.S.C.A. 1962(d), 1964(c); Restatement (Second) of Torts 876 The Racketeer Influenced and Corrupt Organizations Act (RICO) creates a civil cause of action for [a]ny person injured in his business or property by reason of a violation of section 1962. 18 U.S.C. 1964(c). Subsection (d) of 1962 forbids any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of [ 1962]. Petitioner is a former president, CEO, director, and shareholder of Southeastern Insurance Group (SIG). Respondents are former senior officers and directors of SIG who allegedly conspired to, and did, engage in acts of racketeering. Petitioner alleged that after he discovered respondents' unlawful conduct and contacted regulators, respondents orchestrated a scheme to remove him from the company. Petitioner sued respondents, asserting, among other things, a 1964(c) cause of action for respondents' alleged conspiracy to violate 1962(a), (b), and (c). Petitioner alleged that his injury was proximately caused by an overt act-namely, the termination of his employmentdone in furtherance of respondents' conspiracy, and that 1964(c) therefore provided a cause of action. The District Court dismissed his RICO conspiracy claim, agreeing with respondents that employees who are terminated for refusing to participate in RICO activities, or who threaten to report RICO activities, do not have standing to sue under RICO for damages from their loss of employment. [must be injury to business or property] In affirming, the Eleventh Circuit held that, because the overt act causing petitioner's injury was not an act of racketeering, it could not support a 1964(c) cause of action. Held: Injury caused by an overt act that is not an act of racketeering or otherwise wrongful under RICO does not give rise to a cause of action under 1964(c) for a violation of 1962(d). To determine what it means to be injured ... by reason of a conspir[acy], this Court must look to the common law of civil conspiracy. At common law, it was widely accepted that a plaintiff could bring suit for civil conspiracy only if he had been injured by an act that was itself tortious. When Congress adopted RICO, it incorporated this principle. As at common law, a civil conspiracy plaintiff cannot bring suit under RICO based on injury caused by any act in furtherance of a conspiracy that might have caused the plaintiff injury. Rather, such plaintiff must allege injury from an act that is analogous to an ac[t] of a tortious character, see 4 *495Restatement (Second) of Torts, 876, Comment b, meaning an act that is independently wrongful under RICO. The specific type of act that is analogous to an act of a tortious character may depend on the underlying substantive violation the defendant is alleged to have committed. Because respondents' alleged overt act in furtherance of their conspiracy was not an act of racketeering and is not independently wrongful under any substantive provision of the statute, petitioner does not have a cause of action under 1964(c). Pp. 1613-1617. 162 F.3d 1090, affirmed. THOMAS, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and O'CONNOR, SCALIA, KENNEDY, GINSBURG, and BREYER, JJ., joined. STEVENS, J., filed a dissenting opinion, in which SOUTER, J., joined, post, p. 1617. Justice THOMAS delivered the opinion of the Court.

The Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-1968 (1994 ed. and Supp. IV), creates a civil cause of action for [a]ny person injured in his business or property by reason of a violation of section 1962. 18 U.S.C. 1964(c) (1994 ed., Supp. IV). Subsection (d) of 1962 in turn provides that [i]t shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of [ 1962]. The question before us is whether a person injured by an overt act done in furtherance*496 of a RICO conspiracy has a cause of action under 1964(c), even if the overt act is not an act of racketeering. We conclude that such a person does not have a cause of action under 1964(c). I A Congress enacted RICO as Title IX of the Organized Crime Control Act of 1970, Pub.L. 91-452, 84 Stat. 922, for the purpose of seek[ing] the eradication of organized crime in the United States, id., at 923. Congress found that organized crime in the United States [had become] a highly sophisticated, diversified, and widespread activity that annually drain[ed] billions of dollars from America's economy by unlawful conduct and the illegal use of force, fraud, and corruption. Id., at 922. The result was to weaken the stability of the Nation's economic system, harm innocent investors and competing organizations, interfere with free competition, seriously burden interstate and foreign commerce, threaten the domestic security, and undermine the general welfare of the Nation and its citizens. Id., at 923. Finding the existing sanctions and remedies available to the Government [to be] unnecessarily limited in scope and impact, Congress resolved to address the problem of organized crime by strengthening the legal tools in the evidence-gathering process, by establishing new penal prohibitions, and by providing enhanced sanctions and new remedies to deal with the unlawful activities of those engaged in organized crime. Ibid. RICO attempts to accomplish these goals by providing severe criminal penalties for violations of 1962, see 1963, and also by means of a civil cause of action for any person injured in his business or property by reason of a violation of section 1962, 18 U.S.C. 1964(c) (1994 ed., Supp. IV). FN1 *497 Section 1962, in turn, consists of four subsections: Subsection (a) makes it unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity or through collection of an unlawful debt ... to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce; FN2subsection (b) makes it unlawful for any person through a pattern **1612 of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce; subsection (c) makes it 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 or collection of unlawful debt; and, finally, subsection (d) makes it unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section. FN1. RICO also authorizes the Government to bring civil actions to prevent and restrain violations of 1962. 18 U.S.C. 1964(a) and (b). FN2. Section 1961(1) contains an exhaustive list of acts of racketeering, commonly referred to as predicate acts. This list includes extortion, mail fraud, and wire fraud, which were among the 50 separate acts of racketeering alleged by petitioner. Section 1961(4) defines enterprise as any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity. B [1] Petitioner, Robert A. Beck II, is a former president, CEO, director, and shareholder of **Southeastern Insurance Group (SIG).FN3 Respondents, Ronald M. Prupis, Leonard Bellezza, *498 William Paulus, Jr., Ernest S. Sabato, Harry Olstein, Frederick C. Mezey, and Joseph S. Littenberg, are former senior officers and directors of SIG. Until 1990, when it declared bankruptcy, SIG was a Florida insurance holding company with three operating subsidiaries, each of which was engaged in the business of writing surety bonds for construction contractors.

FN3. On review of the Court of Appeals' affirmance of summary judgment for respondents, we accept as true the evidence presented by petitioner. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Beginning in or around 1987, certain directors and officers of SIG, including respondents, began engaging in acts of racketeering. They created an entity called Construction Performance Corporation, which demanded fees from contractors in exchange for qualifying them for SIG surety bonds. Respondents also diverted corporate funds to personal uses and submitted false financial statements to regulators, shareholders, and creditors. During most of the time he was employed at SIG, petitioner was unaware of these activities. In early 1988, however, petitioner discovered respondents' unlawful conduct and contacted regulators concerning the financial statements. Respondents then orchestrated a scheme to remove petitioner from the company. They hired an insurance consultant to write a false report suggesting that petitioner had failed to perform his material duties. The day after this report was presented to the SIG board of directors, the board fired petitioner, relying on a clause in his contract providing for termination in the event of an inability or substantial failure to perform [his] material duties. App. 104. Petitioner sued respondents, asserting, among other things, a civil cause of action under 1964(c).FN4 In particular, petitioner claimed that respondents used or invested income derived from a pattern of racketeering activity to establish and operate an enterprise, in violation of 1962(a); acquired and maintained an interest in *499 and control of their enterprise through a pattern of racketeering activity, in violation of 1962(b); engaged in the conduct of the enterprise's affairs through a pattern of racketeering activity, in violation of 1962(c); and, most importantly for present purposes, conspired to commit the aforementioned acts, in violation of 1962(d). With respect to this last claim, petitioner's theory was that his injury was proximately caused by an overt act-namely, the termination of his employment-done in furtherance of respondents' conspiracy, and that 1964(c) therefore provided a cause of action. Respondents filed a motion for summary judgment, arguing**1613 that employees who are terminated for refusing to participate in RICO activities, or who threaten to report RICO activities, do not have standing to sue under RICO for damages from their loss of employment. The District Court agreed and dismissed petitioner's RICO conspiracy claim. The Court of Appeals affirmed, holding that a cause of action under 1964(c) for a violation of 1962(d) is not available to a person injured by an overt act in furtherance of a RICO conspiracy unless the overt act is an act of racketeering. 162 F.3d 1090, 1098 (C.A.11 1998). Since the overt act that allegedly caused petitioner's injury was not an act of racketeering, see 1961(1), it could not support a civil cause of action. The court held, RICO was enacted with an express target-racketeering activity-and only those injuries that are proximately caused by racketeering activity should be actionable under the statute. Ibid. FN5 FN4. Petitioner's lawsuit was originally brought as a cross-claim in a shareholders' derivative suit filed against SIG officers and directors, including petitioner, in the United States District Court for the District of New Jersey. The New Jersey District Court severed petitioner's claims and transferred them to the Southern District of Florida. FN5. Although petitioner alleged violations of 1962(a), (b), and (c), the Court of Appeals concluded that he had presented no evidence of violations of subsections (a) and (b). It therefore treated each of petitioner's substantive RICO claims as alleging a violation of 1962(c). 162 F.3d, at 1095, n. 8. The court held that petitioner did not present evidence regarding elements of his 1962(c) claims and therefore affirmed the District Court's order granting summary judgment for respondents with respect to those claims. Id., at 1095-1098. Petitioner does not challenge the Court of Appeals' conclusion with respect to his claims under 1962(a)-(c). *500 We granted certiorari, 526 U.S. 1158, 119 S.Ct. 2046, 144 L.Ed.2d 213 (1999), to resolve a conflict among the Courts of Appeals on the question whether a person injured by an overt act in furtherance of a conspiracy may assert a civil RICO conspiracy claim under 1964(c) for a violation of 1962(d) even if the overt act does not constitute racketeering activity. The majority of the Circuits to consider this question have answered it in the negative. See, e.g., Bowman v. Western Auto Supply Co., 985 F.2d 383, 388(C.A.8), cert. denied, 508 U.S. 957, 113 S.Ct. 2459, 124 L.Ed.2d 674 (1993); Miranda v. Ponce Fed. Bank, 948 F.2d 41, 48 (C.A.1 1991); Reddy v. Litton Indus., Inc., 912 F.2d 291, 294-295 (C.A.9 1990), cert. denied, 502 U.S. 921, 112 S.Ct. 332, 116 L.Ed.2d 272 (1991); Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 25 (C.A.2 1990). Other Circuits have allowed RICO conspiracy claims where the overt act was, as in the instant case, merely the termination of employment, and was not, therefore, racketeering activity. See, e.g., Khurana v. Innovative Health Care Systems, Inc., 130 F.3d 143, 153-

154 (C.A.5 1997), vacated sub nom. Teel v. Khurana, 525 U.S. 979, 119 S.Ct. 442, 142 L.Ed.2d 442 (1998); Schiffels v. Kemper Financial Services, Inc., 978 F. 2d 344, 348-349 ( C.A. 7 1992); Shearin v. E.F. Hutton Group, Inc., 885 F.2d 1162, 1168-1169 (C.A.3 1989). II [2][3] This case turns on the combined effect of two provisions of RICO that, read in conjunction, provide a civil cause of action for conspiracy. Section 1964(c) states that a cause of action is available to anyone injured ... by reason of a violation of section 1962. Section 1962(d) makes it unlawful for a person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section. To determine what it means to be injured ... by reason of a conspir[acy], we turn to the well-established common law of civil conspiracy. As we have said, when Congress uses language with a settled meaning at common law, Congress *501 presumably knows and adopts the cluster of ideas that were attached to each borrowed word in the body of learning from which it was taken and the meaning its use will convey to the judicial mind unless otherwise instructed. In such case, absence of contrary direction may be taken as satisfaction with widely accepted definitions, not as a departure from them. **1614Morissette v. United States, 342 U.S. 246, 263, 72 S.Ct. 240, 96 L.Ed. 288 (1952). See Molzof v. United States, 502 U.S. 301, 307, 112 S.Ct. 711, 116 L.Ed.2d 731 (1992) (quoting Morissette, supra, at 263, 72 S.Ct. 240); NLRB v. Amax Coal Co., 453 U.S. 322, 329, 101 S.Ct. 2789, 69 L.Ed.2d 672 (1981) .
FN6

FN6. Petitioner suggests that we should look to criminal, rather than civil, common-law principles to interpret the statute. We have turned to the common law of criminal conspiracy to define what constitutes a violation of 1962(d), see Salinas v. United States, 522 U.S. 52, 63-65, 118 S.Ct. 469, 139 L.Ed.2d 352 (1997), a mere violation being all that is necessary for criminal liability. This case, however, does not present simply the question of what constitutes a violation of 1962(d), but rather the meaning of a civil cause of action for private injury by reason of such a violation. In other words, our task is to interpret 1964(c) and 1962(d) in conjunction, rather than 1962(d) standing alone. The obvious source in the common law for the combined meaning of these provisions is the law of civil conspiracy. By the time of RICO's enactment in 1970, it was widely accepted that a plaintiff could bring suit for civil conspiracy only if he had been injured by an act that was itself tortious. See, e.g., 4 Restatement (Second) of Torts 876, Comment b (1977) (The mere common plan, design or even express agreement is not enough for liability in itself, and there must be acts of a tortious character in carrying it into execution); W. Prosser, Law of Torts 46, p. 293 (4th ed. 1971) (It is only where means are employed, or purposes are accomplished, which are themselves tortious, that the conspirators who have not acted but have promoted the act will be held liable (footnotes omitted)); Satin v. Satin, 69 A.D.2d 761, 762, 414 N.Y.S.2d 570 (1979) (Memorandum Decision) (There is no tort of civil conspiracy in and of itself. There must first be pleaded specific wrongful acts which might constitute*502 an independent tort); Cohen v. Bowdoin, 288 A.2d 106, 110 (Me.1972) ( [C]onspiracy fails as the basis for the imposition of civil liability absent the actual commission of some independently recognized tort; and when such separate tort has been committed, it is that tort, and not the fact of combination, which is the foundation of the civil liability); Earp v. Detroit, 16 Mich.App. 271, 275, 167 N.W.2d 841, 845 (1969) (Recovery may be had from parties on the theory of concerted action as long as the elements of the separate and actionable tort are properly proved); Mills v. Hansell, 378 F.2d 53 (C.A.5 1967) (per curiam) (affirming dismissal of conspiracy to defraud claim because no defendant committed an actionable tort); J. & C. Ornamental Iron Co. v. Watkins, 114 Ga.App. 688, 691, 152 S.E.2d 613, 615 (1966) ([The plaintiff] must allege all the elements of a cause of action for the tort the same as would be required if there were no allegation of a conspiracy); Lesperance v. North American Aviation, Inc., 217 Cal.App.2d 336, 345, 31 Cal.Rptr. 873, 878 (1963) ([C]onspiracy cannot be made the subject of a civil action unless something is done which without the conspiracy would give a right of action (internal quotation marks omitted)); Middlesex Concrete Products & Excavating Corp. v. Carteret Indus. Assn., 37 N.J. 507, 516, 181 A.2d 774, 779 (1962) ([A] conspiracy cannot be made the subject of a civil action unless something has been done which, absent the conspiracy, would give a right of action); Chapman v. Pollock, 148 F.Supp. 769, 772 (W.D.Mo.1957) (holding that a plaintiff who charged the defendants with conspiring to perpetrate an unlawful

purpose could not recover because the defendants committed no unlawful act); Olmsted, Inc. v. Maryland Casualty Co., 218 Iowa 997, 998, 253 N.W. 804 (1934) ([A] conspiracy cannot be the subject of a civil action unless something is done pursuant to it which, without the conspiracy, would give a right of action); Adler v. Fenton, 65 U.S. 407, 24 How. 407, 410, 16 L.Ed. 696 (1860) ([T]he act must be tortious, and there must be consequent damage). **1615 *503 Consistent with this principle, it was sometimes said that a conspiracy claim was not an independent cause of action, but was only the mechanism for subjecting co-conspirators to liability when one of their member committed a tortious act. Royster v. Baker, 365 S.W.2d 496, 499, 500 (Mo.1963) ([A]n alleged conspiracy by or agreement between the defendants is not of itself actionable. Some wrongful act to the plaintiff's damage must have been done by one or more of the defendants, and the fact of a conspiracy merely bears on the liability of the various defendants as joint tort-feasors). See Halberstam v. Welch, 705 F.2d 472, 479 (C.A.D.C.1983) ( Since liability for civil conspiracy depends on performance of some underlying tortious act, the conspiracy is not independently actionable; rather, it is a means for establishing vicarious liability for the underlying tort).FN7 FN7. Justice STEVENS quotes from some of the cases we have cited to suggest that the common law allowed recovery from harm caused by any overt act in furtherance of the conspiracy. See post, at 16181619, n. 4 (dissenting opinion). However, his quotations omit pertinent language. When read in context, it is clear that these passages refer to harm, not from any overt act, but only from overt acts that are themselves tortious. Compare ibid. with Adler v. Fenton, 65 U.S. 407, 24 How. 407, 410, 16 L.Ed. 696 (1860) ([I]t must be shown that the defendants have done some wrong, that is, have violated some right of theirs.... [I]n these cases the act must be tortious); Royster v. Baker, 365 S.W.2d 496, 499 (Mo.1963) (Strictly speaking, there has been no distinct form of writ or action of conspiracy; but the action sounds in tort, and is of the nature of an action on the case upon the wrong done under the conspiracy alleged. The gist of the action is not the conspiracy, but the wrong done by acts in furtherance of the conspiracy (citations and internal quotation marks omitted)); Lesperance v. North American Aviation, Inc., 217 Cal.App.2d 336, 345, 31 Cal.Rptr. 873, 878 (1963) ( It is well settled that a conspiracy cannot be made the subject of a civil action unless something is done which without the conspiracy would give a right of action ); Earp v. Detroit, 16 Mich.App. 271, 275, 167 N.W.2d 841, 845 (1969) ( There is no civil action for conspiracy alone. It must be coupled with the commission of acts which damaged the plaintiff. Recovery may be had from parties on the theory of concerted action as long as the elements of the separate and actionable tort are properly proved (citation omitted)); Halberstam v. Welch, 705 F.2d 472, 479 (C.A.D.C.1983) (stating that civil conspiracy requires an overt tortious act in furtherance of the agreement that causes injury.... Since liability for civil conspiracy depends on performance of some underlying tortious act, the conspiracy is not independently actionable; rather, it is a means for establishing vicarious liability for the underlying tort). [4] *504 The principle that a civil conspiracy plaintiff must claim injury from an act of a tortious character was so widely accepted at the time of RICO's adoption as to be incorporated in the common understanding of civil conspiracy. See Ballentine's Law Dictionary 252 (3d ed. 1969) (It is the civil wrong resulting in damage, and not the conspiracy which constitutes the cause of action); Black's Law Dictionary 383 (4th ed. 1968) ([W]here, in carrying out the design of the conspirators, overt acts are done causing legal damage, the person injured has a right of action (emphasis added)). We presume, therefore, that when Congress established in RICO a civil cause of action for a person injured ... by reason of a conspir[acy], it meant to adopt these well-established common-law civil conspiracy principles. [5][6][7] Justice STEVENS does not challenge our view that Congress meant to incorporate common-law principles when it adopted RICO. Nor does he attempt to make an affirmative case from the common law for his reading of the statute by pointing to a case in which there was (a) an illegal agreement; (b) injury proximately caused to the plaintiff by a nontortious overt act in furtherance of the agreement; and (c) recovery by the plaintiff. See post, at 1618. Instead, he argues only that courts, authoritative commentators, and even dictionaries repeatedly articulated a rule with no meaning or application. FN8 We find this argument to be implausible **1616 *505 and, accordingly, understand RICO to adopt the common-law principles we have cited. Interpreting the statute in a way that is most consistent with these principles, we conclude that injury caused by an overt act that is not an act of

racketeering or otherwise wrongful under RICO, see n. 7, supra, is not sufficient to give rise to a cause of action under 1964(c) for a violation of 1962(d). As at common law, a civil conspiracy plaintiff cannot bring suit under RICO based on injury caused by any act in furtherance of a conspiracy that might have caused the plaintiff injury. Rather, consistency with the common law requires that a RICO conspiracy plaintiff allege injury from an act that is analogous to an ac[t] of a tortious character, see 4 Restatement (Second) of Torts 876, Comment b, meaning an act that is independently*506 wrongful under RICO. The specific type of act that is analogous to an act of a tortious character may depend on the underlying substantive violation the defendant is alleged to have committed.FN9 However, respondents' alleged overt act in furtherance of their conspiracy is not independently wrongful under any substantive provision of the statute. Injury caused by such an act is not, therefore, sufficient to give rise to a cause of action under 1964(c).FN10 FN8. We disagree, moreover, with Justice STEVENS' interpretation of the grounds for decision in some of the cases we have cited. For example, Justice STEVENS reads Mills v. Hansell, 378 F.2d 53 (C.A.5 1967) (per curiam), and Chapman v. Pollock, 148 F.Supp. 769, 772 (W.D.Mo.1957), to deny recovery for conspiracy because the defendants had not entered into an unlawful agreement. See post, at 1618. We think the opinions, and the language cited from these opinions by Justice STEVENS, make clear that recovery was denied because the defendants had committed no actionable tort, regardless of whether they agreed to commit any such act. See ibid. Likewise, Justice STEVENS reads J. & C. Ornamental Iron Co. v. Watkins, 114 Ga.App. 688, 691, 152 S.E.2d 613, 615 (1966), to deny recovery because the plaintiff had suffered no injury. However, in that case, the plaintiff's conspiracy claim was predicated on several alleged torts including fraud, trespass, and malicious interference. Ibid. While the court held that the plaintiff could not recover for conspiracy to maliciously interfere because he had suffered no injury, the plaintiff's remaining conspiracy allegations were insufficient because the plaintiff did not allege all the elements of a cause of action for the tort the same as would be required if there were no allegation of a conspiracy. Ibid. Further, Justice STEVENS chides us for citing cases in which the court allowed recovery. But in two of these cases the court explicitly grounded its decision on the fact that the plaintiff had identified an actionable independent tort on which the conspiracy claim could be based. See Cohen v. Bowdoin, 288 A.2d 106, 110 (Me.1972) ([I]f [the plaintiff's conspiracy claim] is to be upheld as stating a claim upon which relief can be granted, it must be on the ground that the complaint sufficiently alleges the actual commission of the separate and independent tort of defamation against the plaintiff); Middlesex Concrete Products & Excavating Corp. v. Carteret Indus. Assn., 37 N.J. 507, 516, 181 A.2d 774, 779 (1962) (holding that the plaintiffs stated a claim for conspiracy because they alleged an actionable tort). In short, we think that there is ample evidence of the common-law rule we have cited. FN9. For example, most courts of appeals have adopted the so-called investment injury rule, which requires that a plaintiff suing for a violation of 1962(a) allege injury from the defendant's use or invest [ment] of income derived from racketeering activity, see 1962(a). See, e.g., Crowe v. Henry, 43 F.3d 198, 205 (C.A.5 1995); Vemco, Inc. v. Camardella, 23 F.3d 129, 132 (C.A.6) (collecting cases), cert. denied, 513 U.S. 1017, 115 S.Ct. 579, 130 L.Ed.2d 495 (1994). Although we express no view on this issue, arguably a plaintiff suing for a violation of 1962(d) based on an agreement to violate 1962(a) is required to allege injury from the use or invest[ment] of illicit proceeds. FN10. Respondents argue that a 1962(d) claim must be predicated on an actionable violation of 1962(a)-(c). However, the merit of this view is a different (albeit related) issue from the one on which we granted certiorari, namely, whether a plaintiff can bring a 1962(d) claim for injury flowing from an overt act that is not an act of racketeering. Therefore, contrary to Justice STEVENS' suggestion, see post, at 1619-1620, we do not resolve whether a plaintiff suing under 1964(c) for a RICO conspiracy must allege an actionable violation under 1962(a)-(c), or whether it is sufficient for the plaintiff to allege an agreement to complete a substantive violation and the commission of at least one act of racketeering that caused him injury. **1617 Petitioner challenges this view of the statute under the longstanding canon of statutory construction that terms in a statute should not be construed so as to render any provision of that statute meaningless or superfluous. He asserts that under our view of the statute, any person who had a claim for a violation of 1962(d) would necessarily have a claim for a violation of 1962(a), (b), or (c). However, contrary to petitioner's assertions, our

interpretation of 1962(d) does not render it mere surplusage. Under our interpretation, a plaintiff could, through a 1964(c) suit for a violation of *507 1962(d), sue co-conspirators who might not themselves have violated one of the substantive provisions of 1962. III We conclude, therefore, that a person may not bring suit under 1964(c) predicated on a violation of 1962(d) for injuries caused by an overt act that is not an act of racketeering or otherwise unlawful under the statute. The judgment of the Court of Appeals is affirmed.

Ashland Oil, Inc. v. Arnett, 875 F.2d 1271, RICO Bus.Disp.Guide 7213 (7th Cir.(Ind.),May 16, 1989)

Discussion of the intracoporate conspiracy.

Oil suppliers brought suit against distributor, distributor's principals, and accountant which prepared distributor's financial statement for defendants' alleged RICO violations and common-law fraud. The United States District Court for the Northern District of Indiana, Allen Sharp, Chief Judge, entered judgment against distributor and distributor's principals on RICO claims and granted accountant's motion for directed verdict on common-law fraud claim, and appeal was taken. The Court of Appeals, Fairchild, Senior Circuit Judge, held that: (1) predicate acts of arson, bankruptcy, and wire fraud committed over four-month period to deprive four different petroleum companies of oil were sufficiently continuous to constitute a pattern of racketeering activity, notwithstanding that acts were all part of single scheme; (2) distributor qualified as RICO enterprise; and (3) whether the supplier had reasonably relied on unauditied financial statement prepared by accountant was question for jury. Affirmed in part, reversed in part and remanded. See also, 656 F.Supp. 950. [1] Racketeer Influenced and Corrupt Organizations 319H 28

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk28 k. Continuity or Relatedness; Ongoing Activity. Most Cited Cases (Formerly 83k82.71) Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk29 k. Time and Duration. Most Cited Cases (Formerly 83k82.71) Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 30 29

319Hk30 k. Number of Persons Involved or Victimized. Most Cited Cases (Formerly 83k82.71) Predicate acts of **arson, **bankruptcy and **wire fraud committed over four-month period to deprive four different petroleum companies of oil by conveying fraudulent picture of distributor's net worth were sufficiently continuous to constitute a pattern of racketeering activity, notwithstanding that acts were all part of single scheme. 18 U.S.C.A. 1961(5). [2] Racketeer Influenced and Corrupt Organizations 319H 26

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk26 k. Number of Predicate Acts. Most Cited Cases (Formerly 83k82.70) Racketeer Influenced and Corrupt Organizations 319H 31

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk31 k. Multiple Mailings or Communications; Mail or Wire Fraud. Most Cited Cases (Formerly 83k82.70) Sheer number of predicate acts committed is never enough to establish requisite RICO pattern, at least not where only predicate acts alleged are mail and wire fraud. 18 U.S.C.A. 1961(5). [3] Racketeer Influenced and Corrupt Organizations 319H 27

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk27 k. Number of Schemes, Goals, Episodes, or Transactions. Most Cited Cases (Formerly 83k82.70) Mere fact that predicate acts relate to same overall scheme does not necessarily mean that acts failed to satisfy RICO pattern requirement. 18 U.S.C.A. 1961(5). [4] Racketeer Influenced and Corrupt Organizations 319H 63

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk56 Persons Entitled to Sue or Recover 319Hk63 k. Separate or Distinct Racketeering or Criminal Enterprise Injury. Most Cited Cases (Formerly 83k82.72) Oil suppliers that sustained injury significantly different from those of distributor's other creditors, when distributor fraudulently obtained large quantity of oil from suppliers and diverted it to other concerns prior to filing for bankruptcy relief, had standing to bring civil RICO action for damages they sustained as result. 18 U.S.C.A.

1962(c), 1964(c). [5] Racketeer Influenced and Corrupt Organizations 319H 38

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk38 k. Separateness from Predicate Acts, Pattern, or Persons. Most Cited Cases (Formerly 83k82.71) Oil company which employed several individuals **other than officers who conspired to operate it through pattern of racketeering activity was sufficiently distinct from officers to constitute RICO enterprise. 18 U.S.C.A. 1961(4). [6] Conspiracy 91 2

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k1 Nature and Elements in General 91k2 k. Combination. Most Cited Cases Corporation may conspire, even with its own officers, to conduct another enterprise's affairs through a pattern of racketeering activity and may, on that basis, be liable under RICO. 18 U.S.C.A. 1962(c). [10] Accountants 11A 10.1

11A Accountants 11Ak10 Actions 11Ak10.1 k. In General. Most Cited Cases (Formerly 11Ak10) Fraud 184 64(5)

184 Fraud 184II Actions 184II(F) Trial 184k64 Questions for Jury 184k64(5) k. Reliance on Representations and Inducement to Act. Most Cited Cases Whether oil supplier had reasonably relied on unaudited financial statement prepared by accountant in supplying distributor with oil was question for jury, in supplier's fraud action against distributor and accountant. Brady v. Dairy Fresh Products Co., 974 F.2d 1149, RICO Bus.Disp.Guide 8082 (9th Cir.(Cal.),Sep 09, 1992)

Respondeat superior applies under RICO 18 U.S.C. 1962

Webster v. Omnitrition Intern., Inc., 79 F.3d 776, Fed. Sec. L. Rep. P 99,071, RICO Bus.Disp.Guide 9274, 96 Cal. Daily Op. Serv. 1419, 96 Daily Journal D.A.R. 2427 (9th Cir.(Cal.) Mar 04, 1996)

Intracorporate conspiracy principal does not prevent an 18 U.S.C. 1962(d) cause of action. It is possible for corporation to engage in

RICO conspiracy with its own officers and representatives.

Distributors of company's health and skin care products, who had lost money, brought suit against company and its principals, alleging existence of illegal pyramid scheme. The United States District Court for the Northern District of California, Saundra Brown Armstrong, J., granted summary judgment to defendants and appeal was taken. The Court of Appeals, Beezer, Circuit Judge, held that: (1) material issues of fact, precluding summary judgment, existed as to whether arrangement under which distributors wishing to attain status of supervisor purchased large quantities of merchandise, and were to receive commissions on purchases made by later recruited distributors, was a pyramid scheme by virtue of emphasizing remuneration through personnel recruitment rather than product sales; (2) result was not changed by existence of some safeguards purporting to require that there be sales to ultimate users supporting increases in distribution force; (3) material issues of fact, precluding summary judgment, existed as to whether federal securities laws had been violated in connection with creation of scheme; **(4) material issues of fact, precluding summary judgment, existed as to whether Racketeer Influenced and Corrupt Organizations Act (RICO) had been violated; (5) material issues of fact, precluding summary judgment, existed as to whether state laws prohibiting endless chain marketing schemes have been violated; (6) material issues of fact, precluding summary judgment existed as to whether state law prohibiting use of false or deceptive marketing practices had been violated; (7) statute of limitations had run on federal securities law claims against attorney who had advised company in creation of scheme; (8) attorney had not violated RICO; and (9) material issues of fact, precluding summary judgment, existed as to whether attorney had made an actionable false representation under state law. Affirmed in part; reversed in part and remanded. [2] Antitrust and Trade Regulation 29T 231

29T Antitrust and Trade Regulation 29TIII Statutory Unfair Trade Practices and Consumer Protection 29TIII(C) Particular Subjects and Regulations 29Tk231 k. Pyramid, chain, or referral sale plans. Most Cited Cases (Formerly 92Hk12 Consumer Protection) Sine qua non of pyramid scheme is right to receive, in return for recruiting other participants into product sales program, rewards unrelated to sale of product to ultimate users. [3] Federal Civil Procedure 170A 2491.9

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(C) Summary Judgment 170AXVII(C)2 Particular Cases 170Ak2491.9 k. Consumer protection and unfair trade practices, cases involving. Most Cited Cases (Formerly 170Ak2481) Material issues of fact, precluding summary judgment, existed as to whether company's system for selling vitamin and skin care products was an illegal pyramid scheme, even though company claimed it had safeguards which prevented recruitment of new distributors from outpacing revenues derived from product sales, precluding necessary pyramid scheme finding that revenues were obtained from distributor recruitment rather than product sales; requirement that distributor certify sales to ten customers per month was insufficient to insure that product sales revenue supported increases in numbers of distributors, there was no indication that company was enforcing another rule requiring that distributors have sold 70 percent of products previously purchased, and there was no showing that company enforced its buy-back rule, under which company was to repurchase inventory of retiring distributors at 90 percent of invoice price, on merchandise less than three months old.

[4] Securities Regulation 349B

5.24

349B Securities Regulation 349BI Federal Regulation 349BI(A) In General 349Bk5 Securities, What Are 349Bk5.24 k. Distributorships; pyramid schemes. Most Cited Cases Scheme under which distributors of health and skin care products could become supervisors by purchasing specified large amount of product, and would then be entitled to commissions on purchases made by distributors they recruited, was an investment contract for purposes of federal securities laws even though company claimed that distributors received revenue from program based on their own hard work rather than efforts of others, as was case with investment contracts; distributors' efforts were essentially managerial, and success of scheme involved efforts of other persons actually selling product. Securities Act of 1933, 12(1, 2), 15 U.S.C.A. 77l (1, 2); Securities Exchange Act of 1934, 10(b), 15 U.S.C.A. 78j(b); 17 CFR 240.10b-5(c). [5] Federal Civil Procedure 170A 2511

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(C) Summary Judgment 170AXVII(C)2 Particular Cases 170Ak2511 k. Securities cases in general. Most Cited Cases Material issues of fact, precluding summary judgment, existed as to whether promoters of scheme to distribute health and skin care products had made misrepresentations, in violation of federal securities law; assuming that arrangement under which distributors could become supervisors by purchasing large quantity of merchandise, and could receive commissions on purchases of merchandise made by later recruited distributors, was ultimately found to involve an investment control, promoters would be deemed to have made misrepresentation by failing to inform prospective distributors that pyramid scheme was involved and that persons who became distributors late in life of scheme would be sure to lose money. Securities Act of 1933, 12(1, 2), 15 U.S.C.A. 77l (1, 2); Securities Exchange Act of 1934, 10(b), 15 U.S.C.A. 78j(b); 17 CFR 240.10b-5(c). [6] Securities Regulation 349B 60.19

349B Securities Regulation 349BI Federal Regulation 349BI(C) Trading and Markets 349BI(C)7 Fraud and Manipulation 349Bk60.17 Manipulative, Deceptive or Fraudulent Conduct 349Bk60.19 k. Particular conduct. Most Cited Cases **Operation of pyramid scheme violates rule 10b-5 prohibition against engaging in act, practice or course of business which operates as fraud of deceit upon any person. 17 C.F.R. 240.10b-5. [7] Federal Civil Procedure 170A 2509.5

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(C) Summary Judgment 170AXVII(C)2 Particular Cases 170Ak2509.5 k. Racketeering cases. Most Cited Cases (Formerly 170Ak2481)

Material issues of fact, precluding summary judgment, existed as to whether company had violated Racketeer Influenced and Corrupt Organizations Act (RICO) by operating illegal pyramid scheme of product distribution, involving creation of classes of supervisors who purchased large quantities of merchandise and received commissions on purchases made by distributors subsequently recruited by them; there were fact questions as to whether conduct of company involved mail and wire fraud or securities fraud, creating triable fact issue as to whether there were predicate acts to support RICO claim. 18 U.S.C.A 1961(1)(B, D). [8] Federal Civil Procedure 170A 2509.5

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(C) Summary Judgment 170AXVII(C)2 Particular Cases 170Ak2509.5 k. Racketeering cases. Most Cited Cases (Formerly 170Ak2481) Material issues of fact, precluding summary judgment, existed as to whether company violated Racketeer Influenced and Corrupt Organizations Act (RICO) in distribution of its health and skin care products, even though it was claimed that alleged predicate acts of mail and wire fraud relating to recruitment by supervisors of other distributors for whom supervisors were given commission credit, in furtherance of pyramid scheme, did not show intent to defraud; facts showing creation and operation of pyramid were indicative themselves of specific intent to defraud, for summary judgment purposes. 18 U.S.C.A 1961(1)(B, D). [9] Federal Civil Procedure 170A 2509.5

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(C) Summary Judgment 170AXVII(C)2 Particular Cases 170Ak2509.5 k. Racketeering cases. Most Cited Cases (Formerly 170Ak2481) Material issues of fact, precluding summary judgment that Racketeer Influenced and Corrupt Organizations Act (RICO) had been violated, existed as to whether RICO's enterprise requirement was satisfied by company's distribution arrangement for its health and skin care products, involving creation of alleged pyramid scheme in connection with recruitment of distributors; while RICO mandated that enterprise be shown to exist separate and apart from alleged racketeering activity, corporation itself could serve as that separate entity. 18 U.S.C.A 1961(1) (B, D). [10] Conspiracy 91 2

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k1 Nature and Elements in General 91k2 k. Combination. Most Cited Cases **It is possible for corporation to engage in RICO conspiracy with its own officers and representatives. 18 U.S.C.A. 1962(d).

Living Designs, Inc. v. E.I. Dupont de Nemours and Co., 431 F.3d 353, RICO Bus.Disp.Guide 10,975, 35 Envtl. L. Rep. 20,246, 05 Cal. Daily Op. Serv. 10,160, 2005 Daily Journal D.A.R. 13,922 (9th Cir. (Hawai'i),Dec 05, 2005) Background: Commercial nurserymen brought action alleging that fungicide manufacturer, alleging that manufacturer fraudulently concealed adverse testing data in order to obtain favorable settlement of claims against it in prior products liability litigation. The United States District Court for the District of Hawaii, Manuel L. Real, J., 330 F.Supp.2d 1101, granted manufacturer's motions for judgment on pleadings and for summary judgment, and nurserymen appealed. Holdings: The Court of Appeals, Thomas, Circuit Judge, held that: (1) summary judgment in favor of manufacturer was precluded on Racketeer Influenced and Corrupt Organizations Act (RICO) claim; (2) summary judgment in favor of manufacturer was precluded on fraud claims under Hawaii law; and (3) reassignment of case was advisable to preserve the appearance of justice. Reversed and remanded. West Headnotes [1] Racketeer Influenced and Corrupt Organizations 319H 38 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk38 k. Separateness from Predicate Acts, Pattern, or Persons. Most Cited Cases To establish liability under Racketeer Influenced and Corrupt Organizations Act (RICO), one must allege and prove the existence of two distinct entities: **(1) a person, and **(2) an enterprise that is not simply the same person referred to by a different name. 18 U.S.C.A. 1962(c). [2] Racketeer Influenced and Corrupt Organizations 319H 39 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk39 k. Particular Enterprises. Most Cited Cases Racketeer Influenced and Corrupt Organizations Act (RICO) enterprise allegedly formed by manufacturer, the law firms it employed in defending products liability action, and the expert witnesses that the law firms retained was separate and distinct from manufacturer, the RICO person alleged to have fraudulently concealed adverse testing data in order to obtain favorable settlement of claims against it in prior products liability litigation; the associated in fact enterprise formed by the union was a being different from, not the same as or part of, the person whose behavior RICO was designed to prohibit. 18 U.S.C.A. 1962(c). [3] Racketeer Influenced and Corrupt Organizations 319H 62 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings

319Hk56 Persons Entitled to Sue or Recover 319Hk62 k. Causal Relationship; Direct or Indirect Injury. Most Cited Cases To maintain a civil Racketeer Influenced and Corrupt Organizations Act (RICO) claim predicated on mail or wire fraud, a plaintiff must show that the defendants' alleged misconduct proximately caused the injury. 18 U.S.C.A. 1964(c). [4] Federal Civil Procedure 170A 2509.5 170A Federal Civil Procedure 170AXVII Judgment 170AXVII(C) Summary Judgment 170AXVII(C)2 Particular Cases 170Ak2509.5 k. Racketeering Cases. Most Cited Cases Genuine issues of material fact existed as to whether commercial nurserymen reasonably relied on testing data allegedly falsified by fungicide manufacturer in accepting settlement of claims against manufacturer in prior products liability litigation, precluding summary judgment in favor of manufacturer on nurserymen's Racketeer Influenced and Corrupt Organizations Act (RICO) claim based on fraudulent inducement. 18 U.S.C.A. 1964(c). [5] Racketeer Influenced and Corrupt Organizations 319H 59 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk56 Persons Entitled to Sue or Recover 319Hk59 k. Business, Property, or Proprietary Injury; Personal Injuries. Most Cited Cases Court typically looks to state law to determine whether a particular interest amounts to property for purposes of determining whether there was an injury to business or property within the meaning of Racketeer Influenced and Corrupt Organizations Act (RICO). 18 U.S.C.A. 1964(c). [6] Racketeer Influenced and Corrupt Organizations 319H 59 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk56 Persons Entitled to Sue or Recover 319Hk59 k. Business, Property, or Proprietary Injury; Personal Injuries. Most Cited Cases Commercial nurserymen's claim that fungicide manufacturer fraudulently induced them to accept less favorable settlement of their products liability claims based on fraudulently concealed adverse testing data was sufficient allegation of injury to property, under Hawai'i law, to support Racketeer Influenced and Corrupt Organizations Act (RICO) claim. 18 U.S.C.A. 1964(c). [7] Racketeer Influenced and Corrupt Organizations 319H 64 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk64 k. Persons Liable. Most Cited Cases Fungicide manufacturer's alleged falsification, destruction, and misrepresentation of evidence in products liability litigation was not protected by absolute litigation immunity, and thus could form basis of commercial

nurserymen's Racketeer Influenced and Corrupt Organizations Act (RICO) claim arising out of settlement of the products liability litigation. 18 U.S.C.A. 1961(1)(B). [8] Limitation of Actions 241 100(1) 241 Limitation of Actions 241II Computation of Period of Limitation 241II(F) Ignorance, Mistake, Trust, Fraud, and Concealment or Discovery of Cause of Action 241k98 Fraud as Ground for Relief 241k100 Discovery of Fraud 241k100(1) k. In General. Most Cited Cases Civil Racketeer Influenced and Corrupt Organizations Act (RICO) claims based on predicate acts of fraud accrue, for limitations purposes, when plaintiffs have actual or constructive knowledge of defendant's fraud. 18 U.S.C.A. 1964(c). [9] Federal Civil Procedure 170A 2509.5 170A Federal Civil Procedure 170AXVII Judgment 170AXVII(C) Summary Judgment 170AXVII(C)2 Particular Cases 170Ak2509.5 k. Racketeering Cases. Most Cited Cases Genuine issue of material fact existed as to when commercial nurserymen knew of or should have discovered fungicide manufacturer's fraudulent litigation conduct in inducing them to accept a less favorable settlement in prior products liability case, precluding summary judgment in favor of manufacturer on limitations grounds on nurserymen's civil Racketeer Influenced and Corrupt Organizations Act (RICO) claim based on that fraud. 18 U.S.C.A. 1964(c). [10] Fraud 184 25 184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k25 k. Injury and Causation. Most Cited Cases Under Hawaii law, in order to maintain a claim for relief grounded in fraud, the plaintiff must have suffered substantial actual damage, not nominal or speculative. [11] Damages 115 6 115 Damages 115I Nature and Grounds in General 115k6 k. Certainty as to Amount or Extent of Damage. Most Cited Cases Where the fact of damage is established, Hawaii law will not insist upon a higher degree of certainty as to the amount of damages than the nature of the case admits, particularly where the uncertainty was caused by the defendant's own wrongful acts. [12] Federal Civil Procedure 170A 2515 170A Federal Civil Procedure 170AXVII Judgment 170AXVII(C) Summary Judgment

170AXVII(C)2 Particular Cases 170Ak2515 k. Tort Cases in General. Most Cited Cases Genuine issues of material fact existed as to whether commercial nurserymen suffered damages as a result of fungicide manufacturer's fraudulent litigation conduct in prior products liability case, whether alleged manufacturer's fraud was material, and whether they reasonably relied on manufacturer's false representations in accepting a less favorable settlement, precluding summary judgment in favor of manufacturer on nurserymen's fraud claims under Hawaii law. [13] Release 331 37 331 Release 331II Construction and Operation 331k37 k. Covenant Not to Sue or Execute. Most Cited Cases Under Delaware law, covenant not to sue in the settlement agreement between manufacturer and commercial nurserymen in prior case did not bar nurserymen's non-fraud claims stemming from manufacturer's fraudulent litigation conduct in prior case. [14] Negligence 272 222 272 Negligence 272II Necessity and Existence of Duty 272k222 k. Duty Based Upon Statute or Other Regulation. Most Cited Cases Neither Federal Rules of Civil Procedure nor Hawaii Rules of Civil Procedure create duties on which an opposing party may base a negligence claim. Fed.Rules Civ.Proc.Rule 26(e), 28 U.S.C.A.; Haw.Rules Civ.Proc., Rule 26(e). [15] Fraud 184 36 184 Fraud 184II Actions 184II(A) Rights of Action and Defenses 184k36 k. Defenses. Most Cited Cases So long as a cause of action for fraud is asserted, Hawaii's litigation privilege does not protect subsequent litigation asserting other causes of action stemming from the fraud allegedly committed in prior proceedings. [16] Federal Courts 170B 951.1 170B Federal Courts 170BVIII Courts of Appeals 170BVIII(L) Determination and Disposition of Cause 170Bk951 Powers, Duties and Proceedings of Lower Court After Remand 170Bk951.1 k. In General. Most Cited Cases Reassignment of case on remand was advisable to preserve the appearance of justice where visiting district judge, to whom case was reassigned, adopted the findings drafted by the prevailing party wholesale, took the highly unusual step of reversing sub silento the thoughtful certification order previously entered by the district court, and declined to take the Hawaii Supreme Court's opinion, issued in response to the certification request, into consideration. 2. Section 1962 Violations

 5. Generally Home mortgagors allegations against settlement agents, who allegedly participated in mortgage foreclosure rescue scam relating to purported credit repair and refinancing services, were sufficient allegations of injury from predicate acts of mail fraud and wire fraud, for purposes of stating a civil claim for conspiracy to violate Racketeer Influenced and Corrupt Organizations Act (RICO); mortgagors alleged they were charged fees that should not have been charged and that they had their equity-rich homes stolen from them based on illegal services by the enterprises. 18 U.S.C.A. 1962(a, c). Proctor v. Metropolitan Money Store Corp., 645 F. Supp. 2d 464 (D. Md. 2009)

18 U.S.C. 1341 & 1346 Honest services fraud

LaFlamboy v. Landek, 587 F.Supp.2d 914, RICO Bus.Disp.Guide 11,595 (N.D.Ill.,Nov 20, 2008)

18 U.S.C. 1962 (c) Lawyer racketeering as member of the enterprise or as an outsider under Reves v. Ernst
JSC Foreign Economic Ass'n Technostroyexport v. Weiss, 2007 WL 1159637, RICO Bus.Disp.Guide 11,334 (S.D.N.Y.,Apr 18, 2007) OPINION AND ORDER JOHN G. KOELTL, District Judge. *1 The plaintiff, JSC Foreign Economic Association Technostroyexport (Techno), is a Russian Open Joint Stock Corporation that has been involved in litigation for over ten years to obtain and enforce a judgment for more than $200 million against the former New York corporation **International Development and Trade Services, Inc. (IDTS) and its alter egos Edith Reich and Brigitte R. Jossem. The judgment, which confirmed two international arbitration awards and was entered in 1997, arose from a series of contracts Techno entered into in the early 1990s to supply Russian bulk metals to IDTS. IDTS received the metals and resold them through its sales agent Newco AG (Newco), a Swiss corporation, but IDTS failed to pay approximately $200 million that it owed Techno pursuant to these contracts. In a separate 2003 action, this Court granted summary judgment to Techno on its claim that Reich and Jossem diverted millions of dollars from IDTS for their personal use and found that Reich and Jossem were themselves liable for the full amount of the judgment. JSC Foreign Econ. Assoc. Technostroyexport v. Int'l Dev. & Trade Servs., Inc., 386 F.Supp.2d 461, 471-76 (S.D.N.Y.2005). That decision contains an extensive discussion of the facts pertaining to Reich and Jossem's diversion of IDTS funds which need not be repeated here.FN1 FN1. The history of Techno's efforts to enforce its judgment against IDTS, Reich, and Jossem is further detailed in the decision of the Court of Appeals for the Second Circuit affirming the judgment entered against IDTS, AOOT Foreign Econ. Assoc. (VO) Technostroyexport v. Int'l Dev. & Trade Servs., Inc., 139 F.3d 980 (2d Cir.1998), and in other decisions of this Court denying a motion to dismiss a complaint alleging corporate veil-piercing against Reich and Jossem, JSC, 295 F.Supp.2d 366 (S.D.N.Y.2003), and holding Reich and Jossem in civil contempt for violating orders of attachment in connection with that complaint, JSC, 03 Civ. 5562, 2006 WL 1206372 (S.D.N.Y. May 1, 2006) (Reich); JSC, 03 Civ. 5562, 2006 WL 1148110 (S.D.N.Y. Apr. 28, 2006) (Jossem). Techno is also litigating in the New York State Supreme Court to enforce the judgments against additional alter egos of Reich and Jossem. (Compl. 11.) To date, Techno has collected only $7 million of the funds it is owed. (Id. 10.) Techno brings this civil action against **a certified public accountant, Abraham Weiss, and his accounting firm, Weiss & Co., who Techno alleges were members along with Reich, Jossem, and others in a criminal enterprise whose aim was to hide, conceal, and launder the money that Reich and Jossem stole from Techno in the early 1990s, in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-1968. Techno asserts two claims against Weiss and Weiss & Co.: (1) violation of the substantive RICO statute 18 U.S.C. 1962(c), and (2) conspiracy to violate the RICO statute in violation of 18 U.S.C. 1962(d). Jurisdiction is proper

pursuant to 18 U.S.C. 1964. The defendants have moved to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. In connection with that motion, the defendants submitted an affidavit attaching as exhibits fifty-seven documents which the defendants contend Techno had received by late 1998 when it deposed Weiss during its earlier attempts to enforce the judgment entered against IDTS. (Aff. of Sheldon H. Elsen, Oct. 23, 2006.) The defendants argue that Techno relied on these documents in bringing this action and thus that the documents should be considered to determine whether this action is untimely under the fouryear statute of limitations for civil RICO actions. Techno has moved to strike this affidavit and the attached exhibits, as well as factual assertions the defendants made in reference to those exhibits. For the reasons stated below, the motion to dismiss is denied and the motion to strike is denied as moot. I. A. *2 For the purpose of deciding this motion to dismiss, the following facts alleged in the Complaint are accepted as true. Between 1991 and 1993, pursuant to contracts, Techno shipped metals to IDTS with a total value of over $400 million. Reich and Jossem caused IDTS to fail to pay Techo approximately $175 million of the amount owed, and they converted these proceeds to their personal use. (Compl. 49-50.) Reich and Jossem were introduced to Weiss in late 1992 and retained him and his accounting firm Weiss & Co. in January 1993. (Id. 51.) Weiss learned about the IDTS contracts and knew that IDTS failed to remit the proceeds of its metal sales to Techno. Weiss represented IDTS in negotiations with Techno and Newco concerning the IDTS metals contracts. Weiss made several trips to Switzerland to meet with representatives of Newco. (Id.) In maintaining IDTS's books, Weiss and Weiss & Co. failed to account for its revenue and expenditures or record its income accurately. Weiss & Co. prepared false tax returns for IDTS that concealed its revenues and income and exaggerated its expenses. (Id. 52.) Weiss directed the preparation of these tax returns with knowledge that Reich and Jossem would file them with the IRS without changes. (Id.) In a letter dated December 9, 1993, Weiss wrote that IDTS sold the metals it received from Techno through its agent for $389 million. Newco retained some commission and expenses, but it transferred at least $303 million to IDTS. (Id. 53.) However, IDTS's tax returns for the years 1992-94 when these payments were received show gross receipts totaling less than $5 .5 million. The majority of IDTS's proceeds from metal sales were never entered on its books or reported on its corporate tax returns. (Id. 54-55.) With Weiss's knowledge, Reich and Jossem concealed millions of dollars that they stole through IDTS in an IDTS bank account at the United Mizrahi Bank in Switzerland. (Id. 56.) At the request of Reich and Jossem, Weiss reclassified IDTS revenue as loans to Reich and Jossem to conceal these proceeds further. Weiss and Weiss & Co. referred to the loans as Swiss loans. (Id. 57.) **Weiss knew that the Swiss loan funds were revenues of metal sales that should have been remitted to Techno, and he knew that reclassifying them as loans was a means for transferring the funds from Switzerland to Reich and Jossem's accounts in the United States and of avoiding any income tax payments. **Weiss further knew that Reich and Jossem used some of the Swiss loan funds to purchase and renovate four apartments on East 72nd Street in Manhattan, which they have used as their residence since 1994. (Id. 57-58, 68.) Techno alleges on information and belief that at the time when Weiss & Co. prepared tax returns for Reich and Jossem, Weiss knew that Reich had been convicted of wire fraud in connection with a scheme to generate fraudulent orders for auto parts manufactured by Dayco Corp. (Id. 60-61.) Reich filed for personal bankruptcy in September 1984, and the bankruptcy was discharged on February 18, 1995. Weiss knew that Reich was in bankruptcy proceedings. During those proceedings, Weiss knew that Reich received millions of dollars, including at least $14.8 million transferred by Newco to her personal account in Switzerland, yet the 1992 tax return Weiss & Co. prepared

for Reich did not reflect this income. (Id. 62-65.) Because Reich never disclosed these payments to the bankruptcy court or that she had received millions of additional dollars that she stole from IDTS, Techno alleges that the funds were proceeds of bankruptcy fraud. Techno alleges that Weiss and Weiss & Co. knew that these funds were not only stolen through IDTS, but also represented proceeds from bankruptcy fraud. (Id. 65-67.) *3 Weiss caused M & B Oxford 41, Inc. (M & B) to be incorporated in 1993 knowing that's its sole purpose was to hold title to the 72nd Street properties of Reich and Jossem. At first Jossem was the sole shareholder of M & B, until she conveyed all of her stock through a chain of companies that are all alter egos of Reich and Jossem. When Techno intensified its efforts to recover its stolen money in 1997, Weiss together with an Israeli attorney Michael Shine devised a stock purchase agreement to transfer shares of the alter ego company holding the 72nd Street properties to another alter ego of Reich and Jossem in exchange for the repayment of various fictitious loans. (Id. 69-70.) Weiss also devised a scheme to create dummy corporations with no business activities that paid consulting fees to Jossem as a way to launder the money stolen through IDTS. Weiss formed Mabro Trading International, Ltd. (Mabro) in 1993, and Weiss caused Weiss & Co. to prepare fraudulent federal and state tax returns for Mabro which showed millions of dollars in gross receipts or sales but offset this income with fraudulent deductions for rent payments associated with the 72nd Street properties and for Jossem's personal expenses. Jossem received over $1 million in consulting fees from Mabro, but these fees were actually transfers of stolen fees from IDTS back to Jossem. (Id. 71-76.) Techno alleges, on information and belief, that Mabro filed its last federal tax return in 1998. Techno further alleges that around this time Weiss and Shine created the company Hasnaco Trading Ltd. (Hasnaco) under the laws of Cyprus to replace Mabro and to simplify tax preparation work because Hasnaco was a foreign company and thus not required to file United States tax returns. (Id. 77.) Jossem received over $6 million in payments from Hasnaco between 1999 and 2001, which her tax returns describe as consulting income. (Id. 78-80.) Weiss knew that the payments were not compensation for consulting services or any legitimate business, but rather were transfers of the funds stolen by Reich and Jossem. (Id.) Weiss caused Weiss & Co. to deduct rent as a business expense on Jossem's tax returns, knowing that Jossem never paid rent to another entity and did not use her residence in the 72nd Street properties for business purposes. (Id. 81.) Weiss also devised a means for Reich and Jossem to take part in a variety of real estate developments in the Hamptons using the proceeds they had stolen through IDTS. In 1997, Reich, Jossem, and Weiss began purchasing property for future development in the name of Atrium Square, Inc., which was an alter ego of Reich and Jossem. (Id. 24, 83.) Weiss then advocated the approach of using a series of single-purpose entities, rather than Atrium Square alone, to conduct real estate transactions to avoid adverse tax consequences and to make it more difficult to trace the source of the money used to purchase the real estate projects. (Id. 83-84.) Techno alleges on information and belief that funds were funneled through Hasnaco to finance the real estate projects of these entities. Weiss directed Jossem to open an account with Sterling Bank and controlled payments that flowed through this account via wire transfer, with the advice and consent of Reich and Jossem. (Id. 86.) *4 Techno's Complaint includes detailed allegations of various real estate transactions involving Reich and Jossem in which Weiss and Weiss & Co. participated and from which Weiss directly profited. **In summary, these allegations include a series of transactions between various single-purpose entities controlled by Reich and Jossem involving the purchase, development, and sale during the period from 1998 to 2003 of properties in the Hamptons. (Id. 87-103.) **Techno alleges that Weiss or Weiss & Co. received significant payments in connection with many of these transactions. (Id. 87, 90, 93, 99, 102.) **Weiss is alleged to have directed the transfer of funds between the accounts of various entities in connection with these sales. (See id. 96, 99, 102.) After Techno filed its federal action in 2003 to enforce its original IDTS judgment against Reich and Jossem, several additional properties on Red Dirt Road in Amagansett were sold with Weiss's knowledge and participation with the proceeds distributed to alter egos of Reich and Jossem and to third parties allegedly holding mortgage liens on other Reich and Jossem properties. (Id. 104-05.)

Two additional properties that were purchased using Reich and Jossem's stolen funds are still held by the entities Lopers/Noyack Path, L.L.C. and Roses Grove, L.L.C., both which Techno alleges to be alter egos of Reich and Jossem. (Id. 34-35, 106.) Lopers/Noyack is currently a debtor in a bankruptcy case filed by Weiss in the United States Bankruptcy Court for this district. Weiss claims to be both an equity participant and a creditor of Lopers/Noyack. (Id. 35, 107.) Both properties are burdened by substantial mortgages. (Id. 106.) Lopers/Noyack purchased its property on February 18, 2000, while Roses Grove acquired its property on January 26, 2000. (Id. 107-08.) Roses Grove was at the time of filing the Complaint subject to at least three foreclosure actions, including one by mortgagee Dothlyn Investments Limited. (Id. 40, 108.) Techno is seeking to invalidate the Dothlyn mortgage as a fraudulent conveyance in its state court action. (Id. 108.) The Complaint includes allegations that Reich and Jossem used the auction houses Christie's and Sotheby's to launder funds, but those allegations do not address the defendants' role directly and are not addressed further. (See id. 42, 109-18.) In sum, Techno alleges that Weiss and Weiss & Co., together with Reich, Jossem, Shine, and other participants, participated in the conduct of the affairs of a criminal enterprise within the meaning of the RICO statute, through a pattern of racketeering activity, in violation of 18 U.S.C. 1962(c). **Techno alleges that the defendants engaged in a pattern of racketeering activity including the predicate acts detailed above, which it alleges constituted money laundering in violation of 18 U.S.C. 1956, **monetary transactions greater than $10,000 in property derived from specific unlawful activity in violation of 18 U.S.C. 1957, transportation of stolen property in violation of 18 U.S.C. 2314, and the sale and receipt of stolen property in violation of 18 U.S.C. 2315. (Id. 121-23.) B. The defendants next argue that the Complaint does not adequately allege that they conduct[ed] or participate[d] in the conduct of the RICO enterprise's affairs within the meaning of 18 U.S.C. 1962(c). See Reves v. Ernst & Young, 507 U.S. 170, 179 ( 1993) ([ T]he word participate makes clear that RICO liability is not limited to those with primary responsibility for the enterprise's affairs ... but some part in directing that enterprise's affairs is required.). This element of a 1962(c) RICO claim is often referred to as the operation or management requirement. See Reves, 507 U.S. at 185. The defendants assert that Reves and subsequent cases applying its holding show that those who provide outside professional services to a criminal enterprise, such as lawyers and accountants, do not operate or manage the enterprise, even where those professionals knowingly conceal the enterprise's crimes. See, e.g., Madanes v. Madanes, 981 F.Supp. 241, 256-57 (S.D.N.Y.1997); Dep't of Econ. Dev. v. Arthur Andersen & Co., 924 F.Supp. 449, 465-69 (S.D.N.Y.1996); Biofeedtrac Inc. v. Kolinor Optical Enters. & Consultants, S.R.L., 832 F.Supp. 585, 590-92 (E.D.N.Y.1993). **However, Reves provides no blanket immunity for professionals regardless of their involvement in a criminal enterprise, and other cases suggest that, where professionals are alleged to have exceeded the mere rendering of legitimate professional services, the operation or management requirement will be pleaded adequately. E.g., Cadle Co. v. Flanagan, 01 Civ. 531, 2006 WL 860063, at *9 (D.Conn. Mar. 31, 2006) (law firm's conduct far exceeded the rendering of legal advice and constituted participation in fraudulent conduct in violation of RICO); **Tribune Co. v. Purcigliotti, 869 F.Supp. 1076, 1098 (S.D.N.Y.1994) (participation requirement met where law firm helped devise and manage a fraudulent scheme), aff'd sub nom. on other grounds, Tribune Co. v. Abiola, 66 F.3d 12 (2d Cir.1995). Moreover, many of the cases the defendants rely upon were decided on summary judgment, not as here on a Rule 12(b)(6) motion. *9 The Complaint alleges that Weiss and Weiss & Co. did more than prepare tax returns or provide outside accounting services. In particular, it alleges that Weiss was an architect of some of the money laundering activities, that he devised and managed the scheme to use a chain of single-use entities to carry out real estate transactions, that he received more than $2 million in profits from the real estate transactions (exceeding a reasonable fee for mere outside professional services), and that he was an equity investor in at least one of the real estate projects. These allegations are sufficient at the pleading stage to satisfy Techno's burden to allege that the defendants' conduct meets the operation or management requirement of Reves.

Tribune Co. v. Purcigliotti, 869 F.Supp. 1076, RICO Bus.Disp.Guide 8737 (S.D.N.Y. Nov 14, 1994)

Scheme resulted in filing hundreds of fraudulent workers compensation hearing loss claims. Internal citation from Smallwood ex rel. Hills v. Lupoli 2007 WL 2713841 at p. 7, (concluding that participation requirement was met where law firm helped devise and manage fraudulent scheme) affd subd nom. on other grounds, Tribune Co. v, Abiola, 66 F.3d 12 (2d. Cir. 1995)
Madanes v. Madanes, 981 F.Supp. 241 (S.D.N.Y.,Oct 08, 1997)

Instructive on 18 U.S.C. Section

1962. Prohibited activities

(c) It shall be unlawful for any person **employed by or **associated with [this refers to outsiders, who may assist the enterprises affairs, not members of the enterprise, Gio v. U.S. 969 F.Supp.512, at p. 514]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 or collection of unlawful debt. And Section 1962(d) prohibits conspiring to violate either 1962(a), (b) or (c). When read in conjunction with the language of 1962(c), RICO's conspiracy provision proscribes an agreement to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity
The Plaintiff alleges, however, that beyond merely providing legal services, Ortoli was substantially involved in the affairs of the enterprise. FN13 But even this fails to establish liability under 1962(c). See, e. g., Biofeedtrac, 832 F.Supp. at 587-89 (no liability even though RICO enterprise was attorney's sole client and attorney incorporated two corporate defendants involved in scheme and then served as director and officer for both corporations); see also Hayden v. Paul, Weiss, Rifkind, Wharton & Garrison, 955 F.Supp. 248, 254-55 (S.D.N.Y.1997) (collecting cases). Nor do allegations that Ortoli knowingly concealed the fraudulent activities of the enterprise change this result. See, e.g., Baumer v. Pachl, 8 F.3d 1341, 1342-44 (9th Cir.1993) (no liability where attorney prepared letters to state officials to forestall and cover-up the fraud by minimizing or mischaracterizing the [enterprise's] allegedly improper activities). Indeed, even claims that Ortoli recommended certain courses of fraudulent behavior, or that he had substantial persuasive power to induce management to take certain actions, are insufficient to establish 1962(c) liability. Strong & Fisher Ltd. v. Maxima Leather, Inc., No. 91 CIV. 1799, 1993 WL 277205, at *1 (S.D.N.Y. July 22, 1993); see also Arthur Andersen, 924 F.Supp. at 467. Accordingly, the Court dismisses the 1962(c) claim against Ortoli, R & B and RKB.FN14 FN13. The factual support for this allegation is questionable in light of the fact that the Madanes Brothers took many large steps in the scheme without Ortoli's involvement. For instance, Pablo transferred the Artworks to Switzerland in 1988, apparently without the assistance of Ortoli or his firm, and it was not until several years later, in 1991, that the Madanes Brothers allegedly sought Ortoli's help in preparing a false schedule to prevent Ms. Madanes from gaining access to the collection. (Compl. 63, 67.) Moreover, the transfer of funds from the Bingham and Tetra Accounts-involving vast sums of money equaling $1,685,000 and $17,211,000-were apparently undertaken without the aid of Ortoli or his firm, who are not mentioned in this portion of the Complaint. (Id. 108-23.) Perhaps most significantly, the efforts of the Madanes Brothers to conceal assets in Switzerland through the creation of the secret Escrow Account and the Cemave Trust were also undertaken without Ortoli's involvement; again, he is not mentioned in this part of the Complaint. (Id. 133-37.)

FN14. The post-Reves cases upholding claims against professionals are distinguishable. For instance, in many of these cases the core fraud was a scheme to file false lawsuits. See, e.g., Napoli v. United States, 32 F.3d 31, 33 (2d Cir.1994) (scheme involved pattern of **mail fraud and witness bribery by pursuing counterfeit claims and using false witnesses in personal injury trials and law firm defendant earned millions in contingency fees from personal injury suits involving fraud or bribery), cert. denied, 513 U.S. 1110, 115 S.Ct. 900, 130 L.Ed.2d 784 (1995); Tribune Co. v. Purcigliotti, 869 F.Supp. 1076, 1082-83 ( S.D.N.Y. 1994) (scheme resulted in filing of hundreds of fraudulent workers' compensation hearing loss claims), aff'd sub nom. Tribune Co. v. Abiola, 66 F.3d 12 (2d Cir.1995); Shuttlesworth v. Housing Opportunities, 873 F.Supp. 1069, 1075-76 (S.D.Ohio 1994) (defendant lawyers allegedly solicited female tenants to bring false sexual harassment claims and lawsuits against plaintiff landlord). Obviously, a lawyer who solicits and files false lawsuits plays a key role in directing this type of RICO scheme.

The Cadle Co. v. Flanagan, 2006 WL 860063, RICO Bus.Disp.Guide 11,051 (D.Conn.,Mar 31, 2006) Baumer v. Pachl, 8 F.3d 1341, 62 USLW 2354, 62 USLW 2370, RICO Bus.Disp.Guide 8424 (9th Cir. (Cal.),Nov 02, 1993)

Not liable for providing simple legal services.

San Francisco Bay Area Rapid Transit Dist. v. Spencer, 2005 WL 2171906 (N.D.Cal.,Sep 06, 2005) U.S. v. Eisen, 974 F.2d 246, 36 Fed. R. Evid. Serv. 580 (2nd Cir.(N.Y.) Aug 17, 1992)

Scheme to file false lawsuits constitutes the violation of 18 U.S.C. 1962 (c), (d) and based on the underlying predicates 18 U.S.C. 1961, of 1341 mail fraud and state law bribery, perjury. This reaches the criminal racketeering activity of WELLS FARGO, JUDGE ROBINSON, JUDGE GANNON, JUDGE LARSCH, CLERK OF THE COURT ALAN CARLSON [PREDICATE ACTS MAILED COURT NOTICES], SHERIFF AND EVICTER WITHOUT A JUDGEMENT HUTCHENS [MAILED VOID WRIT OF POSSESSION], INDIVIDUAL DEPUTIES, in the state courts CRIMINAL OFFESNE AND RICO PREDICATES MONEY LAUNDERING BY THE COLDWELL BANKER, CONVERSION MAIL FRAUD BY FINANCIAL TITLE WITH THE cc2924 TRUSTEE SALE AND FIDELITY TITLE, TRUSTEE THAT ACTUALLY CONDUCTED THE SALE
Attorneys, law firm's investigators, and its office administrator were convicted in the United States District Court for the Eastern District of New York, Charles P. Sifton, J., of RICO violations in connection with firm's fraudulent conduct of civil litigation as plaintiff's counsel in personal injury cases. Defendants appealed. The Court of Appeals, Jon O. Newman, Circuit Judge, held that: (1) alleged scheme by attorneys, private investigators, and office administrator to deprive civil defendants and their liability insurers of money by means of fraudulently conducted lawsuits was **mail fraud; (2) fortuity that witness' testimony as influenced turned out to be truthful was not defense to bribery of witness; and (3) alleged perjury from hostile government witnesses was admissible. Affirmed. [1] Postal Service 306 35(10)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(10) k. Nature of scheme or device in general. Most Cited Cases Alleged scheme by attorneys, private investigators, and office administrator to deprive civil defendants and their liability insurers of money by means of fraudulently conducted lawsuits was mail fraud, even if convergence theory of mail fraud applied; allegation did not state deprivation of intangible right not cognizable under mail fraud statute, **misrepresentations in pleadings and pretrial submissions were made in hope of fraudulently inducing settlement before trial, and **alleged misconduct was intended to defraud the civil adversaries. 18 U.S.C.A. 1341. [2] Postal Service 306 35(9)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(9) k. Injury from fraud. Most Cited Cases Government in mail fraud prosecution need only establish intent to harm; it is not required to prove that victim was actually injured as result of the scheme. 18 U.S.C.A. 1341. [3] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk4 Racketeering or Criminal Activity 319Hk10 k. Fraud in general. Most Cited Cases Where fraudulent scheme falls within scope of mail fraud statute and other elements of RICO are established, use of mail fraud offense as RICO predicate act cannot be suspended simply because perjury is part of means for perpetrating the fraud. 18 U.S.C.A. 1341, 1961(1). [4] Bribery 63 1(2) 10

63 Bribery 63k1 Nature and Elements of Offenses 63k1(2) k. Bribery of jurors and particular classes of officers. Most Cited Cases Alleged tort-feasor could be found to be person about to be called as a witness within meaning of New York statute criminalizing bribery of witness; tort-feasor was defendant in case by gunshot victim against tort-feasor and his employer, and investigator for victim's attorneys offered $5,000 to influence tort-feasor's testimony and repeatedly referred to what tort-feasor had to do in court or on stand. N.Y.McKinney's Penal Law 215.00. [5] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In general. Most Cited Cases Investigator for gunshot victim's attorneys could be found in RICO prosecution to have requisite intent to bribe tort-feasor in order to influence testimony, even though tape recording of meeting between investigator and tort-

feasor provided some support for investigator's contention that tort-feasor possibly offered testimony to highest bidder, and even though investigator claimed extortion by tort-feasor; investigator initiated contact with tort-feasor, was first to broach subject of money during meeting, and described testimony to be bought from tort-feasor. N.Y.McKinney's Penal Law 215.00; 18 U.S.C.A. 1961 et seq. [6] Bribery 63 1(2)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(2) k. Bribery of jurors and particular classes of officers. Most Cited Cases Witnesses giving completely fraudulent testimony were witnesses within meaning of New York statute criminalizing bribery of witness. N.Y.McKinney's Penal Law 215.00. [7] Bribery 63 3

63 Bribery 63k3 k. Defenses, and persons liable. Most Cited Cases Fortuity that witness' influenced testimony turns out to be true is not defense to charge of bribing witness. N.Y.McKinney's Penal Law 215.00 comment. [8] Criminal Law 110 1172.1(5)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1172 Instructions 110k1172.1 In General 110k1172.1(5) k. Form and language; procedure in giving instructions. Most Cited Cases Decision after charging conference to revise proposed charge on elements of witness bribery did not prejudice defendant and, therefore, could not require reversal; district judge's statement to consider exception raised by government during conference placed defendant on notice that requested charge was subject to further consideration, and following summation, defendant did not take advantage of opportunity to address jury again after court advised defendant that charge was not in accord with argument. N.Y.McKinney's Penal Law 215.00; Fed.Rules Cr.Proc.Rule 30, 18 U.S.C.A. [9] Criminal Law 110 1186.1

110 Criminal Law 110XXIV Review 110XXIV(U) Determination and Disposition of Cause 110k1185 Reversal 110k1186.1 k. Grounds in general. Most Cited Cases Invalidation of mail fraud as predicate act of racketeering would not require reversal of racketeering conviction, where jury indicated on verdict form that defendant committed racketeering by witness bribery and mail fraud. 18 U.S.C.A. 1341, 1961 et seq.,1962(c, d); N.Y.McKinney's Penal Law 215.00. [10] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 95

319HI Federal Regulation 319HI(C) Criminal Remedies and Proceedings 319Hk92 Evidence 319Hk95 k. Weight and sufficiency. Most Cited Cases Law firm office administrator's relationship as daughter of witness and administrator's role in firm representing victim of slip and fall were insufficient basis to convict administrator of racketeering based on mail fraud in allegedly causing witness to give false testimony on behalf of victim; without affirmative evidence in corroboration, negative inference that jury should disbelieve witness' denials of administrator's involvement was, by itself, insufficient to support conviction. 18 U.S.C.A. 1341, 1961 et seq.,1962(c, d). [11] Criminal Law 110 759(1)

110 Criminal Law 110XX Trial 110XX(F) Province of Court and Jury in General 110k754 Instructions Invading Province of Jury 110k759 Inferences from Evidence 110k759(1) k. In general. Most Cited Cases Jury is free to draw negative inferences from untruthful witness' testimony as long as there is affirmative testimony to support or corroborate those negative inferences. [12] Criminal Law 110 1172.1(3)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1172 Instructions 110k1172.1 In General 110k1172.1(2) Particular Instructions 110k1172.1(3) k. Elements and incidents of offense; definitions. Most Cited Cases Error in submitting to jury invalid predicate act was harmless beyond reasonable doubt in RICO prosecution, where three predicate acts were valid and posed a threat of continuity. 18 U.S.C.A. 1961 et seq. [13] Criminal Law 110 632(5)

110 Criminal Law 110XX Trial 110XX(A) Preliminary Proceedings 110k632 Dockets and Pretrial Procedure 110k632(5) k. Pretrial conference or hearing; order. Most Cited Cases Defendant failed to present some evidence of prejudice from leak of grand jury testimony allegedly influencing witness' testimony and, therefore, was not entitled to hearing, even though matter had been referred to Department of Justice for inquiry into whether leak had occurred, even though grand jury witness' testimony about backdating report was echoed in another witness' trial testimony about the report, and even though trial witness had never mentioned any backdating at grand jury appearance; defendants had opportunity and incentive during crossexamination to develop prejudice issue. [14] Grand Jury 193 41.10

193 Grand Jury 193k41 Secrecy as to Proceedings 193k41.10 k. In general. Most Cited Cases Breach of grand jury secrecy can jeopardize defendant's right to fair trial before petit jury. [15] Criminal Law 110 1166(2)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1166 Preliminary Proceedings 110k1166(2) k. Organization and proceedings of grand jury. Most Cited Cases Defendant seeking reversal or hearing regarding alleged grand jury abuse must show prejudice or bias. [16] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(C) Criminal Remedies and Proceedings 319Hk92 Evidence 319Hk94 k. Admissibility. Most Cited Cases Alleged perjury from hostile government witnesses was relevant to government's case in racketeering prosecution alleging that attorney used that perjury in civil suits. 18 U.S.C.A. 1961 et seq. [17] Witnesses 410 323 94

410 Witnesses 410IV Credibility and Impeachment 410IV(A) In General 410k320 Right to Impeach One's Own Witness 410k323 k. Witness hostile to party calling him. Most Cited Cases Where government has called witness whose corroborating testimony is instrumental to constructing government's case, government has right to question witness and to attempt to impeach witness about those aspects of testimony that conflict with government's account of the same events. Fed.Rules Evid.Rule 607, 28 U.S.C.A. [18] Criminal Law 110 2033

110 Criminal Law 110XXXI Counsel 110XXXI(D) Duties and Obligations of Prosecuting Attorneys 110XXXI(D)5 Presentation of Evidence 110k2032 Use of False or Perjured Testimony 110k2033 k. In general. Most Cited Cases (Formerly 110k706(2)) Government's act of calling hostile witnesses to present alleged perjury did not frustrate ability to put on best defense in racketeering prosecution of attorney based on use of the alleged perjury in civil suits; government did not need to confine itself to fragments of witnesses' testimony just because they persisted in repeating untruthful portions. 18 U.S.C.A. 1961 et seq.

[19] Criminal Law 110

338(7)

110 Criminal Law 110XVII Evidence 110XVII(D) Facts in Issue and Relevance 110k338 Relevancy in General 110k338(7) k. Evidence calculated to create prejudice against or sympathy for accused. Most Cited Cases Prejudicial effect of alleged perjury by hostile government witnesses could not outweigh probative value in racketeering prosecution of attorney based on use of alleged perjury in civil suits; district court foreclosed argument that defendant had complicity in witnesses' lies at trial, and prosecutor was careful to attribute alleged lies to personal motivations of witnesses. 18 U.S.C.A. 1961 et seq.; Fed.Rules Evid.Rule 403, 28 U.S.C.A. [20] Criminal Law 110 149

110 Criminal Law 110X Limitation of Prosecutions 110k148 Commencement of Period of Limitation 110k149 k. Commission of offense in general. Most Cited Cases Statute of limitations for mail fraud ran from date of alleged mailing, notwithstanding actions concerning scheme to defraud before the statutory period. 18 U.S.C.A. 1341, 3282. [21] Criminal Law 110 150

110 Criminal Law 110X Limitation of Prosecutions 110k148 Commencement of Period of Limitation 110k150 k. Continuing offenses. Most Cited Cases Statute of limitations for RICO conspiracy did not begin to run until objectives of conspiracy were achieved or abandoned. 18 U.S.C.A. 1961 et seq. [36] Conspiracy 91 40.4

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k39 Persons Liable 91k40.4 k. Withdrawal. Most Cited Cases Law firm's investigator did not withdraw from firm's racketeering conspiracy by leaving firm, even though parties stipulated that work performed by investigator on ad hoc basis after he withdrew from firm was not tainted by illegality; stipulation at most proved investigator's mere cessation of illegal conduct. 18 U.S.C.A. 1961 et seq. [37] Conspiracy 91 40.4

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k39 Persons Liable

91k40.4 k. Withdrawal. Most Cited Cases Attorney's resignation of position of counsel in order to practice with another firm was not withdrawal from firm's racketeering conspiracy; although attorney claimed that he received annualized salary from firm and was not entitled to percentage of recovery in cases tried by him, cooperating codefendant testified that attorney admitted getting a piece of the action on the cases he tried. 18 U.S.C.A. 1961 et seq. Before: MESKILL, Chief Judge, TIMBERS and NEWMAN, Circuit Judges. JON O. NEWMAN, Circuit Judge: This is an appeal of RICO convictions arising from a law firm's fraudulent conduct *251 of civil litigation as plaintiff's counsel in personal injury cases. The appeal is brought by Morris J. Eisen, Joseph P. Napoli, Harold M. Fishman, Dennis Rella, Marty Gabe, Geraldine G. Morganti, and Alan Weinstein from judgments of the United States District Court for the Eastern District of New York (Charles P. Sifton, Judge), following a four-month jury trial. We affirm. Background **Morris J. Eisen, P.C. (the Eisen firm) was a large Manhattan law firm that specialized in bringing personal injury suits on behalf of plaintiffs. The defendants, seven of the Eisen firm's attorneys, investigators, and office personnel, were tried jointly on two counts of conducting and conspiring to conduct the affairs of the Eisen firm through a pattern of racketeering activity, in violation of 18 U.S.C. 1962(c), (d) (1988). The indictment alleged, as the underlying acts of racketeering, that each of the defendants committed, among other crimes, numerous acts of mail fraud, in violation of 18 U.S.C. 1341 (1988); and bribery of witnesses, in violation of New York Penal Law 215.00 (McKinney 1988). **Eisen was the founder, sole shareholder, and principal attorney of the Eisen firm. Napoli was associated with the Eisen firm in an of counsel capacity, and he was the main trial attorney for the firm. Fishman, a trial attorney, was also of counsel to the firm. The Eisen firm regularly used investigators to assist attorneys in the trial preparation of personal injury cases, and **defendants Weinstein, Gabe, and Rella were private investigators affiliated with the firm. **Morganti was the office administrator of the Eisen firm with responsibility for managing the daily affairs of the firm, including assigning attorneys and investigators to particular cases, monitoring the firm's daily calendar, and managing the financial and personnel operations of the firm. The evidence at trial established that the defendants conducted the affairs of the Eisen law firm through a pattern of mail fraud and witness bribery by pursuing counterfeit claims and using false witnesses in personal injury trials, and that the Eisen firm earned millions in contingency fees from personal injury suits involving fraud or bribery. The methods by which the frauds were accomplished included pressuring accident witnesses to testify falsely, paying individuals to testify falsely that they had witnessed accidents, paying unfavorable witnesses not to testify, and creating false photographs, documents, and physical evidence of accidents for use before and during trial. The Government's proof included the testimony of numerous Eisen firm attorneys and employees as well as Eisen firm clients, defense attorneys, and witnesses involved in the fraudulent personal injury suits. Transcripts, correspondence, and trial exhibits from the fraudulent personal injury suits were also introduced. The racketeering acts considered by the jury related to the defendants' conduct with regard to 18 fraudulent personal injury lawsuits in which the plaintiff was represented by the Eisen firm. The defendants were found guilty of racketeering acts involving the following personal injury cases: Eisen: Mulnick, Schwartz, Stanton; Napoli: Ferri, Mulnick, Robbins, Rehberger; Fishman: Aboud, Schwartz, Tuning, Nieves; Rella: Miceli, Rehberger, Schwartz;

Gabe: Robbins, Stanton, Nieves; Morganti: Miceli, Schwartz, Stanton, Pietrafesa; Weinstein: Aboud, Schwartz, Tuning, Nieves, Metrano. The jury convicted all seven defendants of RICO substantive and conspiracy offenses after three weeks of deliberations.FN1 FN1. Rella's RICO conviction was vacated because the racketeering acts underlying that conviction were not committed within the limitations period. Discussion I. Legal Sufficiency of Charges A. Mail Fraud [1] Weinstein argues that a scheme to deprive an adversary of money by means *252 of a civil lawsuit conducted fraudulently does not constitute mail fraud because there is no deprivation of property as defined by the Supreme Court in McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). In that case, the Supreme Court held that the mail fraud statute does not reach schemes to defraud citizens of their right to honest and impartial government but is instead limited in scope to the protection of property rights. Id. at 360, 107 S.Ct. at 2882. Looking to the legislative history of the statute, which indicates that the original impetus ... was to protect the people from schemes to deprive them of their money or property, the Court concluded that the words to defraud commonly refer to wronging one in his property rights by dishonest methods or schemes, and usually signify the deprivation of something of value by trick, deceit, chicane or overreaching. Id. at 356, 358, 107 S.Ct. at 2880, 2881 (footnote and citation omitted). In reversing the convictions of defendants charged with scheming to deprive the state of its right to honest government by having a state agency share proceeds with business entities in which the defendants held interests, the Supreme Court emphasized that there was no allegation that the state or its citizens had been deprived of any money or property. Id. at 360-61, 107 S.Ct. at 2881-82. Weinstein contends that the right of the civil defendants and their liability insurers to have a judgment in a civil proceeding obtained free of fraud and perjury is an intangible right not cognizable under the mail fraud statute. The Government responds that the mail fraud predicates at issue here allege a scheme to defraud that comports squarely with the McNally definition of mail fraud because the Eisen indictment explicitly alleges a scheme to deprive the victims of money. Weinstein relies on United States v. Eckhardt, 843 F.2d 989 (7th Cir.), cert. denied, 488 U.S. 839, 109 S.Ct. 106, 102 L.Ed.2d 81 (1988). In Eckhardt, the defendant had operated a phony tax shelter scheme and had committed perjury and submitted false documents in a civil proceeding brought by his investors against the IRS to challenge disallowance of their deductions. The indictment charged him with a scheme To defraud the United States by impeding and impairing, obstructing and defeating the lawful functions of the Internal Revenue Service in the ascertainment computations, assessment and collection of the revenue, to wit, income taxes, of taxpayer-investors.... 843 F.2d at 996. The Seventh Circuit concluded that this allegation failed to allege mail fraud in light of McNally. It found that the indictment charged the defendant with interfering with the IRS's proper ascertainment and collection of income taxes. It does not specifically allege that

he deprived the government of revenue.... [I]t is not sufficient to allege conduct which could have resulted in the government's failure to collect revenue owed to it.... The connection between the charged conduct and the loss of revenue here is too tenuous and speculative to constitute an actual deprivation of money or property. Id. at 996-97. Weinstein's reliance on Eckhardt is unavailing. The Eisen indictment contained precisely what was found to be lacking in the Eckhardt indictment: the allegation of a scheme to defraud the litigant of money or property. We have upheld charges similar to those made in Eckhardt where an indictment has alleged a scheme to defraud the Government of money. See United States v. Porcelli, 865 F.2d 1352 (2d Cir.), cert. denied, 493 U.S. 810, 110 S.Ct. 53, 107 L.Ed.2d 22 (1989) (upholding conviction for mail fraud against McNally challenge where defendant was charged with defrauding state government of its right to sue for sales tax he failed to collect); United States v. Rubin, 844 F.2d 979, 985-86 (2d Cir.1988) (upholding conviction for mail fraud where defendant defrauded New York State of public revenues). Weinstein next contends that even if the civil defendants were deprived of property, *253 the only party deceived by the alleged fraud were civil juries that awarded the money judgment. Because the juries were not claimed to have been injured, Weinstein argues that the convergence theory of mail fraud, which, he contends, requires that the party defrauded and the party injured be identical, see United States v. Evans, 844 F.2d 36, 39 (2d Cir.1988), is not satisfied. Even if the convergence theory is applicable, **which we do not decide,FN2 its requirements are met here. Weinstein's argument that the civil defendant is contesting, not relying on, the truth of the allegedly false testimony, Brief for Appellant Weinstein at 36, and is therefore not deceived by a corrupt adversary takes an unrealistically narrow view of the charges in this case and ignores settled authority that perjury and fake evidence defraud the adverse party. FN2. Some District Courts in this Circuit have concluded that this Court's dicta in Evans stands only for the proposition that a civil RICO plaintiff must have been injured to have standing under section 1964. See, e.g., Shaw v. Rolex Watch U.S.A., 726 F.Supp. 969, 972-73 (S.D.N.Y.1989); Galerie Furstenberg v. Coffaro, 697 F.Supp. 1282, 1288 (S.D.N.Y.1988). Other district courts outside this Circuit have rejected the convergence theory altogether. See Texas Air Corp. v. Air Line Pilots Ass'n Int., No. Civ. 88-0804, 1989 WL 146414, 1989 U.S. Dist. LEXIS 11149 (S.D.Fla. July 14, 1989); Lewis v. Lhu, 696 F.Supp. 723, 727 (D.D.C.1988). First, a number of the mail fraud predicates in the indictment alleged fraud that was perpetrated directly on the civil defendants and their liability insurers before the lawsuit reached trial. In several cases, misrepresentations in pleadings and pretrial submissions were made in the hope of fraudulently inducing a settlement before trial. And in cases that went to trial, fraudulent representations concerning the claims were directed at the civil defendants and their insurers in an effort to induce settlement before verdict. In fact, several of the lawsuits listed in the indictment were settled. Even in cases decided by a jury, defendants' misconduct was intended to defraud their adversaries. Litigants depend on the integrity of the conduct of participants in civil proceedings though disputing the validity of their opponents' claims to impose or resist civil liability. It is one thing to challenge the perception, memory, or bias of an opponent's witnesses; it is quite another for a party's lawyer and a witness to concoct testimony that they know has been wholly fabricated. Moreover, Weinstein's claim that perjured testimony suborned by the defendants was directed at the civil juries rather than at the other litigants ignores relevant case law. In United States v. Rodolitz, 786 F.2d 77 (2d Cir.), cert. denied, 479 U.S. 826, 107 S.Ct. 102, 93 L.Ed.2d 52 (1986), the defendant had brought a fraudulent civil action against his insurance company and recovered a money judgment from the company at trial. **In affirming the defendant's conviction for mail fraud, this Court explicitly recognized that false evidence at a civil trial works a fraud not only on the jury but on the opposing party as well. Id. at 80-81. See also Averbach v. Rival Manufacturing Co., 809 F.2d 1016 (3d Cir.), cert. denied, 482 U.S. 915, 107 S.Ct. 3187, 96 L.Ed.2d 675 (1987). [2] Weinstein also argues that the causation between the fraud and the resulting deprivation of property is too attenuated. However, the Government need establish only an intent to harm; it is not required to prove that the

victim was actually injured as a result of the scheme, see United States v. Starr, 816 F.2d 94, 98 (2d Cir.1987), much less that any injury that did occur resulted solely from the fraud, see Rodolitz, supra [9th Cir. established case law, on the intent element of mail fraud, states that it is enough that the victim was actually deprived of money or property or that the defendant intended to defraud the victim of the same. United States v. Utz, 886 F,2d 1148, 1151 (9th Cir. 1989)] In Rodolitz, we found a sufficient causal link between the defendant's failure to disclose evidence in his trial to recover losses from his insurance company and the resulting judgment against the company, regardless of what the trial jury may actually have relied upon in reaching its verdict. [3] Finally, Weinstein contends that permitting the mail fraud offenses charged in the Eisen indictment to serve as RICO predicate acts conflicts with the deliberate decision made by Congress in omitting perjury as one of the enumerated RICO predicate offenses within the definition of racketeering activity. See 18 U.S.C. 1961(1). *254 Contrary to the Government's abrupt dismissal of this argument as baseless, Brief for Appellee at 36, we recognize that there is some tension between the congressional decision to include federal mail fraud as a predicate offense and to exclude perjury, whether in violation of federal or state law. That tension is illustrated by this prosecution in which the fraudulent scheme consists primarily of arranging for state court witnesses to commit perjury. Though the tension exists, we do not believe it places the indictment in this case beyond the purview of RICO. Congress did not wish to permit instances of federal or state court perjury as such to constitute a pattern of RICO racketeering acts. Apparently, there was an understandable reluctance to use federal criminal law as a back-stop for all state court litigation. Nevertheless, where, as here, a fraudulent scheme falls within the scope of the federal mail fraud statute and the other elements of RICO are established, use of the mail fraud offense as a RICO predicate act cannot be suspended simply because perjury is part of the means for perpetrating the fraud. We do not doubt that where a series of related state court perjuries occurs, it will often be possible to allege and prove both a scheme to defraud within the meaning of the mail fraud statute as well as the elements of a RICO violation. But in such cases, it will not be the fact of the perjuries alone that suffices to bring the matter within the scope of RICO. In any event, we cannot carve out from the coverage of RICO an exception for mail fraud offenses that involve state court perjuries. B. State Law Bribery [4] 1. Witness as required by 215.00 of New York Penal Law. Weinstein, Rella, Morganti, and Fishman all attack various witness bribery racketeering acts by arguing that the individual allegedly bribed was not a witness or a person about to be called as a witness within the meaning of Section 215.00 of the New York Penal Law. The statute provides in pertinent part: A person is guilty of bribing a witness when he confers, or offers or agrees to confer, any benefit upon a witness or a person about to be called as a witness in any action or proceeding upon an agreement or understanding that (a) the testimony of such witness will thereby be influenced, or (b) such witness will absent himself from, or otherwise avoid or seek to avoid appearing or testifying at, such action or proceeding. N.Y.Penal Law 215.00 (McKinney 1988) The New York Court of Appeals has held that a person's status as a witness under section 215.00 depends upon the evidence he can supply the court, not the immediacy of the need for the evidence, nor whether a subpoena has been issued in order to secure it. People v. Bell, 73 N.Y.2d 153, 164, 538 N.Y.S.2d 754, 760, 535 N.E.2d 1294, 1300 (1989). The Court stated that if the evidence is sufficient to support a finding that defendant reasonably should have believed that the person would be a witness and that he intentionally attempted to influence the witness's testimony ... the crime is complete. Id. Weinstein challenges the witness bribery racketeering act in one of the fraudulent tort cases, Metrano, on the ground that there was insufficient evidence that Alberto Troche was a witness or a person about to be called as a witness within the meaning of section 215.00. The Metrano case arose from injuries sustained by Metrano when he was shot in the leg by a Manhattan parking lot attendant, Alberto Troche, during a row over a parking lot fee.

Metrano subsequently retained the Eisen firm, which brought a civil suit against Troche and Troche's employer, Simone Grossman. The action against Grossman was based on allegations that Grossman should have known that Troche was dangerous and carried a gun. The Eisen firm retained Weinstein as the investigator on the case, which settled on the eve of trial for $300,000. At the Eisen trial, Troche testified that Weinstein had come to his home and offered him $5,000 to testify that his employer was aware that he had dangerous propensities and that he carried a gun. Troche had secretly taped this meeting, and *255 the tape was introduced into evidence at the Eisen trial. Troche, having inflicted the injury that formed the basis of the tort action, was clearly someone Weinstein reasonably should have believed would be a witness in the case. On the tape, Weinstein made repeated references to what Troche must do when he comes to court or when he takes the stand, showing that he clearly anticipated that Troche would be a key witness in the case. [5] In an effort to avoid Troche's obvious status as a witness, Weinstein argues that he did not commit bribery against Troche, but that Troche committed extortion against him. The extortionate conduct, he contends, defeats a section 215.00 violation because it negates the essential element of mens rea in the crime of bribery. Although the tape recording provides some support for Weinstein's contention that Troche might have offered his testimony to the highest bidder, other aspects of the tape recording and Troche's testimony at the Eisen trial provide sufficient evidence that Weinstein had the requisite intent to bribe Troche and that Weinstein's conduct fits easily within the proscription of section 215.00. Both the tape recording and the trial testimony reveal that Weinstein initiated the contact with Troche, that Weinstein was the first to broach the subject of money during their taped meeting, and that Weinstein described the testimony he sought to buy from Troche. Clearly a reasonable jury could find that Troche was a person about to be called as a witness in the Metrano trial and that Weinstein had the requisite intent to bribe Troche. [6] Rella argues that Eddie Goldstein, who testified in the Rehberger case was not a witness within the meaning of section 215.00, and Morganti makes the same claim with respect to Arnold Lustig, who testified in the Schwartz and Aboud cases, because neither Goldstein nor Lustig had observed the accidents about which they testified but were paid to offer completely fraudulent testimony. The claim that Goldstein and Lustig do not meet the statutory definition of witness because their testimony was entirely fraudulent and thus they had no evidence to supply the court is frivolous. In the dictionary sense, a witness is one who, being present, personally sees or perceives a thing, or one whose declaration under oath (or affirmation) is received as evidence for any purpose. See Black's Law Dictionary 1438 (5th ed. 1979). Section 215.00 contains no indication that it is limited to this core definition of this term to the exclusion of a more functional definition. The section, which explicitly reaches attempts to influence the testimony of a witness as well as those about to be called as a witness, applies to benefits conferred in order to induce someone to hold himself out as a witness and offer wholly fraudulent testimony to the court. The statute is not limited to payments for testimony that is false only in part. Both Goldstein and Lustig were paid money to give false testimony, both were prepared to testify falsely, and both were called to testify falsely at personal injury trials. It is of no consequence that the evidence offered and the status of the men as witnesses was entirely an outgrowth of the defendants' criminal designs. 2. Falsity of influenced testimony. Section 215.00 provides in pertinent part that a person is guilty of bribing a witness when he confers, or offers or agrees to confer, any benefit upon a witness or a person about to be called as a witness ... upon an agreement or understanding that (a) the testimony of such witness will thereby be influenced,.... On its face, the statute requires just two elements of proof: **the offer of a benefit to a witness and **the agreement or understanding that the witness's testimony will be influenced by such benefit. See People v. Shaffer, 130 A.D.2d 431, 432, 515 N.Y.S.2d 470, 471 (1st Dep't 1987) (All that is required for a bribery to be complete is the offer or agreement to confer a benefit upon the defendant's agreement or understanding that the witness' testimony will thereby be influenced.). Understanding, as used in the statute, has long been construed as tantamount to the defendant's intent, see *256People v. Kathan, 136 A.D. 303, 120 N.Y.S. 1096 (1910), and it is not necessary for conviction that the jury find that the bribe's intended recipient shared that intent. See People v. Kramer, 132 Misc.2d 753, 505 N.Y.S.2d 769 (Sup.Ct.), modified on other grounds, 132 A.D.2d 708, 518 N.Y.S.2d 189 (2d Dep't 1986). The statute contains no requirement that the benefit actually be conferred or that the testimony

actually be influenced. See Shaffer, 130 A.D.2d at 432, 515 N.Y.S.2d at 471. [7] Weinstein argued in the District Court that section 215.00 requires two additional elements of proof: (a) that the defendant subjectively believe that testimony, influenced as he desires, would be untruthful and (b) that testimony so influenced would in fact be untruthful. Although the District Judge originally incorporated both requirements in the proposed charge, he reconsidered his view following the Government's timely objection. Weinstein now complains about the substance and the timing of that ruling. The charge that Judge Sifton ultimately gave incorporated one of the elements proposed by Weinstein. He instructed the jurors that with respect to the intent element on the charge of witness bribery, they must find that the defendant paid money to a witness in order to get the witness to modify the substance of his testimony in a way that the defendant believed would be false. He did not instruct the jury that it would be a defense to the crime if by sheer happenstance the testimony so influenced turned out to be true. The essence of bribery is the intent to influence improperly the conduct of another by bestowing a benefit, see 39 N.Y.Penal Law 215.00, at 553 (Practice Commentaries) (McKinney 1988); as there is no requirement that the intended result be accomplished, see Shaffer, 130 A.D.2d at 432, 515 N.Y.S.2d at 471, the District Judge properly refused to charge the jury that the fortuity that the testimony, as influenced, turned out to be truthful would be a defense to the charge.FN3 FN3. The Government argues that the bribery statute properly applies whenever money is paid to influence testimony, even if money is paid to secure what the defendant believes is truthful testimony. Because the Judge's charge required the jury to find that the defendant believed that he was seeking to influence testimony in a false direction, we need not decide if section 215.00 extends to payments to influence a witness to testify truthfully. [8] Weinstein also complains that the District Court's charge on the elements of bribery violated Rule 30 of the Federal Rules of Criminal Procedure, requiring a trial court to issue rulings on requests to charge prior to summations in order to afford the parties an opportunity to frame their closing remarks in light of the court's subsequent legal instructions. See United States v. Lyles, 593 F.2d 182, 186 (2d Cir.), cert. denied, 440 U.S. 972, 99 S.Ct. 1537, 59 L.Ed.2d 789 (1979); United States v. Tourine, 428 F.2d 865, 868-69 (2d Cir.1970), cert. denied, 400 U.S. 1020, 91 S.Ct. 581, 27 L.Ed.2d 631 (1971). If the Rule is violated, reversal is required where the defendant can show that he was substantially misled in formulating his arguments or otherwise prejudiced. United States v. Smith, 629 F.2d 650, 653 (10th Cir.), cert. denied, 449 U.S. 994, 101 S.Ct. 532, 66 L.Ed.2d 291 (1980). See Lyles, 593 F.2d at 186; United States v. Conlin, 551 F.2d 534, 539 (2d Cir.), cert. denied, 434 U.S. 831, 98 S.Ct. 114, 54 L.Ed.2d 91 (1977). Weinstein was not prejudiced by Judge Sifton's decision, made after the charging conference, to revise the proposed charge as to the elements of witness bribery. When the issue was raised in the charging conference, the Government objected to the proposed charge. Following an exchange between the Court and the Government on the question of whether the Government had to prove the actual falsity of the testimony sought by the defendant, Judge Sifton said, All right. I'll consider that exception. Weinstein was on notice that his requested charge was the subject of further consideration and could not have been substantially misled by the Court in formulating his summation argument, which contended that the Government had to prove the actual falsity of the testimony sought. Cf. *257Wright v. United States, 339 F.2d 578, 579-80 (9th Cir.1964) (reversal required where court did not respond to defense request for pre-summation rulings on requests to charge, advised counsel to go ahead and argue the case any way you want to argue it, and in its charge rejected the theory of defense offered in summation). Moreover, following the summation, the court advised Weinstein's counsel that the charge was not in accord with his argument and offered counsel an opportunity to address the jury again. Having ignored this offer, counsel has no valid claim of prejudice. II. Sufficiency of Evidence A. The Mulnick Case-Racketeering Act Three

[9] The jury found Eisen guilty of witness bribery and found Eisen and Napoli guilty of mail fraud in connection with the Mulnick case. Both Eisen and Napoli contend that the evidence presented at trial was insufficient to prove beyond a reasonable doubt that they committed mail fraud in connection with the Mulnick case. Both defendants also contend that invalidation of the Mulnick predicate would undermine their RICO substantive and conspiracy convictions. Relying on the standard recently employed by this Court in United States v. Paccione, 949 F.2d 1183, 1198 (2d Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 3029, 120 L.Ed.2d 900 (1992), defendants argue that in a RICO case, where one or more predicates is held invalid on appeal, the RICO conviction cannot stand unless the error in submitting the invalid predicate to the jury is demonstrated to be harmless beyond a reasonable doubt. FN4 Upon careful review of the record, we conclude that the defendants' sufficiency arguments are unavailing. FN4. In Paccione, the Court found that there was no doubt that the jury would have convicted defendant Paccione of a RICO violation even in the absence of the invalid predicate because eight valid predicates remained and because the pattern of verdicts returned against co-defendants on the RICO count demonstrated that the invalid predicate was not an ingredient in the jury's RICO verdicts. **The Mulnick case arose out of injuries suffered by Beth Mulnick in 1979 when she was struck by a car as she was crossing a Manhattan street with her friend Patti Kibel. The Eisen firm sued the car's driver on Mulnick's behalf. Napoli was the attorney assigned to the case, which settled for $1 million after the trial testimony of Patti Kibel. At the Mulnick trial, Kibel had testified that Mulnick was crossing the street with the light and within the crosswalk, dropped her glove, and returned several paces to retrieve it, and that the car then ran into her while she was in the crosswalk with the light still in her favor. At the Eisen trial, Kibel testified that her testimony at the Mulnick trial had been false and that various Eisen firm lawyers, including Eisen and Napoli, caused, or acquiesced in, her false testimony that Mulnick had been crossing with the light. Eisen and Napoli contend that Kibel's testimony at the Eisen trial was too equivocal to support a jury finding that Eisen or Napoli either prepared or caused Kibel to testify falsely at the Mulnick trial. With respect to Napoli, Kibel testified at the Eisen trial that, prior to her testimony at the Mulnick trial, she told the man who prepared her that her anticipated testimony about the accident was false. Although Kibel could not recall the identity or appearance of the lawyer who conducted this trial, it was established through the testimony of other witnesses and documentary evidence that Napoli was the Eisen firm trial attorney who questioned witnesses at the Mulnick trial. Contrary to Napoli's suggestion, the Government was not required to prove that he specifically formulated the lie to which Kibel was to testify. Instead, as the indictment charged, the Government needed to establish that Napoli had either prepared or caused Kibel to testify falsely. To prove this, it was plainly sufficient to establish that Kibel told Napoli the truth about the Mulnick accident but that Napoli did nothing to dissuade her from testifying to the false version conjured by the Eisen firm and that he caused her to testify falsely by putting her on the *258 stand and eliciting the perjurious testimony from her. With respect to Eisen, Kibel's testimony is even more indefinite. Eisen claims that Kibel's wavering testimony at the Eisen trial is insufficient proof that he was the person who instructed Kibel to provide false testimony in connection with the Mulnick case. Kibel's recollection was vague as to the details of her conversations with Eisen, but on direct examination she stated that she told Eisen the truth about Beth Mulnick's accident and that he instructed her to give a false account of how the accident occurred. However, when questioned on cross-examination as to any particular element of the fabricated story offered by her at the Mulnick trial, Kibel could not recall whether Eisen or someone else in the Eisen firm had suggested the alteration. The Government argues that Kibel's assertion on direct that Eisen instructed her how to testify is not invalidated by her inability to remember on crossexamination what Eisen had said to her on specific topics and who precisely had caused her to testify as she did to particular aspects of her testimony. The Government argues that the weakness of Kibel's testimony was a matter for cross-examination, and that any apparent tension in her testimony was a matter of credibility to be resolved by the jury. We need not decide whether Kibel's equivocal testimony constituted sufficient evidence to support the jury's finding with respect to the mail fraud allegation against Eisen specified in the Mulnick predicate act, racketeering act

3. That act (one of three charged against Eisen) alleged that Eisen engaged in criminal activity in connection with the Mulnick case in two distinct ways: **(1) that he committed **mail fraud for the purpose of executing a scheme to prepare and cause Patti Kibel to testify falsely at trial, and (2) that he caused another person to bribe a New York City Police Officer who was about to be called as a witness in connection with the case. The jury indicated on the verdict form that it found Eisen had committed racketeering act 3 both by committing witness bribery and mail fraud. Eisen does not allege any infirmity with the jury's finding on the witness bribery aspect of the Mulnick predicate.FN5 FN5. Officer William Mulligan testified at the Eisen trial that he wrote the original police report of the Mulnick accident, which indicated that Kibel had stated at the time of the accident that Mulnick was crossing the street against the light. He further testified that he had been offered a bribe several days before the Mulnick trial by Eisen firm investigator Frank Laine to testify that he could not recall Kibel's statement. **Laine, who testified under a grant of immunity at the Eisen trial, admitted that he had indeed attempted to bribe the officer and had done so at Eisen's request. A finding either of mail fraud or of witness bribery would have been sufficient to support the Mulnick racketeering act. Thus the invalidation of one of two sufficient bases specifically found by the jury to support this predicate would not undermine the jury's finding that Eisen committed a racketeering act with respect to the Mulnick case. Cf. Griffin v. United States, 502 U.S. 46, ---- - ----, 112 S.Ct. 466, 469-74, 116 L.Ed.2d 371 (1991) (even a general verdict in a criminal case is to be upheld on appeal against a claim of insufficient evidence to support one of alternative bases for conviction whenever the evidence suffices for at least one basis). In light of the fact that Eisen's challenge does not compromise the validity of the Mulnick predicate, and the ample evidence that the Mulnick case was fraudulent and that Eisen participated in the fraud, we have no doubt that the jury would have convicted Eisen on the RICO substantive and conspiracy charges even if it had found that the Mulnick racketeering act rested only on bribery. Cf. Paccione, 949 F.2d at 1198 (jury would have convicted defendant of a RICO violation even in the absence of an invalid predicate). B. The Pietrafesa Case-Racketeering Act Twenty-Six [10] Morganti claims that there was insufficient evidence that she committed mail fraud in connection with the Pietrafesa case. That case arose from injuries sustained*259 by Carmella Pietrafesa when she slipped on a sidewalk outside a supermarket in Greenwich Village. The Eisen firm sued the supermarket on behalf of Pietrafesa. The Eisen firm relied on the testimony of Morganti's 70-year-old mother, Helen Gaimari, who lived four blocks from the supermarket, to establish that the supermarket had prior notice of the sidewalk defect. At trial, Gaimari testified that she gave Pietrafesa her name at the time of the accident, had fallen because of the same defect months before, and had previously complained to the supermarket about the defect. It was not disclosed to defense counsel in the Pietrafesa case that Gaimari was the mother of Morganti, the Eisen firm's office manager. The jury returned a verdict for Pietrafesa of approximately $35,000. [11] Morganti argues that the Government adduced no affirmative evidence that Morganti caused her mother to testify, or that her mother, Helen Gaimari, testified falsely. In evaluating this claim we must credit every inference that can be drawn in the Government's favor, whether from direct or circumstantial evidence. See, e.g., United States v. Parker, 903 F.2d 91, 96-97 (2d Cir.), cert. denied, 498 U.S. 872, 111 S.Ct. 196, 112 L.Ed.2d 158 (1990). Moreover, the jury is free to draw negative inferences from an untruthful witness's testimony as long as there is affirmative testimony to supplement or corroborate those negative inferences. See United States v. Marchand, 564 F.2d 983, 985-86, 1000-01 (2d Cir.1977), cert. denied, 434 U.S. 1015, 98 S.Ct. 732, 54 L.Ed.2d 760 (1978). The Government points to the testimony of five witnesses to support the inference that Morganti caused her mother to testify and that the testimony was false. The plaintiff, Carmella Pietrafesa, testified in a deposition preceding her personal injury trial that she had not gotten the names of the people who helped her up at the time of her accident. In contrast, she testified at her own trial and at the Eisen trial that an elderly woman who turned out to be Gaimari picked her up and gave her a piece of paper containing Gaimari's name and number. Pietrafesa also testified at the Eisen trial that during the course of trial preparation she had had a few discussions with Morganti concerning her case.

Frank DeSalvo, an Eisen firm attorney, testified about his handling of the Pietrafesa case. He stated that he sent out a letter to defense counsel on November 11, 1982, stating that there were no witnesses to Pietrafesa's accident. DeSalvo testified that he represented Pietrafesa at the December 20, 1982, deposition in which she stated that she did not get the name of the person who helped her up. He further testified that he sent a second letter to defense counsel in the Pietrafesa case three days after the deposition that listed Helen Gaimari, Morganti's mother, as a notice witness to Pietrafesa's accident. However, even though DeSalvo had dated Morganti's daughter and had met Gaimari, he claimed to know the older woman only as Grandma Helen. Evan Torgan, another attorney formerly associated with the Eisen firm, testified that Morganti and Eisen assigned him the cases that he tried at the Eisen office, that he had tried the Pietrafesa case in November 1984, and that it was his practice to report trial verdicts to Morganti. He further testified that he was dating Morganti's daughter around the end of 1984 or the beginning of 1985 but also claimed that he did not learn that Gaimari was Morganti's mother until after the Pietrafesa trial ended. Gaimari testified at the Eisen trial that sometime after the accident, she was called by a lawyer who asked her to testify at the Pietrafesa trial; the lawyer indicated that he knew Gaimari was Morganti's mother. Robert Steindorf, a defense attorney at the Pietrafesa trial, testified that Gaimari was a crucial witness against his client because she was the only notice witness at that trial who was not related to Pietrafesa. Giving credence to every inference that could be drawn in the Government's favor from the direct and circumstantial evidence elicited from these witnesses, we find that *260 a reasonable juror could find that Gaimari gave false testimony concerning her presence at the Pietrafesa accident. We are, however, unable to conclude that a reasonable juror could find, beyond a reasonable doubt, that Morganti caused Gaimari to give false testimony in the Pietrafesa case. The Government invites us to rely on Morganti's familial relation to Gaimari as well as Morganti's role in the Eisen firm. While these factors may indicate that Morganti had abundant opportunity to cause Gaimari to give false testimony, they provide an insufficient basis for a reasonable juror to conclude beyond a reasonable doubt that Morganti played a role in having her mother testify falsely at the Pietrafesa trial. Although, having persuaded the jury that Gaimari was untruthful, the prosecutor might have invited the jury to disbelieve Gaimari's denials of her daughter's involvement, without affirmative evidence in corroboration, such a negative inference is, by itself, insufficient to support the conviction. Marchand, 564 F.2d at 986. A jury's verdict will be sustained if there is substantial evidence, taking the view most favorable to the government, to support it. United States v. Mulheren, 938 F.2d 364, 368 (2d Cir.1991) (citations omitted) (emphasis in original). In this case Morganti has met the very heavy burden of demonstrating that the evidence at trial was insufficient to prove her guilt beyond a reasonable doubt. [12] We must now determine whether the invalidation of this racketeering act undermines Morganti's substantive and conspiracy RICO convictions. We conclude that the error in submitting the invalid predicate to the jury was harmless beyond a reasonable doubt. See Paccione, 949 F.2d at 1198. Three valid racketeering acts remain, those relating to the Miceli, Schwartz, and Stanton cases. In each of these cases there was direct and unequivocal testimony that Morganti was an active participant in the cabal to falsify testimony. Furthermore, the pattern of verdicts returned against co-defendants confirms our conclusion that the jury would have returned the RICO convictions in the absence of the invalid predicate [meaning if the specific predicate could not be established and therefore be absent] . Eisen, Gabe, and Rella were convicted of the RICO counts on the basis of a jury finding that they had each committed three racketeering acts. Morganti shares a pair of valid predicates in common with those of Eisen and Rella: Morganti and Eisen were both found guilty of the Schwartz and Stanton predicates; Morganti and Rella were both found guilty of the Miceli and Schwartz predicates. The acts alleged against Morganti in the Miceli, Schwartz, and Stanton predicates occurred, respectively, in 1983, in 1984, and between 1984 and 1988, and thus the substantive RICO conviction remains timely. Because the jury has already found that these predicates relate to each other as well as to the enterprise, and because we have no hesitancy in finding that, even without the Pietrafesa predicate, **these three racketeering predicates posed a threat of continuity, we affirm Morganti's substantive and conspiracy RICO convictions. See United States v. Minicone, 960 F.2d 1099, 1106 (2d Cir.) (to establish pattern of racketeering, prosecution must show racketeering predicates are horizontally and vertically related, and that they amount to or pose threat of continued criminal activity), cert.

denied, 503 U.S. 950, 112 S.Ct. 1511, 117 L.Ed.2d 648 (1992).

Napoli v. U.S., 32 F.3d 31 (2nd Cir.(N.Y.),Aug 04, 1994)

Scheme to file false lawsuits.

Attorneys, law firm's investigators and its office administrator were convicted in the United States District Court for the Eastern District of New York, Charles P. Sifton, J., of Racketeer Influenced and Corrupt Organizations Act (RICO) violations in connection with firm's fraudulent conduct of civil litigation as plaintiff's counsel in personal injury cases, and they appealed. The Court of Appeals, Jon O. Newman, Circuit Judge, 974 F.2d 246, affirmed. Certiorari was denied, 113 S.Ct. 1841. Defendants moved to vacate or set aside their convictions. The District Court denied motion, and appeal was taken. The Court of Appeals, Miner, Circuit Judge, held that any error of law committed by district court in charging jury regarding RICO offense was not such a fundamental defect giving rise to complete miscarriage of justice as to support collateral attack on final judgment. Affirmed. [2] Criminal Law 110 1450

110 Criminal Law 110XXX Post-Conviction Relief 110XXX(B) Grounds for Relief 110k1450 k. In General. Most Cited Cases (Formerly 110k997.3) Statutory grounds for collateral attack on final judgment in federal criminal case are narrowly limited and error that may justify reversal on direct appeal will not necessarily support collateral attack on a final judgment. 28 U.S.C.A. 2255. [3] Criminal Law 110 1451

110 Criminal Law 110XXX Post-Conviction Relief 110XXX(B) Grounds for Relief 110k1451 k. Constitutional or Fundamental Error. Most Cited Cases (Formerly 110k997.3) Criminal Law 110 1493

110 Criminal Law 110XXX Post-Conviction Relief 110XXX(B) Grounds for Relief 110k1493 k. Jurisdiction. Most Cited Cases (Formerly 110k997.3) As general rule, relief is available under statute governing motions to vacate, set aside or correct sentence only for **constitutional error, **lack of jurisdiction in sentencing court or **error of law that constitutes fundamental defect which inherently results in complete miscarriage of justice. 28 U.S.C.A. 2255.

[4] Criminal Law 110

1552

110 Criminal Law 110XXX Post-Conviction Relief 110XXX(B) Grounds for Relief 110k1551 Instructions 110k1552 k. In General. Most Cited Cases (Formerly 110k997.4) Any error of law committed by district court in instructing jury that it need not find that Racketeer Influenced and Corrupt Organizations (RICO) defendants participated in management or control of enterprise for purposes of statute, making it unlawful for person employed by enterprise engaged in commerce to participate in conduct of such enterprise's affairs through pattern of racketeering activity, was not such a fundamental defect giving rise to complete miscarriage of justice as to support a collateral attack on the final judgment since there was overwhelming evidence that defendants played some part in directing affairs of the charged enterprise. 18 U.S.C.A. 1962(c); 28 U.S.C.A. 2255. [5] Criminal Law 110 1438

110 Criminal Law 110XXX Post-Conviction Relief 110XXX(A) In General 110k1435 Consideration Despite Waiver or Other Bar 110k1438 k. Cause and Prejudice in General. Most Cited Cases (Formerly 110k997.2) Procedural default of even constitutional issue will bar review under statute governing motions to vacate, set aside or correct sentence unless petitioner can show cause excusing the default and actual prejudice resulting from challenged error. 28 U.S.C.A. 2255. [6] Criminal Law 110 1439

110 Criminal Law 110XXX Post-Conviction Relief 110XXX(A) In General 110k1435 Consideration Despite Waiver or Other Bar 110k1439 k. Cause. Most Cited Cases (Formerly 110k997.2) It would not have been futile for RICO defendants to raise on direct appeal or in their petitions for certiorari their challenges to trial court's instruction that jury need not find that defendants participated in management or control of enterprise for purposes of statute making it unlawful for person employed by enterprise engaged in commerce to participate in conduct of such enterprise's affairs through pattern of racketeering activity because there was split among the circuits regarding adoption of operation or management test and thus, defendants failed to show cause to be relieved from their procedural default and were not entitled to have their convictions vacated or set aside. 18 U.S.C.A. 1962(c); 28 U.S.C.A. 2255. *33 Before: MESKILL, MINER and MAHONEY, Circuit Judges. MINER, Circuit Judge: Petitioners-appellants Joseph Napoli, Harold Fishman, Marty Gabe, Dennis Rella and Harold Weinstein appeal from an August 31, 1993 order of the United States District Court for the Eastern District of New York (Sifton, J.), denying their motions, brought pursuant to 28 U.S.C. 2255, to vacate and set aside their convictions. Appellants were convicted, following a jury trial, of conducting, and of conspiring to conduct, the affairs of an enterprise

through a pattern of racketeering activity, in violation of 18 U.S.C. 1962(c) and 1962(d). In their section 2255 motions, appellants contended that the district court's charge on the element of section 1962(c) requiring that the defendant conduct or participate, directly or indirectly, in the conduct of the affairs of the RICO enterprise, a charge based upon the settled law of this Circuit, see United States v. Scotto, 641 F.2d 47 (2d Cir.1980), cert. denied, 452 U.S. 961, 101 S.Ct. 3109, 69 L.Ed.2d 971 (1981), was incorrect under the Supreme Court's recent decision in Reves v. Ernst & Young, 507 U.S. 170, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993). The district court denied the motions, concluding that (1) there was no procedural bar to the habeas applications; (2) the charge given satisfied Reves; and (3) any error was, at most, harmless. For the reasons that follow, we affirm. BACKGROUND The convictions in this case arose from appellants' involvement in Morris J. Eisen, P.C., a large Manhattan law firm that specialized in personal injury suits. Napoli and Fishman were trial attorneys who were Of Counsel to the Eisen firm, with Napoli being the main trial attorney for the firm. Gabe, Rella and Weinstein were private investigators affiliated with the firm who assisted with trial preparation. In our opinion affirming the convictions in this case, we summarized the evidence as follows: The evidence at trial established that the defendants conducted the affairs of the Eisen law firm through a pattern of mail fraud and witness bribery by pursuing counterfeit claims and using false witnesses in personal injury trials, and that the Eisen firm earned millions in contingency fees from personal injury suits involving fraud or bribery. The methods by which the frauds were accomplished included pressuring accident witnesses to testify falsely, paying individuals to testify falsely that they had witnessed accidents, paying unfavorable witnesses not to testify, and creating false photographs, documents, and physical evidence of accidents for use before and during trial. The Government's proof included the testimony of numerous Eisen firm attorneys and employees as well as Eisen firm clients, defense attorneys, and witnesses involved in fraudulent personal injury suits. Transcripts, correspondence, and trial exhibits from the fraudulent personal injury suits were also introduced. United States v. Eisen, 974 F.2d 246, 251 (2d Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 1841, 123 L.Ed.2d 467 (1993). The jury considered illegal acts committed in eighteen personal injury lawsuits in which the plaintiffs were represented by the Eisen firm. Appellants were found guilty of racketeering acts involving the following cases: Napoli: Ferri, Mulnick, Robbins, Rehberger Fishman: Aboud, Schwartz, Tuning, Nieves Rella: Miceli, Rehberger, Schwartz Gabe: Robbins, Stanton, Nieves Weinstein: Aboud, Schwartz, Tuning, Nieves, Metrano Id. At trial, the district court charged the jury on the substantive RICO violation as follows: [T]he prosecution must show that the defendant whose case you are considering knowingly and intentionally conducted or participated in the conduct of the affairs of the enterprise through a pattern of racketeering activity.... Simply put, the prosecution must prove that there is a meaningful connection between*34 the pattern of racketeering activity and the affairs of the enterprise, that is, that the defendant knew of the existence of the

enterprise and intended that its affairs be furthered by the defendant engaging in a pattern of racketeering activity. .... The prosecution is not required to prove that the defendant participated in the management or control of the enterprise. The prosecution is, however, required to prove that the defendant's actions were related to the enterprise and that those acts were known to and were intended to further the affairs of the enterprise and did in fact further the affairs of the enterprise. The prosecution need not prove, as the statute indicates, that the defendant directly participated in the conduct of the affairs of the enterprise. It must prove, however, that the defendant either directly or indirectly conducted or participated in the conduct of the enterprise's affairs through the pattern of racketeering activity. J.A. at 33-34 (emphasis supplied). The portion of the charge in which the district court instructed the jury that it need not find that the defendants participated in the management or control of the enterprise was, at the time it was given, a correct statement of the law of this Circuit under our decision in Scotto, 641 F.2d at 54. None of the appellants challenged the charge. On direct appeal, appellants raised numerous challenges to their convictions, all of which were rejected by this Court in an August 17, 1992 opinion. 974 F.2d 246. On October 13, 1992, Reves v. Ernst & Young, 507 U.S. 170, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993) , was argued to the Supreme Court, which rendered its decision in that case on March 3, 1993. Settling a split among the circuits, compare Bennett v. Berg, 710 F.2d 1361, 1364 (8th Cir.) (en banc) (adopting operation or management test), cert. denied, 464 U.S. 1008, 104 S.Ct. 527, 78 L.Ed.2d 710 (1983) with Bank of Am. Nat'l Trust & Sav. Assn. v. Touche Ross & Co., 782 F.2d 966, 970 (11th Cir.1986) (rejecting same test), and overruling in part our decision in Scotto, the Court answered in the affirmative the question whether one must participate, in the operation or management of the enterprise itself to be subject to liability under [18 U.S.C. 1962(c) ]. 507 U.S. at ----, ---- ----, 113 S.Ct. at 1166, 1172-73. None of the petitioners, except Napoli, challenged the propriety of the jury charge on direct appeal. Napoli apparently noted in his reply brief that certiorari had been granted in Reves. He also noted this fact in his petition for rehearing to this Court and in his petition for certiorari. On April 8, 1993, about one month after the Court decided Reves, Fishman apparently filed a supplemental petition for certiorari, FN1 requesting that Reves be applied to his case. The Supreme Court denied each of appellants' petitions for certiorari. --- U.S. ----, 113 S.Ct. 1841, 123 L.Ed.2d 467 (Apr. 19, 1993) (Napoli, Rella, Weinstein and Fishman); --- U.S. ----, 113 S.Ct. 1619, 123 L.Ed.2d 178 (Mar. 22, 1993) (Gabe). FN1. The Government asserts that it could not locate this supplemental petition, and Fishman has not presented it to this Court. During the Summer of 1993, appellants moved the district court, pursuant to 28 U.S.C. 2255, to vacate and set aside their convictions, arguing that the district court's charge was incorrect in light of Reves. On August 28, 1993, the district court denied the motions, finding that (1) there was no procedural bar to the section 2255 applications; (2) the charge given satisfied Reves; and (3) any error was, at most, harmless. This appeal followed. DISCUSSION 1. Reves v. Ernst & Young Under section 1962(c), it is illegal 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 or collection of unlawful debt. Reves involved *35 a civil RICO action brought by the trustee in bankruptcy of a farming cooperative against outside accountants who allegedly filed false financial statements for the cooperative, the charged enterprise. The district court in that case dismissed the section 1962(c) claim because the plaintiffs had failed to demonstrate that the

accountants had participated in the operation or management of the enterprise, as required under the Eighth Circuit's interpretation of the provision. The Supreme Court agreed with the Eighth Circuit's interpretation. First, the Court concluded that the word conduct, as it was used in the provision, required that the defendant exercise some degree of direction over the affairs of the enterprise. 507 U.S. at ---- - ----, 113 S.Ct. at 1169-70. The Court then reasoned, Once we understand the word conduct to require some degree of direction and the word participate to require some part in that direction, the meaning of 1962(c) comes into focus. In order to participate, directly or indirectly, in the conduct of such enterprise's affairs, one must have some part in directing those affairs. Of course, the word participate makes clear that RICO liability is not limited to those with primary responsibility for the enterprise's affairs, just as the phrase directly or indirectly makes clear that RICO liability is not limited to those with a formal position in the enterprise, **but some part in directing the enterprise's affairs is required. The operation or management test expresses this requirement in a formulation that is easy to apply. Id. at ----, 113 S.Ct. at 1170 (footnote omitted). The Court further recognized that liability under section 1962(c) was not limited to upper management, noting that [a]n enterprise is operated not just by upper management but also by lower-rung participants in the enterprise who are under the direction of upper management. Id. at ----, 113 S.Ct. at 1173. However, the Court declined to decide how far 1962(c) extends down the ladder of operation because it was clear that the accountants in that case were not acting under the direction of the cooperative's officers or board. Id. n. 9. The Government argues that the instructions given by the district court in this case, taken as a whole, are consistent with Reves. Because the district court instructed the jury that the prosecution was not required to prove that the defendants participated in the management or control of the enterprise, **we will assume for purposes of this appeal that the instructions were erroneous. Nevertheless, we conclude that Napoli and Fishman cannot show that any error in the instructions resulted in a complete miscarriage of justice such as would justify relief under section 2255, and Gabe, Rella and Weinstein cannot demonstrate cause for failing to challenge the instruction on direct appeal. 2. Napoli and Fishman [1][2][3][4] As we have noted, none of the appellants objected to the RICO instructions at trial, and only Napoli and Fishman challenged the instructions before their direct appeals were exhausted. Even if we assume that Napoli and Fishman preserved their challenges, we must bear in mind that not every asserted error of law can be raised on a 2255 motion. Davis v. United States, 417 U.S. 333, 346, 94 S.Ct. 2298, 2305, 41 L.Ed.2d 109 (1974) . The grounds provided in section 2255 for collateral attack on a final judgment in a federal criminal case are narrowly limited, and it has long been settled law that an error that may justify reversal on direct appeal will not necessarily support a collateral attack on a final judgment. United States v. Addonizio, 442 U.S. 178, 184, 99 S.Ct. 2235, 2240, 60 L.Ed.2d 805 (1979). **As a general rule, relief is available under 2255 only for **a constitutional error, **a lack of jurisdiction in the sentencing court, or an error of law that constitutes a fundamental defect which inherently results in a complete miscarriage of justice. Hardy v. United States, 878 F.2d 94, 97 (2d Cir.1989) (quoting Addonizio, 442 U.S. at 185, 99 S.Ct. at 2240 (quoting Hill v. United States, 368 U.S. 424, 428, 82 S.Ct. 468, 471, 7 L.Ed.2d 417 (1962))). We conclude that, as to Napoli and Fishman, any error of law committed by the district court in charging the jury was not such a *36 fundamental defect giving rise to a complete miscarriage of justice as to support a collateral attack. Under the plain error rule applicable to the review on direct appeal of challenges not raised at trial, we have held that a jury instruction which omits an element of the offense does not warrant reversal if the element was proven by overwhelming evidence. See United States v. Tillem, 906 F.2d 814, 824-25 (2d Cir.1990). In Tillem, we were faced with a challenge to a RICO instruction that failed to require that the predicate acts be interrelated and continuous. We concluded that, although the charge would have been reversible error had it been objected to at trial, reversal was not warranted under the plain error rule because the proof overwhelmingly established that the predicate acts were interrelated and continuous. Id. at 825. On the state of the record in that case, we found that any

error resulting from the deficient instructions did not affect the fundamental fairness of the trial. Id.; see also Ianniello v. United States, 10 F.3d 59, 63-65 (2d Cir.1993) (defective instruction did not warrant relief on 2255 motion in light of overwhelming evidence). Similarly, in United States v. Thai, 29 F.3d 785, 816-17 (2d Cir.1994), we rejected the appellant's challenge to a RICO instruction that allegedly did not comply with Reves. In that case, the proof at trial demonstrated that the appellant had played some part in directing the affairs of the charged enterprise. The plain error analysis applied in Tillem and Thai applies a fortiori here, since the plain error standard, under which we will correct an error that is plain, affect[s] substantial rights and seriously affect[s] the fairness, integrity or public reputation of judicial proceedings, United States v. Olano, 507 U.S. 725, ----, 113 S.Ct. 1770, 1779, 123 L.Ed.2d 508 (1993) (quoting United States v. Atkinson, 297 U.S. 157, 160, 56 S.Ct. 391, 392, 80 L.Ed. 555 (1936)) (alteration in Olano ), is less stringent than the section 2255 standard. Here, Napoli and Fishman cannot show that any error amounted even to plain error, let alone surmount the higher burden of showing that the error amounted to a fundamental defect which inherently results in a complete miscarriage of justice. In this case, there was overwhelming evidence presented to the jury that **Napoli and Fishman played some part in directing the affairs of the charged enterprise. Although Napoli and Fishman contend that they were no more than outside, Of Counsel, attorneys to the Eisen firm, the evidence demonstrated that they were not merely providing peripheral advice, but had participated in the core activities that constituted the affairs of the Eisen firm, namely, trying cases and obtaining settlements. Cf. Azrielli v. Cohen Law Offices, 21 F.3d 512, 521-22 (2d Cir.1994) (defendant who merely acted as attorney in allegedly fraudulent real estate transactions did not participate in management or control of RICO enterprise). Moreover, they discharged their responsibility through a pattern of illegal acts. In the Ferri, Mulnick, Robbins and Rehberger cases, the jury found that Napoli had procured false testimony through bribery, fabricated testimony for witnesses at trial and suborned perjury. The jury also found that Fishman had bribed witnesses, committed mail fraud and instructed witnesses to testify falsely in connection with the Aboud, Schwartz, Tuning and Nieves cases. As attorneys for the Eisen law firm with primary responsibility for the actual litigation of lawsuits, Napoli and Fishman exercised a significant degree of direction over the affairs of the enterprise. Their role plainly involved participating in the control or management of the firm, within the definition of Reves. **On the record in this case, we conclude as we did in Tillem that the challenged instruction did not affect the fundamental fairness of the tria l. 906 F.2d 814. That being so, we must conclude that the instruction did not amount to a fundamental defect which inherently results in a complete miscarriage of justice warranting relief under section 2255. 3. Gabe, Rella and Weinstein [5][6] Unlike Napoli and Fishman, Gabe, Rella and Weinstein failed to raise their challenges on direct appeal. Accordingly, our review of their challenges is more limited. It *37 is settled that a procedural default of even a constitutional issue will bar review under section 2255 unless the petitioner can show cause excusing the default and actual prejudice resulting from the challenged error. Campino v. United States, 968 F.2d 187, 189-90 (2d Cir.1992); see also United States v. Frady, 456 U.S. 152, 166-68, 102 S.Ct. 1584, 1593-95, 71 L.Ed.2d 816 (1982). Relying on our decision in Ingber v. Enzor, 841 F.2d 450, 454-55 (2d Cir.1988), these appellants argue that it would have been futile to raise their challenges on direct appeal in light of the settled law in this Circuit, and that this futility should excuse their default. While it may have been futile to raise the challenges in the district court, inasmuch as that court was bound by our precedents, we do not believe that it would have been futile to raise the challenges on direct appeal, and it certainly would not have been futile for these appellants to include the challenges in their petitions for certiorari. In Ingber, we were faced with a defendant who sought to collaterally attack his conviction on a section 2255 motion after the Supreme Court interpreted the mail fraud statute, 18 U.S.C. 1341, in a way that was favorable to him. 841 F.2d at 452-53. The Supreme Court's decision was handed down after the defendant had exhausted his direct appeals and followed a decade of consistent precedent to the contrary in this Court and numerous other circuit courts. Id. at 454. We concluded that any attempt to raise the issue on direct appeal would have been patently futile. Id. at 455. By contrast, there were several stages in the litigation at which Gabe, Rella and Weinstein could

have raised their challenges to the jury instruction. As Napoli had done, they could have brought to this Court's attention that other circuits disagreed with our analysis in Scotto and that the Supreme Court had granted certiorari in Reves to resolve the split among the circuits on the construction of section 1962(c). Moreover, they could have raised the challenges in their petitions for certiorari, as did Fishman; given the split among the circuits, a factor not present in Ingber, and the fact that certiorari had been granted in Reves, it would have been anything but futile to do so. Accordingly, we must conclude that Gabe, Rella and Weinstein have not shown cause to be relieved from their procedural default and thus are not entitled to the relief they seek. CONCLUSION The order of the district court is affirmed. Curtis & Associates, P.C. v. The Law Offices of David M. Bushman, Esq., 2010 WL 5186795 (E.D.N.Y.,Dec 15, 2010)

Case is distinguished to Eisen, on the facts, in that it pleads only litigation activities as the RICO racketeering activity criminal predicate acts, that RICO plaintiff is to allege criminal predicate acts, as in Eisen, not merely litigation activities, the defendant lawyer [lawyers] must in their engagement of the predicate acts must go well beyond their capacities as legal representatives in conducting their fraudulent scheme. Focus on the crimes committed, or in other words that are already proved or established and are of things that are not yet or to still be determined during the course of the litigation, not the litigation activities in defining the criminal predicate acts of the mail fraud. There is a distinction between malicious prosecution filing a claim without objective evidence to believe that a crime has been committed and filing false evidence, committing perjury, and fraud on the court.]
Background: Attorney and his law firm brought action against three former clients and attorneys and law firms which allegedly represented or counseled those clients in clients' respective legal malpractice litigation against plaintiffs, seeking recovery under Racketeer Influenced and Corrupt Organizations Act (RICO) for economic damages allegedly caused to their business and property, as well as damages under various New York statutory and common law causes of action. Defendants moved to dismiss complaint and for sanctions. Holdings: The District Court, Matsumoto, J., held that: (1) allegations were insufficient to plead predicate acts of mail and wire fraud; (2) plaintiffs failed to plead fraud with particularity; (3) it would decline to exercise supplemental jurisdiction over state law claims; (4) further leave to amend complaint was inappropriate; but (5) defendants were not entitled to sanctions. So ordered. West Headnotes [1] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 69

319Hk68 Pleading 319Hk69 k. In General. Most Cited Cases Although civil Racketeer Influenced and Corrupt Organizations Act (RICO) actions generally need not do more than meet routine pleading requirements, district courts are particularly mindful of pleading standards in context of civil RICO claim, the assertion of which often has almost inevitable stigmatizing effect on those named as defendants. 18 U.S.C.A. 1961 et seq. [2] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk68 Pleading 319Hk69 k. In General. Most Cited Cases Because of likely powerful effect on potentially innocent defendants who face threat of treble damages, and concomitant potential for abuse of Racketeer Influenced and Corrupt Organizations Act's (RICO) potent provisions, there is particular imperative in civil RICO actions to flush out frivolous allegations at early stage of litigation. 18 U.S.C.A. 1961 et seq. [3] Federal Civil Procedure 170A 636 69

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases Where a plaintiff alleges Racketeer Influenced and Corrupt Organizations Act (RICO) predicate acts based upon fraudulent activities such as mail or wire fraud, plaintiff must satisfy particularity requirements of federal procedural rule pertaining to pleading special matters, in addition to general pleading requirements. 18 U.S.C.A. 1961 et seq.; 18 U.S.C.A. 1341, 1343; Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. [4] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk24 Pattern of Activity 319Hk25 k. In General. Most Cited Cases A plaintiff in civil Racketeer Influenced and Corrupt Organizations Act (RICO) suit must establish pattern of racketeering activity. 18 U.S.C.A. 1964(c), 1962(a-d). [5] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk68 Pleading 319Hk72 k. Pattern. Most Cited Cases 72 25

In order to survive motion to dismiss Racketeer Influenced and Corrupt Organizations Act (RICO) claim, pattern of racketeering activity must be adequately alleged in complaint. 18 U.S.C.A. 1964(c), 1962(a-d); Fed.Rules Civ.Proc.Rule 12(b)(6), 28 U.S.C.A. [6] Postal Service 306 35(2)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(2) k. Nature and Elements of Offense in General. Most Cited Cases Telecommunications 372 1014(2)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(2) k. Nature and Elements of Offense in General. Most Cited Cases To state claim for mail and wire fraud, as predicate act which could form basis for pattern of racketeering activity under Racketeer Influenced and Corrupt Organizations Act (RICO), a plaintiff must allege: **(1) existence of scheme to defraud, **(2) the defendant's knowing participation in scheme, and **(3) use of wire, mail, or television communications in interstate commerce in furtherance of scheme. 18 U.S.C.A. 1962(a-c), 1961(1, 5), 1341, 1343. [7] Postal Service 306 35(6)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(6) k. Intent That Mails Be Used as Part of Scheme. Most Cited Cases Telecommunications 372 1014(2)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(2) k. Nature and Elements of Offense in General. Most Cited Cases To prove mail or wire fraud, as predicate act which could form basis for pattern of racketeering activity under Racketeer Influenced and Corrupt Organizations Act (RICO), a plaintiff need not show that defendant personally mailed or wired anything themselves, but that they caused it to be done. 18 U.S.C.A. 1962(a-c), 1961(1, 5), 1341, 1343. [8] Postal Service 306 35(8)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(8) k. Effectiveness of Matter Mailed to Further Fraud. Most Cited Cases

The gravamen of mail fraud offense, as predicate act which could form basis for pattern of racketeering activity under Racketeer Influenced and Corrupt Organizations Act (RICO), is the scheme to defraud, and any mailing that is incident to essential part of scheme satisfies mailing element even if mailing itself contains no false information. 18 U.S.C.A. 1962(a-c), 1961(1, 5), 1341. [9] Postal Service 306 35(10)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(10) k. Nature of Scheme or Device in General. Most Cited Cases Telecommunications 372 1014(8)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(8) k. Nature of Scheme or Device in General. Most Cited Cases Attorney's allegations that three of his former clients and their current legal counsel engaged in litigation activities, such as mailing legal documents and requests for adjournments, in connection with their phony and frivolous legal malpractice actions against attorney, were insufficient to plead predicate acts of mail and wire fraud, as required to state Racketeer Influenced and Corrupt Organizations Act (RICO) claim; allegations at best attempted to make out malicious prosecution claim. 18 U.S.C.A. 1964(c), 1962(a-c), 1343, 1341. [10] Process 313 173

313 Process 313IV Abuse of Process 313IV(A) In General 313k173 k. Nature and Elements in General. Most Cited Cases In New York, a malicious abuse of process claim lies against a defendant who (1) employs regularly issued legal process to compel performance or forbearance of some act (2) with intent to do harm without excuse or justification, and (3) in order to obtain collateral objective that is outside legitimate ends of process. [11] Malicious Prosecution 249 .5

249 Malicious Prosecution 249I Nature and Commencement of Prosecution 249k.5 k. Nature and Elements of Malicious Prosecution in General. Most Cited Cases In order to prevail in an action for malicious prosecution in New York, a plaintiff must show: (1) initiation of action by the defendant against him, (2) begun with malice, (3) without probable cause to believe it can succeed, (4) that ends in failure or, in other words, terminates in favor of the plaintiff; in addition, if proceeding of which plaintiff complains was civil action, plaintiff must prove special injury, that is, some interference with plaintiff's person or property beyond ordinary burden of defending lawsuit. [12] Federal Civil Procedure 170A 636

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases Typically, to meet heightened pleading standard for fraud claim in civil Racketeer Influenced and Corrupt Organizations Act (RICO) action, **where a plaintiff claims that specific communications were themselves fraudulent or misleading, the plaintiff must **identify fraudulent communications, **their contents, **who made communications, **where and **when communications were made, and **why communications were fraudulent. 18 U.S.C.A. 1964(c), 1962(a-c); Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. [13] Federal Civil Procedure 170A 636

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases In civil Racketeer Influenced and Corrupt Organizations Act (RICO) cases where plaintiffs allege that mails or wires were simply used in furtherance of master plan to defraud, mailings need not contain fraudulent information, and **detailed description of underlying scheme and connection therewith of mail and/or wire communications is sufficient to satisfy rule requiring that fraud be pled with particularity; in such cases, **particularity as to mailings themselves is unnecessary, **but rather rule requires adequate particularity in body of complaint as to specific circumstances constituting overall fraudulent scheme. 18 U.S.C.A. 1964(c), 1962(a-c), 1343, 1341; Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. [14] Federal Civil Procedure 170A 636

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases Even if attorney's allegations that three of his former clients and their current legal counsel mailed various litigation-related documents on or about certain specified dates in connection with their phony and frivolous legal malpractice actions against attorney were sufficient to state Racketeer Influenced and Corrupt Organizations Act (RICO) predicate acts of mail and wire fraud, allegations failed to satisfy rule requiring that fraud be pled with particularity; attorney failed to allege which, if any, statements were **false or **misleading, **failed to particularize respect in which he contended statements were fraudulent, and **made no attempt to identify purpose of mailings within overall alleged fraudulent scheme. 18 U.S.C.A. 1964(c), 1962(a-c), 1343, 1341; Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. [15] Postal Service 306 35(10)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(10) k. Nature of Scheme or Device in General. Most Cited Cases Telecommunications 372 1014(9)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(9) k. False Pretenses or Representations. Most Cited Cases A scheme to defraud under wire or mail fraud statutes, as predicate act which could form basis for pattern of racketeering activity under Racketeer Influenced and Corrupt Organizations Act (RICO), requires fraudulent or deceptive means, such as material misrepresentation or concealment. 18 U.S.C.A. 1964(c), 1962(a-c), 1343, 1341. [16] Postal Service 306 35(10)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(10) k. Nature of Scheme or Device in General. Most Cited Cases Any scheme to defraud under the mail and wire fraud statutes, as predicate act which could form basis for pattern of racketeering activity under Racketeer Influenced and Corrupt Organizations Act (RICO), requires some element of deception which may be satisfied where mailing itself is misleading or where there is some other deception which mailing serves. 18 U.S.C.A. 1964(c), 1962(a-c), 1343, 1341. [17] Federal Courts 170B 18

170B Federal Courts 170BI Jurisdiction and Powers in General 170BI(A) In General 170Bk14 Jurisdiction of Entire Controversy; Pendent Jurisdiction 170Bk18 k. Validity or Substantiality of Federal Claims and Disposition Thereof. Most Cited Cases District court would decline to exercise supplemental jurisdiction over state law claims brought by attorney and his law firm against three former clients and clients' current legal counsel, arising out of clients' initiation of legal malpractice actions against attorney, where court dismissed for failure to state claim federal Racketeer Influenced and Corrupt Organizations Act (RICO) claims which formed basis for its federal question jurisdiction. 18 U.S.C.A. 1964(c); 28 U.S.C.A. 1367(c)(3). [18] Federal Civil Procedure 170A 839.1

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(E) Amendments 170Ak839 Complaint 170Ak839.1 k. In General. Most Cited Cases Rationale underlying federal procedural rule authorizing a district court to freely give leave to amend complaint when justice so requires is that if underlying facts or circumstances relied upon by a plaintiff may be proper subject of relief, plaintiff ought to be afforded opportunity to test his claim on merits through amended pleading. Fed.Rules Civ.Proc.Rule 15(a)(2), 28 U.S.C.A. [19] Federal Civil Procedure 170A 851

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(E) Amendments 170Ak851 k. Form and Sufficiency of Amendment. Most Cited Cases Where underlying facts and circumstances could never be proper subject of relief, denial of leave to amend complaint is within district court's discretion. Fed.Rules Civ.Proc.Rule 15(a)(2), 28 U.S.C.A. [20] Federal Civil Procedure 170A 851

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(E) Amendments 170Ak851 k. Form and Sufficiency of Amendment. Most Cited Cases Leave to amend complaint need not be granted where amendment would be futile. Fed.Rules Civ.Proc.Rule 15(a)(2), 28 U.S.C.A. [21] Federal Civil Procedure 170A 851

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(E) Amendments 170Ak851 k. Form and Sufficiency of Amendment. Most Cited Cases Further leave to amend complaint was inappropriate, in action brought by attorney and his law firm against three former clients and clients' current legal counsel, seeking recovery under Racketeer Influenced and Corrupt Organizations Act (RICO) for economic damages allegedly caused attorney's business and property; proposed amendments would not affect district court's analysis as to failure of both complaint and second amended complaint, as matter of law, to adequately plead any predicate acts under RICO, and despite fair notice of deficiencies in complaint, proposed amendments failed to correct those issues. 18 U.S.C.A. 1964(c); Fed.Rules Civ.Proc.Rule 15(a)(2), 28 U.S.C.A. [22] Federal Civil Procedure 170A 2826

170A Federal Civil Procedure 170AXX Sanctions 170AXX(E) Proceedings 170Ak2826 k. Motions; Time for Filing. Most Cited Cases Defendants in civil Racketeer Influenced and Corrupt Organizations Act (RICO) action failed to make motion for sanctions separately from any other motion which described plaintiffs' specific conduct that allegedly violated Rule 11, in accordance with that rule's requirements, and thus were not entitled to attorneys' fees, costs, and damages pursuant to that rule. Fed.Rules Civ.Proc.Rule 11, 28 U.S.C.A. MEMORANDUM & ORDER MATSUMOTO, District Judge. *1 In a fifty-eight page, two hundred and sixty paragraph amended complaint attaching one hundred fifty-four pages of exhibits, Curtis & Associates, P.C. (the Curtis Law Firm), and W. Robert Curtis, Sc.D., J.D. (Curtis), (together, plaintiffs), bring seventeen causes of action against **The Law Offices of David M. Bushman, Esq., David M. Bushman, Attorney at Law, and David M. Bushman, Esq. (collectively, the Bushman defendants); **Jeffrey Levitt, Esq. and Jeffrey Levitt, Attorney at Law, (collectively, the Levitt defendants); **Herbert Monte

Levy, Esq. and Law Offices of Herbert Monte Levy, Esq. (collectively, the Levy defendants); **Eileen DeGregorio (DeGregorio), **Janet Turansky Callaghan (Turansky); and **Stevi Brooks Nichols (Nichols); FN1 (together defendants). Plaintiffs seek recovery under the Racketeer Influenced and Corrupt Organizations (RICO) statute, 18 U.S.C. 1961 et seq., for economic damages allegedly caused to their business and property (the federal claims), as well as damages under various New York statutory and common law causes of action (the state law claims). (See ECF No. 2, Amended Verified Complaint (Complaint or Compl.).) Pursuant to 28 U.S.C. 1331(a), federal question jurisdiction is predicated solely on the first ten causes of action which arise under the federal RICO statute. (Id. 4.) FN2 The Bushman defendants, the Levitt defendants, the Levy defendants, DeGregorio, Turansky, and Nichols each move separately to dismiss the amended complaint on a variety of grounds, including for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) (Rule 12(b) (6)), and plaintiffs oppose. Additionally, after defendants' various motions to dismiss had been fully briefed and were pending before the court, plaintiffs sought and received permission from the court to move to amend/correct/supplement the complaint, plaintiffs so moved, and defendants all opposed. Plaintiffs also move to disqualify Herbert Monte Levy, Esq. (Levy) as counsel for defendant DeGregorio, and Jeffrey Levitt, Esq. (Levitt) as counsel for defendant Turansky, and Levy and Levitt oppose. Finally, defendants Levitt and Turansky move for sanctions against plaintiffs pursuant to Federal Rule of Civil Procedure 11 (Rule 11). For the reasons that follow, the motions to dismiss are granted in their entirety as to the federal RICO causes of action and the court declines to exercise supplemental jurisdiction with respect to the state law causes of action. The motion to amend or supplement the complaint is denied as futile, the motions to disqualify Levitt and Levy as counsel are denied as moot, and the motion for sanctions is denied. BACKGROUND A court considering a motion to dismiss pursuant to Rule 12(b) (6) must accept all well-pleaded factual allegations of a complaint as true, but need not give any effect to legal conclusions couched as factual allegations. Starr v. Sony BMG Music Entm't, 592 F.3d 314, 321 (2d Cir.2010). The factual allegations FN3 of the Complaint and the incorporated documents FN4 are as follows. A. The Parties *2 Plaintiff Curtis is an attorney licensed in the State of New York and the principal of the Curtis Law Firm, a New York professional corporation with an office in Manhattan.FN5 (Compl. 7-8.) Since 1987, plaintiffs allege that the Curtis Law Firm and its predecessor firm have been the only law firm [s] in the United States to concentrate their practice on representing clients injured by attorneys. (Id. 7.) DeGregorio, Turansky, and Nichols are each former clients of the Curtis Law Firm. (Id. 12-14.) Bushman, Levitt, and Levy, are attorneys licensed to practice in the State of New York. (Id. 11, 15, 16.) Bushman practices law in Nanuet, New York through entities named the Law Offices of David M. Bushman, Esq. and David M. Bushman, Attorney At Law (id. 9-10), Levitt practices law in Amityville, New York through an entity named Levitt Attorney at Law (id. 15), and Levy practices law in Manhattan through an entity named Law Offices of Herbert Monte Levy (id. 16).FN6 At various times, the Bushman defendants, the Levy defendants, and the Levitt defendants have each allegedly represented or counseled plaintiffs' former clients DeGregorio, Turansky, and Nichols in those clients' respective litigation against plaintiffs in New York State Court in Westchester County. (See, e.g., id. 49-51, 62, 104, 120, 124, 128.) Tracing the evolution of DeGregorio, Turansky, and Nichols from Curtis Law Firm client to adversary, the Complaint organizes its allegations under headings The Corruption of Defendant DeGregorio, The Corruption of Defendant [Turansky], and The Corruption of Stevi Brooks Nichols. This discussion follows that organization. B. The Corruption of Defendant DeGregorio In December 2001, DeGregorio retained the Curtis Law Firm on an hourly fee basis to prosecute legal malpractice claims against her former divorce attorneys (matrimonial malpractice claims). (Compl. 43.) The Curtis Law Firm also appeared on DeGregorio's behalf in her ongoing matrimonial case. (Id. 45.) Despite a few

early victories by the Curtis Law Firm, ultimately all of DeGregorio's matrimonial malpractice claims were dismissed on appeal. (Id. 46-47.) At the time of this dismissal, DeGregorio had an outstanding legal bill with the Curtis Law Firm for $120,000. (Id. 48.) The Curtis Law Firm offered to settle DeGregorio's bill for $60,000 but DeGregorio rejected the settlement offer. (Id.) Instead, DeGregorio retained the Bushman Law Offices to represent her on a contingent basis and filed a malpractice complaint based on false allegations against the Curtis Law Firm seeking disgorgement of all fees paid to the Curtis Law Firm exceeding $100,000. (Id. 49-51, 56.) The Curtis Law Firm notified its insurance carrier of this malpractice claim. (Id. 52.) In addition, the Curtis Law Firm counterclaimed against DeGregorio for legal fees. (Id. 57.) The Curtis Law Firm also made a separate motion for a quantum meruit hearing to determine the fair and reasonable value of the legal services rendered to DeGregorio by the Curtis Law Firm while litigating the matrimonial malpractice claims. (Id. 66); see also DeGregorio v. Bender, 52 A.D.3d 645, 646, 860 N.Y.S.2d 193 (N.Y.App. Div.2d Dep't 2008) (describing history of fee dispute in DeGregorio's matrimonial malpractice action). Following that hearing, the state court awarded the Curtis Law Firm legal fees in the sum of $94,017.70. Bender, 52 A.D.3d at 646, 860 N.Y.S.2d 193. On appeal, however, the Second Department reversed, finding that the hearing court had failed to consider and give appropriate weight to all the relevant factors involved in valuing legal services, including the court's own finding of ethical violations committed by Curtis. Id. *3 In the course of prosecuting DeGregorio's phony malpractice claim against the Curtis Law Firm and defending against the Curtis Law Firm's fee claims, the Bushman Law Offices, Bushman Attorney at Law, and DeGregorio engaged in various litigation activities. (Compl. 58, 60.) According to the complaint, these litigation activities, constitute mail fraud. (Compl. 58, 60.) Specifically, in order to advance the scheme to litigate DeGregorio's alleged fee obligation to the Curtis Law Firm, the Bushman defendants allegedly committed mail fraud by mailing to the court, other parties, witnesses, or counsel: (1) a Reply to the Counterclaims asserted by the Curtis Law Firm on February 9, 2007; (2) a Notice for Discovery on February 9, 2007; (3) a CrossNotice to Take Deposition on February 9, 2007; (4) a Verified Bill of Particulars on February 22, 2007; (5) a letter regarding a subpoena served on a witness on June 14, 2007; (6) an Affirmation in Opposition to the Curtis Law Firm's Motion to Disqualify Bushman on March 17, 2007; (7) an Affirmation in Opposition to a Cross-Motion dated March 28, 2005; (8) a cover letter for Respondent's Post-Trial Brief dated September 15, 2006; (9) a cover letter transmitting Respondent's Proposed Counter-Judgment and Affirmation in Support dated October 13, 2006; (10) a letter to the court requesting a 90-day extension of time dated October 21, 2005; (11) a letter regarding service by fax dated November 9, 2006; and (12) a letter regarding DeGregorio's ability to satisfy any potential judgment dated December 29, 2006.FN7 (Id. 58(A)-(E)-60(A), 68(A), 72(A)-(B), 78, 860 N.Y.S.2d 193(A)-(C), Ex. 7 .) After the Curtis Law Firm successfully moved to disqualify Bushman in DeGregorio's malpractice action against the Curtis Law Firm, the Levy Law Offices was substituted as DeGregorio's counsel. (Id. 59, 61-62, 860 N.Y.S.2d 193.) The Levy Law Offices then negotiated a settlement of DeGregorio's malpractice action against Curtis. ( Id . 62, 860 N.Y.S.2d 193.) **The complaint alleges that by engaging in litigation activity to advance the fee dispute with the Curtis Law Firm, the Levy defendants and DeGregorio also committed mail fraud. (Id . 81, 88, 860 N.Y.S.2d 193.) Specifically, the complaint alleges that the Levy defendants and DeGregorio engaged in mail fraud by mailing the following documents to the court, other parties, or counsel: (1) a letter to adjourn a motion filing deadline dated January 10, 2008; (2) sworn statements by DeGregorio opposing a fee hearing and the disqualification of Bushman as her attorney dated November 2, 2004 and March 26, 2005, respectively; (3) a letter to the court submitting a replacement Appellant's brief on May 31, 2007; **(4) a handwritten note to the Appellate Division misrepresenting an agreement between the parties regarding the contents of the record dated July 26, 2007; (5) a letter to the Appellate Division regarding adjourning deadlines dated September 11, 2007; (6) a Notice of Settlement dated July 7, 2008; (7) a Notice of Entry by the Levy Law Office dated August 5, 2008; (8) an Answering Affirmation of Levy dated October 14, 2008; and (9) an Order to Show Cause with Affirmation of Levy dated October 2, 2008. (Id. 64(A), 69, 81(A)-(C), 88, 860 N.Y.S.2d 193(A)-(D).) The complaint further alleges that this mail fraud by the Levy defendants and DeGregorio is ongoing because the fee dispute between the Curtis Law Firm and DeGregorio has not yet been resolved and is on the eve of trial. FN8 (Id. 88, 860 N.Y.S.2d 193(E).) C. The Corruption of Defendant Turansky

*4 Turansky retained the Curtis Law Firm in June of 2002 to represent her in her divorce case. (Id. 89, 860 N.Y.S.2d 193.) Turansky then retained the Curtis Law Firm to represent her in a quantum meruit hearing demanded by one of her former divorce attorneys to address his $28,000 retaining and charging lien. (Id. 90-93, 860 N.Y.S.2d 193.) The twenty-eight day quantum meruit hearing was terminated by the court's issuance of a directed verdict in Turansky's favor on February 7, 2004. (Id. 97, 102, 860 N.Y.S.2d 193.) Turansky then authorized the Curtis Law Firm to represent her in opposing the appeal of that directed verdict. (Id. 98-99, 860 N.Y.S.2d 193.) During the course of the earlier quantum meruit hearing, Turansky stopped paying her legal fees to the Curtis Law Firm, which then totaled $282,829.52. (Id. 96, 860 N.Y.S.2d 193.) On November 29, 2004, on the same day that the Curtis Law Firm completed oral argument at the Second Department regarding the appeal from the directed verdict, Turansky terminated the Curtis Law Firm for cause. (Id. 101, 860 N.Y.S.2d 193.) Turansky terminated the Curtis Law Firm allegedly after conferring with Bushman, who advised her that she could avoid paying the Curtis Law Firm's legal fees if she made the termination for cause and sued the Curtis Law Firm for malpractice. (Id. 102-103, 860 N.Y.S.2d 193.) Bushman also allegedly offered to represent Turansky for a nominal fee to defend any fee claims against her by the Curtis Law Firm and on a contingent basis to prosecute a malpractice action against the Curtis Law Firm. (Id.) Turansky retained Bushman and filed a legal malpractice complaint containing **knowingly false allegations against the Curtis Law Firm in December 2004. (Id. 104, 106, 860 N.Y.S.2d 193.) The Curtis Law Firm notified its carrier of this malpractice action and counterclaimed for fees. (Id. 105, 115, 860 N.Y.S.2d 193.) By prosecuting Turansky's legal malpractice action against the Curtis Law Firm and defending Turansky against the Curtis Law Firm's fee claims, Bushman engaged in certain litigation activities which plaintiffs allege constitute mail fraud. (Id. 113, 860 N.Y.S.2d 193.) Specifically, the Complaint alleges that Bushman committed mail fraud by mailing to the court, parties, or counsel: (1) an Affirmation in Opposition to Motion to Dismiss dated February 17, 2005; (2) an Affirmation in Opposition to Motion to Dismiss dated March 24, 2005; (3) a Verified Bill of Particulars dated July 26, 2005; (4) a Supplemental Verified Bill of Particulars dated October 4, 2005; (5) an Affirmation in Opposition to Motion for Summary Judgment dated February 7, 2006; (6) an Affirmation in Opposition to total Disqualification dated February 13, 2006; and (7) a Motion to Dismiss Third-Party Complaint dated August 7, 2006. (Id. 113, 860 N.Y.S.2d 193.) Additionally, Turansky allegedly engaged in mail and wire fraud by: (1) mailing a letter on February 26, 2007 to the Court regarding her preference to have Bushman represent her in defending against plaintiffs' fees counterclaims; (2) making repeated phone calls from Connecticut to Bushman in New York during several days prior to February 26, 2007; (3) mailing upon information and belief, numerous letters to Bushman; **(4) presenting a completely false affidavit within a Notice of Motion dated February 22, 2009 and mailed by Levitt; and (5) committing numerous other unspecified acts of mail and wire fraud. (Id. 113(H), 115(A)-(C), 124, 860 N.Y.S.2d 193(E).) *5 The Curtis Law Firm succeeded in obtaining summary judgment in Turansky's malpractice action against Curtis, but lost its fee action against Turansky when the judicial hearing officer determined that Turansky owed no fees to the Curtis Law Firm. (Id. 114, 116, 860 N.Y.S.2d 193.) According to plaintiffs, the judicial hearing officer's determination relied upon false testimony by Turansky which tracked the false claims contained in Turansky's malpractice action against the Curtis Law Firm. (Id. 116, 860 N.Y.S.2d 193.) After the judicial hearing officer's determination, the charging lien by the Curtis Law Firm on Turansky's equitable distribution was released by court order and Turansky allegedly invested the funds in a property in Connecticut. FN9 (Id. 117, 860 N.Y.S.2d 193.) Later, on appeal, the Second Department reversed and remanded the judicial hearing officer's determination for a new hearing on the Curtis Law Firm's fee claims against Turansky. FN10 (Id. 119, 860 N.Y.S.2d 193.) After Bushman was disqualified as Turansky's attorney, Bushman allegedly recruited Levitt to substitute as the attorney for Turansky at the Second Department and for the rehearing. (Id. 112, 120, 124, 860 N.Y.S.2d 193.) Levitt, allegedly with the assistance of Bushman, also committed mail and wire fraud in the course of representing Turansky by mailing: (1) a Notice of Motion and request for jury trial dated June 14, 2008; and (2) an Omnibus Notice of Motion dated February 22, 2009 seeking to preclude or delay a deposition and containing both an Amended Reply to Counterclaims and an affidavit by Turansky. (Id. 124, 860 N.Y.S.2d 193(A, C-E).) FN11 Finally, plaintiffs allege that because the litigation regarding the fee dispute is ongoing, this mail fraud and wire fraud [on the part of Bushman, Levitt, and Turansky] is ongoing. (Id. 124, 860 N.Y.S.2d 193(F).)

D. The Corruption of Defendant Nichols Nichols became a client of the Curtis Law Firm on a contingency fee basis by a written agreement dated October 14, 1998. (Id. Ex. 20 at 1.) Nichols disputed $150,000 in fees allegedly earned by the Curtis Law Firm. (Id. 128, 860 N.Y.S.2d 193.) On December 3, 2003, Nichols discharged the Curtis Law Firm allegedly for cause, and proceeding pro se, thereafter commenced a legal malpractice action against plaintiffs and others by a verified complaint dated January 9, 2009. (Id. 125, 860 N.Y.S.2d 193, Ex. 19 at 14, Ex. 20 at 3.) The Curtis Law Firm notified its malpractice insurer of this new claim. (Id. 126, 860 N.Y.S.2d 193.) Plaintiffs allege that Nichols has committed mail and wire fraud by mailing her verified complaint from Colorado, where she resides, to the New York Courts, as well as by mailing and faxing letters dated February 6, 17, 23, and 24, 2009 to various New York State judges and others. (Id. 14, 130, 860 N.Y.S.2d 193(A)-(F).) Because Nichols is currently defending a motion to dismiss her complaint, plaintiffs allege that this mail and wire fraud is ongoing. (Id. 130, 860 N.Y.S.2d 193(G).) Moreover, plaintiffs allege that [u]pon information and belief, Bushman has counseled and guided Nichols through her false and extreme accusations of wrong-doing against the Curtis Law Firm. (Id. 127, 860 N.Y.S.2d 193.) Plaintiffs **conclusorily maintain that the contents of the various letters and pleadings mailed and faxed by Nichols disclose[ ] a participation and association [on the part of Nichols] with the Bushman Law Office in the fraudulent schemes devised by Bushman. (Id. 127, 130, 860 N.Y.S.2d 193.) E. The Corruption of Various Non-Parties *6 Plaintiffs also allege that three other non-parties were corrupted by Bushman and stopped paying for legal fees owed to the Curtis Law Firm. (See id. 17-19, 860 N.Y.S.2d 193.) First, Fred Lorentzen (Lorentzen), a former Curtis Law Firm client who had signed an hourly retainer, stopped paying the Curtis Law Firm for his legal services in 1996 when he owed it $50,000. (Id. 20, 860 N.Y.S.2d 193.) Bushman then commenced an action on behalf of Lorentzen against Curtis and others (Lorentzen action). (Id. 22, 860 N.Y.S.2d 193.) The Curtis Law Firm's insurance carrier paid more than $300,000 in defense costs prior to the settlement of the Lorentzen action, purportedly for a $25,000 payment to Lorentzen by Bushman's carrier. (Id. 26-27, 860 N.Y.S.2d 193.) Similarly, Katheryn Boone (Boone) retained the Curtis Law Firm under an hourly retainer agreement to represent her in a malpractice action against her former matrimonial attorney. (Id. 30-31, 860 N.Y.S.2d 193.) In 2004, Boone stopped paying the Curtis Law Firm for legal services when she owed approximately $25,000 in fees. (Id. 31, 860 N.Y.S.2d 193.) After the Curtis Law Firm was granted leave to withdraw, Bushman became Boone's attorney and continues to represent her in her matrimonial action. (Id. 32, 860 N.Y.S.2d 193.) According to plaintiffs, Bushman has indicated that if the Curtis Law Firm seeks to collect the fees allegedly owed by Boone, Boone will counterclaim with a malpractice action against the Curtis Law Firm. (Id. 33, 860 N.Y.S.2d 193.) The Curtis Law Firm has notified its malpractice insurer of this potential claim. (Id. 34, 860 N.Y.S.2d 193.) Finally, Edward King (King) retained the Curtis Law Firm in 1997 under an hourly retainer agreement to represent him in a malpractice action against his former entertainment attorney. (Id . 35-39, 860 N.Y.S.2d 193.) King stopped paying the Curtis Law Firm for legal services in 2005 when he owed it approximately $80,000 in fees. (Id. 39, 860 N.Y.S.2d 193.) Bushman allegedly appeared informally as a legal malpractice attorney on behalf of King at a quantum meruit hearing regarding King's allegedly owed fees. (Id. 40, 860 N.Y.S.2d 193.) During that hearing, Bushman guided King through articulating false claims of malpractice on the record and counsel[ed] King on how to testify untruthfully. (Id. 40, 860 N.Y.S.2d 193.) The court ultimately reduced the amount of fees King owed to the Curtis Law Firm but found that King had not terminated the Curtis Law Firm for cause. (Id. 41, 860 N.Y.S.2d 193, Ex. 3.) The Curtis Law Firm notified its insurance carrier of a potential malpractice action involving King. (Id. 42, 860 N.Y.S.2d 193.) F. The Schemes to Defraud Plaintiffs Broadly, and as summarized in a section of the Complaint entitled Summary of the Repeated Corruption of the

Corruptible, plaintiffs allege that Bushman enlisted two other lawyers, co-defendants Levitt and Levy, and they together corrupt[ed] six or seven corruptable [sic] former Curtis Law Firm clients to engage in several fraudulent, interconnected schemes to defraud plaintiffs. (Id. at 33, 860 N.Y.S.2d 193, id. 141, 146, 860 N.Y.S.2d 193.) Allegedly in violation of RICO, defendants used mail and wire transmittals to complete these schemes of: (i) disputing the Curtis' Law Firm's right to legal fees from its former clients based on phony malpractice claims; (ii) prosecuting knowingly false legal malpractice claims [against the Curtis Law Firm] with suborned perjury and deceit of courts; (iii) providing legal advice [to clients] on how to protect and convey assets so that any judgment eventually obtained by the Curtis Law Firm would be uncollectible; and (iv) delaying and hindering the Curtis Law Firm, a future creditor, from obtaining judgments against its former clients because of frivolous litigation. (Id. 142, 860 N.Y.S.2d 193.) *7 In simpler terms, plaintiffs allege that defendants, who are former Curtis Law Firm clients, together with their new counsel, have committed mail and wire fraud through frivolous litigation by defending against the fee claims initiated by plaintiffs themselves, and by counter-claiming or separately bringing phony malpractice claims against plaintiffs in the course of such defenses. (See id. 142-143, 860 N.Y.S.2d 193.) Because plaintiffs allege that they will ultimately prevail in the underlying state court fee claims, plaintiffs allege that they are future creditors of defendants who have been delayed and hindered by defendants' frivolous litigation and fraudulent conveyance of assets. (Id.) Plaintiffs further allege that the fraudulent and frivolous law suits commenced and defended by the Bushman defendants and now continued by the Levitt and Levy defendants on behalf of the corruptible former clients of the Curtis Law Firm have created a claims history for the Curtis Law Firm which prevents it from obtaining malpractice insurance. (Id. 133-138, 860 N.Y.S.2d 193.) Without malpractice insurance, plaintiffs allege that the Curtis Law Firm was required to stop accepting new clients and is currently going out of business. (Id. 136, 860 N.Y.S.2d 193.) The Curtis Law Firm has been damaged by the lost income from the earned fees disputed by defendants, which has required it to go into debt in order to support the continued operations of its existing case load . (Id. 137, 860 N.Y.S.2d 193.) Additionally, the Curtis Law Firm has been damaged by the need to divert resources away from billable work and toward the non-billable work of defending the fee disputes, malpractice claims, and fraudulent conveyances by the three former clients DeGregorio, Turansky, and Nichols, with the assistance of, variously, the Bushman defendants, Levitt defendants, and Levy defendants. (Id. 138-139, 860 N.Y.S.2d 193.) DISCUSSION I. Motions to Dismiss The Bushman defendants,FN12 the Levitt defendants,FN13 the Levy defendants,FN14 defendant DeGregorio,FN15 defendant Turansky, FN16 and defendant Nichols FN17 each move separately to dismiss the complaint on a variety of grounds, and plaintiffs oppose .FN18 A. Legal Standard Rule 12(b)(6) provides for the dismissal of a complaint containing allegations which fail to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). Thus, in order [t]o survive a motion to dismiss under [Rule 12(b)(6) ], a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, --- U.S. ----, ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). In assessing plausibility on a Rule 12(b)(6) motion to dismiss, a court must assume [the] veracity of all well-pleaded factual allegations contained in the complaint, Iqbal, 129 S.Ct. at 1950, and afford the plaintiff every reasonable inference, see Zinermon v. Burch, 494 U.S. 113, 118, 110 S.Ct. 975, 108 L.Ed.2d 100 (1990). However, allegations must consist of more than mere labels, legal conclusions, or a formulaic recitation of the elements of a cause of action, and bare legal conclusions are not entitled to the assumption of truth . Iqbal, 129 S.Ct. at 1949-50. *8 The facial plausibility standard is met when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Iqbal, 129 S.Ct. at 1949. This does not require a showing of a probability of misconduct, but it does demand more than a sheer possibility that a defendant has acted unlawfully. See id . Thus, where the well-pleaded facts do not permit the court to infer more

than the mere possibility of misconduct, dismissal is appropriate. Starr, 592 F.3d at 321 (quoting Iqbal, 129 S.Ct. at 1950); see also Twombly, 550 U.S. at 570 (where plaintiffs ... have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed). Indeed, when however true, the allegations in a complaint could not raise a claim of entitlement to relief, this basic deficiency should be exposed at the point of minimum expenditure of time and money by the parties and the court. See Twombly, 550 U.S. at 558. [1][2] Although civil RICO actions generally need not do more than meet the routine pleading requirements outlined above, courts are particularly mindful of these standards in the context of a civil RICO claim, the assertion of which often has an almost inevitable stigmatizing effect on those named as defendants. World Wrestling Entm't, Inc. v. Jakks Pac., Inc., 530 F.Supp.2d 486, 495-96 (S.D.N.Y.2007) (internal quotation and citation omitted); see also Nichols v. Mahoney, 608 F.Supp.2d 526, 536 (S.D.N.Y.2009) (A civil RICO lawsuit has vast implications for the defendants because of the specter of treble damages and the possibility of permanent reputational injury to defendants from the allegation that they are racketeers. ). Because of this likely powerful effect on potentially innocent defendants who face the threat of treble damages, and the concomitant potential for abuse of RICO's potent provisions, the court is aware of a particular imperative in cases such as the one at bar, to flush out frivolous [civil] RICO allegations at an early stage of the litigation. World Wrestling Entm't, 530 F.Supp.2d at 496 (internal quotation and citation omitted). [3] Moreover, where, as here, a plaintiff alleges RICO predicate acts based upon fraudulent activities such as mail or wire fraud, a plaintiff must additionally satisfy the particularity requirements of Federal Rule of Civil Procedure 9(b) (Rule 9(b)). See City of New York v. Smokes-Spirits.Com, Inc., 541 F.3d 425, 446 (2d Cir.2008), rev'd on other grounds sub nom. Hemi Group, LLC v. City of New York, --- U.S. ----, 130 S.Ct. 983, --- L.Ed.2d ---(2010) (Allegations of mail or wire fraud must be made with the particularity required by Federal Rule of Civil Procedure 9(b). (citation omitted)). The court will thus examine below the mail and wire fraud allegations in the context of Rule 9(b)'s particularity requirements. B. Application to Federal RICO Claims *9 The RICO statute, 18 U.S.C. Section 1964(c), provides a private right of action to any person injured in its business or property by reason of a violation of Section 1962. See 18 U.S.C. 1961-1968. RICO generally provides for harsh criminal and civil penalties and in the context of a private RICO action, any defendant found liable under Section 1964(c) faces the drastic penalties of treble damages, costs and attorneys fees. See H.J., Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 233, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989) (citing 18 U.S.C. 1963 and 1964(c)). In order to recover under Section 1964(c), a private plaintiff must plead (1) the defendant's violation of [18 U.S.C] 1962, (2) an injury to the plaintiff's business or property, and (3) causation of the injury by the defendant's violation. Lerner v. Fleet Bank, N.A., 459 F.3d 273, 283 (2d Cir.2006) (quoting Commercial Cleaning Servs., L.L.C. v. Colin Serv. Sys., Inc., 271 F.3d 374, 380 (2d Cir.2001)). A showing under the first element, the defendant's violation of 18 U.S.C. 1962, may be made in any one of four ways. Specifically, any person may be liable for violating 18 U.S.C. 1962 who: (i) uses or invests income derived from a pattern of racketeering activity to acquire an interest in or to operate an enterprise engaged in interstate commerce, 1962(a); (ii) acquire[s] or maintain[s], directly or indirectly, any interest in or control of such an enterprise through a pattern of racketeering activity, 1962(b); (iii) by being employed by or associated with such an enterprise, conduct[s] or participate[s], directly or directly, in the conduct of such enterprise's affairs through a pattern of racketeering activity, 1962(c); or (iv) conspires to violate the substantive provisions of 1962(a), (b), or (c), 1962(d). See H.J., 492 U.S. at 232-33. [4][5] Significantly, in order to adequately allege a violation of any one of the substantive provisions of the RICO Act, 18 U.S.C. 1962(a)-(c), a plaintiff must plead a pattern of racketeering activity. See 18 U.S.C. 1962(a)-(c). Further, an underlying substantive violation must be shown in order to establish a conspiracy under 18 U.S.C. 1962(d). See id. 1962(d). Thus, under any prong of 1962, a plaintiff in a civil RICO suit must establish a pattern of racketeering activity. Spool v. World Child Int'l Adoption Agency, 520 F.3d 178, 183 (2d Cir.2008) (internal citation and quotation omitted) (To establish a substantive RICO violation, a plaintiff must show a pattern of racketeering activity, 18 U.S.C. 1962(a)-(c), and to establish a RICO conspiracy, a plaintiff must show a conspiracy to commit a substantive RICO violation, id. 1962(d).). Further, in order to survive a motion to

dismiss, such pattern of racketeering activity must be adequately alleged in the complaint. Id. 1. Each Substantive RICO Claim Fails Because Plaintiffs Fail to Plead Any Predicate Acts and Fail to Plead Fraud With Particularity *10 Here, plaintiffs have alleged in Counts One through Five of the Complaint that defendants committed substantive RICO violations in violation of 18 U.S.C. Section 1962(a), (b), and (c). However, because plaintiffs have failed as a matter of law to plead any underlying predicate acts which could form the basis for a pattern of racketeering activity, the substantive RICO violations alleged in Counts One through Five cannot survive defendants' motions to dismiss. Moreover, the claims must fail because they fail to meet the heightened pleading requirements for fraud under Rule 9(b). a) Failure to Plead Predicate Acts as a Matter of Law First, plaintiffs' RICO claims fail as a matter of law because the claims fail to plead any RICO predicate acts. The RICO statutory scheme defines racketeering activity to include a host of criminal offenses, which are in turn defined by federal and state law. Cofacredit, S.A. v. Windsor Plumbing Supply Co. Inc., 187 F.3d 229, 242 (2d Cir.1999) (citing 18 U.S.C. 1961(1)). Specifically, the RICO statute defines racketeering activity as including any act indictable under various specified federal statutes, including the mail and wire fraud statutes. See 18 U.S.C. 1961(1) (defining racketeering activity to include offenses indictable under 18 U.S.C. 1341 (relating to mail fraud) and 1343 (relating to wire fraud)); see also Smokes-Spirits.Com, 541 F.3d at 434 n. 9 (Mail fraud and wire fraud are forms of racketeering activity for purposes of RICO .) (citation omitted). Pattern is defined by the statute as at least two acts of racketeering activity within a ten-year period. 18 U.S.C. 1961(5). [6][7][8] To state a claim for mail and wire fraud, a plaintiff must allege: (1) the existence of a scheme to defraud, (2) the defendant's knowing participation in the scheme, and (3) the use of wire, mail, or television communications in interstate commerce in furtherance of the scheme. Chanayil v. Gulati, 169 F.3d 168, 170-71 (2d Cir.1999). To prove mail or wire fraud, the plaintiff need not show that a defendant personally mailed or wired anything themselves, but that they caused it to be done. Smokes-Spirits .com, 541 F.3d at 446 (citation omitted). The gravamen of the mail fraud offense is the scheme to defraud, and any mailing that is incident to an essential part of the scheme satisfies the mailing element ... even if the mailing itself contains no false information. Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639, 647, 128 S.Ct. 2131, 170 L.Ed.2d 1012 (2008) (internal quotations and citations omitted). [9] In the Complaint, plaintiffs purport to allege various predicate acts of mail and wire fraud allegedly committed by defendants in the course of defend[ing] fee claims and commenc[ing] and litigat[ing] six phony lawsuits. (Compl. 1.) Specifically, plaintiffs allege that various defendants committed mail and wire fraud predicate acts FN19 by: *11 Mailing a Reply to Counterclaims, Plaintiff's First Notice for Discovery, Plaintiff's Cross-Notice to Take Deposition, and Verified Bill of Particulars, to attorney Douglas Capuder (Capuder) on February 9, February 9, February 9, and February 22, 2007, respectively, (Compl. 58(A-D)); Mailing letter regarding subpoena to Capuder and DeGregorio on June 14, 2007, (Compl. 58(E)); Mailing Bushman's Affirmation in Opposition to Motion to Disqualify to a party unspecified in the Complaint dated March 17, 2007, (Compl. 60(A)); Mailing letter regarding adjourning motion filing deadlines to Bushman and Capuder on January 10, 2008, (Compl. 64(A)); Mailing Affirmation in Opposition to Cross-Motion, Cover letter for Respondent's Post-Trial Brief, Cover letter for Respondent's Proposed Counter-Judgment and Affirmation in Support from Bushman to Curtis Law Firm, DeGregorio and the Court on March 28, 2005, September 15, 2006, and October 13, 2006, respectively, (Compl. 68(A), 72(A-B));

 Mailing letter regarding a 90-day extension of time from Bushman to the Court, DeGregorio, and the Curtis Law Firm dated October 21, 2005, (Compl. 78(A)); Mailing letter regarding service via fax from Bushman to the Curtis Law Firm dated November 9, 2006, (Compl. 78(B)); Mailing letter regarding the sale of DeGregorio's home in order to have adequate funds with which to pay any judgment to the Curtis Law Firm and DeGregorio dated December 29, 2006, (Compl. 78(C)); Mailing letter submitting replacement Appellant's brief to the Court dated May 31, 2007, (Compl. 81(A)); Mailing letter to Court regarding an agreement reached between counsel in connection with the contents of the court record to the Court dated July 26, 2007, (Compl. 81(B)); Mailing letter regarding an adjournment of deadlines to the Appellate Division dated September 11, 2007, (Compl. 81(C)); Mailing Notice of Settlement, Notice of Entry, and Answering Affirmation of Levy from Levy to the Court, Bushman, the Curtis Law Firm, and DeGregorio on July 8, August 5, and October 14, 2008, respectively, (Compl. 88(A-C)); Mailing Order to Show Cause with Affirmation from Levy to the Court, Bushman, and DeGregorio on or about October 2, 2008 and October 10, 2008, (Compl. 88(D)); Mailing Affirmation in Opposition to Motion to Dismiss, second Affirmation in Opposition to Motion to Dismiss, Verified Bill of Particulars, Supplemental Verified Bill of Particulars, Affirmation in Opposition to Motion for Summary Judgment, and Affirmation in Opposition to total Disqualification, from Bushman to Capuder, the Court, and Turansky and dated February 17, March 24, July 26, and October 4, 2005, and February 7, and 13, 2006, respectively, (Compl. 113(A-F)); Mailing letter from Turansky to the Court and Capuder and Bushman dated February 26, 2007, (Compl. 115(B)); *12 Mailing Notice of Motion and request for jury trial and Omnibus Notice of Motion containing an Amended Reply to Counterclaims and an affidavit by Turansky from Levitt to either the Court and/or the Curtis Law Firm dated June 14, 2008 and February 22, 2009, respectively, (Compl. 124(A, C-E)); and Mailing letters in February 2009 and a verified complaint dated January 8, 2009 from Nichols to various judges in the New York County Supreme Court, (see Compl. 130(A-F)). Plaintiffs themselves succinctly and accurately summarize these alleged predicate acts as consisting of litigation activities. (See, e.g., id. 58, 60, 68, 72, 88, 113.) Plaintiffs further characterize these litigation activities as multiple instances of mail fraud in violation of 18 U.S.C. 1341. (Id. 156, 166, 172, 178, 184, 192, 202, 208, 214, 219.) Additionally, plaintiffs portray the alleged numerous phone calls from Turansky in Connecticut to Bushman in New York (id. 113(H), 115(A)) and Nichols' use of wire transmissions to fax copies of letters to various New York State Court judges and other counsel (id. 130(A-F)) as multiple instances of wire fraud in violation of 18 U.S.C. 1343 (id. 156, 166, 172, 178, 184, 192, 202, 208, 214, 219). These allegations fail to state a claim upon which relief may be granted for several reasons. Even a cursory review of the predicate acts alleged in the Complaint reveals that plaintiffs' summary of these actions as litigation activities is apt. FN20 (See, e.g., Compl. 58, 60, 68, 72, 88, 113.) **Thus, the predicate acts alleged in the Complaint all involve the mailing of litigation documents such as pleadings (for example, a Reply to Counterclaims (id. 58(A)), discovery notices (for example, Plaintiff's First Notice for Discovery (id. 58(B)),

requests for adjournments (for example, a letter regarding an adjournment dated January 10, 2008 (id. 64(A)), and other ministerial documents (for example, letters regarding service via fax or submitting a replacement copy of a brief (id. 78(B), 81(A)). Indeed, as the Bushman defendants correctly point out, each and every mailing specified in the Complaint involves the service, filing, or exchange of documents related to a pending legal action. (Bushman Mem. at 11.) The same appears to be true regarding the alleged wire fraud. This understanding-that the alleged RICO predicate acts are no more than litigation activities alone-brings into focus plaintiffs' rather striking theory of the case. Plaintiffs essentially allege that any client with the impudence to contest the Curtis Law Firm's legal fees, and further, to litigate in court that client's obligation to pay those fees or challenge through a malpractice action the professional conduct of the Curtis Law Firm, and any attorney who represents such a client, is a racketeer and liable for treble damages. The gravamen of the Complaint is thus that defendants' have violated RICO by defending against plaintiffs' fee claims or initiating malpractice actions against plaintiffs and thereby forcing plaintiffs to litigate allegedly phony and frivolous lawsuits in state court. This theory cannot withstand a motion to dismiss because it fails to state a claim upon which relief may be granted. *13 [10][11] First, persuasive authority in this and other jurisdictions suggests that the litigation activities alleged in this Complaint cannot properly form the basis for RICO predicate acts. See, e.g., Gunn v. Palmieri, No. 87-cv-1418, 1989 WL 119519, at *1 (E.D.N.Y. Sept.29, 1989), aff'd, 904 F.2d 33 (2d Cir.1990), cert. denied, 498 U.S. 1049, 111 S.Ct. 758, 112 L.Ed.2d 777 (1991) (rejecting untenable interpretation of RICO which would permit litigation activities to be construed as RICO predicate acts). Thus, on similar facts, a number of courts have found that allegations such as those here more properly may be classified as claims sounding in abuse of process FN21 or malicious prosecution.FN22 See, e.g., Daddona v. Gaudio, 156 F.Supp.2d 153, 162 (D.Conn.2000) (finding allegations at best amount to vague abuse of process or malicious prosecution claims where complaint lists a variety of predicate acts, all of which involve the filing of complaints and other legal documents); Nakahara v. Bal, No. 97-cv-2027, 1998 U.S. Dist. LEXIS 825, at *20-21, *27, 1998 WL 35123 (S.D.N.Y. Jan. 30, 1998) (finding that plaintiffs' mail and wire fraud claims are at most a potential yet still inchoate claim for malicious prosecution or abuse of process where the gravamen of [plaintiffs'] Complaint ... is patently directed at [the defendant's] filing of, or participation in, the various legal actions pending against [plaintiffs]); Von Bulow v. Von Bulow, 657 F.Supp. 1134, 1140-42 (S.D.N.Y.1987) (finding that the essence of the stated [fraud] claim sounds in malicious prosecution where plaintiffs' allegations closely parallel[ed] the elements of malicious prosecution claim). Similarly, here, although plaintiffs have styled their allegations as mail and wire fraud, plaintiffs' allegations in fact focus entirely upon the litigation activities involved in defendants' allegedly phony and frivolous litigation with plaintiffs. Plaintiffs' allegations thus loosely track the elements for a malicious prosecution claim in that (1), plaintiffs allege an action against plaintiffs, (plaintiffs allege defendants' commencement of various malpractice actions ( id. 1(C)), (2) begun with malice (plaintiffs allege prosecution of such actions by acts of champerty, corruption and deceitful schemes employing suborned perjury and deceit of the court (id. 141142)), and (3) without probable cause (plaintiffs allege defendants' prosecution of knowingly false legal malpractice claims and challenge of the right to earned legal fees ( id. 142)). See Engel, 145 F.3d at 502. However, plaintiffs fail to allege that the state court litigation underlying their allegations has terminated in plaintiffs' favor, or even terminated at all, a required element of any malicious prosecution claim. See id. Indeed, to the contrary, plaintiffs affirmatively allege that the fee disputes are ongoing. (See Compl. 88(E), 124(F), and 130(G).) Further, plaintiffs fail to allege any special injury. See Engel, 145 F.3d at 502. Thus, despite plaintiffs' creative attempts to plead mail and wire fraud, the court finds that plaintiffs' incomplete allegations at best attempt to make out a malicious prosecution claim.FN23 *14 Without more, such allegations that the state court litigation is frivolous, fraudulent, or baseless-essentially claims of malicious prosecution-without more, cannot constitute a viable RICO predicate act. See, e.g., Daddona, 156 F.Supp.2d at 162 (Attempts to characterize abuse of process or malicious prosecution claims as mail and wire fraud violations for RICO purposes have been scrutinized by the courts, and have been rejected where the only allegedly fraudulent conduct relates to the filing of documents in litigation.); see also Park South Assocs. v. Fischbein, 626 F.Supp. 1108, 1114 (S.D.N.Y.1986), aff'd, 800 F.2d 1128 (2d Cir.1986) (rejecting plaintiffs' RICO claims on various grounds including that plaintiff has not pled a RICO predicate act although [p]laintiffs'

allegations may make out a state court action for abuse of process). Further, and even more compelling than the persuasive authority discussed above, plaintiffs' claims must be rejected because finding otherwise-and allowing malicious prosecution claims such as those attempted to be alleged here to suffice as RICO predicate acts-would lead to absurd results. First, if routine litigation activities such as defending against a fee claim or prosecuting a malpractice action against a former attorney is a violation of RICO, then almost every state or federal action could lead to corollary federal RICO actions. See Kashelkar v. Rubin & Rothman, 97 F.Supp.2d 383, 392 (S.D.N.Y.2000) (Garden-variety pleading errors and the filing of routine motions do not constitute RICO predicate acts. To hold otherwise would turn every state court lawsuit into a predicate for a subsequent federal RICO action.). Plaintiffs' interpretation of RICO is untenable and would result in the inundation of federal courts with civil RICO actions that could potentially subsume all other state and federal litigation in an endless cycle where any victorious litigant immediately sues opponents for RICO violations. See, e.g., Gunn, 1989 WL 119519, at *1 (If serving and filing an answer or a motion by any defendant ... could be considered ... [a RICO predicate act], this Court would be flooded with motions to amend complaints by plaintiffs seeking to add RICO claims based upon mail fraud and obstruction of justice as soon as an answer was served. Such an interpretation of the RICO statute is untenable.); see also Morin v. Trupin, 711 F.Supp. 97, 106 (S.D.N.Y.1989) (The Court finds absurd plaintiffs' apparent suggestion that a lawyer's act in posting a letter which states a client's legal position in a dispute can constitute mail fraud. If such were the situation, every dispute in which the parties' counsel exchanged letters could give rise to RICO litigation. Such activity is simply not fraudulent.) (quoting Paul S. Mullin & Assocs., Inc. v. Bassett, 632 F.Supp. 532, 540 (D.Del.1986)). Indeed, as Levitt correctly points out, were this court to permit plaintiffs' Complaint in this action to move forward, defendants could conceivably countersue plaintiffs for RICO conspiracy violations based upon the many allegations and statements by plaintiffs in this action which defendants might similarly contend are frivolous or false. (See Levitt Mem. at 6 .) *15 Additionally, this absurd result would chill litigants and lawyers and frustrate the well-established public policy goal of maintaining open access to the courts. See Engel, 182 F.3d at 129 (noting generally strong public policy of open access to the courts for all parties and [need] to avoid ad infinitum [litigation] with each party claiming that the opponent's previous action was malicious and meritless) (internal quotation and citation omitted). If any litigant's or attorney's pleading and correspondence in an unsuccessful lawsuit could lead to drastic RICO liability in a private right of action, litigants might hesitate to avail themselves of the courts and available legal remedies or be unable to find representation to help vindicate their rights. See Morin, 711 F.Supp. at 105 (Congress could not have intended that the mail and wire fraud statute sweep up correspondence between attorneys, dealing at arm's length on behalf of their parties, concerning an issue in pending litigation .... Subjecting [such] letter[s] ... to the mail fraud statute would chill an attorney's efforts and duty to represent his or her client in the course of pending litigation.) (internal quotation and citation omitted). Moreover, allowing the federal RICO statute to usurp underlying legitimate state court litigation as proposed by plaintiffs here would inappropriately bypass the state tribunal where the action is pending and which properly controls that proceeding. Should plaintiffs' vague allegations of phony and frivolous litigation, suborned perjury and deceit of court have merit, plaintiffs' should direct such claims to the state courts where these acts are allegedly occurring and where the underlying litigation is still pending. This court flatly rejects plaintiffs' contention that there is ... no remedy to be found in state courts merely by suing Bushman based on only one, or even several, of the seven underlying cases .... (Pl. Bushman Mem. at 28 n. 23.) Rather, this court has full confidence that the New York State courts where the underlying litigation is currently pending are fully competent to address any such wrongs and this court is unconvinced that such issues should be re-litigated in federal court under the guise of a RICO action. See, e.g., Daddona 156 F.Supp.2d at 162 (If a suit is groundless or filed in bad faith, the law of torts may provide a remedy. Resort to a federal criminal statute is unnecessary.) (citation omitted); see also Nakahara, 1998 U.S. Dist. LEXIS 825, at *31, 1998 WL 35123 (The claims of fraud advanced here can be asserted as effectively, if not more so, in each of [the] ongoing [underlying] proceedings. Indeed, this RICO action adds nothing except the in terrorem effect of a treble damage claim and the expense of conducting litigation over these same issues in yet another forum.). Finally, the Congressional intent in enacting RICO does not square with the absurd consequences and contraventions of well-settled public policy which would inevitably result from allowing RICO predicate acts to be based upon the type of malicious prosecution claims alleged here. Certainly, RICO is to be read broadly. Sedima,

S.P.R.L. v. Imrex Co., 473 U.S. 479, 497-98 (1985) (noting that the lesson of RICO's broad interpretation is evident not only [from] ... Congress' self-consciously expansive language and overall approach, but also ... [from] its express admonition that RICO is to be liberally construed to effectuate its remedial purposes' ) (internal citation omitted). However, there can be no dispute that Congress did not intend to effect a wholesale preemption of state civil law in its enactment of RICO. Von Bulow, 657 F.Supp. at 1143. Permitting the litigation activities alleged here to serve as RICO predicate acts would lead to just such an absurd result, in contravention of RICO's admittedly broad remedial purpose. See United States v. Eisen, 974 F. 2d 246, 254 ( 2d Cir. 1992) (noting the understandable reluctance on the part of Congress to use federal criminal law as a back-stop for all state court litigation). *16 For all of these reasons, this court joins a long line of cases in finding, as a matter of law, that the litigation activities pleaded in the Complaint cannot constitute predicate acts for the purposes of RICO. See, e.g., Directv, Inc. v. Lewis, No. 03-cv-6241, 2005 U.S. Dist. LEXIS 8187, at *22, 2005 WL 1006030 (W.D.N.Y. Apr. 29, 2005) (courts have held that serving litigation documents by mail cannot be a predicate act to establish mail fraud under the RICO statute); Kashelkar, 97 F.Supp.2d at 393 (soundly rejecting contention that legitimate conduct of attorneys representing their clients in pending litigation can constitute mail or wire fraud); Daddona, 156 F.Supp.2d at 162 (Courts have found that allegations of malicious prosecution or abuse of process do not, on their own, suffice as predicate acts for a RICO violation.); Nakahara, 1998 U.S. Dist. LEXIS 825, at *24 n. 7, 1998 WL 35123 (The core conclusion ... that the threat of litigation or the initiation of unjustified lawsuits constituting malicious prosecution cannot alone form a predicate act for purposes of RICO has been reached by numerous courts ... in this jurisdiction and others.) (collecting cases); Sundwall[Sunswall] v. Weinstein & Assocs., No. 3:97-cv-405, 1997 U.S. Dist. LEXIS 12702, at *4, 1997 WL 507724 (D.Conn. Aug. 19, 1997) (Plaintiff's ... alleged predicate acts involv[ing] mail fraud and obstruction of justice claims, both arising out of defendants alleged fraudulent activities in representing their clients in Connecticut state and federal courts ... are insufficient, as a matter of law, to constitute the necessary predicate acts under RICO.); D'Orange v. Feely, 877 F.Supp. 152, 156 (S.D.N.Y.1995) (attorneys' legitimate conduct of mailing letters to opposing counsel on behalf of a client in the course of pending litigation cannot constitute predicate acts under RICO). Plaintiffs' response to the Bushman Memorandum's discussion of these multiple persuasive authorities ( see Bushman Mem. at 10-12) amounts to simply alleging that even legitimate legal documents can amount to mail fraud because to prove mail fraud, a plaintiff need not show that the mailings themselves were fraudulent if the mailings were part of an overall scheme to defraud. (See Pl. Bushman Mem. at 23-31.) Certainly, this is a correct statement of the law. See, e.g., Bridge, 553 U.S. at 647 (noting that any mailing that is incident to an essential part of an overall scheme to defraud satisfies the mailing element [for mail fraud] ... even if the mailing itself contains no false information) (internal quotations and citations omitted). However, this argument does nothing to address the weight of authority discussed above. Indeed, notwithstanding plaintiffs' lengthy recitation of the elements and components of the two different alleged schemes to defraud here, plaintiffs' memoranda in opposition to defendants' motions to dismiss fail to discuss a single case contrary to the long line of cases finding that defendants' litigation activities alone, cannot, as a matter of law, suffice as predicate acts to support a RICO claim. *17 Finally, in a footnote to plaintiffs' reply memorandum in support of plaintiffs' motion to again amend the Complaint, plaintiffs seek to respond to this authority by citing to a single Second Circuit case, United States v. Eisen, for the proposition that litigation activities can indeed rise to the level of RICO predicate acts and constitute a pattern of racketeering activity as required by the RICO statutes. (See ECF No. 185, Reply Mem. in Further Support of Pl. Mot. for Leave to Amend at 5 n. 2 (citing Eisen, 974 F. 2d 246 ( 2d Cir. 1992).)**However, Eisen is inapposite here. **First, the holding in Eisen did not reach the issue here regarding whether litigation activities alone can suffice as RICO predicate acts of mail and wire fraud. **Second, the facts of Eisen are plainly distinguishable from the facts here and therefore provide no support for plaintiffs' position. Eisen involved the criminal prosecution of seven attorneys, investigators, and office personnel of a Manhattan law firm (the Eisen Firm) which specialized in bringing personal injury suits on behalf of plaintiffs. Eisen, 974 F. 2d at 251. The evidence at trial in that case showed that the defendants conducted the affairs of the Eisen Firm through a pattern of mail fraud and witness bribery by pursuing counterfeit claims by, among other things **pressuring accident witnesses to testify falsely, **paying individuals to testify falsely ..., **paying

unfavorable witnesses not to testify, and **creating false ... evidence for use before and during trial. Id. **Thus, in Eisen, the defendant attorneys went well beyond their capacities as legal representatives in conducting their fraudulent scheme. See Morrow v. Blessing, No. 04-cv-1161, 2004 U.S. Dist. LEXIS 20318, at *16 (E.D.Pa. Sept. 20, 2004.) Accordingly, **the predicate acts in Eisen amounted to far more than mere litigation activities, and instead involved an extensive and broader scheme to defraud defendants in the personal injury lawsuits commenced by the Eisen Firm. See Nakahara, 1998 U.S. Dist. LEXIS at *30, 1998 WL 35123 (The fraudulent criminal scheme underlying the predicate mail fraud offenses in Eisen was entirely external to, and independent of, any of the particular disputes between the litigants in the civil actions that were improperly filed and litigated by the Eisen defendants in execution of their scheme.). By contrast, here, the allegedly frivolous and phony litigation activities themselves and the merits of the underlying state court lawsuits form the gravamen [gravamen: the material or significant part of a grievance or comlaint] of plaintiffs' RICO and state law claims and the framework for the overall scheme to defraud alleged in the Complaint. See id. ([T]he RICO claim in this case ... seeks to have this Court in effect decide the merits of lawsuits or proceedings that are already pending between these same parties in several other jurisdictions ....) Accordingly, the court finds unavailing plaintiffs' reliance on Eisen and reaffirms that plaintiffs' allegations based on defendants' allegedly frivolous and phony litigation activities cannot, alone, give rise to viable predicate acts of mail and wire fraud. See Von Bulow, 657 F.Supp. at 1145 (finding that a complaint based on nothing more than a party's filing of unjustified suits cannot fulfill the requirement that a RICO plaintiff plead a predicate act but declining to address the situation where allegedly unjustified suits form a part of some more extensive scheme of racketeering activity, such as extortion). [RICO plaintiff to allege criminal predicate acts, as in Eisen, not merely litigation activities, the defendant lawyers must in their engagement of the predicate acts must go well beyond their capacities as legal representatives in conducting their fraudulent scheme. Focus on the crimes committed, or in other words that are already proved or established and are of things that are not yet or to still be determined during the course of the litigation, not the litigation activities in defining the criminal predicate acts of the mail fraud. There is a distinction between malicious prosecution filing a claim without objective evidence to believe that a crime has been committed and filing false evidence, committing perjury, and fraud on the court.] *18 Plaintiffs' arguments are thus unavailing, and this court finds that as a matter of law, the allegations in the Complaint are insufficient to plead a pattern of racketeering activity, and therefore the substantive RICO claims should be dismissed. See Spool, 520 F.3d at 183 ([U]nder any prong of 1962, a plaintiff in a civil RICO suit must establish a pattern of racketeering activity and adequately allege such pattern of racketeering activity in the complaint in order to withstand a motion to dismiss). Shuttlesworth v. Housing Opportunities Made Equal, 873 F.Supp. 1069, RICO Bus.Disp.Guide 8740 (S.D.Ohio,Dec 08, 1994)

Defendant lawyers allegedly solicited female tenants to bring false sexual harassment claims and lawsuits against plaintiff landlord.
Motorola Credit Corp. v. Uzan, 202 F.Supp.2d 239, RICO Bus.Disp.Guide 10,251 (S.D.N.Y.,May 20, 2002)

Support mail and wire fraud, when involving criminal acts, and for bringing an action on the basis of property to which the party bringing the action complained of is not entitled, for which the factfinder is to determine.

FN3. While some lower courts have held that the threat of civil litigation or even the initiation of unjustified civil lawsuits does not constitute a Hobbs Act predicate act under RICO, see G-I Holdings, Inc. v. Baron & Budd, 179 F.Supp.2d 233, 259 (S.D.N.Y.2001); Nakahara v. Bal, 1998 WL 35123 at *7(S.D.N.Y. Jan.30, 1998), none of these cases (which in any event, are not binding on this Court) involved here, the perjurious obtaining of a criminal charge in order to induce physical fear immediately used to try to extort economic concessions.
Sellers of cellular telephone equipment sued three Turkish corporations and their principals, asserting that the defendants were in the process of defrauding the sellers of more than $2.7 billion that the sellers lent to a Turkish cellular telephone company controlled by the principals, in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO) and state law. On the sellers' motion for preliminary injunctive relief, the District Court, Rakoff, J., held that: (1) injunctive relief is available to a private plaintiff bringing a civil RICO action; (2) sellers had a sufficient likelihood of success to warrant injunctive relief; (3) sellers had standing to bring RICO claims and to seek injunctive relief; (4) one seller was independently entitled to injunctive relief by virtue of state and common law claims for common law fraud, promissory fraud, and civil conspiracy; (5) court had authority to issue a preliminary injunctive relief sought; (6) contractual agreements between sellers and the cellular company to submit any disputes to arbitration in Switzerland did not deprive the court of jurisdiction; and (7) the cellular company and a holding company were not indispensible parties to the suit. Motion granted. [1] Injunction 212 133

212 Injunction 212IV Preliminary and Interlocutory Injunctions 212IV(A) Grounds and Proceedings to Procure 212IV(A)1 In General 212k133 k. Mandatory injunction. Most Cited Cases Injunction 212 138.6

212 Injunction 212IV Preliminary and Interlocutory Injunctions 212IV(A) Grounds and Proceedings to Procure 212IV(A)2 Grounds and Objections 212k138.6 k. Nature and extent of injury; irreparable injury. Most Cited Cases Injunction 212 138.18

212 Injunction 212IV Preliminary and Interlocutory Injunctions 212IV(A) Grounds and Proceedings to Procure 212IV(A)2 Grounds and Objections 212k138.18 k. Likelihood of success on merits. Most Cited Cases Where a movant is seeking a mandatory injunction, rather than a prohibitory injunction, i.e., an injunction that will alter, rather than maintain the status quo or that will provide the movant with relief that cannot be undone, the movant must either demonstrate a clear or substantial likelihood of success or show that extreme or very serious damage will result from a denial of the injunction. [2] Injunction 212 94

212 Injunction 212II Subjects of Protection and Relief 212II(G) Personal Rights and Duties 212k94 k. Rights protected in general. Most Cited Cases Injunctive relief is available to a private plaintiff bringing a civil action under the Racketeer Influenced and Corrupt Organizations Act (RICO); legislative history would not support the suggestion that Congress, in amending RICO to add a private right of action for damages, thereby intended to deprive the district courts of applying to private civil RICO cases the courts' equitable powers and jurisdiction. 18 U.S.C.A. 1961 et seq. [3] Injunction 212 138.31

212 Injunction 212IV Preliminary and Interlocutory Injunctions 212IV(A) Grounds and Proceedings to Procure 212IV(A)3 Subjects of Relief 212k138.30 Property, Conveyances and Encumbrances 212k138.31 k. In general. Most Cited Cases Sellers of cellular telephone equipment had a sufficient likelihood of success on a Racketeer Influenced and Corrupt Organizations Act (RICO) claim that Turkish corporations and their principals were defrauding the sellers of more than $2.7 billion the sellers had lent to a Turkish cellular telephone company to warrant preliminary injunctive relief; the sellers established the existence of a family-controlled business empire that functioned as an ongoing enterprise, with its own structure and hierarchy, and that acted to hugely dilute the value of the sellers' collateral in the company and divest them of control of the company which they might otherwise have achieved had they foreclosed on the collateral. 18 U.S.C.A. 1961 et seq. [4] Injunction 212 138.9

212 Injunction 212IV Preliminary and Interlocutory Injunctions 212IV(A) Grounds and Proceedings to Procure 212IV(A)2 Grounds and Objections 212k138.9 k. Adequacy of remedy at law. Most Cited Cases Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk56 Persons Entitled to Sue or Recover 319Hk57 k. In general. Most Cited Cases Sellers of cellular telephone equipment had standing to bring Racketeer Influenced and Corrupt Organizations Act (RICO) claims against Turkish corporations and their principals for defrauding the sellers of more than $2.7 billion the sellers had lent to a Turkish cellular telephone company, and to seek injunctive relief, despite claim that they had not exhausted their legal remedies against the company or thereby ascertained what their damages would be; the defendants, who were accused of fraudulently inducing the loans and of diverting it to their benefit, were independently liable for that known and certain sum, regardless of whether the sellers pursued their alternative remedies against the company. 18 U.S.C.A. 1961 et seq. [5] Injunction 212 138.31 57

212 Injunction 212IV Preliminary and Interlocutory Injunctions 212IV(A) Grounds and Proceedings to Procure 212IV(A)3 Subjects of Relief 212k138.30 Property, Conveyances and Encumbrances 212k138.31 k. In general. Most Cited Cases Seller of cellular telephone equipment was entitled to preliminary injunctive relief on Illinois state and common law claims for common law fraud, promissory fraud, and civil conspiracy against Turkish corporations and their principals, who were allegedly defrauding the seller of funds lent to a Turkish cellular telephone company. [6] Injunction 212 138.31

212 Injunction 212IV Preliminary and Interlocutory Injunctions 212IV(A) Grounds and Proceedings to Procure 212IV(A)3 Subjects of Relief 212k138.30 Property, Conveyances and Encumbrances 212k138.31 k. In general. Most Cited Cases Court had authority, under both **its general equitable powers and **the Racketeer Influenced and Corrupt Organizations Act (RICO), to issue a preliminary injunction preventing Turkish corporations and their principals from disposing of their assets pending adjudication of damages claims by sellers of cellular telephone equipment; the relief sought, transfer to the court's registry of shares in a Turkish cellular telephone company pledged as collateral for the sellers' loans to the company and restraints on the defendants' ability to further transfer or dilute the stock, were equitable remedies sought in aid of preserving an asset in which the sellers had an acknowledged equitable interest. 18 U.S.C.A. 1964(a). [7] Injunction 212 139

212 Injunction 212IV Preliminary and Interlocutory Injunctions 212IV(A) Grounds and Proceedings to Procure 212IV(A)4 Proceedings 212k139 k. Authority of court or judge. Most Cited Cases Injunctive relief permitted under Illinois law would be available in a federal court that had jurisdiction over an Illinois claim. OPINION RAKOFF, District Judge. When business deals go sour, both sides are apt to cry fraud, and courts know better than to take such claims at face *242 value. But here we have the unusual case where every preliminary indication is that the defendants, behind a facade of legitimacy, engaged in repeated acts of fraud and chicanery, and thereby perpetrated, and continue to perpetrate, a rather massive swindle. Plaintiffs **Motorola Credit Corporation (Motorola) and **Nokia Corporation (Nokia) are large, multinational companies that, together with their affiliates, are involved, inter alia, in the sale of cellular telephone equipment. The individual defendants-Kemal Uzan, Cem Cengiz Uzan, Murat Hakan Uzan, Melahat Uzan, Aysegul Akay, and Antonio Luna Betancourt-are members (or, in Betancourt's case, a close associate) of a prominent Turkish family, the Uzans, who control various Turkish businesses, including, inter alia, the three Turkish companies named as corporate defendants here and a large Turkish cellular telephone company called Telsim Mobil Telekomunikasyon Hizmetleri A.S. (Telsim). The plaintiffs allege, in essence, that the defendants, through a pattern of **fraud, **extortion, and other unlawful activities, are in the process of defrauding plaintiffs of more than

$2.7 billion that plaintiffs lent to Telsim. To prevent defendants from further diverting and depleting such assets as might be available to repay this great sum, plaintiffs seek, in addition to damages, extensive preliminary injunctive relief, including, inter alia, the attachment of various New York properties and the deposit in the registry of this Court of certain Telsim shares held by defendant Standart Telekomunikasyon Bilgisayar Hizmetleri A.S. (Standart Telekom) and pledged as collateral for the loans. Following extensive briefing and a lengthy evidentiary hearing extending over six days, the Court, by orders issued May 9 and 10, 2002, concluded that plaintiffs were entitled to the preliminary relief they sought. This Opinion states the reasons for those rulings. [1] In the Second Circuit, a party seeking preliminary injunctive relief must demonstrate, **first, that it will suffer irreparable harm in the absence of such relief, and, **second, that either (a) there is a likelihood that the movant will succeed on the merits of its underlying claims or (b) there is a sufficiently serious question going to the merits of those claims as to make them a fair ground for litigation, coupled with a balance of hardships tipping decidedly in the movant's favor. See, e.g., Random House, Inc. v. Rosetta Books LLC, 283 F.3d 490, 490 (2d Cir.2002) (per curiam); Brenntag Int'l Chemicals, Inc. v. Bank of India, 175 F.3d 245, 249 (2d Cir.1999). Where, moreover, the movant is seeking a mandatory, rather than prohibitory injunction-i.e., an injunction that will alter, rather than maintain the status quo or that will provide the movant with relief that cannot be undone, see Beal v. Stern, 184 F.3d 117, 122 (2d Cir.1999)-the movant must, in satisfying the aforementioned standard, either demonstrate a clear or substantial likelihood of success or show that extreme or very serious damage will result from a denial of the injunction. See, e.g., Beal, 184 F.3d at 122-23; Phillip v. Fairfield Univ., 118 F.3d 131, 133 (2d Cir.1997).[ overruled by Winter v. Natural Resources Defense Council, Inc., 129 S.Ct. 365, 172 L.Ed.2d 249, 374, 77 USLW 4001, 67 ERC 1225, 08 Cal. Daily Op. Serv. 13,990, 2008 Daily Journal D.A.R. 16,797, 21 Fla. L. Weekly Fed. S 547 (U.S. Nov 12, 2008) [1] A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.] Although [t]he distinction between mandatory and prohibitory injunctions is not without ambiguities, Tom Doherty Assocs., Inc. v. Saban Entertainment, Inc., 60 F.3d 27, 34 (2d Cir.1995), the Court is doubtful that what plaintiffs here seek is properly classified as mandatory injunctive relief, since in essence they are simply seeking to preserve the status quo by ensuring that certain assets otherwise available to satisfy a judgment but threatened with being dissipated are effectively frozen*243 -even if this means, in the case of the Telsim stock owned by Standart Telekom, moving it into the Court's registry. But even assuming arguendo that some of the injunctive relief here sought could be viewed as mandatory, the Court finds that plaintiffs satisfy the heightened standard requisite thereto. In particular, the Court, based in substantial part on its assessments of the credibility (or lack thereof) of the parties' respective witnesses who testified at the preliminary injunction hearing and the corresponding inferences (positive or adverse, as the case may be) that the Court drew from those assessments, finds that plaintiffs have clearly demonstrated that they are substantially likely to succeed on the merits of their claims, and have further demonstrated that very serious damage is likely to result if the requested relief is not granted.FN1 FN1. Each of the Court's more specific findings, set forth at various places infra, reflects a determination that the Court credited the testimony or other evidence cited in support of such finding (as well as, in most instances, additional supportive evidence not cited for the sake of brevity) and that the Court discredited any contrary evidence. Overall, the Court, based on its assessment of the witnesses' demeanor, consistency, and responsiveness, found plaintiffs' witnesses highly credible and defendants' witnesses frequently lacking in credibility. [2] Plaintiffs first four causes of action allege violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961 et seq. **A threshold issue is whether injunctive relief is available to a private plaintiff bringing a civil action under RICO. The Second Circuit has never definitively ruled on the issue, but the two other circuits that have squarely decided it are divided on the result-see Religious Technology Center v.

Wollersheim, 796 F.2d 1076 (9th Cir.1986) (denying injunctive relief); NOW, Inc. v. Scheidler, 267 F.3d 687 (7th Cir.2001) (granting injunctive relief)-and the Supreme Court recently granted certiorari in the latter case to resolve the split, see Scheidler v. National Organization for Women, Inc., 535 U.S. 1016, 122 S.Ct. 1604, 152 L.Ed.2d 619 (2002). While the instant Court would gladly avoid the issue until the Supreme Court rules, that is not possible, for even though (as discussed infra ) Motorola has an independent entitlement to injunctive relief under its state law claims, co-plaintiff Nokia has brought claims here only under RICO and a certain percentage of the Telsim stock that plaintiffs seek to transfer to this Court's registry is claimed as collateral by Nokia alone. Thus, at least so far as Nokia's application for injunctive relief is concerned, the issue of the availability of injunctive relief to a private RICO plaintiff must be decided now. **In concluding that injunctive relief was not available to private RICO plaintiffs, the Ninth Circuit in Wollersheim relied heavily on extended inferences drawn from what the Seventh Circuit in Scheidler described as mere snippets of legislative history. Scheidler, 267 F.3d at 699. In reaching the opposite result, the Seventh Circuit relied on what it characterized as the unambiguous statutory language of the applicable section of RICO, 1964. Id. The present Court agrees with the result in Scheidler, but for somewhat different reasons. As even the court in Wollersheim recognized, the right to grant injunctive relief in private civil actions in accordance with traditional principles of equity jurisdiction is one of the equitable powers given to federal courts by the Judiciary Act of 1789. See Wollersheim, 796 F.2d at 1083; see generally, *244Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 318-19, 119 S.Ct. 1961, 144 L.Ed.2d 319 (1999) . It would be extraordinary indeed if Congress, in enacting a statute that Congress expressly specified was to be liberally construed to effectuate its remedial purposes, Pub.L. NO.91-452, 904(a), 84 Stat. 947 (1970), intended, without expressly so stating, to deprive the district courts of this utilizing this classic remedial power in private civil actions brought under the act. Whether or not the language of 1964 expressly confers this power as unambiguously as the Seventh Circuit asserts, it nowhere expressly denies courts this power in private civil actions, and thus the normal presumption favoring a court's retention of all powers granted by the Judiciary Act of 1789 prevails. Furthermore, the Ninth Circuit's reading in Wollersheim of RICO's legislative history is far too narrow and wooden. RICO was originally conceived as a statute that would provide the Government, alone, with both criminal and civil remedies, with the former set forth in what became 1963 and the latter in what became subsections (a) and (b) of 1964. See Sedima, S.P.L.R. v. Imrex Company, Inc., 473 U.S. 479, 487, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985); see generally Jed S. Rakoff & Howard W. Goldstein (eds.), RICO: Civil and Criminal Law & Strategy 1.01 (1989). Specifically, subsection (a) of 1964 made express what was already inherent-that in civil RICO actions, as in other civil actions, the federal district courts have broad equitable powers. If anything, subsection (a) extended the courts' equitable jurisdiction in civil RICO actions beyond what was granted by the Judiciary Act of 1789, while subsection (b) gave the Government the right to bring such actions. Since, however, the Government was not a victim and had not suffered any loss, there was no reference to damages in the original version of RICO that passed the Senate. It was only relatively late in the legislative process that the House added an amendment to give victims of racketeering activity a private right of action, and this amendment, which was copied from the Clayton Act and provided for treble damages, was tacked on to 1964 in what is now subsection (c) thereof. See Sedima, 473 U.S. at 487-88, 105 S.Ct. 3275. Taken overall, then, what clearly emerges from the legislative history is that Congress intended to give private civil litigants a right to sue under RICO and that, since the Act nowhere else specified damages, this was expressly included in the amendment. But to go further and to suggest that Congress in so amending 1964 to add a private right of action for damages thereby intended to deprive the district courts of applying to private civil RICO cases the courts' equitable powers and jurisdiction that subsection (a) of the Act so broadly affirmed is to push the legislative history far beyond what it can reasonably support. Accordingly, the Court concludes that the instant plaintiffs may seek injunctive relief pursuant to their RICO claims.

[3] While plaintiffs bring such claims here under each of the four subsections of RICO's Prohibited Acts section, 1962, it is enough for present purposes to evaluate their likelihood of success under any of those claims, for each is broad enough to support the injunctive relief here sought. Consider Count III of the Complaint, which alleges that the defendants conducted the affairs of one or more enterprises through a pattern of racketeering activity and thereby caused economic injury to plaintiffs. See Complaint, 286-88. The Court finds that the plaintiffs have shown, *245 by clear and convincing evidence, each essential element of this claim. Of the two RICO enterprises alleged in the Complaint, the one that most particularly fits Count III is the Uzan Association Enterprise, which the Complaint defines as an association in fact of the Uzans, their associates, and the various companies they control, including the named corporate defendants, Telsim, and such other companies as Rumeli Holding A.S., a holding company through which the Uzans exercise control over numerous entities. See Complaint 24-25, 242, 286. At the hearing on the instant motion, the plaintiffs established, virtually without contradiction, that this Uzancontrolled business empire functioned as ongoing enterprise, with its own structure and hierarchy antedating and independent of the racketeering activities here alleged. See, e.g., United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981); U.S. v. Coonan, 938 F.2d 1553, 1559 (2d Cir.1991). Each Sunday night, key members of the Uzan family would sit down to a dinner meeting at which the key business decisions were made with respect to the entire enterprise, with individual members of the family, including the individual defendants here, then delegated to carry out the decisions. See, e.g., transcript at preliminary injunction hearing (tr.) at 59, 423. At the some time, even those individual members of the family who functioned as chief executive officers of particular business entities within the enterprise could not make major decisions without checking, not with their respective boards of directors (although those were also Uzan-controlled), but with the family hierarchy. See, e.g., tr. 10, 27-29, 421-23, 857, 967-68. Each of the defendants here was associated with the enterprise, and in the case of the individual defendants played a dominant role; but the enterprise itself was considerably greater than, and distinct from, any or all of the defendants. By virtue of their respective roles, however, the defendants were in a position to conduct the affairs of the enterprise, and, as the evidence here showed, that conduct sometimes consisted of racketeering activities. So far as the plaintiffs here are concerned, defendants' racketeering activities primarily took the form of fraudulent schemes, in the execution of which, among numerous other means, international wire communications between Europe and New York were utilized, in violation of the wire fraud statute, 18 U.S.C. 1343. (A partial listing of applicable wire transfers is appended as Attachment E to the Complaint). In particular, over a period of several years (beginning, in Motorola's case, as early as 1998), **each of the plaintiffs (in ignorance of the other), was fraudulently induced to make to Telsim ever greater loans, and to forego repayment of prior loans, based on false representations that: (i) the proceeds were to be used by Telsim for certain specified purposes (such as purchase of cellular telephone equipment from the plaintiffs), see, e.g., tr. 869-71, 1221-22, see also, plaintiffs' exhibit (Pl.Ex.) 79, defendants' exhibit (Def. Ex.) 74; (ii) Telsim's financial and business circumstances were sound and it was on the verge of being acquired or funded by other sound companies, see, e.g., Pl.Ex. 64, 72, 75, 76, 78-79, 81, 85-87; and (iii) plaintiffs' loans were fully collateralized by Telsim stock, see, e.g., Pl.Ex. 75, 79; tr. 14. In actuality, however, as the proof at the preliminary injunction hearing clearly established: *246 (i) at least $1 billion of the $2.7 billion loaned to Telsim by plaintiffs is unaccounted for, with some of it admittedly used for purposes other than those specified in the loan documents, see e.g., Pl.Ex. 79; tr. 713, 870, 957959, 1221, 1261, and much of it seemingly diverted by defendants to the benefit of the Uzan Association Enterprise, see, e.g., tr. 56-59;

(ii) Telsim's financial condition was increasingly precarious (long before any alleged crisis in the Turkish economy on which defendants now seek to rely to conceal their fraud), see, e.g., tr. 938-940, and its prospects for effecting a sale or merger of the company were far more remote than represented, see, e.g., tr. 42-44, 53, 73-74, 938940-facts which the defendants helped conceal from plaintiffs by withholding important financial data and by preventing plaintiffs from having meaningful access to third parties familiar with Telsim's merger prospects, see, e.g., Pl.Ex. 87, 91; tr. 11, 83-84, 86-88; and, (iii) defendants secretly and fraudulently diluted the value of plaintiffs' collateral, see Pl.Ex. 14, 36; tr. 89, 466. This latter event was a particularly raw bit of business that well illustrates the defendants' fraudulent intent and their willingness to make use of the Uzan Association Enterprise to achieve their fraudulent purposes. Prior to the meeting, over 95% of the shares of Telsim were owned by two Uzan-controlled entities: Rumeli Holding, which owned 21.99% of the Telsim stock, and Rumeli Telefon Sistemleri A.S. (Rumeli Telefon), which owned a controlling 73.63% of the Telsim stock. Virtually the entirety of the Telsim stock owned by Rumeli Telefon had, in turn, been pledged to Motorola and Nokia as collateral for their loans to Telsim. In inducing the plaintiffs to make ever greater loans, and in quieting plaintiffs' ever-growing fears about repayment, the Uzans repeatedly emphasized that, if all else failed, plaintiffs were fully protected by the value of this collateral. See, e.g., Pl.Ex. 75, 79; tr. 14. Eventually, however, as plaintiffs slowly learned more and more suspicious circumstances, it became ever more probable that plaintiffs would finally demand repayment and/or foreclose on the collateral. When this at last appeared imminent, the defendants, making use of the multiple opportunities afforded by the Uzan Association Enterprise to shift assets and ownership, convened on April 24, 2001, without the slightest notice to plaintiffs, a specially-called meeting of Telsim's shareholders, see tr. 81-82. At the meeting, the shareholders issued new shares that tripled the number of outstanding Telsim shares, but gave the prior shareholders preemption rights to purchase the new shares up to a level that would enable them to retain proportions of ownership corresponding to their prior percentages of ownership. Rumeli Telefon, however, waived its preemption rights, whereupon those rights were transferred to another Uzan-controlled entity, defendant Standard Telefon, which previously had owned only 0.32% of the Telsim stock. Standard Telefon then exercised the rights so transferred, thus magically increasing its percentage of Telsim stock to a controlling 66.48%. Meanwhile, the Telsim stock retained by Rumeli Telefon (and pledged to the plaintiffs) was reduced to 24.54% of the total shares, i.e., one third of the original ownership. See Pl.Ex. 36; see also, tr. 598. **The net effect of this palpable fraud was to hugely dilute the value of plaintiffs' collateral, as well as effectively divesting them of such control of Telsim as they might have otherwise achieved if they had foreclosed on the collateral. Recognizing the fraudulence of their acts, moreover, the defendants not only kept the events of *247 April 24 secret from the plaintiffs (with whom they were in regular contact), see, e.g., tr. 89, 466, 1204, but also did not even tell Telsim's chief financial officer, Fatih Azami, until several weeks had passed, see tr. 854.FN2 As this also evidences, Telsim itself was but a pawn in the Uzan Association Enterprise. FN2. Remarkably, none of the Uzan defendants, even the one (Cem Uzan) who is not challenging the Court's personal jurisdiction, chose to appear at the preliminary injunction hearing-a fact from which the Court draws the obvious adverse inferences. Instead, they sent poor Mr. Azami, who, as the above testimony indicates, was kept in the dark by the Uzans as to critical decisions. As for defendants' contention the issuance of the new shares was simply motivated by legal concerns over maintaining a sufficient capitalization to meet new Turkish investment certificate requirements, both plaintiffs' and defendants' Turkish law experts testified that, if such recapitalization was required at all for this purpose, it was not required, at the earliest, before December 2001, see tr. 610, 985. Moreover, nothing in the alleged recapitalization requirement required dilution of the proportionate value of the collateral, let alone keeping this secret from plaintiffs. The Court rejects the proffered excuse as itself nothing but a sham. Eventually, plaintiffs learned of the dilution, and, with their suspicions now fully aroused, began investigating whether they had indeed been defrauded. See, e.g., tr. 90-97, 103, 467-468. Defendants retaliated by **use of fear

and extortion, and thereby violated another RICO predicate, the Hobbs Act, 18 U.S.C. 1951. Specifically, the defendants arranged for a lawyer for the Uzan family to initiate Turkish criminal proceedings against the executive hierarchy of both Motorola and Nokia, accusing them, in a sworn complaint that is frivolous on its face and unsupported by a single credible fact of record, of making explicit and armed threats to kill the Uzan family. Pl.Ex. 99. Attempting to utilize the fear thereby engendered (especially since several of the executives so accused were within Turkish jurisdiction), see tr. 1067-69, the defendants then informed plaintiffs that, if only plaintiffs would agree to defer seeking repayment of the overdue loans, defendants would arrange to have the criminal charges dropped, see tr. 90-93. As this testimony (which the Court fully credits) well illustrates, this was a classic extortion scheme in clear violation of the Hobbs Act. See, e.g., United States v. Abelis, 146 F.3d 73, 82 (2d Cir.1998).FN3 FN3. While some lower courts have held that the threat of civil litigation or even the initiation of unjustified civil lawsuits does not constitute a Hobbs Act predicate act under RICO, see, e.g., G-I Holdings, Inc. v. Baron & Budd, 179 F.Supp.2d 233, 259 (S.D.N.Y.2001); Nakahara v. Bal, 1998 WL 35123, at * 7 ( S.D.N.Y. Jan. 30, 1998), none of these cases (which, in any event, are not binding on this Court) involved, as here, the perjurious obtaining of a criminal charge in order to induce physical fear immediately used to try to extort economic concessions. From the foregoing alone (and there is much more), it is clear that defendants have for several years now conducted the affairs of the Uzan Association Enterpirse through a pattern of racketeering activities and have thereby directly and proximately injured plaintiffs, who not only relied to their detriment on defendants' false representations but who have now seen their monies diverted from Telsim and the Telsim shares on which they ultimately relied for repayment diluted to a small fraction of their former value. Moreover, defendants' **open-ended racketeering scheme continues apace, threatening still further injury to plaintiffs' *248 business and property. For example, as recently as January of this year, the defendants arranged, in another unannounced Telsim shareholders' meeting, for the voting rights of the remaining Telsim shares pledged to plaintiffs to be diminished, while the voting rights of the unencumbered shares were greatly increased, thus further reducing plaintiffs' opportunity for recovery (and further increasing the need for injunctive relief by this Court).FN4 See Pl.Ex. 39, see also, tr. 610-615. FN4. After plaintiffs commenced this lawsuit on January 28, 2002, defendants asserted that the January resolution had never become effective. see tr. 1287. Under all the facts and circumstances, the Court draws the inference that defendants did not implement the resolution only because it would further expose their fraud in the eyes of the Court, and that, unless prevented by appropriate injunctive relief, they will likely seek an opportunity to implement the resolution in the future. This step was taken, moreover, in the teeth of defendants' repeated promises-never fulfilled-to restore plaintiffs' collateral to its original status. See, e.g., tr. 89, 90, 101, 467-469, 861; see also, Pl.Ex. 100, 101. Indeed, the Court finds that defendants, by repeatedly making these representations even during the course of this litigation while taking no actions to fulfill their pledge and instead offering sham excuses and false testimony, have carried their fraud into the court itself. Under these circumstances, it is clear that plaintiffs are likely to suffer severe further injury if the Court does not grant the requested injunctive relief necessary to preserve the status quo and prevent any further diversion or diminution of the assets available for repayment. See, e.g., Brenntag, 175 F.3d at 249, Republic of Philippines v. Marcos, 806 F.2d 344, 356 (2d Cir.1986) (preliminary injunctions are proper to prevent a defendant from making a judgment uncollectable). In short, plaintiffs, having clearly demonstrated that they are substantially likely to succeed on their RICO claim under Count III, and having further demonstrated that, in the absence of the requested relief, they are likely to suffer severe injury, are fully entitled to the relief here sought.FN5 FN5. While, given the Court's findings that plaintiffs are substantially likely to prevail on their claims, there is no need to assess any alleged hardship to defendants from the requested injunctive relief, in fact there is

none. (Defendants are, moreover, fully protected against any error in this Court's ruling by their right to immediate appeal and by the very substantial bond of $ 2,000,000 that the Court has ordered plaintiffs to post.) Although defendants argue that the placement of the Telsim shares in this Court's registry could negatively impact Telsim's telecommunications license because of a Turkish requirement of 50% Turkish ownership, the Court is, needless to say, neither assuming ownership itself nor transferring it at this time, so that the Turkish requirement continues to be met. Indeed, the Turkish Ministry of Telecommunication and Transportation had previously made clear that there was no prohibition to the very shares in question being held in escrow in a Swiss bank in connection with certain arbitration proceedings that might arise (discussed infra ). See Pl.Ex. 57, 58. The Court, moreover, credits plaintiffs' expert's opinion that such transfer would present no problem under Turkish law. Tr. 616-620. By contrast, defendants' expert, while contending that the transfer would present problems, was obliged to concede that the Turkish Ministry had effectively rejected his interpretation. Tr. 1003-04. [4] Defendants, however, in addition to challenging the availability of private injunctive relief under RICO (as discussed supra ) also argue that the plaintiffs lack standing at this time either to bring their RICO claims or to seek injunctive relief predicated on those claims, because they have not exhausted their legal remedies *249 against Telsim nor thereby ascertained precisely what their RICO damages will be, see First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 768 (2d Cir.1994). In First Nationwide, however, the plaintiff sought to bring a RICO claim against the very borrower on whose collateral the plaintiff had not yet fully foreclosed and as to whom ordinary collection proceedings were far from completed. Here, by contrast, the borrower (Telsim) is not a party at all, and the named defendants, who are accused, inter alia, of fraudulently inducing the plaintiffs to extend the $2.7 billion in loans and of diverting it to their benefit, are independently liable for this known and certain sum, regardless of whether plaintiffs pursue their alternative remedies against Telsim or not. Similarly, even the portion of the injunctive relief relating to Telsim stock is relief sought, as a practical matter, not from Telsim, but from the current owners of the stock and from those who, by controlling the Uzan Association Enterprise, are in a position to divert Telsim's monies and diminish the value of plaintiffs' collateral. See GICC Capital Corp. v. Technology Fin. Group, Inc., 30 F.3d 289, 293 (2d Cir.1994) (when a corporation fraudulently is caused to issue debt and stripped of its assets in a manner that obviously will leave the creditors unpaid, those creditors have [RICO] standing); see also In re Merrill Lynch Ltd. P'ships Litig., 154 F.3d 56, 59 (2d Cir.1998) (distinguishing First Nationwide on other grounds). [5] Beyond all this, Motorola is independently entitled to the injunctive relief it here seeks by virtue of its Illinois state and common law claims against defendants, including, inter alia, claims for common law fraud (Count V), promissory fraud (Count VI), and civil conspiracy (Count VII). FN6 From the foregoing recitations, it is clear that plaintiffs have shown a likelihood of success under each of these claims, and neither side questions the fact that Illinois law empowers courts to impose the full range of injunctive relief to prevent irreparable harm. See, e.g., Caterpillar, Inc. v. Jerryco Footwear, Inc., 880 F.Supp. 578, 587 (C.D.Ill.1994); People ex rel. Hartigan v. Dynasty System Corp., 128 Ill.App.3d 874, 83 Ill.Dec. 937, 471 N.E.2d 236 (4th Dist.1984). Moreover, the Illinois claims are in no way subject to such limitations as may arguably exist with respect to the RICO claims by virtue of First Nationwide. See, e.g., Bank of Ravenswood v. City of Chicago, 307 Ill.App.3d 161, 240 Ill.Dec. 385, 717 N.E.2d 478, 483-84 (1st Dist.1999) (cause of action accrues at the time [the plaintiff's] interest is invaded; the mere fact that the extent of its damages is not immediately ascertainable does not postpone the accrual of a plaintiff's claim); see also Austin v. House of Vision, Inc., 101 Ill.App.2d 251, 256, 243 N.E.2d 297 (1st Dist.1968) (Illinois courts have held that an action sounding in tort accrues at, and limitations begin to run from, the date on which there is a wrongful invasion of personal or property rights, regardless of the time when the full extent of the injury or damages sustained is ascertained). FN6. While two of these claims are brought against defendants Hakan Uzan and Cem Cengiz Uzan alone, the claim for civil conspiracy is brought against all defendants. Moreover, the proof before the Court shows that Hakan Uzan and Cem Uzan stand, along with their father Kemal Uzan, at the very pinnacle of the Uzan business empire, and a court applying Illinois law can impose injunctive remedies against not only named defendants but also those acting in concert with them or subject to their control. See, e.g., People ex rel. Scott v. Master Barbers & Beauty Culturists Ass'n., 9 Ill.App.3d 981, 293 N.E.2d 393, 397 (1973).

*250 While defendants offer a hodgepodge of other objections to plaintiffs' motion for preliminary injunctive relief-all of which have been considered, and rejected, by the Court-only a few deserve mention here. [6] First, defendants renew their argument, previously rejected by the Court in its Order dated February 15, 2002, that, under the doctrine of Grupo Mexicano, supra, this Court lacks authority to issue a preliminary injunction preventing petitioners from disposing of their assets pending adjudication of plaintiffs' claim for damages. Grupo Mexicano, however, was addressed to the situation where an unsecured creditor seeks to restrain the general assets of its debtor in aid of collecting the debt. Since the Judiciary Act of 1789 conveyed to federal courts only the equity jurisdiction exercised by the High Court of Chancery in England at that time, and since, at that time, a general unsecured creditor was not entitled to such a prior restraint of a debtor's assets, the Supreme Court held in Grupo Mexicano that a federal court lacked power to issue such an injunction. Grupo Mexicano, 527 U.S. at 318, 119 S.Ct. 1961 ff. By contrast, however, as the Supreme Court in Grupo Mexicano further indicated, such equitable remedies are available, both historically and now, to creditors possessing a lien or equitable interest in the property at issue, see Grupo Mexicano at 329-33, 119 S.Ct. 1961, and subsequent decisions have expressly so held. See Wishnatzki & Nathel, Inc. v. H.P. Island-Wide, Inc., 2000 WL 1610790, *1-2 (S.D.N.Y. October 27, 2000) (and cases there cited); see also Deckert v. Independence Shares Corporation, 311 U.S. 282, 289, 61 S.Ct. 229, 85 L.Ed. 189 (1940) . Here, the portions of plaintiffs' requested preliminary relief that defendants chiefly challenge-i.e., the transfer to this Court's registry, in aid of a proposed constructive trust, see Compl. at 337, of the Telsim shares held by defendant Standart Telekom that are pledged as collateral for plaintiffs' loans, as well as restraints on defendants' ability to further transfer or dilute the stock-are equitable remedies sought in aid of preserving an asset in which the plaintiffs have an acknowledged equitable interest. Accordingly, the doctrine of Grupo Mexicano poses no bar to the requested relief. [7] Furthermore, even if (contrary to fact) such relief were not available under the Court's general equitable powers conveyed by the Judiciary Act of 1789, it would be available under the specific grant of power given by Congress under 1964(a) of RICO, which expressly provides that the district courts of the United States shall have jurisdiction to prevent and restrain violations of section 1962 of this chapter by issuing appropriate orders, including, but not limited to: ordering any person to divest himself of any interest, direct or indirect, in any enterprise; [and] imposing reasonable restrictions on the future activities or investments of any person; .... Finally, because Illinois law, as previously noted, clearly permits such injunctive relief, it would be available in a federal court that, as here, has jurisdiction over an Illinois claim. See Grupo Mexicano, 527 at 319 n. 3, 119 S.Ct. 1961 (noting that this argument was not there preserved). [8] Second, defendants argue that this entire case is simply an end run around the contractual agreements between plaintiffs and Telsim to submit any disputes to arbitration in Switzerland, and that, consequently, this Court has no jurisdiction to entertain this action. But, as the foregoing findings of fact make evident, plaintiffs have already demonstrated a clear likelihood of success on their contentions, inter alia, that the Telsim contracts were induced by fraud and that the instant defendants,*251 rather than Telsim, were the real parties in interest, operating outside the confines of Telsim and using it simply as a front. Consequently, the arbitration provisions of the Telsim contracts are a total irrelevancy. Furthermore, even if this were not so, the arbitration clause in the contract between Motorola and Telsim expressly provides that nothing in this section will prevent either party from resorting to judicial proceedings if ... interim relief from a court is necessary to prevent serious and irreparable injury to one party or to others. Def. Ex. 5. While the situation with respect to Nokia is more complicated, both because Nokia, though the real party in interest, made its loans via an intermediary, ABN-AMRO Bank, N.V. (ABN), and also because the corresponding contracts do not contain as explicit a grant as the above-quoted clause, nevertheless, entertaining an application for a preliminary injunction in aid of arbitration is consistent with the court's power .... Borden, Inc. v. Meiji Milk Products, Co., 919 F.2d 822, 826 (2d Cir.1990). Third, all defendants except Cem Cengiz Uzan (who concedes the Court's personal jurisdiction) argue that the Court lacks personal jurisdiction over them and therefore lacks jurisdiction to impose any restraint upon them. But the Complaint adequately alleges personal jurisdiction, and this is sufficient until the matter is properly challenged on an evidentiary basis. Defendants, indeed, propose to mount such a challenge, but on their own volition have

chosen to schedule the briefing and argument of that motion for several weeks hence. For them to raise the same objection here is therefore premature. That said, it may also be noted that, even at the hearing on the preliminary injunction, plaintiffs adduced considerable evidence indicating their personal jurisdiction over all defendants, both under RICO, see 18 U.S.C. 1965, and under the applicable law of New York. Among much else, there was ample evidence that most of the individual defendants reside in New York, have New York driver's licenses, maintain New York bank accounts, and do business in New York, as well as serving as principals for the corporate defendants. See Dixon v. Mack, 507 F.Supp. 345, 350 (S.D.N.Y.1980). [9] Furthermore, even if any defendant succeeds in convincing the Court, in the forthcoming motion practice on personal jurisdiction, that the plaintiffs have failed to carry their burden of establishing personal jurisdiction over that particular defendant, so that that defendant must be dismissed from the lawsuit, even that defendant may still be subject to the injunctive relief already granted to the extent that he, she, or it is acting in concert with a defendant properly before the Court. [10] Fourth, defendants argue that injunctive relief must be denied because of plaintiffs' failure to join two parties allegedly indispensable to the granting of such relief, namely, Telsim and Rumeli Telefon. But while these two entities will undoubtedly figure in this lawsuit, they are in no sense indispensable to a lawsuit that neither seeks relief from them nor threatens to affect them more than tangentially. In particular, the Telsim shares that are the focus of the contested injunctive relief are owned by Standart Telekom and controlled by the Uzan family. More generally, even to the extent that Telsim and Rumeli Telefon are indirectly implicated in this lawsuit, the Court sees little reason to conclude that their interests will not be more than adequately represented by the individual defendants in this suit who, as majority*252 shareowners in both corporations, have heavily aligned interests.FN7 FN7. To the extent that defendants also contend that ABN is also an indispensable party, the Court can see no reason why its interests will not be adequately represented by Nokia which is the real party in interest with respect to the loans that ABN extended to Telsim. See tr. 415-416, 441, 495. Accordingly, for the foregoing reasons, the Court hereby reaffirms its Orders of May 9 and May 10, 2002 granting plaintiffs' requested relief.

Hall American Center Associates Ltd. Partnership v. Dick, 726 F.Supp. 1083 (E.D.Mich.,Dec 19, 1989)

Lawsuit, involving criminal acts, and for bringing an action on the basis of property to which the party bringing the action complained of is not entitled, for which the fact-finder is to determine. Keycite from von Bulow v. von Bulow 657 F.Supp.1134.
Landowner filed suit, alleging that defendants filed lawsuits and notices of lis pendens as part of a scheme to extort landowners' property. Landowners asserted claims under the RICO statute, as well as state law claims of assigner of title, tortious interference with business relationships, and abuse of process. Defendants moved for dismissal. The District Court, Ralph M. Freeman, Senior District Judge, held that: (1) plaintiffs' allegations of enterprise were defective; **(2) plaintiffs' complaint stated a claim under the Hobbs Act; and (3) the court had pendent-claim jurisdiction over the state-law claims as against certain defendants, but not as against others. So ordered. [1] Racketeer Influenced and Corrupt Organizations 319H 34

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk33 Enterprise 319Hk34 k. In General. Most Cited Cases (Formerly 83k82.72) Court would dismiss RICO count unless plaintiffs within 30 days filed amended complaint to cure defects which included failure to state of what or whom alleged enterprise consisted. 18 U.S.C.A. 1961-1968, 1962(c). [2] Commerce 83 82.60

83 Commerce 83II Application to Particular Subjects and Methods of Regulation 83II(K) Miscellaneous Subjects and Regulations 83k82.60 k. Criminal or Racketeer Influenced and Corrupt Organizations. Most Cited Cases (Formerly 83k82.72) **RICO plaintiffs' allegation of interstate use of mails and wires as having effect on interstate commerce sufficed to meet pleading requirement of effect on interstate commerce under RICO statute. 18 U.S.C.A. 1962(c). [3] Postal Service 306 35(2)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(2) k. Nature and Elements of Offense in General. Most Cited Cases (Formerly 83k82.72) Telecommunications 372 1014(2)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(2) k. Nature and Elements of Offense in General. Most Cited Cases (Formerly 372k362, 83k82.72) Allegation in RICO complaint that defendants in their enterprise and scheme to fraudulently misrepresent themselves repeatedly employed use of mails and use of wires, was insufficient to establish predicate acts of mail and wire fraud as support for establishing pleading requirement of pattern of racketeering activity; **complaint failed to allege even generally defendants' intent to defraud or deceive, and **did not allege what representations of material fact defendants made to plaintiffs upon which they relied to their detriment. [4] Extortion and Threats 165 25.1

165 Extortion and Threats 165II Threats 165k25 Nature and Elements of Offenses 165k25.1 k. In General. Most Cited Cases (Formerly 165k25, 83k82.72)

Allegations of landowners' complaint stated claim under Hobbs Act and, consequently, predicate act as required to allege RICO pattern of racketeering activity; complaint alleged that defendants filed lawsuits and notices of lis pendens as part of scheme to extort landowners' property. 18 U.S.C.A. 1951, 1962(c). [5] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk56 Persons Entitled to Sue or Recover 319Hk58 k. Injury in General. Most Cited Cases (Formerly 83k82.72) Plaintiffs sufficiently alleged injury as a result of defendants' alleged RICO violations in connection with defendants' filing lawsuits and notice of lis pendens as part of their alleged scheme to extort plaintiffs' property;**plaintiffs alleged collapse of their joint venture. 18 U.S.C.A. 1962(c). [6] Federal Courts 170B 15 58

170B Federal Courts 170BI Jurisdiction and Powers in General 170BI(A) In General 170Bk14 Jurisdiction of Entire Controversy; Pendent Jurisdiction 170Bk15 k. Federal Question Cases in General, Claims Pendent To. Most Cited Cases RICO claim which alleged that defendants filed lawsuits and notices of lis pendens as part of scheme to extort landowners' property allowed federal district court to retain pendent jurisdiction over state-law claims against them for **slander of title, tortious interference with business relationships, and abuse of process; state-law claims were part of defendants' alleged extortionate schemes, and evidence with respect to federal and state claims would substantially overlap. MEMORANDUM OPINION RALPH M. FREEMAN, Senior District Judge. This action revolves around the American Center Building (Building) and approximately 40 of its 70 surrounding acres of undeveloped property (Land) in Southfield, Michigan.FN1 The court will review the background facts and then address the various motions to dismiss filed by the defendants.FN2 The court will dismiss the RICO claim if the plaintiffs do not cure certain pleading deficiencies within 30 days and will dismiss the state law claims against defendants Evans, the Vestevich firm, and the Barbier firm, as to whom no independent basis for federal jurisdiction exists. FN1. The Building and the Land are collectively referred to as **the Property. FN2. Defendants **Dick, **American Town Center Associates Limited Partnership (ATCA) and **American Investment Properties, Inc. (AIP) have filed a motion for dismissal and summary judgment. The defendants have only attacked the legal sufficiency of the pleadings rather than argued that there is no genuine issue of material fact and that the defendants are entitled to judgment as a matter of law. The court will not treat the motion as one for summary judgment under F.R.Civ.P. 56(c). I. BACKGROUND Plaintiff **Hall American Center Associates Limited Partnership (Building Partnership) is a limited partnership organized under the laws of the State of Michigan, with its principal place of business in the Eastern District of Michigan. Plaintiff **American Center Properties Limited Partnership (Land Partnership) is a limited partnership o rganized under the laws of the State of Michigan, with its principal place of business in the Eastern District of Michigan. Plaintiff **Hall Financial Group, Inc. (Hall Financial) is a corporation organized under the laws of the

State of Delaware, with its principal place of business in Dallas, Texas. The **American Center Building (Building) is a major metropolitan office complex, with a total gross square footage in excess of 579,000, comprised of a 25-story office building, a two-story commercial mall, and a two-level underground parking structure located on approximately 30 acres of real property in Southfield, Michigan. The Building is owned by the Building Partnership, itself comprised of three general partners and 175 limited partners located in *1085 various states. Approximately 70 acres of undeveloped real estate (Land) located immediately adjacent to the Building FN3 is owned by the Land Partnership, itself comprised of three general partners and 87 limited partners located in various states. The three general partners of the Building Partnership and the Land Partnership (collectively, the Partnerships) are common to those Partnerships, as is Craig Hall, their managing general partner. FN3. The Land consists of 70-75 acres, some of which may be protected wetlands. According to a recent newspaper article, trees and vegetation have been cleared from the 75 acres for the development of a $165-million retail, office, convention, hotel and apartment complex, which American Center Properties Ltd. and Hall American Center Associates have said they want to build over the next 10 years. Angel, Developers Put Land at Risk, Southfield Says, Detroit Free Press, Nov. 17, 1989, at 19A. Hall Financial provides day-to-day management services to the Partnerships, coordinates communications with them, and gives them advice in connection with their assets and properties. Neither Hall Financial nor any of its employees or affiliates has any authority to agree to sell the Property or to accept any terms relative to any sale. Decisions regarding the sale of the Property can only be made by Craig Hall on behalf of the Partnerships, after which there must be formal approval of a majority in interest of the Partnerships' respective limited partners. **Defendant Leslie Dick (Dick) is a citizen of the State of Michigan, a resident of the Eastern District of Michigan, and the defendant to whom most of the allegations in the complaint point. **Defendant L. Stanford Evans (Evans) is a lawyer and a member of **the defendant law firm Vestevich, Dritsas, McManus, Evans, Payne & Vlcko (Vestevich). **Defendant American Town Center Associates Limited Partnership (ATCA) is a limited partnership organized under the laws of the State of Michigan, with its principal place of business in the Eastern District of Michigan. Defendant American Investment Properties, Inc. (AIP) is a corporation organized under the laws of the State of Michigan, with its principal place of business in the Eastern District of Michigan. According to the complaint, Dick owns and controls ATCA and AIP and at all times relevant to the allegations herein, ATCA was acting on the express and/or implied authority of Dick and/or AIP, and AIP was acting on the express and/or implied authority of Dick. Complaint, 21. Defendants Vestevich, a Michigan law firm, and **Barbier & Tolleson (Barbier), also a Michigan law firm, have acted as legal counsel for Dick, ATCA, and AIP in matters concerning the Property. According to the Summary of the Complaint, FN4 FN4. The court recognizes that the summary of the complaint as well as the complaint itself are replete with denigrating, adjectival characterizations; however, the court feels at liberty to quote from the complaint for the purpose of ruling on the various motions to dismiss. Under a F.R.Civ.P. 12(b)(6) motion to dismiss, the factual allegations in the complaint must be accepted as true. Windsor v. The Tennessean, 719 F.2d 155, 158 (6th Cir.1983), cert. denied, 469 U.S. 826, 105 S.Ct. 105, 83 L.Ed.2d 50 (1984). The Summary of Complaint is the plaintiffs' preview to the allegations in the complaint and precedes the actual allegations; the defendants are not required to answer the summary. The court quotes from the summary because it adequately highlights the allegations in the forty-page complaint. Leslie Dick has, since 1986, tried every way he could apparently imagine to buy the American Center Building ... and approximately 40 of its 70 surrounding acres of undeveloped property.... He relentlessly harassed the owners of the Property with letter proposals until his proposals were flatly rejected on a number of bases, not the least of which was that the owners simply did not want to sell to Mr. Dick (judging him financially incapable of purchasing a property of this size and value) and that the owners (i) thought that the time was not right for a sale of the Building and (ii) have themselves been more interested in a joint venture for the Land with an

experienced, capable and respected developer.... Instead of accepting defeat in his efforts, Mr. Dick has, through a shell partnership and a dummy corporation, *1086 launched a vicious and malicious campaign of (i) baseless litigation (he has filed two essentially identical lawsuits and has sought to intervene in yet another), (ii) threats and harassment (he has so harassed and interfered with a proposed joint venture with the Land that the joint venture has collapsed), (iii) intimidation (he unsuccessfully and wrongfully attempted to use the offices of the United States Attorney to pressure Plaintiffs into submission and has threatened the proposed joint venture partner with retaliatory litigation and scheduled a useless deposition of that individual) and **(iv) clouding title to the Property through the filing of a welter of notices of lis pendens. Mr. Dick's first lawsuit was filed in Federal District Court [Zatkoff, J.] and sought specific performance of what he claimed to be both written and oral contracts to purchase the Property, and included a count for damages based on the alleged fraud. That complaint was dismissed by summary judgment. However, within 24 hours and in what can only be viewed as blatant forum shopping, Mr. Dick filed a virtually identical complaint in the Oakland County Circuit Court seeking enforcement of the same alleged contract which was summarily rejected the day before by the Federal Court.FN5 FN5. Apparently the one difference between the two actions is the alleged principal on whose behalf the agents were purportedly acting (Hall 83 in the District Court Complaint and the Partnership in the Oakland County Complaint). Plaintiffs' Response Brief, at 5 n. 5. In addition, Mr. Dick and his attorneys have relentlessly threatened all parties with whom the owners have sought to deal with respect to the Land, including joint venture partners and their counsel, and have even blanketed title companies with written claims of an interest in the Property. Aside from the clear abuse of process, Mr. Dick's aim (and that of his affiliated parties) has been to freeze all dealings with the Property, in an attempt to squeeze and coerce Plaintiffs into selling the Property to Mr. Dick.... So far, it has worked. Plaintiffs have been rendered virtually incapable of dealing with the Property as they would otherwise have a right to do, the proposed joint venture for the Land has collapsed, the Land is now subject to a defaulted mortgage and a disappointed mortgagee, foreclosure and loss of the Land is now a real and imminent risk, and Plaintiffs are virtually isolated from any commercial dealings, except with Mr. Dick. Importantly, this does not appear to be the first time that Mr. Dick has used these tactics to his advantage. Indeed, in 1984, Mr. Dick sought the same ends through much the same means against Pacific Mutual Life Insurance Company. However, there he succeeded in coercing Pacific Mutual into a settlement as a result of which Mr. Dick eventually received over $1 million.... Thus, Plaintiffs have filed this Complaint to attack Mr. Dick's actions for what they are: **(i) commercial extortion which is actionable as a civil RICO violation under the Federal law; (ii) slander of title; (iii) tortious interference with business relationships; and (iv) abuse of process. Complaint, at 2-4. II. DEFENDANTS' MOTIONS TO DISMISS The gist of the motions is that the RICO FN6 count (Count I) fails to state a claim upon which relief can be granted. Since the other three counts are all state-law claims, the defendants also argue that the court should not exercise pendent jurisdiction over those claims. Since the majority of the parties' submissions concern the RICO count, the court will address the motions to dismiss that count first. FN6. Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-68 (1982 & Supp. VI 1987). *1087 A. Motions to Dismiss Count I

Under 18 U.S.C. 1962(c),FN7 it is unlawful FN7. After a review of the complaint, the court was unable to ascertain what provision of RICO the plaintiffs allege defendants violated. The plaintiffs' response brief states that subsection (c) was violated. 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.... The terms racketeering activity, person, enterprise, and pattern of racketeering activity are defined in 18 U.S.C. 1961 as follows: (1) racketeering activity means ... (B) any act which is indictable under any of the following provisions of [18 U.S.C.]: ... section 1341 (relating to mail fraud), section 1343 (relating to wire fraud), ... section 1951 (relating to interference with commerce, robbery, or extortion), .... (3) person includes any individual or entity capable of holding a legal or beneficial interest in property; (4) enterprise includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity; (5) pattern of racketeering activity requires at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years ... after the commission of a prior act of racketeering activity,.... The statute provides a private right of action for a person injured in his or her business or property because of a RICO violation, which includes the recovery of treble damages. 18 U.S.C. 1964(c). The parties agree that to state a claim for relief under section 1962(c), a complaint must generally state four elements: (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. See Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 3285, 87 L.Ed.2d 346 (1985).FN8 The plaintiffs have asserted the RICO claim against defendants Dick, ATCA, and AIP, and the heart of the claim is at paragraphs 96-112 of the complaint. FN8. More specifically, a complaint under section 1962(c) must allege (1) a person (2) employed by or associated with (3) an enterprise engaged in or affecting interstate commerce (4) and such person conducts or participates, directly or indirectly, in that enterprise's affairs (5) through a pattern (6) of racketeering activity. Bhatla v. Resort Development Corp., 720 F.Supp. 501, 510 (W.D.Pa.1989); see Moss v. Morgan Stanley, Inc., 719 F.2d 5, 17 (2d Cir.1983) (listing seven elements), cert. denied, 465 U.S. 1025, 104 S.Ct. 1280, 79 L.Ed.2d 684 (1984). The court will discuss the need for a more specific RICO pleading in section II(A)(1).

At p. 1087,
The RICO defendants FN9 move to dismiss Count I on the ground that the plaintiffs have failed to plead the essential elements of a RICO violation. Specifically, the defendants argue that (1) the activity complained of does not constitute racketeering activity proscribed by RICO; (2) the plaintiffs failed to allege a pattern of racketeering activity; (3) the plaintiffs failed to allege an enterprise properly; (4) the plaintiffs failed to plead fraud with sufficient particularity; and (5) the plaintiffs failed to *1088 plead injury properly as well as failed to plead a conspiracy under section 1962(d).FN10 FN9. The principal motion and brief relating to the RICO count has been filed by defendants Dick, ATCA, and AIP, in which the other defendants have joined. FN10. The defendants' initial jab that RICO's aim is organized crime-consequently rendering the statute

inapplicable to the commercial setting of this case-has been deflected by the Supreme Court given the statute's current language. RICO focuses upon enterprise criminality in general, and its applicability is not limited by the criminal status of the individual or person corrupting the enterprise. The court is well aware, however, that certain members of the Supreme Court, and a plethora of lower courts, have suggested a revisitation of RICO by Congress would be both prudent and welcome. See, e.g., H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 109 S.Ct. 2893, 2909, 106 L.Ed.2d 195 (1989) (Scalia, J., concurring) (That the highest Court in the land has been unable to derive from this statute anything more than today's meager guidance bodes ill for the day when [a constitutional challenge to RICO] is presented.); The RICO Racket, National Legal Center for the Public Interest, at 59, 63 (Sept. 1989) (comments of Justices Marshall and Rehnquist, respectively); Sedima, 473 U.S. at 499, 105 S.Ct. at 3286 (White, J.) (correction must lie with Congress); see also The RICO Racket, id. at 43 (criticizing RICO because of its use in practice, citing cases involving divorce, disputes between church members, between landlords and tenants, and between family members, among others). After a thorough review of the complaint, the court finds that the plaintiffs have plead, albeit not without some difficulty, the essential elements of a violation of section 1962(c) to withstand the defendants' arguments. However, as will be explained, the court on its own will require the plaintiffs to replead their RICO claim or claims with more specificity, following which the parties and the court will assuredly revisit many of the same arguments. 1. Person and Enterprise [1] The complaint alleges that **Dick, **ATCA, and **AIP are the RICO defendants, but it does not allege that **Dick, **ATCA, and **AIP are each persons under 18 U.S.C. 1961(3) who are employed by or associated with an enterprise and who conduct or participate in that enterprise's affairs through a pattern of racketeering activity. See 18 U.S.C. 1962(c); footnote 8, supra. Paragraph 98 of the complaint reads: Dick, ATCA and AIP conspired in an enterprise to fraudulently misrepresent themselves to the Partnerships and Hall Financial as qualified buyers having the financing necessary to acquire the Property. (emphasis added); see also Complaint 99 (Dick, ATCA and AIP have further conspired in an enterprise.... (emphasis added)). The plaintiffs' use of the term conspired is unavailing. **First, the court does not know if the plaintiffs are attempting to allege a violation of section 1962(d) (conspiracy to violate subsection (a), (b), or (c)) or if the term somehow pertains to a section 1962(c) violation. **Second, if it pertains to section 1962(c), it hardly qualifies as alleging that each defendant was associated with an enterprise and participated in the affairs of that enterprise through a pattern of racketeering activity. See United States v. Joseph, 835 F.2d 1149, 1151 (6th Cir.1987) (1962(c) requires, among other elements, proof that defendant associated with the enterprise). Moreover, after reading the complaint the court is left with the indelible impression that Dick is the prime RICO defendant or person. See, e.g., Summary of Complaint (Mr. Dick has, through a shell partnership and a dummy corporation, launched a vicious and malicious campaign....; Mr. Dick has used these tactics....; Plaintiffs have filed this Complaint to attack Mr. Dick's actions....; Complaint, 21 (Dick owns and controls ATCA and AIP). Nevertheless, the plaintiffs have named ATCA and AIP as RICO defendants, requiring the court to consider their individual liability under 1962(c). As mentioned, the statute defines enterprise as any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity. 18 U.S.C. 1961(4). Although not specified in the complaint, the plaintiffs rely upon the so-called association-in-fact enterprise. Plaintiffs' Response Brief, at 12. The [association-in-fact] enterprise is an entity, for present purposes a group of persons associated together for a common purpose of engaging in a course of conduct *1089 ... and is proved by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function together as a continuing unit. United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 2528, 69 L.Ed.2d 246 (1981). Turkette confirmed the association-in-fact enterprise and specifically held that illegitimate enterprises fall within the scope of section 1962(c). FN11 FN11. Turkette indicated an association-in-fact enterprise: (1) must be an ongoing organization, formal or informal; (2) its members must function as a continuing unit; and (3) it must be separate from the pattern of racketeering activity in which it engages. 452 U.S. at 583, 101 S.Ct. at 2528. The circuit courts of appeal have differed in their interpretations of the Turkette language. The Second, Sixth, and Eleventh Circuits, for example, require the associated members to have a common purpose and to function as a

continuing unit. See, e.g., United States v. Qaoud, 777 F.2d 1105, 1115-16 (6th Cir.1985), cert. denied sub nom. Callanan v. United States, 475 U.S. 1098, 106 S.Ct. 1499, 89 L.Ed.2d 899 (1986); United States v. Mazzei, 700 F.2d 85, 89 (2d Cir.), cert. denied, 461 U.S. 945, 103 S.Ct. 2124, 77 L.Ed.2d 1304 (1983); United States v. Cagnina, 697 F.2d 915, 920-21 (11th Cir.), cert. denied, 464 U.S. 856, 104 S.Ct. 175, 78 L.Ed.2d 157 (1983). The Third, Fourth, and Eighth Circuits require a structure separate from the racketeering activity and distinct from the organization inherent in the pattern element. See, e.g., United States v. Leisure, 844 F.2d 1347, 1363-64 (8th Cir.), cert. denied, --- U.S. ----, 109 S.Ct. 324, 102 L.Ed.2d 342 (1988); United States v. Tillett, 763 F.2d 628, 632 (4th Cir.1985); United States v. Riccobene, 709 F.2d 214, 223-24 (3rd Cir.) (three part test), cert. denied sub nom. Ciancaglini v. United States, 464 U.S. 849, 104 S.Ct. 157, 78 L.Ed.2d 145 (1983). The D.C., First, Fifth, Seventh, and **Ninth Circuits are unclear in their respective interpretations of Turkette. See, e.g., United States v. Doherty, 867 F.2d 47, 68 (1st Cir.) (existence of enterprise inferred from nature and number of racketeering acts and participation of main figures in scheme for several years), cert. denied, --- U.S. ----, 109 S.Ct. 3243, 106 L.Ed.2d 590 (1989); United States v. Feldman, 853 F.2d 648, 655-57 (9th Cir.1988) (must show existence of organization among corporations and individuals and that organization has some continuity), cert. denied, 489 U.S. 1030, 109 S.Ct. 1164, 103 L.Ed.2d 222 (1989); United States v. Perholtz, 842 F.2d 343, 356-59 (D.C.Cir.) (enterprise and pattern proof need not be separate), cert. denied, --- U.S. ----, 109 S.Ct. 65, 102 L.Ed.2d 42 (1988); Manax v. McNamara, 842 F.2d 808, 811-12 (5th Cir.1988) (enterprise structure required); United Energy Owners Comm., Inc. v. United States Energy Management Sys., Inc., 837 F.2d 356, 361 (9th Cir.1988) (split in circuits noted); United States v. Neapolitan, 791 F.2d 489, 500 (7th Cir.), cert. denied sub nom. Turner v. United States, 479 U.S. 939, 107 S.Ct. 421, 93 L.Ed.2d 371 (1986); United States v. Winter, 663 F.2d 1120 (1st Cir.1981), cert. denied, 460 U.S. 1011, 103 S.Ct. 1250, 75 L.Ed.2d 479 (1983). The defendants argue that the plaintiffs' use of the term enterprise in the complaint indicates that they have referred to enterprise as a systematic purposeful activity rather than as a distinct entity, rendering the enterprise allegations deficient. Although the court does not agree with the defendants' precise reasoning, the court agrees that the requisite enterprise allegations are deficient in certain respects. Of immediate concern is the plaintiffs' indiscriminate lumping of all three RICO defendants in one count, ostensibly representing three separate RICO claims.FN12 Each defendant is entitled to individual consideration and to know what enterprise it is that they are alleged to have illegally conducted through a pattern of racketeering activity. The court's statement in Beck v. Cantor Fitzgerald & Co., 621 F.Supp. 1547, 1563 (N.D.Ill.1985), is applicable to this complaint: FN12. The court does not necessarily mean that a plaintiff cannot allege RICO claims against several defendants in one count; however, the basis for each defendant's liability should be clearly delineated in that count, a delineation lacking in this complaint. Plaintiff's response serves only to confuse further the defects in his complaint which in turn stem from his failure to plead facts supporting and constituting each RICO claim precisely in separate counts against each separate defendant who is liable as a person for conducting each RICO enterprise through a specified pattern of racketeering activity. As this Court has previously noted ..., the question ... is not whether a defendant can also constitute an enterprise but whether the alleged enterprise has a separate and sufficiently lasting identity apart from the person or persons' who allegedly ... are employed or associated with it.... Defendants are entitled to sufficient information to know precisely which enterprise it *1090 is that they are alleged to have illegally conducted through a pattern of racketeering activity. If plaintiff cannot plead a separate, lasting enterprise apart from each defendant alleged to be liable under Section 1962(c) and specify the predicate acts and conduct of that enterprise by each allegedly liable defendant with particularity, in separate counts, he has no business charging RICO violations. This complaint only appears to allege that Dick, ATCA, and AIP, the purported RICO defendants, are an association-in-fact enterprise. The complaint states that the three defendants conspired in an enterprise, but it does not state of what or whom that enterprise consists.FN13 The plaintiffs' enterprise allegations may run afoul of the majority rule that, under 18 U.S.C. 1962(c), the defendant or person cannot be the same entity as the enterprise. See, e.g., Schofield v. First Commodity Corp. of Boston, 793 F.2d 28, 29-34 (1st Cir.1986) (defendant

cannot be same entity as enterprise under 1962(c), citing cases from 2d, 3rd, 4th, 7th, 8th, and 9th Circuits). But see United States v. Hartley, 678 F.2d 961, 988 (11th Cir.1982), cert. denied, 459 U.S. 1170, 103 S.Ct. 815, 74 L.Ed.2d 1014 (1983). An issue arising from a further refinement of that rule is whether the enterprise can consist of a person whose behavior RICO was designed to punish. See Entre Computer Centers v. FMG of Kansas City, Inc., 819 F.2d 1279, 1287 (4th Cir.1987) (assuming a corporation can be part of association-in-fact enterprise, it cannot combine with other entities to form an enterprise when it is already the person whose behavior the Act is designed to punish) (citing United States v. Computer Sciences Corp., 689 F.2d 1181, 1190 (4th Cir.1982) (enterprise refers to a being different from, not same as or part of, the person whose behavior the act was designated to punish), cert. denied, 459 U.S. 1105, 103 S.Ct. 729, 74 L.Ed.2d 953 (1983)); von Bulow By Auersperg v. von Bulow, 634 F.Supp. 1284, 1306 (S.D.N.Y.1985) (allegation that husband (person) conducted the affairs of an enterprise (consisting of the husband and the wife) through a pattern of racketeering activity rejected, for husband could not be both RICO person and RICO enterprise). But see Cullen v. Margiotta, 811 F.2d 698, 729-30 (2d Cir.) (solitary entity cannot be both person and enterprise, but it may be person and one of a number of members of an enterprise, for example, a multi-entity association), cert. denied sub nom. Nassau County Republican Committee v. Cullen, 483 U.S. 1021, 107 S.Ct. 3266, 97 L.Ed.2d 764 (1987) ; Fustok v. Conticommodity Services, Inc., 618 F.Supp. 1074, 1075-76 (S.D.N.Y.1985) (association-in-fact of three corporations can be enterprise even though the three corporations are also persons who can be liable under RICO). Cf. Yellow Bus Lines, Inc. v. Local Union 639, 839 F.2d 782, 791 (D.C.Cir.) (citing cases and stating an organization cannot join with its own members to do that which it normally does and thereby form an enterprise separate and apart from itself), cert. denied, 488 U.S. 926, 109 S.Ct. 309, 102 L.Ed.2d 328 (1988); McCullough v. Suter, 757 F.2d 142, 144 (7th Cir.1985); Haroco, Inc. v. American National Bank and Trust Co., 747 F.2d 384, 399-402 (7th Cir.1984), aff'd on other *1091 grounds, 473 U.S. 606, 105 S.Ct. 3291, 87 L.Ed.2d 437 (1985). FN13. One commentator's hypothetical illustrates the need for care in alleging the enterprise or enterprises: Assume ... that two defendants, X and Y, join in bribing public officials to gain favors for their two legitimate businesses, X Corporation and Y Corporation. At least seven enterprises can be alleged against X and Y: (1) X is the enterprise with which Y is associated; (2) Y is the enterprise with which X is associated; (3) X and Y together are the enterprise; (4) **X Corporation is the enterprise with which X and Y are associated [one alternative, to define WELLS FARGO and Judge Robinson; Judge Gannon.]; (5) Y Corporation is the enterprise with which X and Y are associated; (6) X Corporation and Y Corporation are the enterprise with which X and Y are associated; (7) X Corporation, Y Corporation, X and Y are the enterprise. [one alternative, to define WELLS FARGO, Judge Robinson, Judge Gannon.] The choice of enterprise may be dictated by considerations such as venue, scope of forfeiture, and differing proof requirements. Tarlow, RICO: The New Darling of the Prosecutor's Nursery, 49 Fordham L.Rev. 165, 203 (1980); see also Smith and Reed, Civil RICO 3.05, at 3-42 (1989) (noting plaintiff's freedom to plead enterprise invites confused pleadings and creates difficulty in determining plaintiff's theory of the case). The court does not necessarily quarrel with the plaintiffs' apparent position that Dick, ATCA, and AIP are an association-in-fact enterprise, but the court does not know, nor presumably do the defendants, if the enterprise is alleged to be the same for each RICO person. The complaint appears to allege that Dick associated with the enterprise of Dick, ATCA, and AIP and conducted the affairs of that enterprise through a pattern of racketeering activity (mail fraud, wire fraud, and extortion). The complaint also appears to allege that ATCA and AIP associated with the larger enterprise consisting of themselves and the other two RICO defendants and conducted the affairs of that enterprise through a pattern of racketeering activity. If the plaintiffs intend to allege separate RICO claims as to Dick, ATCA, and AIP, they should allege separate RICO counts in which they provide factual support for each RICO element as to each RICO defendant. See also Citizens Savings Association v. Franciscus, 656 F.Supp. 153, 160 (M.D.Pa.1986) (In order to sustain a RICO claim, a plaintiff must present proof that each defendant was in some manner involved in the performance of the requisite predicate acts.) (emphasis in original); United States v. Castellano, 610 F.Supp. 1359, 1396 (S.D.N.Y.1985) (A RICO charge under 1962(c) necessarily incorporates allegations that each of the defendants named was associated with or employed by the same enterprise, and

participated in the enterprise by engaging in at least two acts of racketeering related to the enterprise.); Eaby v. Richmond, 561 F.Supp. 131, 135 (E.D.Pa.1983) (plaintiffs failed to allege that person committed at least two predicate racketeering acts, citing cases holding that to sustain substantive RICO claim, proof that each individual defendant committed at least two racketeering acts necessary). [2] The defendants also contend that the plaintiffs have failed to allege that the enterprise affects interstate commerce, as is required by section 1962(c). The law is well settled that for purposes of 1962(c) the criminal enterprise need only have a minimal impact upon interstate commerce. United States v. Robinson, 763 F.2d 778, 781 (6th Cir.1985). The interstate commerce nexus requirement can be met by the racketeering activities of the enterprise. See Bunker Ramo Corp. v. United States Business Forms, Inc., 713 F.2d 1272, 1289 (7th Cir.1983). In paragraph 20 of the complaint the plaintiffs allege: The actions of Defendants complained of in this matter involved the use of interstate commerce in that Defendants have taken those actions through the use of the mails and interstate wire services, as well as other instrumentalities of interstate commerce. Paragraph 110 states: In performing their extortionate conduct referred to in this Complaint, Dick, ATCA, and AIP have used the interstate mails and wires. The plaintiffs caption paragraph 110 with the *1092 heading The Affect Upon Interstate Commerce. The court's resolution of this issue begins with the emphasis that there is not a failure to allege an effect on interstate commerce. See Rose v. Bartle, 871 F.2d 331, 356 (3rd Cir.1989). Given the allegation of the enterprise's effect on interstate commerce, given the minimal effect required on interstate commerce under RICO, and given the favorable interpretation the court must give the complaint under F.R.Civ.P. 12(b)(6), the court cannot say that the plaintiffs could prove no set of facts to establish the nexus between the enterprise and interstate commerce. However, the court makes this ruling with some skepticism surrounding the interstate commerce allegations. In Gitterman v. Vitoulis, 579 F.Supp. 423, 425-26 (S.D.N.Y.1983), in the context of a summary judgment motion, the district court held that the intrastate use of the telephone does not establish the interstate commerce element required for a RICO violation. In Weft, Inc. v. G.C. Investment Associates, 630 F.Supp. 1138, 1142 (E.D.N.C.1986), aff'd without opinion sub nom. Weft, Inc. v. Georgaide, 822 F.2d 56 (4th Cir.1987), the district court ruled that: Although in plaintiff's second, third and fourth claims for relief; they allege the use of the mails to establish the jurisdictional base for the federal securities claims, these allegations are not part of the seventh claim [RICO] and, even if they were, it is doubtful that they would constitute a sufficient effect on interstate commerce under RICO. See also Fields v. National Republic Bank of Chicago, 546 F.Supp. 123, 125 (N.D.Ill.1982) (allegation that defendant used mail for three letters in furtherance of scheme to defraud in violation of RICO; court ruled that no allegation that the alleged enterprise was engaged in, or that its activities affected, interstate commerce). But see United States v. Barton, 647 F.2d 224, 234 (2d Cir.) (appellants made several interstate telephone calls to and from New York in their quest for explosive devices needed for their activities....), cert. denied, 454 U.S. 857 [, 102 S.Ct. 307, 70 L.Ed.2d 152] (1981). In sum, the court holds that the plaintiffs' allegation of the interstate use of the mails and wires as having an effect on interstate commerce suffices to meet the pleading requirement of an effect on interstate commerce under section 1962(c). 2. Pattern of Racketeering Activity [3] The defendants next argue that the plaintiffs have failed to allege a pattern of racketeering activity, an element that continues to spawn considerable case law, commentary, and confusion. See, e.g., Northwestern Bell, 109 S.Ct. at 2906 (Scalia, J., concurring). The requisite pattern of racketeering activity has two elementsracketeering activity, more commonly called predicate acts, and a pattern of that racketeering activity. The defendants focus initially on the racketeering activity, without which there could be no pattern. a. Racketeering Activity The defendants' position is that Count I amounts to nothing more than a state law claim of malicious prosecution rather than indictable predicate acts. The plaintiffs respond by arguing that the complaint alleges more than malicious prosecution or abuse of process, for the complaint alleges the actual filing of lawsuits and the employment of other legal process as part of an overall extortionate scheme. (emphasis in original). Paragraphs 100 and 101 of the complaint list the alleged predicate acts:

100. In their enterprise and scheme to fraudulently misrepresent themselves to the Partnerships and Hall Financial, Dick, ATCA and AIP repeatedly employed the use of the mails in violation of 18 U.S.C. 1341 (mail fraud) and the wires in violation of 18 U.S.C. 1343 (wire fraud). 101. In addition, Dick, ATCA and AIP's enterprise and scheme to file the District Court Complaint, the Oakland County Complaint, the First Notice of Lis Pendens, the Second Notice of Lis Pendens and the Amended Notice of Lis Pendens, their seeking to involve the United States *1093 Attorney and their conduct of an improper campaign of threats of financial harm, intimidation and harassment, all for those extortionate purposes set forth earlier in this Complaint, constitutes extortion under 18 U.S.C. 1951. The court finds the allegations in paragraph 100 insufficient to establish predicate acts of mail and wire fraud. As the United States Court of Appeals for the Sixth Circuit stated in Bender v. Southland Corp., 749 F.2d 1205, 1215-16 (6th Cir.1984): The crime of mail fraud has two elements: **a scheme or artifice to defraud and **a mailing for the purpose of executing the scheme. [citations omitted]. This court has held that the scheme to defraud must involve: [I]ntentional fraud, consisting in deception intentionally practiced to induce another to part with property or to surrender some legal right, and which accomplishes the end desired. [A scheme to defraud] requires intent to deceive or to defraud. [Emphasis supplied]. Epstein v. United States, 174 F.2d 754, 765 (6th Cir.1949).... This court has also held that the scheme to defraud must involve misrepresentations or omissions reasonably calculated to deceive persons of ordinary prudence and comprehension. [citation omitted]. ...**Although intent is a state of mind that may be averred generally, FRCP 9(b), it must be alleged. **The complaint in this case fails to allege even generally the defendants' intent to defraud or deceive. **Moreover, the complaint does not allege what representations of material fact the defendants made to the plaintiffs upon which they relied to their detriment. Id. at 1216. Finally, the complaint does not meet the pleading requirement of F.R.Civ.P. 9(b), which requires that fraud be plead with particularity. **To satisfy FRCP 9(b), a plaintiff must at a minimum allege **the time, **place and **contents of the misrepresentations upon which he relied. Id.; see Barker v. Underwriters at Lloyd's, London, 564 F.Supp. 352, 356 (E.D.Mich.1983). The plaintiffs fail to meet the 9(b) pleading requirement. These pleading deficiencies are equally applicable to the plaintiffs' conclusory allegation of wire fraud. See, e.g., United States v. Lemire, 720 F.2d 1327, 1335 (D.C.Cir.1983) (elements of mail and wire fraud statutes similar, thus cases construing the statutes helpful to interpretation of both statutes), cert. denied, 467 U.S. 1226, 104 S.Ct. 2678, 81 L.Ed.2d 874 (1984). Consequently, the court will disregard the mail and wire fraud allegations as support for establishing the pleading requirement of a pattern of racketeering activity. [4] The plaintiffs also rely upon two alleged violations of the Hobbs Act, 18 U.S.C. 1951 (**extortion and **attempted extortion), to establish both racketeering activity and the pattern of that activity. 18 U.S.C. 1951 reads as follows: (a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined not more than $10,000 or imprisoned not more than twenty years, or both. (b) As used in this section.... (2) The term extortion means the obtaining of property from another, with his consent, induced by

**wrongful use of actual or threatened force, violence, or fear, or under color of official right. (emphasis added). Judicial construction of the Hobbs Act has not limited the Act's reach to paradigmatic racketeering activities; to the contrary, the reach of the Hobbs Act has been extended to a broad range of conduct far different from the classic case of extracting money by threats or infliction of physical harm. To establish a violation of section 1951, the plaintiffs must prove three elements: (1) that the defendants induced or attempted to induce*1094 FN14 his victim to part with property; (2) that they did so by extortion; and (3) that interstate commerce was delayed, interrupted, or adversely affected (or that would have been the result had the defendants' efforts succeeded).FN15 See Devitt and Blackmar, Federal Jury Practice and Instructions, 56.01 & 56.04; Pattern Jury Instructions, # 46, Criminal Cases, Eleventh Circuit (1985). The property element includes intangible as well as tangible property, including the right ... to make a business decision free from outside pressure wrongfully imposed. United States v. Santoni, 585 F.2d 667, 673 (4th Cir.1978), cert. denied, 440 U.S. 910, 99 S.Ct. 1221, 59 L.Ed.2d 459 (1979); see United States v. Zemek, 634 F.2d 1159, 1174 (9th Cir.1980), cert. denied, 450 U.S. 916, 101 S.Ct. 1359, 67 L.Ed.2d 341 (1981). The plaintiffs can satisfy the extortion element by proof of the use of fear, which is not limited to fear of force or violence-**fear of economic harm is proscribed as well. See United States v. Kattar, 840 F.2d 118, 123 (1st Cir.1988); United States v. Cusmano, 659 F.2d 714, 715 (6th Cir.1981) (Cusamo I ), cert. denied, 467 U.S. 1252, 104 S.Ct. 3536, 82 L.Ed.2d 841 (1984); Zemek, 634 F.2d at 1174. The fear of economic harm, though, must be actual and reasonable and [the] defendant [must know] and intentionally ... use ... such actual fear. Cusmano, 659 F.2d at 715. The Act covers explicit as well as implicit threats. See United States v. Duhon, 565 F.2d 345, 351 (5th Cir.), cert. denied, 435 U.S. 952, 98 S.Ct. 1580, 55 L.Ed.2d 802 (1978). FN14. The Hobbs Act proscribes attempted extortion as well as extortion. 18 U.S.C. 1951(a). The plaintiffs are alleging a completed case of extortion in 1984 against Pacific Mutual and a case of attempted extortion regarding the plaintiffs' Property. FN15. To the extent not apparent from these general elements, the court notes that the plaintiffs must prove mens rea or intent, though the level of intent that must be proven is not without some debate. See, e.g., United States v. Furey, 491 F.Supp. 1048, 1061 (E.D.Pa.) (extortion under Act general intent crime but noting defendant must have general intent to exploit the fear), 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). But see United States v. Sturm, 870 F.2d 769, 777 (1st Cir.1989) (discussion of general and specific intent in context of Hobbs Act prosecution); United States v. Aguon, 851 F.2d 1158, 1168 (9th Cir.1988) (en banc) (lack of instruction on specific intent requires reversal). The plaintiffs have alleged that the defendants have affected or attempted to affect interstate commerce by extortion. The extortionate activity allegedly engaged in by the defendants was their attempt to obtain the plaintiffs' Property, with the plaintiffs' consent, but induced by their wrongful use of actual or threatened fear of economic harm should the Property not be sold on the defendants' terms. The economic harm appears to be the termination of the Joint Venture, resulting in the continuation of the mortgage default, the continuation of significant interest payments, the loss of profits expected from the venture, the potential loss of the Property, as well as the inability to deal with lenders, buyers, and joint venture partners, along with public officials, necessary to the development of the land. See Complaint, 107, 108 & 111. **The economic harm allegedly resulted from the defendants' lawsuits and notices of lis pendens, along with the defendants' letters, threats, and communications to various third parties concerning the Property. The court's analysis begins with the emphasis upon the language of the Hobbs Act itself rather than with an attempt, at least at this stage, to characterize (or mischaracterize) this case as one simply for malicious prosecution. The statutory definition of extortion is precise, and there is persuasive evidence that Congress intended to make punishable all conduct falling within the reach of the statutory language. United States v. Sturm, 870 F.2d 769, 771 (1st Cir.1989) (quoting United States v. Culbert, 435 U.S. 371, 377, 98 S.Ct. 1112, 1115, 55 L.Ed.2d 349 (1978)). **The wrongfulness element of the statute has been the subject of some debate and is the element principally at issue in the dismissal motions. To distill the defendants' main point, they argue that their lawsuits and notices of

lis pendens are not *1095 wrongful, for they are legitimate avenues of redress that they are entitled to pursue for alleged contractual wrongs committed by the plaintiffs. To the extent that the defendants illegitimately pursued their legal remedies, the defendants state the plaintiffs have their civil remedies of malicious prosecution and abuse of process-but not resort to RICO and the Hobbs Act. In **United States v. Enmons, 410 U.S. 396, 400, 93 S.Ct. 1007, 1009, 35 L.Ed.2d 379 (1973) , the Supreme Court held that wrongful has meaning in the Hobbs Act only if it limits the statute's reach to those instances in which the obtaining of the property itself would be wrongful because the alleged extortionist has no lawful claim to the property. Justice Stewart reasoned for the majority: The term wrongful, which on the face of the statute modifies the use of each of the enumerated means of obtaining property-actual or threatened force, violence, or fear-would be superfluous if it only served to describe the means used. For it would be redundant to speak of wrongful violence or wrongful force since, as the government acknowledges, any violence or force to obtain property is wrongful. **Rather, wrongful has meaning in the Act only if it limits the statute's coverage to those instances where the obtaining of the property itself would be wrongful **because the alleged extortionist has no lawful claim to that property. Id. at 399-400, 93 S.Ct. at 1009. Enmons interpreted extortion in the Hobbs Act as consisting of the use of wrongful means to achieve a wrongful objective. See United States v. Traitz, 871 F.2d 368, 381 (3rd Cir.1989); United States v. Clemente, 640 F.2d 1069, 1077 (2d Cir.1981). Enmons also has been interpreted as creating a claim of right defense to a charge of extortion under the Act. See United States v. Agnes, 753 F.2d 293, 298 (3rd Cir.1985) (even if unlawful means used (force, for example), if the defendant used force in pursuit of a legitimate claim or objective (lawful strike to obtain wages, for example), no Hobbs Act violation). Enmons, however, has been limited by most courts to the labor context. See Agnes, 753 F.2d at 298-99 (citing cases); United States v. Russo, 708 F.2d 209, 215 (6th Cir.), cert. denied, 464 U.S. 993, 104 S.Ct. 487, 78 L.Ed.2d 682 (1983). This case involves fear of economic harm, which presents circumstances unique from typical Hobbs Act cases. One point to be emphasized is that the threat of economic harm is not inherently wrongful. As one court put it, the anxiety that some economic benefit or interest may be lost ... is after all the animating force of our economic system. United States v. Sturm, 671 F.Supp. 79, 84 (D.Mass.1987), vacated and remanded, 870 F.2d 769 (1st Cir.1989). Similar sentiments could be expressed of our legal system. Accordingly, courts have recognized a claim of right defense in a fear of economic harm case. In addition, courts have clarified what the wronfulness element means in such a case. In Clemente, 640 F.2d at 1077, the United States Court for the Second Circuit, in rejecting challenges to the district court's jury charge on elements of the Hobbs Act, stated: [The defendant] contends that the use of fear of economic harm is not inherently wrongful, but rather represents a device routinely used in legitimate business transactions, and claims that merely using fear of economic loss to obtain money does not render the receipt of such money wrongful. Thus, he asserts that the requirement set forth by the Supreme Court in Enmons, that both the means and the objective be wrongful to constitute extortion ..., was not adequately conveyed to the jury.... We are satisfied that the charge correctly instructed the jury on the wrongfulness element of the crime on extortion. The thrust of the district court's charge ... was that the use of fear of economic loss to obtain property to which one is not entitled is wrongful. It is obvious that the use of fear of financial injury is not inherently wrongful. And precisely because of this fact, the objective of the party employing fear of economic loss will have a bearing on the *1096 lawfulness of its use.... [T]he wrongfulness element of the crime would be satisfied upon finding that fear of economic loss was employed by the defendants to obtain money to which they were not lawfully entitled. In Sturm, 870 F.2d at 774, the United States Court of Appeals for the First Circuit presented a hypothetical under the Hobbs Act that presents implications for the allegations in this case: Two parties, A and B, enter into a contract. A sincerely believes that B has breached the contract, and threatens litigation unless B abides by A's interpretation of the contract. B refuses to do so, and the judgment in the ensuing lawsuit indicates that B had not breached the contract. May A then be convicted of attempted extortion based on

the threat of litigation? We think not. Even though A had no objective right to the contractual entitlement she sought, her threat of litigation does not amount to attempted extortion because A subjectively thought she had a right to the contractual entitlement. [citations omitted]. It would be unjust to convict A of extortion unless she knew she had no claim to the property that she allegedly sought to extort. (emphasis added). The court also noted that, even though most defendants will claim that they thought they were legally entitled to the property allegedly extorted, **that issue is for the factfinder, who is not required to believe a particular defendant in light of all the evidence. Id. at 774 n. 6. The implicit thrust of Sturm, albeit dicta, is that a threat to sue may constitute extortion under the Hobbs Act. As mentioned, the plaintiffs are alleging the wrongful use of economic fear to obtain property to which they are not, and know they are not, entitled. According to the complaint, Dick initially misrepresented himself to the defendants as a renter rather than a potential buyer of the Property. He then sent a series of self-serving letters of intent in an attempt to create evidence of a contract even though he did not have money for a good faith deposit much less complete financing for a transaction of the magnitude contemplated.FN16 He then filed the lawsuits and notices of lis pendens, FN17 interfered with the Joint Venture, interfered with other lawsuits, threatened parties connected with the Property, and sought to involve the United States in the matter, all with the improper purposes (1) of preventing the plaintiffs from making business decisions involving the Property and (2) of forcing the plaintiffs to sell the Property to the defendants at a price below its market value. The implicit threat was that, should the plaintiffs refuse to sell the Property, the Property would be tied up in litigation, the Joint Venture would collapse, the mortgage would be foreclosed, the high interest payments would continue to be owed, and the Property would be lost completely. Viewing the allegations in the complaint as true, the court cannot say that the plaintiffs have failed to allege a predicate act under the Hobbs Act.FN18 FN16. The plaintiffs also contend that the Property was not even on the market. FN17. [A] lis pendens is designed to warn persons who deal with property while it is in litigation that they are charged with notice of the rights of their vendor's antagonist and take subject to the judgment rendered in the litigation. Backowski v. Solecki, 112 Mich.App. 401, 412, 316 N.W.2d 434 (1982). FN18. The court again emphasizes the pleading problem of lumping all the RICO claims, including the predicate acts, into one count. The court is most concerned about the liability of ATCA and AIP. The court does not necessarily disagree with the authority upon which the defendants rely, but the court does not find it controlling. von Bulow By Auersperg v.von Bulow, 657 F.Supp. 1134 ( S.D.N.Y. 1987) (a careful reading of the complaint reveals that this alleged scheme amounts to nothing more than a series of acts that, taken together, state a claim for malicious prosecution); see I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d 265 (8th Cir.1984) (two threats to file civil action do not constitute pattern of racketeering activity); Manax v. McNamara, 660 F.Supp. 657 (W.D.Tex.1987) (initiation of lawsuits does *1097 not constitute scheme to defraud under mail or wire fraud statutes; nor was Hobbs Act violated), aff'd, 842 F.2d 808 (5th Cir.1988); Paul S. Mullin & Associates v. Bassett, 632 F.Supp. 532, 540 (D.Del.1986) (lawyer's act of posting letter in which he states client's legal position not mail fraud predicate for RICO); American Nursing Care of Toledo v. Leisure, 609 F.Supp. 419 (N.D.Ohio 1984) (threat of litigation regarding commercial agreements not criminal act and consequently not predicate act for RICO). The von Bulow court in particular noted that it need not address the situation where allegedly unjustified suits form a part of some more extensive scheme of racketeering activity, such as extortion. 657 F.Supp. at 1145. As mentioned, the plaintiffs have alleged that the defendants filed the lawsuits and notices of lis pendens as part of an extortionate scheme to obtain property to which they are not entitled. The J. Lauritzen A/S case was decided in the context of a summary judgment motion rather than, as here, on a motion to dismiss. Moreover, rather than analyzing the elements of the Hobbs Act, the court ruled that the threat to sue did not amount to extortion because the plaintiff cited no authoritative case law to support the proposition. 751 F.2d at 267. FN19 The allegations in this case go further than the simple threat to sue in J. Lauritzen A/S. In addition, the 1989 First Circuit case of Sturm supports the plaintiffs' position, as do the literal elements of the Hobbs Act . See also Kattar, 840 F.2d at 124.

FN19. That court justifiably noted that criminal statutes are to be construed strictly and that the right to access to courts might be chilled if a threat to sue and one instance of travel for the purpose of making the threat constituted a pattern of racketeering activity. 751 F.2d at 267. **However, as in Sturm, the key inquiry will be the subjective claim of entitlement to the property. The pattern element is a separate matter, and the concerns of the J. Lauritzen A/S court are actually criticisms of RICO, the correction of which lies with Congress. Accordingly, the court holds that, in the context of a Rule 12(b)(6) motion to dismiss, the plaintiffs' allegationsthe defendants' filing of lawsuits and notices of lis pendens as part of a scheme to extort the plaintiffs' Property, which included the defendants' interference with the Joint Venture, the defendants' attempt to involve the United States Attorney in the matter, and other harassment of third persons involved with the Property, Property to which they knew they were not entitled-suffice to state a claim under the Hobbs Act and consequently a predicate act under RICO. The plaintiffs have alleged the defendants similarly extorted property from Pacific Mutual. The next issue is whether these two predicate acts suffice to state a pattern. b. Pattern of Racketeering Activity The RICO statute defines pattern of racketeering activity as at least two acts of racketeering activity, one of which occurred after [October 15, 1970] and the last of which occurred within ten years ... after the commission of a prior act of racketeering activity. The mere proof of two predicate acts, however, does not establish a pattern. In Sedima, 473 U.S. 479, 105 S.Ct. 3275, a 5-4 decision, the Supreme Court entered into the fray of providing a meaningful formulation of the pattern requirement: The legislative history supports the view that two isolated acts of racketeering activity do not constitute a pattern. As the Senate Report explained: The target of [RICO] is thus not sporadic activity. The infiltration of legitimate business normally requires more than one racketeering activity and the threat of continuing activity to be effective. It is this factor of continuity plus relationship which combines to produce a pattern. [citation omitted]. Similarly, the sponsor of the Senate bill, after quoting this portion of the Report, pointed out to his colleagues that [t]he term pattern itself requires the showing of a relationship.... So, therefore, proof of two acts of racketeering activity, without more, does not establish a pattern.... [citation omitted]. Id. at 496 n. 14, 105 S.Ct. at 3285 n. 14 (emphasis in original); *1098id. at 528, 105 S.Ct. at 3289 (Powell, J, dissenting). Given the dicta emphasizing the continuity plus relationship, the lower courts embarked upon renewed efforts to define the elusive pattern requirement. See, e.g., Kalinka, The Changing RICO Pattern Requirement By Michigan Judges, 68 Mich.B.J. 960 (Oct.1989) (discussing so-called restrictive, liberal, and balanced approach to pattern requirement taken by various federal judges in this state). Following a variety of lower court approaches, the Supreme Court once again attempted to assist the lower courts in Northwestern Bell. In that case, the United States Court of Appeals for the Eighth Circuit had held that the pattern element required an allegation and proof of multiple schemes, an approach the Court rejected. The Court began its discussion of the pattern requirement by noting Congress intended a flexible approach in which a pattern might be demonstrated by reference to a range of different ordering principles or relationships between predicates, within the expansive bounds set. Looking to RICO's legislative history, the Court held that to prove a pattern of racketeering activity a plaintiff ... must show that the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity. Id. at 109 S.Ct. at 2900 (emphasis in original). The Court next defined the elements of **relatedness and **continuity. The relationship of the defendant's acts, one to another, can be shown by criminal acts that have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events. Id. at 2901 (citation omitted). If the relatedness element is satisfied, the plaintiff must also show that the predicates amount to, or constitute a threat of, continuing racketeering activity. The Court rejected the notion that this continuity can be shown only by proof of multiple schemes, though it noted such proof would be highly relevant to the continuity inquiry.

Rejecting a rigid approach, the Court stated: Continuity is both a closed- and open-ended concept, referring either to a closed period of repeated conduct, or to past conduct that by its nature projects into the future with a threat of repetition. [citation omitted]. It is, in either case, centrally a temporal concept-and particularly so in the RICO context, where what must be continuous, RICO's predicate acts or offenses, and the relationship these predicates must bear one to another, are distinct requirements. A party alleging a RICO violation may demonstrate continuity over a closed period by proving a series of related predicates extending over a substantial period of time. Predicate acts extending over a few weeks or months and threatening no future criminal conduct do not satisfy this requirement: Congress was concerned with long-term criminal conduct. Often a RICO action will be brought before continuity can be established in this way. In such cases, liability depends on whether the threat of continuity is demonstrated. Id. at 2902 (emphasis in original). The defendants contend the allegations in this case are insufficient to constitute a pattern of racketeering activity, though neither side cited the Northwestern Bell case at oral argument held approximately six weeks after the case was decided. **The court finds the relatedness element sufficiently plead. The complaint alleges two extortionate schemes in violation of the Hobbs Act: one in 1984 against Pacific Mutual and the present one against the Partnerships. The schemes allegedly had similar purposes-an attempt to force the sale of real property with a concomitant attempt to prevent the sale of the property to another. The methods by which the extortions were allegedly perfected are similar, involving the use of the court process as part of the coercive means, along with threats and harassment. Both of the alleged victims were sellers of real property. Finally, Dick, ATCA, and AIP are allegedly involved in both schemes. *1099 **The court also finds the continuity element sufficiently plead. Without limiting the plaintiffs to a claim of closed- or open-ended continuity, the court finds there is at least a case for open-ended continuity. **The plaintiffs allege the defendants' predicate acts are a regular way of conducting their business or enterprise. See id. at 2902. The first Hobbs Act predicate allegedly occurred in 1984 and the start of the next predicate allegedly began in 1986. The complaint alleges that AIP is a dummy corporation and that ATCA, capitalized with ten dollars, is without assets. The complaint posits that Dick, ATCA, and AIP have and will continue to extort property until they are stopped, ostensibly through this suit. In addition, while recognizing the limitations of the term scheme, the court refers to the allegations of two distinct schemes to extort property as further support for a finding of continued criminal activity or a threat of such activity in the future. The court is well aware, as the Supreme Court noted, that allegations of multiple schemes are of limited use because the term scheme is not a self-defining term. See id. at 2901 n. 3. This case could be viewed, for example, as involving one general scheme to extort real property. It could also be viewed as involving two distinct schemes with the threat of future distinct schemes. The plaintiffs' emphasis is upon this latter characterization involving the Pacific Mutual extortionate scheme in 1984 and the distinct, though similar, extortionate scheme involving the plaintiffs' Property from 1986 to 1989. These supportable allegations of multiple schemes, along with the allegations about the organization and affairs of the RICO enterprise and the allegations mentioned in the relatedness inquiry, suffice at the pleading stage to meet the continuity prong of the pattern requirement. Accordingly, the plaintiffs have plead a pattern of racketeering activity to withstand the defendants' current motions to dismiss. 3. Injury and Conspiracy [5] Contrary to the defendants' argument, the court finds that the complaint sufficiently alleges injury as a result of the alleged RICO violations. In particular, the plaintiffs allege the collapse of the Joint Venture, with all of its attendant consequences. See Complaint 107(ii) (plaintiffs incapable of developing land); (iii) (interest expenses, risk of foreclosure of mortgage and loss of land, defending lawsuits, loss of fair market value for land); (iv) (loss of profits, among others). The defendants' argument about the lack of conspiracy allegations may be true, but the court does not find any conspiracy even alleged in the complaint. The conspiracy arguments are moot. 4. Conclusion For the above reasons, the defendants' motions to dismiss the RICO count (Count I) are DENIED. However, the court will dismiss Count I if the plaintiffs do not cure the pleading deficiencies mentioned above within 30 days in

an amended complaint, which the court grants the plaintiffs leave to file. III. MOTIONS TO DISMISS STATE CLAIMS [6] Defendant Barbier moves to dismiss Count III (tortious interference with business relationships) on the ground that it fails to state a claim upon which relief can be granted. Barbier also moves to dismiss Count IV (abuse of process) on the same ground. All the defendants argue that the court should refuse to retain pendent jurisdiction over the state claims. The defendants initially argued that the court should not retain jurisdiction over Counts II-IV because they are state-law claims that are not necessary to the plaintiffs' RICO cause of action. See United Mine Workers of America v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966) (within court's discretion to decide pendent state-law claims, looking to factors of judicial economy, convenience, and fairness to litigants, among others). At oral argument, the defendants also relied upon the Supreme Court's recent case of Finley v. United States, 490 U.S. 545, 109 S.Ct. 2003, 104 L.Ed.2d 593 (1989), which was the subject of supplemental briefs. This case *1100 involves pendent claims as well as pendent parties. Gibbs applies to pendent claims; Finley applies to pendent parties. [Finley overruled by statute in 1990 by 28 U.S.C. 1367 Supplemental Jurisdiction, at Subidivision A.] The initial question is whether the court should exercise pendent-claim jurisdiction over those state-law claims asserted against defendants as to whom there is an independent basis for federal jurisdiction. This court's jurisdiction is premised upon 28 U.S.C. 1331, the plaintiffs having alleged violations of RICO, which also contains a specific jurisdictional grant. 18 U.S.C. 1964(c). The RICO claim is brought against Dick, ATCA, and AIP, allowing the court to retain pendent jurisdiction over state-law claims against them **if the RICO and state claims arise out of a common nucleus of operative fact. Gibbs, 383 U.S. at 727, 86 S.Ct. at 1139. Under Gibbs, the court will retain pendent-claim jurisdiction of Count II (slander of title) against federal defendants Dick and ATCA; Count III (tortious interference with business relationships) against Dick and ATCA; and Count IV (abuse of process) against Dick, ATCA, and AIP. The court finds that these state-law claims are a part of the defendants' alleged extortionate schemes. The evidence with respect to the federal and state claims would without question substantially overlap, and the plaintiffs would normally be expected to try them all in one judicial proceeding. Id. at 727, 86 S.Ct. at 1139. [7] Although the plaintiffs also would normally expect to try the state-law claims against defendants Evans, the Vestevich firm, and the Barbier firm, the court does not have the jurisdictional power to retain pendent-party jurisdiction over these additional state defendants. Consequently, the court will not rule on their substantive 12(b)(6) motions to dismiss the state-law claims but will dismiss the claims as to them without prejudice. The court's reasoning is as follows. The Finley case, a 5-4 decision, clarified the law of pendent-party jurisdiction . In Finley, the petitioner filed suit against the United States under the Federal Tort Claims Act (FTCA), 28 U.S.C. 1346(b), charging that the Federal Aviation Administration had been negligent in its operation and maintenance of runway lights and in its performance of air traffic control functions following a plane crash in which petitioner's decedents died. The petitioner then sought leave to amend her complaint to add state-law claims against both a city and a utility company as to both of whom there was no independent basis for federal jurisdiction. The district court granted the motion, asserting pendent jurisdiction over the parties and the claims under the Gibbs rationale. The court of appeals reversed, and the Supreme Court affirmed that decision, holding that the FTCA did not permit the exercise of pendent-party jurisdiction over additional parties as to whom no basis for federal jurisdiction existed. More specifically, the Court held that Gibbs, which applied to pendent-claim jurisdiction, did not extend to pendent-party jurisdiction. 109 S.Ct. at 2010. Justice Scalia's analysis for the majority began by reiterating the two prerequisites for the creation of jurisdiction: It remains rudimentary law that [a]s regards all courts of the United States inferior to this tribunal, two things are necessary to create jurisdiction, whether original or appellate. The Constitution must have given to the court the capacity to take it, and an act of Congress must have supplied it.... To the extent that such action is not

taken, the power lies dormant. Id. at 2006 (emphasis in original) (citations omitted). The Court then turned to Gibbs and the well-established principle of pendent-claim jurisdiction. Gibbs held that pendent jurisdiction exists, in the sense of judicial power, when there is a claim arising under federal law and the relationship between that claim and the state claim indicates that there is but one constitutional case. 383 U.S. at 725, 86 S.Ct. at 1138. There is but one constitutional case when the federal and nonfederal claims derive from a common nucleus of operative fact and the plaintiff would normally expect to try them in one proceeding. The petitioner in Finley argued that the Gibbs rationale applied to her state claims against the city and the electric*1101 company and that there was but one constitutional case. The Court ruled that Gibbs did not apply to such claims under the FTCA: Analytically, petitioner's case is fundamentally different from Gibbs in that it brings into question what has become known as pendent-party jurisdiction, that is, jurisdiction over parties not named in any claim that is independently cognizable by the federal court. We may assume, without deciding, that the constitutional criterion for pendent-party jurisdiction is analogous to the constitutional criterion for pendent-claim jurisdiction, and that petitioner's state-law claims pass that test. Our cases show, however, that with respect to the additions of parties, as opposed to the addition of only claims, we will not assume that the full constitutional power has been congressionally authorized, and will not read jurisdictional statutes broadly. Beyond a Gibbs inquiry, a court must examine the posture in which the nonfederal claim is asserted and of the specific statute that confers jurisdiction over the federal claim. Id. 109 S.Ct. at 2007 (quoting Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 373, 98 S.Ct. 2396, 2402, 57 L.Ed.2d 274 (1978)). The significant posture in Finley was that the added claims were against parties as to whom no independent basis of federal jurisdiction existed. A further factor is the text of the jurisdictional statute at issue. The FTCA confers jurisdiction over civil actions on claims against the United States, which the Court interpreted as meaning against the United States and no one else. Id. 109 S.Ct. at 2008. In this case, as in Finley, the plaintiffs are asserting state-law claims against parties as to whom there is no independent basis for federal jurisdiction. Although the state-law claims against these defendants meet the Gibbs test, that is not enough.FN20 Moreover, the jurisdictional statutes under which this suit was brought do not provide the court with the power to assert jurisdiction over the pendent parties. 28 U.S.C. 1331 states that [t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States. In light of this court being a court of limited jurisdiction and the Supreme Court's admonition in Finley that jurisdictional statutes are not to be read broadly, the court cannot read the language of section 1331 as conferring pendent jurisdiction over a pendent party whose liability does not arise under federal law. Similarly, the court cannot read the jurisdictional grant in RICO as extending jurisdiction over pendent parties not charged under RICO. 18 U.S.C. 1964(c) states that [a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee. This language confers jurisdiction over persons injured by RICO violations and only over those persons-no one else. 109 S.Ct. at 2008; see also Charles Kurz Co. v. Lombardi, 595 F.Supp. 373, 378 (E.D.Pa.1984) (The legislative history [of RICO] is devoid of any evidence of intent, express or implied, concerning jurisdiction over pendent parties. The court, however, decided that it had the power to decide pendent party claims but that it would not exercise its discretion to do so). FN20. The court notes that, unlike the petitioner in Finley, the plaintiffs may not have had to file suit in federal court. See Lou v. Belzberg, 834 F.2d 730 (9th Cir.1987) (state and federal courts have concurrent jurisdiction over RICO claims), cert. denied, 485 U.S. 993, 108 S.Ct. 1302, 99 L.Ed.2d 512 (1988). Contra Intel Corp. v. Hartford Accident and Indemnity Co., 662 F.Supp. 1507 (N.D.Calif.1987). Numerous courts have split on the issue. Accordingly, under Finley, the court does not have the jurisdictional power to decide the state-law claims against the pendent parties over whom no independent basis for federal jurisdiction exists. Neither 28 U.S.C. 1331 nor 18 U.S.C. 1964(c) permit such pendent-party jurisdiction. The state-law claims against Evans,

Vestevich,*1102 and Barbier will be dismissed without prejudice.FN21 FN21. The court notes that the plaintiffs will now have to litigate the state-law claims in two forums unless the plaintiffs desire to dismiss their pendent claims against the federal defendants Dick, ATCA, and AIP and try all the state claims in state court. This inefficiency must obtain under Finley. IV. CONCLUSION This case presents serious allegations and implications under RICO. After scrutinizing the complaint and the parties' submissions under the 12(b)(6) standards, the court is not satisfied that the allegations are so deficient that no factual development would entitle the plaintiffs to relief under section 1962(c). But the court is also not satisfied with the complaint as drafted, with its combined claims against Dick, ATCA, and AIP, as well as certain vague and conclusory charges. The defendants' motions, however, also treated the allegations in the aggregate, only arguing generally a failure to allege an enterprise and a pattern of racketeering activity. The court's extended analysis of these issues is intended to goad the parties into refining their theories and arguments so that the case can either be dismissed in part or in whole or proceed upon common ground. Accordingly, the defendants' motions to dismiss the RICO count (Count I) are DENIED WITHOUT PREJUDICE. The plaintiffs, however, will suffer dismissal of the RICO count if they do not file an amended complaint within 30 days curing the deficiencies mentioned in the memorandum insofar as F.R.Civ.P. 11 permits. The defendants may then renew their motions or file additional motions.FN22 The court will also GRANT Evans, Vestevich, and Barbier's motion to dismiss the state-law claims and will DISMISS WITHOUT PREJUDICE the state-law claims as to them for lack of jurisdiction. FN22. The defendants have filed a motion to disqualify the plaintiffs' attorneys to which the plaintiffs have filed a responsive brief. The parties shall receive a notice shortly indicating whether the court will hear oral argument or decide the matter on the briefs submitted. The plaintiffs should still proceed in accordance with this memorandum as if Simpson & Moran is the attorney of record. The plaintiffs shall submit an appropriate order approved as to form. The thirty-day period within which the plaintiffs must file an amended complaint begins upon entry of that order.

DirecTV, Inc. v. Lewis, 2005 WL 1006030, RICO Bus.Disp.Guide 10,868 (W.D.N.Y. Apr 29, 2005)

Distinguish on facts of the case to the instant case. This case involves, lawful litgation activities. And states that lawful litigation acts and activities such as mailing a prelitigation letter does not constitute extortion or mail fraud under RICO.
DECISION AND ORDER SIRAGUSA, J. I. INTRODUCTION *1 Plaintiff/counter defendant DirecTV, Inc. (DirecTV) alleges in a four-count complaint filed on May 22, 2003, that **defendant/counterclaimant John M. Militello (Militello) purchased and used a pirate access device designed to permit viewing of DirecTV's scrambled television programming without authorization by or payment to DirecTV. The case is now before the Court on DirecTV's motion (# 70) pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss Militello's counterclaims. For the reasons stated below, DirecTV's application is granted. II. PROCEDURAL AND FACTUAL BACKGROUND DirecTV commenced this action by filing a complaint on May 22, 2003. In its complaint, DirecTV alleges that it is the nation's leading direct broadcast satellite system, delivering over 225 channels of television and other programming to more than ten million homes and businesses in the United States. Further, DirecTV maintains that it

encrypts-electronically scrambles-its satellite transmissions to provide security for and prevent unauthorized viewing of its satellite television programming. DirecTV also states that it offers its television programming to residential and business customers either by a subscription, or on a pay-per-view basis only, and that each customer is required to obtain a DirecTV Access Card and other system hardware, including a small satellite dish, and create an account with DirecTV. DirecTV further alleges that upon its activation of the Access Card, the customer can receive and view in a decrypted format (i.e., unscrambled) those channels to which the customer has subscribed or otherwise made arrangement to purchase. (Complaint 1-2.) The complaint also states that on or about May 25, 2001, with the assistance of local law enforcement, DirecTV executed several writs of seizure upon a mail shipping facility used by several major sources of pirate technologies, including Vector Technologies, DSS-Stuff, DSSPro, DSS-Hangout, Whiteviper Technologies, Meadco, PCEase, Intertek Technologies, Shutt, Inc., and Canadian Security and Technology. During and subsequent to the raids, DirecTV contends that it came into possession of a substantial body of sales and shipping records, e-mailed communications, credit card receipts, and other materials. Paragraph 11 of the complaint contains factual allegations pertaining specifically to Militello. There, DirecTV alleges the following: Defendant John M. Militello is a resident of East Rochester, New York. Upon information and belief, beginning in or about April 2001, defendant Militello purchased one or more Pirate Access Devices from Canadian Security. Defendant placed each order by using interstate or foreign wire facilities, and received his orders via the Postal Service or commercial mail carriers. Specifically, these illegal purchases included: (a) On or about April 10, 2001, defendant Militello purchased a Pirate Access Device, consisting of a printed circuit board device called an Unlooper, from Canadian Security. The device was shipped to defendant Militello at his address in East Rochester, New York. *2 (Complaint 11.) DirecTV's complaint raises three claims against Militello: **(1) unauthorized reception of satellite signals in violation of 47 U.S.C. 605(a); **unauthorized interception of electronic communications in violation of 18 U.S.C. 2511(1)(a); and **(3) possession of Pirate Access Devices in violation of 18 U.S.C. 2512(1)(b). (Complaint 20-31.) Militello filed an answer and counterclaims on April 30, 2004. In his counterclaims, Militello raises the following causes of action against DirecTV: (1) attempted extortion in violation of 18 U.S.C. 1951 (Hobbs Act); (2) conspiracy to commit extortion in violation of 18 U.S.C. 1951; (3) mail fraud in violation of 18 U.S.C. 1341; a claim under the Racketeer Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. 1962; (5) violation of the New York Consumer Protection Law, N.Y. Gen. Bus. Law 349; and (6) fraud and misrepresentation. III. LEGAL STANDARDS In considering a motion to dismiss pursuant Rule 12(b)(6), a moving party must show that the claimant can prove no set of facts in support of his claim that would entitle him to relief. See H.J. Inc. v. Northwest Bell Telephone Co., 492 U.S. 229, 249, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989) ; see also 2 MOORE'S FEDERAL PRACTICE, 12.34[1][a] (Matthew Bender 3d ed.). here, the Court must view the counterclaims in the light most favorable to Militello, as the non-moving, giving him the benefit of all reasonable inferences party. Id.; see also 2 MOORE'S FEDERAL PRACTICE, 12.34[1][b] (Matthew Bender 3d ed.) (court must accept plaintiff's factual allegations as true). Further legal standards, pertaining to each of Militello's, counterclaims are discussed in detail below. IV. ANALYSIS A. Militello's First and Second Counterclaims alleging Attempted Extortion and Conspiracy to Commit Extortion under the Hobbs Act

Militello states that he was sent pre-litigation letters indicating the following: that he possessed an illegal pirate access device; that by so doing so he violated federal law; that he was subjected to damages of up to $10,000 per violation; and that his involvement in modifying devices to illegally gain access to DirecTV's scrambled satellite programming increased the potential damages to $100,000. In this regard, Militello maintains that DirecTV, Hughes Electronics, Yarmuth Wilsdon Calfo, PLLC and the End User Recovery Project have violated 18 U.S.C. 1951, also known as the Hobbs FN1 Act. That statute provides in relevant part as follows: FN1. Hobbs Act (June 25, 1948, c. 645, 62 Stat. 793), Anti-Racketeering Act (Copeland Anti-Racketeering Act) (Hobbs Anti-Racketeering Act) (June 18, 1934, ch. 569, 48 Stat. 979), Sept. 13, 1994, Pub.L. 103-322, Title XXXIII, 330016(1)(L), 108 Stat. 2147, now codified at 18 U.S.C. 1951 (2005). Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined under this title or imprisoned not more than twenty years, or both. 18 U.S.C. 1951(a) (2005). *3 Militello further alleges that DirecTV and its agents have sent about 100,000 letters to individuals throughout the country seeking settlements of $3,500 each. (Answer 44.) He also states that, upon information and belief, DirecTV and its agents have no evidence of actual interception of DirecTV's satellite signals, and that there are legitimate uses for the pirate access device allegedly possessed by Militello. (Answer 45-47.) Finally, Militello alleges that the communication from DirecTV, Hughes Electronics, Yarmuth Wilsdon Calfo, PLLC and the End User Recovery Project demanded that he give DirecTV personal property, money and a signed statement that he would cease and desist from having any involvement in obtaining unauthorized satellite broadcasts from DirecTV's system. The Second Circuit reviewed the legislative history of the Hobbs Act, particularly with respect to its purpose, in a decision reversing judgments of conviction in a criminal case (which were subsequently affirmed by a later hearing at the same court): The 1945 debates on the bill that was eventually to become the Hobbs Act, see 91 Cong. Rec. 11,839-48, 11,899922 (1945), showed both that the legislators believed that the 1934 Congress viewed extortion as having an element of wrongfulness, and that the Hobbs Act Congress-which retained the substance of the 1934 Act's prohibition-held the same view. See id. at 11,901-02, 11,906, 11,908, 11,920. The discussion leading to the express use of the word extortion in the Hobbs Act, and of the definition of that term, centered on the generally accepted meaning of the term, which traditionally included a component of wrongfulness. The Hobbs Act proponents pointed out that the 1934 Act was fashioned in no small measure after the then-current definition of extortion used in the New York Penal Code. See, e.g., 91 Cong. Rec. 11,843, 11,900, 11,906; see also United States v. Zappola, 677 F.2d 264, 268 (2d Cir.), cert. denied, 459 U.S. 866, 103 S.Ct. 145, 74 L.Ed.2d 122 (1982); United States v. Nedley, 255 F.2d 350, 355 (2d Cir.1958). That definition expressly included a wrongfulness element, see N.Y. PENAL LAW 850 (Consol.1930) (extortion is the obtaining of property from another ... with [his] consent, induced by a wrongful use of force or fear, or under color of official right (emphasis added)), and the Hobbs Act proponents viewed that definition as representative of the extortion laws of every state, see 91 Cong. Rec. at 11,906. Thus, the definition of extortion included in the Hobbs Act reflected what its proponents believed to be the generally accepted definition. See id. at 11,900, 11,906, 11,910, 11,914; see generally Black's Law Dictionary 696 (4th ed.1957) (extort: To gain by wrongful methods, to obtain in an unlawful manner, to compel payments by means of threats of injury to person, property, or reputation .... to exact something unlawfully by threats or putting in fear.). Accordingly, Representative Hobbs stated that the terms extortion and robbery have been construed a thousand times by the courts. Everybody knows what they mean. 91 Cong. Rec. 11,912. *4 United States v. Jackson, 180 F.3d 55, 68-69 (2d Cir.1999). As the Southern District of New York observed in an action where a plaintiff alleged a violation of the Hobbs

Act, [t]hreats of litigation, and even threats of meritless litigation or the actual pursuit of such litigation, have been held not to constitute acts of extortion. G-I Holdings, Inc. v. Baron & Budd, 179 F.Supp.2d 233, 259 (S.D.N.Y.2001); see also Building Industry Fund v. Local Union No. 3, Intern. Broth. of Elec. Workers, AFL-CIO, 992 F.Supp. 162, 176 (E.D.N.Y.1996) (The filing of a meritless lawsuit or administrative action, even if for the purpose of harassment, does not involve a threat of force, violence or fear.). The case law also states that, [t]o prove extortion under the Hobbs Act ..., [a plaintiff] would have to show wrongful means and wrongful objective. Viacom Int'l Inc. v. Icahn, 747 F.Supp. 205, 210 (S.D.N.Y.1990) (discussing the Hobbs Act); United States v. Enmons, 410 U.S. 396, 419 n. 16, 93 S.Ct. 1007, 35 L.Ed.2d 379 (1973) ([E]xtortion requires an intent to obtain that which injustice and equity the party is not entitled to receive. (quoting People v. Cuddihy, 151 Misc. 318, 271 N.Y.S. 450, 456 (1934), and referring to New York State Law)). Andrea Doreen Ltd. v. Building Material Local Union 282, 299 F.Supp.2d 129, 149 (E.D.N.Y.2004). Turning to the communications of which Militello complains, the first he includes is one from DirecTV End User Development Group, is dated August 7, 2002 and is signed by David Bautista, Investigator. (Militello's Mem. of Law (Docket No. 74), Ex. A.) Later that month, plaintiff received a letter with virtually identical wording, this time on the letterhead of law firm Yarmuth, Wilsdon, Calfo, PLLC, and signed by Spencer D. Freeman, Gregory Q. Zamudio, Deborah T. Boylston, and John M. Stellwagon. That letter starts with this sentence: This law firm represents DIRECTV, Inc. in the investigation of and litigation regarding the illegal reception and use of its satellite television programming. (Letter from Spencer D. Freeman, Gregory Q. Zamudio, Deborah T. Boylston, and John M. Stellwagon to Mr. John M. Militello (Aug. 23, 2002), at 1.) It also warns that, possessors and users of illegal signal theft equipment face substantial monetary damage awards for their conduct (Id., at 2), and makes the following offer: In return for your cooperation, DIRECTV is willing to forego litigation against you for violations occurring prior to the date of this letter. DIRECTV is prepared to release its claims in return for your agreement to: (1) surrender all illegally modified Access; Cards or other satellite signal theft devices in your possession, custody, or control; (2) execute a written statement to the effect that you will not purchase or use illegal signal theft devices to obtain satellite programming in the future, nor will you have any involvement in the unauthorized reception and use of DIRECTV's satellite television programming; and (3) pay a monetary sum to DIRECTV for your past wrongful conduct and the damages thereby incurred by the company. *5 (Id., at 2.) The second letter Militello provides is one dated July 2, 2003, from DirecTV End User Development Group. That letter includes information about the 6,465 individuals DirecTV sued in the United States as of the date of that letter, including 631 in New York State, advises Militello that his case had been forwarded to outside counsel, and indicates that, [i]n the event we decide to file a lawsuit, any previous settlement offers are revoked.... (Militello's Mem. of Law (Docket No. 74), Ex. A, at 3.) Militello's complaint is that the letters threaten litigation even though DirecTV and its fellow wrongdoers possessed no evidence of actual interception of DirecTV's satellite signal by Defendant Militello at the time the demand letter was sent to him. (Militello's Mem. of Law, at 4.) However, this assertion overlooks the evidence that DirecTV did have. Specifically, DirecTV had documentary proof that Militello had purchased an Unlooper, a device which DirecTV alleges is capable of altering DirecTV access cards so those cards can receive DirecTV signals illegally. A plaintiff need not produce direct evidence to establish that a communication was received or intercepted, but may rely upon circumstantial evidence to do so. DirecTV, Inc. v. Gilliam, 303 F.Supp.2d 864, 870 (W.D.Mich.2004) (citing Walker v. Darby, 911 F.2d 1573, 1578 (11th Cir.1990) (holding that circumstantial evidence may be used to prove a wiretap claim, including actual interception)). In any event, the Court concludes that the actions of DirecTV's, and those of its fellow wrongdoers, do not amount to a violation of the Hobbs Act. Threats of litigation, even economically ruinous litigation, even unmeritorious litigation, do not constitute extortion. See G.I. Holdings, Inc. v. Baron & Budd, 179 F.Supp.2d 233, 259 (S.D.N.Y.2001). Moreover, the Court finds that prelitigation activities, such as those engaged in here, are protected by **the Noerr-Pennington doctrine, a judicially created doctrine that **protects a party's entitlement to act in furtherance of

the First Amendment right to petition governmental authorities for redress. Eastern Railroads Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961) and United Mine Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965). In construing a claimed antitrust violation, the Ninth Circuit held that the filing of a lawsuit is immune from antitrust laws under the NoerrPennington doctrine, unless that suit is a sham. The Court wrote: A sham suit is one that is an abuse of the judicial processes. **In California Transport, the Supreme Court identified two types of sham activity: **misrepresentations ... in the adjudicatory process and **the pursuit of a pattern of baseless, repetitive claims. Thus, in California Transport, the Court held that a complaint alleging that the petitioner's competitors initiated administrative proceedings against the petitioner without probable cause, and regardless of the merits, stated an antitrust cause of action. *6 Columbia Pictures Industries, Inc. v. Professional Real Estate Investors, Inc., 944 F.2d 1525, 1529 (9th Cir.1991), aff'd sub nom Professional Real Estate Investors v. Columbia Pictures Indus., 508 U.S. 49, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993) (citing California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 510 & 512, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972)) (footnote omitted). The Court is aware that a contrary view exists, that is, that Noerr-Pennington is applicable only to antitrust litigation. See, e.g., Cardtoons, L.C. v. Major League Baseball Players Ass'n, 208 F.3d 885 (10th Cir.2000). However, the concept has been extended, by analogy, as recognized by the Second Circuit, to cases not involving anti-trust litigation: Courts have extended Noerr-Pennington to encompass concerted efforts incident to litigation, such as prelitigation threat letters, see McGuire Oil Co. v. Mapco, Inc., 958 F.2d 1552, 1560 (11th Cir.1992) (holding that concerted threats of litigation are protected under Noerr-Pennington ); Coastal States Mktg., Inc. v. Hunt, 694 F.2d 1358, 1367-68 (5th Cir.1983) (same); Barq's Inc. v. Barq's Beverages, Inc., 677 F.Supp. 449, 452-53 (E.D.La.1987) (applying prelitigation rights to enforcement of trademark litigation), and settlement offers, see Columbia Pictures Indus., Inc. v. Professional Real Estate Investors, Inc., 944 F.2d 1525, 1528-29 (9th Cir.1991), aff'd, 508 U.S. 49, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993). Litigation, including good faith litigation to protect a valid copyright, therefore falls within the protection of the Noerr-Pennington doctrine. Primetime 24 Joint Venture v. National Broadcasting, Co., Inc., 219 F.3d 92, 100 (2d Cir.2000); Sosa v. DirecTV, No. CV 03-5972 AHM (Rzx) (C.D.Cal. Dec. 3, 2003). Noerr-Pennington has also been extended to protect petitioning activity. See, e.g., NAACP v. Claiborne Hardware Co., 458 U.S. 886, 913-15, 102 S.Ct. 3409, 73 L.Ed.2d 1215 (1982) (holding First Amendment immunized non-violent petitioning conduct, and applied NoerrPennington in considering whether intent or purpose of boycott was relevant ); Brownsville Golden Age Nursing Home, Inc. v. Wells, 839 F.2d 155, 160 (3d Cir.1988) (Noerr-Pennington doctrine immunized defendants from tort liability for petitioning government to shut down nursing home); Havoco of Am., Ltd. v. Hollobow, 702 F.2d 643, 649-50 (7th Cir.1983) (applying Noerr-Pennington doctrine in context of complaints registered with Securities and Exchange.); Cove Rd. Dev. v. Western Cranston Indus. Park Assocs., 674 A.2d 1234, 1237-38 (R.I.1996) (Rhode Island Supreme Court held that the Petition Clause protected both petitioning at the town-council level and access to court.); see generally Carol Rice Andrews, A Right of Access to Court under the Petition Clause of the First Amendment: Defining the Right, 60 Ohio St. L.J. 557 (1999). As the Second Circuit observed, This circuit has not gone so far as to apply the Noerr-Pennington doctrine to state law causes of action. But it has, in the process of applying Noerr-Pennington and the sham exception to Sherman Act claims, explicitly described the doctrine as an application of the First Amendment. See Landmarks Holding Corp. v. Bermant, 664 F.2d 891, 895-96 (2d Cir.1981) (issue is whether the conduct alleged is immunized by the First Amendment from antitrust liability under the Noerr-Pennington doctrine); Miracle Mile Associates v. City of Rochester, 617 F.2d 18, 20 (2d Cir.1980) (Under Noerr, mere solicitation of governmental action through legislative processes ... is an activity which is fully protected by the First Amendment and is immune from Sherman Act liability....); Mountain Grove Cemetery Assoc. v. Norwalk Vault Co., 428 F.Supp. 951, 956 (D.Conn.1977) ( Noerr and California Motor Transport teach that when antitrust objectives and the right to petition for government action are in conflict, the scales must tip in favor of the First Amendment.). See also Taylor Drug Stores, Inc. v. Associated Dry Goods Corp., 560 F.2d 211, 214 (6th Cir.1977) (per curiam) (referring to rights under the First Amendment ... as those

rights have been described in [Noerr] and [Pennington ]). *7 Suburban Restoration Co., Inc. v. ACMAT Corp., 700 F.2d 98, 101 (C.A.Conn.1983) Accordingly, the Court finds that Militello can prove no set of facts in support of his claim that would entitle him to relief. DirecTV had a good faith basis for asserting a claim against Militello and its statements in the letters, and the letters of its lawyers, are nothing more than threats to enforce a right they already had-litigation in this Court. Therefore, his First Counterclaim alleging attempted extortion in violation of the Hobbs Act must be dismissed. Since the Court has determined that there was no attempt to violate the Hobbs Act, Militello's Second Counterclaim, alleging a conspiracy to violate that Act, is similarly dismissed. B. Militello's Third Counterclaim Alleging Mail Fraud in Violation of 18 U.S.C. 1341 Militello also alleges that DirecTV, Hughes Electronics, Yarmuth Wilsdon Calfo, PLLC and the End User Recovery Project have intentionally made false representation of material facts to Defendant regarding Defendant's purchase, possession and use of electronic equipment, as well as fraudulently represented misleading or false interpretations of federal statutes so DirecTV could collect an unlawful debt and attempt to extort money from the Defendant. (Answer 62.) The statute Militello relies on reads as follows: Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both. 18 U.S.C. 1341 (2005). Militello has not alleged a scheme to defraud, and sending letters to a potential defendant in a lawsuit is, as the Court has already determined, above, protected activity in the context of a lawsuit. The Seventh Circuit, reviewing the meaning of scheme to defraud in the context of a similar statute, held that *8 [t]he plain meaning of scheme is a design or plan formed to accomplish some purpose, Black's Law Dictionary 1344 (6th ed.1990), or a plan, design, or program of action to be followed. The Random House College Dictionary 1177 (rev. ed.1980). To defraud means to practice fraud, to cheat or trick, Black's, supra, at 483, or to deprive of a right or property by fraud, Random House, supra, at 349; fraud means deceit, trickery, or breach of confidence, used to gain some unfair or dishonest advantage. Id. at 526. United States v. Doherty, 969 F.2d 425, 428 (7th Cir.1992). Nothing Militello has plead in his counterclaim suggests a scheme to defraud. Further, courts have held that serving litigation documents by mail cannot be a predicate act to establish mail fraud under the RICO statute. Vemco v. Camardella, 23 F.3d 129, 134 (6th Cir.1994) (citations omitted); see also Heights Community Congress v. Smythe, Cramer Co., 862 F.Supp. 204, 207 (N.D.Ohio 1994) (dismissing RICO claim and holding that a threat to sue unless a party agreed to settlement was not extortion or a predicate act for RICO purposes). These courts have rejected this mail-fraud theory on policy grounds, recognizing that such charges are merely artfully pleaded claims for malicious prosecution. Id. at 1208; see also Auersperg v. von Bulow, 657 F.Supp. 1134, 1146 (S.D.N.Y.1987) [von Bulow v. von Bulow 657 F.Supp.1134, 1146] (explaining that allegations of RICO fraudulent scheme was merely malicious prosecution claim); Auburn Med. Ctr. Inc. v. Andrus, 9 F.Supp.2d 1291, 1297 (M.D.Ala.1998) (finding malicious prosecution claims, couched in terms of mail fraud claims, cannot give rise to a RICO action).

The Court also finds no misstatement of the law in the letters sent and cited by Militello. Though it is true that this Court has held there is no private cause of action for illegal possession of a pirate access device, the content of the letters correctly stated that possession of such devices is an offense under federal law. See 18 U.S.C. 2512; DirecTV, Inc. v. Lewis, No. 03-CV-6241CJS(F), 2004 WL 941805 (W.D.N.Y. Jan.6, 2004). Militello can prove no set of facts in support of his mail fraud claim that would entitle him to relief. Consequently, the Third Counterclaim must be dismissed. C. Militello's RICO Counterclaim Mllitello alleges that through a settlement scam (quotations in the original), DirecTV and its coconspirators ... collected and attempted to collect an unlawful debt through overt extortion demands and/or directly or indirectly invested in, or maintained an interest in, or participated in an enterprise, the activities of which affect interstate or foreign commerce in violation of 18 U.S.C. 1962(b). FN2 (Answer 70.) In addition to the allegations in his counterclaim, Militello has filed a RICO statement setting forth his claim in detail. The relevant subdivisions of 1962 read as follows: FN2. In his RICO statement and in a later paragraph of the counterclaim, Militello alleges that DirecTV has violated both subdivisions (b) and (c) of 18 U.S.C. 1962. *9 (b) It shall be unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce. (c) 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 or collection of unlawful debt. 18 U.S.C. 1962(a) & (b)(2005). Militello, in the RICO statement, cites to the prelitigation correspondence referred to earlier, and alleges that it misrepresented the illegality of an unlooper utilized [sic] the area of smart card technology by implying the device's only function was illegal.... This letter was sent without DirecTV, or its agents, possession any evidence of actual interception of Plaintiff's signal by Defendant, and with DirecTV conducting no investigation in to Mr. Militello's alternate reasons for the alleged possession. (RICO Case Statement, at 3.) To plead a case under RICO, a claimant must allege at least two predicate acts. Moss v. Morgan Stanley, Inc., 719 F.2d 5, 17 (3d Cir.1983). Racketeering activity includes extortion, as well as many other crimes. See 18 U.S.C. 1961 (2005) (definitions). However, as the Court has previously determined, DirecTV and the others Militello names have not committed extortion. Even DirecTV's offer to settle its claim against Militello for $3,500 does not constitute extortion. See G-I Holdings, Inc., 179 F.Supp.2d at 259. Thus, Militello has failed to meet even the first prerequisite to pleading a civil RICO action. Moss, 719 F.2d at 17. The Court is unpersuaded by Militello's citation to DirecTV v. Haston, No. 03-0228-CV-W-HFS (W.D.Mo. Mar. 30, 2004). In his decision, Judge Sachs addressed an argument made by DirecTV in that case that the defendant fails to allege that it acquired the enterprise as a result of racketeering activity.... Haston, slip. opn. at 4. That argument has not been made here. Furthermore, as Judge Sachs points out in his decision, DirecTV failed to respond there to the defendant's assertion of a claim under 1962(c). Thus, unlike the situation before this Court, in Haston, Judge Sachs was faced with a counterclaim and no argument in contradiction. Here, by contrast, the Court has reviewed DirecTV's arguments about its protected conduct and lack of extortion, and has determined that Militello has no basis for a claim that DirecTV attempted to extort money from him through a scheme to defraud. Furthermore, precedent in this circuit and others convinces the Court that Militello can prove no set of facts on his RICO claim that would entitle him to relief. See G-I Holdings, Inc., 179 F.Supp.2d at 259; I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d 265, 267 (8th Cir.1984); DirecTV v. Keehn, No. 5:03-CV-58, 2003 WL 23200249, *7 (W.D.Mich. May 21, 2003). As the court observed in Nakahara v. Bal, No. 97 CIV.2027(DLC), 1998 U.S. Dist. LEXIS 825 (S.D.N.Y.1998),

*10 The core conclusion in von Bulow [v. von Bulow, 657 F.Supp. 1134 (S.D.N.Y.1987) ], that the threat of litigation or the initiation of unjustified lawsuits constituting malicious prosecution cannot alone form a predicate act for purposes of RICO, has been reached by numerous courts encountering these circumstances in this jurisdiction and others. See, e.g., Harris Custom Builders, Inc. v. Hoffmeyer, 1994 U.S. Dist. LEXIS 9299, 90 Civ. 741, 1994 WL 329962, at *4 (N.D.Ill. July 7, 1994); Ippolito v. State of Florida, 824 F.Supp. 1562, 1575 (M.D.Fla.1993); Capasso v. CIGNA Ins. Co., 765 F.Supp. 839, 843 & n. 2 (S.D.N.Y.1991); Manax v. McNamara, 660 F.Supp. 657, 660-61 (W.D.Tex.1987); Paul S. Mullin & Assocs., Inc. v. Bassett, 632 F.Supp. 532, 540 (D.Del.1986); American Nursing Care of Toledo, Inc. v. Leisure, 609 F.Supp. 419, 430 (N.D.Ohio 1984). Nakahara v. Bal, No. 97 CIV.2027(DLC). Therefore, the Court grants DirecTV's motion to dismiss Militello's Fourth Counterclaim. Daddona v. Gaudio, 156 F.Supp.2d 153 (D.Conn. Sep 08, 2000)

Distinguished to Eisen in that the underlying litigation is part of larger scheme to deprive the plaintiff, Dadonna of property. And that plaintiff Daddona does not allege extortion or any other racketeering activity apart from mail and wire fraud. At p. 164, Daddona asserts no claims of extortion or **any other racketeering activity apart from mail and wire fraud. **Unlike Eisen, there is no claim here that the underlying litigation over the note and mortgage is part of any larger scheme to deprive Daddona of his property. As noted above, Daddona's sole allegation of mail and wire fraud is that defendants Gaudio, Swaim and Brandner used the U.S. Mails and telephone wires in furtherance of their scheme to maintain control over Stamford Color Photo Inc. assets ... in violation of 18 U.S.C. 1341 and 1343, in an ongoing pattern of racketeering in Civil and Bankruptcy cases they involved them selves [sic] in within the State of Maine and the State of New York.
Purported successor-in-interest to corporation, whose assets allegedly included mortgage and note, brought pro se action against wife who was awarded the mortgage and note in a divorce action, wife's attorney, husband's attorney, judge in a civil action dealing with husband and wife's assets, and the United States, alleging conspiracy under Racketeer Influenced and Corrupt Organizations Act (RICO) and claims under 1983. Defendants moved to dismiss, and plaintiff moved to amend his complaint. The District Court, Arterton, J., held that: (1) claims against the United States were barred by sovereign immunity; (2) judge was entitled to immunity from claims; (3) plaintiff failed to state claim under RICO; and (4) plaintiff's failure to file his RICO case statement on date set by court's scheduling order did not warrant sanctions. Motions granted. [1] United States 393 125(9)

393 United States 393IX Actions 393k125 Liability and Consent of United States to Be Sued 393k125(9) k. Nature of Action in General. Most Cited Cases Claims against the United States by purported successor-in-interest to corporation under Racketeer Influenced and Corrupt Organizations Act (RICO), alleging conspiracy to deprive him of note and mortgage allegedly owned by corporation, were barred by sovereign immunity. 18 U.S.C.A. 1962.

[2] United States 393

47

393 United States 393I Government in General 393k46 Liabilities for Official Acts 393k47 k. In General. Most Cited Cases Purported mortgagee's claims under Racketeer Influenced and Corrupt Organizations Act (RICO) against federal district court judge in his official capacity, alleging that judge conspired with others involved in a civil suit to deprive mortgagee of the note and mortgage, were barred by sovereign immunity. 18 U.S.C.A. 1962(d). [3] Officers and Public Employees 283 119

283 Officers and Public Employees 283III Rights, Powers, Duties, and Liabilities 283k119 k. Actions by or Against Officers and Employees. Most Cited Cases Official-capacity suits generally represent only another way of pleading an action against an entity of which the officer is an agent. [4] Officers and Public Employees 283 119

283 Officers and Public Employees 283III Rights, Powers, Duties, and Liabilities 283k119 k. Actions by or Against Officers and Employees. Most Cited Cases An official capacity suit against an officer is, in all respects other than name, to be treated as a suit against the government entity. [5] Judges 227 36

227 Judges 227III Rights, Powers, Duties, and Liabilities 227k36 k. Liabilities for Official Acts. Most Cited Cases Purported mortgagee's claims under Racketeer Influenced and Corrupt Organizations Act (RICO) against federal district court judge in his individual capacity, alleging that judge conspired with others involved in a civil suit to deprive mortgagee of the note and mortgage, were barred by judicial immunity; judge's alleged conduct was judicial in nature, and purported mortgagee did not assert that judge lacked subject matter jurisdiction. 18 U.S.C.A. 1962(d). [6] Judges 227 36

227 Judges 227III Rights, Powers, Duties, and Liabilities 227k36 k. Liabilities for Official Acts. Most Cited Cases Judicial immunity, like other forms of absolute immunity, is an immunity from suit, not just from ultimate assessment of damages. [7] Judges 227 227 Judges 36

227III Rights, Powers, Duties, and Liabilities 227k36 k. Liabilities for Official Acts. Most Cited Cases A judge will not have judicial immunity with respect to actions of a non-judicial nature. [8] Judges 227 36

227 Judges 227III Rights, Powers, Duties, and Liabilities 227k36 k. Liabilities for Official Acts. Most Cited Cases **A judge is not entitled to judicial immunity for actions, though judicial in nature, taken in the complete absence of all jurisdiction. [9] Judges 227 36

227 Judges 227III Rights, Powers, Duties, and Liabilities 227k36 k. Liabilities for Official Acts. Most Cited Cases In determining whether a particular act was taken in the complete absence of all jurisdiction, as would preclude judicial immunity, the necessary inquiry is whether at the time the judge took the challenged action he had jurisdiction over the subject matter before him. [10] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk4 Racketeering or Criminal Activity 319Hk5 k. Predicate Acts in General. Most Cited Cases The statutory list of predicate acts that can constitute racketeering activity under the Racketeer Influenced and Corrupt Organizations Act (RICO) is exclusive. 18 U.S.C.A. 1961(1). [11] Racketeer Influenced and Corrupt Organizations 319H 14 5

319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(A) In General 319Hk4 Racketeering or Criminal Activity 319Hk14 k. Collection of Unlawful Debts. Most Cited Cases Purported mortgagee's allegations that two attorneys and one of their clients pursued fraudulent litigation to recover the note and mortgage did not state claim for collecting an unlawful debt under Racketeer Influenced and Corrupt Organizations Act (RICO). 18 U.S.C.A. 1961(6). [12] Fraud 184 41

184 Fraud 184II Actions 184II(C) Pleading 184k41 k. Allegations of Fraud in General. Most Cited Cases

A Racketeer Influenced and Corrupt Organizations Act (RICO) complaint alleging mail and wire fraud as predicate acts must show: (1) the existence of a scheme to defraud; (2) defendant's knowing or intentional participation in the scheme; and (3) the use of interstate mails or transmission facilities in furtherance of the scheme. 18 U.S.C.A. 1341, 1343, 1962(d). [13] Fraud 184 42

184 Fraud 184II Actions 184II(C) Pleading 184k42 k. Intent. Most Cited Cases Plaintiff alleging predicate acts of mail and wire fraud in action under Racketeer Influenced and Corrupt Organizations Act (RICO) must plead facts that give rise to a strong inference that the defendant possessed fraudulent intent. 18 U.S.C.A. 1341, 1343, 1962(d). [14] Fraud 184 42

184 Fraud 184II Actions 184II(C) Pleading 184k42 k. Intent. Most Cited Cases Telecommunications 372 1014(12)

372 Telecommunications 372III Telephones 372III(I) Offenses and Prosecutions 372k1011 Offenses 372k1014 Wire Fraud 372k1014(12) k. Civil Liabilities; Actions. Most Cited Cases (Formerly 372k362) A plaintiff alleging violation of Racketeer Influenced and Corrupt Organizations Act (RICO) based on predicate acts of wire and mail fraud, in order to plead facts that give rise to a strong inference that the defendant possessed fraudulent intent, may allege facts to show that defendants had both motive and opportunity to commit fraud, or allege facts that constitute misbehavior or recklessness. 18 U.S.C.A. 1341, 1343, 1962(d). [15] Federal Civil Procedure 170A 636

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases Federal Rule of Civil Procedure requiring that fraud claims be stated with particularity requires plaintiffs pleading fraud to specify the time, place, speaker, and sometimes even the content of the alleged misrepresentations. Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. [16] Federal Civil Procedure 170A 170A Federal Civil Procedure 170AVII Pleadings and Motions 636

170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases Purported mortgagee's allegations that two attorneys and one of their clients used the United States Mails and telephone wires in furtherance of their scheme to maintain control over assets including mortgage, in an ongoing pattern of racketeering in civil and bankruptcy cases they involved themselves in, were insufficient to plead predicate acts of mail and wire fraud with particularity, as required to state Racketeer Influenced and Corrupt Organizations Act (RICO) claim. 18 U.S.C.A. 1341, 1343, 1962(d); Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A. [17] Racketeer Influenced and Corrupt Organizations 319H 319H Racketeer Influenced and Corrupt Organizations 319HI Federal Regulation 319HI(B) Civil Remedies and Proceedings 319Hk68 Pleading 319Hk73 k. Enterprise. Most Cited Cases Purported mortgagee's allegations that two attorneys and one of their clients conspired through civil litigation to deprive mortgagee of his note and mortgage could not state claim under Racketeer Influenced and Corrupt Organizations Act (RICO), absent allegations that defendants were distinct from the alleged enterprise. 18 U.S.C.A. 1962(c). [18] Federal Civil Procedure 170A 1935.1 73

170A Federal Civil Procedure 170AXIV Pre-Trial Conference 170Ak1935 Order 170Ak1935.1 k. In General. Most Cited Cases Failure of plaintiff bringing action under Racketeer Influenced and Corrupt Organizations Act (RICO) to file his RICO case statement on date set by court's scheduling order did not warrant sanctions; plaintiff submitted affidavit explaining that traffic accident kept him from timely reaching the clerk's office on day statement was due, and he express mailed case statement that night. 18 U.S.C.A. 1962; Fed.Rules Civ.Proc.Rule 16(f), 28 U.S.C.A. RULING ON PENDING MOTIONS ARTERTON, District Judge. Overview: In this case, pro se plaintiff Paul R. Daddona alleges that the defendants, **Phillip Swaim, **Maxine Gaudio, **Geoffrey Brandner, **Judge Alvin W. Thompson and the United States FN1 engaged in twenty-two acts of racketeering in violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1962(b)-(d), and that plaintiff suffered damages, including lost interest and legal fees, as a direct and proximate result. See Amended Complaint, at 8, 9 [Doc. # 47]. Daddona alleges that Gaudio, Swaim and Brandner violated 18 U.S.C. 1962(b), (c) and (d) and that Judge Thompson violated 18 U.S.C. 1962(d) and 42 U.S.C. 1983. Daddona seeks damages, attorneys fees, and an order directing the parties to return certain disputed funds to the court registry (which they have already done). FN1. Plaintiff lists the United States as a defendant in his complaint, but asserts no claims against it in his complaint, and did not include it as a defendant in his RICO Case Statement. See Complaint, at 4. This case arose, indirectly, out of Maxine and Arthur Gaudio's divorce, and the subsequent dispute over assets owned by Arthur Gaudio, including a $450,000 mortgage and note from Shelter for the Homeless, payable to Arthur Gaudio's company, Stamford Color Photo, Inc. Daddona claims to be the successor-in-interest to the assets of a company called Hudson Pak Est., which allegedly include the disputed mortgage and note. Defendant Phillip Swaim

represented defendant Maxine Gaudio in the divorce and in the subsequent litigation over the assets, including Hudson Pak Est. v. Shelter for the Homeless, Civ. No. 5:91:cv00468 (AWT) (the Hudson Pak Est. case). Defendant Geoffrey Brandner was Arthur Gaudio's attorney in the divorce and subsequent proceedings. Defendant Judge Alvin W. Thompson is the presiding judge in the Hudson Pak Est. case. The disputed mortgage and note were awarded to Maxine *156 Gaudio by Judge Thompson in the Hudson Pak Est. case. In his Amended Complaint and Amended RICO Case Statement, Daddona claims that the defendants conspired to organize a Enterprise as a vehicle in which they would engage in a unlawful pattern of racketeering activity in violation of 18 USC 1962(b). See Amended Complaint, at 7a; Amended RICO Case Statement, at. 1-2. In his Amended RICO Case Statement, he identifies the alleged wrongful conduct as follows: defendants Maxine Swaim, Phillip Swaim, and Geoffrey Brandner filed a complaint in the Superior Court at the J/D of Stamford/Norwalk State of Connecticut in which Stamford Color Photo was named as a defendant in order to acquire and maintain control, directly or indirectly, over Stamford Color Photo's assets thru the use of the lawsuit known as CV-87, that they knew had no basis in facts that they could sustain in a court of law. Amended RICO Case Statement, at 1-2. He further claims that the defendants accomplished control over Stamford Color Photo Inc. by engaging in litigation that they knew would apply relentless financial pressure on the assets of Stamford Color Photo Inc., in the form of legal fees notwithstanding the fact that the defendants knew that (1) they lacked jurisdiction over the assets of Stamford Color Photo., ... (2) The defendants refused to state a claim upon which relief could be granted and continued to file motions and documents which advocated positions in these pleadings and motions knowing that these pleadings and motions were without merit in CV-87 and in violation of U.S.C. 1962(b), (c) and (d). Id. at p. 2. Daddona claims to allege 22 predicate acts to establish a civil RICO violation (due to repetition, the actual number of alleged acts is unclear). See Amended Complaint, 7a-7p. These allegations are either conclusory assertions of conspiracy and fraud related to the Hudson Pak Est. case and other litigation over the note and mortgage or factual allegations describing the filing of litigation documents and allegedly biased conduct by Judge Thompson in the Hudson Pak Est. case.** There are no factual details explaining or supporting the allegations of fraud. In support of his conspiracy claim, Daddona simply states that the disputed funds that were interpleaded in the Hudson Pak Est. case were paid out from the court registry as follows : [u]pon information and belief Phillip Swaim paid Maxine Gaudio $215,000.00, Judge Thompson received $200,000.00 and Phillip Swaim paid himself $300,000.00 and the balance of the funds were paid to Geoffrey Brandner in the amount of $34,680.000. Amended Complaint, at 11. Per order of Judge Thompson dated March 7, 2000, Swaim apparently has returned the funds to the court registry pending the outcome of this action. See Doc. # 55. Motions for Leave to File Amended Complaint and RICO Case Statement: Daddona has filed motions for leave to file an amended complaint [Doc. # 47] and RICO Case Statement [Doc. # 48], arguing that granting leave to amend will reduce the activity and volume of documents filed by both the plaintiff and the defendants in this instant action. Doc. # 47, at p. 1. Because Daddona's original complaint and RICO Case Statement fail to satisfy the pleading requirements for specificity in fraud pleadings under Fed.R.Civ.P. 9(b), these motions for leave to amend are granted, and the Court looks to the amended complaint and RICO Case Statement*157 in deciding the defendants' motions to dismiss against Daddona. Motions to Dismiss: The United States of America: Although Plaintiff lists the United States as a defendant in his first complaint, he does not assert any claims against it, and does not include any allegations of wrong-doing by the United States in his RICO Case Statement.

Plaintiff indicates in his Objection to Defendant Alvin W. Thompson's Motion to Dismiss that his Amended Complaint no longer asserts any claims against the United States, see Doc. # 49, at 1, but his amended complaint nevertheless, although perhaps inadvertently, continues to list the United States as a defendant, see Doc. # 47, at 4. [1] While it is thus unclear whether plaintiff actually has withdrawn his claims against the United States, any such claims are barred by sovereign immunity. See F.D.I.C. v. Meyer, 510 U.S. 471, 475, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994) (absent waiver, sovereign immunity shields the United States and its agencies from suit). Here, there is no claim or indication that the United States has waived immunity. See United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 63 L.Ed.2d 607 (1980) (waiver of sovereign immunity by the United States must be explicit). It is ... well established that an affirmative defense of official immunity ... may be resolved by Rule 12(b)(6) if clearly established by the allegations within the complaint. Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 74 (2d Cir.1998). To the extent that any claims remain against the United States, the United States' motion to dismiss is granted. Judge Thompson: Daddona claims that Judge Thompson violated 18 U.S.C. 1962(d) (RICO conspiracy) and 42 U.S.C. 1983. He states that Judge Thompson conspired with Swaim, Gaudio and Brandner to deprive Daddona of the note and mortgage, and that Judge Thompson received $200,000 of the interpleaded funds. In support of his 1983 claim, he alleges the following: Judge Thompson refused to allow the Hudson Pak Est. case to go to trial, made rulings that were unsupported by the facts, engaged in ex parte communications in a related case, was biased against Daddona, refused to hold a hearing to allow Daddona to present evidence supporting his charges of abuse of process, and interfered with Daddona's attempts to file for bankruptcy on behalf of Hudson Pak (in violation of Judge Thompson's order). See Amended Complaint, at p1-p5(g)(2). He is suing Judge Thompson in both his official and individual capacity. See Plaintiff's Objection to Defendant Alvin W. Thompson's Motion to Dismiss the Complaint, Doc. # 49, at 2. This Court must assume the truth of these assertions for purposes of ruling on this motion to dismiss. See Citibank, N.A. v. K-H Corp., 968 F.2d 1489, 1494 (2d Cir.1992) (a case may be dismissed under Rule 12(b)(6) for failure to state a claim only where it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief). Accepting all the allegations in the Amended Complaint and Amended RICO Case Statement as true, Judge Thompson's motion to dismiss Daddona's claims against him in both his official and individual capacity must be granted. [2][3][4] The claims against Judge Thompson in his official capacity, like the claims against the United States, are barred by sovereign immunity. [O]fficial-capacity suits generally represent only another way of pleading an action against an entity of which an officer is an agent.... *158 Monell v. Department of Social Services, 436 U.S. 658, 691 n. 55, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978). [A]n official capacity suit is, in all respects other than name, to be treated as a suit against the entity. Kentucky v. Graham, 473 U.S. 159, 165, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985). Because official capacity suits are suits against the government entity, the official defendant is entitled to raise those defenses the entity could raise. Thus, as Daddona's claims against Judge Thompson in his official capacity are to be treated as claims against the United States, they must be dismissed because of sovereign immunity. [5][6] The claims against Judge Thompson in his individual capacity are barred by judicial immunity. As the Supreme Court noted in Butz v. Economou, controversies sufficiently intense to erupt in litigation are not easily capped by a judicial decree. The loser in one forum will frequently seek another, charging the participants in the first with unconstitutional animus. Absolute immunity is thus necessary to assure that judges, advocates, and witnesses can perform their respective functions without harassment or intimidation. 438 U.S. 478, 512, 98 S.Ct. 2894, 57 L.Ed.2d 895 (1978) (citations omitted). Judicial immunity, like other forms of absolute immunity, is an immunity from suit, not just from ultimate assessment of damages. Mireles v. Waco, 502 U.S. 9, 11, 112 S.Ct. 286, 116 L.Ed.2d 9 (1991) (per curiam). The Second Circuit has held that since

absolute immunity spares the official any scrutiny of his motives, an allegation that an act was done pursuant to a conspiracy has no greater effect than an allegation that it was done in bad faith or with malice, neither of which defeats a claim of absolute immunity. Dorman v. Higgins, 821 F.2d 133, 139 (2d Cir.1987); accord Mireles, 502 U.S. at 11, 112 S.Ct. 286 (judicial immunity is not overcome by allegations of bad faith or malice); Pierson v. Ray, 386 U.S. 547, 554, 87 S.Ct. 1213, 18 L.Ed.2d 288 (1967) (immunity applies even when the judge is accused of acting maliciously and corruptly). Thus, Daddona's allegations of conspiracy, fraud and bribery have no effect on the inquiry as to immunity. See Dennis v. Sparks, 449 U.S. 24, 27, 101 S.Ct. 183, 66 L.Ed.2d 185 (1980) (upholding the dismissal of claims against judge involving allegations that an official act of the defendant judge was the product of a corrupt conspiracy involving bribery of the judge on judicial immunity grounds). [7][8][9] **Judicial immunity can only be overcome in two circumstances: **First, a judge will not be found immune with respect to actions of a non-judicial nature. See Mireles, 502 U.S. at 11, 112 S.Ct. 286 . **Second, a judge is not immune for actions, though judicial in nature, taken in the complete absence of all jurisdiction. Id. In determining whether a particular act was taken in the complete absence of all jurisdiction, the necessary inquiry ... is whether at the time [the judge] took the challenged action he had jurisdiction over the subject matter before him. Stump v. Sparkman, 435 U.S. 349, 356, 98 S.Ct. 1099, 55 L.Ed.2d 331 (1978) . **Here, there is no allegation or assertion that Judge Thompson did not have subject matter jurisdiction over the Hudson Pak Est. case. In support of his RICO conspiracy allegations, Daddona alleges that Judge Thompson improperly issued unfavorable rulings in the Hudson Pak Est. case, and that he received $200,000 from the disbursed funds from the court registry in the Hudson Pak Est. case after the funds were ordered disbursed to Maxine Gaudio. Daddona also claims that two federal court reporters altered court transcripts to protect Judge Thompson, but alleges no facts *159 to support a connection between Judge Thompson and any such alterations. However, even assuming the truth of Daddona's allegations, as is required for purposes of deciding this motion to dismiss, see McLaughlin v. Anderson, 962 F.2d 187, 189 (2d Cir.1992), Judge Thompson's alleged role in the conspiracy is essentially engaging in improper conduct while serving as judge in the Hudson Pak Est. case. Because all these alleged actions are judicial in nature, plaintiff's claims for damages against Judge Thompson in his individual capacity must be dismissed. Phillip Swaim and Geoffrey Brandner: Finally, Plaintiff alleges that defendants Swaim, Brandner and Gaudio violated 18 U.S.C. 1962(b)-(d). Defendants Swaim and Brandner have moved to dismiss under Fed.R.Civ.P. 12(b)(6) and Fed.R.Civ.P. 9(b) [Docs. # 37, 43].FN2 FN2. The Court notes that while defendant Maxine Gaudio filed a motion to dismiss on July 12, 1999 [Doc. # 4], that motion was denied without prejudice to renew by Order of this Court on August 20, 1999 [Doc. # 19] because Ms. Gaudio was then represented by Phillip Swaim, a named party. Ms. Gaudio entered an appearance pro se on September 10, 1999 [Doc. # 27], but to date has not renewed her motion to dismiss. However, Daddona's RICO claims against Ms. Gaudio suffer from the same lack of specificity in pleading that this Court identifies below with respect to Swaim and Brandner, and thus an identical analysis will be applied. Daddona claims that Swaim and Brandner conspired to organize an Enterprise as a vehicle to engage in racketeering activity in violation of 18 U.S.C. 1962(b). Amended Complaint, at 7a. The pattern of racketeering he identifies is to engage in extensive litigation filing of false documents and affidavits which is a pattern that has infected the entire pleadings.... Amended RICO Case Statement, at 5f. He characterizes the common plan as the plan to steal the funds in the Court's Registry which were being held as security for payment of a mortgage and note, the sum that was stolen is $661,000. Id. at 5g. In support of their motions to dismiss, defendants argue that Daddona has failed to allege a pattern of racketeering activity or the collection of an unlawful debt, as is required to find a RICO violation, that he has not established the existence of a RICO enterprise, and that the claim under 1962(c) must be dismissed for lack of distinctness. In addition, they assert that Daddona has failed to allege any effect on interstate or foreign commerce, that Daddona lacks standing to file this suit in his own behalf and cannot bring suit on behalf of Hudson Pak Est. because he is not an attorney, and that his current RICO claims are barred by res judicata and collateral estoppel.

The Second Circuit laid out the following requirements for pleading a civil RICO violation in Moss v. Morgan Stanley, Inc.: To state a claim for damages under RICO a plaintiff has two pleading burdens. **First, he must allege that the defendant has violated the substantive RICO statute, 18 U.S.C. 1962 (1976), commonly known as criminal RICO. In doing so, he must allege the existence of seven constituent elements: (1) that the defendant (2) through the commission of two or more acts (3) constituting a pattern (4) of racketeering activity (5) directly or indirectly invests in, maintains an interest in, or participates in (6) an enterprise (7) the activities of which affect interstate or foreign commerce. 18 U.S.C. 1962(a)-(c) (1976). Plaintiff must allege adequately defendant's violation of section 1962 before turning to the second burden-i.e., invoking *160 RICO's civil remedies.... To satisfy this latter burden, plaintiff must allege that he was injured in his business or property by reason of a violation of section 1962. 719 F.2d 5, 17 (2d Cir.1983). As discussed below, because Daddona's conclusory allegations in his amended complaint and RICO case statement fail to provide the specificity required in fraud pleadings and therefore do not establish that the defendants engaged in a pattern of racketeering activity, defendants Swaim and Brandner's motions to dismiss are granted. The section 1962(b) claims: [10] The list of predicate acts that can constitute racketeering activity in 18 U.S.C. 1961(1) FN3 is exclusive. See Harvey v. Harvey, 931 F.Supp. 127, 130 (D.Conn.1996); Red Ball Interior Demolition Corp. v. Palmadessa, 874 F.Supp. 576, 586 (S.D.N.Y.1995). In order to state a claim under either 1962(b) or (c), Daddona must demonstrate either a pattern of racketeering activity or collection of unlawful debt. See 18 U.S.C. 1962(b) and (c). FN3. Section 1961(1) provides, in relevant part, that (1) racketeering activity means (A) any act or threat involving ... robbery, bribery, extortion, ..., which is chargeable under State law and punishable by imprisonment for more than one year; (B) any act which is indictable under any of the following provisions of title 18, United States Code: ... section 1341 (relating to mail fraud), section 1343 (relating to wire fraud).... [11] Daddona's allegations that defendants Swaim, Gaudio and Brandner engaged in the collection of an unlawful debt by pursuing fraudulent litigation to recover the note and mortgage, see Complaint at 5, 7g, fall far outside the definition of unlawful debt in 18 U.S.C. 1961(6). This section provides that for purposes of the RICO statute, unlawful debt means a debt (A) incurred or contracted in gambling activity which was in violation of the law of the United States, a State or political subdivision thereof, or which is unenforceable under State or Federal law in whole or in part as to principal or interest because of the laws relating to usury, and (B) which was incurred in connection with the business of gambling in violation of the law of the United States, a State or political subdivision thereof, or the business of lending money or a thing of value at a rate usurious under State or Federal law, where the usurious rate is at least twice the enforceable rate. 18 U.S.C. 1961(6). As nothing in Daddona's complaint or RICO Case Statement provides any support whatsoever for his claim that the defendants' litigation over the note and mortgage was an unlawful debt as defined in this subsection, Swaim and Brandner's motions to dismiss this portion of Daddona's complaint are granted.FN4 FN4. Because Daddona's amended complaint is not divided into separate counts, and simply asserts a violation of RICO 1962(b)-(d) as a single allegation against defendants Swaim, Brandner and Gaudio, in deciding these motions to dismiss this Court has ruled on each RICO subsection independently, but cannot refer to those portions of Daddona's amended complaint by count or paragraph number.

Defendants Swaim and Brandner correctly observe that the only pattern of racketeering possibly alleged by Daddona's complaint is a violation of the mail and wire fraud acts, 18 U.S.C. 1341 and 1343. Daddona's Amended RICO Case Statement simply states that his RICO claims are based on wire fraud, mail fraud,' Amended RICO Case Statement, at *161 5c, and, as discussed below, provides none of the detailed support required for this claim. [12][13][14][15] The Second Circuit has held that allegations of predicate mail and wire fraud acts should state **the contents of the communications, **who was involved, **where and **when they took place, and **explain why they were fraudulent. Mills v. Polar Molecular Corp., 12 F.3d 1170, 1176 (2d Cir.1993). In addition, a complaint alleging mail and wire fraud must show (1) the existence of a scheme to defraud, (2) defendant's knowing or intentional participation in the scheme, and (3) the use of interstate mails or transmission facilities in furtherance of the scheme. S.Q.K.F.C., Inc. v. Bell Atlantic Tricon Leasing Corp., 84 F.3d 629, 633 (2d Cir.1996). Finally, the plaintiff must plead facts that give rise to a strong inference that the defendant possessed fraudulent intent. Id. at 634. A plaintiff may meet this last burden by (1) alleging facts to show that defendants had both motive and opportunity to commit fraud, or (2) by alleging facts that constitute misbehavior or recklessness. Id. Any complaint alleging fraud, including mail and wire fraud, must also comply with Fed.R.Civ.P. 9(b), which states that the circumstances constituting fraud or mistake shall be stated with particularity. Rule 9(b) thus requires plaintiffs pleading fraud to specify **the time, **place, **speaker, and **sometimes even the content of the alleged misrepresentations. Luce v. Edelstein, 802 F.2d 49, 54 (2d Cir.1986). [16] Daddona's only allegation of mail and wire fraud is that defendants Gaudio, Swaim and Brandner used the U.S. Mails and telephone wires in furtherance of their scheme to maintain control over Stamford Color Photo Inc. assets ... in violation of 18 U.S.C. 1341 and 1343, in an ongoing pattern of racketeering in Civil and Bankruptcy cases they involved them selves [sic] in within the State of Maine and the State of New York. See Amended Complaint at 7f. There is no explanation whatsoever as to any of the circumstances surrounding these frauds, much less the specificity required by Rule 9(b). The remainder of his complaint lists a variety of other alleged predicate acts, all of which involve **the filing of complaints and other legal documents.FN5 Assuming the truth of all his allegations for purposes of this motion to dismiss, the conclusory allegation of mail and wire fraud in Daddona's complaint is plainly inadequate and are dismissed on this ground. FN5. See Amended Complaint at 7a (filed a complaint); 7b (engaging in litigation); (continued to file motion and documents which advocated positions in these pleadings and motions knowing that these pleadings and motions were without merit); 7d (continued to maintain in the State Courts of Connecticut that Maxine Gaudio had a valid claim ...); 7e (continued to file dolcuments [sic] and motions ... after the case had been dismissed); 7h (same); 7k (filed a proof of claim in Arthur Gaudio bankruptcy case), (filed a motion to intervene ... [in the Hudson Pak Est. case] ... [and] again committed a fraud on the court making fraudulent claims that they have a valid claim against the note and mortgage); and L3 (begin a blizzard of motions and false filings of Affidavits in the Hudson Pak Est. civil case). Daddona also asserts that, in conjunction with the Hudson Pak Est. case, Judge Thompson engaged in improper conduct. In addition, this Court notes that were Daddona able to plead mail and wire fraud with the required specificity, it is doubtful whether the predicate acts alleged in Daddona's amended complaint and RICO Case Statement could constitute a pattern of racketeering activity as contemplated by the RICO statute. In his Amended RICO Case Statement, Daddona characterizes the pattern of racketeering activity as follows: *162 [t]he pattern of racketeering activity carried on by the defendants is to engage in extensive litigation filing of false documents and affidavits which is a pattern that has infected the entire pleadings, this pattern is intended to injure, it is wilful, the defendants have engaged in similar conduct in other litigation, the docket run is now over 64 pages in Hudson Pak Est. v. Shelter for the Homeless Dkt. No. 5-91-CV-00468 (AWT). Amended RICO Case Statement, at 5f. **These allegations at best amount to a vague abuse of process or malicious prosecution claim. Courts have found that allegations of malicious prosecution or abuse of process do not,

on their own, suffice as predicate acts for a RICO violation. See, e.g., von Bulow v. von Bulow, 657 F.Supp. 1134, 1145 (S.D.N.Y.1987) (a complaint based on nothing more than a party's filing of unjustified suits cannot fulfill the requirement that a RICO plaintiff plead a predicate act); Nakahara v. Bal, No. 97 Civ.2027(DLC), 1998 WL 35123, at *8 (S.D.N.Y. Jan. 30, 1998) (same); Auburn Medical Center, Inc. v. Andrus, 9 F.Supp.2d 1291, 1299 (M.D.Ala.1998) (same). As the Eight Circuit noted in dicta, Judges and lawyers often complain that the courts are inundated with a flood of litigation, but the fact remains that litigation is as American as apple pie. If a suit is groundless or filed in bad faith, the law of torts may provide a remedy. Resort to a federal criminal statute is unnecessary. I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d 265, 267-68 (8th Cir.1984). Attempts to characterize abuse of process or malicious prosecution claims as mail and wire fraud violations for RICO purposes have been scrutinized by the courts, and have been rejected **where the only allegedly fraudulent conduct relates to the filing of documents in litigation. See, e.g., Auburn Medical Center, 9 F.Supp.2d at 1297 (finding that engaging in [allegedly fraudulent and baseless] litigation does not constitute mail fraud for purpose of supporting a RICO claim and that as plaintiff's mail fraud claims are, in fact, artfully pleaded claims for malicious prosecution ... they cannot form the basis of a RICO claim); Nakahara, 1998 WL 35123, at *8 (allegations of mail and wire fraud relating to the filing of fraudulent documents in litigation constitute at most an incipient claim for malicious prosecution and fail as a matter of law to establish the requisite predicate acts for purposes of their asserted RICO claim). In Auburn Medical Center, the plaintiff, a health care corporation, alleged that the defendants, a competing hospital, its directors and a state health board official, had conspired to prevent the construction of plaintiff's hospital by filing fraudulent applications to the health board and by interfering in a lawsuit filed by the plaintiff against the state health board by attempting to intervene and file post-judgment motions subsequent to a ruling by [the] court ... and then file new litigation and subsequent appeals, 9 F.Supp.2d at 1297. The complaint also alleged that defendants acted with knowledge that their appeals were groundless. See id. at 1298. Under these circumstances, the court found that despite plaintiff's efforts to couch its claims concerning Defendants' litigation activities in terms of fraud, plaintiff, in essence, is stating a claim for malicious prosecution. Id. at 1297. Similarly, in Nakahara, the plaintiffs claimed that the defendants conspired in a scheme to deprive them of their money and property by **knowingly making perjurious statements and representations, and wrongfully engaged in the filing of, or *163 participation, in the various legal actions pending against them. 1998 WL 35123, at *3, *8. Despite the plaintiffs' efforts to draft their complaint as alleging mail and wire fraud violations, the court found that the numerous references to fraud and fraudulent did not change the basic fact that the gravamen of their complaint related to malicious prosecution. Id. at *8. **Because the Complaint's only detailed pleadings allege incidents of vexatious and harassing litigation the court concluded that the plaintiffs had at most plead[ ] an inchoate claim for malicious prosecution and at bottom fail[ ] adequately to allege the predicate acts of mail and wire fraud that are posited as the basis for their RICO action. Id. at *9, *11. Those cases that have found that alleged mail and wire fraud violations arising out of malicious prosecution or abuse of process could be RICO predicate acts **involved additional allegations of extortion or some other pattern of racketeering activity. See United States v. Eisen, 974 F. 2d 246, 251-54 ( 2d Cir. 1992) (mail and wire fraud violations arising out of scheme by law firm to deprive civil defendants and their liability insurers of money through the filing of fraudulent lawsuits, bribery and intimidation of witnesses and the creation of false photographs, documents and physical evidence of accidents for use before and during trial could be RICO predicate act); Lemelson v. Wang Laboratories Inc., 874 F.Supp. 430, 434 (D.Mass.1994) (mail and wire fraud violations in case claiming extortion of millions of dollars through a pattern of litigation and subsequent settlement over fraudulently obtained patents were RICO predicate act); see also Hall American Center Assoc. L.P. v. Dick, 726 F.Supp. 1083, 1097 (E.D.Mich.1989) (finding that plaintiff's allegations that defendants engaged in filing lawsuits and notices of lis pendens as one part of a larger extortionate scheme to obtain plaintiff's property by encumbering it with liens that made it impossible for plaintiff to sell the property to anyone other than defendant were sufficient to state a cause of action under the Hobbs Act, and thus could be considered a RICO predicate act).

In Eisen, the Second Circuit noted that there is some tension between the congressional decision to include federal mail fraud as a predicate offense and to exclude perjury, whether in violation of federal or state law. 974 F. 2d at 254. However, the court concluded, where a fraudulent scheme falls within the scope of the federal mail fraud statute and the other elements of RICO are established, use of the mail fraud offense as a RICO predicate act cannot be suspended simply because perjury is part of the means for perpetrating the fraud. We do not doubt that where a series of related state court perjuries occurs, it will often be possible to allege and prove both a scheme to defraud within the meaning of the mail fraud statute as well as the elements of a RICO violation. But in such cases, it will not be the fact of the perjuries alone that suffices to bring the matter within the scope of RICO. Id. (emphasis added). In Nakahara, the court distinguished Eisen on the grounds that [t]he fraudulent criminal scheme underlying the predicate mail fraud offenses in Eisen was entirely external to, and independent of, any of the particular disputes between the litigants in the civil actions that were improperly filed and litigated by the Eisen defendants in execution of their scheme. In contrast, the RICO claim in this caselike the claim in von Bulow -seeks to have this Court in effect decide the merits of lawsuits or proceedings that are already pending between these same parties in several *164 other jurisdictions, and which are at heart based on long-standing disputes between the parties that predate this litigation. Id. at *9. Here, as in Nakahara, Daddona asserts **no claims of extortion or **any other racketeering activity apart from mail and wire fraud. **Unlike Eisen, there is no claim here that the underlying litigation over the note and mortgage is part of any larger scheme to deprive Daddona of his property. As noted above, Daddona's sole allegation of mail and wire fraud is that defendants Gaudio, Swaim and Brandner used the U.S. Mails and telephone wires in furtherance of their scheme to maintain control over Stamford Color Photo Inc. assets ... in violation of 18 U.S.C. 1341 and 1343, in an ongoing pattern of racketeering in Civil and Bankruptcy cases they involved them selves [sic] in within the State of Maine and the State of New York. See Complaint p. 5, at 7f. From his reference to civil and bankruptcy cases in Maine and New York, it appears that Daddona is complaining about Swaim and Brandner's participation as attorneys in the Gaudio divorce and Arthur Gaudio's subsequent bankruptcy, although there is no explanation as to how this constitutes a scheme to defraud Daddona.FN6 As the court concluded in Nakahara, Daddona seems simply to be asking this Court to allow him to re-litigate the Hudson Pak Est. case and to provide him with a new forum to air his on-going dispute with Swaim, Gaudio and Brandner. As in Nakahara, it appears that these allegations, even if properly supported by the requisite factual detail, simply fail to establish a pattern of racketeering activity, as defined by 1961. However, because this Court has granted the motion to dismiss on the grounds of insufficiency of the mail and wire fraud pleadings, it need not decide this issue at this time. FN6. Arthur Gaudio's bankruptcy petition was filed in Maine, and Maxine Gaudio filed a proof of claim in the bankruptcy case. See Doc. # 31, at 5.8 It is unclear what proceedings, if any, occurred in New York. Section 1962(c) claim: [17] Although the activity sought to be alleged may not, as a matter of law, constitute a pattern of racketeering activity, which would dispose of both the 1962(b) and 1962(c) claims, Daddona's 1962(c) claim suffers from an additional, fatal deficiency, which would require dismissal regardless of whether mail and wire fraud in the context of allegations of malicious prosecution can establish a pattern of racketeering activity for RICO purposes. Section 1962(c) prohibits any person employed by or associated with any enterprise ... to conduct ... such enterprise's affairs through a pattern of racketeering activity. Daddona alleges violation of this section by defendants Swaim, Gaudio and Brandner. Swaim and Brandner have moved to dismiss this claim on the grounds that Daddona has not pled that the person and the enterprise are distinct. **Indeed, Daddona's Amended RICO Case Statement unambiguously states that [t]he defendants are the Enterprise itself, Amended RICO Case Statement at 13b.

Because the prohibited activity in 1962(c) is conducting the affairs of an enterprise through a pattern of racketeering activity, **the Second Circuit has held that the person charged with violating 1962(c) and the enterprise she or he allegedly conducted cannot be the same entity. See Bennett v. United States Trust Co., 770 F.2d 308, 315 (2d Cir.1985) (section 1962(c) clearly envisions that the person and the enterprise will be distinct);*165 Discon, Inc. v. NYNEX Corp., 93 F.3d 1055, 1062 (2d Cir.1996) (citing cases), vacated on other grounds, 525 U.S. 128, 119 S.Ct. 493, 142 L.Ed.2d 510 (1998). Thus Swaim and Brandner's motions to dismiss must be granted as to the portion of Daddona's complaint asserting a violation of 1962(c) on this alternative ground. Section 1962(d) RICO Conspiracy: Section 1962(d) states that [i]t shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section. Any claim under 1962(d) based on conspiracy to violate the other subsections of section 1962 necessarily must fail if the substantive claims are themselves deficient. Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1191 (3d Cir.1993). Therefore, because this Court finds that the pleading of Daddona's 1962(b) and 1962(c) claims is deficient, Swaim and Brandner's motions to dismiss the portion of Daddona's complaint stating a 1962(d) conspiracy claim are granted as well. Because the Court has ruled in favor of defendants Swaim and Brandner on the substantive RICO issue and the RICO conspiracy issue, it need not reach their additional arguments of lack of standing, res judicata and collateral estoppel. Despite doubts about whether the activity alleged by Mr. Daddona can constitute a pattern of racketeering for RICO purposes, this Court notes that Daddona is a pro se litigant, and he has not yet been granted an opportunity to replead with the benefit of guidance from this Court. Cf. Mooney v. Vitolo, 435 F.2d 838, 839 (2d Cir.1970) (affirming dismissal without right to replead where plaintiff had been given an opportunity to replead twice and had the benefit of extensive discovery). Generally, repleading is permitted where fraud claims are dismissed for lack of specificity pursuant to Fed.R.Civ.P. 9(b). See Luce v. Edelstein, 802 F.2d 49, 56 (2d Cir.1986) (Complaints dismissed under Rule 9(b) are almost always' dismissed with leave to amend.); see also Official Publications, Inc. v. Kable News Co., 884 F.2d 664, 669 (2d Cir.1989) (reversing district court's denial of leave to replead). Daddona is granted leave to replead to set forth the factual basis for his mail and wire fraud allegations that this Court has found lacking in his current amended complaint, if indeed such factual basis can in good faith be pled.

Nakahara v. Bal, 1998 WL 35123, RICO Bus.Disp.Guide 9428 (S.D.N.Y. Jan 30, 1998)

Distinguished by Motorola v. Uzan 202 F.Supp.239 (S.D.N.Y.,May 20, 2002) Look at frcp 60 setting aside a judgment for fraud on the court, for more case law examples.
47 Am. Jur. 2d Judgments, IX. RELIEF FROM JUDGMENTS B. Equitable and Independent Actions 2. Fraud upon Court a. In General Topic Summary Correlation Table References 729. Nature of fraud on court; types of fraud distinguished

West's Key Number Digest West's Key Number Digest, Judgment A.L.R. Library Vacating or Opening Judgment by Confession on Ground of Fraud, Illegality, or Mistake, 91 A.L.R.5th 485 Construction and application of provision of Rule 60(b) of Federal Rules of Civil Procedure that Rule does not limit power of Federal District Court to set aside judgment for "fraud upon the court," 19 A.L.R. Fed. 761 The appropriate remedy for most cases of fraud is by motion pursuant to specific provisions in the applicable rule, or by an independent action, subject to the procedural limitations applicable to those remedies.[1] For purposes of supporting an independent action, a fraud upon the court is more serious than the ordinary fraud necessary to obtain relief from a judgment by motion under the rule,[2] and as a basis for equitable relief a fraud upon the court is construed narrowly in order to preserve the finality of judgments.[3] The remedy is available only to prevent a grave miscarriage of justice.[4] Thus, while a fraud upon the court must be extrinsic, rather than intrinsic, to support relief, [5] it is a more limited concept than extrinsic fraud.[6] In particular, a fraud between the parties, without more, is not a fraud upon the court that may form the basis of an independent action for relief from the judgment.[7] A fraud on the court is fraud which is directed at the judicial machinery itself,[8] directly corrupting the impartial functions of the court[9] or attempting to subvert the integrity of the court itself,[10] such as a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudicating cases which are presented for adjudication.[11] It may require a showing of an unconscionable plan or scheme which is designed to improperly influence the court's decision,[12] and it exists only where there has been the most egregious conduct involving a corruption of the judicial process itself.[13] Some jurisdictions may define extrinsic fraud as a fraud on the court, noting that while claims of intrinsic fraud must be brought pursuant to specific provisions of the applicable rule, an extrinsic fraud, also known as a fraud upon the court, may be brought as an independent action challenging the final judgment.[14] While some jurisdictions may note that intrinsic fraud in particular does not support relief from a judgment on the basis of a fraud on the court,[15] other jurisdictions may refer to an intrinsic fraud on the court as referring to a fraud relating to the proceeding itself and concerning some matter necessarily under the consideration of the court upon the merits, but which does not alone warrant equitable relief from judgment.[16] CUMULATIVE SUPPLEMENT Cases: Fraud on the court, such as could support relief from final judgment, consists of conduct: 1) on part of officer of the court; that 2) is directed to judicial machinery itself; 3) is intentionally false, willfully blind to the truth, or is in reckless disregard of the truth; 4) is positive averment or concealment when one is under duty to disclose; and 5) deceives the court. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. Johnson v. Bell, 605 F.3d 333 (6th Cir. 2010). [END OF SUPPLEMENT] 443(.5) to 443(3)

[FN1] Allen v. Bussell, 558 P.2d 496 (Alaska 1976).

As to fraud as a ground for a motion seeking relief from a judgment, pursuant to a rule providing for such relief, as opposed to an independent action seeking relief from a judgment, see 694 to 699.

[FN2] Geo. P. Reintjes Co., Inc. v. Riley Stoker Corp., 161 F.R.D. 2 (D. Mass. 1995), judgment aff'd, 71 F.3d 44, 33 Fed. R. Serv. 3d 697 (1st Cir. 1995). [FN3] Luttrell v. U.S., 644 F.2d 1274 (9th Cir. 1980). [FN4] Duse v. IBM Corp., 212 F.R.D. 58 (D. Conn. 2002), judgment aff'd, 75 Fed. Appx. 44 (2d Cir. 2003). [FN5] Hall v. Hall, 587 So. 2d 1198 (Ala. 1991); Southeastern Colorado Water Conservancy Dist. v. Cache Creek Min. Trust, 854 P.2d 167 (Colo. 1993). [FN6] Serzysko v. Chase Manhattan Bank, 461 F.2d 699, 16 Fed. R. Serv. 2d 169 (2d Cir. 1972); Martina Theatre Corp. v. Schine Chain Theatres, Inc., 278 F.2d 798 (2d Cir. 1960). As to distinction between intrinsic and extrinsic fraud relative to grounds for an independent action in equity for relief from a judgment, see 720. [FN7] Wise v. Nirider, 261 Mont. 310, 862 P.2d 1128 (1993).

**[FN8] Amstar Corp. v. Envirotech Corp., 823 F.2d 1538 (Fed. Cir. 1987); Baltia Air Lines, Inc. v.
Transaction Management, Inc., 98 F.3d 640, 36 Fed. R. Serv. 3d 340 (D.C. Cir. 1996).

**[FN9] Bulloch v. U.S., 763 F.2d 1115, 1 Fed. R. Serv. 3d 926 (10th Cir. 1985); Stone v. Stone, 647 P.2d
582 (Alaska 1982).

**[FN10] Wise v. Nirider, 261 Mont. 310, 862 P.2d 1128 (1993). **[FN11] Serzysko v. Chase Manhattan Bank, 461 F.2d 699, 16 Fed. R. Serv. 2d 169 (2d Cir. 1972);
Kupferman v. Consolidated Research & Mfg. Corp., 459 F.2d 1072, 19 A.L.R. Fed. 747 (2d Cir. 1972); Martina Theatre Corp. v. Schine Chain Theatres, Inc., 278 F.2d 798 (2d Cir. 1960); Kenner v. C. I. R., 387 F.2d 689 (7th Cir. 1968); Wilkin v. Sunbeam Corp., 466 F.2d 714, 16 Fed. R. Serv. 2d 606 (10th Cir. 1972); Southeastern Colorado Water Conservancy Dist. v. Cache Creek Min. Trust, 854 P.2d 167 (Colo. 1993); Filler v. Richland County, 247 Mont. 285, 806 P.2d 537 (1991).

**[FN12] First Nat. Bank of Louisville v. Lustig, 96 F.3d 1554, 45 Fed. R. Evid. Serv. 813, 36 Fed. R.
Serv. 3d 307 (5th Cir. 1996);** Alexander v. Robertson, 882 F.2d 421, 14 Fed. R. Serv. 3d 641 (9th Cir. 1989). [FN13] Great Coastal Exp., Inc. v. International Broth. of Teamsters, Chauffeurs, Warehousemen and Helpers of America, 675 F.2d 1349, 33 Fed. R. Serv. 2d 1234 (4th Cir. 1982); Lockwood v. Bowles, 46 F.R.D. 625, 13 Fed. R. Serv. 2d 1299 (D. D.C. 1969); Wise v. Nirider, 261 Mont. 310, 862 P.2d 1128 (1993); Filler v. Richland County, 247 Mont. 285, 806 P.2d 537 (1991). [FN14] Bank One, N.A. v. Batronie, 884 So. 2d 346 (Fla. Dist. Ct. App. 2d Dist. 2004). [FN15] Chewning v. Ford Motor Co., 354 S.C. 72, 579 S.E.2d 605 (2003). [FN16] Johnson v. Herbie's Place, 157 N.C. App. 168, 579 S.E.2d 110 (2003), review denied, 357 N.C. 460, 585 S.E.2d 760 (2003).

 730. Bribery or corruption West's Key Number Digest West's Key Number Digest, Judgment 443(.5) to 443(3)

The bribery of judges is an example of a corruption of the judicial process warranting relief from a judgment because of a fraud upon the court,[1] and in particular, such bribery may constitute one of the clearest examples of a fraud upon the court.[2] Employment of counsel to improperly influence the court may also be an example of a fraud upon the court which is sufficiently egregious to form the basis of an independent action for relief from the judgment.[3]

[FN1] Chicago Title & Trust Co. v. Fox Theatres Corp., 182 F. Supp. 18 (S.D. N.Y. 1960). [FN2] Root Refining Co. v. Universal Oil Products Co., 169 F.2d 514 (C.C.A. 3d Cir. 1948); Wilkin v. Sunbeam Corp., 466 F.2d 714, 16 Fed. R. Serv. 2d 606 (10th Cir. 1972); U. S. v. International Tel. & Tel. Corp., 349 F. Supp. 22 (D. Conn. 1972), judgment aff'd, 410 U.S. 919, 93 S. Ct. 1363, 35 L. Ed. 2d 582 (1973); Lockwood v. Bowles, 46 F.R.D. 625, 13 Fed. R. Serv. 2d 1299 (D. D.C. 1969); Great Coastal Exp., Inc. v. International Broth. of Teamsters, Chauffeurs, Warehousemen & Helpers of America, 86 F.R.D. 131, 29 Fed. R. Serv. 2d 1181 (E.D. Va. 1980); Wise v. Nirider, 261 Mont. 310, 862 P.2d 1128 (1993). [FN3] Lockwood v. Bowles, 46 F.R.D. 625, 13 Fed. R. Serv. 2d 1299 (D. D.C. 1969); Wise v. Nirider, 261 Mont. 310, 862 P.2d 1128 (1993). 731. Suppression or nondisclosure of information; misrepresentation West's Key Number Digest West's Key Number Digest, Judgment 443(.5) to 443(3)

While a failure to disclose or produce material requested in discovery may constitute misconduct warranting relief pursuant to a motion for relief as prescribed by rule,[1] generally a mere nondisclosure to an adverse party and to the court of facts pertinent to a controversy before the court is not sufficient in itself to constitute a fraud upon the court justifying vacating a judgment.[2] In particular, a failure to disclose to an adversary or the court matters which would defeat one's own claim is intrinsic fraud, and does not allow for a judgment to be set aside due to fraud upon the court.[3] Allegations of nondisclosure during pretrial discovery are likewise generally not sufficient to support an action for fraud upon the court.[4] Thus, for example, an independent action cannot be maintained despite alleged misrepresentations or concealments to the court prior to the decree, where, if the party seeking relief had appeared in the original action, the complaining party could have contested the representations.[5] In particular, an independent action based on a fraud on the court is not adequately supported by a withholding of a psychological report, particularly if it is cumulative of other evidence presented;[6] a mere failure to disclose assets in a marital dissolution proceeding;[7] a failure to inform the court that the defendants have absolute defenses before judgment is confessed;[8] or the unintentional suppression of a document.**[9] Where the conduct of counsel in making misrepresentations is considered pernicious, relief may be supported;**[10] however, nondisclosures which are not part of a deliberate scheme of misrepresentations fall short of the standard needed to set aside a judgment for fraud upon the court.[11]

[FN1] Abrahamsen v. Trans-State Exp., Inc., 92 F.3d 425, 35 Fed. R. Serv. 3d 840, 1996 FED App. 0262P (6th Cir. 1996). As to requisites of motions for relief from judgments based on grounds specified by rule, see 704 to 706. [FN2] Kerwit Medical Products, Inc. v. N. & H. Instruments, Inc., 616 F.2d 833, 29 Fed. R. Serv. 2d 1190 (5th Cir. 1980); H. K. Porter Co., Inc. v. Goodyear Tire & Rubber Co., 536 F.2d 1115, 21 Fed. R. Serv. 2d 1429 (6th Cir. 1976). [FN3] Chewning v. Ford Motor Co., 354 S.C. 72, 579 S.E.2d 605 (2003). [FN4] Anderson v. Beatrice Foods Co., 900 F.2d 388, 16 Fed. R. Serv. 3d 572 (1st Cir. 1990); H. K. Porter Co., Inc. v. Goodyear Tire & Rubber Co., 536 F.2d 1115, 21 Fed. R. Serv. 2d 1429 (6th Cir. 1976). [FN5] In re Marriage of Woolsey, 214 Mont. 106, 692 P.2d 451 (1984). [FN6] Greiner v. City of Champlin, 152 F.3d 787, 41 Fed. R. Serv. 3d 495 (8th Cir. 1998). [FN7] Wise v. Nirider, 261 Mont. 310, 862 P.2d 1128 (1993) (nondisclosure of existence of pension plan). [FN8] Hadden v. Rumsey Products, 196 F.2d 92, 49 Ohio Op. 19, 64 Ohio L. Abs. 568 (2d Cir. 1952).

**[FN9] Seismograph Service Corp. v. Offshore Raydist, Inc., 263 F.2d 5 (5th Cir. 1958). **[FN10] Virgin Islands Housing Authority v. David, 823 F.2d 764 (3d Cir. 1987).
[FN11] Dankese Engineering, Inc. v. Ionics, Inc., 89 F.R.D. 154 (D. Mass. 1981). 732. Perjury [NOTE: This is the application of the ground of perjury within FRCP 60(b)(3), and 60(d)(3)] FRCP Rule 60. Relief from a Judgment or Order (b) Grounds for Relief from a Final Judgment, Order, or Proceeding.On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether previously called intrinsic misrepresentation, or misconduct by an opposing party; (4) the judgment is void; (5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or (6) any other reason that justifies relief. (c) Timing and Effect of the Motion. or extrinsic),

(1) Timing.A motion under Rule 60(b) must be made within a reasonable time-and for reasons (1), (2), and (3) no more than a year after the entry of the judgment or order or the date of the proceeding. (2) Effect on Finality.The motion does not affect the judgment's finality or suspend its operation. (d) Other Powers to Grant Relief.This rule does not limit a court's power to: (1) entertain an independent action to relieve a party from a judgment, order, or proceeding; (2) grant relief under 28 U.S.C. 1655 to a defendant who was not personally notified of the action; or (3) set aside a judgment for fraud on the court. And in contrast, under 18 U.S.C. 1961 in the 9th Cir. perjury is prohibited under 18 U.S.C. 1503 obstruction of justice as a predicate criminal offense.]

West's Key Number Digest West's Key Number Digest, Judgment 444

A subornation of perjury by an attorney, amounting to conduct by an attorney effectively precluding the opposing party from having his or her day in court, may constitute a fraud on the court sufficient to support setting aside the judgment.[1] Generally, however, the fact that parties engaged in perjury, acting on their own, is not sufficient to support subsequent relief in an independent action based on an alleged fraud on the court.[2] Observation: Some jurisdictions may deem the knowing use of perjured testimony or fabricated evidence to be intrinsic fraud,[3] and not a ground for reopening a judgment,[4] at least not where the perjured or false evidence was not accompanied by any extrinsic or collateral fraud.[5] In particular, while some courts may deem perjury to be a fraud on the court,[6] or may otherwise consider the making of a material misrepresentation to the court a fraud perpetrated on the court, a subsequent suit for fraud on the court based on perjury in the first suit is not appropriate if the statutes and court rules provide an avenue for bringing the fraud to the attention of the first court and obtaining relief there.[7] Merely establishing that there was a conflict in the evidence does not prove that there was a fraud on the court, for the purposes of an action in equity.[8]

[FN1] Chewning v. Ford Motor Co., 354 S.C. 72, 579 S.E.2d 605 (2003).

[FN2] Serzysko v. Chase Manhattan Bank, 461 F.2d 699, 16 Fed. R. Serv. 2d 169 (2d Cir. 1972); Great Coastal Exp., Inc. v. International Broth. of Teamsters, Chauffeurs, Warehousemen and Helpers of America, 675 F.2d 1349, 33 Fed. R. Serv. 2d 1234 (4th Cir. 1982); Porcelli v. Joseph Schlitz Brewing Co., 78 F.R.D. 499 (E.D. Wis. 1978), aff'd, 588 F.2d 838 (7th Cir. 1978); Southeastern Colorado Water Conservancy Dist. v. Cache Creek Min. Trust, 854 P.2d 167 (Colo. 1993) (also noting that there was no factual support for the perjury charge); Salway v. Arkava, 215 Mont. 135, 695 P.2d 1302, 23 Ed. Law Rep. 754 (1985).

[FN3] In re Rachel M., 113 Cal. App. 4th 1289, 7 Cal. Rptr. 3d 153 (4th Dist. 2003), review denied, (Mar. 3, 2004); Cody v. Old Republic Title Co., 156 S.W.3d 782 (Mo. Ct. App. E.D. 2004); Hooks v. Eckman, 159 N.C. App. 681, 587 S.E.2d 352 (2003); Browning v. Prostok, 165 S.W.3d 336 (Tex. 2005). As to application of distinction of extrinsic versus intrinsic fraud in motions for relief based on fraud, see 696. As to distinction between intrinsic and extrinsic fraud relative to grounds for an independent action in equity for relief from a judgment, see 720. [FN4] In re Rachel M., 113 Cal. App. 4th 1289, 7 Cal. Rptr. 3d 153 (4th Dist. 2003), review denied, (Mar. 3, 2004); Johnson v. Herbie's Place, 157 N.C. App. 168, 579 S.E.2d 110 (2003), review denied, 357 N.C. 460, 585 S.E.2d 760 (2003); Chewning v. Ford Motor Co., 354 S.C. 72, 579 S.E.2d 605 (2003).

**[FN5] Chewning v. Ford Motor Co., 354 S.C. 72, 579 S.E.2d 605 (2003). **[FN6] Lim Kwock Soon v. Brownell, 369 F.2d 808 (5th Cir. 1966); Dausuel v. Dausuel, 195 F.2d 774
(D.C. Cir. 1952). Toscano v. C. I. R., 441 F.2d 930, 24 A.L.R. Fed. 683, 27 A.F.T.R.2d 71-1308, 71-1 USTC P 9382 (9th Cir.,Apr 28, 1971) [FN7] Tingley v. Wardrop, 265 Mich. App. 264, 2005 WL 428287 (2005). [FN8] Cleveland Demolition Co., Inc. v. Azcon Scrap Corp., a Div. of Gold Fields American Industries, Inc., 827 F.2d 984, 8 Fed. R. Serv. 3d 453 (4th Cir. 1987).

733. Involvement of officer of court West's Key Number Digest West's Key Number Digest, Judgment 442, 443(.5) to 443(3)

The involvement of an attorney in the perpetration of a fraud may be a key factor in determining the existence of a fraud upon the court.[1] Absent the involvement of an officer of the court, there is no fraud upon the court, despite a claim which might have amounted to a lesser species of fraud.[2] Where an attorney suborns perjury or engages in the intentional concealment of documents, for example, such misconduct may support setting aside a judgment due to a fraud upon the court.[3] Likewise, where an attorney corruptly sells out a client's interest to the other side, such that there was no real contest in the trial or hearing of the case, a new suit to set aside and annul a former judgment may be sustained.[4]

[FN1] Serzysko v. Chase Manhattan Bank, 461 F.2d 699, 16 Fed. R. Serv. 2d 169 (2d Cir. 1972); Kupferman v. Consolidated Research & Mfg. Corp., 459 F.2d 1072, 19 A.L.R. Fed. 747 (2d Cir. 1972); U. S. v. International Tel. & Tel. Corp., 349 F. Supp. 22 (D. Conn. 1972), judgment aff'd, 410 U.S. 919, 93 S. Ct. 1363, 35 L. Ed. 2d 582 (1973); Lockwood v. Bowles, 46 F.R.D. 625, 13 Fed. R. Serv. 2d 1299 (D. D.C. 1969); Waters v. Jolly, 582 So. 2d 1048 (Ala. 1991). [FN2] Kerwit Medical Products, Inc. v. N. & H. Instruments, Inc., 616 F.2d 833, 29 Fed. R. Serv. 2d 1190 (5th Cir. 1980).

**[FN3] Chewning v. Ford Motor Co., 354 S.C. 72, 579 S.E.2d 605 (2003).

**[FN4] In re Rachel M., 113 Cal. App. 4th 1289, 7 Cal. Rptr. 3d 153 (4th Dist. 2003), review denied,
(Mar. 3, 2004).

19 alr fed 761, Construction and application of provision of Rule 60(b) of Federal Rules of Civil Procedure that rule does not limit power of federal district court to set aside judgment for "fraud upon the court"
This annotation collects and analyzes the federal cases construing or applying the provision of Rule 60(b) of the Federal Rules of Civil Procedure that the Rule does not limit the power of a Federal District Court to set aside a judgment for "fraud upon the court." The full text of the relevant portions of Rule 60(b) is as follows: On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order, or proceeding was entered or taken. . . . This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding, or to grant relief to a defendant not actually personally notified as provided in Title 28, USC, 1655 [28 U.S.C.A. 1655], or to set aside a judgment for fraud upon the court. 1[b] IntroductionRelated matters Related Annotations are located under the heading of this Annotation. 2. Background; Hazel-Atlas Case The provision of Rule 60(b) expressly disclaiming any limitation upon a Federal District Court's power to set aside a judgment for "fraud upon the court" was promulgated on December 27, 1946, and its effective date was March 19, 1948. At the time this provision was promulgated, the Notes of the Advisory Committee on the 1946 Amendments to the Rules stated that Rule 60(b) "expressly does not limit the power of the court, when fraud has been perpetrated upon it, to give relief under the saving clause. As an illustration of this situation, see Hazel-Atlas Glass Co. v Hartford Empire Co. (1944) 322 US 238, 88 L Ed 1250, 64 S Ct 997 [reh den 322 US 772, 88 L Ed 1596, 64 S Ct 1281]." In the Hazel-Atlas Case, which was decided by the Supreme Court shortly before the promulgation of Rule 60(b)'s provision dealing with "fraud upon the court," it was held that although the term at which a Court of Appeals' judgment had been entered had expired, the undisputed evidence revealed such fraud on the Court of Appeals as to demand, under settled equitable principles, that the judgment be set aside. It was noted that in their brief filed with the Court of Appeals, the defendant's attorneys, one of whom had played a part in having a spurious article prepared for publication, had directed the Court of Appeals' attention to this article, and that the Court of Appeals, guoting copiously from the article to show that new and differentiating elements of a process patented by the defendant were recognized, had held that the defendant's patent was valid and infringed, and had reversed a District Court judgment. It was emphasized that the present case did not involve simply a judgment obtained through the aid of a witness who, on the basis of after-discovered evidence, was believed possibly to have been guilty of perjury, **but that the case involved a deliberately planned and carefully executed scheme to defraud not only the Patent Office, but also Research References

the Court of Appeals. Also, it was noted that the matter did not concern merely private parties, but that there were issues of great moment to the public in a patent suit, and that tampering with the administration of justice in the manner indisputably shown involved far more than an injury to a single litigant, but involved a wrong against the institutions set up to protect and safeguard the public. 3[a] Summary and commentGenerally [Cumulative Supplement] Although a few cases appear to have used the terms "fraud upon the court" and "fraud" interchangeably, without making any distinction between the two concepts ( 4[b], infra), several cases have noted that the concept of "fraud upon the court," within the meaning of Rule 60(b), is distinct from and narrower than the concept of ordinary "fraud" between the parties ( 4[a], infra). In determining whether fraud upon the court has occurred, the courts have pointed out **(1) that the concept of fraud upon the court is limited to that species of fraud which does, or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner the impartial task of adjudging cases which are presented for adjudication; **(2) that in order to constitute fraud upon the court, the acts of an adverse party must have been of such a nature as to have prevented the losing party from fully and fairly presenting his case or defense; and (3) that in order to have a judgment set aside on the ground of fraud upon the court, it is necessary to show that there was an unconscionable plan or scheme which was designed to influence the court in its decision ( 6[a], infra). The courts have indicated that the following are among the practical effects of distinguishing between "fraud upon the court" and ordinary "fraud": (1) Expiration of the one-year period of limitations applicable to a Rule 60(b)(3) motion to set aside a judgment on the ground of ordinary fraud between the parties **does not preclude relief from a judgment on the ground of fraud upon the court; (2) relief from a judgment on the ground of fraud upon the court, unlike relief from a judgment on the ground of fraud between the parties, may be granted by the court on its own motion; and (3) although a party's laches may preclude him from obtaining relief from a judgment on the ground of fraud between the parties, **laches cannot preclude relief from a judgment on the ground of fraud upon the court ( 4[c], infra). (However, as supporting the view that relief from a judgment on the ground of fraud upon the court may be precluded on the basis of laches, see Simons v United States (1971, CA2 NY) 452 F2d 1110; Seismograph Service Corp. v Offshore Raydist, Inc. (1958, CA5 La) 263 F2d 5, both infra 4[c].) Several cases have recognized that under Rule 60(b), a motion seeking relief from a District Court judgment on the ground of fraud upon the court is addressed to the court's sound discretion, and that the District Court's decision in passing upon such a motion will not be reversed unless there is an abuse of discretion ( 5, infra). Although cases decided prior to the 1946 amendment of Rule 60(b) indicated that in order for fraud to be a ground for relief from a judgment, the fraud was required to be "extrinsic" rather than "intrinsic," and although Rule 60(b)(3), as amended in 1946, provides that relief from a judgment may be granted on the ground of "fraud" regardless of whether such fraud has been "heretofore denominated intrinsic or extrinsic," the cases decided since 1946 have not specified whether or under what circumstances "fraud upon the court," as distinguished from ordinary "fraud," must be "extrinsic" in order to constitute a ground for relief under Rule 60(b), as amended in 1946 ( 6[b], infra). Several cases have noted that where a party is seeking relief from a judgment on the ground of fraud upon the court, he must state with particularity the nature of the allegedly fraudulent conduct ( 7, infra).[1] Upon consideration of the circumstances of particular cases, the courts have generally concluded that fraud upon the court was not sufficiently established ( 8- 14, infra). **Although a few cases appear to have recognized that perjury or other false statements may, at least under certain circumstances, constitute fraud upon the court ( 8[a], infra), many cases have held that at least under the particular circumstances, allegations as to perjury or other false statements did not sufficiently establish fraud upon the court ( 8[b], infra). Moreover, many cases have held that at least under the particular circumstances, the suppression or nondisclosure of information did not constitute fraud upon the court ( 9, infra), and various other instances of allegedly fraudulent conduct have also been held not to constitute fraud upon the court ( 11, infra). **However, it has been recognized in several cases that bribery or corruption of a judge or jury would constitute fraud upon the court ( 10, infra).

**In a number of cases, it has been recognized that if an attorney, who is an officer of the court, is involved in the perpetration of a fraud, this fact supports the conclusion that fraud upon the court exists ( 12, infra). However, in applying this principle to the facts of particular cases, the courts have generally concluded that no fraud upon the court existed because (1) even if certain conduct was fraudulent, no attorney was shown to have been involved in such conduct ( 13, infra), or (2) even if an attorney was involved in certain conduct, such conduct was not shown to have been fraudulent ( 14, infra). 3[b] Summary and commentPractice pointers [Cumulative Supplement] When an attorney becomes involved in an attempt to set aside a judgment on the ground of fraud upon the court, he is likely to be faced with such questions as the following: (1) In what court should relief be sought? (2) Through what means of procedure should the issue of fraud upon the court be brought to the court's attention? (3) To what extent may a party's laches preclude relief from a judgment obtained through fraud upon the court? (4) What presumptions and burden of proof are applicable with respect to the issue of fraud upon the court? (5) If an attempt to obtain relief from a judgment on the ground of fraud upon the court fails, what alternative means of obtaining relief may remain available? (1) If an attorney wishes to seek relief from a Federal District Court judgment on the ground of fraud upon the court, it would appear generally advisable for him to seek such relief from the court in which the judgment has been rendered.[2] It has been recognized that when an independent action seeking to relieve a party from a District Court judgment on the ground of fraud upon the court is brought in the court which rendered the judgment, the court, having had jurisdiction over the original action, has ancillary jurisdiction over the independent action even if the independent action does not itself involve a federal question or diversity of citizenship.[3] It has been held that the Court of Claims lacks jurisdiction over an action seeking relief from a Federal District Court judgment on the ground of fraud upon the District Court.[4] However, it has been held that while Rule 60(b) applies only to the Federal District Courts, and not to the Tax Court, the Tax Court nevertheless has authority, after one of its own decisions becomes final, to set the decision aside on the ground of fraud upon the court as expounded in the HazelAtlas Case.[5] (2) An attorney who is seeking to have a District Court set aside its judgment on the ground of fraud upon the court might find it advisable to proceed by means of both filing a Rule 60(b) motion to set aside the judgment, and instituting an independent action to obtain equitable relief from fraud upon the court.[6] A possible advantage of simultaneously employing the alternative procedures of a motion and an independent action is that even if one procedure fails because of a particular court's interpretation of Rule 60(b), the other procedure may succeed.[7] There may, however, be special statutory procedures available for setting aside a particular kind of District Court judgment or order on the ground of fraud upon the court, and the court may require a party to resort to such statutory procedures, rather than to Rule 60(b) procedures.[8] Nevertheless, if an attorney represents a client who is seeking to have a judgment in his favor upheld, the attorney must be prepared for the contingency that regardless of what procedures, if any, are employed by the opposing party to raise the contention of fraud upon the court, the court may decide to inquire, on its own motion, into the issue of fraud upon the court, and the court may determine, also on its own motion, that fraud upon the court has occurred and that the judgment must therefore be set aside.[9] (3) Because some courts appear to have taken the position that a request for relief from a judgment on the ground of fraud upon the court may be barred by laches,[10] it would appear advisable that if an attorney is representing a client who believes that he has been the victim of fraud upon the court, the attorney should institute, as promptly as possible, judicial proceedings requesting relief. (4) An attorney who is attempting to defend a Federal District Court judgment against charges of fraud upon the court may find it worthwhile to emphasize that such fraud cannot be presumed; that there is a presumption against such fraud; and that one who seeks relief from the judgment has the burden of establishing such fraud by clear and convincing evidence.[11]

(5) If an attorney is unsuccessful in seeking relief from a District Court judgment on the ground of fraud upon the court, it may be advisable for the attorney to request the court to specify that the denial of relief is without prejudice to another application for relief on different grounds, such as the grounds stated in Rule 60(b)(5) or Rule 60(b)(6).[12] CUMULATIVE SUPPLEMENT Cases: In order to state successful claim of fraud on the court, party must show by clear and convincing evidence that: (1) fraud attempted to subvert court's integrity itself, or was fraud perpetrated by court officers, such that party was prevented from presenting his case, and (2) fraud's perpetrator possessed sufficient mental state. Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.A. Bowie v. Maddox, 677 F. Supp. 2d 276, 75 Fed. R. Serv. 3d 944 (D.D.C. 2010). II. General principles 4[a] Distinction between fraud upon court and other fraudGenerally; cases making distinction [Cumulative Supplement] In addition to the various federal cases (see generally 6- 13, infra) which appear to support, by implication, the view that the concept of "fraud upon the court," within the meaning of Rule 60(b), is distinct from and narrower than the concept of "fraud," the following cases expressly support this view. To the same effect as the foregoing cases are Martina Theatre Corp. v Schine Chain Theatres, Inc. (1960, CA2 NY) 278 F2d 798; and United States v International Tel. & Tel. Corp. (1972, DC Conn) 349 F Supp 22, affd without op 410 US 919, 35 L Ed 2d 582, 93 S Ct 1363. In Simons v United States (1971, CA2 NY) 452 F2d 1110, the court, noting that it had given a strict construction to the phrase "fraud upon the court," held that the allegations in a complaint showed only a fraud upon the United States, not upon the court. In Kupferman v Consolidated Research & Mfg. Corp. (1972, CA2 NY) 459 F2d 1072, 19 ALR Fed 747, it was recognized that the phrase "fraud upon the court" could not be read to embrace any conduct of an adverse party of which the court disapproved, and that to do so would render meaningless the one-year period of limitations on motions seeking relief from ordinary fraud under Rule 60(b)(3). (To the same effect, see 7 Moore, Federal Practice 60.33, wherein it was noted that if the term "fraud upon the court" is construed to include substantially all types of fraud which would fall within Rule 60(b)(3), then the time limitation upon motions under Rule 60(b)(3) will be meaningless.) In Serzysko v Chase Manhattan Bank (1972, CA2 NY) 461 F2d 699, cert den 409 US 883, 34 L Ed 2d 139, 93 S Ct 173, reh den 409 US 1029, 34 L Ed 2d 324, 93 S Ct 470, the court recognized that "fraud upon the court" was a more limited concept than ordinary fraud between the parties. In United States v Ryan (1973, DC NY) 360 F Supp 265, affd without op (CA2 NY) 478 F2d 1397, it was noted that fraud between the parties, without more, should not be regarded as "fraud upon the court," within the meaning of Rule 60(b). See Toscano v Commissioner (1971, CA9) 441 F2d 930, wherein the court, while not dealing with a District Court judgment or with Rule 60(b), recognized that the phrase "fraud upon the court" should be read narrowly, so as to further the important legal and social interest of preserving the finality of judgments. In Lockwood v Bowles (1969, DC Dist Col) 46 FRD 625, it was recognized that fraud between the parties, without more, should not be regarded as fraud upon the court. CUMULATIVE SUPPLEMENT Cases: Even such an offense as perjury may not suffice to constitute a fraud on the court, for purpose of motion for relief from final judgment; instead the type of conduct that would qualify as fraud on the court must be something

on the order of bribing a judge. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. U.S. v. 6 Fox Street, 480 F.3d 38 (1st Cir. 2007). Garden variety deceit and fraud by a party do not rise to the level of a motion for relief from judgment claim or fraud upon the court. Fed.Rules Civ.Proc.Rule 60(b)(6), 28 U.S.C.A. Roger Edwards, LLC v. Fiddes & Son, Ltd., 227 F.R.D. 19 (D. Me. 2005). "Fraud on the court" may be distinguished from the fraud or misrepresentation that is the subject of the rule allowing a party to obtain relief from final judgment or order where there has been fraud, misrepresentation, or other misconduct of an adverse party; instead, "fraud on the court" subcategory of fraud refers to fraud, misrepresentation, or other misconduct committed by the court, its personnel, or its officers. Fed.Rules Bankr.Proc.Rule 9024, 11 U.S.C.A.; Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.A. In re R & R Associates of Hampton, 248 B.R. 1 (Bankr. D.N.H. 2000). In case where parallel actions were brought in state and federal courts, settlement entered into on action in state court is not reviewable for fraud upon court under Rule 60(b) because fraud, if any, was on state court, not federal district court. Pfotzer v Amercoat Corp. (CA2 Conn) 548 F2d 51. While the rule governing motions for relief from judgment based upon fraud of an adverse party deals with injury to a single litigant, fraud under the savings clause of rule governing relief from judgment, which allows a court to set aside a judgment for fraud upon the court, is limited to fraud that seriously affects the integrity of the normal process of adjudication. Fed.Rules Civ.Proc.Rule 60(b)(3), (d), 28 U.S.C.A. James v. U.S., 603 F. Supp. 2d 472 (E.D. N.Y. 2009). Under rule governing relief from judgment, "fraud upon the court," as distinguished from fraud on an adverse party, is limited to fraud which seriously affects the integrity of the normal process of adjudication; this concept involves far more than an injury to a single litigant because it threatens the very integrity of the judiciary and the proper administration of justice. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. Travelers Cas. & Sur. Co. v. Crow & Sutton Associates, 228 F.R.D. 125 (N.D. N.Y. 2005). Party seeking relief from judgment on ground of fraud under catchall provision of federal rule must show that fraud was of a kind that seriously affects the integrity of the normal process of adjudication. Fed. Rules Civ. Proc. Rule 60(b)(6), 28 U.S.C.A. Buxbaum v. Deutsche Bank AG, 216 F.R.D. 72 (S.D. N.Y. 2003). Fraud upon the court differs from fraud on an adverse party in that it is limited to fraud which seriously affects the integrity of the normal process of adjudication. Herring v. U.S., 424 F.3d 384 (3d Cir. 2005). The concept of "fraud upon the court," warranting the setting aside of a judgment, should embrace only that species of fraud which does, or attempts to, subvert the integrity of the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases that are presented for adjudication; relief should be denied in the absence of such conduct. Fed.Rules Civ.Proc.Rule 60(d)(3), 28 U.S.C.A. North Emerson-West v. Redman, 630 F. Supp. 2d 373 (D. Del. 2009). In action brought by company against union to recover for damage to property allegedly caused by union violence, and for lost business allegedly caused by illegal boycott, perjured testimony as to purported acts of violence by union did not constitute fraud on court within meaning of Rule 60(b), Federal Rules of Civil Procedure, so as to permit court to "set aside judgment for fraud upon the court," even though one-year period for bringing motion to set aside judgment had expired, since perjured testimony did not present deliberate scheme to directly subvert judicial process or impinge upon integrity of court and its ability to function impartially. Great Coastal Express, Inc. v International Brotherhood of Teamsters, etc. (1982, CA4 Va) 675 F2d 1349, 110 BNA LRRM 2058, 93 CCH LC 13447, 33 FR Serv 2d 1234, cert den (US) 74 L Ed 2d 978, 103 S Ct 764, 112 BNA LRRM 2280, 95 CCH LC 13933. District court did not abuse its discretion, in lessor's action for enforcement of arbitration award against lessee, by holding that lessee was a successful company and thus denying motion to grant relief from judgment on grounds of fraud, despite allegation that lessee lied about being a successful company. Fed. Rules Civ. Proc. Rule 60(b), 28 U.S.C.A. Rive v. Briggs of Cancun, Inc., 82 Fed. Appx. 359 (5th Cir. 2003). Fraud on the court, such as could support relief from final judgment, consists of conduct: 1) on part of officer of the court; that 2) is directed to judicial machinery itself; 3) is intentionally false, willfully blind to the truth, or is in reckless disregard of the truth; 4) is positive averment or concealment when one is under duty to disclose; and 5) deceives the court. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. Johnson v. Bell, 605 F.3d 333 (6th Cir. 2010). Fraud on court, of a kind required to support independent action attacking judgment under the savings clause of Federal Rule of Civil Procedure governing motions for relief from judgment, is narrower in scope than fraud on adverse party, such as will support motion for relief under the Rule. 28 U.S.C.A. Fed. Rules Civ. Proc. Rule 60(b)(3) In re M.T.G., Inc., 291 B.R. 694 (E.D. Mich. 2003). "Fraud upon the court," within meaning of Rule 60(b) has been narrowly interpreted, and, other than in patent

cases, fraud must involve corruption of judicial process itself. Thus, in action involving alleged ex parte contact by Bankruptcy Judge in violation of Bankruptcy Rule 9003, reviewing court did not find fraud upon the court since, for nullification of judicial proceedings there must be prejudice to party, and in case at bar no prejudice had been shown. Re Met-L-Wood Corp. (1988, CA7 Ill) 861 F2d 1012, 18 BCD 1045, CCH Bankr L Rptr 72511, 12 FR Serv 3d 832, cert den (US) 104 L Ed 2d 157, 109 S Ct 1642. "Fraud upon the court," such as may permit relief from judgment under catchall provision of civil procedure rule, embraces that species of fraud which does, or attempts to, defile the court itself, or which is fraud perpetrated by officers of court so that judicial machinery cannot perform in usual manner its impartial task of adjudging those cases presented for adjudication. Fed. Rules Civ. Proc. Rule 60(b)(6), 28 U.S.C.A. In re Martin, 268 B.R. 168 (Bankr. E.D. Ark. 2001), order aff'd, 271 B.R. 333, 51 Fed. R. Serv. 3d 624 (B.A.P. 8th Cir. 2002). "Fraud on the court" embraces only that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court; a party's failure to disclose information, or even a party's perjury, does not ordinarily constitute fraud on the court. In re Napster, Inc. Copyright Litigation, 479 F.3d 1078 (9th Cir. 2007). The basis for an independent action to set aside a judgment for fraud on the court lies in misconduct that harms the integrity of the judicial process; "fraud upon the court" embraces only that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery can not perform in the usual manner its impartial task of adjudging cases that are presented for adjudication. Appling v. State Farm Mut. Auto. Ins. Co., 340 F.3d 769 (9th Cir. 2003). Federal courts possess the inherent power to vacate or amend a judgment obtained by fraud on the court, but that power is narrowly construed, applying only to fraud that defiles the court or is perpetrated by officers of the court. Dixon v. C.I.R., 316 F.3d 1041, 91 A.F.T.R.2d 2003-569 (9th Cir. 2003). Court has inherent authority to vacate judgment for fraud perpetrated on court. Chavez v. City of Albuquerque, 402 F.3d 1039 (10th Cir. 2005). Fraud on the court is fraud which is directed to the judicial machinery itself and is not fraud between the parties or fraudulent documents, false statements or perjury. U.S. v. Buck, 281 F.3d 1336 (10th Cir. 2002). "Fraud on the court" sufficient to warrant relief from judgment is fraud which is directed to the judicial machinery itself, and is not fraud between the parties or fraudulent documents, false statements or perjury; it is thus fraud where the court or a member is corrupted or influenced or influence is attempted, or where the judge has not performed his judicial functionthus, where the impartial functions of the court have been directly corrupted. Fed. Rules Civ. Proc. Rule 60(b), 28 U.S.C.A. Switzer v. Coan, 261 F.3d 985 (10th Cir. 2001). Fraud upon the court embraces only that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases that are presented for adjudication. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. Zakrzewski v. McDonough, 490 F.3d 1264 (11th Cir. 2007). See Travelers Indem. Co. v Gore (1985, CA11 Ga) 761 F2d 1549, 2 FR Serv 3d 502, 8[b]. Proper forum in which to assert that a party has perpetrated a fraud on the court is the court which allegedly was a victim of that fraud; independent action for damages cannot be maintained in a court that was not the one in which the alleged fraud was committed. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A.; West's F.S.A. RCP Rule 1.540. Florida Evergreen Foliage v. E.I. Dupont De Nemours and Co., 336 F. Supp. 2d 1239 (S.D. Fla. 2004).
Dixon v. C.I.R., 316 F.3d 1041, 91 A.F.T.R.2d 2003-569, 2003-1 USTC P 50,194, 54 Fed.R.Serv.3d 1111, 03 Cal. Daily Op. Serv. 537, 2003 Daily Journal D.A.R. 675 (9th Cir., Jan 17, 2003) assessed by the Internal Revenue Service (IRS). The United States Tax Court, 1999 WL 171398, entered judgment in favor of the IRS, upholding the deficiencies, and imposing additional penalties. Following discovery of secret settlement agreement between IRS counsel and certain taxpayers that was contingent on taxpayers not prevailing in case, taxpayers filed motion to vacate, which was denied by the United States Tax Court and taxpayers appealed. The Court of Appeals, 26 F.3d 105, reversed and remanded for evidentiary hearing. On remand, the United States Tax Court, reinstated the prior judgment in part, but relieved taxpayers of additional penalties and imposed costs and attorney fees on the IRS. Taxpayers again appealed. The Court of Appeals, Michael Daly Hawkins, Circuit Judge, held that: (1) IRS counsel committed intentional fraud on the Tax Court, and (2) judgment in favor of taxpayers equivalent to terms of secret

settlement was appropriate remedy. Reversed and remanded, with directions. [1] Internal Revenue 4710 220k4710Most Cited Cases The Court of Appeals reviews the Tax Court's refusal to grant a motion vacating a judgment on the basis of fraud on the court for abuse of discretion, mindful that only when the Court of Appeals has a definite and firm conviction that the Tax Court committed a clear error of judgment in the conclusion it reached is reversal appropriate. [2] Federal Civil Procedure 2654 170Ak2654Most Cited Cases Federal courts possess the inherent power to vacate or amend a judgment obtained by fraud on the court, but that power is narrowly construed, applying only to fraud that defiles the court or is perpetrated by officers of the court. [3] Federal Courts 921 170Bk921Most Cited Cases When the Court of Appeals concludes that the integrity of the judicial process has been harmed by a fraud on the court, and the fraud rises to the level of an unconscionable plan or scheme which is designed to improperly influence the court in its decisions, the Court of Appeals not only can act, it should. [4] Federal Civil Procedure 2654 170Ak2654Most Cited Cases Fraud on the court occurs when the misconduct harms the integrity of the judicial process, regardless of whether the opposing party is prejudiced; the perpetrator of the fraud should not be allowed to dispute the effectiveness of the fraud after the fact. [5] Internal Revenue 4655 220k4655Most Cited Cases [5] Internal Revenue 4755 220k4755Most Cited Cases Counsel for Internal Revenue Service (IRS) committed intentional fraud on the Tax Court, in taxpayers' action seeking redetermination of deficiencies assessed by IRS against taxpayers, requiring reversal of judgment in favor of IRS, upholding the deficiencies and imposing additional penalties; IRS counsel entered into secret settlement agreements with certain taxpayers, in exchange for their false testimony and cooperation in case, which corrupted the adversarial nature of the proceeding, the integrity of the witnesses, and the ability of the Tax Court to judge impartially, and violated the rights of the other taxpayers who agreed to be bound by the Tax Court decision. [6] Internal Revenue 4755 220k4755Most Cited Cases The Court of Appeals has the inherent power to vacate a judgment of the Tax Court based upon fraud, fashion an appropriate remedy, and sanction a party or its lawyers for willful abuse of the judicial process, particularly when the party or its lawyers have intentionally practiced a fraud upon the court.

[7] Internal Revenue 4755 220k4755Most Cited Cases Judgment in favor of taxpayers equivalent to prior secret settlements with certain taxpayers was appropriate remedy for Internal Revenue Service (IRS) counsel's commission of intentional fraud on the Tax Court, in taxpayers' action seeking redetermination of deficiencies assessed by IRS, by entering into secret settlement agreements with certain taxpayers, in exchange for their false testimony and cooperation in case. *1043 Before D.W. NELSON, HAWKINS and WARDLAW, Circuit Judges. OPINION MICHAEL DALY HAWKINS, Circuit Judge. "Truth needs no disguise." [FN1]

FN1. Justice Hugo Black in Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 247, 64 S.Ct. 997, 88 L.Ed. 1250 (1944), overruled on other grounds by Standard Oil v. United States, 429 U.S. 17,18, 97 S.Ct. 31, 50 L.Ed.2d 21 (1976). We must decide whether the Tax Court's finding of a pattern of government misconduct amounts to a fraud on the court and, if so, whether such a fraud requires a showing of prejudice to justify relief. We conclude that the misconduct, including its persistence and concealment, did indeed amount to a fraud on the court. **Consistent with Supreme Court authority and the law of this Circuit, we hold that no showing of prejudice is required and, for the reasons that follow, we reverse the Tax Court determination that these taxpayers are not entitled to relief. Factual Background & Procedural History During the 1970s and 1980s, a group of individual taxpayers participated in an investment program and tax shelter designed and administered by Honolulu businessman Henry Kersting ("Kersting"). The investments, which came to bear Kersting's name, consisted of a somewhat complicated program in which participants purchased stock with loans from Kersting-controlled entities financed by two layers of promissory notes. [FN2] Kersting marketed the product as a legitimate investment which would enable participants to claim interest deductions on their individual tax returns. When Kersting participants claimed those deductions, [FN3] the IRS issued notices of deficiency, disallowing all interest deductions taken, and reasoning that the underlying transactions were shams, the interest was not "paid or properly accrued," and the notes did not constitute a bona fide indebtedness. FN2. The Kersting investment consisted of the following: (i) corporate stock or stock subscription rights or investment certificates purchased by a loan from a Kersting company (a "Primary Note"); (ii) prepayment of interest on the Primary Note financed by a secondary or "leverage" note from another Kersting entity at a lower interest rate than the Primary Note; (iii) principal on the Primary Note paid by surrender of the stock or other underlying asset; and (iv) interest on the Primary Note paid by a distribution from the corporation whose stock was purchased with the Primary Note. Dixon v. Comm'r, 62 T.C.M. (CCH) 1440, 1454-62 (1991) (original Tax Court opinion). FN3. Deductions were claimed pursuant to 26 U.S.C. 163.

In a Tax Court action brought by Kersting on their behalf, program participants sought a redetermination of the deficiencies. Recognizing that the sheer number of affected taxpayers (approximately 1,800) made it impractical to try each case individually, the parties agreed to employ a "test case" approach to determine liability. To facilitate this process, the bulk of affected taxpayers signed stipulations ("piggyback agreements") agreeing to be bound by the decision of a test case trial involving representative taxpayers. The agreed-upon process provided that two representatives would be chosen by the taxpayers' attorneys and five by IRS attorneys. Approximately 1,300 taxpayers, some 500 already having settled, signed on to the piggyback agreements. The test cases proceeded to a consolidated one-month trial before the Tax Court sitting in Honolulu. **The Tax Court ultimately concluded that the taxpayers were *1044 liable for all assessed deficiencies and would be required to pay additional negligence and tax-motivated transaction penalties. **Crucial to this determination was the testimony of John R. Thompson ("Thompson"), the only taxpayer who testified that he believed the instruments creating the claimed interest would not be enforced. As it turns out, that which the Tax Court and other participants believed to be a legitimate, representative proceeding, binding on the test case petitioners and all those waiting in the wings, was anything but. Some time prior to the test case trial, **Kenneth W. McWade ("McWade"), the IRS attorney trying the case, and William A. Sims ("Sims"), the IRS attorney with supervisory authority over it, had entered into secret settlement agreements with Thompson and another test case petitioner, John R. Cravens ("Cravens"). Cravens was one of the taxpayer-selected test case representatives, chosen by taxpayer counsel because his payment of capital gains taxes upon exiting the Kersting investment program made him a particularly good representative. A condition of their settlements required Thompson and Cravens to remain test case petitioners. McWade also convinced Cravens, who mistakenly believed his liability was finalized by the settlement, to proceed pro se. With respect to Thompson, [FN4] McWade agreed to have Thompson's tax deficiencies reduced in proportion to his attorney's fees, which exceeded $60,000. **At no point did McWade or Sims reveal to the Tax Court or to any other taxpayer representative that two of the test case petitioners' cases had been settled, much less reveal the conditions imposed on them. FN4. Thompson had an ongoing dispute with Kersting over the validity of the investment certificates. Specifically, Kersting had threatened to initiate collection proceedings against Thompson. Therefore, Thompson had an interest in seeing that the certificates of investment were declared invalid and unenforceable. DeCastro, Thompson's attorney, used the test case proceeding to elicit testimony from Thompson regarding the sham nature of the notes in order to bolster Thompson's position in any subsequent litigation with Kersting. The deception continued with a cover-up, which was carefully designed to prevent the Tax Court and other taxpayers from learning of the secret settlement agreements. At Kersting's deposition, which McWade attended, Kersting's lawyer objected to the presence of Thompson's attorney because of rumors that Thompson was attempting to settle. **Knowing that Thompson had, in fact, already settled, McWade remained silent. **McWade then misled the Tax Court by failing to disclose the settlement when he moved to set aside the Thompson piggyback agreement, a pre-trial motion necessary to ensure Thompson's status as a test case petitioner. Deceptive silence

matured into overt misconduct when, during the course of the test case trial, it became apparent that Thompson was going to testify about his settlement. McWade quickly shifted his questions to unrelated matters. [FN5] FN5. In the Tax Court proceedings on remand, Judge Beghe pointed to the following exchange as evidence of this deception: Mr. Thompson: The procedure went through a tax firm in Los Angeles known as Loeb & Loeb, and I wound up with the DeCastro Law Corporation by way of their direction, and made several discoveries that were startling to me. And of course, I settled. To be quite honest, I had to get out of this. I was not going to spend my life-Mr. McWade: Well, let me-Mr. Thompson:--doing all this. Mr. McWade: Let me stop you here for a moment. Mr. Thompson: Okay. I'm sorry. I beg your pardon. Mr. McWade: Mr. Thompson, can you tell me: have we been successful in getting the lien removed from your house? Thompson's use of the word "settled" did not disclose the secret settlement between Thompson and the IRS because, in the original proceeding, Judge Goffe mistakenly interpreted the remark as referring to resolution of the Thompsons' tax liability for another year which was not at issue. Dixon v. Comm'r, 77 T.C.M. (CCH) 1630, n. 55. McWade did nothing to disabuse the court of its interpretation. *1045 McWade and Sims also secured an agreement with taxpayer Dennis Alexander [FN6] ("Alexander") whereby the IRS would reduce Alexander's tax deficiencies in exchange for testimony and trial preparation assistance. In accordance with this agreement, the IRS paid for Alexander's expenses in Hawaii for the length of the trial. McWade then filed a memorandum regarding the basis for the settlement of Alexander's tax liabilities which the Tax Court later found to be false. **During the test case trial, McWade also sat silently through testimony by Alexander that he knew to be false. [FN7] FN6. Alexander was then embroiled in a legal battle with Kersting involving more than $4 million. Alexander's animus towards Kersting was made clear in a letter to the IRS ("When the Nazi knows that 1400 of his clients are going to be clobbered and that he will have the Criminal Investigative Division of the IRS coming down on him, I think he will be inclined to pay me my money."). FN7. When one of the attorneys for the taxpayers asked Alexander if McWade had discussed a reduction of Alexander's tax deficiency in exchange for his testimony, Alexander responded, "Specifically, no." McWade failed to correct this patently false statement. The Tax Court's test case determination left the remaining taxpayers--those who had signed on to the piggyback agreements--subject to judgment on the same adverse terms. This is when the McWade-Sims house of cards began to collapse. Thompson and Cravens, who had sat silent while the Tax Court entered judgment against them, pressured McWade and Sims to live up to the terms of their secret settlement agreements. It was now clear that the IRS would have to move to set aside the Thompson and Cravens judgments; McWade and Sims were forced to reveal the secret settlements necessitating the Tax Court's entry of "revised" judgments in favor of Thompson and Cravens.

After being asked to approve the set aside motions, senior IRS officials determined that McWade and Sims had engaged in active misconduct and informed the Tax Court of the secret settlements, [FN8] asking for an evidentiary hearing to determine the extent of the damage. The Tax Court refused to hold an evidentiary hearing and proceeded to enforce the terms of the Thompson and Cravens settlements. The taxpayers appealed the refusal to this Court, which remanded with instructions to hold an evidentiary hearing. Dufresne v. Comm'r, 26 F.3d 105 (9th Cir.1994). FN8. As the Tax Court proceeding on remand revealed, this disclosure was anything but complete, excluding, for example, the arrangement to "pay" (through a reduction in disallowed deductions) $60,000 to Thompson for his attorney fees. On remand, the Tax Court conducted the mandated evidentiary hearing. **Incredibly, McWade's pattern of deception continued with his persistent denial that the Thompson settlement was a vehicle for paying Thompson's attorneys' fees and his testimony that the Thompson settlement was attributable to a separate transaction. After making extensive findings concerning the government's misconduct, the Tax Court surprisingly concluded that what had occurred was harmless error. While the bulk of the decision from the original test case proceeding was reinstated, the Tax Court did relieve the taxpayers of that portion of the original judgment which imposed increased interest penalties for negligence and "tax motivated transactions" and imposed costs and attorneys' fees on *1046 the IRS. From the Tax Court's refusal to vacate the adverse judgments against them, the taxpayers filed this timely appeal. We have jurisdiction pursuant to 26 U.S.C. 2482. Standard of Review [1] We review the Tax Court's refusal to grant a motion vacating a judgment on the basis of fraud on the court for abuse of discretion, Abatti v. Comm'r, 859 F.2d 115, 117 (9th Cir.1988); England v. Doyle, 281 F.2d 304,309 (9th Cir.1960), mindful that only when this Court has a "definite and firm conviction that the Tax Court committed a clear error of judgment in the conclusion it reached" is reversal appropriate. Abatti, 859 F.2d at 117. Discussion [2][3] Courts possess the inherent power to vacate or amend a judgment obtained by fraud on the court, Toscano v. CIR, 441 F.2d 930, 933 (9th Cir.1971), but that power is narrowly construed, applying only to **fraud that defiles the court or **is perpetrated by officers of the court. When we conclude that the integrity of the judicial process has been harmed, however, and the fraud rises to the level of "an unconscionable plan or scheme which is designed to improperly influence the court in its decisions," we not only can act, we should. England, 281 F.2d at 309;Levander v. Prober, 180 F.3d 1114, 1119 (9th Cir.1999); Intermagnetics Am., Inc. v. China Int'l Trust and Inv. Corp., 926 F.2d 912, 916-17 (9th Cir.1991). Here, the factual findings of the Tax Court support the conclusion that a fraud, plainly designed to corrupt the legitimacy of the truth-seeking process, was perpetrated on the trial court by McWade and Sims. The Tax Court, however, applied the wrong law when it imposed a requirement that taxpayers show prejudice as a result of the misconduct. Dixon v. Comm'r, 77 T.C.M. (CCH) 1630 (1999). [4] Prejudice is not an element of fraud on the court. Hazel-Atlas, 322 U.S. at 238, 64 S.Ct. 997;Pumphrey v. K.W. Thompson Tool Co., 62 F.3d 1128, 1132-33 (9th Cir.1995). [FN9] Fraud on the court occurs when the misconduct harms the integrity of the

judicial process, regardless of whether the opposing party is prejudiced. Alexander v. Robertson, 882 F.2d 421, 424 (9th Cir.1989) . Furthermore, the perpetrator of the fraud should not be allowed to dispute the effectiveness of the fraud after the fact. Hazel-Atlas, 322 U.S. at 247, 64 S.Ct. 997;Pumphrey, 62 F.3d at 1133. Because the Tax Court applied the wrong legal standard, it abused its discretion. See Paulson v. City of San Diego, 294 F.3d 1124, 1128 (9th Cir.2002) (en banc). FN9. The Seventh Circuit reached a contrary decision in Drobny v. Commissioner, 113 F.3d 670, 678-79 (7th Cir.1997). Drobny distinguishes Hazel-Atlas by claiming that Hazel-Atlas involved the general equitable powers of the federal courts as opposed to those of the Tax Court. Id. at n. 15. The Ninth Circuit, however, holds to the view that the application of the fraud on the court doctrine in the context of Tax Court cases is the same as applied in Article III courts. Toscano, 441 F.2d at 934;see also24 ALR Fed. 697 (1975) ("The construction and application of the phrase [fraud on the court] in other federal courts, as well as its use in Rule 60(b), although not binding in Tax Court cases, have been considered helpful when it has been necessary to apply the phrase in regard to possible vacation of final Tax Court decisions."). [5] As the Supreme Court observed more than fifty years ago, "[t]ruth needs no disguise." Hazel-Atlas, 322 U.S. at 247, 64 S.Ct. 997. There can be no question here but that the actions of McWade and Sims amounted to a fraud on both the taxpayers and the Tax Court. The Tax Court believed it was hearing a legitimate *1047 adversarial dispute when, in fact, the proceeding was a charade fraught with concealed motives, hidden payments, and false testimony. What did occur was clearly designed to defile the court itself, and there is no question that it was carried out by an officer of the court. Toscano, 441 F.2d at 933. Such fraud corrupts the adversarial nature of the proceeding, the integrity of witnesses, and the ability of the trial court to judge impartially. See England, 281 F.2d 304. This harm is noteworthy not only because it defiled the sanctity of the court and the confidence of all future litigants, but also because it violated the rights of the test case petitioners and the more than 1,300 taxpayers who agreed to be bound by the outcome of the Tax Court proceeding. See Levander, 180 F.3d at 1118 ("[T]ampering with the administration of justice in this manner involves far more than an injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public."). As such, the taxpayers have clearly and convincingly demonstrated fraud on the court and are entitled to relief. Remedy [6][7] We have the inherent power to vacate the judgment of the Tax Court, fashion an appropriate remedy, Chambers v. NASCO, Inc., 501 U.S. 32, 44-45, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991); Hazel-Atlas, 322 U.S. at 250, 64 S.Ct. 997; Fink v. Gomez, 239 F.3d 989, 992 (9th Cir.2001), and sanction a party or its lawyers for willful abuse of the judicial process, particularly when the party or its lawyers have intentionally practiced a fraud upon the court. Levander, 180 F.3d at 1119;see also Gomez v. Vernon, 255 F.3d 1118, 1133-34 (9th Cir.2001). This power, however, is to be "exercised with restraint and discretion." Roadway Express, Inc. v. Piper, 447 U.S. 752, 765, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980). Here, it plainly would be unjust to remand for a new, third trial. The IRS had an opportunity to present its case fairly and properly. Instead its lawyers intentionally defrauded the Tax Court. The Tax Court had two opportunities to equitably resolve this situation and failed. Enormous amounts of time and judicial resources have been wasted. In addition, the IRS has done little to punish the

misconduct [FN10] and even less to dissuade future abuse. The taxpayers should not be forced to endure another trial and the IRS should be sanctioned for this extreme misconduct. FN10. McWade and Sims were both suspended for two weeks without pay and transferred out of the Honolulu division. Sims accepted this censure and was transferred to the San Francisco Regional Counsel Office, where he was assigned nonsupervisory duties. McWade retired from the IRS, choosing not to accept the terms of the proposed disciplinary action but keeping the $1,000 bonus earlier paid him for his performance in the original Tax Court proceedings. We note that counsel for the Hongsermeier test case petitioners recently filed a grievance against McWade and Sims with the attorneys' respective Bars. Conversely, we will not enter judgment eradicating all tax liability of these taxpayers. Such an extreme sanction, while within the court's power, is not warranted under these facts. See Chambers, 501 U.S. at 45, 111 S.Ct. 2123. Instead, we remand to the trial court with directions to enter judgment in favor of Appellants and all other taxpayers properly before this Court on terms equivalent to those provided in the settlement agreement with Thompson and the IRS. [FN11] FN11. We leave to the Tax Court's discretion the fashioning of such judgments which, to the extent possible and practicable, should put these taxpayers in the same position as provided for in the Thompson settlement. *1048Conclusion The judgment of the Tax Court is reversed with directions to set aside the decision in Dixon v. Comm'r, 62 T.C.M. (CCH) 1440, [FN12] and to enter judgment in favor of Appellants consistent with this opinion. FN12. This is the judgment entered following the original Tax Court proceeding, which bound the remaining "piggyback" taxpayers. This judgment was reinstated, with modification, following the Tax Court proceeding on remand. Dixon v. Comm'r, 77 T.C.M. (CCH) 1630. REVERSED AND REMANDED WITH DIRECTIONS.

Toscano v. C. I. R., 441 F.2d 930, 24 A.L.R. Fed. 683, 27 A.F.T.R.2d 71-1308, 71-1 USTC P 9382 (9th Cir.,Apr 28, 1971) Taxpayer and litigant commits fraud on the court by filing a joint return that represents as true that person with which whom he had filed was his wife when in fact that statement is false. Appeal from decision of the tax court. The Court of Appeals, Duniway, Circuit Judge, held that taxpayer's claim that person with whom she had filed joint return was not her husband and that her signatures on the joint returns were either forged or were placed there by her under duress alleged two frauds, **one upon the Commissioner and **one upon taxpayer, and when person filing the returns petitioned tax court for redetermination which culminated in determination of joint deficiencies against **taxpayer as well as himself, **he committed fraud on the court and tax court should have exercised its power to grant leave to taxpayer to file motion to vacate its decision. Decision vacated with directions. Byrne, District Judge, dissented and filed opinion.

[1] Internal Revenue 220

4664.1

220 Internal Revenue 220XXI Assessment of Taxes 220XXI(E) Review by Tax Court 220k4664 Decisions and Orders 220k4664.1 k. In General. Most Cited Cases (Formerly 220k4664, 220k1570) Tax court can reopen its decision on basis of fraud on the court. 26 U.S.C.A. (I.R.C.1954) 7481. [2] Internal Revenue 220 4664.1

220 Internal Revenue 220XXI Assessment of Taxes 220XXI(E) Review by Tax Court 220k4664 Decisions and Orders 220k4664.1 k. In General. Most Cited Cases (Formerly 220k4664, 220k1570) Taxpayer's claim that person with whom she had filed joint return was not her husband and that her signatures on the joint returns were either forged or were placed there by her under duress alleged two frauds, one upon the Commissioner and one upon taxpayer, and when person filing the returns petitioned tax court for redetermination which culminated in determination of joint deficiencies against taxpayer as well as himself, he committed fraud on the court and tax court should have exercised its power to grant leave to taxpayer to file motion to vacate its decision. Tax Court Rules, rule 19(f), 26 U.S.C.A. (I.R.C.1954) 7453; Fed.Rules Civ.Proc. rule 60(b), 28 U.S.C.A. [3] Internal Revenue 220 4664.1

220 Internal Revenue 220XXI Assessment of Taxes 220XXI(E) Review by Tax Court 220k4664 Decisions and Orders 220k4664.1 k. In General. Most Cited Cases (Formerly 220k4664, 220k1570) Where tax court in 1955 rendered decision determining deficiencies in income taxes of taxpayer and another person on a joint return basis and in 1968 taxpayer moved for special leave to file motion to vacate the 1955 decision on ground that decision was procured by fraud on the court in that taxpayer had never been married to other person named in joint returns, taxpayer's showing was strong enough to require a hearing, as against Commissioner's contention that there was gross neglect in not filing the motion sooner. Tax Court Rules, rule 19(f), 26 U.S.C.A. (I.R.C.1954) 7453; Fed.Rules Civ.Proc. rule 60(b), 28 U.S.C.A. Before CHAMBERS and DUNIWAY, Circuit Judges, and BYRNE, District judge. FN* FN* Honorable William M. Byrne, United States District Judge, Central District of California, sitting by designation. DUNIWAY, Circuit Judge: This case presents two question: **1. Did the Tax Court have jurisdiction, after its decision had become final under 26 U.S.C 7481, to grant

leave to *931 file a motion to vacate its decision on the ground of fraud on the court? **2. If the Tax Court had such jurisdiction, should it have granted leave and afforded the taxpayer an evidentiary hearing in this case? We answer both questions in the affirmative and remand to the Tax Court for further proceedings. The question arises in this way. One John J. Toscano, with whom petitioner Josephine D. Zelasko was then living, but to whom she claims that she was never married, filed joint income tax returns for the two of them, as husband and wife, for the years 1946 through 1950. The Commissioner assessed deficiencies. A joint petition was filed with the Tax Court, and a settlement stipulation was filed with that court, on the basis of which deficiencies were determined for 1947, 1949, and 1950. Decision was entered March 28, 1955. It became final three months later (26 U.S.C. 7483), no petition for review having been filed (26 U.S.C. 7481). Miss Zelasko alleges, and has submitted considerable documentary evidence to support her allegations, **that she never was married to Toscano. She says that her signatures on the joint returns were either **forged by Toscano, or **were placed there by her under duress. The duress consisted of either the threat of brutal physical beatings, or actual beatings. Toscano ran a restaurant in Los Angeles at various locations from 1943 or 1944 until 1954. Miss Zelasko never had any interest in Toscano's ventures and received none of their profits. She did all the cooking, cleaning and scrubbing at the restaurants, slept on a cot in the restaurant building, and lived in constant fear of Toscano. In 1954, Toscano moved to Nevada, where he lived with another woman. While Miss Zelasko and Toscano were living in Los Angeles, he represented that they had been married in Arkansas in 1943, while he was stationed there in the army. **Her counsel, however, presented evidence that demonstrates that no such marriage occurred. Nor were they ever married in California or elsewhere. In 1954 Toscano obtained a Nevada divorce from Miss Zelasko. He alleged a 1943 Arkansas marriage. An answer to his complaint was filed by a Las Vegas attorney, purporting to appear for Miss Zelasko. **However, he had no authority to do so, and she never signed any appearance, never had any contact with the attorney, and never authorized him to appear for her. In 1953, the Commissioner assessed deficiencies against Toscano and his wife, Miss Zelasko. She, however, never received or saw a copy of the notice of deficiencies. Toscano, on October 7, 1953, filed a joint petition for redetermination. The Commissioner answered, and on January 18, 1954, Toscano filed a joint reply. He told his attorney that he and Miss Zelasko had been married in Arkansas. On March 21, 1955, Toscano permitted his attorney to enter into a stipulation with the Commissioner, on a joint return basis. The stipulation admitted certain deficiencies. This is the basis for the Tax Court decision. Toscano died in 1962. The Commissioner then sought to collect from Miss Zelasko- attempts which finally resulted in the present proceedings.FN1 Miss Zelasko*932 alleges that she has no recollection of signing the petition or any paper that was filed with the Tax Court, that she did not knowingly participate in the Tax Court proceedings, and that, until the Commissioner levied on her assets, she had no knowledge that any deficiencies had been assessed against her. FN1. The present proceeding is not Miss Zelasko's first attempt to obtain relief. On January 23, 1964, she filed an action in the United States District Court for the District of Nevada at Las Vegas, seeking to enjoin the District Director of Internal Revenue from attempting to collect the deficiencies from her. The District Court dismissed, Enterprises Unlimited, Inc. v. Davis, 1964, 64-1 U.S.T.C. P9431, and we affirmed, Enterprises Unlimited, Inc. v. Davis, 9 Cir., 1965, 340 F.2d 472. We pointed out that a civil action for a refund was available, and that the District Court has no jurisdiction to review the decision of the Tax Court. Thereafter, the deficiency assessment for 1949 was paid, and an action for refund was filed. This was dismissed without prejudice, by stipulation, so that relief could be sought in the Tax Court. The refund action was refiled on July 7, 1968, and is still pending, the Court having stayed it pending the present appeal. 1. Can the Tax Court Reopen its Decision On the Basis of Fraud On the Court?

[1] Section 7481 of the Internal Revenue Code, 26 U.S.C., contains an elaborate set of rules as to when a decision of the Tax Court is final. It covers all stages of review, from failure to petition the Court of Appeals for review (subsection (1)), applicable here, through various stages of review, including review by the Supreme Court and proceedings on remand from that Court. The legislative history shows that Congress was conscious of the need that finality be clearly defined, so that the process of collection can proceed unimpeded. Court decisions, supporting this objective, have been strict in applying the statute. The Supreme Court has held that it cannot entertain a petition for rehearing in a case in which it had affirmed the Board of Tax Appeals, when the petition is filed after the Board's statutory finality date, but during the time for filing a petition for rehearing established by the Court's Rules. Helvering v. Northern Coal Co., 1934, 293 U.S. 191, 55 S.Ct. 3, 79 L.Ed. 281. See also R. Simpson & Co. v. C.I.R., 1944, 321 U.S. 225, 64 S.Ct. 496, 88 L.Ed. 688; Lasky v. C.I.R., 1957, 352 U.S. 1027, 77 S.Ct. 594, 1 L.Ed.2d 598, aff'g per curiam, 9 Cir., 1955, 235 F.2d 97. The Courts of Appeals have been equally strict. They have held that once statutory finality has attached, the Tax Court (or Board of Tax Appeals) cannot reopen on any of various grounds that have been urged: fraud, Jefferson Loan Co. v. C.I.R., 8 Cir., 1957, 249 F.2d 364; reformation of a stipulation, Lentin v. C.I.R., 7 Cir., 1957, 243 F.2d 907; id, 237 F.2d 5; newly discovered evidence, Kutner v. C.I.R., 7 Cir., 1957, 245 F.2d 462; excusable neglect, Lasky v. C.I.R., 9 Cir., 1956, 235 F.2d 97, affirmed, 1957, 352 U.S. 1027, 77 S.Ct. 594, 1 L.Ed.2d 598; Monjar v. C.I.R., 2 Cir., 1944, 140 F.2d 263; McCarthy v. C.I.R., 7 Cir., 1943, 139 F.2d 20; intervening change in the law, White's Will v. C.I.R., 3 Cir., 1944, 142 F.2d 746; Denholm & McKay Co. v. C.I.R., 1 Cir., 1942, 132 F.2d 243; Sweet v. C.I.R., 10 Cir., 1941, 120 F.2d 77; failure of Commissioner to follow mandate of the Circuit Court of Appeals, Crews v. C.I.R., 10 Cir., 1941, 120 F.2d 749; ground not stated, swall v. C.I.R., 9 Cir., 1941, 122 F.2d 324. Nor can a comparasuit, result be had by an independent lawsuit, Schaffner v. Bingler, 3 Cir., 1959, 268 F.2d 76 (alternative holding); Jefferson Loan Co. v. Arundell, 1959, 106 U.S.App.D.C. 370, 273 F.2d 105. There are but three cases to the contrary: Kenner v. C.I.R., 7 Cir., 1968, 387 F.2d 689, involving claimed fraud on the court, Reo Motors, Inc. v. C.I.R., 6 Cir., 1955, 219 F.2d 610, involving mutual mistake, and La Floridienne J. Buttgenbach & Co. v. C.I.R., 5 Cir., 1933, 63 F.2d 630, where there was a stipulation to reopen. This court in Lasky, supra, which was affirmed by the Supreme Court, criticized and refused to follow Reo Motors and La Floridienne, supra, we also criticized La Floridienne in Swall, supra. So did the First Circuit in Sweet, supra. The Second Circuit in Monjar, supra, distinguished it as a consent case; the Third expressed doubts about it in White's Will, supra. So far as we know Kenner v. C.I.R., supra, has not yet been criticized by any court. The Kenner opinion states that the Tax Court does have jurisdiction to set aside a final decision for fraud on the court. It bases this view in part on several cases that state that the Tax *933 Court is (now, at least) more than a mere administrative agency, as we described it in Lasky, but in fact exercises judicial powers, Stern v. C.I.R., 3 Cir., 1954, 215 F.2d 701, 707-708; Reo Motors v. C.I.R., supra; Fairmount Aluminum Co. v. C.I.R., 4 Cir., 1955, 222 F.2d 622; Louisville Builders Supply Co. v. C.I.R., 6 Cir., 1961, 294 F.2d 333; MacRae v. Riddell, 9 Cir., 1965, 350 F.2d 291. Thus the Tax Court differs from its predecessor, the Board of Tax Appeals, which was held not to be a court and to have no equitable powers. C.I.R. v. Gooch Milling & Elev. Co., 1943, 320 U.S. 418, 64 S.Ct. 184, 88 L.Ed. 139. None of the cases cited in Kenner, however, involved setting aside a final decision, except Reo Motors, which was not followed by us or by the Supreme Court in Lasky. And Louisville Builders Supply denied one equitable power to the Tax Court, the power to order the taking of a deposition in anticipation of a case that might later come before it. Thus precedent for the view of the Kenner court is sparse. It concluded that a decision obtained by fraud on the Tax Court can be set aside by it at any time because it is not a decision at all-a view strongly supported, as applied to the Court of Appeals, by the Supreme Court in Hazel-Atlas Glass Co. v. Hartford Empire Co., 1944, 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250. And it relied in part on the fact that the Commissioner conceded that the power exists. However, Kenner also held that fraud on the court had not been shown. The Commissioner makes the same concession as to the power of the Tax Court here, citing Kenner. Under these circumstances, we hold that the Tax Court can, after its decision becomes final, set it aside on the narrow ground of fraud on the court, as expounded in Hazel-Atlas, supra. 2. Should the Tax Court Have Exercised its Power Here?

[2] The Tax Court's Rule 19(f) provides: (f) No motion to vacate or revise a decision may be filed more than 30 days after the decision has been entered, except by special leave. Miss Zelasko's motion was for special leave under this rule. The Tax Court denied leave. In so doing, that court indicated that it believed that, assuming the truth of Miss Zelasko's allegations, she had not shown a fraud on the court, but merely a fraud on herself or on the Commissioner. If that view is correct, then the decision must be affirmed. **We are of the opinion, however, that the allegations of the motion and of the supporting documents do show a fraud on the Tax Court. The distinction between **fraud on the one hand and **fraud on the court on the other is by no means clear, and most attempts to state it seem to us to be merely compilations of words that do not clarify. Mo. Moore has made a valiant attempt at definition in the portion of his treatise that deals with Rule 60(b), F.R.Civ.P., which uses the phrase fraud upon the court. He discusses the problem at length (7 Moore's Federal Practice, 2d ed. 1970, 60.33, pp. 504-13), and concludes as follows (p. 512-13): Fraud upon the court' should, we believe, embrace only that species of fraud which does, or attempts to, defile the court itself, or is a fraud perpertrated by officers of the court so that the judicial machinery can not perform in the usual manner its impartial task of adjuding cases that are presented for adjudication. Fraud, inter partes, without more, should not be a fraud upon the court, but redress should be left to a motion under 60(b)(3) or to the independent action.' Because there is here no charge of corruption of the court itself (cf. Root Refining Co. v. Universal Oil Products Co., 3 Cir., 1948, 169 F.2d 514), we do not find the foregoing very helpful. What is meant by defile the court itself? What is meant by fraud perpetrated by officers of the court? Does *934 this include attorneys? Does it include the case in which an attorney is deceived by his client, and is thus led to deceive the court? The most that we can get out of Moore's definition is that the phrase fraud on the court should be read narrowly, in the interest of perserving the finality of judgments, which is an important legal and social interest. We agree, but do not find this of much help to us in deciding the question before us. This court and others have also attempted definitions. In Keys v. Dunbar, 9 Cir., 1969, 405 F.2d 955, 957-958 we said that the acts of the adverse party must be such as prevented the losing party from fully and fairly presenting his case or defense, citing Atchison, Topeka and Santa Fe Railway Co. v. Barrett, 9 Cir., 1957, 246 F.2d 846, 849, where we said the same thing. Neither case is comparable to the present case; each involved a claim that false evidence had been presented; in each, the complaining party had had a chance to meet it. In each, relief was denied. In England v. Doyle, 9 Cir., 1960, 281 F.2d 304, 309, we said that it is necessary to show an unconscionable plan or scheme which is designed to improperly influence the court in its decision. We found no such scheme there. The problem is, how broadly is the foregoing language to be read? See also Independence Lead Mines Co. v. Kingsbury, 9 Cir., 1949, 175 F.2d 983, which involved a stipulated judgment in a contested case. The present case seems to us to fall within the Keys and Barrett language. Miss Zelasko's claim is that she was prevented from presenting her defense at all, much less fully or fairly. The Second Circuit, in Martina Theatre Corp. v. Schine Chain Theatres, Inc., 1960, 278 F.2d 798, 801, quoted and applied Moore's language to a dismissal of an action pursuant to stipulation, and denied relief. But there, both parties were before the court; one claimed that it had been deceived by the other. The court felt that the moving party had also been guilty of deception. **Here, Miss Zelasko claims that she was never really before the court. If what she claims is true, she can hardly be accused of deceiving the court. See also Hawkins v. Lindsley, 2 Cir., 1964, 327 F.2d 356, 359, which cites and follows Martina Theatre in a somewhat comparable situation. As Mr. Moore recognizes, the leading case dealing with fraud on the court is Hazel-Atlas Glass Co. v. HartfordEmpire Co., 1944, 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250. We think that the case before us falls within the principles there applied, whatever words may be used to describe them. In Hazel-Atlas, a party seeking a patent, when confronted with apparently insurmountable Patent Office opposition, procured the publication in a trade journal of an article purportedly by a supposedly distinguished expert, but actually written by the party's attorney,

describing the device as a remarkable advance in the art. The patent issued. Later, the patentee sued for infringement. It lost in the District Court. On appeal, it relied heavily on the spurious article and obtained a reversal. The losing party, following an investigation and long after the judgment was final, moved in the Court of Appeals for an order permitting it to seek, in the District Court, an order setting aside the judgment entered pursuant to the mandate of the Court of Appeals. The motion was denied. **On certiorari, the Supreme Court reversed, directing the Court of Appeals to set aside its judgment, recall its mandate, dismiss the original appeal, require reinstatement of the original judgment, and take other appropriate action. In so doing, the court said (pp. 245-246, 64 S.Ct. at p. 1001): Every element of the fraud here disclosed demands the exercise of the historic power of equity to set aside fraudulently begotten judgments. This is not simply a case of a judgment obtained with the aid of a witness who, on the basis of after-discovered evidence, is believed possibly to have been guilty of perjury. **Here, even if we consider nothing but Hartford's*935 sworn admissions, we find a deliberately planned and carefully executed scheme to defraud not only the Patent Office but the Circuit Court of Appeals. Cf. Marshall v. Holmes, 141 U.S. 589, 12 S.Ct. 62, 35 L.Ed. 870, supra. Proof of the scheme, and of its complete success up to date, is conclusive. Cf. United States v. Throckmorton, 98 U.S. 61, 25 L.Ed. 93, supra. And no equities have intervened through transfer of the fraudulently procured patent or judgment to an innocent purchaser. Cf. Ibid; Hopkins v. Hebard, 235 U.S. 287, 35 S.Ct. 26, 59 L.Ed. 232. The Court also held that the moving party was not barred by lack of diligence, although it took over 10 years to uncover the fraud after first becoming suspicious. The Court said (p. 246, 64 S.Ct. at p. 1001): But even if Hazel did not exercise the highest degree of diligence, Hartford's fraud cannot be condoned for that reason alone. This matter does not concern only private parties. **These are issues of great moment to the public in a patent suit. Mercoid Corporation v. Mid-Continent Investment Co., 320 U.S. 661, 64 S.Ct. 268, 88 L.Ed. 376; Moron Salt Co. v. G. S. Suppiger Co., 314 U.S. 488, 62 S.Ct. 402, 86 L.Ed. 363. Furthermore, tampering with the administration of justice in the manner indisputably shown here involves far more than an injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public, institutions in which fraud cannot complacently be tolerated consistently with the good order of society. Surely it cannot be that preservation of the integrity of the judicial process must always wait upon the diligence of litigants. The public welfare demands that the agencies of public justice be not so impotent that they must always be mute and helpless victims of deception and fraud. In the case before us, the original fraud was not upon the Tax Court, but upon the Commissioner, just as in Hazel-Atlas it was upon the Patent Office. It is alleged that Toscano had income but that Miss Zelasko had none. If Toscano was not married to Miss Zelasko, he had no right to file joint returns. Filing joint returns was an obvious way for him to make it appear that he owed less taxes than the law required him to pay. It is alleged that to obtain this result he resorted to both forgery and duress. Moreover, if he was not married to her, she was not liable for his taxes. **Thus he perpetrated two frauds, **one upon the Commissioner, **the other on Miss Zelasko. The spurious claim of an Arkansas marriage and the spurious Nevada divorce both would lend verisimilitude to the claimed right to file joint returns, whatever other considerations may also have motivated them. They are somewhat analogous to the things that went on while the fraud in Hazel-Atlas was being investigated. See 322 U.S. at 241-243, 64 S.Ct. 997. When a deficiency was assessed, and Toscano petitioned the Tax Court for redetermination, **he carried the fraud into the Tax Court. Thus he was continuing to defraud the Commissioner, and he was continuing to attempt to subject Miss Zelasko to a liability that was not hers. But he was doing more; **he was also perpetrating a fraud upon the Tax Court, which culminated in a determination of joint deficiencies against Miss Zelasko as well as himself. **This, we think, was as much a fraud on the court as was the use of the spurious article in the Court of Appeals in Hazel-Atlas. **We have heretofore held that if a husband procures his wife's signature in a joint return by duress, this is a fraud upon the wife, and warrants setting aside a deficiency assessed against her. Furnish v. C.I.R., 1958, 262 F.2d

727, 733-734.FN2 **The second circuit has held *936 that a joint return filed by the husband but not signed by the wife, or bearing a forgery of her signature, or bearing her signature given under duress, cannot impose liability upon her for his taxes. Bauer v. Foley, 2 Cir. 1968, 404 F.2d 1215, and supplemental opinion, 1969, 408 F.2d 1331.FN3 In that case, the joint notice of deficiency was mailed only to the husband, under 26 U.S.C. 6212(b)(2) (1964 ed.). The court did not disapprove this practice in the usual case, where the return is in fact joint. But it did say, 404 F.2d at p. 1220: FN2. Persons who are not married have no right to file joint returns, thereby reducing their taxes. See Gersten, 1956, 28 T.C. 756, 770-771, aff'd, 9 Cir., 1959, 267 F.2d 195, 199-200; Estate of Buckley, 1962, 37 T.C. 664, 672-673; Untermann, 1962, 38 T.C. 93; Borax, 1963, 40 T.C. 1001, 1009-1010. FN3. See also Brown, 1968, 51 T.C. 116. But the basic issue is not whether the Government had a right to compute and send out a notice of deficiency before it had examined into and discovered whether or not the signatures on the returns were genuine and that the filing was not the result of duress- a procedure which would impose an intolerable burden on the collection of taxesbut was, rather, whether or not the taxpayer wife, after gaining actual knowledge of the assessment, long after the only statutory remedy which she could invoke had expired, had a right to be heard and an opportunity to show that her signatures had been forged or obtained by duress. The consequence of the Government's and the lower court's interpretation of the applicable statutes to the facts of this case is that, so long as a 6212(b) (2) notice is mailed, a taxpayer wife is irrevocably bound by the forgery and duress of her husband and is subject to having all of her property confiscated by the Government, though she never had any taxable income of her own, and never became party to a joint return. This is to say that, even if the taxpayer can conclusively prove that her signature was forged or a joint return containing her signature was signed and filed under duress, she still, as a matter of law, is liable for the tax on her husband's income. But a single joint notice of deficiency is effective in imposing liability only in the case of a joint income tax return filed by husband and wife. * * *. We think that this language means that the return contains the genuine signatures of both, unless signed by a duly authorized agent, and that neither was made under duress and that both intended that it be filed as the law requires. Moreover, it seems unreasonable to hold that Congress had in mind that the mailing of a single joint notice would operate, in the case of a forged or coerced joint return, to bar the party having no knowledge of it during the period for petitions for redetermination from ever being heard. Such a harsh result would conflict with the wellestablished objective of the notice provisions which is fairness to the taxpayer in affording him the opportunity to challenge an alleged deficiency in the Tax Court before he has to pay it. See, e.g., DeWelles v. United States, 378 F.2d 37, 38-39 (9 Cir., 1967).' Here, Miss Zelasko claims that the fraud was carried forward by Toscano's having his attorney stipulate to joint deficiencies, on the basis of which the decision was entered. She disclaims retaining the attorney or authorizing him to stipulate in her behalf. If she can prove these claims, she has never had her day in court. [3] The Commissioner also argues that the Tax Court's decision should be upheld on an independent ground, that the Court has discretion to grant or deny leave under its rule, and that it properly exercised that discretion. It argues that there was gross neglect in not filing the motion sooner, and that the record shows that Miss Zelasko knowingly joined in the stipulation. As to the first argument, what the Supreme *937 Court said in Hazel-Atlas, supra, is pertinent. As to the second, we think that Miss Zelasko's showing is strong enough to require a hearing. In this case, as in Furnish, supra, we think that the Tax Court should determine the issues raised on their merits. The decision of the Tax Court is vacated with directions to grant leave under its Rule 19(f), to hold an evidentiary hearing, and for further proceedings consistent with this opinion.

Appling v. State Farm Mut. Auto. Ins. Co., 340 F.3d 769, 148 Lab.Cas. P 59,770, 03 Cal. Daily Op. Serv. 7243, 2003 Daily Journal D.A.R. 9071 (9th Cir.(Cal.) Aug 13, 2003)

Fraud upon the court not found. [13] Federal Courts 170B 813

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(K) Scope, Standards, and Extent 170BVIII(K)4 Discretion of Lower Court 170Bk813 k. Allowance of Remedy and Matters of Procedure in General. Most Cited Cases The Court of Appeals reviews a district court's decision to deny equitable relief for an abuse of discretion. [14] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases The basis for an independent action to set aside a judgment for fraud on the court lies in misconduct that harms the integrity of the judicial process; fraud upon the court embraces only that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery can not perform in the usual manner its impartial task of adjudging cases that are presented for adjudication. [15] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Non-disclosure, or perjury by a party or witness, does not, by itself, amount to fraud on the court. [16] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Alleged conduct by attorney for insurance company of responding on behalf of former insurance company executive, without the executive's permission, to a subpoena regarding documents concerning the subject matter of breach of contract action brought by agents against insurance company did not constitute a fraud on the court, given that the conduct was aimed only at the agents and did not disrupt the judicial process because the agents through due diligence could have discovered the non-disclosure, and, even if the nondisclosure worked an injustice, it did not work a grave miscarriage of justice, as required to constitute a fraud on the court. Before B. FLETCHER, KOZINSKI, and TROTT, Circuit Judges. Opinion by Judge TROTT; Dissent by Judge BETTY B. FLETCHER

OPINION TROTT, Circuit Judge. **Plaintiffs-Appellants (Agents) are independent-contractor insurance agents who sold insurance products for **the State Farm group of insurance companies (State Farm).FN1 **Each Agent has or had an independentcontractor agreement with State Farm (contract).FN2 FN1. The State Farm group of insurance companies are **(1) State Farm Mutual Automobile Insurance Company, **(2) State Farm Fire and Casualty Company, **(3) State Farm Life Insurance Company, and** (4) State Farm General Insurance Company. FN2. State Farm has modified the contract from time to time; however, each of the Agents had the AA660 (introduced in 1966), AA3 (introduced in 1977), or AA4 (introduced in 1982) version of the contract. Because the changes in the versions of the contract do not affect our analysis, we refer to all three versions as the contract. This consolidated appeal arises from **an action the Agents brought in district court alleging that State Farm breached the contract (breach of contract action). The district court granted summary judgment in favor of State Farm on July 3, 2000. The Agents appeal this decision in Case No. 00-16521, arguing that the district court abused its discretion by not applying collateral estoppel against State Farm based on our unpublished decision in Sandberg v. State Farm Mut. Auto. Ins. Co., 182 F.3d 927 (9th Cir.1999) (mem. disposition), cert. denied, 528 U.S. 1118, 120 S.Ct. 938, 145 L.Ed.2d 816 (2000). The Agents also argue that a genuine issue of material fact exists as to: **(1) whether the contract's termination provision required good cause before State Farm could terminate its agents; **(2) whether State Farm breached the implied covenant of good faith and fair dealing by terminating some of the Agents; **(3) whether the contract's provision granting State Farm the right to prescribe rules governing the binding, acceptance, renewal, rejection, or cancellation of risks allowed State Farm to implement a program that limited its risk exposure in certain geographic locations; and **(4) whether State Farm breached the implied covenant of good faith and fair dealing by not giving the Agents permission to place rejected business with other insurance carriers. We have jurisdiction under 28 U.S.C. 1291, and we affirm because we hold that there are no genuine issues of material fact on any of these claims. *773 On August 20, 2001, the Agents brought **an independent action (independent action) to set aside part of the summary judgment in their failed breach of contract action. In the independent action, Case No. 02-16452, the Agents alleged as a ground for relief that State Farm's counsel, Orrick, Herrington & Sutcliffe LLP (Orrick), committed fraud on the district court by (1) responding to a subpoena for information from a retired State Farm executive without the executive's permission, and (2) assuring the Agents' counsel that the retired executive did not have any documents or knowledge concerning the subject matter of the litigation. The district court dismissed the independent action pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. We have jurisdiction under 28 U.S.C. 1291, and we affirm because we hold that Orrick's actions do not amount to fraud on the district court.
At p. 774,

B. The basis for the Agents' independent action involved Orrick's response to an October 1998 subpoena issue in the breach of contract action and served on Henry Keller (Keller), a former State Farm executive who retired in 1976. The subpoena sought the following information: **1. Any and all documents regarding [State Farm] ... from, and including, January 1, 1988 to the present. **2. Any and all correspondence with any representative, employee, officer, director, agent, consultant or and all other persons working for or with [State Farm] ... from, and including, January 1, 1988 to present. **Keller contacted State Farm about the subpoena, and State Farm assured him they would handle the matter on his behalf. On November 9, 1998, Orrick responded to the subpoena on Keller's behalf by objecting to it. The

Agents also allege that during a break at a deposition on November 19, 1998, Orrick assured their counsel that Keller did not have any documents or knowledge concerning the subject matter of the litigation. In January 2001, six months after the district court entered its summary judgment in the breach of contract action, **the Agents discovered that Keller had not authorized State Farm to respond on his behalf, and was never shown a copy of the objections or consulted with respect to their contents. On August 20, 2001, the Agents brought the independent action to set aside the portion of the summary judgment in the breach of contract action relating to the Termination Provision. The Agents asserted that Orrick's actions regarding Keller were fraud on the court and that, without the fraud, Keller would have produced: **(1) a 1997 letter Keller wrote to State Farm's President and CEO criticizing State Farm's handling of a new form contract; **(2) a 1988 videotape interview of Keller, in which Keller states that the 1966 revision of the Termination Provision was in response to agent concerns about arbitrary terminations; and **(3) a statement Keller made discussing the 1966 revision. **The district court dismissed the independent action, holding that Orrick's actions regarding Keller were not fraud on the court.

At p. 780,

II Case No. 02-16452-The Agents' Appeal From the District Court's Dismissal of Their Independent Action for Failure to State a Claim [13] We review de novo a dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Lipton v. Pathogenesis Corp., 284 F.3d 1027, 1035 (9th Cir.2002). However, an independent action to set aside a prior judgment is based on equity. In re Levander, 180 F.3d 1114, 1118 (9th Cir.1999). We review a district court's decision to deny equitable relief for an abuse of discretion. Levi Strauss & Co. v. Shilon, 121 F.3d 1309, 1313 (9th Cir.1997). Federal Rule of Civil Procedure 60(b) preserves the district court's right to hear an independent action to set aside a judgment for fraud on the court. An independent action to set aside a judgment for fraud on the court is reserved for those cases of injustices which, in certain instances, are deemed sufficiently gross to demand a departure from rigid adherence to the doctrine of res judicata. United States v. Beggerly, 524 U.S. 38, 46, 118 S.Ct. 1862, 141 L.Ed.2d 32 (1998) (internal quotation marks omitted). [A]n independent action should be available only to prevent a grave miscarriage of justice. Id. at 47, 118 S.Ct. 1862 (holding that allegations that the prevailing parting failed during discovery in the underlying case to thoroughly search its records and make full disclosure to the Court were not fraud on the court). [14][15] As we explained in In re Levander, the basis for an independent action to set aside a judgment for fraud on the court lies in misconduct that harm[s] the integrity of the judicial process. 180 F.3d at 1119 (internal quotation marks omitted). We read the term fraud on the court narrowly, and apply the following definition: **Fraud upon the court ... embrace[s] only that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery can not perform in the usual manner its impartial task of adjudging cases that are presented for adjudication. Id. (internal quotation marks). Non-disclosure, or perjury by a party or witness, does not, by itself, amount to fraud on the court. Id. at 1119-20. [16] Fraud on the court requires a grave miscarriage of justice, Beggerly, 524 U.S. at 47, 118 S.Ct. 1862, and a fraud that is aimed at the court. Here, Orrick's actions, even if they did occur as alleged, were aimed only at the Agents and did not disrupt the judicial process because the Agents through due diligence could have discovered the non-disclosure. Even if the nondisclosure worked an injustice, it did not work a grave miscarriage of justice. Accordingly, we hold that the district court did not abuse its discretion by dismissing the independent action. *781 CONCLUSION For the foregoing reasons, we affirm the district court's summary judgment in the breach of contract action, Case No. 00 16521, and its dismissal of the independent action for failure to state a claim, Case No. 02-16452.

AFFIRMED. Switzer v. Coan, 261 F.3d 985, 57 Fed. R. Evid. Serv. 808, 2001 DJCAR 4216 (10th Cir.(Colo.) Aug 16, 2001) (19 ALR Fed 761) at p. 21, 6[a] Relevant criteriaGenerally [Cumulative Supplement] The courts have applied the following general criteria in determining whether there has been fraud upon the court: (1) The concept of fraud upon the court is limited to that species of fraud which does, or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner the impartial task of adjudging cases which are presented for adjudication; (2) in order to constitute fraud upon the court, the acts of an adverse party must have been of such a nature as to have prevented the losing party from fully and fairly presenting his case or defense; and (3) in order to have a judgment set aside on the ground of fraud upon the court, it is necessary to show that there was an unconscionable plan or scheme which was designed to influence the court in its decision. (19 ALR Fed 761) at p. 23, (3) In England v Doyle (1960, CA9 Cal) 281 F2d 304, it was stated that in order to set aside a judgment because of fraud upon the court under Rule 60(b), it is necessary to show an unconscionable plan or scheme which is designed to improperly influence the court in its decision. To the same effect are Kupferman v Consolidated Research & Mfg. Corp. (1971, DC NY) 53 FRD 387, affd on other grounds (CA2 NY) 459 F2d 1072, 19 ALR Fed 747; and Lockwood v Bowles (1969, DC Dist Col) 46 FRD 625. Ninth Circuit Crateo, Inc. v Intermark, Inc. (CA9 Cal) 536 F2d 862, cert den 429 US 896, 50 L Ed 2d 180, 97 S Ct 738 United States v Standard Oil Co. (DC Cal) 73 FRD 612 (19 ALR Fed 761), at p. 24, "Fraud on the court" requires direct attack upon judicial process that "defiles the court itself" or prevents it from operating; lying to judge would be fraud upon the court. Petersville Sleigh, Ltd. v Schmidt (1989, SD NY) 124 FRD 67. In order to meet the demanding standard for proof of fraud upon the court, there must be: (1) an intentional fraud; (2) by an officer of the court; (3) which is directed at the court itself; and (4) in fact deceives the court. Herring v. U.S., 424 F.3d 384 (3d Cir. 2005). Elements of fraud on the court are: (1) conduct on part of officer of court; (2) that is directed at judicial machinery itself; (3) that is intentionally false, wilfully blind to truth, or is in reckless disregard for truth; (4) that is positive averment or concealment when one is under duty to disclose; and (5) that deceives court. Workman v. Bell, 484 F.3d 837 (6th Cir. 2007). Even if holder of title to condominium land had established elements of claim of fraud upon the court, any such fraud by title insurer related to the sale and distribution of land in 2001 and 2002 could not have invalidated orders entered by the court in 1998 and 1999 in quiet title action. Blachy v. Butcher, 129 Fed. Appx. 173, 2005 FED App. 0273N (6th Cir. 2005), related reference (W.D. Mich. June 14, 2005). "Fraud on the court," of kind which may warrant relief from prior order or judgment of court, is conduct (1) on part of officer of court; (2) that is directed at judicial machinery itself; (3) that is intentionally false, willfully blind to the truth, or in reckless disregard of the truth; (4) that is in nature of positive averment or, when one is under duty to

disclose, of concealment; and (5) that deceives court. Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.A. In re M.T.G., Inc., 400 B.R. 558, 51 Bankr. Ct. Dec. (CRR) 14 (E.D. Mich. 2009). For purposes of a motion for relief from judgment, the elements of "fraud upon the court" consists of conduct: (1) on part of officer of the court; (2) that is directed to judicial machinery itself; (3) that is intentionally false, willfully blind to the truth, or is in reckless disregard for the truth; (4) that is positive averment or is concealment when one is under duty to disclose; (5) that deceives court. Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.A. Okros v. Angelo Iafrate Const. Co., 502 F. Supp. 2d 648 (E.D. Mich. 2007). (19 ALR Fed 761), at p. 25, To obtain relief from judgment, victim of fraud or other misconduct need show only that it affected his ability to present his case, not that he would have won had fraud or misconduct not occurred. 28 U.S.C.A. Fed. Rules Civ. Proc. Rule 60(b)(3) Ty Inc. v. Softbelly's Inc., 353 F.3d 528, 69 U.S.P.Q.2d (BNA) 1213 (7th Cir. 2003). Term "fraud on the court," for purposes of motion for relief from judgment, refers to conduct that might be thought to corrupt judicial process itself, as when party bribes judge or inserts bogus documents into the record. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. Oxxford Clothes XX, Inc. v. Expeditors Intern. of Washington, Inc., 127 F.3d 574 (7th Cir. 1997). See Re Met-L-Wood Corp. (1988, CA7 Ill) 861 F2d 1012, 18 BCD 1045, CCH Bankr L Rptr 72511, 12 FR Serv 3d 832, cert den (US) 104 L Ed 2d 157, 109 S Ct 1642, 4[a]. A claim for fraud on the court is justified only by the most egregious misconduct directed to the court itself, such as bribery of a judge or jury or fabrication of evidence by counsel. Hammann v. 1-800 Ideas.com, Inc., 455 F. Supp. 2d 942 (D. Minn. 2006) Under Rule 60(b), fraud upon court as basis for equitable relief is narrowly construed in order to preserve finality of judgments; fraud upon court confers equitable jurisdiction where unsuccessful party was prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent, such as by keeping him away from court, or making false promise of compromise, where defendant never had knowledge of suit, being kept in ignorance by acts of plaintiff, where attorney fraudulently or without authority assumed to represent party and connived at his defeat, or where attorney corruptly sold out his client's interest to other side. Luttrell v United States (1980, CA9 Or) 644 F2d 1274, 31 FR Serv 2d 847. Intent to defraud is an absolute prerequisite to a finding of fraud on the court that will support independent action that is exempt from one-year time period for filing motions for relief from judgment under federal rules. Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.A. Zurich North America v. Matrix Service, Inc., 426 F.3d 1281 (10th Cir. 2005) [END OF SUPPLEMENT] 6[b] Relevant criteriaNecessity that fraud be extrinsic [Cumulative Supplement] Prior to 1946, several cases had held that in order for fraud to be a ground for relief from a judgment, the fraud had to be extrinsic or collateral to the issues tried, rather than intrinsic (see, for example, United States v Throckmorton (1878) 98 US 61, 25 L Ed 93). However, when Rule 60(b) was amended in 1946 to provide that the Rule did not limit the power of the court to set aside a judgment for "fraud upon the court," the Rule was also amended to provide, as part of Rule 60(b)(3), that relief from a judgment could be granted on the ground of "fraud" regardless of whether such fraud had been "heretofore denominated intrinsic or extrinsic." Although the latter amendment specified that fraud need not be extrinsic in order to constitute a ground for relief under Rule 60(b)(3), the amendment did not specify whether fraud needed to be extrinsic in order to constitute a ground for relief in an independent action, or in a Rule 60(b) motion alleging "fraud upon the court." Observation

The courts have not specified whether it is maintainable (1) that relief from fraud, whether intrinsic or extrinsic, is available if relief is sought within the one-year period of limitations applicable to relief from ordinary "fraud" under Rule 60(b), but that relief from "fraud upon the court," if not sought until after the one-year period has expired, is available only if the fraud is "extrinsic," or (2) that if a fraud is "upon the court," such a type of fraud is so serious as to warrant relief from a judgment, without limitation as to time, even if the fraud is "intrinsic." The federal courts have said very little as to whether fraud upon the court must be "extrinsic" in order to constitute a ground for relief under Rule 60(b), as amended in 1946. In Dowdy v Hawfield (1951) 88 App DC 241, 189 F2d 637, cert den 342 US 830, 96 L Ed 628, 72 S Ct 54, the court, noting that Rule 60(b) did not limit the power of a court to entertain an independent action to set aside a judgment for fraud upon the court, stated that the rule that fraud must be extrinsic or collateral to the matter tried, rather than intrinsic, was not changed by the Hazel-Atlas Case. Comment The court stated in the Dowdy Case that in Josserand v Taylor (1946) 34 Cust & Pat App (Pat) 824, 159 F2d 249, it had been held that the Hazel-Atlas Case did not change the law with respect to the requirement that fraud must be extrinsic rather than intrinsic in order to be a ground for relief from a judgment. However, the Josserand Case not only was not based upon any construction of Rule 60(b), but was decided prior to the effective date of the amendment of Rule 60(b)(3) providing expressly that fraud constituted a ground for relief from a District Court judgment whether or not the fraud had been "heretofore denominated intrinsic or extrinsic." Thus, it would appear that neither the Josserand Case nor the reliance upon it in the Dowdy Case can properly support the conclusion that Rule 60(b)(3), as amended, requires fraud to be extrinsic rather than intrinsic in order to be a ground for relief from a District Court judgment. Moreover, the court did not purport in the Dowdy Case to distinguish the concept of "fraud upon the court" from the concept of ordinary fraud between the parties, nor did the court purport to indicate whether it considered that the elimination of the distinction between "intrinsic" and "extrinsic" fraud may have been inapplicable to the concept of "fraud upon the court" even if applicable to the Rule 60(b)(3) concept of "fraud." See Independence Lead Mines Co. v Kingsbury (1949, CA9 Idaho) 175 F2d 983, cert den 338 US 900, 94 L Ed 554, 70 S Ct 249, wherein the court, affirming an order dismissing a petition to vacate a judgment on the ground that fraud was practiced upon the court, noted that in order to obtain such relief, it must be shown that the fraud was extrinsic or extraneous to the issues in the action in which the judgment had been rendered. However, the court did not refer to Rule 60(b), and the prior judgment and the petition to vacate the judgment were filed before the effective date of the amendment to Rule 60(b). Rule 60(b) provides that court may consider independent action to set aside judgment for fraud on court and that such actions may be maintained only for extrinsic fraud which is conduct that prevents party from presenting his claim in court. Wood v McEwen (1981, CA9 Cal) 644 F2d 797, cert den Wood v McEwen (1982) 455 US 942, 71 L Ed 2d 654, 102 S Ct 1437. [END OF SUPPLEMENT] 7. Necessity of specifying nature of alleged fraud [Cumulative Supplement] It has been held that where a party is seeking relief from a judgment on the ground of fraud upon the court, he must state with particularity the nature of the allegedly fraudulent conduct. Thus, in Chicago Title & Trust Co. v Fox Theatres Corp. (1960, DC NY) 182 F Supp 18, it was held that a petition seeking to have an order vacated was fatally defective because it failed to state facts showing, or from which it could be concluded, that an order by a federal district judge was the result of fraud or corruption on the part of officers of the court. However, instead of ordering a dismissal of the petition, the court granted the petitioners the opportunity to file a detailed statement of facts supporting their conclusory allegations. The present petition was in the nature of a summary proceeding in an equity receivership which had been commenced many years earlier. It was alleged that the federal district judge's order approving a settlement was tainted with fraud and corruption, and that

he had been corruptly induced to sign the order to cover up extensive frauds which the respondents had perpetrated upon the corporation in receivership, and upon its creditors and stockholders. The petitioners sought to have the order vacated and set aside, and to have all steps and proceedings taken under it nullified. It was noted by the court that the long lapse of time since the transactions with which the petition was concerned took place, the enormous scope and wide ramifications of such transactions, the difficulties of defending adequately against charges a quarter of a century after the event, and intervening changes of status and position, all made it imperative that the facts constituting corruption be clearly and specially alleged. It was also noted that the fact that the judge who had issued the order was convicted of the crime of obstructing justice in connection with other litigation, and the fact that there were reasonable grounds to believe that corruption may have occurred in later phases of the receivership, were not substitutes for allegations of fact showing that fraud and corruption existed with respect to the specific order which was sought to be set aside. The court referred to the provision of Rule 9(b) of the Federal Rules of Civil Procedure to the effect that in all averments of fraud, the circumstances constituting fraud were required to be stated with particularity. It was noted that mere general allegations that there was fraud, corruption, or conspiracy, or characterizations of acts or conduct in such terms were not enough, no matter how frequently repeated. While distinguishing the Hazel-Atlas Case on the ground that the court had found the proof of fraud to be conclusive in that case, the court did not rely specifically upon Rule 60(b). The court noted that the petition did not even allege that the judge was bribed, and that all that was alleged were conclusions that conduct otherwise lawful was corrupt. In granting the petitioners an opportunity to file an additional statement, rather than dismissing their petition, the court noted that the judge who had entered the order stood convicted of dishonest judicial conduct in another connection; that there was evidence lending support to the claim that in a later phase of the same receivership, the judge was corruptly influenced by persons who were named as respondents in the present petition; and that the whole atmosphere surrounding the receivership was unsavory. The court directed the petitioners to file a detailed statement of any actual proof which they had showing that the order was brought about by the corruption of the judge. It was emphasized that such proof, if it existed, must be in the form of testimony or documentary evidence, and that the petitioners' statement must consist of facts only, and not any characterizations, conclusions, or innuendos of the petitioners or their counsel. [END OF SUPPLEMENT] III. Particular conduct as constituting fraud upon court A. In general 8[a] Perjury or other false statementsHeld fraud upon court [Cumulative Supplement] Some cases appear to support the view that perjury or other false statements may, at least under certain circumstances, constitute fraud upon the court. Thus, while holding that allegedly perjurious testimony was in no way relevant to the grounds upon which a prior judgment had been rendered, in Jungersen v Axel Bros., Inc. (1954, DC NY) 121 F Supp 712 (affd per curiam (CA2 NY) 217 F2d 646, cert den 349 US 940, 99 L Ed 1267, 75 S Ct 784, reh den 350 US 868, 100 L Ed 769, 76 S Ct 99), infra 8[b], the court recognized that perjurious testimony suborned by a party to litigation, affecting material matter, will, if established, support a bill of review in equity when a fraud has by this means been perpetrated on the court. See Toscano v Commissioner (1971, CA9) 441 F2d 930, wherein the appellant alleged that a taxpayer had falsely represented her to be his wife for purposes of filing joint income tax returns and had permitted his attorney to enter into a stipulation with the Commissioner of Internal Revenue on a joint return basis, and wherein the court concluded that since the petitioner's claim was that she had been prevented from presenting her defense at all, the allegations of her motion for relief from a Tax Court judgment, and of the supporting documents, made a strong enough showing of a fraud upon the Tax Court to require a hearing. While not dealing with a District Court decision or with Rule 60(b), the court noted that the Tax Court had the power to set aside one of its judgments on the narrow ground of fraud upon the court, as expounded in the Hazel-Atlas Case. CUMULATIVE SUPPLEMENT

Cases: If unequivocal evidence establishes that party willfully perjured himself, and thereby prevented opposition from fully and fairly presenting its case, vacating judgment is proper remedy. Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.(2000 Ed.) Devon Distributing Corp. v. Miner, 525 F. Supp. 2d 1089 (S.D. Iowa 2007). [END OF SUPPLEMENT] 8[b] Perjury or other false statementsHeld not fraud upon court [Cumulative Supplement] In the following cases, allegations as to perjury or other false statements were held not to have established fraud upon the court. Comment Several of the cases which have held allegations as to perjury insufficient to establish fraud upon the court have relied upon Hazel-Atlas Glass Co. v Hartford-Empire Co. (1944) 322 US 238, 88 L Ed 1250, 64 S Ct 997, reh den 322 US 772, 88 L Ed 1596, 64 S Ct 1281, supra 2, wherein the court, holding that where a party's attorneys had been involved in perpetrating a fraud upon the court, the court's judgment should be set aside, noted that the case was not simply one in which a judgment had been obtained with the aid of a witness who, on the basis of afterdiscovered evidence, was believed possibly to have been guilty of perjury. [END OF SUPPLEMENT] 9. Suppression or nondisclosure of information Products liability defendant's failure to disclose existence of videotape of unfavorable tests was fraud on court under Rule 60(b). Pumphrey v K.W. Thompson Tool Co. (1995, CA9 Idaho) 62 F3d 1128, 95 CDOS 5998, 95 Daily Journal DAR 10301, 32 FR Serv 3d 332. [END OF SUPPLEMENT] 10. Bribery or corruption [Cumulative Supplement] Several cases have recognized that bribery or corruption of a judge or jury would constitute fraud upon the court. Thus, in Chicago Title & Trust Co. v Fox Theatres Corp. (1960, DC NY) 182 F Supp 18, where it was alleged in general terms that a federal judge had been corruptly induced to sign an order, and that the order was tainted with fraud and corruption, but where it was held that no facts were alleged in support of such conclusory allegations, the court, without relying expressly upon Rule 60(b), recognized that it had the inherent power to ferret out and rectify frauds committed upon it through the corruption of its own officers, and the court, referring to such cases as the Hazel-Atlas Case, stated that if there was corruption on the part of officers of the court, the court was under a duty to take whatever action might be appropriate to sustain its integrity and to undo any harm or injustice which resulted. In United States v International Tel. & Tel. Corp. (1972, DC Conn) 349 F Supp 22, affd without op 410 US 919, 35 L Ed 2d 582, 93 S Ct 1363, it was recognized that bribery of a judge or members of a jury could constitute a fraud upon the court. See Root Refining Co. v Universal Oil Products Co. (1948, CA3 Del) 169 F2d 514, cert den 335 US 912, 93 L Ed 444, 69 S Ct 481, reh den 336 US 915, 93 L Ed 1079, 69 S Ct 601, 602, wherein the court, while dealing with a Court of Appeals judgment rather than a District Court judgment, and while not basing its decision on Rule 60(b), vacated a judgment on the ground of a corrupt and illicit conspiracy to obstruct justice between a successful litigant,

one of the litigant's attorneys, and a Court of Appeals judge. Although holding that fraud upon the court was not established, in Wilkin v Sunbeam Corp. (1972, CA10 Kan) 466 F2d 714, cert den 409 US 1126, 35 L Ed 2d 258, 93 S Ct 940, the court recognized that the corruption of judicial officers was a clear example of fraud upon the court, within the meaning of Rule 60(b). In Lockwood v Bowles (1969, DC Dist Col) 46 FRD 625, it was recognized that examples of fraud upon the court included bribery of judges, employment of counsel to "influence" the court, and bribery of the jury. 11. Miscellaneous CUMULATIVE SUPPLEMENT Cases: Trying improperly to influence a witness is fraud on the court and on the opposing party. Ty Inc. v. Softbelly's, Inc., 517 F.3d 494, 85 U.S.P.Q.2d 2002 (7th Cir. 2008). [END OF SUPPLEMENT] B. Involvement of attorney in perpetration of fraud 12. Generally [Cumulative Supplement] Several cases have recognized that the fact that an attorney, who is an officer of the court, is involved in the perpetration of a fraud, supports the conclusion that the fraud is one "upon the court." Comment The cases referring to an attorney's involvement in the perpetration of a fraud have often relied upon Hazel-Atlas Glass Co. v Hartford-Empire Co. (1944) 322 US 238, 88 L Ed 1250, 64 S Ct 997, reh den 322 US 772, 88 L Ed 1596, 64 S Ct 1281, supra 2, wherein the court, holding, prior to the promulgation of the current provisions of Rule 60(b), that a Court of Appeals' judgment should be set aside because of fraud upon the court, emphasized that the fraud had been perpetrated by one of the parties' attorneys, who had helped to obtain publication of a spurious article in a trade journal and had directed the Court of Appeals' attention to such article, which was heavily relied upon by the Court of Appeals in its opinion in favor of the attorney's client. Although holding that it did not constitute fraud upon the court for an attorney to fail to disclose an instrument which he could reasonably have supposed to have been known to his adversary, in Kupferman v Consolidated Research & Mfg. Corp. (1972, CA2 NY) 459 F2d 1072, 19 ALR Fed 747, supra 9, the court, quoting from 7 Moore, Federal Practice 60.33, recognized that while an attorney should represent his client with singular loyalty, such loyalty obviously does not demand that he act dishonestly or fraudulently; that on the contrary, his loyalty to the court, as an official thereof, demands integrity and honest dealing with the court; and that when he departs from such standard in the conduct of a case, he perpetrates a fraud upon the court. Cases: Bankruptcy court, pursuant to Rule 60(b), would vacate sale of bankrupt's assets where evidence demonstrated that counsel for debtor in possession, and purchaser of assets, had colluded in making inaccurate and misleading statements to court in connection with sale. Re Tri-Cran, Inc. (1989, BC DC Mass) 98 BR 609, 13 FR Serv 3d 1052. Since attorneys are officers of court, their allegedly dishonest conduct involving misrepresentation and perjury would constitute fraud on court. H. K. Porter Co. v Goodyear Tire & Rubber Co. (CA6 Ohio) 536 F2d 1115. Frcp rule 60 relief from judgment westlaw annotated

251. ---- Due process violations, void judgments, grounds for relief Debtor was not entitled to relief from order dismissing adversary proceeding on ground that it was void absent evidence that order was inconsistent with due process or that bankruptcy judge lacked jurisdiction over adversary proceeding on date order was entered. Wesco Products Co. v. Alloy Automotive Co., C.A.7 (Ill.) 1989, 880 F.2d 981, rehearing denied. Federal Civil Procedure 2651.1 209. ---- Misrepresentations made to court, fraud upon court, grounds for relief In borrower's action against various entities and individuals who were involved with securing forged note and mortgage on her home, defendant's representations to the court, which led court to believe that no notary fees were paid in violation of Real Estate Settlement Procedures Act's (RESPA) fee splitting provision in connection with the loan closings at issue, did not constitute fraud on the court permitting relief from dismissal order; alleged conduct was not the type of egregious conduct contemplated under fraud-on-the-court theory such as bribery or fabrication of evidence, and there was insufficient evidence that defendants acted with the intent to defraud the court. Welch v. Centex Home Equity Co., L.L.C., D.Kan.2004, 224 F.R.D. 490. Federal Civil Procedure 1840 Fraud alleged, that general partner of debtor limited partnership misrepresented to court that $24,000,000 mortgage was outstanding and that transfer of real property of debtor to assignee of mortgage holder would satisfy indebtedness, and that general partner's representation of outstanding mortgage resulted in bankruptcy court order approving sale of real property, was not fraud between parties, but if true, revealed misrepresentations by officer of court upon which court relied and acted to detriment of limited partners of debtor partnership, so as to constitute fraud on the court, not subject to fixed limitations period. Matter of Tudor Associates, Ltd., II, E.D.N.C.1986, 64 B.R. 656. Federal Civil Procedure 2658 210. ---- Nondisclosure or suppression of evidence, fraud upon court, grounds for relief Conduct of products liability defendant, through individual who was its vice president and general counsel, with respect to videotaped tests of product in question amounted to fraud on the court, thus justifying setting aside defense verdict; individual was present when two videotapes were made, one favorable to defendant and one unfavorable, and individual had possession of both videotapes after they were made but failed to disclose existence of unfavorable one to defendant's trial counsel or to plaintiffs despite discovery request; moreover, individual drafted answer to interrogatories that mischaracterized tests and was present during trial when witness testified that he had never seen product malfunction during tests. Pumphrey v. K.W. Thompson Tool Co., C.A.9 (Idaho) 1995, 62 F.3d 1128, certiorari denied 116 S.Ct. 1042, 516 U.S. 1158, 134 L.Ed.2d 189. Federal Civil Procedure 2654 Setting aside a judgment on account of fraud, misrepresentation, or other misconduct does not require that material withheld be sufficient to alter trial court's judgment. Square Const. Co. v. Washington Metropolitan Area Transit Authority, C.A.4 (Va.) 1981, 657 F.2d 68. Federal Civil Procedure 2654 That state's response to habeas corpus petition referred to affidavit of lawyer representing accused on his appeal from state court conviction but state failed to annex affidavit to response or thereafter present it did not amount to such fraud on court as would justify setting aside order denying habeas corpus relief, where statements attributed by state to attorney were expressions of opinion on a matter of law and not a purported recitation of facts and were irrelevant and did not affect district court's determination of petition for habeas corpus. Keys v. Dunbar, C.A.9 (Cal.) 1969, 405 F.2d 955, certiorari denied 90 S.Ct. 158, 396 U.S. 880, 24 L.Ed.2d 138. Habeas Corpus 802 211. ---- Unconscionable plan or scheme, fraud upon court, grounds for relief 212. ---- Miscellaneous fraud, fraud upon court, grounds for relief While plaintiffs' allegations, that defendant banks exacted usurious interest rates, failed properly to credit plaintiffs' mortgage payments, presented false evidence and perjured testimony during state court foreclosure and replevin

actions, and kidnapped plaintiffs, might have resulted in overturning state court foreclosure and replevin judgments, allegations did not amount to fraud on the court requiring vacation of federal court judgments adverse to plaintiffs in their RICO and civil rights suits arising out of the state actions, where plaintiffs' claims were based on inequities in state court proceedings, did not allege inequities in federal court proceedings, and merely restated claims already decided by the previous courts. Andersen v. Roszkowski, N.D.Ill.1988, 681 F.Supp. 1284, affirmed 894 F.2d 1338. Federal Civil Procedure 2654 Attorney for creditor's assignee committed fraud on court when he filed motion for default judgment against debtor, and thus vacation of default judgment was warranted, where, upon receiving summons, debtor's attorney sent email pointing out that its contract was not with assignee, assignee's attorney verified statements in email, but did not file amended complaint demonstrating transfer of claim and pendency of bankruptcy claim, and assignee's attorney was aware that assignee's principal's verification was false. Eastern Financing Corp. v. JSC Alchevsk Iron and Steel Works, S.D.N.Y.2008, 258 F.R.D. 76. Federal Civil Procedure 2444.1 Former employee failed to show that he had no opportunity to litigate his allegation that former employer's attorney committed fraud upon the court, or that employer presented any false evidence, in prior Title VII race discrimination and retaliation action, as required to support motion for relief from prior judgment on ground of fraud. Gladstone Ford v. New York City Transit Authority, C.A.2 (N.Y.) 2003, 81 Fed.Appx. 385, 2003 WL 22849890, Unreported, certiorari denied 124 S.Ct. 2917, 542 U.S. 938, 159 L.Ed.2d 814. Federal Civil Procedure 2654 223. Attorney misconduct, grounds for relief Under Seventh Circuit law, new trial on all issues may be granted as form of sanction for attorney misconduct. Schreiber Foods, Inc. v. Beatrice Cheese, Inc., C.A.Fed. (Wis.) 2005, 402 F.3d 1198, 74 U.S.P.Q.2d 1204. Federal Civil Procedure 2654 Attorney malfeasance which actively misleads client or is comparably culpable might be proper basis for granting client relief from judgment pursuant to federal procedural rule. In re Virginia Information Systems Corp., C.A.4 (Va.) 1991, 932 F.2d 338. Federal Civil Procedure 2651.1 A motion for reconsideration is not the proper vehicle to raise a new allegation of ineffective assistance of counsel. James v. U.S., E.D.N.Y.2009, 603 F.Supp.2d 472. Criminal Law 1870 224. Misconduct of adverse party, grounds for relief Movant was not entitled to relief under rule authorizing relief from judgment based on showing that adverse party committed fraud, misrepresentation, or other misconduct, on grounds that affidavits submitted by opposing party contained material misstatements, given that affidavit upon which movant relied to show alleged misconduct at most showed conflict in the evidence and not requisite intentional misrepresentation of pertinent facts by opposing party, and that movant failed to show how alleged misconduct substantially interfered with his ability to present his case prior to entry of judgment. Karak v. Bursaw Oil Corp., C.A.1 (Mass.) 2002, 288 F.3d 15. Federal Civil Procedure 2654 Failure to disclose or produce material requested in discovery can constitute misconduct within purview of rule permitting relief from judgment on ground of fraud or misconduct. Abrahamsen v. Trans-State Exp., Inc., C.A.6 (Ohio) 1996, 92 F.3d 425. Federal Civil Procedure 2651.1 Failure to disclose or produce materials requested in discovery can constitute misconduct within purview of rule relating to relief from judgment, and the term can cover even accidental omissions. Anderson v. Cryovac, Inc., C.A.1 (Mass.) 1988, 862 F.2d 910, on remand 127 F.R.D. 1, on remand 129 F.R.D. 394. Federal Civil Procedure 2651.1 228. ---- Reliance upon testimony, perjury, grounds for relief

Party's subornation of perjury will be grounds for reopening judgment when perjury goes to heart of issue. Harris v. Mapp, E.D.Va.1989, 719 F.Supp. 1317, affirmed 907 F.2d 1138. Federal Civil Procedure 2654 229. ---- Sufficiency of evidence, perjury, grounds for relief Refusal to vacate judgment by district court on motion which asserted that judgment had been obtained by fraudulent practices by means of which perjured testimony had been procured and which was supported by affidavits and indication that witnesses were willing to testify after having been warned of their constitutional rights was not exercise of sound legal discretion. Peacock Records, Inc. v. Checker Records, Inc., C.A.7 (Ill.) 1966, 365 F.2d 145, certiorari denied 87 S.Ct. 707, 385 U.S. 1003, 17 L.Ed.2d 542. Federal Civil Procedure 2646

Frcp 60 relief from judgment or order Lexis annotated

432. Misrepresentations in pleadings Plaintiff's Rule 60(b) motion for relief from judgment was properly denied to extent that it was based on allegation that defendant knew that its assertion of res judicata was meritless and that co-defendant remained silent in face of misrepresentation as to res judicata defendants, since this assertion fell within scope of Rule 60(b)(3), party may not prevail on Rule 60(b)(3) motion on basis of fraud where he has access to disputed information or has knowledge of inaccuracies in opponent's representations at time of alleged misconduct, and in this case plaintiff, even if she lacked notice of motion to dismiss on grounds of res judicata, at least had notice from her attorney of possible grounds for appeal but failed to appeal despite timely access to information which could have undermined defendant's claim of res judicata. Ojeda-Toro v Rivera-Mendez (1988, CA1 Puerto Rico) 853 F2d 25, 12 FR Serv 3d 376. Defendant against whom summary judgment had been entered in action against him on promissory notes was entitled to relief from judgment under Rule 60(b)(3) where it was only on morning of hearing on motion for summary judgment that defendant's attorney received discovery material indicating that plaintiff had entered into scheme with defendant's partners whereby partners had paid notes with partnership funds but had given uncanceled notes to plaintiff to allow him to sue defendant, and defendant's attorney had not read this material until after summary judgment hearing, since these materials constituted newly discovered evidence which corrected material misrepresentations in plaintiff's pleadings and gave defendant iron clad defense of payment. Green v Foley (1988, CA4 Va) 856 F2d 660, 12 FR Serv 3d 1446, cert den (1989) 490 US 1031, 104 L Ed 2d 204, 109 S Ct 1769. X.FRAUD UPON THE COURT 580. Generally Fraud on court occurs where court is corrupted or influenced or influence is attempted or where judge has not performed his judicial function, i.e., where impartial functions of court have been directly corrupted. Bulloch v United States (1985, CA10 Utah) 763 F2d 1115, 1 FR Serv 3d 926, cert den (1986) 474 US 1086, 88 L Ed 2d 900, 106 S Ct 862. To constitute fraud on court, fraud must be part of unconscionable plan or scheme, or subvert integrity of court itself; such plan cannot be garden variety fraud--it must rise to level of bribing judge, jury tampering, designing scheme intended to

deceive court, or involvement of officer of court in perpetrating fraud; fraudulent act must be intentionally false, wilfully blind to truth, or in reckless disregard for truth. Bowie v Maddox (2010, DC Dist Col) 677 F Supp 2d 276, 75 FR Serv 3d 938.

Search terms: federal rules of civil procedure 60(b) fraud upon the court or fraud on the court brib! /s jud!
U.S. v. Throckmorton, 98 U.S. 61, 8 Otto 61, 1878 WL 18409, 25 L.Ed. 93 (U.S.Cal. Oct Term 1878)

statement that fraud upon the court has to be extrinsic to constitute a ground to set aside a judgment under FRCP 60(b) has been superseded by rule as stated or overruled as recognized in the following authorities. Bailey v. I.R.S., 188 F.R.D. 346, 353, 83 A.F.T.R.2d 99-2088, 99-1 USTC P 50,342 (D.Ariz.,Jan 27, 1999) II. FRAUD AGAINST PLAINTIFF, AS AN EXCEPTION TO THE RES JUDICATA BAR [12] The old law permitted relief from a judgment if it involved extrinsic fraud, fraud collateral to the matter or question that was tried and determined by the judgment in question, but denied relief for intrinsic fraud, fraud relating to the subject matter of the action, even if perjury was later proven. 11 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure: Civil 2d (1995), 2861 at 319. The distinction originated in the Supreme Court's decision in United States v. Throckmorton, 98 U.S. 61, 65, 8 Otto 61, 65, 25 L.Ed. 93 ( 1878). Thirteen years later, the Supreme Court refused to apply the distinction as a hard and fast rule, holding that equity could enjoin the enforcement of a judgment at law obtained by the use of a forged instrument and false testimony **if the falsity was not discovered until after the judgment had been entered and the time for a new trial motion had run. 11 Wright, Miller & Kane, 2861 at 320, citing Marshall v. Holmes, 141 U.S. 589, 596, 12 S.Ct. 62, 64, 35 L.Ed. 870 (1891). Over time, case law further narrowed relief to cases **where the movant could show that the falsity could not have been discovered by reasonable diligence in time to offset it at the trial or that for other good reason, the failure to use diligence is in all the circumstances not a bar to relief. 11 Wright, Miller & Kane, 2861 at 322, citing Shammas v. Shammas, 9 N.J. 321, 88 A.2d 204, 208 (1952) (emphasis added) [13][14] Since it was amended in 1946, Rule 60(b), Fed.R.Civ.P., has provided two ways to obtain relief from a judgment based on fraud. **First, on motion within a year after the judgment, a court may relieve a party from a final judgment for fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party. Fed.R.Civ.P. 60(b)(3). **There is also a saving clause at the end of Rule 60(b), which states: This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment,... or to set aside a judgment for fraud upon the court. The burden of proof of fraud is on the moving party and that fraud must be established by clear and convincing evidence. 11 Wright, Miller & Kane, 2860 at 312-13. Further, the fraud must have prevented the moving party from fully and fairly presenting his case. (Id.) Gleason v. Jandrucko, 860 F.2d 556, 560,12 Fed.R.Serv.3d 909 (2nd Cir.(N.Y.),Nov 01, 1988) [2] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Fraud upon the court warranting relief from final judgment, as distinguished from fraud on adverse party, is

limited to fraud which seriously affects integrity of normal process of adjudication. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [3] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Relief from judgment by way of independent action need not be premised on showing of extrinsic as opposed to intrinsic fraud. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [4] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Subsequently discovered evidence of perjury by detectives at depositions and nondisclosure of relevant evidence during pretrial discovery in arrestee's civil rights action did not support finding of fraud upon the court justifying relief from judgment of voluntary dismissal of that action; arrestee had ample opportunity in prior proceeding to uncover alleged fraud. 42 U.S.C.A. 1983, 1985; Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A.

[3][4] Notwithstanding Judge Leval's determination that plaintiff alleged only perjury and nondisclosure as the basis for his independent action for relief, Gleason nevertheless contends that the new evidence before the district court was indicative of a broad conspiracy and cover-up which transcended mere perjury and nondisclosure. Thus, plaintiff claims that the district court erred in finding the alleged fraud to be intrinsic to the prior proceeding. Although we agree with plaintiff that relief from a judgment by way of an independent action need not be premised on a showing of extrinsic as opposed to intrinsic fraud, see Averbach v. Rival Mfg. Co., 809 F.2d 1016, 1022 (3d Cir.) ( extrinsic-intrinsic distinction which is based on a statement in United States v. Throckmorton, 98 U.S. (8 Otto) 61 [23 L.Ed. 93] (1878), was overruled, if it was ever the law, by Marshall v. Holmes, 141 U.S. 589 [12 S.Ct. 62, 35 L.Ed. 870] (1891)), cert. denied, --- U.S. ----, 107 S.Ct. 3187, 96 L.Ed.2d 675 (1987); see also Serzysko, 461 F.2d at 702 n. 2; 11 C. Wright & A. Miller, Federal Practice and Procedure 2868, at 240-41 (1973) (distinction between extrinsic and intrinsic fraud is most unfortunate, if true. [It] rests on clouded and confused authorities, its soundness as a matter of policy is very doubtful, and it is extremely difficult to apply. It ought not to persist as a limit on independent actions under Fed.R.Civ.P. 60(b).), an aggrieved party seeking relief under the saving clause of Rule 60(b) still must be able to show that there was no opportunity to have the ground now relied upon to set aside the judgment fully litigated in the original action. Serzysko, 461 F.2d at 702 n. 2; see Marshall, 141 U.S. at 596, 12 S.Ct. at 64; M.W. Zack Metal Co. v. International Navigation Corp., 675 F.2d 525, 530 (2d Cir.), cert. denied, 459 U.S. 1037, 103 S.Ct. 449, 74 L.Ed.2d 604 (1982); 11 Wright & Miller 2868, at 239. The district court explicitly found that plaintiff had ample opportunity in the prior proceeding to uncover the alleged fraud, and the record supports the court's determination. Accordingly, plaintiff's contention in this regard is without merit. In re Levander, 180 F.3d 1114, 99 Cal. Daily Op. Serv. 5751, 1999 Daily Journal D.A.R. 7355 (9th Cir. (Cal.),Jul 20, 1999) Distinguishes Gleasons treatment of perjury as not fraud upon the court and states that perjury constitutes fraud upon te court, when the victim of the perjury does not have the opportunity to challenge the alleged perjured

testimony or non-disclosure because the issue was already before the court, and that perjury is fraud upon the court when it is committed by an officer of the court and submitted to the court, and defiles the bankruptcy court, and the court itself is a victim of the fraud, as opposed to just a party. Chapter 11 debtors moved to amend bankruptcy court order awarding the attorney fees, seeking to designate partnership to which judgment debtor's assets had been conveyed as additional judgment debtor. The Bankruptcy Court granted motion and awarded debtors additional fees and costs against partnership. Partnership appealed. The United States District Court for the Central District of California, Kim McLane Wardlaw, J., reversed. Debtors appealed. The Court of Appeals, Tashima, Circuit Judge, held that: (1) federal court may amend a judgment or order under its inherent power when the original judgment or order was obtained through fraud on the court; (2) actions of judgment debtor and partnership, in committing fraud on the bankruptcy court, triggered bankruptcy court's inherent power to amend order; (3) bankruptcy court could rely on California law permitting amendment of judgment to add judgment debtor to amend its attorney fees order; (4) under California law, as predicted by Court of Appeals, finding that partnership was alter ego of judgment debtor was not required for amendment of order; and (5) partnership in essence controlled litigation, as required for amendment of order. District court decision reversed and remanded with directions. [5] Bankruptcy 51 2164.1

51 Bankruptcy 51II Courts; Proceedings in General 51II(B) Actions and Proceedings in General 51k2164 Judgment or Order 51k2164.1 k. In General. Most Cited Cases Judgment debtor and partnership to which judgment debtor's assets had been transferred **committed fraud on the bankruptcy court when judgment debtor's corporate officer testified in deposition that judgment debtor's assets haven't been sold, even though assets had already been transferred to shell entities, and **bankruptcy court relied upon judgment debtor's depositions to impose attorney fees on judgment debtor rather than partnership, which was party with the assets; therefore, bankruptcy court could exercise its inherent power to amend order that required judgment debtor to pay attorney fees and costs to Chapter 11 debtors to add partnership as judgment debtor. [8] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases To constitute fraud on the court, the alleged misconduct must harm the integrity of the judicial process. [9] Federal Civil Procedure 170A 928

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(I) Motions in General 170Ak928 k. Determination. Most Cited Cases Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Generally, nondisclosure by itself does not constitute fraud on the court triggering federal court's inherent powers to set aside or amend fraudulently obtained order or judgment. [10] Federal Civil Procedure 170A 928

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(I) Motions in General 170Ak928 k. Determination. Most Cited Cases Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Perjury by a party or witness, by itself, is not normally fraud on the court for purposes of federal court's inherent powers to set aside or amend judgment or order obtained through fraud on the court. [9][10] Generally, non-disclosure by itself does not constitute fraud on the court. See England v. Doyle, 281 F.2d 304, 310 (9th Cir.1960) (failure to produce evidence, without more, does not constitute fraud on the court). Similarly, perjury by a party or witness, by itself, is not normally fraud on the court. See, e.g., Gleason v. Jandrucko, 860 F.2d 556, 559-60 (2d Cir.1988); *1120 12 James Wm. Moore & Joseph T. McLaughlin, Moore's Federal Practice 60.21[4][c], at 60-56-57 (3d ed.1998). The Gleason court reasoned that since perjury is an evil that could and should be exposed at trial, it should not qualify as fraud upon the court. See Gleason, 860 F.2d at 560. **The reason why the courts in these cases did not treat perjury or non-disclosure alone as fraud on the court was that the plaintiff had the opportunity to challenge the alleged perjured testimony or non-disclosure because the issue was already before the court. For example, in Gleason, Gleason could have deposed eyewitnesses and introduced evidence at trial to impeach the police officers' testimony, which he claimed was perjured, because the issues of lack of probable cause and bad faith on the part of the officers, and therefore their credibility, were already before the court. See id. at 559. The court concluded that Gleason could not, after the fact, claim fraud on the court based only on this alleged perjury, which he could have challenged during the trial. See id. at 559-60. In contrast, the perjury and non-disclosure in the instant case (that the Corporation had transferred its assets to shell entities months before the Corporation testified in depositions that the Corporation's assets haven't been sold) was not-and could not have been-an issue at the attorneys' fees hearing, as neither the court nor the Levanders knew that the Partnership existed. Therefore, neither the Levanders nor the court had any reason to question the veracity of the Corporation with respect to whether the Corporation still possessed its assets. Further, not only did the Corporation and the Partnership deceive the Levanders, but they also deceived the court, because the court relied on the Corporation's depositions to impose attorneys' fees on the Corporation, rather than on the party with the assetsthe Partnership. See, e.g., Broyhill Furniture Indus., Inc., 12 F.3d at 1086-87 (although party knowingly withheld material and thereafter sought enforcement of a fraudulently obtained patent, there was no fraud on the court because fraudulent evidence used to obtain patent from patent office was not submitted to court, so court itself was not victim of fraud); In re Intermagnetics Am., Inc., 926 F.2d at 917 ([T]he inquiry as to whether a judgment should be set aside for fraud upon the court ... focuses not so much in terms of whether the alleged fraud prejudiced the

opposing party but more in terms of whether the alleged fraud harms the integrity of the judicial process.). **Therefore, since the bankruptcy court itself was defiled by the perjury, the fraud was a fraud on the court.

Zurich North America v. Matrix Service, Inc., 426 F.3d 1281, 1292, 23 IER Cases 1132, 36 Employee Benefits Cas. 1341 (10th Cir.(Okla.),Oct 18, 2005)

Claims of fraud by nondisclosure between the parties under frcp 60(b) (3), under the 10th Circuit require evidence of an intent to deceive or defraud the court, by means of a deliberately planned and carefully executed scheme. Or intentional nondisclosure. It is true that a failure to disclose requested information during discovery may constitute misconduct under Rule 60(b)(3). Woodworker's Supply, Inc., 170 F.3d at 993; Cummings, 365 F.3d at 955. However, this usually requires the violation of a specific discovery request or order. Id. **Because Zurich never brought the issue before the district court, there was no discovery order in this case compelling the production of the premium payment documents. Zurich argues a violation of a specific request or a court order were unnecessary to prove fraud because Matrix was obligated to disclose the premium payment documents under Rule 26. While some violations of Rule 26 may constitute misconduct, such violations are clear and deliberate and typically lead to other misconduct such as the introduction of false testimony. Abrahamsen v. Trans-State Express, Inc., 92 F.3d 425, 428-29 (6th Cir.1996). Here, Matrix's obligation to disclose the premium payment documents under Rule 26 is less than clear. **At no time during the pleadings, discovery or the summary judgment motions did Zurich raise the issue of premium payments. While it is arguable that Matrix was obligated to disclose the documents under Rule 26 based on its assertion in its pleadings and cross-summary judgment motion that Ortiz was a covered employee, it is a stretch. In any event, arguable violations of Rule 26 do not satisfy the clear and convincing evidence of fraud, misrepresentation or misconduct standard. De Saracho v. Custom Food Machinery, Inc., 206 F.3d 874, 880-81 (9th Cir.2000). The proper remedy for any perceived violation of discovery is to seek redress under Rule 37(a)(2), not to wait until after summary judgment and file a Rule 60(b)(3) motion.
Additionally, it is questionable whether Matrix's failure to produce the documents prior to the dispositive motions truly impaired Zurich's ability to present its case based on the issues it brought before the court. After all, **Zurich failed to request the documents during discovery even though it knew of their existence and claimed a contractual right to them. Nor did Zurich file a Rule 56(f) motion requesting the summary judgment motion be postponed until it could procure them. It *1293 was only after Matrix was granted summary judgment that premium payment became an overarching issue. Parties cannot use Rule 60(b) as mechanism to correct their own mistakes after summary judgment has not gone their way. Given this Court's ruling in Yapp, and apart from it, it is impossible to say the district court abused its discretion by relying on Buck and denying Zurich's motion for relief under Rule 60(b)(3). There was no discovery request or motion to compel the production of the documents and **an absence of direct evidence that Matrix intentionally did not comply with its contractual obligation to supply the documentation because it would show non-payment of Ortiz's premiums. Oxxford Clothes XX, Inc. v. Expeditors Intern. of Washington, Inc., 127 F.3d 574 (7th Cir.(Ill.) Sep 30, 1997)

7th Circuit holds that mistatement of law in which the opposition has the opportunity to rebut or if it is not capable of obstructing the opposing litigant does not constitute fraud on the court. The act must obstruct the party from fully and fairly presenting their case. Cf.
Wright v. U.S., 2001 WL 1137255, 88 A.F.T.R.2d 2001-5767, 2002-1 USTC P 50,143 (E.D.Cal.,Aug 21, 2001)

Clothing manufacturer, which originally brought replevin action for release of imported fabrics against customs-clearing service, amended complaint to seek recovery of $75,000 that it paid service under agreement settling replevin claim, asserting claims for fraud, duress, and rescission. The United States District Court for the Northern District of Illinois, Ronald A. Guzman, United States Magistrate Judge, 1996 WL 732523, granted service's motion to enforce settlement agreement and dismissed action. Manufacturer appealed. The Court of Appeals, Posner, Chief Judge, held that: (1) service did not misrepresent any fact, so as to be liable for fraud, when it asserted that it held lien on withheld fabrics; (2) service's alleged conduct in misrepresenting to district court that it had valid liens on manufacturer's imported fabrics was not fraud on the court; (3) service was not liable under duress theory; and (4) settlement agreement was not voidable on ground that service had no liens on withheld fabrics. Affirmed. [1] Judgment 228 501

228 Judgment 228XI Collateral Attack 228XI(B) Grounds 228k500 Errors and Irregularities 228k501 k. In general. Most Cited Cases When mistake of law is court's mistake, remedy is to appeal, not to mount collateral attack on judgment founded on mistake. [2] Federal Civil Procedure 170A 2647.1

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2647 Nature and Form of Remedy 170Ak2647.1 k. In general. Most Cited Cases Motion for relief from judgment based on mistake of law, asking district court to set aside its judgment, will not be allowed to do service for appeal. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [3] Judgment 228 407(4)

228 Judgment 228X Equitable Relief 228X(A) Nature of Remedy and Grounds 228k407 Existence of or Resort to Other Remedy 228k407(4) k. Appeal, error, or certiorari. Most Cited Cases Independent suit based on prior mistake of law is not proper substitute for appeal. [4] Federal Courts 170B 815

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(K) Scope, Standards, and Extent 170BVIII(K)4 Discretion of Lower Court 170Bk814 Injunction 170Bk815 k. Preliminary injunction; temporary restraining order. Most Cited Cases Any mistake of law that is premise of preliminary injunction can be corrected by means of direct appeal from

grant of injunction. [5] Fraud 184 28

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k28 k. Fraud in particular transactions or for particular purposes. Most Cited Cases Customs-clearing service did not misrepresent any fact, so as to be liable for fraud, when, based on facts known equally well to clothing manufacturer, it asserted that it had lien on manufacturer's imported fabrics as result of debt owed by manufacturer's predecessor; that claim was frivolous did not make it fraudulent. [6] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; perjury. Most Cited Cases Customs-clearing service's alleged conduct in misrepresenting to district court that it had valid liens on manufacturer's imported fabrics was not fraud on the court. [7] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; perjury. Most Cited Cases Term fraud on the court, for purposes of motion for relief from judgment, refers to conduct that might be thought to corrupt judicial process itself, as when party bribes judge or inserts bogus documents into the record. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [8] Fraud 184 20

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k19 Reliance on Representations and Inducement to Act 184k20 k. In general. Most Cited Cases Lie uttered in court is not fraud on liar's opponent if opponent knows it is a lie, yet fails to point this out to court. [9] Fraud 184 28

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k28 k. Fraud in particular transactions or for particular purposes. Most Cited Cases Fraud in the legal process is not actionable if it is incapable of obstructing opposing litigant. [10] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; perjury. Most Cited Cases Erroneous legal contention, being out in the open, does not have obstructive capability, and is not fraud on the court merely because, if believed, it would confer advantage on party making it. [11] Federal Courts 170B 612.1

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(D) Presentation and Reservation in Lower Court of Grounds of Review 170BVIII(D)1 Issues and Questions in Lower Court 170Bk612 Nature or Subject-Matter of Issues or Questions 170Bk612.1 k. In general. Most Cited Cases Customs-clearing service waived argument, raised for first time on appeal, that clothing manufacturer was alter ego of manufacturer's predecessor, and thus that service had right to withhold fabrics imported by manufacturer based on debt owed by predecessor. [12] Corporations and Business Organizations 101 2722

101 Corporations and Business Organizations 101X Mergers, Acquisitions, and Reorganizations 101X(C) Sale, Lease, or Exchange of Substantially All Corporate Assets 101k2721 Assumption of or Succession to Transferor's Debts and Liabilities 101k2722 k. In general. Most Cited Cases (Formerly 101k445.1) General rule in Illinois is that purchase even of all of corporation's assets does not carry with it assumption of corporation's liabilities. [13] Corporations and Business Organizations 101 101 Corporations and Business Organizations 101IX Corporate Powers and Liabilities 101IX(D) Contracts and Indebtedness 101k2440 k. In general. Most Cited Cases (Formerly 101k447) Among assets of corporation are its rights under its contracts. [14] Corporations and Business Organizations 101 2724(2) 2440

101 Corporations and Business Organizations 101X Mergers, Acquisitions, and Reorganizations 101X(C) Sale, Lease, or Exchange of Substantially All Corporate Assets 101k2721 Assumption of or Succession to Transferor's Debts and Liabilities 101k2724 Particular Debts and Liabilities 101k2724(2) k. Contracts. Most Cited Cases

(Formerly 101k445.1) Clothing manufacturer did not voluntarily assume its predecessor's contractual obligations when it acquired predecessor's contracts and other assets; manufacturer acquired predecessor's contract rights, not contract liabilities. [15] Payment 294 87(1)

294 Payment 294V Recovery of Payments 294k87 Duress 294k87(1) k. In general. Most Cited Cases Customs-clearing service was not liable to clothing manufacturer under theory of duress due to service's refusal to release fabrics imported by manufacturer, based on debt owed by manufacturer's predecessor, until manufacturer paid service $75,000 in exchange for service's release of its purported liens, given availability to manufacturer of complete legal remedy. [16] Torts 379 436

379 Torts 379V Other Miscellaneous Torts 379k436 k. Duress or coercion in general; extortion and threats. Most Cited Cases (Formerly 165k34) Hallmark of duress or extortion is that victim has no feasible legal remedy. [17] Compromise and Settlement 89 6(1)

89 Compromise and Settlement 89I In General 89k1 Nature and Requisites 89k6 Consideration 89k6(1) k. Necessity and sufficiency in general. Most Cited Cases Settlement agreement between clothing manufacturer and customs-clearing service, which arose from manufacturer's replevin action seeking release of imported fabrics being held by service, and under which manufacturer agreed to pay $75,000 in exchange for service's release of purported liens on fabrics, was not voidable on ground that service had no such liens, in that consideration paid by service was release of fabrics, which had significant value to manufacturer. Before POSNER, Chief Judge, and MANION and KANNE, Circuit Judges. POSNER, Chief Judge. This diversity suit, brought (and dismissed) in federal district court, has a curious *576 history. It begins with Oxxford Clothes, Inc., a manufacturer of expensive suits for men. The suits are made out of imported fabrics. For many years Oxxford had used Expeditors International of Washington, Inc. to clear these imports through customs pursuant to a contract in which Oxxford granted Expeditors a lien in the fabrics when they were in Expeditors' possession, so that Expeditors (which is the defendant in this suit) could be assured of collecting its charges for the customs-clearing service. Oxxford's principal creditor was Heller Financial, Inc. On December 3, 1994, Heller made a contract with Oxxford in which it was agreed that Heller would foreclose its liens and transfer the assets of Oxxford obtained by the foreclosure to Tom James Company, a large clothing manufacturer, which in turn would transfer the assets to a newly created subsidiary of that company. After a name change, the subsidiary is now known as Oxxford Clothes XX, Inc.; we'll call it XX to distinguish it from its predecessor. On December 9, XX notified Expeditors that it

had bought Oxxford's assets. At the time, Oxxford owed Expeditors $97,000, representing the unpaid balance of charges for customs-clearing services. On December 12, XX notified Expeditors that there were no assets out of which to satisfy its predecessor's debt to Expeditors. Expeditors was, no doubt, miffed. With reckless audacity XX then put its head in the lion's mouth by asking Expeditors to clear customs for it, even though its predecessor had repudiated the $97,000 debt. XX's lawyer explained at argument that it wanted to give Expeditors a chance to recoup some of the losses that Expeditors had incurred as a result of the repudiation! As soon as a significant quantity of imported fabrics came into Expeditors' possession, which happened between December 14 and December 18, Expeditors told XX that it would not deliver them until XX paid it $97,000. Expeditors claimed to have possessory liens in the fabrics arising out of Oxxford's debt for that amount. XX was indignant. It believed it owed nothing to Expeditors other than the modest charges for Expeditors' services in clearing customs for the newly imported fabrics (the fabrics owned by XX rather than by its predecessor), because XX had not assumed Oxxford's debts. It brought this suit to obtain the release of the fabrics. It asked the court for a temporary restraining order (and later a preliminary injunction), which was denied after a brief hearing in which Expeditors' lawyer claimed without amplification that his client did have valid liens in the new shipments. By now it was December 30. XX claims, and for purposes of this appeal we accept the claim (although skeptical), that without the shipments of fabrics that Expeditors had impounded XX would be unable to supply suits to its major retailer customers and as a result its business would be destroyed. It therefore knuckled under to what it regarded as Expeditors' extortionate demand and on January 3, 1995, negotiated a consent decree whereby Expeditors agreed to release the fabrics and transfer its so-called liens to XX in exchange for $75,000, which XX quickly paid. Three weeks later, XX, pursuant to an amended complaint that it filed with leave of court, asked the district court to order Expeditors to return the $75,000. The ground was that Expeditors had failed to deliver the liens as promised because it had no liens. Expeditors was happy to give up its liens; the alleged fraud is that it had no liens. Expeditors denied fraud and asked the court to enforce the provision of the consent agreement in which XX had agreed, upon performance of the other terms of the agreement, to dismiss its suit. The court sided with Expeditors and ordered the suit dismissed with prejudice, precipitating this appeal. XX's original suit was a suit to replevy the fabrics. The claim was that Expeditors lacked a legal justification for refusing to release XX's property to it. The claim became moot when, pursuant to the consent agreement, Expeditors released the fabrics to XX. The amended complaint touched off in effect a new suit, one claiming that Expeditors had obtained the $75,000 settlement from XX by fraud and duress. One count of the amended complaint seeks $75,000 in compensatory damages for the fraud and $5 million in punitive damages. The other seeks to *577 rescind the consent agreement on grounds of fraud, duress, and absence of consideration. XX doesn't really want rescission. That would imply putting the parties back where they were when the consent agreement was signed-which would require XX to return the fabrics to Expeditors. What XX must have meant to do in the second count was seek to rescind its purchase of the liens on the ground that, the liens having been worth exactly nothing, the contract of sale is unenforceable for want of consideration. So, giving XX the benefit of the doubt, we have three theories of liability to consider: fraud, duress, and rescission. [1][2][3][4] A fourth candidate, but one that XX does not nominate, is mistake of law. Lawyers Title Ins. Corp. v. Dearborn Title Corp., 118 F.3d 1157, 1163-65 (7th Cir.1997). XX paid $75,000 to Expeditors in the mistaken belief that the latter had a lien; it was a mistake of law because all the facts were known. XX was right not to advance such a theory, because where the mistake is the court's, the remedy is to appeal, not to mount a collateral attack on the judgment founded on the mistake. A motion under Fed.R.Civ.P. 60(b) asking the district court to set aside its judgment will not be allowed to do service for an appeal. Parke-Chapley Construction Co. v. Cherrington, 865 F.2d 907, 915 (7th Cir.1989); McKnight v. United States Steel Corp., 726 F.2d 333, 337 (7th Cir.1984); Bank of California, N.A. v. Arthur Andersen & Co., 709 F.2d 1174, 1177-78 (7th Cir.1983) (on pet. for reh.). It is even clearer that an independent suit is not a proper substitute for an appeal. Any mistake of law that is the premise of a

preliminary injunction can be corrected by means of a direct appeal from the grant of the injunction. Advent Electronics, Inc. v. Buckman, 112 F.3d 267, 274 (7th Cir.1997); Kinney v. Pioneer Press, 881 F.2d 485, 493 (7th Cir.1989); Time Warner Cable v. Bloomberg L.P., 118 F.3d 917, 923 n. 6 (2d Cir.1997). [5] The fraud claim is a nonstarter. Expeditors did not misrepresent any fact. It merely asserted a claim, based on facts known equally well to XX. It claimed that Oxxford's debt to it entitled it to hold on to XX's fabrics until the debt was paid. The claim was, as we shall see, meritless, and indeed frivolous. But since when is a frivolous claim a form of fraud? What would be particularly bizarre would be for a person against whom the frivolous claim was made to pay the claim and then turn around and sue the claimant for fraud, when what it should have done was simply to refuse to pay the claim, or if as in this case the claimant resorted to self-help to enforce his claim, to seek legal redress-which XX did. But then, unaccountably, it folded when the district court indicated that it was going to deny a preliminary injunction-unaccountably because the denial could have been appealed immediately, 28 U.S.C. 1292(a)(1), and because XX could have asked us for injunctive relief pending the determination of its appeal, arguing irreparable harm and pointing out the feebleness of Expeditors' defense to the claim for replevin. Fed. R.App. P. 8(a); Classic Components Supply, Inc. v. Mitsubishi Electronics America, Inc. , 841 F.2d 163 (7th Cir.1988); Chemical Weapons Working Group v. Department of the Army, 101 F.3d 1360 (10th Cir.1996); Half Moon Bay Fishermans' Marketing Ass'n v. Carlucci , 857 F.2d 505, 506 (9th Cir.1988). Upon the obtaining of such relief and the posting of a bond, XX would have gotten the fabrics released to it and would not have had to enter into the consent agreement. If as it believes Expeditors' defense was frivolous, it could have obtained sanctions, making it whole for the legal and related costs of obtaining the release of the fabrics through legal action. Alternatively, if XX could have purchased substitute fabrics in the open market and used them to make its suits, it could then have sought recovery of any excess expense incurred by this measure as damages in the replevin suit. Sheppard v. Fagan, 94 Ill.App.3d 290, 49 Ill.Dec. 856, 859, 418 N.E.2d 876, 879 (1981); Doe v. Roe, 289 Ill.App.3d 116, 224 Ill.Dec. 325, 335, 681 N.E.2d 640, 650 (1997); Dr. Franklin Perkins School v. Freeman, 741 F.2d 1503, 1520 (7th Cir.1984). XX claims, and in the posture of the case we accept, that the fabrics that Expeditors was holding as hostages for the repayment of Oxxford's debt to it were custom-made and could not be replaced in time to avert disaster.*578 **Even so, there was the quick and simple remedy of appeal; and our basic point is that a frivolous claim is not, as XX believes, a fraudulent claim. [6][7][8] XX also argues that Expeditors committed fraud on the court, by misrepresenting to the district court that it had valid liens. The term refers to conduct more egregious than anything here, conduct that might be thought to corrupt the judicial process itself, as where a party bribes a judge or inserts bogus documents into the record. In re Met-L-Wood Corp., 861 F.2d 1012, 1018-19 (7th Cir.1988); In re Whitney-Forbes, Inc., 770 F.2d 692, 698 (7th Cir.1985); Baltia Air Lines, Inc. v. Transaction Management, Inc. , 98 F.3d 640, 642-43 (D.C.Cir.1996). The only significance of the distinction is that, since fraud on the court is more serious than fraud on the opposing litigant, the party complaining about the fraud is not bound by the one-year limitation on motions to vacate a judgment because of fraud. Fed.R.Civ.P. 60(b). As XX's motion to set aside the consent judgment was filed well within a year, the characterization of Expeditors' fraud as fraud on the court is irrelevant. The question is, was there a fraud? A lie uttered in court is not a fraud on the liar's opponent if the opponent knows it's a lie yet fails to point this out to the court. If the court through irremediable obtuseness refuses to disregard the lie, the party has-to repeat what is becoming the refrain of this opinion-a remedy by way of appeal. Otherwise fraud on the court would become an open sesame to collateral attacks, unlimited as to the time within which they can be made by virtue of the express provision in Rule 60(b) on this matter, on civil judgments. [9][10] Whether Expeditors had liens was not a matter of private information that it could have concealed from XX. It was a matter of inference from facts (including documents, dates, intercorporate relations, and the ownership of the fabrics) and legal principles that were in XX's possession. Far from conceding the existence of the liens on the basis of phony assurances by Expeditors, XX contested their existence in the district court. Only it did so ineptly, so that the district court was left with the impression that Expeditors had valid liens. Fraud in the legal process is not actionable if it is incapable of obstructing the opposing litigant. Walsh v. McCain Foods Ltd., 81 F.3d 722, 726 (7th Cir.1996); Anderson v. Cryovac, Inc., 862 F.2d 910, 926 (1st Cir.1988); In re M/V Peacock, 809 F.2d 1403, 1405 (9th Cir.1987). An erroneous legal contention, being out in the open as it were, does not have obstructive capability, and is not fraud merely because if believed it would confer an advantage on the party making it. If that were the

standard for fraud on the court, no civil judgments would be final; every legal error that a judge committed that had been invited by the winning litigant would be, prima facie, fraud on the court. [11] The claim of duress has a similar infirmity-despite surface appeal. Expeditors, having no shadow of a legal right to withhold the fabrics in its possession from XX, used XX's inability to cover for the missing fabrics as a lever for extorting the payment of a debt owed by someone else, namely Oxxford. **And there was no shadow of a right, provided that Oxxford and XX are separate enterprises and the latter is not responsible for the former's debts. At argument Expeditors argued for the first time in this litigation that XX is really just the alter ego of Oxxford. Maybe so-maybe the three-sided transaction among Oxxford, Heller, and Tom James was a scheme for wiping out Oxxford's unsecured creditors (including Expeditors) without a declaration of bankruptcy, and the transfer of Oxxford's assets to XX a fraudulent conveyance. But the argument comes too late in the day to influence our decision; it is waived. [12][13][14] Another possibility, which Expeditors has argued throughout, is that XX voluntarily assumed its predecessor's contractual obligations. There is no indication it did. The general rule, in Illinois as elsewhere, is that a purchase even of all of a corporation's assets doesn't carry with it the assumption of the corporation's liabilities. Unit Trainship, Inc. v. Soo Line R.R., 905 F.2d 160, 162 (7th Cir.1990) (applying Illinois law); Shaw v. Republic Drill Corp., 810 F.2d 149 (7th Cir.1987) (per curiam) (applying Illinois*579 law); Myers v. Putzmeister, Inc., 232 Ill.App.3d 419, 173 Ill.Dec. 130, 131, 596 N.E.2d 754, 755 (1992); Fenderson v. Athey Products Corp., 220 Ill.App.3d 832, 163 Ill.Dec. 337, 339, 581 N.E.2d 288, 290 (1991). Among the assets of a corporation are its contracts-more precisely, the corporation's rights under its contracts, because the liabilities that the contracts create are not assets. The contract by which XX succeeded Oxxford recites that XX is acquiring the contracts and other assets of Oxxford, and this means, as in the Shaw and Myers cases cited above, the contract rights, not contract liabilities, of Oxxford; there is no intimation that it was also acquiring its liabilities. [15] So it's as if Expeditors had been exploiting a temporary, situational monopoly over one of its customers in order to obtain payment from another customer against whom it had no effective legal remedy. That sounds a lot like extortion, and almost like theft and ransom, with Expeditors stealing fabrics that have enormous value to XX because of the danger that without them XX's business will collapse, and then ransoming them to the owner for $75,000-in effect making XX buy the fabrics twice, first from the Italians and second from Expeditors. The fatal flaw in this ground of liability is, as before, XX's complete legal remedy. XX didn't have to pay Expeditors a cent. All it had to do, having failed to persuade the district court that this was indeed extortion, was to appeal to us and seek an injunction pending the decision of the appeal, as we explained before. [16] The hallmark of duress or extortion is that the victim has no feasible legal remedy. JPM, Inc. v. John Deere Industrial Equipment Co., 94 F.3d 270, 272 (7th Cir.1996); Beijing Metals & Minerals Import/Export Corp. v. American Business Center, Inc., 993 F.2d 1178, 1185 (5th Cir.1993); Abbadessa v. Moore Business Forms, Inc., 987 F.2d 18, 23 (1st Cir.1993). Consider the famous case of Alaska Packers' Ass'n v. Domenico, 117 F. 99 (9th Cir.1902). The defendant hired seamen in San Francisco for a voyage to Alaska to fish for salmon. When the ship arrived in Alaska waters, the seamen announced that they wouldn't do any work unless the defendant promised to pay them an additional wage beyond what was specified in their contract of employment. The defendant yielded, promising them the higher wages, but reneged when the ship returned to California. They sued-and lost. The promise had been made under duress because the defendant had had no feasible remedy against the seamen's demand. It could not have covered by hiring substitute seamen on the spot, given the brevity of the Alaska salmon season and the limited supply of seamen in Alaska. And it would not have been feasible for it to sue them, as the filing of many suits would have been necessary and the chances of collecting a significant judgment from each seaman at reasonable cost would have been remote. In our case the victim of so-called duress not only had but utilized an entirely feasible legal remedy, inexplicably failing to appeal and instead incurring the expense of what amounted to a brand new suit in the district court. See also Industrial Representatives, Inc. v. CP Clare Corp. , 74 F.3d 128, 129-30 (7th Cir.1996); United States v. Stump Home Specialties Mfg., Inc. , 905 F.2d 1117, 1121-22 (7th Cir.1990); Austin Instrument, Inc. v. Loral Corp., 29 N.Y.2d 124, 324 N.Y.S.2d 22, 272 N.E.2d 533 (1971). [17] XX's last argument is that the consent agreement, viewed, properly enough, as a contract, Schering Corp. v. Illinois Antibiotics Co., 62 F.3d 903, 908 (7th Cir.1995); Beckett v. Air Line Pilots Ass'n, 995 F.2d 280, 286

(D.C.Cir.1993); Johnson v. Robinson, 987 F.2d 1043, 1046 (4th Cir.1993), is voidable because the liens that Expeditors sold to XX for $75,000 were worth nothing. Meyer v. Marilyn Miglin, Inc., 273 Ill.App.3d 882, 210 Ill.Dec. 257, 263, 652 N.E.2d 1233, 1239 (1995); Corroon & Black of Illinois, Inc. v. Magner, 145 Ill.App.3d 151, 98 Ill.Dec. 663, 669, 494 N.E.2d 785, 791 (1986). They were indeed worth nothing. But they were not the whole of the consideration. In fact, they were not any part of the consideration. They were just a flourish in the consent agreement-and what would a document drafted by a lawyer be without flourishes? The consideration was the release of the fabrics, which was *580 worth a lot to XX. If Expeditors had no right to hold on to the fabrics, it had no right to sell that right back to XX; but this is just the duress claim redescribed, and it fails for the reason we have given. AFFIRMED.

Pumphrey v. K.W. Thompson Tool Co., 62 F.3d 1128, 64 USLW 2178, 32 Fed.R.Serv.3d 332, 95 Cal. Daily Op. Serv. 5998, 95 Daily Journal D.A.R. 10,301 (9th Cir.(Idaho) Aug 01, 1995) Plaintiffs in products liability action against handgun manufacturer filed independent action seeking to set aside defense verdict on grounds of fraud on the court in connection with defendant's presentation of videotaped product tests. The United States District Court for the District of Idaho, Edward J. Lodge, Chief Judge, granted motion, and defendant appealed. The Court of Appeals, Skopil, Senior Circuit Judge, held that: (1) individual who was defendant's vice president and general counsel served as officer of the court in litigation even though he did not enter appearance; (2) failure to disclose existence of videotape of unfavorable tests amounted to fraud on the court; (3) plaintiffs' failure to uncover fraud did not bar instant action; and (4) plaintiffs were entitled to new trial on all issues. Affirmed. [1] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases One species of fraud on the court that will justify setting aside judgment occurs when officer of the court perpetrates fraud affecting ability of court or jury to impartially judge case. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [2] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases In context of motion to set aside judgment in products liability action for fraud on the court in presentation of videotaped product tests, individual who was vice president and general counsel of defendant was officer of the court in litigation; although individual did not enter appearance, was not admitted pro hac vice, and did not sign any documents filed with court, he attended trial on defendant's behalf, gathered information in response to discovery requests, and participated in videotaping. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. SKOPIL, Senior Circuit Judge:

We review in this appeal a district court's decision to set aside a verdict in favor of a defendant in a wrongful death action after the court discovered that defendant's in-house counsel participated in a scheme to defraud the court. The court ordered a new trial over defendant's objection that its conduct did not rise to the level of fraud upon the court, and even assuming that it did, that a new trial should be limited solely to the issue of liability. We agree with the district court that defendant's actions constituted fraud on the court, and that a new trial on all issues is appropriate. Accordingly, we affirm. I. Melvin Sparks was killed when he dropped a Thompson P.C. Contender handgun and it fired, sending a bullet through his heart. Sparks' widow and children (Sparks) brought a wrongful death action against **the gun manufacturer, K.W. Thompson Tool Company (Thompson), alleging that the gun's internal and external safety devices were engaged at the time of the accident, but that the gun nevertheless fired when dropped. At trial, Thompson introduced a videotape (trial video) showing the Contender dropped from various heights and angles. The trial video shows that during the tests, the safeties performed as designed, and the gun never fired. **Thompson's production manager, Kendrick French, conducted the tests. Also present were Thompson's vice president and general counsel, Edward Bartlett, and Thompson's president, Robert Gustafson. The jury found that plaintiffs suffered $100,000 in damages, but that the decedent was 80% contributorily negligent. The present action arises as a result of a subsequent, unrelated lawsuit in which another plaintiff claimed injuries resulting from a dropped Thompson Contender. In this lawsuit, a second video (original video) was produced during discovery, showing that the Contender fired when dropped during testing. This video was prepared by Thompson on the same day as the trial video, but was never produced during the Sparks litigation. A magistrate judge conducting a settlement conference in the later lawsuit learned that the original video was never produced in Sparks, and that Thompson's expert witness, Kendrick French, testified several times in Sparks that he had conducted drop-tests of the Contender but it had never fired. The magistrate judge reported these facts to the federal District Court in Idaho; Sparks' attorney was thereafter informed. Sparks filed this independent action pursuant to Federal Rule of Civil Procedure 60(b), seeking to set aside the Sparks verdict. **The district court granted summary judgment in favor of Sparks on the ground that Bartlett was an officer of the court and had committed fraud upon the court. The district court further held that even if Bartlett was not an officer of the court, the conduct was sufficient to constitute fraud upon the court. The district court set aside the verdict, ordered a new trial, and awarded attorney's fees. II. [1][2] Federal Rule of Civil Procedure 60(b) provides that a judgment may be set aside for fraud upon the court. One species of fraud upon the court occurs when an officer of the court perpetrates fraud affecting the ability of the court or jury to impartially judge a case. See In re Intermagnetics America, Inc., 926 F.2d 912, 916 (9th Cir.1991); Alexander v. Robertson, 882 F.2d 421, 424 (9th Cir.1989). Thompson first contends that Bartlett was not an officer of the court for purposes of the Sparks litigation. Commencing in April, 1982, Edward Bartlett was general counsel and vice president of Thompson. He was not admitted to practice in the District of Idaho, where the Sparks trial occurred. He did not enter an appearance in Sparks, was not admitted pro hac *1131 vice, and did not sign any documents filed with the court . Rather, Thompson was represented at trial by local counsel from Idaho. We note, however, that Bartlett participated significantly in Sparks by attending the trial on Thompson's behalf, gathering information to respond to discovery requests and framing the answers, and participating in the videotaping of both the trial video and the original video. Additionally, Bartlett retained possession of both the trial video and original video after they were made. No one at Thompson differentiated between Bartlett's activities as vice president and his activities as general counsel. We agree with the district court that Bartlett's participation in Sparks was sufficient to render him an officer of the court. Cf. NCK Organization, Ltd. v. Bregman, 542 F.2d 128, 133 (2d Cir.1976) (house counsel, who was also

vice president and director, may not avoid disqualification from a matter at least where circumstances indicate that [his] participation consisted of more than action simply in an officer's capacity); E.F. Hutton & Co. v. Brown, 305 F.Supp. 371, 381 (S.D.Tex.1969) (law firm was disqualified from matter due to level of participation in case, notwithstanding firm's failure to enter an appearance). Thompson offers no sound reason why an attorney's participation in a case should not render him an officer of the court. The authority offered by Thompson in support of its position stands only for the propositions that attorneys have a duty to the courts before which they practice, and that courts have the corresponding authority to discipline attorneys who practice before them. See e.g., In re Snyder, 472 U.S. 634, 643, 105 S.Ct. 2874, 2880, 86 L.Ed.2d 504 (1985) (courts have inherent authority to discipline lawyers which derives from lawyer's role as an officer of the court which granted admission); Cord v. Smith, 338 F.2d 516, 524 (9th Cir.1964) (ethical rules of a federal court apply to attorney appearing before a federal court even if state rules differ). Therefore, we conclude that Bartlett was an officer of the court in the Sparks litigation. [3] Thompson next contends that Bartlett's actions do not constitute fraud upon the court.FN1 We disagree. [F]raud upon the court includes both attempts to subvert the integrity of the court and fraud by an officer of the court. Intermagnetics, 926 F.2d at 916. Furthermore, it must involve an unconscionable plan or scheme which is designed to improperly influence the court in its decision. Abatti v. Commissioner, 859 F.2d 115, 118 (9th Cir.1988) (internal quotation omitted). Based upon the following undisputed facts, we agree with the district court's conclusion that Thompson, through Bartlett, perpetrated fraud upon the court. FN1. Thompson argues that the district court erred by granting summary judgment on the issue of fraud upon the court, as Sparks did not specifically move for summary judgment on this ground. Thompson, however, raised the issue of fraud upon the court in its own motion for summary judgment, and fully aired its position on the issue. Moreover, Thompson fails to indicate a single argument or piece of evidence that it did not have the opportunity to present. Accordingly, the district court did not err by considering summary judgment on this issue. See United States v. Grayson, 879 F.2d 620, 625 (9th Cir.1989). Thompson made two videotapes approximately two months before trial. During the filming of the original video, while the Contender's internal safety was being tested, the gun fired after it was dropped. During the filming of the trial video, while the internal safety was being tested, the gun did not fire when dropped. The trial video was made because the test shown on the original video did not turn out as planned. French and Bartlett were present at the filming of these videos. Bartlett had possession of these videos after they were made, yet he never disclosed the existence of the original video to trial counsel for Thompson. Prior to filming the videos, Thompson answered a request for production by stating that defendant is not presently aware of any records relating to the testing of the Thompson Contender handguns. If records are later discovered, they will be made available pursuant to this request. Contrary to that statement, however, the original video was never disclosed to Sparks at any time, despite the fact that Bartlett participated in filming the video, had possession of the video, and drafted later discovery responses. *1132 Barely one month after the drop-tests were conducted, Bartlett drafted an answer to Sparks' interrogatories which mischaracterized the drop-tests. **The answer admitted that during one test the Contender fired when dropped, but misstated that the drop was from five feet rather than three feet. The answer further misstated that both safeties were intentionally disengaged, when in fact the internal safety was unintentionally disengaged. The answer also misstated that there was no record of the test. Bartlett attended the trial at which French testified several times, without qualification, that he had never seen the Contender fire when dropped during tests. Additionally, French was deposed in two cases subsequent to Sparks involving the same gun. Bartlett was present at both depositions. In one case, French stated that he had never been able to engage the internal safety, disengage the external safety, and then drop the gun and have it fire. In another case, French stated that he had been able to jar the safety out of place when dropping the gun but had not been able to make it fire. These undisputed facts reveal that Thompson, through Bartlett, engaged in a scheme to defraud the jury, the court, and Sparks, through **the use of misleading, inaccurate, and incomplete responses to discovery requests,

**the presentation of fraudulent evidence, and **the failure to correct the false impression created by French's testimony. The end result of the scheme was to undermine the judicial process, which amounts to fraud upon the court. Cf. Hazel-Atlas Glass Co. v. Hartford Empire Co., 322 U.S. 238, 245-46, 250, 64 S.Ct. 997, 1001, 1003, 88 L.Ed. 1250 (1944) (deliberately planned scheme to present fraudulent evidence constitutes fraud upon the court), overruled on other grounds, Standard Oil Co. of Cal. v. United States, 429 U.S. 17, 97 S.Ct. 31, 50 L.Ed.2d 21 (1976); Abatti, 859 F.2d at 118 (fraud upon the court involves unconscionable plan or scheme to improperly influence the court). Thompson argues, however, that there was no fraud upon the court because Bartlett believed the original video was taped over, and in 1982, no one at Thompson thought that a videotape was a document or record. Even taking the above as true, we nonetheless conclude that there is ample evidence of fraud upon the court. Bartlett said nothing when trial counsel argued that the trial video should be admitted, because the test was not staged or rigged or anything else. French added to the deception at trial when he engaged in the following colloquy regarding the making of the trial video: Q. Was there any attempt to alter or modify that video tape or edit it? A. No, sir, there was not. Q. Does the video tape fairly and accurately portray the tests you did with the dropping of the gun? A. Yes, it does. **Bartlett, who knew that French's answers were false because he was present at the taping, failed to take action regarding French's false answers at trial and in subsequent depositions. Additionally, Bartlett provided a misleading answer to the interrogatory regarding the drop-test. Thompson further contends that regardless of whether the videotape was knowingly withheld, there was no fraud upon the court because the original video was not material to the issues in Sparks because it revealed only what Thompson's experts conceded at trial; namely, that the internal safety could disengage if the gun was dropped, and that the gun could fire if dropped with both safeties off. We reject this argument for two reasons. First, it is not as clear as Thompson suggests that the video is immaterial. Thompson appears to argue that the original video shows the gun firing after the internal safety was unintentionally disengaged during a prior drop. Review of the transcript, however, reveals that it is equally plausible that the safety disengaged and the gun fired on the same drop. This is, of course, why it should not have been concealed from the plaintiff or the jury. Second, Thompson's argument misses the point. The issue here is not whether Sparks would have prevailed had the original video been produced. As we noted in Intermagnetics, the inquiry as to whether a judgment *1133 should be set aside for fraud upon the court under Rule 60(b) focuses not so much in terms of whether the alleged fraud prejudiced the opposing party but more in terms of whether the alleged fraud harms the integrity of the judicial process. Intermagnetics, 926 F.2d at 917 (citing Hazel-Atlas, 322 U.S. at 264, 64 S.Ct. at 1010). By failing to disclose the original video, mischaracterizing the results of the drop-tests, and failing to correct the false impression created by French's testimony, Bartlett undermined the judicial process. As the district court noted, Bartlett, as a licensed attorney, is aware of the necessity for compliance with the rules of discovery and the rules of professional responsibility. He is aware of the damage failure to abide by these rules can wreck in the specific case at hand and the larger framework of confidence in the adversary trial system. Moreover, Thompson is in no position to dispute the effectiveness of the scheme in helping to obtain a favorable jury verdict. See Hazel-Atlas at 246-47, 64 S.Ct. at 1001-02 (holding that party who presented fraudulent evidence cannot disclaim its effectiveness after the fact). Thompson further argues that the interrogatory answers regarding the drop-test contained only immaterial and technical inaccuracies, and thus, are insufficient to support a finding of fraud. We disagree. The issue in Sparks was whether the Contender could fire when dropped with one or both safeties engaged. Thus, contrary to Thompson's assertion, whether the internal safety was intentionally or unintentionally disengaged, and whether there was any record of the test, likely affected Sparks' pursuit of discovery.

[4][5] Nor do we agree with Thompson that Sparks' failure to uncover the alleged fraud, after receiving Thompson's interrogatory answers admitting that the gun fired during a drop test, should bar this action. Thompson's conduct during discovery assured that Sparks would have no reason to pursue discovery regarding the drop-tests. We note that Thompson failed to update the request for production, and also filed a misleading interrogatory answer regarding its drop-tests. We further note that Thompson did not reveal the fact that the gun fired during a drop-test until less than a month before trial. In addition, Thompson successfully pursued a protective order precluding the deposition of Bartlett and others at Thompson after the drop-test occurred, but before the results were revealed to Sparks. This order made it clear that the only remaining discovery was to be Thompson's answers to Sparks' interrogatories. Moreover, even assuming that Sparks was not diligent in uncovering the fraud, the district court was still empowered to set aside the verdict, as the court itself was a victim of the fraud. In Hazel-Atlas the Supreme Court reasoned that: even if Hazel did not exercise the highest degree of diligence [the] fraud cannot be condoned for that reason alone. This matter does not concern only private parties.... [and] tampering with the administration of justice in the manner indisputably shown here involves far more than injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public, institutions in which fraud cannot complacently be tolerated consistently with the good order of society. Surely it cannot be that preservation of the integrity of the judicial process must always wait upon the diligence of the litigants. The public welfare demands that the agencies of public justice be not so impotent that they must always be mute and helpless victims of deception and fraud. Hazel-Atlas, 322 U.S. at 246, 64 S.Ct. at 1001. Accordingly, Sparks' failure to uncover the fraud during Sparks does not bar this action. III. [6] Thompson argues that a new trial should be limited to the issue of liability, because any fraud that occurred did not relate to the issue of damages. We disagree. Partial trials may not properly be resorted to unless it clearly appears that the issue to be retried is so distinct and separable from others that a trial of it alone may be had without injustice. *1134Gasoline Products Co., Inc. v. Champlin Refining Co., 283 U.S. 494, 500, 51 S.Ct. 513, 515, 75 L.Ed. 1188 (1931). Sparks should be given the opportunity to present a complete case, unhampered by Thompson's fraud. The district court did not abuse its discretion by ordering a new trial on all issues. See d'Hedouville v. Pioneer Hotel Co., 552 F.2d 886, 897 (9th Cir.1977) (whether to limit issues in new trial is within trial court's discretion). IV. [7] Sparks seeks attorney's fees on appeal pursuant to our inherent power to levy sanctions for abusive litigation practices. See Yagman v. Republic Ins., 987 F.2d 622, 628 (9th Cir.1993). Our inherent powers includes the power to assess attorney's fees when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons. Chambers v. NASCO, Inc., 501 U.S. 32, 45-46, 111 S.Ct. 2123, 2133, 115 L.Ed.2d 27 (1991) (internal quotations omitted). Although Thompson did not prevail on appeal, we do not conclude that its arguments were presented in bad faith, vexatiously, wantonly, or for oppressive reasons. Therefore, we decline to award attorney's fees on appeal. AFFIRMED.

Chicago Title & Trust Co. v. Fox Theatres Corp., 182 F.Supp. 18, 3 Fed.R.Serv.2d 98 (S.D.N.Y.,Mar 01, 1960)

Case provides citations to U.S. v. Manton and Root v. Universal.

Proceeding on petition to have an order approving a settlement entered into in an equity receivership set aside on ground such order was tainted with fraud and corruption, and on ground that the judge who entered the order was

corruptly induced to sign it. Respondents moved to dismiss the petition. The District Court, Frederick van Pelt Bryan, J., held that where there were insufficient allegations of fact to support the petition, but serious charges were levied against the integrity of the court, and there were protracted hearings at which thousands of pages of testimony were taken, and **judge against whom grave charges were made stood convicted of dishonest judicial conduct in another connection, and there was evidence lending support to the claim that in a later phase of the receivership the judge who entered the order was corruptly influenced, and charges of improper conduct made against receivers in the matter resulted in substantial settlements with them or their sureties, court, rather than dismissing the proceedings, finally would direct that petitioners file with the court a detailed statement of any actual proof which they might have showing that the order in question was brought about by corruption of the judge in question. Order in accordance with opinion. [1] Receivers 323 204

323 Receivers 323VII Accounting and Compensation 323k204 k. Discharge of Receiver. Most Cited Cases Whether an equity receivership per se was terminated or not, a court had power to take evidence on question of corrupt conduct on the part of officers of the court, and **if there was corruption, the court was under a duty to take whatever action might be appropriate to sustain its integrity and to undo any harm or injustice which resulted. [2] Receivers 323 204

323 Receivers 323VII Accounting and Compensation 323k204 k. Discharge of Receiver. Most Cited Cases Where an equity receivership had been terminated for a number of years, the only purpose for which the court retained any powers over it was to determine whether there was any corrupt conduct on the part of officers of the court in regard thereto, and unless it was shown that officers of the court acted **corruptly or **fraudulently, and that in order to uphold the integrity of the court some action should be taken to rectify resulting wrongs or injustices, the court had no power or jurisdiction whatsoever over the receivership, nor could it entertain any applications made in regard to it. [3] Receivers 323 87

323 Receivers 323IV Management and Disposition of Property 323IV(A) Administration in General 323k87 k. Collection of Assets. Most Cited Cases A lapse of approximately 25 years prior to filing of a petition to set aside an order approving a settlement in an equity receivership, on ground a fraud was practiced on the court, together with the scope and wide ramifications of the transactions and the difficulties of defending adequately against charges a quarter of a century after the event, and intervening changes of status and position all made it imperative that facts constituting corruption be clearly and specially alleged. Fed.Rules Civ.Proc. rule 9(b), 28 U.S.C.A. [4] Receivers 323 87

323 Receivers 323IV Management and Disposition of Property 323IV(A) Administration in General

323k87 k. Collection of Assets. Most Cited Cases Where a petition was filed to have a 1933 order approving a settlement in an equity receivership vacated and set aside on ground that fraud was practiced on the court, burden was on petitioners to allege facts in their petition showing that injustice or fraud resulted from corruption of officers of the court, and neither the fact that substantial sums were recovered for a trust estate set up as the result of the receivership proceedings, by way of settlement in certain unrelated proceedings, **nor the fact that judge who signed the order in question was convicted of crime of obstructing justice in another connection, nor fact there were reasonable grounds to believe that corruption might have occurred in later phases of the receivership **were substitutes for allegations of fact showing that fraud and corruption existed with respect to the order of settlement which petitioners sought to set aside. Fed.Rules Civ.Proc. rule 9(b), 28 U.S.C.A. [5] Federal Civil Procedure 170A 636

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases Rule of Civil Procedure providing that in all averments of fraud the circumstances constituting fraud be stated with particularity is a restatement of a long-standing rule at common law. Fed.Rules Civ.Proc. rule 9(b), 28 U.S.C.A. [6] Federal Civil Procedure 170A 636

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases **Mere general allegations that there was **fraud, **corruption or **conspiracy, or characterizations of acts or conduct in such terms are not enough to state a cause of action for fraud no matter how frequently repeated, nor do statements of malice, intent, knowledge and other conditions of mind, in general, substitute for **particularization of the circumstances constituting the fraud charged, within the Rules of Civil Procedure. Fed.Rules Civ.Proc. rule 9(b), 28 U.S.C.A. [7] Fraud 184 50

184 Fraud 184II Actions 184II(D) Evidence 184k50 k. Presumptions and Burden of Proof. Most Cited Cases Fraud cannot be presumed, but any presumption there may be is against it. [8] Federal Civil Procedure 170A 691

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(B) Complaint 170AVII(B)2 Particular Actions

170Ak691 k. In General. Most Cited Cases To state a cause of action for fraud, **facts must be alleged which, if proven, would constitute fraud or would lead clearly to the conclusion that fraud has been committed. Fed.Rules Civ.Proc. rule 9(b), 28 U.S.C.A. [9] Federal Civil Procedure 170A 2659

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2657 Procedure 170Ak2659 k. Motion, Complaint or Bill. Most Cited Cases Requirement of alleging averments of fraud with particularity is strictly enforced when it is sought to impeach an order or decree of a court, especially one of long standing. Fed.Rules Civ.Proc. rule 9(b), 28 U.S.C.A. [10] Corporations 101 558

101 Corporations 101XII Insolvency and Receivers 101k551 Appointment of Receiver 101k558 k. Appointment, Qualification, and Tenure. Most Cited Cases It was proper for a senior circuit judge, acting under a designation of himself as a district judge, to appoint as a coreceiver, the president of a large corporation which was being placed in equity receivership, and it was equally in order for him to appoint a coreceiver who was disinterested. [11] Corporations 101 561(1)

101 Corporations 101XII Insolvency and Receivers 101k561 Collection of Assets 101k561(1) k. In General. Most Cited Cases Allegations in a petition to have an order of settlement entered into in an equity receivership vacated and set aside on ground order approving the settlement was tainted with fraud and corruption and on ground that judge who signed the order was corruptly induced to sign it, to the effect that the judge inquired about certain negotiations involved between the corporation in receivership, and others, and that certain business and personal relationships between the judge who signed the order, and other persons, firms and corporations were not disclosed by the judge to creditors of corporation in receivership, were insufficient to show there was anything which should have been disclosed to the creditors, and were totally insufficient to show that judge who signed the order was disqualified from passing on the settlement. [12] Federal Civil Procedure 170A 2643.1

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2643 Power of Court 170Ak2643.1 k. In General. Most Cited Cases (Formerly 170Ak2643) Federal Civil Procedure 170A 2651.1

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2651.1 k. In General. Most Cited Cases (Formerly 170Ak2651) Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases A court has the inherent power to inquire into the integrity of its own judgments and to set them aside when fraud or corruption of its officers has been shown. [13] Receivers 323 87

323 Receivers 323IV Management and Disposition of Property 323IV(A) Administration in General 323k87 k. Collection of Assets. Most Cited Cases A petition in an equity receivership to set aside an order approving a settlement on ground it was tainted with fraud and corruption, and on ground that judge who signed the order was corruptly induced to sign it, was fatally defective where, accepting its allegations of fact as true, it failed to state facts showing, or from which it could be concluded, that the order in question was the result of fraud or corruption on the part of officers of the court. [14] Receivers 323 87

323 Receivers 323IV Management and Disposition of Property 323IV(A) Administration in General 323k87 k. Collection of Assets. Most Cited Cases Where there were insufficient allegations of fact to support petition to set aside an order approving a settlement entered into in an equity receivership, on ground that the judge who entered such order was corruptly induced to sign it, but serious charges were levied against the integrity of the court, and there were protracted hearings on the petition at which thousands of pages of testimony were taken, and judge against whom grave charges were made stood convicted of dishonest judicial conduct in another connection, and there was evidence lending support to the claim that in a later phase of the receivership the judge who entered the order was corruptly influenced, and charges of improper conduct made against receivers in the matter resulted in substantial settlements with them or their sureties, court, rather than dismissing the proceedings, finally would direct that petitioners file with the court a detailed statement of any actual proof which they might have showing that the order in question was brought about by corruption of the judge in question. FREDERICK van PELT BRYAN, District Judge. This application is in the nature of a summary proceeding in an equity receivership commenced in this court in early 1932. It is before me on motions by various of the respondents to dismiss the petition on a variety of grounds.

The first objective of the proceeding is to vacate and set aside an order made in the equity receivership on November 17, 1933 by the late Martin Manton, then the Senior Circuit Judge of the Circuit Court of Appeals of this Circuit, sitting in the District Court. That order authorized the then equity receivers, William E. Atkinson and John F. Sherman, *21 to make a settlement of claims against various of the respondents named in the petition, and others, for the recovery of assets alleged to have been unlawfully transferred from the defendant Fox Theatres Corporation prior to the receivership, said to amount to more than $20,000,00. Many of these claims were the subject of a plenary action brought by the receivers against Fox Film Corporation, certain of the respondents, and others, in the New York State courts. Petitioners charge that the order of November 17, 1933 approving the settlement was tainted with fraud and corruption and that Judge Manton was corruptly induced to sign it to cover up extensive frauds which it is claimed that respondents had perpetrated upon Fox Theatres Corporation, its creditors and stockholders. Petitioners seek to have the order vacated and set aside and to have all steps and proceedings taken under it nullified. They also seek other far-reaching relief to which I will refer later. Parties On January 30, 1939 an order of Judge Manton was entered in this receivership confirming a plan proposed by the then equity receivers for the realization upon and liquidation of the assets of defendant Fox Theatres Corporation. The plan contemplated the creation of a trust to be administered and enforced by the Supreme Court, New York County, which was analogous in its functions to a corporation set up to realize upon and distribute the assets of a receivership estate. The realization plan was described by the court as one which would terminate the equity receivership, but which contemplates continuous liquidation of the corporate assets'. Pursuant to the plan a deed of trust was executed as of February 24, 1939 for the benefit of the creditors and stockholders of defendant Fox Theatres. Trustees were duly designated by Judge Manton and the deed was duly filed with the County Clerk of New York County. All of the property and assets of the equity receivership and of Fox Theatres Corporation were transferred to and vested in the trustees under the deed of trust. Participating certificates were issued to the Fox creditors and stockholders entitled to share in the assets. Duly designated trustees have been carrying out the terms of the trust under the supervision of the New York Supreme Court ever since. The petitioners in this proceeding are the present trustees under this deed of trust. They derive whatever status they may have to maintain the proceeding solely from their capacity as such trustees. The more than thirty parties named in the petition as respondents include a banking corporation, eight other corporations, fifteen individuals, the erstwhile equity receiver in the Delaware Chancery Court of one of the corporations named, three persons named individually and as co-partners, and the executors of two decedents. A number of the respondents are the successors in interest of persons alleged to have participated in the transactions complained of. The Relief Sought The petition consists of fifty printed legal-sized pages containing ninety-seven separately numbered allegations, many of which are in turn sub-numbered. It is more than a little difficult to summarize its allegations. It is petitioners' theory that beginning in 1930 various of the named respondents, the predecessors in interest of other respondents, and many others named and unnamed, engaged in a vast and far-reaching conspiracy to milk Fox Theatres Corporation of assets worth many millions of dollars,' in derogation of the rights of its creditors and stockholders. The conspiracy is said to have culminated in this equity receivership and in the allegedly corrupt order of November 17, 1933 approving the settlement by the equity receivers of the claims to recover fraudulently transferred assets. It is claimed that the equity receivership was collusive, that the settlement made by the receivers was grossly and unconscionably inadquate *22 and insufficient and that the order authorizing the settlement and its consummation was made as the result of the corruption of Judge Manton. Petitioners' counsel summarizes their position as follows:

The conspiracy alleged was to denude Fox Theatres of its assets; to transfer them to the Respondents, and then, by a Court order authorizing the settlement, to regularize the despoliation. In addition to vacating and setting aside the order of November 17, 1933 authorizing the settlement and its consummation the petition also seeks **(1) a declaration that all proceedings, transfers, releases, covenants not to sue, and other instruments and assurances of title, pursuant to or under the authority of such order, be declared void; **(2) a decree requiring that the respondents, their assignees and transferees' account to petitioners for all properties, monies and other assets of Fox Theatres * * * received by them or on their behalf or for their account or coming into their possession, and to return, reassign, retransfer and redeliver same * * * or if same are no longer in their possession or susceptible of physical retransfer and redelivery * * *, then and in that event to pay to petitioners the fair monetary value thereof, together with the accumulations, profits and receipts therefrom; **(3) a judgment for such sums, damages, profits, interest, costs, disbursements and counsel fees' as are appropriate; **(4) a judgment that all the respondents are guilty of contempt of this court and providing punishment therefor; and **(5) items of ancillary relief. The Issues Now Before the Court This proceeding was commenced by the service on various of the respondents of an order to show cause made on December 9, 1954 and the accompanying petition. Respondents Chase National Bank, Bender, Van Kleeck and Aumack, individually and as co-partners doing business as Bender & Co., American Express Company, General Precision Equipment Corporation, National-Simplex-Bludworth Corporation, Inc., Skouras Theatres Corporation, Randforce Amusement Corporation, Rinfriss Corporation, Samuel Rinzler, and the executors under the will of Louis Frisch, deceased, appeared specially for the purpose of moving to dismiss the portions of the petition and order to show cause which sought to set aside the settlement order of Judge Manton of November 17, 1933. After conference with Chief Judge Knox before whom all remaining matters in this receivership were then pending, a stipulation was entered into with the approval of the court, permitting the special appearance of these respondents for this limited purpose and reserving to them the right to answer the petition or to make other motions directed, among other things, (1) to the sufficiency of the petition generally, (2) the right of petitioners to proceed summarily rather than by plenary action, (3) the capacity of the petitioners to institute and maintain the proceeding, and (4) the jurisdiction of the court over the trust res. These respondents then made motions to dismiss the petition upon the grounds (1) that it failed to state facts upon which the order of November 17, 1933 could be set aside and declared void or facts showing that the order of any proceedings had pursuant thereto was the result of any fraud or misconduct on the part of officers of the court; (2) that the petition was barred by the time limitations of Rule 60(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A., since it was not made within a reasonable time and no facts were set forth justifying delay; (3) that petitioners were guilty of gross laches to the great prejudice of respondents; (4) as to some of the respondents that petitioners were precluded from the relief sought because they had made it impossible to restore the status quo ante; and (5) that there has been a prior binding adjudication of the underlying claims asserted in the petition. Petitioners then sought an order to show cause bringing on motions by them to strike the special appearances filed by *23 the moving respondents, to dismiss' their motions to dismiss the petition, to compel them to answer the petition, and for other relief. That order to show cause was never signed. Some time thereafter this matter was assigned to me for all purposes. At a conference of counsel before me it was determined that the court would hear and determine the issues of law (1) as to whether the petition failed to allege facts showing that the order of November 17, 1933 under attack, and proceedings taken thereunder, were the result of any fraud or corruption on the part of officers of this court, and (2) as to whether any defenses of laches might be available to the respondents under the circumstances. All other questions raised by respondents' motions to dismiss were reserved for future determination if that should be necessary. These are the only issues before me at this point. The History and Background of This Equity Receivership The questions raised must be viewed against the background of the long and troublesome history of this hoary

equity receivership. Much of this background is murky. Some of it is obscure. And almost all of it is replete with complications. The key events with which this proceeding is concerned took place more than a quarter of a century ago. In June 1932, when this receivership commenced, Judge Manton was Senior Circuit Judge of the Circuit Court of Appeals of this Circuit. At that time there was, as the Supreme Court said in Johnson v. Manhattan Ry. Co., 289 U.S. 479, 483, 53 S.Ct. 721, 723, 77 L.Ed. 1331: An acute controversy between the Senior Circuit Judge of the Second Circuit and the District Judges of the Southern District of New York respecting the authority of a judge specially assigned to that district- particularly the Senior Circuit Judge when so assigned- to entertain an application for the appointment of receivers in a suit in equity. In so far as that controversy affected the present equity receivership the Supreme Court said, 289 U.S. at pages 483-484, 53 S.Ct. at page 723: In 1930 the Senior Circuit Judge, acting under 28 U.S.C. 22, and reciting that the public interest required it, assigned himself to hold at any time a session or sessions of the District Court for that district, for the purpose of trying causes and entertaining and disposing of any matter which might come before him. In June, 1932, at the suggestion of counsel in an intended suit in equity for the appointment of receivers for the Fox Theatres Corporation, the Senior Circuit Judge sought informally to persuade one or more of the District Judges that a trust company ought not to be selected as receiver, but failed to secure an acceptance of his view. Thereupon, acting under his assignment of 1930, he entertained the application for a receiver and appointed individual receivers. The controversy between Judge Manton and the District Judges had arisen primarily over the practice of the District Judges in not infrequently selecting as an equity receiver the trust company which was designated by District Court Rules as a standing receiver in bankruptcy cases. The Johnson case did not involve this receivership but another equity receivership involving the Interborough Rapid Transit Company, one of the principal transit facilities in the City of New York. Equity receivers had been appointed by Judge Manton in that case after he had assigned himself to hold a District Court for the Southern District of New York. His action in so doing was collaterally attacked. The Supreme Court held that the Senior Circuit Judge had the power so to assign himself and to appoint receivers in the suit in equity. However, the court said that Judge Manton had acted hastily and evidently with questionable wisdom and that his action*24 had embarrassed and was continuing to embarrass the receivership. The court suggested that it would be the part of wisdom for him to withdraw from further participation in the receivership proceedings under the circumstances. Thereafter Judge Manton withdrew from the Interborough case. However, no question appears to have been raised in this receivership as to the propriety of its being before Judge Manton or as to his power to appoint the receivers, and he continued to handle it until his resignation from the bench in 1939. On June 22, 1932 Judge Manton appointed as temporary receivers William E. Atkinson, President of defendant Fox Theatres, and John F. Sherman, who appears to have had no connection with the defendant, any of the respondents, or any of the transactions alleged to have taken place prior to his appointment. FN1 On July 12, 1933 their appointment was made permanent. The order appointing permanent receivers directed them to institute such actions as were necessary to protect the trust estate. FN1. On August 16, 1932 Alfred Blumenthal, a creditor of Fox Theatres who is named as a respondent and co-conspirator in the proceeding at bar, moved to vacate the order of June 22, 1932 appointing the temporary receivers, and all orders entered thereafter, on the ground that the proceedings were collusive, sham, fictitious, in bad faith and of ulterior motive. He alleged a collusive and fraudulent scheme to milk

Fox Theatres of its assets, to place it in friendly equity receivership, and to have Atkinson appointed as receiver for the purpose of prejudicing and defrauding its creditors. The motion was denied by Judge Manton. On June 30, 1933 the receivers commenced an action in the New York Supreme Court against Fox Film Corporation and others. They named as defendants in that action all but seven of the respondents, or the predecessors in interest of the respondents, named in the petition now before me though it does not appear how many of them were actually served. In August of that year the original complaint was discontinued by stipulation and an omnibus complaint in a similar action of broader scope was prepared by the receivers. One of the defendants named was Daniel O. Hastings, who, on February 29, 1932, had been appointed by the Chancery Court of Delaware as receiver of the property and assets of General Theatres Equipment Co., Inc., which then held voting control of Fox Film Corporation. Three other complaints against Fox Film Corporation alone were also prepared by the receivers. The various actions commenced or contemplated by the receivers, Atkinson and Sherman, embraced a substantial portion of the transactions which are alleged in the petition now before me to be part of the conspiracy to milk Fox Theatres Corporation of its assets by means of fraudulent transfers and preferences. Chase Bank, Chase Securities, Fox Film and General Theatres were alleged to have been principal actors in this series of transactions designed to divert assets from Fox Theatres, it being alleged that Chase Bank and Chase Securities, under the domination of Albert H. Wiggin, Chairman of Chase Bank, controlled General Theatres and Fox Film as well as Fox Theatres.FN2 FN2. Most of these same charges were litigated in an action brought in 1932 in the Supreme Court, New York County, by Chicago Title & Trust Company against William Fox. Fox impleaded as additional defendants Fox Film Corporation, Fox Theatres, Chase Bank, Chase Securities Corporation, General Theatres Equipment and Hastings, as its receiver, among others, charging conspiracy to strip Fox Theatres of its assets and force it into a friendly receivership in order to defraud its creditors, of whom Fox was one. After a lengthy trial the late Sol M. Stroock, a distinguished member of the New York Bar, acting as referee, found in a 118 page opinion rendered in 1936, that no such conspiracy existed and that there was no merit to the charges. In the course of his opinion he carefully reviewed many of the transactions which the instant petition charges were part of the respondents' conspiracy. Chicago Title & Trust Co. v. Fox., N.Y.Sup.Ct., Index No. 31588 (1932), judgment entered June 2, 1936, app. dism. (1st Dept.) N.Y.L.J. December 18, 1936, p. 2288, not officially reported. *25 Archibald R. Watson, who had been appointed as attorney and solicitor for the receivers, and his partner Wilguss, instituted the litigation on the receivers' behalf. After negotiations between the receivers and their counsel, Hastings, as receiver of General Theatres, the attorneys for Fox Film Corporation, and others, a settlement was agreed upon. Under the terms of the proposed settlement the receivers of Fox Theatres were paid the sum of $500,000 in cash and received 2,500 shares of the capital stock of William Fox Isis Investment Co. which owned the Fox Isis Theatre in Denver, Colorado, which had previously been given by Fox Theatres to Fox Film as collateral security for an indebtedness. This stock was valued at some $330,000. Claims of approximately $4,000,000 filed against the Fox Theatres Corporation in receivership by defendants in the action, their subsidiaries, or persons whom they controlled, were withdrawn and released. Various releases were mutually exchanged and among those so released were Fox Film, General Theatres and its receiver, National Theatres Equipment, Chase Bank and Chase Securities Corporation. In addition it was provided that Hastings, as receiver of General Theatres, should transfer to Fox Film substantially all the stock of Movietone News, Inc. held by him, which represented fifty percent of the outstanding stock of that company, together with certain notes of Movietone News, in part payment of certain claims. On or about October 24, 1933 Hastings, as receiver of General Theatres, filed a petition in the Delaware Chancery Court setting forth the terms of the proposed settlement and asking authority to consummate it. Full notice of this petition was given to all stockholders and creditors of General Theatres and was published in New York and

other newspapers. On November 17, 1933 Hastings was authorized by the Delaware Chancellor to consummate the settlement. On November 15, 1933 Watson, counsel for Atkinson and Sherman as receivers, served on the attorneys for the plaintiff in this receivership, the attorneys for the defendant, attorneys for Fox Film, and the attorneys for William Fox and Ben Leo, creditors who had appeared, notice of an application returnable November 17, 1933 for an order approving the settlement. It appears that this notice was served on all parties and intervenors in the Fox Theatres equity receivership though no notice was given to creditors generally. The petition on the application, prepared by counsel for the receivers, set forth in some detail the various claims of Fox Theatres against the defendants named in the omnibus complaint, discussed and commented upon them and gave, in summary form, the terms of the proposed settlement. On November 17 a hearing was held before Judge Manton on the receivers' application for approval of the settlement. One creditor of Fox Theatres appeared at the hearing and objected to the proposed settlement though on what grounds does not appear. Judge Manton then signed the order dated November 17, 1933 approving the settlement as proposed and authorizing its consummation. Thereafter the settlement was consummated. **This is the order which the petitioners here seek to set aside as tainted with fraud and corruption. On December 4 and 5, 1933, some three weeks after the entry of the order under attack, Atkinson and Sherman, as receivers, and Watson, their attorney, filed separate applications for allowances for services through November 1933. These petitions referred in considerable detail to the settlement and its terms. On January 4, 1934, less than seven weeks after the order of November 17 had been entered, a hearing was held before Judge Manton on the report of the receivers for the preceding six months, recommending that the business of Fox Theatres be continued for another six months. Notice of this hearing was served by mail on all known creditors and was duly published. The receivers' report discussed at some length the terms of the settlement which had been approved by Judge Manton and the Delaware *26 Chancellor on November 17, 1933. There is no doubt that the creditors of Fox Theatres were thoroughly familiar with the fact that the settlement had been approved and consummated for there are numerous references to the settlement and its terms in various petitions and applications filed during the course of the receivership. On February 25, 1934 John F. Sherman died and was succeeded as co-receiver by Milton C. Weisman on August 16, 1934. On September 18, 1934 Atkinson resigned as co-receiver and Weisman continued as sole receiver. On September 28, 1934 Watson, who had been counsel for the receivers since the inception of the proceedings, resigned and was succeeded by Basil O'Connor. In December 1938 Weisman, as sole receiver, filed with the court the plan for realization upon and liquidation of the assets of Fox Theatres Corporation to which I have previously referred. After a hearing was held on the plan on notice to all of the creditors it was duly approved on January 30, 1939, and Weisman and Kenneth Steinreich, one of the present petitioners, were appointed as trustees. As I have indicated, the plan provided for a realization and liquidation trust to be administered by the Supreme Court, New York County, and all of the assets and property of the receivership and of Fox Theatres was turned over to this trust which has since been administered by the state court. In the meantime, in the summer of 1938 an investigation was commenced of the judicial activities of Judge Manton, and in February of 1939, shortly after the approval of the Fox realization plan, Judge Manton resigned. On June 6, 1939 Judge Manton was indicted for conspiracy to obstruct the administration of justice and to defraud the United States, and thereafter was convicted. See United States v. Manton, 2 Cir., 107 F.2d 834. It may be noted that none of the persons who were indicted with Judge Manton were in any way involved in the present proceeding and the matters alleged in the indictment bore no relation to the Fox Theatres receivership or anything involved therein. In April 1939 Weisman, the then receiver of Fox Theatres, and Atkinson, on behalf of himself and his deceased coreceiver Sherman, filed final accounts in this court. Objections were filed to the accounts by a stockholders committee and by Robert Aronstein, as attorney for the Trust Company of Georgia as trustee, one of the creditors. Judge Knox, to whom by then the receivership had been assigned for all purposes, referred the objections to Nathan

A. Smyth as Special Master to hear and report. The objections to the receivers' accounts filed by Mr. Aronstein attacked, among other things, the settlement approved by the order of November 17, 1933 upon grounds similar to those which are raised here. At about the same time Judge Knox requested the then United States Attorney, John T. Cahill, to make an investigation of the Fox Theatres receivership. Aronstein was permitted to cooperate. By August 30, 1940, an indictment had been filed by a Grand Jury in this court against George B. Skouras, Harvey P. Newins, one of the respondents in this proceeding, Skouras Theatres Corporation, another of the respondents, and Ktima Corporation, charging a conspiracy to bribe Judge Manton in connection with an order of January 12, 1937, entered in the receivership which approved the sale of the capital stock of William Fox Realty Corporation, a wholly owned subsidiary of the defendant, together with a lease of the Academy of Music Theatre, to Skouras Theatres Corporation. This order had been entered upon the application of Weisman, as receiver, over the objections of a Fox Theatres stockholders committee. On the basis of the information set forth in the Skouras-Newins indictment and other information obtained through the investigation made by the United States Attorney, Aronstein, representing the Trust Company of Georgia, applied in March 1941 to set aside the order of January 12, 1937 which had approved the *27 sale to Skouras Theatres Corporation. After extended negotiations, on June 27, 1944 an order was entered approving a settlement under which the property conveyed to Skouras Theatres Corporation pursuant to the order of January 12, 1937, was returned to the Fox realization trustees. The indictment returned against Skouras, Newins and the two corporations arising out of this transaction was never brought to trial. During the course of 1944 the United States Attorney filed with Judge Knox a memorandum as to his results of investigations of the Fox Theatres receivership. This memorandum dealt primarily with the course of the receivership subsequent to the time when the receivership of Atkinson and Sherman had been terminated. It indicated that no evidence of impropriety had been uncovered in the course of the investigation with respect to the earlier phases of the receivership or with respect to the order of November 17, 1933, though the investigation had not been directed to those phases of the matter. On November 27, 1945 an order was entered on application of Aronstein approving a settlement for $40,000 of the objections raised on behalf of the Fox Theatres trustees to the accounts of Weisman as receiver. Weisman's accounts as receiver were thereupon approved and Weisman and his surety were discharged. Thereafter on March 19, 1946 a settlement in the sum of $35,000 with the sureties on the bonds of Atkinson and Sherman as receivers, Atkinson having also died in the meantime, was approved by Judge Knox. The accounts of Atkinson and Weisman were then approved and they and their sureties were discharged. On May 1, 1946 Judge Knox, on the application of Aronstein, entered an order enlarging and extending the scope of the hearings theretofore authorized before Mr. Smyth as Special Master, to hear evidence and take testimony concerning all transactions had by the receivers herein respecting or pertaining to the assets of Fox Theatres Corporation and its subsidiary and affiliated corporations'. The order further provided that Aronstein was authorized to present evidence before the Special Master. Continuation of the hearings before the Special Master was authorized by Judge Knox on May 7, 1952. On May 6, 1957, shortly after this matter was assigned to me, I signed an order appointing a new Special Master to succeed Mr. Smyth, who had died, and authorizing further continuation of the hearings before him. Aronstein, representing the Trust Company of Georgia as creditor, assisted by counsel for the trustees of the realization and liquidation plan, has been presenting evidence before the Special Master over a period of some ten years. According to the petitioners scores of witnesses have been examined, over ten thousand pages of testimony have been taken, there are hundreds of exhibits and thousands of pages of records in various actions and proceedings in other courts have been examined. On November 27, 1950, after negotiations between Aronstein and counsel for Twentieth Century Fox Film Corporation, successor to Fox Film Corporation, a settlement was agreed upon of all claims between Fox Theatres and these corporations. The settlement was approved by an order entered by Judge Knox on November 27, 1950. It was predicated upon claims that Fox Film Corporation and other parties had been participants in the same conspiracy alleged in the present petition which is claimed to have led to the settlement

approved by Judge Manton's order of November 17, 1933. Under the terms of this settlement Twentieth Century Fox paid the sum of $200,000 to the trustees of the Fox realization trust. Twentieth Century Fox, its predecessor corporations, and a number of the alleged co-conspirators, who are alleged to have participated in the transactions alleged in the petition now before me, were released by the trustees. However, the trustees expressly reserved their rights against the respondents named in their present petition. *28 The present petition was filed in December 1954, more than four years later. The Present Posture of the Receivership I have given no more than an outline of some of the salient facts in the long history of this receivership, stretching as it does over more than a quarter of a century. The facts to which I have referred have been culled from an enormous record and are merely in capsule form. However, an understanding of these facts, at least, is essential since they bear on the present posture of this receivership and the very limited purposes for which it remains open in this court. They also indicate the setting in which the petition and the questions now raised with respect to it must be viewed. The present posture of the equity receivership in this court may be summarized as follows: All of its assets have been vested for twenty years in the trustees of the realization trust under the jurisdiction of the Supreme Court, New York County. During that period the trustees have been functioning and carrying out their duties under the trust indenture. The trustees are not officers of this court. None of the assets vested in them have been in the possession, custody or control of this court and its officers since the plan for realization and liquidation was consummated. Any questions concerning the consummation and the execution of the plan have long since been disposed of and the successive equity receivers have been fully released and discharged for over ten years. While the equity receivership in one sense remains open in this court the purposes for which it remains open are severely limited. When Judge Knox designated a special master to hear evidence in connection with transactions of the receiver, he did not retain jurisdiction over the equity receivership per se. He was merely exercising a power inherent in the court to ferret out and rectify **frauds committed upon it through the corruption of its own officers. This power was exercised subsequent to the consummation of the plan for realization and liquidation only because of questions raised as to the conduct of officers of the court during the course of the receivership itself. The orders of Judge Knox authorizing the taking of testimony before the special master and the presentation of such testimony by Aronstein representing creditors, did not reopen generally the terminated receivership proceeding nor in any way impair or vitiate the consummated realization plan. The plan remained in full force and effect and the receivership remained terminated **except in so far as steps were being taken to discover whether there was any evidence of corrupt conduct on the part of officers of the court, and particularly of Judge Manton, in relation to this receivership. [1] There is no doubt about the power of the court to do this whether the equity receivership per se was terminated or not. Indeed, if there was such corruption the court is under a duty to take whatever action may be appropriate to sustain its integrity and to undo any harm or injustice which has resulted. See Root Refining Co. v. Universal Oil Products Co., 3 Cir., 169 F.2d 514; Hazel-Atlas Glass Co. v. Hartford Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250. [2] But this is the only purpose for which this court retains any powers over this long since terminated receivership. Unless it is shown that its officers have acted corruptly or fraudulently and that in order to uphold the integrity of the court some action should be taken to rectify resulting wrongs or injustices, this court has no power or jurisdiction whatsoever over the receivership nor may it entertain any applications made in it.FN3 FN3. I have already held in Chicago Title & Trust Co. v. Fox Theatres Corporation (Steinreich v. Sterling Bank and Trust Co.), D.C., 178 F.Supp. 899, that this court has no jurisdiction to entertain summary

proceedings brought by the trustees of the Fox realization trust in the equity receivership to enforce rights which do not arise from alleged corruption of officers of the court in the course of the receivership. *29 Thus, the question now presented as to whether the petition states facts sufficient to show that the order of Judge Manton of November 17, 1933 was brought about by the corruption of officers of the court goes to the heart not only of the petitioners' right to relief but also of the power of this court to entertain a summary application of this nature at all. The Nature of the Present Proceeding No facts had been presented to the court prior to the filing of the present petition showing that the order of November 17, 1933 was the result of corrupt conduct of its officers. Up to that point there were only the suspicions which had been voiced by Aronstein and his associates. The question now presented is whether the petition filed shows that such facts, as distinguished from mere suspicion or conjecture actually exist. This is not a proceeding which the court has already authorized as petitioners' counsel seem to think. Even less is it a proceeding brought by the court on its own motion. It is not the adversary portion of the investigation ordered by this court in May 1939, nor is it part of an investigatory and punitive proceeding conducted by the court itself, as counsel for the petitioners have claimed it to be. This is an adversary proceeding brought by private litigants, the petitioner-trustees, who seek to set aside the order of November 17, 1933 in order to recover large sums for the benefit of the creditors and stockholders whom they represent. The action taken by the court thus far has in no way set the seal of its approval upon this proceeding, nor have petitioners' counsel been designated as officers of the court for the purpose of prosecuting it. The only action which the court has thus far taken is to permit Mr. Aronstein, as counsel for an interested creditor, to present testimony before a special master regarding the acts and proceedings of the receivers in an effort to ascertain what facts, if any, exist to support suspicions that there may have been corruption of officers of this court. The order of Judge Knox of May 1, 1946 enlarging the scope of the hearings before the special master, which had previously been confined to hearing testimony on the objections to the accounts of the receivers, provided that evidence upon said hearing may be presented by Robert Aronstein, Esq. as attorney for First National Bank of Atlanta, Georgia, or any other of the parties herein. It directed that the expenses of the hearing, including the fees of the special master, should be a charge upon and paid out of the assets of the Fox realization trust but that any counsel fees shall be contingent upon and allowed and paid only out of any assets which are hereafter recovered and shall be in such amounts as may be ordered by this court. My order of May 6, 1957 appointing a new special master did not enlarge the scope of Judge Knox's previous order. Having presented evidence before the special master for some eight and a half years after the entry of Judge Knox's order, Aronstein and the petitioners now must make a proper showing that the order of November 17, 1933 was brought about by the corruption or fraud of officers of the court before they can be permitted to maintain such a proceeding as this. Far from it making no difference what the petition states', as petitioners have claimed, whether or not its allegations are sufficient makes every difference. [3][4] The long lapse of time since the transactions with which the petition is concerned took place, the enormous scope and wide ramifications of such transactions and the difficulties of defending adequately against charges a *30 quarter of a century after the event, and intervening changes of status and position, all make it imperative that facts constituting corruption be clearly and specially alleged. Neither the fact that, through Aronstein's efforts, substantial sums were recovered for the estate by way of settlement in other unrelated proceedings, nor the fact that Judge Manton was convicted of the crime of obstructing justice in quite another connection, nor the fact that there were reasonable grounds to believe that corruption may have occurred in later phases of this receivership, are substitutes for allegations of fact showing that fraud and corruption existed with respect to the specific order of settlement signed by Judge Manton on November 17, 1933 which is sought to be set

aside. This is the foundation upon which all else rests and unless such foundation is firm and sound the whole structure erected by the petitioners must fall. The many underlying transactions alleged in the petition to be part of a grandiose conspiracy are exceedingly complex. They relate to complicated intercorporate and financial dealings which took place in the midst of the depression of the early 1930's. They involve numerous persons and corporations in addition to the thirty-odd named as respondents. The relationship of one transaction to another and of the various actors to one another in unclear. Plainly an enormous burden will be placed on the respondents if they are required to go to trial on these charges. Such a trial would entail large expenditures of money, time and effort. The mere lapse of time and the intervening deaths of many if not most of the persons who are alleged to have participated in these transactions would make the task exceedingly difficult. Moreover, a number of the respondents are merely the successors in interest to the original participants and there have been many intervening changes in status, corporate and otherwise. Quite apart from any questions of laches on the part of the petitioners and to respondents' prejudice, it would be unjust to require respondents to undertake a full scale defense against the allegations of the petition unless it has been shown that there are sound grounds upon which it can be maintained. This court will not shrink from putting respondents to their defense if it is shown that injustice or fraud resulted from the corruption of its officers. But the burden is on the petitioners to make such a showing in their petition. The Tests Which the Petition Must Meet As the Supreme Court said in Stearns v. Page, 48 U.S. 819, at page 829, 12 L.Ed. 928, a leading case in this field, where the court refused to set aside an order made twenty-six years before on the ground that fraud had been practiced on the court: * * * But as lapse of time necessarily obscures the truth and destroys the evidence of past transactions, courts of chancery will exercise great caution in sustaining bills which seek to disturb them. They will hold the complainant to stringent rules of pleading and evidence, and require him to make out a clear case. Charges of fraud are easily made, and lapse of time affords no reason for relaxing the rules of evidence or treating mere suspicion as proof. If a defendant can be compelled to open settled accounts, to explain or prove each item, after a lapse of near thirty years, by general allegations of fraud,- if the fraud can be proved by his inability to elucidate past transactions after so great a length of time, or by showing some slips of recollection or by contradicting him in some collateral facts by the frail recollection of other witnesses- no man's property or reputation would be safe. In United States v. Throckmorton, 98 U.S. 61, at page 64, 25 L.Ed. 93, in affirming a dismissal on demurrer of a petition attacking a decree twenty years *31 after it was rendered, the court, emphasizing the lapse of time, said: But we think these are good reasons why a bill which seeks under these circumstances to annul a decree thus surrounded by every presumption which should give it support, shall present on its face a clear and unquestionable ground on which the jurisdiction it invokes can rest. [5] Quite apart from lapse of time or intervening circumstances, it is settled at common law and provided by the Rules of Civil Procedure that circumstances constituting fraud must be alleged with particularity. Rule 9(b) of the Federal Rules of Civil Procedure provides: In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. This is a restatement of the long standing rule at common law. See Stearns v. Page, supra; United States v. Throckmorton, supra; Chamberlain Machine Works v. United States, 270 U.S. 347, 46 S.Ct. 225, 70 L.Ed. 619; Zaring v. Strauss & Co., 9 Cir., 30 F.2d 313; Barnes v. Boyd, D.C.S.D.W.Va, 8 F.Supp. 584, affirmed 4 Cir., 73

F.2d 910, certiorari denied 294 U.S. 723, 55 S.Ct. 550, 79 L.Ed. 1254; 2 Moore, Federal Practice, (2d edition), p. 1907. [6] Mere general allegations that there was fraud, corruption or conspiracy or characterizations of acts or conduct in these terms are not enough no matter how frequently repeated. Aetna Casualty & Surety Co. v. Abbott, 4 Cir., 130 F.2d 40; Voliva v. Bennett, 5 Cir., 201 F.2d 434; Curacao Trading Co. v. William Stake & Co., D.C.S.D.N.Y., 2 F.R.D. 308; Martin v. Clayton, D.C.S.D.N.Y., 6 F.R.D. 214. Nor do statements of malice, intent, knowledge, and other condition of mind in general terms under the last sentence of Rule 9(b) substitute for particularization of the circumstances constituting the fraud charged. See United States v. Hartmann, D.C.E.D.Pa., 2 F.R.D. 477. As the Supreme Court said in Chamberlain Machine Works v. United States, supra, 270 U.S. at page 349, 46 S.Ct. at page 226: The general allegations of fraud and coercion were mere conclusions of the pleader, and were not admitted by the demurrer. * * * To show a cause of action it was necessary that the petition state distinctly the particular acts of fraud and coercion relied on, specifying by whom and in what manner they were perpetrated, with such definiteness and reasonable certainty that the court might see that, if proved, they would warrant the setting aside of the settlement.' See, also, Stearns v. Page, supra; Schultz v. Manufacturers & Traders Trust Co., D.C.W.D.N.Y., 1 F.R.D. 53; In re Burton Coal Co., D.C.N.D.Ill., 57 F.Supp. 361, affirmed 7 Cir., 126 F.2d 447, 449. [7][8] Fraud cannot be presumed, ( United States v. Wunderlich, 342 U.S. 98, 100, 72 S.Ct. 154, 96 L.Ed. 113; United States v. Colorado Anthracite Co., 225 U.S. 219, 226, 32 S.Ct. 617, 56 L.Ed. 1063), and, indeed, any presumption there may be is against it. Prevost v. Gratz, 19 U.S. 481, 5 L.Ed. 311. Facts must be alleged which, if proven, would constitute fraud or which lead clearly to the conclusion that fraud has been committed. Barnes v. Boyd, supra. [9] These requirements are strictly enforced when it is sought to impeach an order or decree of the court, especially one of such long standing as the order under attack here. Stearns v. Page, supra; McCampbell v. Warrich Corp., 7 Cir., 109 F.2d 115, certiorari denied 310 U.S. 631, 60 S.Ct. 1077, 84 L.Ed. 1401; Davis v. State Bank of Woodstock, 7 Cir., 151 F.2d 180; Barnes v. Boyd, supra; In re Burton Coal Co., supra. The portions of the petition which purport to show that the order of November 17, 1933 is tainted with fraud and corruption must meet these tests. They are *32 not the less applicable because the fraud and corruption charged is that of the court's own officers. This charge as to the order of November 17, 1933 is the keystone of the petitioners' case as petitioners themselves recognize. Any rights they might have to assert underlying claims embraced in the plenary actions brought by the receivers which were settled pursuant to the order of November 17, 1933 are entirely dependent upon first setting aside the order and the settlement which it approved. That in turn is dependent on whether their petition has sufficiently alleged that fraud and corruption was committed by officers of this court with respect to that order. The Allegations of the Petition as to Corruption with Respect to the November 17, 1933 Order An analysis of the rather confusing and obscure allegations of the petition makes it plain that it does not state facts which show, or from which the conclusion can be drawn, that the order of November 17, 1933 was the result of fraud or corruption on the part of officers of the court. (1) First it should be noted that while the petitioners make certain allegations with respect to the institution of this

equity receivership and the appointment of the receivers by Judge Manton, they do not seek to set aside anything which was done in the course of the receivership other than the order of November 17, 1933 and the settlement it approved. Indeed, the only status petitioners may have to maintain this proceeding as trustees of the Fox realization trust is dependent upon the receivership and orders issued by Judge Manton in the course of it. It was Judge Manton who approved the plan of liquidation under which the realization trust was set up and who designated the original trustees, one of whom is a petitioner here. Thus, this is not an attack on the entire receivership proceeding ab initio nor an attempt to unscramble all that has been done in it over a period of twenty-five or more years. The allegations as to the institution of the receivership and the appointment of the receivers are of significance only in so far as they bear on the fraudulent and corrupt conduct charged with respect to the November 1933 order. (2) The first time it is claimed that Judge Manton came into the picture is in June of 1932. It is alleged in substance that Harry Kosch, who on May 18, 1932 had been appointed receiver of Roxy Theatres Corporation, which had some affiliations with Fox Theatres, by another judge of this court, after conferring with Atkinson, the newly elected president of Fox Theatres, procured the services of one Newins who was then friendly or engaged in business transactions' with Manton to arrange for a conference with reference to the appointment of a receiver and attorneys for the receiver of Fox Theatres. Newins is alleged to have arranged for such a conference at which it was agreed that Manton would designate himself as a District Judge to take jurisdiction of the application and appoint Atkinson as sole receiver and an attorney for him. Newins is not alleged to have been present at the conference, nor to have done anything other than to arrange it. All this is characterized as irregular, unlawful and corrupt and based upon an illegal consideration and for the purpose of having a friendly receiver appointed to block any actions for fraud against respondents. It is then alleged that Manton designated himself as District Judge, assumed jurisdiction and appointed Atkinson as receiver and John F. Sherman as co-receiver. It may be noted Atkinson was not appointed sole receiver as had allegedly been arranged, but a co-receiver was appointed who is not alleged to have had any connection with the conspiracy or with any of the respondents. However, he is alleged to have been a close friend and business associate of a trusted friend and benefactor of said Manton. Though the petition makes no reference to the *33 fact, Archibald Watson, a well known member of the New York bar was appointed attorney for the receivers. This is all that is said about the initial stages of the receivership. Stripped of adjectives, characterizations and conclusions none of these allegations show any fraud or corruption on the part of Manton or the receivers either bearing on the order of November 17, 1933 or otherwise. The allegations as to Manton's designation of himself as a District Judge for the purpose of taking jurisdiction over the receivership are of course inaccurate. As the Supreme Court pointed out in Johnson v. Manhattan Ry. Co., supra, 289 U.S. at page 484, 53 S.Ct. 721, Manton was acting under a designation of himself as District Judge which had been made in 1930. But apart from this it is plain that such designation and assignment by Senior Circuit Judges was a common and long standing practice in all circuits but one, and fully within their powers. Johnson v. Manhattan Ry. Co., supra. There is nothing in such an assignment on which to predicate a charge of fraud or corruption. [10] It was entirely in order for Manton to appoint as one of the co-receivers the president of the large enterprise which was being placed in receivership. It was equally in order for him to appoint a co-receiver who, as far as appears from the petition was disinterested. There is nothing improper in a friendly receivership. These are common and long accepted practices which have been followed not only in equity receiverships but in proceedings under Section 77b and Chapter 10 of the Bankruptcy Act, 11 U.S.C.A. 501 et seq. See In re Metropolitan Ry. Receivership, 208 U.S. 90, 28 S.Ct. 219, 52 L.Ed. 403; Kingsport Press v. Brief English Systems, 2 Cir., 54 F.2d 497, certiorari denied sub nom. Owen v. Kingsport Press, Inc., 286 U.S. 545, 52 S.Ct. 497, 76 L.Ed. 1282; Guaranty Trust Co. v. International Steam Pump Co., 2 Cir., 231 F. 594, certiorari denied sub nom. Lewis v. International Steam Pump Co., 241 U.S. 676, 36 S.Ct. 725, 60 L.Ed. 1232; Lincoln Printing Co. v. Middle West

Utilities Co., D.C.N.D.Ill., 6 F.Supp. 663, affirmed 7 Cir., 74 F.2d 779, certiorari denied sub nom. Pollak v. McCulloch, 295 U.S. 746, 55 S.Ct. 659, 79 L.Ed. 1691. The fact that Kosch, a receiver appointed by this court, talked to Manton about the appointment of receivers for a company in which his receivership estate had some interest, is certainly not even a remote indication of fraud or corruption on the part of anybody. The allegation that Sherman was a friend of a trusted friend and benefactor of Manton, accepted as true, adds nothing. Quite apart from the fact that the trusted friend and benefactor is not named or again referred to anywhere in the petition, there is nothing to show that he had anything to do with anybody else in the case or the slightest connection with the respondents or the alleged conspiracy. Plainly a judge would be unlikely to appoint a co-receiver who was unknown to him. Then there is the allegation that Newins, who is alleged to have arranged but not participated in the conference between Kosch and Manton, was hired by Kosch in the Roxy receivership, by Atkinson in the Fox Theatres receivership and subsequently was placed on the payroll of Skouras Theatres and that the Fox receivers paid Newins his emolument of some $400 and later $200 per week by check, many of which checks were cashed by Kosch as receiver of Roxy. The hiring of Newins by Atkinson is alleged to have been as a reward to Newins and any other persons with whom Newins might share said reward. This is a prime example of the petitioners' attempts to establish fraud by innuendo rather than by allegations of fact. The petition is replete with matter of this character. Newins' escutcheon is now tarnished because of his connection with the Skouras Theatres-Academy of Music sale in this same receivership in 1937, four or more years after the events alleged here and his indictment for his part in that transaction. Manton *34 is discredited by his later conviction, his connection with the Skouras deal and other transactions. Skouras Theatres was the moving factor in the Academy of Music deal and appears to have been involved in bribery of Manton in that connection. **None of these matters are claimed to have anything to do with the transactions involved in this proceeding. Yet petitioners' language leaves the subtle suggestion that corruption here should be implied because of the blemished reputations of Newins, Manton and Skouras in quite different connections. The references to any other persons with whom Newins might share the reward , to the fact that Kosch cashed Newins' checks and to employment of Newins by Skouras at some later unspecified date emphasize the wisdom of requiring that specific facts showing fraud must be stated. There is nothing in the allegations thus far discussed to show or lead to the conclusion that there was any fraud or corruption on the part of anybody. (3) [11] We now turn to the only allegations regarding the settlement and the signing of the order approving it, the key point of petitioners' case. Instead of alleging concrete facts the allegations become even weaker. It is alleged that Manton suggested to Archibald Watson, the solicitor for the receivers, whose integrity is not questioned, that before serving a complaint against Fox Film he confer with Kent, president of Fox, and that Kent and Manton were known to each other either directly or through common friends or business associates'. Then Manton is alleged to have asked the co-receiver Sherman what he knew concerning the settlement negotiations. Sherman is said to have explained the details to Manton and also explained that Senator Hastings, the Delaware Chancery receiver of General Theatres, had called on the receivers' Special Counsel unsolicited at the suggestion of someone he met in Chicago who knew of said Special Counsel's identity with the receivership and of the suggestion by said Special Counsel to Hastings that he call on the solicitor for the receivers of Fox Theatres Corporation. How any of these facts tend to show corruption of Manton is beyond me. Manton had every right to inquire about the negotiations. See In re Nevitt, 8 Cir., 117 F. 448. The Delaware receiver had the right and, indeed, the duty to talk to counsel for the Fox Theatres about a proposed settlement. That Manton may have known someone who knew Kent, which is highly likely, is utterly irrelevant in the absence of other facts. All this amounts to is an attempt at sly innuendo without any foundation in fact whatsoever.

The allegation is also made that the business and personal relationships between said Manton and certain persons, firms or corporations (or their respective servants, agents or employees) interested in (the plenary) action by Sherman and Atkinson, as receivers, as against Fox Film Corporation, et al., were not disclosed by said Manton to the Fox Theatres creditors as they should have been. Nowhere is the nature of these relationships stated. The persons with whom they were maintained are not identified. No facts are alleged to show that bearing, if any, they have upon anything which occurred in the Fox Theatres receivership. These allegations are wholly insufficient to show that there was anything which should have been disclosed to the creditors, much less that Manton was disqualified from passing on the settlement. See Morse v. Lewis, 4 Cir., 54 F.2d 1027; In re Fox West Coast Theatres, 9 Cir., 88 F.2d 212, certiorari denied sub nom. Talley v. Fox Film Corp., 301 U.S. 710, 57 S.Ct. 944, 81 L.Ed. 1363; Duncan v. United States, 9 Cir., 48 F.2d 128, certiorari denied 283 U.S. 863, 51 S.Ct. 656, 75 L.Ed. 1468; In re Nevitt, 8 Cir., 117 F. 448. See, also, Wierin v. Shubert Theatre Corp., 2 Cir., decided May 13, 1942, rehearing denied November 14, 1945, unreported. *35 (4) With this slim background, totally devoid of any facts spelling out fraud and corruption of any of the officers of the court who are involved in the receivership, we come to the signing of the order of November 17, 1933 by Manton. The allegations are made **(1) that no proper notice of the settlement was given to the Fox creditors, and **(2) the settlement was patently, grossly, completely, wholly and unconscionably inadequate and insufficient. I have already referred to the facts concerning the procedure as to notice and hearing on the proposed settlement (see supra at page 25 of 182 F.Supp.) and I will not repeat them. It is admitted that notice was given to all parties and intervenors in the receivership action and that one of the creditors did appear at the hearing. Under the then Equity Rule IV of this court all matters were to be heard upon such notice to the parties and creditors as (the judge) shall prescribe. There was no requirement that notice be given to all creditors of an application for approval of a settlement made by the receivers. The notice given in this instance was the same as that given on all of the numerous applications for settlement made throughout the course of the receivership until the transfer of assets to the trustees in 1939. It might even be argued with some plausibility that this was an administrative matter (see Petition of Baxter, 6 Cir., 269 F. 344) which under Rule IV could be disposed of ex parte. But even if the notice given was inadequate the important fact is that there was no attempt to conceal the settlement from the creditors or to brush it under the rug. On the contrary it was referred to at length in the fee applications of the receivers and their counsel filed less than three weeks after the order of approval. It was brought specifically to the attention of all creditors in the receivers' semi-annual report filed less than seven weeks after it was consummated and in numerous later reports and applications in the course of the receivership. It may be noted, moreover, that the settlement was also approved by the Delaware Chancery Court upon application of the receiver of General Theatres after full notice served on creditors and published in New York and other newspapers. There is nothing to support the petitioners' conclusions that the creditors were not notified in order to conceal the terms of the settlement. Nor is there anything alleged showing that the order of November 17, 1933 was void per se even if that question could be raised at this stage of the proceedings in the absence of fraud and corruption. The characterizations as to the inadequacy of the settlement are mere conclusions of the petitioners. The petitioners apparently are under the misapprehension that the more adjectives they use to characterize the settlement the stronger become their allegations. No facts have been alleged to support such conclusions. **There is no showing as to the value of what the various parties to the settlement received or gave up under it.

The terms are not even stated. Yet the records of this court show that the receivers obtained for the estate in the settlement some $830,000 and the release of claims aggregating almost $4,000,000. The difficulties of litigating the matters in controversy were plainly enormous. Such difficulties, like attendant expense, inconvenience, delay and uncertainty of success, are, of course, major factors in settlement. Moreover, it must be remembered that the settlement was made in the depths of the depression and no doubt was affected by the economic conditions then prevailing. Such facts as appear in the court records belie the petitioners' mere conclusions that the settlement was inadequate. No factual basis has been shown to indicate that it was inadequate at all, to say nothing of its being so inadequate overall as to shock the conscience of the court and justify setting it aside. See *36 Gelfert v. National City Bank, 313 U.S. 221, 61 S.Ct. 898, 85 L.Ed. 1299; Graffam v. Burgess, 117 U.S. 180, 6 S.Ct. 686, 29 L.Ed. 839; In re Burr Mfg. & Supply Co., 2 Cir., 217 F. 16; Bethlehem Steel Co. v. International Combustion Engineering Corp., 2 Cir., 66 F.2d 409; In re Riggi Bros. Co., Inc., 2 Cir., 42 F.2d 174; In re Paley, D.C.S.D.N.Y., 26 F.Supp. 952. No facts are alleged to show or lead to the conclusion that the settlement resulted from fraud and corruption on the part of the officers of the court who participated in it. (5) Petitioners urge that regardless of whether any of their separate allegations concerning the acts of Manton and the receivers state facts showing corrupt conduct, They must be viewed as part and parcel of the conspiracy of respondents achieving its purpose to dissipate Fox Theatres property rights through the complicity and connivance of Judge Manton. That Judge Manton could legallyif with proper motives- have done or omitted to do one or more though obviously not all of these acts * * * is beside the point if it be assumed in accorddance with Petitioners' allegations that Judge Manton's acts were corrupt, and that the very acts which he could have lawfully done- had he acted in good faith and in performance of his duty- became defiled by the circumstance that he lent himself and his high office to the object of accomplishing Respondents' nefarious purposes. (Italics supplied The difficulty with petitioners' position is that it is based on the assumption that their allegations show that Judge Manton's acts were corrupt. If that assumption were correct petitioners might have smoother sailing. But their allegations do not state any facts making such a showing. Assuming that a conspiracy of the nature alleged existed, there are no allegations of fact showing, or from which it can be concluded, that Manton became a part of it, or, in petitioners' words, lent himself and his high Office to the object of accomplishing Respondents' nefarious purposes'. The petitioners' characterizations, conclusions and innuendos are not a substitute for absent allegations of fact. Such allegations, for example, as that acts were done as a result of frauds and fraudulent practices and conspiracies perpetrated and entered into by respondents, add nothing in the absence of facts from which it could be concluded that this is what occurred. The Authorities on Which Petitioners Rely In United States ex rel. Accardi v. Shaughnessy, 2 Cir., 206 F.2d 897, 904, Judge Frank pointed out in the course of his dissenting opinion: An attack on an official's decision, by recourse to off-the-record evidence, is not allowed if the allegations are vague: Legality should be more than well-ordered paper work, but allowable peering behind the paper facade has its limits. One may not compel an official to submit to court room interrogation in the search for possible concealed, unlawful behavior, unless one first brings forward some striking traces of it. As a consequence, well-concealed misconduct may escape judicial correction. That is the price we pay to avoid having governmental action at the mercy of everyone who voices mere suspicions. For instance, to open up the judgment in the Root Refining case ( Root Refining Co. v. Universal Oil Products Co., 3 Cir., 169 F.2d 514) it would not have sufficed to allege, without more, the judge was bribed. There must be an offer to prove specific facts which will pretty plainly impugn the

official record.' See, also, Judge Frank concurring in United States v. Scully, 2 Cir., 225 F.2d 113, at page 117. Petitioners place their main reliance on *37Root Refining Co. v. Universal Oil Products Co., 3 Cir., 169 F.2d 514, certiorari denied sub nom. Universal Oil Products Co. v. William Whitman co., 335 U.S. 912, 69 S.Ct. 481, 93 L.Ed. 444, to which Judge Frank referred. However, rather than supporting their position here the case points up its deficiencies. In the case at bar there has been no offer to prove specific facts which will pretty plainly impugn the official record nor, indeed, have petitioners brought forward some striking traces' of unlawful behavior on the part of officers of the court. It is not even alleged that the judge was bribed. All that is alleged are conclusions that conduct otherwise lawful was corrupt. In contrast, in the Root case there were allegations of specific facts showing beyond question a judge had been corrupted and had rendered a corrupt decision. In the Root case the Court of Appeals of the Third Circuit instituted proceedings on its own motion to reopen one of its judgments because of a corrupt conspiracy between Judge Davis, one of its judges, and Kaufman, an attorney employed by Universal, one of the litigants. Davis and Kaufman had been indicted in 1940 for obstruction of justice. Upon the trial of the indictment the jury disagreed. At the instance of parties affected by the judgment on appeal, who asserted that the evidence at the criminal trial indicated that Judge Davis had been bribed, the court in November 1941 appointed a special master to investigate the charges. After taking extensive evidence the special master reported that the judgment on appeal had been obtained through the corruption of Judge Davis by Kaufman. The Court of Appeals approved the findings of its special master and vacated the judgment. The Supreme Court reversed ( Universal Oil Products v. Root, 328 U.S. 575, 578, 66 S.Ct. 1176, 90 L.Ed. 1447) on the ground that there had not been a proper adversary proceeding. The Court of Appeals then vacated its order setting aside the judgment on appeal but on its own motion ordered Universal, who had employed Kaufman, to show cause why the judgment should not be vacated because of fraud upon the court. It authorized the Attorney General of the United States to appear as amicus curiae. The Attorney General as amicus filed a Statement of Ultimate Facts' supporting the charges of fraud which would operate as a pleading under the Rules of Civil Procedure. That statement set forth the following facts: There was an arrangement between Kaufman representing Universal and Judge Davis whereby Davis was to perform judicial favors for Universal in return for financial benefits out of monies paid to Kaufman by Universal. The benefits were by way of a $10,000 loan from Kaufman to Stokely, a relative of Davis, which was not a bona fide business transaction. Kaufman obtained the $10,000 loaned to Stokely from $25,000 paid to him by Universal the day after certiorari had been denied by the Supreme Court in the cases which Davis had decided in its favor. Kaufman performed no legal services of any value in the cases and was retained and paid solely because he was an intimate of Davis. Davis decided the cases in favor of Universal in return for the financial benefit received from Kaufman. Davis and Kaufman had a continuing corrupt relationship during this period by which Davis, in return for financial benefits from Kaufman, was to favor Kaufman's clients, one instance of which was a bribe paid to Davis by William Fox in return for which Davis had decided bankruptcy matters before him entirely in favor of Fox. The Attorney General followed this statement with a document entitled Notice of Issue and Proofs in Support thereof which set forth the evidence on which he relied to show the corruption of Davis by Kaufman resulting in the decisions in favor of Kaufman's client Universal. This document went into the details of the facts set forth in the previous*38 Statement of Ultimate Facts' and elaborated on them . For example, it gave the dates, places and circumstances of the meetings between Davis and Kaufman, the circumstances under which Kaufman was retained

for the sole purpose of influencing Davis, the details of the checks received by Kaufman from Universal and the deposit of them in his bank account, the delivery of Kaufman's checks on this account to Stokely by Davis's law clerk, the payment by Stokely to Davis of $1,400 for his own use, the payment of $27,500 to Davis by Fox at the instance of Kaufman, and the decision of five bankruptcy appeals in Fox's favor on opinions written by Davis in consideration for the bribes received. There is no question that specific facts were alleged showing the corruption of Judge Davis and a fraud upon the court. Respondent Universal never raised such a question. Universal's motions were directed to a dismissal of the entire proceeding on the ground there was no justiciable controversy under the Constitution and were denied. The Court of Appeals ordered that a hearing be held to determine whether Davis's judicial acts had been corruptly influenced by Kaufman. Its order was based upon the allegations of specific wrongdoing set forth by the Attorney General, and specific findings by the special master that Davis and Kaufman had been guilty of fraudulent and corrupt conduct, which the court had previously adopted. After a hearing before the Court of Appeals, without the intervention of a special master, the court found, in detail, that Davis had been corruptly influenced by Kaufman to decide in favor of Universal, and that Davis had also been bribed in the Fox matters. It ordered that the judgment which had previously been entered in favor of Universal should therefore be vacated and Universal's suits dismissed. [12] There is no doubt that the Root case stands squarely for the proposition that a court has the inherent power to inquire into the integrity of its own judgments and to set them aside when fraud or corruption of its officers has been shown. But it does not hold directly or by implication that the court should permit an adversary proceeding of the nature of the one at bar to proceed in the absence of facts showing that such fraud or corruption existed. The other cases on which petitioners place reliance, Hazel-Atlas Co. v. Hartford Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250; Dick v. Marr, D.C.S.D.N.Y., unreported, Equity No. 50-59, and the Academy of Music proceeding in this equity receivership do not hold so either. In the Hazel-Atlas case the Supreme Court found that the proof of fraud was conclusive. In Dick v. Marr, an elaborate petition filed by the Government as amicus curiae charged that plaintiff had perpetrated a fraud on the court by suppressing evidence. Evidence of the fraud had come to light as a result of an indictment filed against plaintiff. The sufficiency of the petition was never attacked though, after hearing, the court found that fraud had not been established. The original Academy of Music petition was dismissed though it annexed a copy of an indictment charging a conspiracy to bribe Judge Manton to bring about the sale which was sought to be set aside. The amended petition specifically charged that a bribe in the amount of $20,000 had been paid to Manton by check of Skouras, one of the conspirators, and delivered to him by Newins, another of them. Thus petitioners in the Academy of Music matter were required to and did allege specific facts showing corruption- allegations which are lacking in the petition at bar. The proceeding conclusion at bar, quite unlike that in the Root case is not a proceeding instituted by the court on its own motion after a showing of facts constituting corruption. The burden here is on the petitioners as private litigants to allege facts showing corruption or from which it can be concluded that corruption existed with relation to the order they seek to set aside. *39 The court has given petitioners and counsel for the Trust Company of Georgia, as creditor, ample opportunity to elicit such facts if they exist. Their inquiry before the special master appointed by the court has been pursued for some ten years. It followed an extensive previous investigation by the United States Attorney. Yet petitioners have failed to present any facts in this petition to sustain the charges which they assert. I will pass over the contention made by the moving respondents, not without some merit, that apart from the

failure to show corruption of Manton the petition also fails to allege facts showing their connection with any such fraud or corruption if it had been shown to exist. Nor will I deal with the respondents' contention that the petition is fatally defective in failing to allege affirmatively when the alleged corruption was discovered, and facts showing that it could not have been discovered earlier by the exercise of due diligence, or with the contention that these petitioners have no standing to maintain this summary proceeding. It is unnecessary at this time to pass on these contentions, or on the question of whether, as a matter of law, laches may be raised as a defense. [13] I hold that the petition is fatally defective in any event for the reason that, accepting its allegations of fact as true, it fails to state facts showing, or from which it can be concluded, that the order of November 17, 1933 was the result of fraud or corruption on the part of officers of the court. This would ordinarily call for a dismissal of the petition. Moreover, after all that has gone on and all the opportunity which has been afforded petitioners to obtain and present any facts which may exist, to permit the filing of an amended petition would only serve to prolong further litigation on claims which have grown increasingly stale. To do so would not be in accord either with public policy dictating an eventual end to litigation or with sound judicial administration. [14] However, this is not an ordinary case. Serious charges have been leveled against the integrity of the court itself. There have been protracted hearings at which thousands of pages of testimony have been taken. Manton, against whom these grave charges are made, stands convicted of dishonest judicial conduct in another connection. There is evidence lending support to the claim that in a later phase of this same receivership Judge Manton was corruptly influenced and that Newins and Skouras Theatres, who are named in the present petition, were participants in such corruption. Charges of improper conduct made against the receivers resulted in substantial settlements with them or their sureties. Quite apart from whether any of these facts bear on the present claims, the whole atmosphere surrounding the receivership is unsavory. All this requires that the court make sure that it has not overlooked any actual evidence of fraud or corruption, if any such evidence exists. I have therefore determined that I will not dismiss the proceeding finally at this time. Instead, adopting a procedure somewhat analogous to that used in the Root case, I will direct that petitioners file with the court a detailed statement of any actual proof which they have showing that the order of November 17, 1933 was brought about by the corruption of Judge Manton. By now such proof, if it exists, must be in the form of testimony or documentary evidence. The statement so to be filed will be accompanied by the excerpts of the testimony and the documentary evidence on which petitioners rely. The statement will be limited to the specific charge I have just mentioned. It will consist of facts only and will not contain any characterizations, conclusions or innuendos of the petitioners or their counsel. The court will evaluate such evidence as may be presented and will draw its own conclusions. If it appears from the statement that there is sufficient evidence that the order of November 17, 1933 was the result *40 of corruption of Judge Manton to justify the maintenance of this summary proceeding, or any action on the court's own motion, then the court will consider and fix procedures for the future conduct of such proceedings as may be appropriate. If, on the other hand, the statement fails to present such evidence the petition will be dismissed and this long drawn out matter will be finally laid at rest. The statement to be filed by petitioners will be served on the moving respondents who will have opportunity to comment thereon. The times within which petitioners' statement and respondents' comments will be served and filed will be fixed in the order to be entered on these motions which will be settled before me on ten days' notice. When proposed orders have been filed I may, if I deem it necessary, afford the parties an opportunity to be heard with respect to provisions of the order to be signed. Parties will be notified if and when they will be heard in that connection.

Under federal criminal statute there exists a distinction between the general criminal conspiracy statute 18 U.S.C. 371 and the internal plain meaning of the words statute, as the use

of the words conspires in the 18 U.S.C. 1952 extortion federal criminal statute.
U.S. v. Manton, 107 F.2d 834 (C.C.A.2 (N.Y.),Dec 04, 1939) Martin T. Manton and George M. Spector were convicted on an indictment charging them, together with other persons, with a conspiracy to obstruct the administration of justice and to defraud the United States, and they appeal separately. Affirmed.

See fed_civ_procedure_judgment_relief_from_judgment_grounds_fraud_perjury_digest. Doc [1] Indictment and Information 210 125(5.5) 210 Indictment and Information 210VI Joinder 210k125 Duplicity 210k125(4) Series of Acts Constituting One or Same Offense 210k125(5.5) k. Conspiracy. Most Cited Cases (Formerly 210k125(51/2)) An indictment charging a general conspiracy constituting an agreement between a Circuit Judge and an acquaintance by the terms of which, without a time limit, acquaintance should seek out litigants and parties, known or unknown, who were interested in suits then or thereafter pending and in effect represent to each of them that judge would accept money in return for corrupt judicial action by him favorable to the interests of those who paid, charged a conspiracy to obstruct the administration of justice and to defraud the United States as a single continuing offense, and did not charge a number of distinct offenses. Cr.Code 37, 135, 18 U.S.C.A. 371, 1503. [2] Conspiracy 91 25

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k25 k. Object. Most Cited Cases A conspiracy constitutes an offense irrespective of the number or variety of objects which the conspiracy seeks to attain or whether any of the ultimate objects are attained. [3] Conspiracy 91 27

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k27 k. Overt Act. Most Cited Cases The offense of conspiracy becomes complete when the agreement is made, and the only effect of a statutory requirement that an overt act be shown is to permit an abandonment of the conspiracy in the meantime and the consequent avoidance of the penalty which the statute imposes.

[4] Indictment and Information 210

125(5.5)

210 Indictment and Information 210VI Joinder 210k125 Duplicity 210k125(4) Series of Acts Constituting One or Same Offense 210k125(5.5) k. Conspiracy. Most Cited Cases (Formerly 210k125(51/2)) An indictment charging a conspiracy to obstruct the administration of justice in violation of a criminal statute and also to defraud the United States was not bad for duplicity. Cr.Code 37, 135, 18 U.S.C.A. 371, 1503. [6] Conspiracy 91 43(10)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k43 Indictment or Information 91k43(10) k. Conspiracy to Defraud Government. Most Cited Cases Conspiracy 91 43(11)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k43 Indictment or Information 91k43(11) k. Conspiracy to Obstruct Justice or Impede Administration of Laws. Most Cited Cases An indictment charging a conspiracy to obstruct justice and to defraud the United States was not bad as charging a conspiracy to accept and secure bribes which is not an indictable conspiracy, where scheme of resorting to bribery was averred only to be a way of consummating the conspiracy as purely ancillary to the substantive offense. Cr.Code 37, 135, 18 U.S.C.A. 371, 1503. [7] Conspiracy 91 47(2)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence 91k47 Weight and Sufficiency 91k47(2) k. Circumstantial Evidence. Most Cited Cases (Formerly 91k47) **In prosecution for a conspiracy, it is not necessary that the participation of accused should be shown by direct evidence, but connection may be inferred from such facts in evidence as legitimately tend to sustain that inference. [8] Criminal Law 110 1144.13(3)

110 Criminal Law 110XXIV Review 110XXIV(M) Presumptions 110k1144 Facts or Proceedings Not Shown by Record

110k1144.13 Sufficiency of Evidence 110k1144.13(2) Construction of Evidence 110k1144.13(3) k. Construction in Favor of Government, State, or Prosecution. Most Cited Cases (Formerly 110k1144(13)) Criminal Law 110 1159.2(10)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(10) k. Particular Offenses and Prosecutions. Most Cited Cases (Formerly 110k1159(2)) Criminal Law 110 1159.4(5)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.4 Credibility of Witnesses 110k1159.4(5) k. Particular Offenses and Prosecutions. Most Cited Cases (Formerly 110k1159(4)) In passing on the sufficiency of the proof to connect an accused with a conspiracy to obstruct justice and to defraud the United States, it was not the province of the Circuit Court of Appeals to weigh the evidence or to determine credibility of witnesses, but that court was required to take that view of the evidence most favorable to the government and sustain the jury's verdict of conviction if there was substantial evidence to support it. 18 U.S.C.A. 371, 1503. [9] Conspiracy 91 47(13)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence 91k47 Weight and Sufficiency 91k47(3) Particular Conspiracies 91k47(13) k. Obstructing Justice, Bribery, and Perjury. Most Cited Cases (Formerly 91k47) Evidence sustained conviction of Circuit Judge for participating in conspiracy to obstruct the administration of justice and to defraud the United States by entering into an agreement with an acquaintance whereby acquaintance should seek out litigants and parties, known or unknown, who were interested in suits then or thereafter pending, and in effect represent to each of them that judge would accept money in return for corrupt judicial action by him favorable to the interests of those who paid. Cr.Code 37, 135, 18 U.S.C.A. 371, 1503. [10] Criminal Law 110 110 Criminal Law 110XVII Evidence 427(3)

110XVII(O) Acts and Declarations of Conspirators and Codefendants 110k427 Preliminary Evidence as to Conspiracy or Common Purpose 110k427(3) k. Order of Proof. Most Cited Cases In conspiracy prosecution, objection to testimony concerning statements made by coconspirator in defendant's absence going only to the order of proof was addressed to the discretion of the District Court. [11] Conspiracy 91 43(12)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k43 Indictment or Information 91k43(12) k. Issues, Proof, and Variance. Most Cited Cases In prosecution for conspiring to obstruct the administration of justice and to defraud the United States, testimony in respect of a certain trial before a particular judge was not improperly received on ground that case was in a District Court, whereas indictment related only to proceedings in the Circuit Court of Appeals, where indictment specifically mentioned that particular case as having been duly brought in the United States District Court for the Southern District of New York and included that court and that case by general words of description as being within the purview of the conspiracy. Cr.Code 37, 135, 18 U.S.C.A. 371, 1503. [12] Criminal Law 110 398(1)

110 Criminal Law 110XVII Evidence 110XVII(J) Best and Secondary Evidence 110k398 Necessity and Admissibility of Best Evidence in Criminal Prosecutions 110k398(1) k. In General. Most Cited Cases Photostatic reproductions of the face of checks which had been paid were admissible as primary evidence of payment in conspiracy prosecution within statute providing that any writing or record made as a memorandum or record of any act, transaction, occurrence, or event shall be admissible as evidence thereof, if made in the regular course of business. 28 U.S.C.A. 1732. [13] Criminal Law 110 398(1)

110 Criminal Law 110XVII Evidence 110XVII(J) Best and Secondary Evidence 110k398 Necessity and Admissibility of Best Evidence in Criminal Prosecutions 110k398(1) k. In General. Most Cited Cases The best evidence rule should be so applied as to promote the ends of justice and guard against fraud or imposition, and it should not be pushed beyond the reason on which it rests. [14] Criminal Law 110 398(1)

110 Criminal Law 110XVII Evidence 110XVII(J) Best and Secondary Evidence 110k398 Necessity and Admissibility of Best Evidence in Criminal Prosecutions 110k398(1) k. In General. Most Cited Cases

The best evidence rule is not based on the view that so-called secondary evidence is not competent, since, if the best evidence is shown to be unobtainable, secondary evidence at once becomes admissible. [15] Criminal Law 110 398(1)

110 Criminal Law 110XVII Evidence 110XVII(J) Best and Secondary Evidence 110k398 Necessity and Admissibility of Best Evidence in Criminal Prosecutions 110k398(1) k. In General. Most Cited Cases Where it appears that what is called secondary evidence is clearly equal in probative value to what is called the primary proof and that fraud or imposition reasonably is not to be feared, the reason on which the best evidence rule rests ceases, and the rule itself ceases to be applicable. [16] Criminal Law 110 398(1)

110 Criminal Law 110XVII Evidence 110XVII(J) Best and Secondary Evidence 110k398 Necessity and Admissibility of Best Evidence in Criminal Prosecutions 110k398(1) k. In General. Most Cited Cases So-called original and carbon copies of a document are duplicate originals, and one is as much primary evidence as the other. [17] Witnesses 410 268(1)

410 Witnesses 410III Examination 410III(B) Cross-Examination 410k268 Scope and Extent of Cross-Examination in General 410k268(1) k. In General. Most Cited Cases The office of cross-examination is to test the truth of the statements made by the witness on direct examination, and to that end it may be exerted directly to break down the testimony in chief, to affect the credibility of the witness, or to show intent. [18] Criminal Law 110 1153.18(2)

110 Criminal Law 110XXIV Review 110XXIV(N) Discretion of Lower Court 110k1153 Reception and Admissibility of Evidence 110k1153.18 Examination 110k1153.18(2) k. Cross-Examination. Most Cited Cases (Formerly 110k1153(4)) Witnesses 410 270(1)

410 Witnesses 410III Examination

410III(B) Cross-Examination 410k270 Cross-Examination as to Irrelevant, Collateral, or Immaterial Matters 410k270(1) k. In General. Most Cited Cases The extent to which cross-examination on collateral matters shall go is a matter peculiarly within the discretion of the trial judge, and his action will not be interfered with unless there has been a plain abuse of discretion. [19] Conspiracy 91 34

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k34 k. Conspiracy to Obstruct or Pervert Justice or Hinder the Execution of Law. Most Cited Cases A conspiracy contemplating the payment of money to induce a Circuit Judge to exercise his judicial power in favor of bribe givers without regard to the merits, became complete the instant the conspiracy was formed, whether the object of the conspiracy ever was consummated, or, if consummated, whether the decisions finally rendered in pursuance of the conspiracy were legally sound or not, and hence, in prosecution for conspiracy, District Judge's refusal to charge that jury might consider whether decisions involved were correct, was not error with respect to Circuit Judge. Cr.Code 37, 135, 18 U.S.C.A. 371, 1503. [20] Criminal Law 110 1129(1)

110 Criminal Law 110XXIV Review 110XXIV(H) Assignment of Errors 110k1129 In General 110k1129(1) k. Necessity. Most Cited Cases Under rule permitting the Circuit Court of Appeals at its option to notice a plain error though not assigned, the option should not be so exercised as to bring the primary substantive rules to naught by an arbitrary exercise of power, but the circumstances must be such as to make the consideration of the point a legitimate exercise of discretion. Rules of the Circuit Court of Appeals for the Second Circuit, rule 10. [21] Criminal Law 110 1056.1(4)

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)2 Exceptions 110k1056 Review of Instructions and Failure or Refusal to Give Instructions 110k1056.1 In General 110k1056.1(3) Particular Instructions 110k1056.1(4) k. Instructions Omitted or Refused. Most Cited Cases (Formerly 110k1056(1)) Criminal Law 110 1129(1)

110 Criminal Law 110XXIV Review 110XXIV(H) Assignment of Errors 110k1129 In General 110k1129(1) k. Necessity. Most Cited Cases

Criminal Law 110

1137(1)

110 Criminal Law 110XXIV Review 110XXIV(L) Scope of Review in General 110XXIV(L)11 Parties Entitled to Allege Error 110k1137 Estoppel 110k1137(1) k. In General. Most Cited Cases Where no exception was taken to District Court's failure to follow language of requested instruction relating to defendant's good character or with respect to charge given on the subject, assignment of errors ignored the matter, District Court upon request gave additional instructions on good character, and defendant's counsel stated that he thought the court had covered all of the requests, the refusal to give requested instruction was not open to review. Rules of the Circuit Court of Appeals for the Second Circuit, rules 9, 10. [24] Conspiracy 91 41

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k39 Persons Liable 91k41 k. Acts of Coconspirators. Most Cited Cases It is not necessary that each of the conspirators participate in or have knowledge of all of the operations of a conspiracy, but a conspirator may join at any point in its progress and be held responsible for all that may be or has been done. [25] Conspiracy 91 47(13)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence 91k47 Weight and Sufficiency 91k47(3) Particular Conspiracies 91k47(13) k. Obstructing Justice, Bribery, and Perjury. Most Cited Cases (Formerly 91k47) Evidence justified jury's conclusion that a criminal conspiracy existed to influence and obstruct the administration of justice and defraud the United States of its right to the conscientious action of a Circuit Judge free from corruption, and that judge's codefendant knowingly became a party to the conspiracy and participated in the execution of its purposes in so far as they related to a particular case. Cr.Code 37, 135, 18 U.S.C.A. 371, 1503. [26] Conspiracy 91 41

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k39 Persons Liable 91k41 k. Acts of Coconspirators. Most Cited Cases

A charge of engaging in a far-reaching conspiracy cannot be avoided by showing that what the accused conceived to be a limited conspiracy turned out to be a conspiracy of wider range of which the supposed smaller one was in fact but a segment, and it is enough that accused knew he had connected himself with a criminal conspiracy, even though he was unaware of its full extent. [27] Conspiracy 91 43(12)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k43 Indictment or Information 91k43(12) k. Issues, Proof, and Variance. Most Cited Cases In prosecution for conspiring to obstruct the administration of justice and to defraud the United States, even if Circuit Judge's codefendant was not criminally connected with general conspiracy and was involved in a separate conspiracy, there was not a fatal variance between allegations and proof, but proof in respect of conspiracy with which codefendant was not connected could be regarded as incompetent with respect to him, where indictment alleged in a separate paragraph pendency of appeal in a particular case with which codefendant was allegedly connected, proof corresponded with those allegations, and District Judge instructed jury to confine themselves, in passing on question of codefendant's guilt or innocence, to evidence relating to him without reference to that which related only to Circuit Judge. Cr.Code 37, 135, 18 U.S.C.A. 371, 1503. Before STONE and SUTHERLAND, Circuit Justices, and CLARK, Circuit judge. SUTHERLAND, Circuit Justice. This is an appeal from a judgment in pursuance of a verdict of conviction upon an indictment charging the above named defendants, together with William J. Fallon, John L. Lotsch, and Forrest W. Davis, with a conspiracy to obstruct the administration of justice and to defraud the United States. The statutes to be considered in connection with the indictment are Secs. 88 *837 and 241, Title 18 U.S. Code, 18 U.S.C.A. 88, 241, printed in the margin. FN1 Each of the three defendants last named pleaded guilty FN1. Sec. 88. If two or more persons conspire either to commit any offense against the United States, or to defraud the United States in any manner or for any purpose, and one or more of such parties do any act to effect the object of the conspiracy, each of the parties to such conspiracy shall be fined not more than $10,000, or imprisoned not more than two years, or both. Sec. 241. Whoever corruptly, or by threats or force, or by any threatening letter or communication, shall endeavor to influence, intimidate, or impede any witness, in any court of the United States or before any United States commissioner or officer acting as such commissioner, or any grand or petit juror, or officer in or of any court of the United States, or officer who may be serving at any examination or other proceeding before any United States commissioner or officer acting as such commissioner, in the discharge of his duty, or who corruptly or by threats or force, or by any threatening letter or communication, shall influence, obstruct, or impede, the due administration of justice therein, shall be fined not more than $1,000, or imprisoned not more than one year, or both. The indictment names as defendants Manton, Spector, Fallon, Lotsch and Davis, and alleges that they, together with Archie M. Andrews, now deceased, Alfred F. Reilly and Almon B. Hall, and divers other persons to the grand jurors unknown, conspired to commit offenses against the United States, to wit: corruptly to endeavor to influence, obstruct and impede the due administration of justice in suits pending before certain courts of the United States; and to defraud the United States of and concerning its right to have the lawful functions of the judicial power of the United States exercised and administered free from unlawful impairment and obstruction, and more particularly its right to the conscientious, faithful, disinterested and unbiased judgment and action of the defendant Manton as the Senior Circuit Judge of the United States Circuit Court of Appeals for the Second Circuit free from corruption, partiality, improper influence, bias, dishonesty and fraud.

**The indictment further alleges that Manton was a stockholder in, or wholly or substantially owned or controlled, a number of corporations, some of which are named; that Fallon was an intimate acquaintance of Manton; that the conspirators knew that certain cases would be, during the course of the conspiracy, pending in and before the Circuit Court of Appeals for the Second Circuit and certain district courts; that several cases, named and described, were pending from time to time in these courts between the years 1930 and 1939, in the decision of which Manton participated; that it was a part of the conspiracy that Fallon would hold himself out as intimately acquainted with Manton and would represent to litigants and parties interested in these and other cases that, by reason of such association and intimacy, he could and would procure action favorable to such litigants and parties; that Fallon would seek out litigants and parties interested in these cases and would be sought by them for the purpose of having Fallon procure such action, in virtue of Manton's office, position, power and influence; **that Manton would accept and receive and agree to accept and receive **sums of money as gifts, **loans and **purported loans in return for such action, and would corruptly act in each of these cases without regard to the merits. The indictment sets forth, and alleges the particulars of, **twenty-eight distinct overt acts committed in pursuance of the conspiracy and participated in by Manton and one or more of the other conspirators. Manton demurred to the indictment and entered a motion to quash on the grounds: (1) that the indictment charged not one single conspiracy but a number of separate and distinct conspiracies in one count, (2) that the indictment did not state an offense, (3) that more than one crime was charged in the indictment. Both the demurrer and motion to quash were overruled. The case was tried before the district court and a jury and resulted in a verdict of conviction against both appellants, upon which final judgments were rendered imposing imprisonment and fine. From these judgments appellants have separately appealed to this court. The cases have been separately presented, and we shall separately consider them. *838 The Case of Manton. The appellant Manton assails the judgment upon several grounds, which, so far as necessary to be considered, may be epitomized as follows: 1. That the court erred in overruling the demurrer to the indictment and motion to quash; 2. That the evidence fails to connect him with any conspiracy and the court erred in refusing his request to instruct the jury to acquit; 3. That his motions to strike out testimony of certain witnesses were erroneously denied; and that evidence was improperly admitted against his objections; 4. That his cross-examination upon collateral matters was so unfairly conducted as to require a reversal; 5. That the court erred in refusing certain requests to charge the jury and in respect of some instructions actually given; 6. That the conduct of the trial and the charge to the jury were so hostile and unfair as to require a reversal. [1] First. Manton's contention is that the indictment sets forth in one count a number of distinct conspiracies; that is to say, that the allegations in respect of each of the suits set forth a separate and distinct conspiracy. But this confuses the conspiracy, which was one, with its aims, which were many. The indictment charges a general conspiracy, continuous in operation and single in character, having relation to no particular litigation, but constituting an agreement between Manton and Fallon by the terms of which, without limit as to time, Fallon was to seek out litigants and parties, whether then known or unknown, who were interested in suits, then or thereafter

pending, and, in effect, represent to each of them **that Manton would accept sums of money in return for corrupt judicial action by him favorable to the interests of those who paid. **In short, the conspiracy to obstruct the administration of justice and to defraud the United States was to be consummated by sale of judicial action to all willing to pay the price. That this was a single continuing offense and not a number of distinct offenses is settled by numerous decisions. Harvey v. United States, 2 Cir., 23 F.2d 561, presented a similar situation. There, in a single count, the indictment charged defendants, who were prohibition agents, with having conspired together and with other persons to obtain evidence of violations of the National Prohibition Act in order to seek and to receive bribes to influence their official acts. Evidence having been admitted of several distinct acts of the kind covered by the conspiracy, it was contended that this amounted to the admission of evidence of distinct conspiracies; but the court held the evidence to be proper, saying that it was competent to prove several offenses committed by the conspirators pursuant to their general criminal scheme. [2] The conspiracy constitutes the offense irrespective of the number or variety of objects which the conspiracy seeks to attain, or whether any of the ultimate objects be attained or not. Williamson v. United States, 207 U.S. 425, 28 S.Ct. 163, 52 L.Ed. 278. Mr. Justice White, speaking for the Court in that case, concisely stated the rule, by saying ( 207 U.S. page 447, 28 S.Ct.page 170, 52 L.Ed. 278): The conspiracy is the offense which the statute defines, without reference to whether the crime which the conspirators have conspired to commit is consummated. The indictment in that case charged that the defendants had conspired to suborn a large number of persons to commit perjury in proceedings for the purchase of public lands. The indictment was held good, although the persons to be suborned were not stated or the times or places particularized. It was not essential, the Court said, that these particulars should have been agreed upon since the criminality of the conspiracy charged consisted in the unlawful agreement to compass a criminal purpose. [3] The offense becomes complete when the agreement is made. The only effect of the requirement that an overt act shall be shown is to permit an abandonment of the conspiracy in the meantime and the consequent avoidance of the penalty which the statute imposes. This offense does not consist of both the conspiracy and the acts done to effect the object of the conspiracy, but of the conspiracy alone. The provision of the statute, that there must be an act done to effect the object of the conspiracy, merely affords a locus poenitentiae, so that before the act done either one or all of the parties may abandon their design, and thus avoid the penalty prescribed by the statute. United States v. Britton, 108 U.S. 199, 204, 205, 2 S.Ct. 531, 534, 27 L.Ed. 698. *839 United States v. Kissel, 218 U.S. 601, 607, 31 S.Ct. 124, 54 L.Ed. 1168, distinctly recognizes the rule that a conspiracy exists as soon as the agreement is made but may continue beyond the time of making it. But when the plot contemplates, the Court said (218 U.S.page 607, 31 S.Ct.Age 126, 54 L.Ed. 1168) bringing to pass a continuous result that will not continue without the continuous co-operation of the conspirators to keep it up, and there is such continuous co-operation, it is a perversion of natural thought and of natural language to call such continuous co-operation a cinematographic series of distinct conspiracies, rather than to call it a single one. And again (218 U.S.page 608, 31 S.Ct.page 126, 54 L.Ed. 1168): A conspiracy is constituted by an agreement, it is true, but it is the result of the agreement, rather than the agreement itself, just as a partnership, although constituted by a contract, is not the contract, but is a result of it. The contract is instantaneous, the partnership may endure as one and the same partnership for years. A conspiracy is a partnership in criminal purposes. That as such it may have continuation in time is shown by the rule that an overt act of one partner may be the act of all without any new agreement specifically directed to that act. [4][5] Nor, contrary to Manton's contention, is the indictment bad for duplicity because it alleges that the conspiracy contemplated the violation of a criminal statute and also the defrauding of the United States. While there are some decisions which seem to lend support to the contention, the Supreme Court of the United States has held otherwise, and by its decision, of course, we are bound. Frohwerk v. United States, 249 U.S. 204, 210, 39 S.Ct. 249, 252, 63 L.Ed. 561. The conspiracy, the Court there said, is the crime, and that is one, however diverse its objects. See also Magon v. United States, 9 Cir., 260 F. 811, 813; Anderson v. United States, 9 Cir., 269 F. 65, 76. [6] It is further urged that the indictment charges, and that the government sought to prove, a conspiracy to

accept and secure bribes, and that this is not an indictable conspiracy. We do not stop to inquire whether in the present case the conclusion would follow from the premises, since it is clear that the premises are not true. Perhaps this sufficiently appears from what we have already said; but we add a few words at this point which, at least, may be useful by way of emphasis. **The indictment does not charge as a substantive offense the giving or receiving of bribes; **nor does it charge a conspiracy to give or accept bribes. **It charges a conspiracy to obstruct justice and defraud the United States, the scheme of resorting to bribery being averred only to be a way of consummating the conspiracy and which, like the use of a gun to effect a conspiracy to murder, is purely ancillary to the substantive offense. The long argument upon the point consequently fails for lack of foundation to give it support. Second. The testimony clearly establishes the making of a large number of payments to Fallon by or in the interest of litigants with the understanding that the moneys would be transferred in the form of **gifts or **loans to the defendant Manton or to corporations which he owned or controlled or in which he was interested, in return for corrupt favorable action on his part in the decision of the several suits and controversies named in the indictment and others not named. Proof of acts to effect the object of the conspiracy alleged in respect of each of these suits and controversies is full and ample; and the only question which requires consideration is whether Manton was in fact a party to a conspiracy which indubitably these acts were calculated to effect. [7][8] It is not necessary that the participation of the accused should be shown by direct evidence. The connection may be inferred from such facts and circumstances in evidence as legitimately tend to sustain that inference. Indeed, often if not generally, direct proof of a criminal conspiracy is not available and it will be disclosed only by a **development and collocation of circumstances. In passing upon the sufficiency of the proof, it is not our province to weigh the evidence or to determine the credibility of witnesses. We must take that view of the evidence most favorable to the government and sustain the verdict of the jury if there be substantial evidence to support it. Hodge v. United States, 6 Cir., 29 F.2d 881. [9] A careful reading of the record in the light of these principles satisfies us that the verdict of the jury must be upheld. It is not necessary to recount the evidence at length. It is enough to say *840 that the jury could have found, and, in support of their verdict we may properly assume, did find, the following: 1. Fallon and Manton had been on friendly terms and in frequent contact for many years. Fallon had procured moneys with the understanding that they were to be paid to Manton or loaned to companies in which Manton was interested by or for the benefit of parties to several cases named in the indictment. Fallon had personally introduced to Manton some of these parties or their agents or attorneys. Fallon had been in contact with one or more persons connected with or interested in each of the cases, had held himself out to them as willing and able to buy Manton's favorable offices, and had secured payments for that avowed purpose. Indeed, Fallon's constant intermediation and his activities in connection with all cases involved in the charge of conspiracy is a most pertinent and significant fact tending to establish the singleness of purpose and the unbroken continuity of the conspiracy. 2. The first of the suits involved in the conspiracy, the Art Metal Works case, was begun in 1932, the defense being assumed by the Evans Case Company. Reilly, Resident[sic] of the company, was one of the conspirators. He advised with Fallon about the case on a number of occasions. He gave Fallon, at the latter's request, many sums of money aggregating thousands of dollars and for several years carried him on the payroll of the Evans Case Company at $100 per week and paid him other sums, the whole amounting to nearly $20,000. The district court, having decided the case against the Evans Case Company, the company appealed. In another case decided in its favor an appeal was taken by the losing party. After some negotiations between Reilly and Fallon, the former expressed a willingness to pay $25,000 upon Fallon's assurance of favorable action by Manton on the appeal, $15,000 to go to Manton as a loan. At a later time, Reilly was informed by Fallon by telephone that he had learned that the decision would be favorable and that the Judge (Manton) was in bad circumstances for the money and wanted to know if I could not get $10,000 as quickly as possible. About the same time, decisions favorable to the Evans Case Company were handed down, the opinions being rendered by Manton. Reilly then paid Fallon $10,000 in cash and also gave him three $500 checks. The $10,000 was entered in the books of the Evans Case Company as Prepaid Royalties, Air-Flow. **Subsequently, on motion of Reilly, the board of directors of the company directed that the item be transferred to the legal and professional account for litigation expense.

During the summer of 1934, Reilly was introduced by Fallon to Manton, and thereafter Reilly, Manton and Fallon played golf together, and Reilly lunched with Manton at the Lawyers Club and went out with Manton and his wife, Fallon at times being present. In February 1939, Manton resigned his office. A day or two before the resignation was to take effect Manton called Reilly on the long-distance telephone and told him he understood he had Bill (meaning Fallon) on the payroll. Receiving an affirmative reply, Manton said: That will be very embarrassing for me if found out, because I heard they intend to investigate. Manton repeated that it would be very embarrassing for him and Reilly responded: I don't know what to do about it. After the lapse of a few hours, Reilly had another long-distance telephone talk with Manton, first asking him if it was all right to talk. Manton answered: I don't think exactly. Manton then asked Reilly for his telephone number and said that he would call him back under another name. Later in the same day, the call was made; and the former conversation was repeated in substance. In the course of this conversation, Manton spoke of the statute of limitations and said that it would protect them in the Art Metal investigation; that anything that was three years old was outlawed. Manton again spoke of Fallon being carried on the payroll, saying that it was a great embarrassment to him and to get rid of the records because of the Art Metal investigation. Manton admitted that telephone conversations between himself and Reilly occurred, and that he initiated them, but gave a different version of what was said. A few days later, Reilly directed the bookkeeper to procure all the records and to destroy them. The bookkeeper destroyed the records of the company up to 1935- cashbooks, ledgers, bills, vouchers and everything with the exception of some *841 papers subsequently discovered and turned over to the government. 3. In the year 1934, an appeal was taken from the decision of the district court in Smith v. Hall, a patent infringement case. More than a million dollars was involved. Hall was introduced by Forrest W. Davis, one of the defendants named in the indictment, to Fallon as one who, Davis had advised, could help him in the litigation. Hall told Fallon of the litigation and was asked by Fallon for copies of the decision, briefs and record so that he might show them to Manton. At a later meeting, Fallon reported that Manton after a conference had said that for $75,000 a decision in Hall's favor could be obtained. It was finally agreed that the amount should be reduced to $60,000. A check was given for $5,000 on account. So far, there is no direct evidence connecting Manton with this transaction. But later along, Hall, being dissatisfied with the situation, Fallon agreed to obtain Manton's note, and upon that basis a second check for $5,000 was given, and thereafter Hall received a note signed by Manton payable to Davis for $5,000. Other payments from time to time were made to Fallon, the final amount to complete the payment of the $60,000 being made after a decision in Hall's favor was handed down by Judge Manton. In the summer of 1938, after the beginning of an official investigation respecting Manton, Davis, who theretofore had never met Manton, received a telephone call from him in response to which Davis called on Manton at the latter's residence. Manton asked him whether he, Davis, had lent any money to Manton. Davis replied that he had not. Here again, Manton admitted the conversation, but gave a different version of it. 4. Three other cases involved in the conspiracy conveniently may be considered together. Two of them, Electric Autolite Company v. P. & D. Manufacturing Company, and General Motors Corporation v. Preferred Electric & Wire Corporation were patent cases. The third was a criminal prosecution against John L. Lotsch. Lotsch was a patent attorney and with other counsel represented the defendants in the patent cases. The district court had decided both cases against Lotsch's clients, and both were reversed on appeal. Pending the appeal, Lotsch was introduced to Fallon who asked Lotsch whether he could secure loans for Manton from a bank in which Lotsch was an officer, and told him that if he could obtain them he would introduce Lotsch to Manton. Lotsch was then introduced to Manton, and he and Manton agreed that loans in the sum of $25,000 would be obtained. The loans were made, $10,000 at once and $15,000 a short time later. Thereafter, the Electric Autolite case was decided in favor of Lotsch's client; Manton handing down the opinion. In the General Motors case, Lotsch, seeking a stay which had been denied by the lower court, applied to Manton who issued an order to show cause and, after argument, granted the stay. On the day of the argument, Manton requested of Lotsch an additional loan of $25,000, which was made, but in the name of Sullivan, president of a company which Manton controlled. The loan was guaranteed by Manton who also furnished collateral as security.

When the loan was made, Sullivan drew his check for the full amount payable to himself which he then indorsed in blank and which, after being certified by the bank, was handed to Manton. Manton had asked that the check be made to his own order, but Lotsch suggested that the course which was followed would be better, since the check could then be dealt with by Manton and no one would know for whom it was made. The check was indorsed by Manton and deposited to the credit of The Financial Corporation. In an opinion by Manton, the decree in the General Motors case was reversed. A short time thereafter, Sullivan having died, Manton executed a new note, and the loan was transferred to him and Sullivan's note released. In December, 1935, Lotsch was indicted, in a district court sitting in the second circuit, for taking a bribe. He discussed the matter with Manton. In February following, the case was assigned to Judge Thomas and set for trial. Manton told Lotsch that he had arranged to see Thomas and subsequently reported to Lotsch that he had seen Thomas who would take care of the case for $10,000 paid before trial. Lotsch borrowed the money and paid it to Manton in two sums of $5,000 each. There is no proof that Thomas, who was not called as a witness, received any part of the money. At the trial, Thomas granted Lotsch's motion for a directed verdict of acquittal. Thereupon, Lotsch was discharged but *842 immediately rearrested on a charge of extorting money under color of office . Lotsch sought out Judge Manton who expressed the opinion that the charge presented a case of double jeopardy. At this conversation Manton gave Lotsch a copy of the government's trial brief in the earlier case which Thomas had handed Manton. Lotsch was indicted upon the charge and sued out a writ of habeas corpus, which was argued before a district judge who dismissed the writ. From this action Lotsch appealed. The appeal was heard by the appellate court, Manton presiding. The court reversed the district court and directed that the indictment be dismissed. Following the argument, and before the decision, Lotsch discussed the case with Manton who suggested that a reply brief be filed with respect to a certain point that had been raised. A reply brief was subsequently filed and thereupon, and before the decision of the case, Manton telephoned Lotsch to meet him on a designated Long Island train. The meeting took place in a parlor car, and Manton showed Lotsch a draft of the proposed opinion of the court, which Lotsch read. After reading it, Lotsch suggested the elimination of certain things which he thought objectionable; and Manton accepted two of the suggestions. Lotsch also objected to a criticism directed against Judge Thomas, but Manton told him that could not be taken out because his colleagues would not stand for it. Thereafter, a decision in Lotsch's favor was handed down. In the summer of 1937, Lotsch was prosecuted for still another offense. He was convicted in 1938 and appealed from the judgment. He showed the record to Manton and discussed it with him. Manton told him that the case would be reversed when reached because of certain errors committed at the trial. In August, 1938, at Manton's request, Lotsch met Manton and had a conversation with him at the latter's home on Long Island. Manton told him that State District Attorney Dewey was making an investigation in connection with the Sullivan matter and that Manton understood Dewey was looking for Lotsch with a view of having him subpoenaed. He suggested that Lotsch go away until the matter blew over. In pursuance of the suggestion, Lotsch went into Connecticut where he stayed with his daughter for two weeks. In February, 1939, just after Manton's resignation, he and Lotsch again met at an office in New York. Manton there suggested that Lotsch see the acting United States District Attorney and tell him that a certain loan that had been mentioned by Dewey in a public letter, and other loans, were regular business transactions. During the same month Lotsch informed Manton that the fact that he, Lotsch, had borrowed $10,000 had been disclosed; whereupon Manton told Lotsch that that matter in connection with Judge Thomas, he should carry to his grave and, if asked it before the grand jury, he should say that he paid the $10,000 to Judge Millard, an attorney then deceased- Judge Millard is dead and no one can testify against him. Manton suggested that Lotsch go into Connecticut again, but Lotsch being without funds, Manton gave him the name of a person from whom he might borrow the necessary amount. In that or a later conversation, Manton inquired when the Thomas payment was made and being informed said that the statute of limitations would outlaw that. Manton admitted having conversations with Lotsch, but denied Lotsch's version of them. 5. In 1936, suit was brought in the district court by Schick Industries against Dictograph Products Company,

Inc. It was a patent infringement case involving the claim of the Schick razor against the Packard razor. The district court had entered an interlocutory decree and appointed a special master and required the Dictograph Company to furnish a $50,000 bond. **Archie Andrews held the principal interest in the Dictograph Company and apparently felt much disturbed by the action of the district court. He was introduced to Morris Renkoff, told him of his trouble and was informed by Renkoff that he could help if the case came to the appellate court because he had a man who could fix things up. With Andrews authority to do so, Renkoff then saw Fallon who promised to take the matter up with Manton. Shortly thereafter, Fallon reported to Renkoff that he had seen Manton and that the case would be taken care of for $50,000, provided that an attorney named Weisman were employed by Andrews. Andrews thought the amount too high and suggested $25,000. After Fallon had been told, he reported that he had seen Manton and that the amount would be acceptable. It was then agreed between Fallon, Renkoff and Andrews that $10,000 would be paid at once and the balance after a favorable *843 decision. The $10,000 was paid to Fallon, part of it being a loan from Renkoff. A written statement signed by Renkoff and delivered to Andrews acknowledged the receipt of the $10,000 for the purpose of purchasing Dictograph Products Company stock. The amount was paid to Fallon in cash, and Fallon left, ostensibly to pay the amount to Manton. In the course of an hour Fallon returned and told Renkoff: Everything is O.K. You can go and tell Archie Andrews that he is going to get the decision in his favor. There will be a bond of $25,000 and no man in the business. The evidence does not show whether the $24,000, or any part of it, was in fact received by Manton. In 1936, Renkoff had been convicted of a criminal offense and sentenced to imprisonment. The judgment was affirmed and thereafter Andrews enlisted the assistance of Spector, to whom he made a number of payments amounting in the aggregate to a very large sum. These payments began while the appeal was pending in the Schick case and were completed either before or immediately after its final determination. Following these payments, **Spector turned over equivalent sums in the form of loans to the National Cellulose Company in which Manton held a large interest. Other sums similarly received he also turned over, in the form of loans aggregating more than $20,000 to Manton's confidential and official secretary who was an officer of a corporation in which Manton likewise had a large interest. We shall discuss, in further detail, these devious proceedings when we come to deal with the case of Spector. On December 2, 1936, Manton ordered that the Schick case be set for argument on January 4, 1937. The schedule of the court showed that Manton was to sit on that day. Counsel for the Schick company, having noted that fact and that Manton was not to sit on January 11th, secured an agreement with opposing counsel to postpone the argument until the latter date; and Manton entered an order accordingly. Subsequently, the schedule was changed so that Manton would sit on January 11th. A further Postponement was sought, and counsel on both sides appeared before Manton in chambers for argument on the request. Counsel for the Schick company, before appearing, examined the assignment of judges with a view of selecting an adjourned date. They selected February 11th, a date when Manton was not to sit. On the argument, Manton suggested February 4th, a day on which he was scheduled to sit, but counsel for both parties after conferring agreed upon February 11th. Manton, putting this agreement aside, said: This case will be argued on February 4th. And the case was argued on that day, Manton presiding. The decision was against the Schick Company, Manton concurring in the opinion with another judge, the third judge dissenting. In the foregoing recital of facts and circumstances, to which others less significant might be added, we have set forth some matters with respect to which Manton's immediate connection is not shown by the evidence. And we have done so because of the light they shed upon the relevant evidence in respect of Manton's partnership in the conspiracy and the aid they furnish toward a better understanding of that matter. But in considering the contention that the court erred in submitting to the jury the initial question whether Manton was a party to the conspiracy, we have put these facts and circumstances aside. Of course, Manton's partnership in the conspiracy being settled prima facie, these matters become relevant as acts and declarations of co-conspirators in the execution of the conspiracy, by which Manton would be bound. It is true that Manton denied all incriminating testimony, and that, in the main, the evidence tending to show Manton's partnership in the conspiracy came from the lips of convicted co-conspirators and other witnesses of bad or dubious character. Indeed, in a case like this, it is unlikely that it would be otherwise. But the credibility of these witnesses and the weight to be given their testimony, as we have already said, were questions for the jury and are matters beyond the scope of judicial review. Moreover, the record contains a mass of documentary evidence-

**accounts, **cancelled checks, **promissory notes, etc.- not only corroborative of the oral testimony, but adding independent strength to the government's case. We deem it unnecessary to comment further upon the evidence. It is enough to say that, if believed by the jury, as we may properly assume it was, it discloses a state of affairs so plainly at variance with the claim of Manton's innocence as to make the verdict of the jury unassailable. The circumstances taken altogether amply *844 sustain that conclusion. Among these circumstances the following are especially significant: **(a) The long and friendly relations between Fallon and Manton. **(b) The employment of Fallon in obtaining loans for Manton corporations. (c) The apparently gratuitous introduction by Fallon to Manton of persons interested in cases while they were under consideration or pending. (d) Lotsch's testimony that after being introduced by Fallon he paid to Manton $10,000 ostensibly for the corruption of Judge Thomas, received from Manton a trial brief of the government in that case, consulted with him about the language of an opinion before it was handed down, was advised to leave New York because of an investigation then in progress or threatened, was admonished to keep secret the Thomas matter, and that Manton, after being told, upon inquiry by him, the date when a particular transaction had occurred, said it was barred by the statute of limitations. (e) Manton's relations with Reilly, their telephone conversations, in which Manton expressed anxiety about Fallon's being carried on the payroll because of a pending investigation; Manton's suggestion that the circumstance would be embarrassing to him and that the record pages relating to the matter should be pulled out, that certain records be destroyed because of the Art Metal investigation, and that the statute of limitations would protect them in that investigation. **(f) The manipulation of the schedule of assignments of judges to enable Manton to sit in the Schick case. **(g) The loans made at Manton's request by or through the intervention of persons interested in some of the cases during their pendency, one of the most significant of these being the loan of $25,000 made in the name of Sullivan by Lotsch to Manton at the latter's solicitation on the very day of the argument of the General Motors case, the proceeds of which were immediately handed by Sullivan to Manton, a method adopted to conceal Manton's connection with the transaction. Similar technique appears in respect of the loans made by Andrews to or for corporations in which Manton was interested through Spector as a conduit, the details in respect of which will more fully appear when we come to consider the case of Spector. Third. It is contended that the trial court committed many errors against appellant in receiving and in refusing to strike out evidence. Some of the claims of error so clearly are without merit that we put them aside at once. Others we consider. [10] Motions made to strike out testimony as to statements made by Fallon in Manton's absence it is urged should have been granted. This evidence was offered and received before it was shown that Manton was a party to the conspiracy, the objection to the testimony going only to the order of proof; and so viewed the point falls for want of merit, for the rule has been so long established as to be elementary that the order of proof is a matter addressed to the discretion of the trial court. We are unable to find that this discretion was abused in any of the instances mentioned in the brief. [11] It is urged that testimony in respect of the Lotsch trial before Judge Thomas was improperly received. The ground advanced is that the case was in a district court while the indictment related only to proceedings in the Circuit Court of Appeals. This is clearly incorrect. The indictment specifically mentions this particular case as having been duly brought in the United States District Court for the Southern District of New York and includes that court and this case by general words of description as being within the purview of the conspiracy. [12] The trial court over objection admitted in evidence what are called recordak facsimiles of checks. The objection made to this ruling of the court is that such facsimiles do not constitute the best evidence. These recordaks are photostatic reproductions of the face of checks which have been paid; and they were offered as evidence of such payments. It is argued that the original checks themselves were the best evidence and that their absence should have been accounted for as a prerequisite to the admission of the recordaks. With this contention we cannot agree. These recordaks are made and kept among the records of many banks in due course of business and are within the words of 28 U.S.C. 695, 28 U.S.C.A. 695.FN2 Their accuracy is not questioned. They represent,*845 in the course of a year, perhaps millions of transactions. No one at all familiar with bank routine would hesitate to accept them as practically conclusive evidence. As proof of payment, they constitute not secondary but primary evidence FN2. In any court of the United States and in any court established by Act of Congress, any writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any

act, transaction, occurrence, or event, shall be admissible as evidence of said act, transaction, occurrence, or event, if it shall appear that it was made in the regular course of any business, and that it was the regular course of such business to make such memorandum or record at the time of such act, transaction, occurrence, or event or within a reasonable time thereafter. All other circumstances of the making of such writing or record, including lack of personal knowledge by the entrant or maker, may be shown to affect its weight, but they shall not affect its admissibility. The term 'business' shall include business, profession, occupation, and calling of every kind. [13][14][15] But putting all this aside, the best evidence rule should not be pushed beyond the reason upon which it rests. It should be so applied, as the Supreme Court held in an early case, as to promote the ends of justice, and guard against fraud or imposition. Renner v. Bank of Columbia, 9 Wheat. 581, 597, 6 L.Ed. 166. See also United States v. Reyburn, 6 Pet. 352, 366, 8 L.Ed. 424; Minor v. Tillotson, 7 Pet. 99, 100, 8 L.Ed. 621. The rule is not based upon the view that the so-called secondary evidence is not competent, since, if the best evidence is shown to be unobtainable, secondary evidence at once becomes admissible. And if it appear, as it does here, that what is called the secondary evidence is clearly equal in probative value to what is called the primary proof, and that fraud or imposition, reasonably, is not be feared, the reason upon which the best evidence rule rests ceases, with the consequence that in that situation the rule itself must cease to be applicable, in consonance with the well established maxim- cessante ratione legis, cessat ipsa lex. An over-technical and strained application of the best evidence rule serves only to hamper the inquiry without at all advancing the cause of truth. The fundamental basis, the Supreme Court has said, upon which all rules of evidence must rest- if they are to rest upon reason- is their adaptation to the successful development of the truth. Funk v. United States, 290 U.S. 371, 372, 381, 54 S.Ct. 212, 215, 78 L.Ed. 369. There is not the slightest reason to suspect that this fundamental basis was affected in the present instance. [16] Manton's brief contains a short, obscurely-placed paragraph complaining of the action of the court in admitting in evidence a carbon copy of a letter without accounting for the absence of the original. While there is some conflict in the decisions, the better rule is that so-called original and carbon copies are duplicate originals; and that one is as much primary evidence as the other. See 2 Jones on Evidence (2d Ed.) Sec. 798. They are made upon sheets of paper between which carbons have been interposed. The messages are impressed at the same time and by the same impact. To call one of them an original and the other a copy is simply to ignore the obvious. [17][18] Fourth. The attack upon the cross-examination in respect of collateral matters as being so unfair as to require a reversal may be quickly disposed of. The office of cross-examination is to test the truth of the statements of the witness made on direct; and to this end it may be exerted directly to break down the testimony in chief, to affect the credibility of the witness, or to show intent. The extent to which cross-examination upon collateral matters shall go is a matter peculiarly within the discretion of the trial judge. And his action will not be interfered with unless there has been upon his part a plain abuse of discretion. 3 Wharton's Criminal Evidence (11th Ed.) Sec. 1308. See Alford v. United States, 282 U.S. 687, 694, 51 S.Ct. 218, 75 L.Ed. 624. We find no such case here. The crossexamination, whether upon collateral matters or not, while prolonged and searching, presents nothing which calls for interference by an appellate court. And the rulings might be equally defensible in some instances if the trial judge, in the exercise of his discretionary power, had ruled the other way. See Johnston v. Jones, 1 Black 209, 226, 17 L.Ed. 117. And in some instances, the rulings well might be criticized as restricting overmuch the government's right of cross-examination. [19] Fifth. The trial judge refused to charge the jury that they might consider the question whether the decisions here involved were correct. On Manton's behalf this is assailed as error on the ground that there could be no obstruction of justice unless the decisions were wrong and *846 that the jury should have been so told. There is nothing in the point. The crime charged in the indictment became complete the instant the conspiracy was formed (provided only that there could be no prosecution unless followed by some overt act), whether the object of the conspiracy ever was consummated, or, if consummated, whether the result, considered apart, was conformable to law or the reverse. See Goldman v. United States, 245 U.S. 474, 476, 477, 38 S.Ct. 106, 62 L.Ed. 410. **The conspiracy here contemplated

the payment of money to induce a judge to exercise his judicial power in favor of the bribe-givers, without regard to the merits. If the decisions finally rendered in pursuance of the conspiracy be legally sound the fact is immaterial. The evidence here, indeed, does not forbid the inference that generally Manton refrained from agreeing to the final step except where the correctness of the decision to be rendered seemed to him to be fairly clear, and, in consequence, discovery and exposure less probable. We cannot doubt that the other judges who sat in the various cases acted honestly and with pure motives in joining in the decisions. No breath of suspicion has been directed against any of them and justly none could be. And for aught that now appears we may assume for present purposes that all of the cases in which Manton's action is alleged to have been corruptly secured were in fact rightly decided. But the unlawfulness of the conspiracy here in question is in no degree dependent upon the indefensibility of the decisions which were rendered in consummating it. Judicial action, whether just or unjust, right or wrong, is not for sale; and if the rule shall ever be accepted that the correctness of judicial action taken for a price removes the stain of corruption and exonerates the judge, the event will mark the first step toward the abandonment of that imperative requisite of even-handed justice proclaimed by Chief Justice Marshall more than a century ago; that the judge must be perfectly and completely independent with nothing to influence or control him but God and his conscience. Sixth. We are unable to discover anything in the record which gives support to the contention that Manton was not given a fair trial or that the charge to the jury was hostile or unfair. On the contrary, the record plainly discloses the patience and fairness of the judge in dealing with the various questions which arose during the trial. We find it unnecessary to pursue the matter further, except as it relates to the requested instruction in respect of good character and the court's charge on the subject; and we pass to a consideration of that question. [20][21] Manton requested the district court to instruct the jury that evidence of good character is substantive evidence and that such evidence might alone raise in their minds reasonable doubt of the defendant's guilt. The court in substance instructed the jury that the establishment of a good reputation was a fact to be considered by the jury and might in an otherwise doubtful case turn the scales in favor of the defendant; that it was not in itself a sufficient answer to a criminal charge but only one of the circumstances in evidence to be considered in determining whether guilt had been established beyond a reasonable doubt. No exception was taken to the action of the court in failing to follow the language of the request or with respect to the charge itself on the subject. But this is not all. Fifty-eight assignments of error are made, among them several relating to refusals of the court to charge as requested and to specific parts of the charge as given. But, significantly, the assignment of errors ignores altogether the question of good character and, clearly, the default was intentional. The omissions contravene Rule 9 which requires that a party excepting to the charge shall state distinctly the several matters of law to which he excepts, and Rule 10 which requires that when the error claimed is to the charge, the assignments of error must set out the part challenged, whether it be to an instruction given or to a request refused. If these rules are to be respected, the question presented is not open to review. It is true that Rule 10, as counsel belatedly suggests, permits the court, at its option, to notice a plain error though not assigned. But since the exercise of the power is optional, the circumstances must be such as to make the consideration of the point a legitimate exercise of discretion. The option should not be so exercised as to bring the primary substantive rules to naught by an arbitrary exercise of power. At the conclusion of the charge, the judge stated to counsel that he would be *847 glad to hear any exceptions they desired to take to the charge. Manton's counsel directed the court's attention to several requests relating to matters other than character, and asked that these be given. The court gave one of them, declining to give the others. To each refusal counsel duly excepted. In respect of his request on the subject of good character, counsel asked that it be given as requested exactly and added: I do not believe that your Honor did instruct the jury that it was their duty to acquit the defendant Manton if the evidence of good character entered in his favor raises a reasonable doubt in their minds. To this the court responded: Of course, I so instructed them, but if you did not understand it that way, I would rather give them the instruction * * * (you) have than give you an exception on it. However, you want 38 (the good character request) given to them, do you? Counsel said, Yes, and the court responded, Very well. The court then told the jury that he had been asked to emphasize a little more the effect of good reputation. After

paraphrasing a part of what he had before said, the judge added that evidence of good reputation is only one fact, like other facts, to be taken into consideration in weighing all the evidence in the case to determine whether there is a reasonable doubt, or whether there should be a verdict of acquittal or conviction. Upon concluding his additional instructions, the court said: I think I have covered them all, to which counsel for Manton responded: I think you did, your Honor. The court then asked whether there were any other exceptions, to which there was no response. [22] The colloquies between court and counsel make manifest the willingness of the trial judge to comply with the good character request. The primary purpose of Rule 9, and the essential function of the specific exceptions it requires, is to direct the mind of the trial judge to the precise point so that he may have fair opportunity to reconsider and change a ruling if so advised, and also to obviate injustice and mistrials due to inadvertent error. United States v. U.S. Fidelity & Guaranty Co., 236 U.S. 512, 529, 35 S.Ct. 298, 59 L.Ed. 696; Fillippon v. Albion Vein Slate Co., 250 U.S. 76, 82, 39 S.Ct. 435, 63 L.Ed. 853. Quite evidently, the trial judge believed he had substantially complied with the request and, quite as evidently, Manton's counsel was then of the same view. For he not only assented to the suggestion that the various matters had all been covered but further evinced his satisfaction by failing to enter an exception after his attention pointedly had been called to the subject. If, instead of remaining silent, he had spoken, an opportunity would have been afforded the trial judge to ascertain from counsel the precise point of difference between what was requested and what was given. We cannot avoid the conclusion that such a course would have borne fruit, in view of the expressed willingness of the judge substantially to follow the request and his belief that he had done so. A somewhat similar situation was presented to the Supreme Court in Boyd v. United States, 271 U.S. 104, 108, 46 S.Ct. 442, 443, 70 L.Ed. 857. In that case, as in this, the trial judge had given, at appellant's suggestion, an additional instruction to the jury, and Mr. Justice VanDevanter, speaking for the Supreme Court, answered the claim of error on the part of the appellant by saying: With that addition the charge elicited no criticism or objection from the defendant, although there was full opportunity therefor. It evidently was regarded as consistent and satisfactory. Besides, in view of what was said in other parts of the charge, we are justified in assuming that, had the court's attention been particularly drawn at the time to the part complained of now, it would have been put in better form. Certainly, after permitting it to pass as satisfactory then, the defendant is not now in a position to object to it. McDermott v. Severe, 202 U.S. 600, 610, 26 S.Ct. 709, 50 L.Ed. 1162; United v. U.S. Fidelity & Guaranty Co., 236 U.S. 512, 529, 35 S.Ct. 298, 59 L.Ed. 696; Norfold & Western Ry. Co. v. Earnest, 229 U.S. 114, 110, 120, 33 S.Ct. 654, 57 L.Ed. 1096; Ann. Cas. 1914C., 172. See also San Antonio & A. P. Ry. v. Wagner, 241 U.S. 476, 480, 36 S.Ct. 626, 60 L.Ed. 1110; Harrison v. United States, 2 Cir., 7 F.2d 259, 261, 262. It is fair to conclude that the introduction of the point now is a mere afterthought. Even in the Manton brief, it is not listed as a substantive error but, in the shortest possible terms, is treated only as an instance of what is called the hostility*848 and unfairness of the trial judge. And it was not until counsel came to write a reply brief, by leave of the court after the argument was concluded, that really serious consideration was given to the matter or any reference made to the plain error proviso. [23] If the failure to enter an exception or assign error had been a mere inadvertence the matter might stand in a different light. But that view cannot be indulged. Plainly enough, counsel consciously and intentionally failed to save the point and led the trial judge to understand that counsel was satisfied. We see no warrant for the exercise of our discretion to set aside standing rules, so necessary to the due and orderly administration of justice, and review the challenge to the legal accuracy of the charge where, as here, the failure of the judge to follow the text of the requested instruction was, at the last, induced by the action of counsel; and where, moreover, the evidence of guilt is convincing. Spector's Case We pass now to a consideration of the case of Spector. Most of the contentions urged in his behalf are the same as those advanced by Manton and have already been answered. The only remaining question which we find it

necessary to consider is whether the evidence was sufficient to warrant the trial court in submitting the case to the jury. [24][25][26] First. The theory of the indictment and of the prosecution at the trial is that Spector, although not one of the original conspirators or connected with its consummation generally, knowingly joined the general conspiracy and participated in the execution of its purposes in so far as they related to the Schick case. It is not required that each of the conspirators shall participate in, or have knowledge of, all its operations. He may join at any point in its progress and be held responsible for all that may be or has been done. Allen v. United States, 7 Cir., 4 F.2d 688, 692; Baker v. United States, 4 Cir., 21 F.2d 903, 905; Rudner v. United States, 6 Cir., 281 F. 516, 519; Commonwealth v. Anderson, 64 Pa.Super. 427. The evidence warrants a finding that Andrews was a party to the general conspiracy. His special interest was of course in the Schick case; and he had joined with Fallon and Renkoff in the effort to secure Manton's corrupt action in that case. Renkoff having dropped out, Andrews sought and obtained the assistance of Spector in the further prosecution of this criminal enterprise. As already appears, Andrews made many payments of money to Spector aggregating a very large sum. On one occasion a payment of $7,500 made to Spector was first designated as a 90-day loan to him. Spector, after some hesitation, agreed to give his note for the amount. He failed to do so and the amount, having first been entered as prepaid insurance, was later entered in the suspense account and finally charged to Andrews personally. We have already discussed the way in which Spector lent himself as an intermediary between Andrews and Manton to transfer from the former to the latter the large sums of money which were loaned. And it is quite evident that the purpose of such action was to conceal the true character of the transactions. In that connection a significant item of evidence may be cited. Spector had received from Andrews $5,000. Instead of transferring the sum by one check to Manton's secretary, he first drew a check for $2,437.60 and a day or two later another check for $2,562.40, the two aggregating $5,000, the proceeds of both finding their way into the hands of a Manton corporation. On another occasion the sum of $5,000 was divided into checks, one for $2,615.66 and the other for $2,384.34. Both checks bear the same date and the proceeds followed the same course as in the preceding instance. Taken in connection with other evidence, it is hard to explain these devices upon any other theory than that they were adopted to conceal the real facts and to aid in the consummation of the criminal conspiracy. Certainly they are not the accompaniments of honest business. The circumstances of secrecy, intrigue and deviousness, and the attempts to conceal the real nature of the transactions, which the evidence discloses, are hallmarks of fraud and dishonesty, justifying the jury's conclusion that a criminal conspiracy existed to influence and obstruct the administration of justice and defraud the United States of its right to the conscientious action of the defendant Manton free from corruption; and that Spector knowingly became a party to that conspiracy. Spector may have thought the conspiracy did not go beyond the Schick case, but that is immaterial. In a case like this, it is enough that a convicted defendant knew he had connected himself with a criminal conspiracy, *849 even though he was unaware of its full extent . A charge of engaging in a far-reaching conspiracy cannot be avoided by showing that what the accused conceived to be a limited conspiracy turned out to be a conspiracy of wider range, of which the supposed smaller one, in fact, was but a segment. The conclusion of the jury as to Spector's connection with the conspiracy is greatly fortified by statements in the nature of a confession which were made by him after the final termination of the Schick case. The decision of the court in Andrews' favor was handed down April 12, 1937, and in June of the same year Spector had a conversation with one Chaperau. Spector told Chaperau that he was going to Europe to dispose of some foreign rights in an electric razor. Spector showed him a letter of introduction from Judge Manton to someone in England. Chaperau gave Spector a letter to a London solicitor and Spector inquired with respect to the possibilities of raising capital and was informed by Chaperau that patents were not regarded favorably on the other side because of the fear that someone would infringe on them. Spector replied that there was nothing to worry about; that the Dictograph Company had secured the reversal by the Circuit Court of Appeals of an adverse decision in a lower federal court for which he, Spector was responsible. Spector said: I put the G . . . d . . . deal over all by myself. No one can infringe on us and the patent situation is an excellent one and if anyone were to go into business, they could put them out of business.

In the light of the foregoing, there can be no doubt that the case was properly submitted to the jury. [27] Second. But the conclusion would not be otherwise even if we reject the view that Spector was criminally connected with the general conspiracy and assume that the verdict cannot be sustained unless upon the theory that Spector was involved in a distinct and separate conspiracy; for the position which Spector takes on the basis of that assumption, to the effect that a fatal variance would then result between the allegations and the proof, is without merit. The trial judge was careful to tell the jury that they must confine themselves, in passing upon the question of Spector's guilt or innocence, to the evidence which related to him, without reference to that which related only to the defendant Manton; and that they were to limit their consideration to the facts of the Schick case with which the testimony connected Spector. Thus the attention of the jury was pointedly directed and confined to the specific facts relating to Spector. If, then, the view be adopted that Spector was not a party to the general conspiracy alleged, the effect of the evidence would be to split the conspiracy, so far as Spector alone is concerned, into two: one, the general conspiracy; and the other, a smaller one, confined to the Schick case. Some of the circuit courts of appeals have held that this would constitute a fatal variance, but the Supreme Court in Berger v. United States, 295 U.S. 78, 81, 55 S.Ct. 629, 630, 79 L.Ed. 1314; rejected that concept, holding that it ignored the question of materiality and should be so qualified as to make the result of the variance depend upon whether it has substantially injured the defendant. In reality, the attack made upon the verdict is not that the evidence does not prove the smaller conspiracy but that it proves more. In the Berger case it was pointed out that the general rule in criminal cases in respect of variances is based upon the requirements **(1) that the accused shall be informed of the charge against him so that he may not be taken by surprise and **(2) that he may be protected against another prosecution for the same offence. The true inquiry, therefore, the court said, is not whether there has been a variance in proof, but whether there has been such a variance as to 'affect the substantial rights' of the accused. Certainly there has been no such variance in respect of Spector in the present case. The indictment is explicit in its allegations. It alleges in a separate paragraph the pendency of the appeal in the Schick case and that it was a part of the conspiracy alleged in the indictment that the co-conspirator Andrews would pay and cause to be paid, directly and indirectly, to the defendant George M. Spector, certain sums of money * * * to the defendant Martin T. Manton, directly and indirectly, and for his use and benefit through his interest in the Manton corporations as aforesaid, * * * The proof at the trial corresponds with *850 allegations, so that the case is controlled by the language used by the Supreme Court in the Berger case: The proof here in respect of the conspiracy with which Berger (Spector) was not connected may, as to him, be regarded as incompetent; but we are unable to find anything in the facts * * * or in the record from which it reasonably can be said that the proof operated to prejudice his case, or that it came as a surprise; and certainly the fact that the proof disclosed two conspiracies instead of one, each within the words of the indictment, cannot prejudice his defense of former acquittal of the one or former conviction of the other, if he should again be prosecuted. (295 U.S.page 83, 55 S.Ct.page 631, 79 L.E. 1314.) We have not been unmindful of other contentions made by both appellants; but we do not discuss them because either they have been sufficiently covered by what we have already said or they are so clearly without substance as to make a review of them unnecessary. After a careful consideration of the entire record, we find nothing to warrant a reversal of the judgments of the trial court and, accordingly, they are affirmed.

Root Refining Co. v. Universal Oil Products Co., 169 F.2d 514, 78 U.S.P.Q. 95 (C.C.A.3 (Del.),Jul 06, 1948)

No record of interest payments and or principal payments to an alleged loan evidence of bribery by the alleged borrower to the alleged lender. Statement of at p. 529, at the paragraph, The Stokely Transaction
Patent infringement actions by Universal Oil Products Company against Root Refining Company, and by American Safety Table Company against Singer Sewing Machine Company. From a decree for the plaintiff in the

first named case, 6 F.Supp. 7 63, the defendant appealed, and from an adverse judgment in the second named case the plaintiff appealed. The Circuit Court of Appeals affirmed the decree in the first named case, 78 F.2d 991. In the second named case the Circuit Court of Appeals reversed the judgment, 95 F.2d 543. Petitions were filed to vacate these judgments of the Circuit Court of Appeals. William Whitman Company, Inc., was permitted to intervene in the first named case. Decision in accordance with opinion. West Headnotes [1] Judgment 228 340

228 Judgment 228IX Opening or Vacating 228k339 Authority of Court 228k340 k. In General. Most Cited Cases A court has inherent power to inquire into integrity of its own judgments. [2] Judgment 228 497(1)

228 Judgment 228XI Collateral Attack 228XI(B) Grounds 228k488 Want of Jurisdiction 228k497 Effect of Judgment Record or Recitals Therein 228k497(1) k. In General. Most Cited Cases A judgment implies prior existence of justiciable case or controversy between the opposing litigants. [3] Judgment 228 375

228 Judgment 228IX Opening or Vacating 228k372 Misconduct of Party or Counsel 228k375 k. Fraud in Preventing Defense or Procuring Judgment. Most Cited Cases Judgment 228 386(7)

228 Judgment 228IX Opening or Vacating 228k386 Time for Application 228k386(7) k. Fraudulent Judgments. Most Cited Cases Where controversy is terminated by judgment, judgment's freedom from fraud is subject of further judicial inquiry, and general rule that courts do not set aside their judgments after term at which they were rendered is inapplicable, notwithstanding that injured party may have been derelict in bringing fault to court's attention. [4] Federal Courts 170B 956.1

170B Federal Courts 170BVIII Courts of Appeals

170BVIII(L) Determination and Disposition of Cause 170Bk956 Jurisdiction and Proceedings of Court of Appeals After Remand; Recalling Mandate 170Bk956.1 k. In General. Most Cited Cases (Formerly 170Bk956, 106k406.9(22), 106k406(2)) Judgment 228 375

228 Judgment 228IX Opening or Vacating 228k372 Misconduct of Party or Counsel 228k375 k. Fraud in Preventing Defense or Procuring Judgment. Most Cited Cases The trial court can vacate its own judgment for fraud and likewise the appellate court can, for fraud, vacate decree of trial court entered pursuant to mandate of appellate court. [5] Federal Courts 170B 956.1

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(L) Determination and Disposition of Cause 170Bk956 Jurisdiction and Proceedings of Court of Appeals After Remand; Recalling Mandate 170Bk956.1 k. In General. Most Cited Cases (Formerly 170Bk956, 106k406(2), 106k406.9(11)) In proceeding in Circuit Court of Appeals to vacate judgment of such court on ground of fraud, the right to intervene was governed by principles underlying Federal Rules of Civil Procedure regulating intervention in the district courts. Rules of United States Circuit Court of Appeals for the Third Circuit, rule 18(5); Fed.Rules Civ.Proc. rule 24(a, b), 28 U.S.C.A. [6] Federal Courts 170B 956.1

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(L) Determination and Disposition of Cause 170Bk956 Jurisdiction and Proceedings of Court of Appeals After Remand; Recalling Mandate 170Bk956.1 k. In General. Most Cited Cases (Formerly 170Bk956, 106k406.9(11), 106k406(2)) In proceeding to vacate on ground of fraud a judgment of Circuit Court of Appeals affirming decree of patent infringement, third party who was interested in vacation of infringement decree in order to obtain in impending litigation a revocation of patent license based on decree was permitted to intervene. Fed.Rules Civ.Proc. rule 24(b), 28 U.S.C.A. [7] Federal Courts 170B 956.1

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(L) Determination and Disposition of Cause 170Bk956 Jurisdiction and Proceedings of Court of Appeals After Remand; Recalling Mandate 170Bk956.1 k. In General. Most Cited Cases (Formerly 170Bk956, 106k406(2), 106k6(2), 106k406.9(11)) In proceeding to vacate Circuit Court of Appeals judgment affirming decree of patent infringement, on ground

that plaintiff in patent infringement action employed attorney with expectation that attorney would exercise on circuit judge an improper influence in order to secure favorable judicial action in the patent infringement action and that judge's actions in such case were influenced by expectation of gain pursuant to agreements to that effect with attorney, other transactions undertaken as part of illicit combinations between judge and attorney were admissible to show the illicit combination between judge and attorney **to obstruct justice, although such transactions were not admissible to show that plaintiff was a party to the combination in the patent infringement action. [8] Equity 150 65(1)

150 Equity 150I Jurisdiction, Principles, and Maxims 150I(C) Principles and Maxims of Equity 150k65 He Who Comes Into Equity Must Come with Clean Hands 150k65(1) k. In General. Most Cited Cases He who comes into equity must come with clean hands and keep them clean throughout the course of litigation, and if he violates the rule he must be denied all relief, whatever may have been the merits of his claim. [9] Federal Courts 170B 956.1

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(L) Determination and Disposition of Cause 170Bk956 Jurisdiction and Proceedings of Court of Appeals After Remand; Recalling Mandate 170Bk956.1 k. In General. Most Cited Cases (Formerly 170Bk956, 106k406(2), 106k406.9(11)) Evidence warranted vacation of Circuit Court of Appeals judgment affirming judgment of patent infringement and vacation of such judgment of patent infringement on ground that plaintiff in patent infringement action employed attorney with expectation that attorney would exercise on circuit court judge an improper influence in order to secure favorable judicial action in patent infringement action and that judge's actions in such case were influenced by expectation of gain pursuant to agreements to that effect with attorney. [10] Attorney and Client 45 42

45 Attorney and Client 45I The Office of Attorney 45I(C) Discipline 45k37 Grounds for Discipline 45k42 k. Deception of Court or Obstruction of Administration of Justice. Most Cited Cases An attorney who attempts by personal influence to control a judge or jury in their decision in pending case or who merely holds himself out as able to do so, whether or not he actually makes the attempt and whether or not he succeeds or fails in the attempt, is ejected from the courts and ceases to exist as a lawyer. [11] Federal Courts 170B 956.1

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(L) Determination and Disposition of Cause 170Bk956 Jurisdiction and Proceedings of Court of Appeals After Remand; Recalling Mandate 170Bk956.1 k. In General. Most Cited Cases (Formerly 170Bk956, 106k406(2), 106k406.9(11))

Evidence warranted vacation of district court judgment and Court of Appeals judgment holding patents valid and infringed on ground that plaintiff employed attorney on appeal for the purpose and with the expectation that attorney would exercise or endeavor to exercise an improper influence on circuit judge to secure judicial action from the judge favorable to the plaintiff's interest in the patent infringement action.

Before SOPER and MAHONEY, Circuit Judges, and PRETTYMAN, Associate Justice of United States Court of Appeals for the District of Columbia, Sitting by Designation of the Chief Justice of the United States, FRED M. VINSON. SOPER, Circuit Judge. This proceeding relates to the integrity of the judgment of this court in certain patent infringement suits, that is; two companion cases, Nos. 5648 and 5546, Root Refining Company v. Universal Oil Products Company, June 26, 1935, 78 F.2d 991, and also No. 6459, American Safety Table Company v. Singer Sewing Machine Company, March 9, 1938, 95 F.2d 543. It is asserted that these judgments are invalid and should be vacated because in each case there was a corrupt and illicit conspiracy to obstruct justice between J. Warren Davis, one of the former judges of this Court, and Morgan S. Kaufman, one of the attorneys for the successful litigant; and that in each case the successful litigant was party to the unlawful combination. The two Universal cases were one for all practical purposes and were so treated at the time they were tried in the District Court and in this court. The trial of the charges respecting the judgments therein was consolidated by us with the trial of like charges respecting the judgment in the American Safety Table Company v. Singer Sewing Machine Company case, since much of the evidence was common to both cases. Nos. 5546 and 5648. Root Refining Company v. Universal Oil Products Company. Universal Oil Products Company was owned one-half by the Standard Oil Company of California and one-half by the Shell Oil Company. It was the owner and licensor of certain patents for the production of gasoline from petroleum, on which patents its suits against Root Refining Company were based; and Universal was also the plaintiff in other infringement suits, in respect to the same patents, against other oil companies in various parts of the United States. The instant proceeding had its inception at an informal hearing in this court on June 5, 1941, before certain judges of this court who were not members thereof when the judgments under examination were rendered. *517 On that date the attorneys for the defendants in the other suits brought by Universal appeared in this court and charged that the judgments in Root Refining Company v. Universal Oil Products Company were invalid for the reasons outlined above, and that these judgments were being used in the other cases as a precedent or as res judicata with respect to the validity of the patents. Universal was represented by attorneys at this hearing, but Root was not, since it did not desire to reopen the case and disturb an agreement with Universal entered into in the early part of 1939, whereby Root acquired a license under the patents, before the investigation of the charges against Davis and Kaufman had been begun. Davis and Kaufman were tried under an indictment to obstruct justice in the District Court of the Eastern District of Pennsylvania between May 19 and May 29, 1941, and the trial resulted in a disagreement of the jury.FN1 The attorneys who attacked the judgments in this court at the hearing on June 5, 1941, alleged that the evidence then recently offered at the first criminal trial indicated that Davis had been bribed by Kaufman to secure a decision favorable to Universal in the Root appeals; and they suggested an investigation of the matter but, as their clients were not parties in the cases, they expressed doubt as to their capacity to participate. The presiding judge of the court thereupon suggested that they serve as amici curiae, and accordingly, they accepted this role. Thereafter, petitions were filed by the attorneys in which as amici they asked the court to appoint a master to investigate the Root appeals, stating at the same time that they were also concerned with the interests of their clients in suits which Universal had brought against them. Universal, on its part, while denying the fraud, offered to consent to a reargument of the Root cases without disturbing its agreement with Root even though Universal should prevail in the reargument; but this offer was not accepted. On November 26, 1941, the court appointed a master and authorized and directed him to examine, investigate and report to the court his conclusions concerning the

relationship between Universal, Morgan S. Kaufman and Judge Davis in connection with these cases and particularly whether the judgments of this court therein were tainted and invalidated by fraud. He was directed to receive relevant documents and evidence in the possession of the United States Department of Justice, its Bureau of Investigation, and United States Attorneys, and to inspect the federal grand jury proceedings in New York and Philadelphia. He was given power to summon and swear witnesses, and subject them to the examination and crossexamination of the attorneys. It was further ordered that the fees and expenses of the master should be first paid by the amici, and ultimately taxed against them or Universal as the court might direct. The master took the testimony of numerous witnesses who were sworn and subjected to examination by the amici and by the attorneys of Universal; and the master also examined records in the possession of the United States Attorney in New York, the records of the proceedings of the grand jury in Philadelphia and other records and statements, in the absence and without assistance of the attorneys. On October 19, 1943, he reported his conclusion that the judgments of the Circuit Court of Appeals in the Root appeals were tainted and invalidated by fraud. The nature of his work is described in Universal Oil Co. v. Root Refining Co., 328 U.S. 575, 66 S.Ct. 1176, 90 L.Ed. 1447, wherein the Supreme Court considered the propriety of certain fees which had been allowed by this court to the amici for their services. The Supreme Court said: (328 U.S. at pages 578, 579, 66 S.Ct. at page 1178) * * * He examined records in the possession of the United States Attorney for the Southern District of New York, the records of proceedings before a Philadelphia*518 grand jury, bank records, and various statements of interested parties. From this mass of material, he selected those documents which he deemed appropriate for submission to the inspection of the amici and of counsel for Universal. Witnesses were also heard and petitioner was given the right to cross-examine. * * * Petitioner's (Universal's) counsel duly excepted to the manner in which the investigation was being conducted, if it were to involve any property rights of our clients, including the validity of any judgment. * * * The master evidently did not view the proceedings in the light of an adversary litigation. He ruled that the investigation- for that is all it is- should (not) be conducted strictly according to the rules of evidence in litigation. At the conclusion of this investigation, the master rendered a report in which he concluded that there was in connection with this case such fraud as tainted and invalidated the judgments' in the Root appeal. Exceptions to the master's report were filed by the amici and by Universal but on June 15, 1944, after hearing, the court overruled the exceptions, adopted the findings and conclusions of the master, vacated the judgments of June 26, 1935, recalled its mandate and restored the cases to the reargument list. 62 U.S.P.Q. 114. No attempt to review this order was made. Thereafter application was made by the amici for the allowance of costs, disbursements and fees, after a hearing an order was passed on December 29, 1944, wherein the amici were allowed $100,000 for their services and the additional amount of $54,606.57 as reimbursement for their out-of-pocket expenses. Root Refining Co. v. Universal Oil Products Co., 3 Cir., 147 F.2d 259. These amounts had in fact been already paid to the amici by their oil company clients, and the awards therefore constituted an order for the reimbursement to the clients by Universal. With respect to this order a writ of certiorari was sought and granted, and when it was considered by the Supreme Court, this court's order was reversed. FN2 In passing on the question, the Supreme Court made the following statement which directly bears upon the power and duty of this court as now constituted in conducting the present proceeding. We refer particularly to portions of the statement which we have emphasized. The court said ( 328 U.S. at page 580, 66 S.Ct. at page 1179, 90 L.Ed. 1447, June 10, 1946): The inherent power of a federal court to investigate whether a judgment was obtained by fraud, is beyond question. Hazel-Atlas Co. v. Hartford-Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250. The power to unearth such a fraud is the power to unearth it effectively. Accordingly, a federal court may bring before it by appropriate means all those who may be affected by the outcome of its investigation. But if the rights of parties are to be adjudicated in such an investigation, the usual safeguards of adversary proceedings must be observed. No doubt, if the court finds after a proper hearing that fraud has been practiced upon it, or that the very temple of justice has been defiled, the entire cost of the proceedings could justly be assessed against the guilty parties. Such is precisely a situation where for dominating reasons of justice a court may assess counsel fees as part of the taxable costs. Sprague v. Ticonic National Bank, 307 U.S. 161, 167, 59 S.Ct. 777, 780, 83 L.Ed. 1184. But, obviously, a court cannot deprive a successful party of his judgment without a proper hearing. This question is not before us, except as it bears on the order allowing attorneys' fees and costs. But if the judgment could not be nullified without adequate opportunity to be heard in a proper contest, neither is it just to assess the fees of attorneys and their expenses in conducting an investigation where petitioner throughout objected to the character of the investigation if it was to be

used as a basis for adjudicating rights.' On December 19, 1946, after the case had been returned to this court, Universal called this court's attention to the comments of the *519 Supreme Court upon the master's procedure in conducting the investigation and filed a motion to vacate the order of June 15, 1944, whereby the judgments in the Root appeals had been vacated. On June 20, 1947, after counsel had been heard, this court vacated the order of June 15, 1944, but at the same time ordered Universal to show cause why said judgment should not be vacated by reason of fraud or corruption practiced upon this court by it or those acting upon its behalf. The court also authorized the Attorney General of the United States to appear in the proceeding as amicus curiae. FN3 It thus appears that after the expiration of six years, this proceeding was returned to the point at which it began on June 5, 1941. The subsequent proceedings were as follows: On July 1, 1947, Alfred C. Aurich, Special Assistant to the Attorney General, appeared as attorney for the United States, amicus curiae, and thereupon the former amici withdrew. On September 18, 1947, Universal petitioned the Supreme Court for a writ of certiorari and for writs of mandamus and prohibition to forbid further proceedings in the instant case on the ground that there was no justiciable case or controversy before the court, and on November 10, 1947, the Supreme Court denied these petitions. 332 U.S. 813, 68 S.Ct. 145. On December 26, 1947 the Senior Judge of this court certified that by reason of the volume, accumulation or urgency of business in this circuit, or the disability or necessary absence from the circuit of one or more Circuit Judges, the court was unable to perform speedily the work before it and on January 16, 1948, the Chief Justice of the United States designated and assigned the judges of the court now sitting herein to act as Circuit Judges in this circuit and discharge all of the duties of the Circuit Judges thereof in connection with cases Nos. 5546 and 5648, Root Refining Company v. Universal Oil Products Company, and case No. 5649, American Safety Table Company v. Singer Sewing Machine Company. On December 31, 1947, William Whitman Company, Inc. petitioned for leave to intervene in this proceeding, stating that Universal had sued Whitman's predecessor, the National Refining Company, for infringement of the patents involved in the Root appeals and on the strength of the judgments therein, had induced its predecessor to take a license under the patents and pay royalties to Universal, which were paid until June 15, 1944, when the judgments herein were vacated; that Whitman had sued Universal in the United States District Court of Delaware for the revocation of the licenses and the repayment of the royalties paid thereunder on the ground that the judgments in the Root appeals had been procured by fraud, and hence Whitman had an interest in the outcome of the present proceeding and should be allowed to participate therein. On January 22, 1948, pursuant to the designation made by the Chief Justice of the United States on January 16, 1948, we called a conference of the attorneys for the United States as amicus curiae, the attorneys for Whitman and the attorneys for Universal, at which the posture of the cases was discussed and counsel were instructed to propose any legal questions which might be involved preliminary to an investigation into the merits of the proceeding; and subsequently on March 23, 1948, a hearing upon these questions was held. In the meantime, on February 10, 1948, Universal made return to the order of June 20, 1947, and moved the court to dismiss the rule to show cause thereby imposed upon it, contending, for the reasons hereinafter set out, that no justiciable controversy then existed in these cases; and on February 16, 1948, Universal filed a memorandum in opposition to Whitman's motion to intervene, on the grounds hereinafter described. On March 2, 1948, Alfred C. Aurich, on behalf of the United States as amicus curiae, filed a statement of ultimate facts relating to the proceedings and the charges of fraud in this case; and on March 8, 1948, Universal filed a reply in opposition thereto and a *520 motion to strike the same from the records of the court. On April 6, 1948, we issued an order in which the prior history of the cases was reviewed and it was directed (1) that the United States, through the Assistant Attorney General designated by the Attorney General, be authorized to participate in this proceeding as amicus curiae; (2) that the motion of Universal that the statements of the United States as amicus curiae be stricken from the records and the motion that these proceedings be dismissed be denied; and (3) that the motion of Whitman to intervene be granted. FN4 **We further ordered that in view of the conclusions

contained in the report of the Special Master, and the allegations of wrongdoing set forth by the United States as amicus curiae and by Whitman, we deemed it necessary to determine whether Judge Davis was improperly influenced as a member of this court in his action in these cases by the hope of gain or reward, and whether the judgment of the court in these cases was secured by fraud or wrongdoing on the part of Universal or any one acting on its behalf, and to that end we formulated the charges that had been made and that were to be tried as follows: (a) Whether Judge J. Warren Davis' action in these cases was influenced by the expectation of gain or favors pursuant to an agreement or understanding to that effect with Morgan S. Kaufman. (b) Whether certain transactions effected in the latter part of 1935, **whereby Morgan S. Kaufman advanced the sum of $10,000 **to one Charles Stokley, a cousin of Judge Davis, were the means whereby Judge Davis was compensated in whole or in part for his decision favorable to Universal Oil Products Company in these cases, and whether certain other transactions between Judge Davis and Morgan S. Kaufman during the period 1935 to 1938 allegedly relating to the litigation evolving from the bankruptcy of one William Fox, were part of a corrupt and illicit combination between Judge Davis and Kaufman to obstruct justice. (c) Whether Morgan S. Kaufman was employed or retained by Universal Oil Products Company in connection with these cases and, if so, whether the purpose of such employment or retainer was the expectation of Universal Oil Products Company that Kaufman would exercise or endeavor to exercise an improper influence upon Judge Davis in order to secure favorable judicial action by him in connection with these cases. We further ordered that the motions and answers filed herein by Universal be accepted as a general denial of all allegations of wrongdoing on the part of the court or on its part. We further ordered that the trial of the cases be set for hearing before the court without the intervention of a master, on May 10, 1948, and thence continuously from day to day until completed; and that in the trial of the charges the amicus curiae should have the duty to present to the court the available evidence bearing upon the charges, whether or not in support thereof, to the end that the truth might be ascertained; and that Whitman and Universal should have full opportunity to present evidence bearing on the charges and to participate in the examination and cross examination of witnesses and in the argument before the court, so that the customary procedure of an adversary proceeding might be observed. We further ordered that the trial of the charges above set forth be consolidated with the trial of the charges set forth in an order of this court of the same date passed in the case of American Safety Table Company v. Singer Sewing Machine Company in the manner hereinafter described in the discussion of that case. The hearing took place in accordance *521 with the terms of this order and ten days were consumed in the taking of testimony. The evidence was presented to the court by the attorney for the United States as amicus, but full opportunity was accorded and was availed of by the attorneys for Universal and the attorney for Whitman, the intervenor, to examine and cross-examine the witnesses offered by the amicus; and to offer witnesses on their own behalf. At the conclusion of the testimony, the court took an adjournment for one week in order to afford the attorneys an opportunity to prepare their arguments at which the attorneys who desired to speak were heard without restriction as to time. Before stating the findings and conclusions of fact which we have reached upon the testimony, it is desirable to examine the legal objections raised by Universal to our order of April 6, 1948, under which the proceeding in its present phase has been conducted. They relate, as we have seen, to the jurisdiction of the court to conduct the inquiry, and if that be found to exist, to the propriety of allowing Whitman to intervene as an interested party. Universal's argument on the jurisdictional point is set out in the indented paragraphs which follow. The jurisdiction of the federal courts is limited by Article 3, Section 2 of the Constitution to cases' and controversies' in which the claims of litigants are brought before them for determination by such regular proceedings as are established for the protection and enforcement of rights, or the prevention, redress, or punishment of wrongs; and this jurisdiction is limited to cases and controversies between adverse litigants presented in such

form that the judicial power is capable of acting upon them, and pronouncing and carrying into effect a judgment between the parties, and does not extend to the determination of abstract questions or issues framed for the purpose of invoking the advice of the court without real parties or a real case. Liberty Warehouse Co. v. Grannis, 273 U.S. 70, 74, 47 S.Ct. 282, 71 L.Ed. 541. It follows that when by the act of the parties, as by a settlement, an existing controversy comes to an end, the case becomes moot and a federal court is powerless to act further in the matter. United States v. Alaska S.S. Co., 253 U.S. 113, 116, 40 S.Ct. 448, 64 L.Ed. 808. That is the situation here. The Root appeal presents no case or controversy because Root settled its differences with Universal by a settlement in 1939 and this fact was recognized by the amici when they first approached this court, as the Supreme Court pointed out in Universal Oil Products v. Root Refining Co., 328 U.S. 575, 577, 66 S.Ct. 1176, 90 L.Ed. 1447, for although their clients were hostile to Universal, their controversies with Universal were outside the Root cases and their attorneys secured a standing therein only as amici. Moreover, the Supreme Court on May 29, 1944, in Universal Oil Products Co. v. Globe Oil & Refining Co., 322 U.S. 471, 66 S.Ct. 1110, 88 L.Ed. 1399, declared that the Egloff patent, one of the patents involved in the Root appeals, was invalid, and that the Dubbs patent, the other patent involved, was not infringed by the refining process employed by Root and the other oil companies sued by Universal. Universal also pointed out that the Dubbs patent had expired. Therefore, Universal contends no controversy prevails in the instant proceeding. This result is not affected by the attempted intervention of Whitman, since an existing suit within the court's jurisdiction is a prerequisite of an intervention. Kendrick v. Kendrick, 5 Cir., 16 F.2d 744; and furthermore, Whitman does not assert an individual claim for relief either in law or in equity which is an essential basis to a right of action in a federal court. Oklahoma v. Civil Service Comm., 330 U.S. 127, 67 S.Ct. 544, 91 L.Ed. 794; Coffman v. Breeze Corporations, 323 U.S. 316, 323, 65 S.Ct. 298, 89 L.Ed. 264. Finally it is said that since this court is a Court of Appeals, it has no power in the exercise of its federal jurisdiction to make findings of fact in the first instance and to enter judgments or decrees based thereon. [1][2][3] This argument completely ignores the inherent power of a court to inquire into the integrity of its own judgments. Such a judgment implies the prior existence*522 of a justiciable case or controversy between opposing litigants; but when the controversy has been terminated by a judgment, its freedom from fraud may always be the subject of further judicial inquiry; and the general rule that courts do not set aside their judgments after the term at which they rendered has no application. The matter is not one of merely private concern subject to the action or inaction of the litigants, but is one of vast public importance, so that it becomes immaterial that the injured party may have been derelict in bringing the fault to the court's attention. On this point, the Supreme Court in Hazel-Atlas Glass Co. v. Hartford Empire Co., 322 U.S. 238, at page 246, 64 S.Ct. 997, at page 1001, 88 L.Ed. 1250, where also a charge of fraud was made as to the prosecution of a suit upon a valuable patent in a District Court and in the Circuit Court of Appeals of the Third Circuit, said: * * * This matter does not concern only private parties. There are issues of great moment to the public in a patent suit. Mercoid Corporation v. Mid-Continent Investment Co., 320 U.S. 661, 64 S.Ct. 268 (88 L.Ed. 376); Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488, (788), 62 S.Ct. 402, 86 L.Ed. 363. Furthermore, tampering with the administration of justice in the manner indisputably shown here involves far more than an injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public, institutions in which fraud cannot complacently be tolerated consistently with the good order of society. Surely it cannot be that preservation of the integrity of the judicial process must always wait upon the diligence of litigants. The public welfare demands that the agencies of public justice be not so impotent that they must always be mute and helpless victims of deception and fraud. [4] The power inheres in the appellate as well as in the trial court and the former may vacate its own judgment and direct the vacation of a decree of the latter entered pursuant to the mandate of the former. In discussing this question and rejecting the argument **that although the courts of appeal have power to permit the trial courts to review a judgment attacked for fraud in a case which the appellate court has reviewed, the appellate court may not review the judgment itself after the expiration of the term, the Supreme Court said in the same case, 322 U.S. at pages 248, 249, 250, 64 S.Ct. at page 1002:

Equitable relief against fraudulent judgments is not of statutory creation. It is a judicially devised remedy fashioned to relieve hardships which, from time to time, arise from a hard and fast adherence to another court-made rule, the general rule that judgments should not be disturbed after the term of their entry has expired. Created to avert the evils of archaic rigidity, this equitable procedure has always been characterized by flexibility which enables it to meet new situations which demand equitable intervention, and to accord all the relief necessary to correct the particular injustices involved in these situations. * * * * * * to reason otherwise would be to say that although the Circuit Court has the power to act after the term finally to deny relief, it has not the power to act after the term finally to grant relief. It would, moreover, be to say that even in a case where the alleged fraud was on the Circuit Court itself, the relevant facts as to the fraud were agreed upon by the litigants, and the Circuit Court concluded relief must be granted, that Court nevertheless must send the case to the District Court for decision. Nothing in reason or precedent requires such a cumbersome and dilatory procedure. Indeed the whole history of equitable procedure, with the traditional flexibility which has enabled the courts to grant all the relief against judgments which the equities require, argues against it. **We hold, therefore, that the Circuit Court on the record here presented had both the duty and the power to vacate its own judgment and to give the District Court appropriate directions. Universal made the same contention as to lack of jurisdiction in this court to conduct an inquiry into the conduct of Judge Davis when Universal was before the Supreme Court in the earlier phase of *523 the pending case. The Supreme Court, however, brushed aside this contention and made the statement (328 U.S.at page 580, 66 S.Ct. 1176, 1179, 90 L.Ed. 1447) hereinbefore set out, to the effect that a federal court has inherent power to investigate whether a judgment was obtained by fraud, and for this purpose may bring before it by appropriate means all those who may be affected by the outcome of the investigation. It is true that in the same opinion the court reversed the order of this court requiring Universal to pay the fees of the amici as part of the costs; but this was done because property rights were affected by this court's action and it was shown that the master in reaching the conclusion approved by this court had acted at times as an investigator rather than as a judicial officer, and in these respects, had failed to observe the usual safeguards of adversary proceedings. This decision, however, did not indicate that this court lacked the power to act, but only that in some respects the power had been exercised improperly. This interpretation of the Supreme Court's position is in harmony with its subsequent rejection of Universal's petition for writs of prohibition and mandamus, directed to this court, wherein Universal again advanced the contention that this court had acted in excess of its jurisdiction.FN5 The Supreme Court did not strike down the act of this court whereby the judgments upon the Root appeals were vacated. It said that the question was not before it but that obviously, a court cannot deprive a successful party of his judgment without a proper hearing. Because of that statement this court, as formerly constituted, on June 20, 1947, struck out its vacating order; and, thereafter, in due course, the proceeding before the court as now constituted was recommenced. The subsequent trial has been conducted under the judicial safeguards which obtain in the administration of justice; and although we are told that the evidence we have heard has not differed materially from that presented to the master, we have abstained from examining that evidence or the findings of the master thereon, and have reached our conclusions solely upon the evidence presented at the hearing before us. However, the fact, that an able and impartial lawyer rendered a decision adverse to Universal on the issue of fraud at the former hearing, and that his decision was affirmed by the regular members of this court, has been considered by us in connection with the other facts outlined above as ample justification for proceeding with the inquiry in its present form. Indeed these facts not only justify the inquiry but impose upon us the duty to make it, even if no party to the original cause should be willing to cooperate, to the end that the records of the court might be purged of fraud, if any should be found to exist. Our consent to the intervention of Whitman is based, we think, on grounds equally substantial. Whitman (formerly National) has been engaged for many years in refining oil, and in 1930 and 1931 installed in its plants in Ohio and Kansas new equipment for the cracking of oil in the production of gasoline by the method known to the industry as the Winkler-Koch process. Universal charged that this process infringed the Dubbs and Egloff patents, and, as we have seen, brought suit thereon in the District Court of Delaware against Root which was brought to a successful conclusion when the Supreme Court denied Root a writ of certiorari on October 21, 1935. Meanwhile, Universal sued National in the Northern District of Ohio in 1931 on the same patents; was permitted to dismiss this suit without prejudice on February 26, 1935; again sued National in the Northern District of Kansas on the same

patents on April 1, 1935, and in the suit claimed that the issue between the parties was res judicata in its favor, because National had participated in the Root cases through membership in the Winkler-Koch Patent Company, a voluntary association of oil companies, including Root, which employed counsel and defended Root *524 and other users of the Winkler-Koch process. In reply National admitted participation in the patent club, denied that the judgments were res judicata, but subsequently, under the advice of counsel, entered into a settlement with Universal and accepted a license agreement under which it has paid Universal approximately a million dollars. After June 15, 1944, when this court vacated the Root judgments, National ceased the payment of royalties, and on December 28, 1946, brought suit in the District Court of Delaware (to which Whitman has succeeded) reciting the prior history of the pending proceeding in this court and praying for a judgment cancelling its license agreement with Universal, and granting restitution of the royalties theretofore paid, or in the alternative, the enforcement of the so-called favored nation clause in the agreement. Finally, on December 31, 1947, Whitman filed a motion to intervene herein on the ground that an essential element in its case against Universal in the District Court of Delaware, that is, the fraudulent character of the judgments in the Root cases and the complicity of Universal therein, is involved in the pending proceeding and that Whitman, as well as Root, should be allowed to be heard. Universal, in opposition to the application for intervention, asserts that the fundamental infirmity of Whitman's motion lies in the absence in this proceeding of a case or controversy, and in addition, urges that Whitman has no right to intervene because (1) a party has no right to intervene in a case for the first time in the appellate court; (2) it will not be bound by the judgment herein; (3) there are no equities which should incline the court to exercise its discretion to grant intervention; and (4) Whitman has waited so long after it received knowledge of the facts recited herein before applying for intervention that it is guilty of inexcusable laches. We have already shown that the power of this court to conduct this proceeding is well established, and its power to allow Whitman to participate also seems to us to be beyond reasonable question. It is true that intervention in a litigated case by a third party usually occurs in the trial court and is usually regulated by statute; but even in the appellate court the process is not unknown, and in the instant case, the significant and controlling circumstance is that although the court is appellate, the proceeding is not so, since it affects the existence of the court itself and partakes of the nature of an original action in that the issues are framed and the testimony is taken for the first time. Rule 18(5) of this court authorizes intervention in proceedings for the review or enforcement of orders of all administrative agencies, boards or commissions, where the case first enters the federal courts in the Court of Appeals. Procedure under this rule is akin to that approved without rule of court in the First Circuit In Bethlehem Shipbuilding Corp. v. N.L.R.B., 1 Cir., 120 F.2d 126, where it was held, in analogy with the practice of the District Courts under the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, that the Court of Appeals might appropriately exercise the power to grant the privilege of pretrial discovery to the Labor Board in an original contempt proceeding instituted by it for violation of the Court of Appeals decree. The court held that this action was justified by Section 262 of the Judicial Code, 28 U.S.C.A. Section 377, which gives power to all federal courts to issue all writs not specifically provided for by statute which may be necessary for the exercise of their respective jurisdictions and agreeable to the usages and processes of law. [5] Intervention in the District Courts is regulated by Rule 24 of the Federal Rules of Civil Procedure. Upon timely application, it is granted as of right (paragraph a) when the representation of the applicant's interest by existing parties is or may be inadequate and the applicant is or may be bound by a judgment in the action; and it may be permitted upon such application (paragraph b) in the court's discretion when the applicant's claim or defense and the main action have a question of law or fact in common. The present case is fortunately unique and presents a *525 phase of original jurisdiction, as distinguished from appellate jurisdiction, derived from the inherent power of a federal court to investigate whether its judgment has been obtained by fraud; and we have no doubt that the same considerations which justified this court to issue its Rule 18(5) and also justified the First Circuit to adopt by analogy the Federal Rule of Civil Procedure in contempt cases, authorize us in like manner to apply to this case the principles underlying the Federal Rules of Civil Procedure which regulate intervention in the District Courts. [6] When the provisions of paragraph (b) of Rule 24 are applied, the intervention of Whitman is clearly permissible and should be granted. The determination by this court of the question whether Universal has been

guilty of unclean hands in the Root appeals would necessarily be of great weight in the decision of the same question in the suit between Whitman and Universal now pending in the District Court of Delaware, even if Whitman were not allowed to intervene herein, and would not be technically bound by our conclusions. But there can be no doubt that the question of Universal's complicity in the fraud is common to the instant proceeding and also to that suit, and that if Whitman is permitted to intervene, it will be bound by our finding on that question. FN6 It cannot be denied that so far as that suit is concerned, Whitman's interest in our decision is as great as that of Universal and it is reasonable and just to give Whitman, on one side of the issue, the same opportunity to participate as is accorded Universal on the other, especially as the amicus has been enjoined to present all of the evidence bearing on both sides. Any doubt as to the right of Whitman to intervene is dispelled by the broad statement of the Supreme Court when the prior phase of this case was before it, 328 U.S. at page 580, 66 S.Ct. at page 1179, 90 L.Ed. 1447, that when the question is whether a judgment of the court was obtained by fraud the court may bring before it by appropriate means all those who may be affected by the outcome of its investigation. This court is entitled to whatever assistance is available to it in its effort to unearth the truth, and it is of no moment that Whitman's application may not have been promptly presented after it was informed as to the facts, since, as pointed out in Hazel-Atlas Glass Co. v. Hartford Empire Co., 322 U.S. 238, 246, 64 S.Ct. 997, 88 L.Ed. 1250, the matter does not merely concern private parties and issues of great moment to the public are at stake. **The important questions of fact in this proceeding are whether Universal employed Kaufman in order that he might influence Judge Davis improperly and secure judicial action favorable to Universal in the Root cases, and whether Judge Davis was in fact so influenced. Our ultimate conclusions of fact based upon a summary of the evidence which we have prepared and filed herein are as follows: For many years before the Root cases were filed, Davis and Kaufman had been close friends and associates, and the association included Judge Buffington, whose integrity is not assailed in this proceeding, and Kaufman's brother David, who was once United States Minister to Siam. The four men visited in each other's houses and offices, and they spent all or a part of February with each other at the same resort in Miami, Florida in 1935, 1936 and 1937. This intimacy was well known in legal circles in the Third Circuit. The Root cases were instituted in the United States District Court in Delaware on March 11, 1929. They were of the greatest importance to Universal. In fact, they were test cases and an adverse decision in the Third Circuit would have destroyed the lucrative licensing system which Universal*526 was establishing amongst the refiners of oil in the United States. Universal was financially very strong and no effort or expense was spared in the litigation, and after the Root cases were won, copies of Judge Davis' opinion were sent to prospective licensees and large sums of money were paid to Universal by divers oil companies for past infringement. Universal's staff of lawyers in the Root cases was of a very high order, and each lawyer was well qualified for the part he was employed to play. Thomas G. Haight of Jersey City, New Jersey, the leading attorney, had become an eminent and successful patent lawyer, especially in the Third Circuit, after his resignation from the federal bench in 1920. He had been a colleague of Judge Davis in the District Court of New Jersey from 1914 to 1919, and a member of the Third Circuit Court of Appeals in 1919 and 1920; and when he resigned from that court, he was succeeded by Judge Davis. Haight took the lead in the preparation and trial of the Root cases in the District Court and in the Court of Appeals. He was in close touch with Frank L. Belknap of Chicago, the generalissimo of Universal's legal forces in the United States until the latter's death in May, 1933; and Haight was also in close touch throughout the litigation with **Hiram J. Halle, president of Universal, who maintained an office in New York. Hugh M. Morris of Wilmington, Delaware, was United States District Judge in that State from January 27, 1919 to June 30, 1930, and was experienced in patent law by reason of the considerable volume of patent cases in his court. He ruled as District Judge on a motion for a bill of particulars, and on two motions for leave to file interrogatories in the Root cases preliminary to the hearing of the cases on the merits before his resignation took effect on June 30, 1930. On the following day he accepted a retainer of $2500 from Universal of which $208.34 was charged to the Root cases. This employment was in accordance with a previous understanding between him and Haight, acting with Belknap's consent, when it was known that Judge Morris intended to resign. He took an active part in the preparation and trial of the cases in the District Court, examined one witness and argued the case before

his successor, Judge Nields. He attended the argument of the cases in the Court of Appeals but took no active part therein. Eugene E. Berl of Wilmington took no part in the trial of the Root cases but rendered casual services as local attorney in connection with Judge Morris, and was in a position to furnish all the assistance needed by Universal at the seat of the District Court. William F. Hall of Washington was very active in the litigation and argued the case in both courts. He confined himself to the scientific aspects of the issues of validity and infringement. Charles S. Thomas of Washington, D.C., participated in the trial of the cases in the District Court and in the preparation of the briefs for the Court of Appeals. He confined himself to questions of patent law. To this competent group of lawyers Morgan S. Kaufman was added in 1932. He lived in Scranton, Pennsylvania, where he had maintained a law office since 1905. He served as referee in bankruptcy in the Middle District of Pennsylvania from 1913 to 1934. In the period between 1909 and 1939 he was attorney of record in seventeen cases in the Circuit Court of Appeals. On March 4, 1933, Judge Nields appointed him receiver in bankruptcy of S. W. Strauss Company, a mortgage investment company whose principal office was in New York City. From shortly after this appointment, and until the completion of the receivership some time after the year 1940, he maintained his home and his office in New York City where the business of the bankrupt had been conducted. During this period his main occupation, aside from the business of the receivership, was buying and selling securities on the stock market. None of the lawyers in the Root cases had known Kaufman, except Haight, who was introduced to Kaufman by Judge Davis at a lawyer's dinner in New York in 1930 or 1931. In the spring of 1932, according to Kaufman, Belknap sought an appointment with Kaufman and met him in Philadelphia and retained him as an attorney *527 for Universal. Neither the character of the services to be rendered nor the fee to be paid was fixed, but it was understood that Kaufman was not to accept employment from other oil companies. There was no need at that time or later for Kaufman's services in the Root cases, or indeed for any legitimate service that he was competent to render. He did not live in Delaware and could not efficiently perform the work of local counsel in Wilmington where Morris and Berl were both located; and he had neither the training nor the experience nor the ability to understand or present the difficult scientific questions or the legal questions which the Root cases involved. As a matter of fact, Kaufman rendered no services whatsoever to Universal in the Root cases from the beginning to the end of the litigation. He had no contact with any of the other lawyers except for two casual inquiries by him as to the progress of the litigation and a conference just before the argument of the cases in the Court of Appeals when it was decided not to put his name on the briefs lest Judge Buffington, a warm friend of his brother, would be unfavorably affected. Belknap, however, informed Universal's active lawyers at a pretrial conference in June, 1932, that Kaufman had been retained. Hall understood at the time that Kaufman was employed because he was favorably known to the courts, and Haight understood that Kaufman was employed to prevent his employment by rival oil companies under what the English called a hold-off retainer. Halle was told of Kaufman's retention by Belknap before Belknap's death in May, 1933; and shortly thereafter, Kaufman telephoned Halle to confirm the retainer. Halle agreed to Kaufman's continuance, but made no arrangement with him either as to the services to be rendered or the fee to be paid. There is no correspondence or documentary evidence relating to Kaufman's employment by Belknap or Halle. Nevertheless, Halle paid Kaufman a fee of $30,000 in 1935 and 1936 in connection with the Root cases, and the additional sum of $20,000 for legal fees in patent litigation in the Third Circuit in 1936, that is to say, $50,000 in all between October 22, 1935 and December 31, 1936. The first time that Kaufman approached Halle in person was on April 15, 1935, after the cases had been argued in the Court of Appeals and the decision was still in the breast of the court. Kaufman and Haight called that day to see Halle but what took place is not known for Halle said he could not remember, and Haight and Kaufman did not testify in regard to the conference. At that time the cases were in the hands of Judge Davis who was charged with the

duty of writing the opinion of the court. They had been argued in the Court of Appeals on January 7, 1935, before Judges Buffington, Davis and Thompson, and were discussed by the judges in conference at Philadelphia on January 17, 1935. Davis and Thompson favored an affirmance of the decree of the District Court, whereby the patents had been held valid and infringed, while Buffington was for reversal. On January 18, Buffington assigned the opinion to Davis. At the conclusion of the conference on January 17, Judge Davis left by motor for the Battle Creek Sanitarium at Miami, Florida. On his way south he stopped to visit his cousin C. L. Stokley at Mount Dora, Florida. He arrived at Miami on January 30. Judge Buffington and David Kaufman had already arrived at the same hotel and Morgan Kaufman joined them on February 9. David Kaufman left the resort on February 27 but the others remained until the week in March. On his way north Davis again visited his cousin at Mount Dora. Judge Davis' opinion in Universal's favor in the Root cases, in which both Buffington and Thompson concurred, was filed on June 26, 1935, and rehearing was denied by the court on August 6, 1935. In August, Kaufman called a second time upon Halle and asked for a fee of $35,000 on the basis of $10,000 a year for the three and one-half years which had elapsed since his retention by Belknap. Halle suggested the sum of $25,000 contingent, according to Kaufman, upon the denial of Root's petition for certiorari then pending in the Supreme Court. On September 12, 1935, a conference took place at Halle's office *528 attended by Halle, Haight, Richard E. Dwight of New York, representing the Standard Oil Company of California, and W. D. Whitney of New York, attorney for the Shell Oil Company. They agreed that Kaufman should be paid $25,000. A check for this amount, drawn and dated October 18, 1935, was delivered to Kaufman in Universal's office in New York on October 22, 1935, the day after the Supreme Court denied certiorari, 296 U.S. 626, 56 S.Ct. 149, 80 L.Ed. 445. Kaufman gave a receipt covering services to October 1, 1935. This sum was supplemented on July 27, 1936, when Kaufman called upon Halle and asked him to restore the sum of $10,000 which Halle had cut from Kaufman's original demand. Kaufman had learned that Universal had been paid one million dollars by the Mid-Continent Oil Company in settlement of Universal's claim against it based on the Root decision. Kaufman had not been associated in any way with the Mid-Continent case, but he contended that the Mid-Continent settlement proved the great value of the Root decision. Halle thereupon gave Kaufman an additional $5,000. The total payments of $30,000 to one who had rendered no legal services may be compared with the following fees received by the lawyers who actually did the work in the Root cases: Haight $86,300.00 Hall 54,712.00 Thomas 24,143.00 Morris 12,708.00 Berl 1,073.00 Kaufman received additional fees from Universal amounting to $20,000 in 1936. It was decided at the conference of September 12, 1935, to employ Kaufman on the basis of an annual retainer of $10,000. Universal was then contemplating important litigation in the Third Circuit against the Doherty interests. Kaufman was consulted as to the district in which the suit should be brought, and betrayed ignorance of the well known rules of venue in patent cases. Suit was instituted against Crew-Levick Company in the Eastern District of Pennsylvania on January 30, 1936, and a fee of $10,000 was paid to Kaufman in this case on March 18, 1936. He acted as local counsel, filed a complaint and various motions, but did not prepare them. In the same case Haight was paid $3,000, Hall $75 and Morris and Thomas $2,500 each. The case did not come to trial but was dismissed on October 23, 1944, after the Root decision was destroyed by the decision of the Supreme Court adverse to Universal in the Globe case. Kaufman also appeared as counsel of record in Universal Oil Products Co. v. Derby Oil & Refining Company, D.C., 19 F.Supp. 821, in the New Jersey District. The case was tried on January 7, 1936. Haight and other lawyers appeared for Universal at the trial. It does not appear what, if any, services were rendered by Kaufman in this case. Kaufman was paid another $10,000 by Universal on December 3, 1936. The explanation offered by Universal for this payment is that it represented Kaufman's retainer for 1937 paid in advance at the end of 1936 at Kaufman's

request because he expected large stock market profits in 1937 and desired to avoid a large income tax in that year. At the time, Halle told him that this was the last retainer Universal would pay. On April 25, 1938, Kaufman wrote Halle that he had not received his $10,000 retainer for 1937 but dropped this demand when he was reminded that it had been paid in 1936. To overcome the reasonable inference from these facts that Kaufman was retained and paid by Universal for a sinister purpose, evidence was offered that Halle was a man of unblemished character, and reliance was placed upon the high professional standing and reputation of the active lawyers for Universal in the Root cases. Reference is also made to the testimony of Halle that he was moved to settle with Kaufman for $25,000 when approached in August, 1935, in order to avoid a law suit such as those brought against Universal for additional fees by former Senator James Reed of Missouri and Charles W. German, each for one million *529 dollars which Universal settled by the payment of $125,000 and $40,000 respectively. It is also pointed out that subsequent to the Root decision Universal prosecuted infringement of the patents in other circuits, notably in the unsuccessful Globe case, an action which it is contended was inconsistent with the belief that in the Third Circuit Universal had a preferred standing with the court. But these considerations are not persuasive. It is idle to suggest that Kaufman was retained by Universal to prevent his employment by a competitor, for he had nothing to offer an adversary other than the illicit influence which Universal secured for itself. It is frivolous to say that he was paid the first $25,000 to forestall an unjustified suit, for thereafter, without the shadow of a claim or any qualification for the work, he was kept on the payroll and given an additional $25,000 for which no substantial legal services were rendered. No witness for Universal has attempted to explain why the trial of the Globe suit in the Seventh Circuit was undertaken, but it is a fact that in that case Universal urged that the issue was res judicata on account of the Root decision, and also made use of that decision in its settlements with the Mid-Continent Oil Company and with the National Refining Company, Whitman's predecessor. See Universal Oil Products Co. v. Winkler-Koch Engineering Co., D.C., 27 F.Supp. 161; Universal Oil Products Co. v. Globe Oil & Refining Co., D.C., 31 F.Supp. 665. Upon the whole testimony, our conclusion is that Kaufman was employed or retained by Universal for the purpose and with the expectation that he would exercise upon Judge Davis an improper influence in order to secure favorable judicial action in the Root cases. There is no other reasonable explanation for the relationship or for the large fees that were paid him. He possessed nothing of value to offer Universal, except his intimacy with the members of the court. All phases of the litigation were in the hands of able lawyers, and Kaufman was incompetent to assist them in any legitimate way even if he had tried to do so. In fact, he made no lawful contribution whatsoever. Stokley Transactions. **The evidence also indicates that Judge Davis' actions in the Root cases were actually influenced by the expectation of gain or favors, pursuant to an agreement or understanding to that effect with Kaufman. After Kaufman received the first payment of $25,000, certain transactions took place between him, Davis and Davis' cousin, C. L. Stokley, which indicate that Davis was paid for his action in the Root cases. These transactions originated in February, 1935, shortly after the argument, but before the decision of the Root cases while Davis and Kaufman were in Florida. Stokley was a grower of citrus fruit and was threatened with the loss of certain property through foreclosure proceedings instituted by the Town of Mount Dora on account of an unpaid paving assessment of $29,000. Davis learned of this situation when he visited Stokley on his way to Miami, and again on his return trip to Philadelphia. He promised Stokley to try to secure a loan for Stokley from a friend. After his return, Davis entered into active correspondence with Stokley and with the town authorities in respect to the title of the property, and an acceptance of a smaller sum in compromise of the assessment. The correspondence went on through the ensuing months, but although the town was pressing for payment, Davis did not make a firm offer of a loan until October 4, 1935, when he wired the town that $10,000, the sum which the town had agreed to accept, had been definitely promised. **On October 24, 1935, two days after Kaufman had been paid by Universal, Davis arranged a meeting in his office at Trenton between Kaufman and Stokley, who then met for the first time. An agreement between them was drawn, under which Kaufman agreed to loan $10,000 to Stokley at 8 per cent. per annum, and Stokley agreed to make certain conveyances of property to Kaufman by which the loan would be amply secured. In November, 1935, Davis sent his law clerk to Mount Dora with Kaufman's certified check for $10,000, payable to the town. The check was delivered and deed for the property *530 were received and sent to Kaufman. During this period and thereafter

until the Government investigation of Davis had begun, Davis showed great interest in the transaction and Kaufman no interest at all other than to enter into the agreement and advance the money. The financial condition of Judge Davis in 1935 and 1936 is pertinent to the issues in this case. Davis was insolvent at this time as result of stock speculations which came to a disastrous end in the financial crash of 1929. He was a client of Samuel Ungerleider and Company, New York brokers, and in 1929 owed them $9,000 which has never been repaid. Morgan Kaufman also dealt in stocks with the Ungerleider firm. He and Davis and Samuel Ungerleider were friends. **In 1941, in the course of the Grand Jury investigation of Davis, Kaufman testified that in 1929 he received a bill from the Ungerleider firm for either $9,000 or $14,000 on an account entitled J. Warren Davis, c/o Morgan S. Kaufman. In the instant proceeding Kaufman said that no such account ever existed and that his Grand Jury testimony was a mistake caused by nervousness. In the spring of 1937, Davis owed the banks $85,000. He believed that he had a malignant disease and was preparing to go to the hospital for an operation. In this emergency Samuel Ungerleider arranged a composition with the banks for the sum of $37,674.50, and advanced the money to put it into effect. Davis gave notes for the loan and assigned certain insurance policies on his life to Ungerleider. Ultimately Ungerleider recovered certain sums from the proceeds of the policies and from payments by Davis on the loan, leaving a balance of $17,000 which has never been repaid. Samuel Ungerleider was also helpful in the Stokley transactions. **After the $10,000 loan from Kaufman to Stokley was effected, it was learned that Stokley was threatened with foreclosure of certain of his orange groves by reason of an obligation to the Eustis Company, and that he did not have sufficient funds to pay that obligation and also the taxes on the property conveyed to Kaufman. **He needed $4,000 to settle the debt. **Davis himself, insolvent at the time, borrowed the money from Ungerleider without security on March 12, 1936, and loaned it to Stokley at 8 per cent. per annum, and took certain deeds from Stokley as security. Davis never repaid the $4,000 to Ungerleider. Subsequently, Stokley made certain payments to Davis now to be described whereby we find that money due Kaufman on account of the $10,000 loan was paid to Davis. **Davis did not keep accurate books of account, but his records show that Stokley paid him $200 on June 22, 1936, $200 on July 7, 1936, and $400 in February, 1937, which Davis testified were paid on account of the principal of the $4,000 loan. **The evidence clearly shows, on the contrary, that these sums were payments on account of interest on the $10,000 loan from Kaufman to Stokley. These payments correspond in amount to overdue semiannual payments of interest at 8 per cent. on $10,000, and **could not have been made for interest on the $4,000 loan. Interest on that loan in the sum of $320 for the first year was paid by Stokley to Davis on February 9, 1937. **Nor were the three sums mentioned payments of principal on the $4,000 loan as Davis testified, because in March and April, 1937, Stokley sent to Davis two checks of $500 each, marked as the first and second payments on the property which secured the $4,000 loan. **That the payments in question were actually interest on the Kaufman loan, but paid to Davis, is corroborated by other circumstances. A statement prepared by Stokley's son showed a payment by Stokley to Davis on February 28, 1938 of interest in the sum of $400, the amount of one-half year' interest on the $10,000 loan; but a subsequent statement covering the same period prepared by Stokley for submission to the Grand Jury in the investigation of Davis in 1941 omitted this item altogether. Moreover, the stub of this check in the Stokley checkbook had been completely torn out and destroyed. **The change in the statement and the destruction of the stub were obviously designed to conceal this payment to Davis. Significant also was the testimony of Kaufman given during the Davis investigation that in July, 1936, he received a $200 *531 payment from Stokley on the $10,000 loan . This testimony was obviously designed to offset the evidence outlined above which tended to show that Kaufman was indifferent to the loan and that interest due him had been paid to Davis; **but the Kaufman testimony was proved to be false for he went on to say that he deposited the check in a certain bank whose officers testified that no such deposit had in fact been made. In the instant proceeding, Kaufman testified that he had no recollection of the deposit of the check. Kaufman's indifference to the loan of $10,000 during the period 1935 to the beginning of 1939 is highly significant. **He met Stokley at Davis' office and made the loan on October 24, 1935, on the heels of the payment of $25,000 by Universal. **However, he manifested no interest in the loan until after the Davis investigation was

begun in the spring of 1939. **Ordinarily he was persistent in pressing defaulting creditors for payment, **but in this instance he took no action although his agreement with Stokley called for annual payments of $2,500, and Stokley made no payment to him at all, principal or interest, until the summer of 1939. Kaufman testified that he wrote Stokley many times before 1939 but this testimony is incredible since none of the letters were produced and Kaufman's secretary, who kept his books, testified that she never heard of Stokley before he made a payment of $600 on the loan on June 18, 1939. Kaufman produced two letters from Stokley dated April 7, 1937 and May 11, 1938, respectively, which referred to the $10,000 loan and his difficulties in making payment. Unlike all the other letters produced by Kaufman, these were written in lead pencil and were not accompanied by envelopes in which they were mailed. Kaufman's real interest in the $10,000 loan did not begin until after the Government had started the Davis investigation and until after Kaufman and Stokley dined together at Davis' house in Trenton in the spring or early summer of 1939. Stokley paid the loan to Kaufman on December 29, 1943, in the sum of $12,000 at which time the interest was reduced to 4 per cent. The $4,000 loan, with interest at 8 per cent., was paid to Davis in full on March 25, 1943. There can be no reasonable doubt, especially when the timing of the loan is considered, coming as it did immediately after the receipt by Kaufman from Universal of the sum of $25,000, that the $10,000 loan was designed to provide an indirect means for the payment from Kaufman to Davis, and a false front behind which the true nature of the payment was concealed. Fox Transactions. The foregoing conclusions of fact find striking support in convincing evidence that the illicit arrangement between Davis and Kaufman was continued in the Fox bankruptcy cases in the Third Circuit, in which Davis played an active part in the years 1936 to 1938. Fox was a movie magnate, residing in New York, who controlled a number of corporations amongst them, the American Tri-Ergon Corporation which owned patents deemed to be of very great value for processes relating to the recording of motion pictures and the accompanying dialogue. Suits on these patents were brought in the Second and Third Circuits and resulted in the victories for the patentee. Judge Manton wrote the opinion in the Second Circuit in American Tri-Ergon Corporation v. Paramount Publix Corporation, 2 Cir., 71 F.2d 153, and Judge Davis wrote the decisions in the Third Circuit, Altoona Publix Theatres v. American Tri-Ergon Corporation, 3 Cir., 72 F.2d 53. **Murray Becker, who was Fox's attorney in New York, employed Kaufman as local counsel in the Third Circuit in 1932. Kaufman testified that he was paid $10,000 at the beginning of the litigation and expected to receive additional fees at the conclusion of the litigation since the patents were thought to be worth millions of dollars. The active counsel in this case for Fox were the New York firm of Ward, Crosby and Neale. The decisions in both circuits, however, were reversed when the Supreme Court, first having denied certiorari and later granting it, held that the patents were invalid, 293 U.S. 587, 55 S.Ct. 101, 79 L.Ed. 682; 293 U.S. 528, 55 S.Ct. 139, 79 L.Ed. 638; 294 U.S. 464, 55 S.Ct. 449, 79 L.Ed. 997; 294 U.S. 477, 55 S.Ct. 455, 79 L.Ed. 1005. After this defeat, Fox was unable to pay his debts and moved to Atlantic City in *532 August, 1935 to avoid his creditors. There he filed a petition in bankruptcy on May 29, 1936, which was referred to Referee Robert E. Steedle, now deceased. Fox testified before the master in 1942 in the investigation in the pending proceeding, and this testimony was admitted in the evidence before us because Fox was too ill to appear. His testimony was denied in important particulars by Davis and Kaufman but we find it to be true. It contains the following account of his subsequent dealings with Davis and Kaufman. **On account of these transactions, he was indicted with Davis and Kaufman for conspiracy to obstruct justice and pleaded guilty, and testified for the United States. He was sentenced to serve a year and a day in prison. United States v. Fox, 3 Cir., 130 F.2d 56. In May, 1936, Fox met Kaufman and Davis in Atlantic City and Kaufman, who had known Fox for ten years, introduced him to the judge. Fox asked them to influence the referee to take favorable action in his case. Davis himself testified that Kaufman later introduced him to the referee, and that during the summer of 1936, he befriended Steedle, took him fishing, invited him to meals and to his daughter's wedding, and asked him whether he would like to become United States District Judge in case Davis should retire. The referee's decisions, however, were unfavorable to Fox and were the subject of the appeals hereinafter discussed.

In July, 1936, Kaufman told Fox in Atlantic City that Davis desired to borrow $15,000 from him, to enable Davis to pay the expense of his daughter's wedding. Fox borrowed the money from his daughter and gave it to Kaufman, who delivered the money in $50 and $100 bills to Davis in Kaufman's apartment in the Bellevue-Stratford in Philadelphia. Later in the year Davis borrowed $12,500 from Fox to enable Davis to restore his daughter's life savings which he had used. Fox borrowed the money from his daughter or his wife and gave it to Davis in $1000 bills, wrapped in newspaper, at the corner of Chestnut or Walnut Street and 12th Street in Philadelphia. Five $1,000 bills, whose numbers were recorded by an Atlantic City bank in which certain Fox corporations had accounts, were paid in May, 1936, to Fox's daughter in Atlantic City; and it was stipulated that the same bills were deposited in a Florida bank by Davis' daughter on April 14, 1937. **Davis testified in the prior phase of this investigation that he received these bills from one David Lewis who died in September, 1937. The money was received, he said, in payment of certain loans which he and Mrs. Davis had made to Lewis; but he changed his story as to the time of payment a number of times, placing it in 1933, 1934, 1935 and in the early part of 1936, and did not fix the date of payment finally as July or November, 1936, until he learned that the bills were not issued to the Atlantic City Bank by the Federal Reserve Bank in Philadelphia until May 7, 1936. After the Davis investigation started, Fox met Davis in the middle of 1940 in the Pennsylvania Hotel in New York and Davis told him that the $1,000 bills had been traced to Davis' daughter. Davis warned Fox that if the Atlantic City Bank had kept records of the numbers of the bills, they were both in serious trouble. Davis met Fox again on March 17, 1941 at the Governor Clinton Hotel in New York City where Davis, according to his own admission, registered under the name of Herman Goldberg. The situation in which the men were placed was again discussed at this meeting. Davis also attended a conference with Fox and Kaufman in the latter's office in New York at which Davis, according to Kaufman's secretary, gave the name of Moon. At a meeting held in September, 1940, according to Fox, which Davis denied, Davis asked Fox whether he knew David Lewis, above referred to in Davis' explanation of his possession of the $1000 bills. Davis asked Fox whether he could remember paying these bills to Lewis in payment of a loan that Lewis had made to Fox. Davis told Fox that if this was so, it would explain Davis' possession of the money because Lewis had made a payment to him; **but Fox took the position that the thing was too complicated and he preferred not to have anything to do with the arrangement. It was in September, 1940 that *533 Davis appeared before the United States Attorney and gave his final version of the Lewis loan. Fox engaged Martin Littleton of the New York bar as his attorney, and acting under his advice, made a confession of his transactions with Davis to the United States Attorney in New York, and later pleaded guilty as above stated. Fox claimed that the United States promised him that if Davis and Kaufman should be acquitted, he would be given an opportunity to withdraw his plea and stand trial, but that this promise was not kept. See United States v. Fox, 3 Cir., 130 F.2d 56. Five cases growing out of the Fox bankruptcy proceeding were appealed to this court, and were heard by Judges Buffington, Davis and Thompson in 1936, 1937 and 1938. All of the cases resulted in reversals of the action taken by the District Court, and all of the decisions were in favor of the Fox interests and adverse to the trustee in bankruptcy. **The opinions in these cases appear under the name of Judge Buffington but all of them were actually written by Judge Davis. **The conclusions announced in these opinions and the methods adopted by the Court in disposing of the cases, as shown by the uncontradicted testimony of the attorney for the trustee, William E. Brown, show indubitably that some malign influence was at work. This will appear, for example, by a comparison of the action of the court in case No. 2660, All Continent Corp. v. Steelman, 3 Cir., 96 F.2d 20, and its action in All Continent Corp. v. Steelman, 3 Cir., 86 F.2d 913, case No. 6253. The first case had its origin in testimony offered by creditors of Fox at a hearing before the referee from which it seemed clear to the trustee that certain assets of Fox were in the hands of the All Continent Corp., a Fox corporation. There was a balance in the All Continent account in an Atlantic City Bank in excess of $60,000 on February 13, 1936 and thereafter more than $200,000 was deposited in the same account during 1936, most of it after Fox was adjudicated bankrupt on May 29, 1936. Accordingly, the trustee secured an order from the referee requiring the All Continent Corporation to turn over its books to the trustee for examination and audit. This order was affirmed by Judge Avis of the District Court of New Jersey on October 15, 1936, 16 F.Supp. 950, and an appeal was taken to this court. On November 13, 1936, the trustee moved this court, which was then hearing the appeal in the other case, to advance No. 6260 for hearing. On December 8, trustee's counsel was notified that case No. 6260 would be heard on December 11, although the printed record and

the appellant's brief had not been filed at the time. The court, upon the motion of the trustee, postponed the hearing until December 22, 1936, on which day the case was argued. Nothing was heard from the court until October 1937, when the trustee was notified that a reargument would he held on December 6, 1937. **On that day the case was argued but it was not decided until March 31, 1938, after counsel for the trustee had petitioned the Supreme Court for writ of mandamus directed to this court and requiring it to decide the case. The decision was adverse to the trustee. The Supreme Court granted certiorari, 300 U.S. 648, 57 S.Ct. 492, 81 L.Ed. 860, and thereupon, counsel for the All Continent Corporation surrendered its books for examination. On the other hand, this court acted with the utmost expedition in case No. 6253, which was an appeal from an order of the District Court which restrained the prosecution in the Eastern District of Pennsylvania of a suit brought by **the All Continent Corporation against the trustee and others to remove a cloud on the title to certain stock of Fox which was claimed by the trustee. This order was passed on October 7, 1936, and an appeal was allowed on October 20, 1936. On Friday, November 6, the trustee's attorney was notified that the case would be argued on Monday the 9th. The next day he was served with All Continent's brief and a copy of the record. He appeared in court on Monday and said he was not prepared to argue the case on such short notice. Judge Buffington told him that the appeal had been advanced pursuant to a policy of the court to accelerate hearings in bankruptcy cases. The Court, however, allowed him until Friday, November 13, to file a brief, and argument was set *534 for that day. He was given leave to file a typewritten brief, which he did. At the argument on the 13th he was criticized by Davis for having submitted a typewritten brief and told that it was an imposition on the court, and especially on Judge Buffington. The decision of the court adverse to the trustee was filed on December 1, 1936, 3 Cir., 86 F.2d 913. The attorney for the trustee applied to Judge Buffington for a stay of the mandate and also for an order upon the opposing side to show cause why the stay should not be granted, but both orders were refused. Later a Justice of the Supreme Court issued a stay and when the case came before the Supreme Court, the decision of this court was reversed, 301 U.S. 278, 57 S.Ct. 705, 81 L.Ed. 1085, on the ground that there was probable cause to believe that the suit filed by the All Continent Corporation in the Eastern District of Pennsylvania was a step in a conspiracy between the bankrupt, his relatives and the All Continent Corporation to impede the administration of the bankrupt estate in New Jersey. In case No. 6605, Hirsh, Newman, Reass and Becker v. Capital Co., 100 F.2d 777, this court also reversed a decision of the District Court which refused to interfere with the examination by a creditor of Fox of certain attorneys of Fox in supplementary proceedings to a judgment obtained by the creditor against Fox. This court also reversed the action of the District Court in issuing contempt orders against Mrs. Fox and against an auditor in the employ of All Continent when they refused to answer questions put to them at hearings before the referee. The refusal of Mrs. Fox to appear and testify was based on her alleged illness, **but this excuse was overruled by the District Judge upon the report of a physician appointed by him to examine the witness. When the case reached this court on appeal, it appointed its own physician who gave contrary testimony. The obstruction to prompt action by the trustee caused by the refusal of the witnesses to testify, and the long delay of this court in rendering adverse decisions to the trustee, are most significant. Mrs. Fox was summoned to testify in August and again in September, 1936. The order of the District Judge adjudging the witness guilty of contempt was made in May, 1937, in which month the appeal was taken. The case was not set down for argument until December 6, 1937, and was not decided until April 2, 1938. Fox v. Capital Co., 3 Cir., 96 F.2d 684. In the auditor's case, the appeal from the contempt order was taken in May, 1937, but the decision reversing the order was not rendered until April 2, 1938, although motions to advance the appeal were made. Leitstein v. Capital Co., 3 Cir., 96 F.2d 23. [7] Our conclusions from these findings as to the issues formulated in this proceeding are that Judge Davis' action in the Root appeals was influenced improperly by Morgan S. Kaufman; that Kaufman was employed by Universal for this improper purpose; and that the Stokley transactions were means by which Judge Davis was compensated at least in part for his decision. We conclude also that the Fox transactions were undertaken as part of the illicit combination between Davis and Kaufman to obstruct justice, and that these transactions may be considered as evidence to show the existence of the combination which was manifested both in the Root cases and in the Fox litigation. However, we have not considered the Fox episodes in reaching the conclusion that Universal was implicated in the illicit combination so far as the Root cases were concerned. While the actions of the parties in the transactions involved in the two sets of cases are evidence of a common plan between Davis and Kaufman, their subsequent conduct is not admissible to show that Universal was party to the conspiracy in the Root cases.

[8] The disposition now to be made of the Root cases admits of no doubt. The records of the courts must be purged and the judgments in Universal's favor, both in this court and in the District Court must be vacated and the suits by Universal must be finally dismissed. No principle is better settled than the maxim that he who comes into equity must come with *535 clean hands and keep them clean throughout the course of the litigation, and that if he violates this rule, he must be denied all relief whatever may have been the merits of his claim. Hazel-Atlas Co. v. Hartford Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250; Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 54 S.Ct. 146, 78 L.Ed. 293; Mas v. Coca-Cola Co., 4 Cir., 163 F.2d 505; American Insurance Co. v. Lucas, D.C.W.D. Mo., 38 F.Supp. 896, affirmed as American Insurance Co. v. Scheufler, 8 Cir., 129 F.2d 143. Consequently there can be no question as to the course to be taken with regard to Universal's suits against Root. In Hazel-Atlas Co. v. Hartford Co., supra, the fraud consisted in the publication of an article commendatory of the patent and purported to be written by a disinterested person, but actually prepared by officials of the Company which owned the patent, and in the Mas v. Coca-Cola Company, the plaintiff was denied relief because he had forged certain letters indicating the priority of his invention. In both cases the courts did not merely exclude the tainted evidence, but denied the patentee all relief. How much more deserving of condemnation is the conduct of the patentee in the instant case which was directed against the integrity of the court itself. [9] The judgment of the court is that the mandates in the Root cases be recalled, that the judgments of this court therein be vacated, and that the cases be remanded to the District Court with directions to vacate its judgments therein and dismiss the suits by reason of the fraud practiced upon this court. No. 6459. American Safety Table Company v. Singer Sewing Machine Company. The appeal in this case was decided by a court consisting of Buffington and Davis, Circuit Judges, and Johnson, District Judge, on March 9, 1938, in an opinion by Judge Buffington, 95 F.2d 543. Thereby the decision of the District Court of the Eastern District of Pennsylvania was reversed, and a patent of the American Safety Table Company for a mechanical clutch connecting a sewing machine to a power shaft was held valid and infringed by the Singer Sewing Machine Company. Thereafter, in due time, a motion for reargument and an application to the Supreme Court for writ of certiorari were denied, and on October 17, 1938, the mandate of this court was issued under which an interlocutory decree in favor of the patentee was entered by the District Court and a master was appointed to take account of damages and profits. The proceeding before the master is still pending. The attorneys who tried the case for American in the District Court were Augustus B. Stoughton and E. S. W. Farnum, Jr., well known lawyers of the Philadelphia bar experienced in patent law; but after the adverse decision American employed Levinsohn, Neiner and Levinsohn, patent lawyers of the New York bar, and later, under circumstances presently to be described, American put the appeal in charge of Morgan S. Kaufman, and he retained Thomas G. Haight and Samuel E. Darby, experienced and successful practitioners of patent law, who prepared the briefs with the assistance of Levinsohn and argued the appeal in this court. During the period in which the inquiry as to damages and profits was dragging its slow way before the special master, the investigation by the United States into the relationship between Davis and Kaufman, the indictment and trial of Davis, Kaufman and Fox for the obstruction of justice, and the inquiry by this court and its master into the integrity of the judgments in the Root appeals took place. These proceedings have been described in the foregoing opinion, Root Refining Company v. Universal Oil Products Company, and need not be discussed here other than to say that in this case as in the Root cases they constitute part of the background which justifies the present proceeding. On June 15, 1944, as appears in the foregoing opinion, this court adopted the master's findings of fact and conclusions of law and vacated its judgments in the Root cases; and thereafter, on September 26, 1944, Singer Sewing Machine Company filed a petition for recall of the mandate and reargument of the merits of the case *536 now under consideration, on the ground that at the time of the argument of the case in this court, there existed a

corrupt and illicit combination between Davis and Kaufman to obstruct justice. The petition also charged that Judge Buffington was disqualified to sit in the hearing of the appeal in this case because of the infirmities of old age and his consequent reliance upon Judge Davis. By supplement to the petition, it was charged that Judge Johnson was also disqualified and unfit to participate in the decision of this case on appeal by reason of improper official conduct on his part as District Judge in the Middle District of Pennsylvania, as set out in Report No. 1639 of the Judiciary Committee of the House of Representatives, 79 Cong., 2d Sess. In reply the American Table Company set out the circumstances under which Kaufman and his other attorneys were employed, denied any improper conduct on its part, denied the existence of any unlawful combination between Davis and Kaufman in this case, and also denied that Judges Buffington and Johnson were disqualified to participate in the appeal. The questions raised by these pleadings were argued on March 6, 1945, before Judges of this court who did not hear the argument on the appeal in 1938, and decision thereon was withheld during the proceedings then pending in this court in Root Refining Company v. Universal Oil Products Company, as outlined in our opinion in that case; and thereafter, on June 20, 1947, an order was passed by this court requiring American to show cause why the relief prayed by Singer should not be granted and further authorizing the Attorney General of the United States to appear as amicus curiae. In reply, American reaffirmed its denial of any improper conduct in this case on its part or on the part of Kaufman, and denied that any of the judges therein were disqualified. Thereafter the designation of the judges now sitting herein was made by the Chief Justice of the United States and proceedings were taken in this case which paralleled those taken in the Root cases described in the foregoing opinion. On April 6, 1948, this court passed an order in this case which recited in substance the foregoing facts and authorized the United States, through the Assistant Attorneys General designated by the Attorney General, to participate in this proceeding as amicus curiae. It further ordered, in view of the foregoing facts that the court deemed it necessary to determine whether Judges Buffington, Davis and Johnson were disqualified from participating in the appeal in this case, and whether the judgment of the court in this case was secured by fraud or wrongdoing on the part of American Safety Table Company or any one acting on its behalf, and to that end, set forth the charges that had been made and and were to be tried as follows: **(a) Whether, Judge Davis' action in this case was influenced by any expectation of gain or favors pursuant to an agreement or understanding to that effect with Morgan S. Kaufman. **(b) Whether certain transactions effected in the latter part of 1935, whereby Morgan S. Kaufman advanced the sum of $10,000 to one **Charles Stokley, a cousin of Judge Davis, and also whether certain other transactions between Judge Davis and Morgan S. Kaufman in the period 1935 to 1938, allegedly related to the litigation evolving from the bankruptcy of one William Fox, were part of a corrupt and illicit combination between Judge Davis and Kaufman to obstruct justice, and, if so, whether Judge Davis was disqualified from participation in the appeal in this case by virtue of the combination. **(c) Whether Morgan S. Kaufman was employed or retained by American Safety Table Company in connection with this case and, if so, whether the purpose of such employment or retainer was the expectation of American Safety Table Company that Kaufman would exercise or endeavor to exercise an improper influence upon Judge Davis in order to secure favorable judicial action by him in connection with this case. **(d) Whether Judge Buffington, by virtue of his physical condition in 1938 and his reliance upon Judge Davis, was disqualified from participation in the appeal in this case. ** *537 (e) Whether, in the light of the findings of the Committee on the Judiciary of the House of Representatives in respect of Judge Johnson's conduct in office, Judge Johnson was disqualified from participation in the appeal in this case. We further ordered that the trial be set for hearing before the court as now constituted without the intervention of a special master, and that in the trial of the charges, the amicus curiae should have the duty to present to the court the available evidence bearing upon the charges whether or not in support thereof, to the end that the truth might be ascertained, and that the parties to the case should have full opportunity to present evidence bearing on the charges

and to participate in the examination and cross examination of witnesses so that the customary procedure of an adversary proceeding might be observed. The court further ordered that the trial of the charges set forth be consolidated with the trial of the charges set forth in the order of the court of the same day in Nos. 5648 and 5546, Root Refining Company v. Universal Oil Products Company. Subsequently a pretrial conference was held in this case at which the question was discussed whether the inquiry should be limited to the propriety of vacating the judgment in this court on the appeal and submitting the case to the court for reargument; and this court concluded and announced with the assent of the parties that the case would be heard upon the issues formulated in the order of April 6, 1948, and that the court would not restrict itself, in case the charges were sustained, to ordering a reargument of the appeal. It was subsequently stipulated by the parties and by the amicus before the hearing that the testimony of the witnesses and the exhibits in the Root cases should be offered as part of the record in this case, subject to objections on the ground of admissibility, and without limitation upon the right of either party to offer additional testimony. Certain objections of American to the admissibility against it of certain testimony offered in the Root cases must be considered before we state the conclusions of fact upon which we base our disposition of this case. It is contended that none of the testimony taken before the master in the Root cases is admissible against American because American was not party to that inquiry, and in fact did not know anything about it until long after the testimony was given. However, American raises no objection before us to any of that testimony except that of Judge Davis and Fox, but contends that the objection to their testimony is not overcome by the fact that Davis is dead and Fox is physically unable to appear. American relies on the general rule that testimony in a prior proceeding is not admissible in a subsequent proceeding on the ground of the death or disability of the witness, unless the same issue was involved in both proceedings and the subsequent proceeding is between the same parties or their privies as the first. Wigmore on Evidence, Section 1388. The strict rule that the parties must be the same in both proceedings has been somewhat liberalized where the same issue is involved in both proceedings, and there is some degree of relationship between the party against whom it was offered at the first proceeding and the party against whom it was offered at the subsequent trial.FN7 Wigmore takes the position that the earlier testimony should be admitted in a subsequent proceeding without regard to technical niceties where the former testimony *538 was subjected to the test of cross-examination by a party who had the same interest and motive to combat it as the party against whom it is offered in the subsequent trial. Wigmore on Evidence, Section 1388. The reason of course, is that the testimony of the witness is subject to all the tests to which the objecting party would have resorted if the opportunity had been afforded. This broad view has not generally been adopted by the courts, but it may well be that in a proceeding in which the integrity of the court itself is under investigation, technical niceties should be disregarded and that testimony which has been subjected to the usual tests and safeguards should be admitted in order that the truth may be ascertained. However, we do not need to decide that question in this case in view of the conclusion which we have reached as to one of the issues upon testimony which was offered at the hearing to which no objection was taken. The issue is squarely presented whether American Safety Table Company employed or retained Kaufman on this appeal for the purpose and with the expectation that he would exercise or endeavor to exercise an improper influence upon Judge Davis to secure judicial action from him favorable to American's interest in this suit. We have prepared and filed a summary of the evidence bearing on the issues in the case and as to this issue our ultimate conclusions of fact are as follows: The setting under which Kaufman was employed was significant. The case was thought to be of great importance by American, especially as its adversary was a powerful corporation and its chief competitor. Its leading attorney in the District Court had been Mr. Stoughton, the dean of the patent bar in Philadelphia who had practiced law since 1888, and was thoroughly familiar with conditions in the Third Circuit; and when the case was lost, the firm of Levinsohn, Neiner and Levinsohn was also retained. Nevertheless the five Frankel Brothers, who established American and owned its stock, were not satisifed, and Louis Frankel, the president of the corporation, determined to go to New York to confer with the well-known law firm of Otterbourg, Steindler, Houston and Rosen, which had guided the Frankel family in legal matters since 1920. Charles A. Houston of that firm was familiar with patent

matters and actually conducted the final proceedings for an accounting before the master in this case. Obviously American did not lack access to experienced men who could aid them in the selection of an additional counsel for the appeal if any was thought necessary. For this purpose Louis Frankel when to New York shortly after October 18, 1937, when the main brief for the appellant prepared by the Levinsohn firm was filed. But he did not visit either the Otterbourg or the Levinsohn firm. His brother, David Frankel, who lived in New York, took him instead to see Murray Becker the attorney for William Fox of motion picture fame. The visit had to do with business transactions between Fox and the Frankels. In the course of the visit the Frankels and Becker talked about the American suit against Singer, and Becker advised the Frankels to employ Morgan S. Kaufman to handle the appeal for them. Becker was well acquainted with the Third Circuit Court of Appeals, especially the court composed of Judges Buffington, Davis and Thompson. He had been the counsel for the Fox interests in Altoona Publix Theatres, Inc. v. American Tri-Ergon Corporation, wherein an important patent covering *539 motion pictures was sustained by this court on August 6, 1934, 72 F.2d 53, and later lost in the Supreme Court, 293 U.S. 587, 55 S.Ct. 101, 79 L.Ed. 682; 294 U.S. 477, 55 S.Ct. 455, 79 L.Ed. 1005. In that case distinguished patent counsel had striven to uphold the patent, and Kaufman had been employed as local counsel. For this service he had been paid a fee of $10,000 and expected to receive an additional fee in case of ultimate success as the patent was thought to be very valuable. Subsequently Fox filed a petition in bankruptcy in Atlantic City and in a series of appeals in the bankruptcy cases from the District Court of New Jersey to this court, Becker achieved remarkable success for the Fox interests and members of the Fox family before the same judges. In these cases, according to the uncontradicted testimony of William Elmer Brown, Jr., attorney for the trustee in bankruptcy, the administration of the bankrupt estate was greatly hampered and delayed by the decisions of this court. See Steelman v. All Continent Corp., 301 U.S. 278, 57 S.Ct. 705, 81 L.Ed. 1085, and the description of this litigation in the opinion of this proceeding in Root Refining Co. v. Universal Oil Products Company. This litigation was before the Circuit Court of Appeals in 1936, 1937, and 1938, and was in active progress at the time Becker recommended Kaufman to the Frankels in October, 1937. It was also during this period that Judge Davis' personal financial affairs reached a crisis. He had been insolvent since the market crash of 1929 as the result of speculation in stocks. In 1937 he owed divers New Jersey banks the aggregate sum of $85,000 and was preparing to go to a hospital for an operation as he believed that he had a malignant disease. In this emergency, one Samuel Ungerleider, a New York stock broker, advanced the sum of $37,675.50 for Davis and arranged a composition with his creditors, receiving certain promissory notes inadequately secured from Davis which were never fully paid. Both Davis and Kaufman were customers and friends of Ungerleider. Davis and Kaufman were on intimate terms of personal friendship, and their relationship was well-known in legal circles in the Third Circuit. Their association included Judge Buffington and Kaufman's brother David; and the four men visited each others' offices and houses and spent all or part of February together in the same hotel in Florida in 1935, 1936 and 1937. Becker had ample opportunity to learn this situation while the Tri-Ergon and Fox cases were going through the courts of the circuit in the years 1934 to 1938. Subsequently in 1940, when the relationship between Fox and Davis and Kaufman was under investigation, it was Becker who called Kafuman, according to the latter's testimony, to arrange a conference between Davis and Fox.FN8 American added Kaufman to its legal staff in this case under these conditions, and the pertinent inquiries are what legitimate services Kaufman was expected to perform, what compensation he expected to receive and what competence he possessed to act as an attorney in important patent litigation. Kaufman was experienced in bankruptcy matters since he had acted as referee in the Middle District of Pennsylvania, under appointment from Judge Johnson and other judges, from 1913 to 1934. He had long maintained a home and law office in Scranton, Pennsylvania, but in 1933 the District Court of Delaware appointed him a receiver in bankruptcy of S. W. Strauss Company, a mortgage investment company whose principal office was in New York City. Shortly after this appointment, he set up his home and his office as receiver in New York City and his main occupation, aside from the business of receiver, was the buying and selling of securities on the stock market; and he practically gave up the

practice of the law. At no time during his career was he competent to brief or to argue a patent case. This was the situation when American employed him in its suit against Singer. There is seldom need for local counsel *540 to file papers, secure orders of court and make engagements with respect to a case in a court of appeals; and if such a need had arisen in this case, Kaufman, whose headquarters were in New York, was not conveniently available, while Stoughton and Farnum maintained their offices in Philadelphia where this court holds its regular sessions and the clerk's offices are located. What was Kaufman's function to be? Frankel testified that they employed him as general counsel in the Singer case so that he might in turn employ competent patent lawyers to prepare the reply brief and to argue the case in the appellate court. For this purpose American agreed to advance him $5,000 to pay the lawyers' fees and costs of the appeal, and in addition promised him 25 per cent. of any monies which American might recover from Singer, against which percentage the $5,000 was to be credited. American did in fact pay him $5,000 and he employed Thomas G. Haight of Jersey City, New Jersey, and Samuel Darby of New York City, well known and well qualified patent lawyers who prepared the reply brief with the aid of the Leveinsohn firm and argued the case in the Court of Appeals. They were successful in that court, and the patent was held valid and infringed. Upon the return of the case to the District Court, an interlocutory decree in favor of American was issued and the case was referred to a master to fix the damages. For the services in the Court of Appeals Kaufman paid Darby $1750 and Haight $1250 and kept $2000 for himself. Subsequently when certiorari was sought from the Supreme Court and denied, 305 U.S. 622, 59 S.Ct. 82, 83 L.Ed. 397, Kaufman got an additional $1500 from American and paid $500 of this sum to Darby for the preparation of a brief in opposition to the application for certiorari, and kept the remaining $1,000 for himself. In short, the lawyers who did all the actual work received $3500 in the aggregate and Kaufman retained $3000 for himself. This, however, is not the whole story. American's claim against Singer for damages and profits was substantial and Kaufman had been promised 25 per cent of any recovery as an additional fee. American presented a claim against Singer before the master in the sum of $737,450.62 and the master actually awarded the sum of $40,362.97. American excepted to this allowance as insufficient on the ground that the master had failed to take into account and make any allowance for certain devices of Singer which American claimed to be infringements of the patent. The decision of that question has been held in abeyance pending this proceeding. Notwithstanding the sums paid Kaufman in this case and the prospect of large additional payments in case of success, **Kaufman rendered no substantial legal services in the litigation. His file was produced in evidence and it was found to contain copies of the opinion, briefs and other papers prepared by the patent lawyers. In addition, it contained 61 letters written by him or to him about the case; but they were routine in nature and shoed merely that he was kept in touch with the progress of the case, arranged conferences and conveyed information from the Frankels to Darby. Nothing in the file indicates that he made any intellectual contribution to the case or performed any routine service that would not have been performed as a matter of course by the active lawyers in the case if Kaufman had not been employed. **There was in fact no room for him in the case, and no legitimate service that he was competent to perform. There was no need for his services as local counsel, no need for advice from him as to the selection of the lawyers to conduct the appeal, and no ability on his part to present to the court the position of American on the questions of fact or of law involved. He had only one asset to offer his employer, and that was, his personal intimacy and influence with Judge Davis. We cannot escape the conclusion that it was for this purpose, and this purpose only, that he was employed by American in this case. In the foregoing opinion in the Root cases, we cited the authorities for the principle that one who comes into a court of equity must come with clean hands, and the suitor who fails in this respect will be denied all relief, whatever may be the *541 merits of his claim. That principle is equally applicable here. Fortunately, venality or even susceptibility to personal influence is rarely found in a judicial officer; and the reports do not disclose instances of the employment of a lawyer by a litigant where it is clearly shown, as in this case, that neither professional competence nor the expectancy of professional services inspired the employment, but only the expectation that the attorney's personal influence with the judge would be exerted to win a favorable decision. There are, however, cases where the courts have emphasized the correlative duty of the lawyer to depend solely upon the merits of his client's case and to abstain from all efforts to throw into the scales of justice the weight of his personal influence with the man upon the bench. The legal profession has formulated this primary obligation of the lawyer in the Canons of

Professional Ethics of the American Bar Association which provide that a lawyer shall not communicate or argue privately with the judge as to the merits of a pending case, and which denounce any device or attempt to gain from a judge special personal consideration or favor. [10] The courts enforce these rules by disciplinary action.FN9 The attorney who attempts by personal influence to control a judge or jury in their decision in a pending case, or who merely holds himself out as able to do so, whether or not he actually makes the attempt, and whether or not he succeeds or fails in the attempt, in short, an apostate lawyer, who is false to the lawyers' creed that justice shall be undefiled, is ejected from the courts, and as a lawyer ceases to exist. See Ex Parte Cole, C.C. Iowa, Fed. Cas. No. 2973, p. 35; cf. In re Doe, 2 Cir., 95 F.2d 386; In re Claiborne, 1 Cir., 119 F.2d 647; In re Shon, 262 App.Div. 225, 28 N.Y.S.2d 872; Werner v. State Bar, 24 Cal.2d 611, 150 P.2d 892; In re Farris, 340 Mo. 1206, 105 S.W.2d 921, 923. [11] The client who with evil intent employs such an agent fares no better in the instant case. To him also the doors of the courts are closed. From the moment that he ceases to depend upon the justice of his case and seeks discriminatory and favored treatment, he becomes a corrupter of the Government itself and is fortunate if he loses no more than the rights he seeks to obtain. So it must be in this case with the American Safety Table Company. The decree of the court will provide that its former mandate on this appeal be recalled, that the judgment of the court herein be vacated, and that the case be remanded to the District Court with directions to vacate its judgment and dismiss the suit. By this action, the records of this court and of the District Court will be purged, and there will be no need to consider whether or not in this case Kaufman actually succeeded in exerting an improper influence upon Judge Davis, or whether upon the evidence before us, excluding the testimony of Davis and Fox, the Stokley and Fox transactions were part of a corrupt and illicit combination between Davis and Kaufman, or whether Judge Buffington and Johnson were disqualified in this appeal. The court extends its thanks to Mr. Alfred C. Aurich, the attorney for the amicus curiae, for his able and painstaking presentation of the complicated facts in these cases under great pressure. Through his efforts and through the willing cooperation of all the attorneys in these cases the work of this special court was greatly expedited and the period during which it was performed was greatly shortened. FN1. A second trial upon the indictment took place between July 28, 1941 and August 21, 1941, and also resulted in a disagreement. FN2. Without objection the court had previously allowed the master $25,000 for his services and for his expenses. FN3. In Universal Oil Products Company v. Root Refining Company, 328 U.S. 575, 581, 66 S.Ct. 1176, 1179, 90 L.Ed. 1447, the court said that a federal court can always call on law officers of the United States to serve as amici. FN4. At the same time we granted a motion of the Skelly Oil Company to withdraw from the case as intervenor. Our predecessors had previously granted Skelly leave to intervene on the ground that it was engaged in litigation over another patent with Universal in the District Court of Delaware, which patent related to the instant cases; and Skelly participated in the argument before us on January 22 and March 23, 1948, but subsequently entered into an agreement of settlement with Universal and asked leave to withdraw. FN5. As to the right of the court to act on its own motion when it is charged that its judgment has been secured by fraud, see also American Insurance Co. v. Lucas, D.C.W.D. Mo., 38 F.Supp. 896, 921 to 925; American Wood Paper Co. v. Heft, 131 U.S.Append. XCII, 19 L.Ed. 378.

FN6. We have no occasion to decide whether Whitman was bound by the Root decision by reason of participation in the activities of the Winkler-Koch Club, or whether, even if the Root decision was not res judicata as to Whitman, that decision was secured and used by Universal to influence the execution of the agreement of settlement with Whitman in such a way as to justify rescission by the District Court of Delaware. See Universal Oil Products Co. v. Winkler-Koch Engineering Co. et al., D.C. Ill., 27 F.Supp. 161, Universal Oil Products Co. v. Globe Oil & Refining Co., D.C., 31 F.Supp. 665. FN7. This has been done where the relationship was that of husband and wife, Proulx v. Parrow, Vt., 56 A.2d 623; Bartlett v. Kansas City Public Service Co., 349 Mo. 13, 160 S.W.2d 740, 142 A.L.R. 666; Security Realty & Development Co. v. Bunch, Tex. Civ. App., 143 S.W.2d 687; parent and child, Lyon v. Rhode Island Co., 38 R.I. 252, 94 A. 893, L.R.A. 1916A, 983; (father had sued in first action as next of kin, and in his own right in second); see Atlanta & West Point R.R. v. Venable, 67 Ga. 697 (admitted against same defendant), and Palon v. Great Northern R. Co., 135 Minn. 154, 160 N.W. 670 (ibid); intestate and administrator, Hutchings v. Corgan, 59 Ill. 70, 71; Indianapolis & St. L.R. Co. v. Stout, 53 Ind. 143, 158; executor and heir, Fredericks v. Judah, 73 Cal. 604; 15 P. 305; principal and agent, see Goodrich v. Hanson, 33 Ill. 498; successors in title or interest in property, Myers v. Wright, 158 Ga. 418, 123 S.E. 740; Wade v. King, 19 Ill. 301; Cooper v. Smith, 8 Watts, Pa., 536. In re Durant, 80 Conn. 140, 67 A. 497, 10 Ann.Cas. 539, it was held that the testimony of a witness in a divorce proceeding which was damaging to the attorney representing the wife, was admissible in the attorney's disbarment proceedings, since the attorney, though not a party to the divorce case, had an opportunity to cross-examine the witness. See also Charlesworth v. Tinker, 18 Wis. 633, where it was held that evidence given for the defendant in a criminal prosecution for assault and battery was admissible against the complaining witness in a civil suit by her upon the same assault since, under Wisconsin procedure, the complaining witness in the criminal case was in charge of the trial. FN8. Becker was not called as a witness to explain why he advised the Frankels to employ Kaufman to represent them in a patent case. FN9. Morgan S. Kaufman was disbarred from practice in this court on November 10, 1944. Universal Oil Products Co. v. Root Refining Co., 328 U.S. 575, 66 S.Ct. 1176, 90 L.Ed. 1447, 69 U.S.P.Q. 454 (U.S.Del.,Jun 10, 1946) Patent infringement suit by the Universal Oil Products Company against the Root Refining Company. The Circuit Court of Appeals, as the result of an investigation by master appointed by the court assisted by amici curiae, vacated its judgment affirming decree of infringement and ordered the cause reargued. To review judgments of Circuit Court of Appeals, 147 F.2d 259, taxing expenses and compensation of master and expenses and attorney's fees for amici curiae against the Universal Oil Products Company, that company brings certiorari. Judgment taxing expenses and fees of amici curiae reversed and remanded to Circuit Court of Appeals for entry of judgment in conformity with opinion and writ of certiorari to review the other judgment dismissed. [1] Amicus Curiae 27 3

27 Amicus Curiae 27k3 k. Powers, Functions, and Proceedings. Most Cited Cases The status of attorneys recognized by Circuit Court of Appeals as amici curiae to conduct investigation before master of alleged fraud in procuring affirmance of decree of patent infringement remained that of amici curiae throughout proceedings resulting in vacation of affirmance and reargument though attorneys were admittedly also concerned with interests of clients who were interested in having infringement decree vacated, but had not subjected themselves to jurisdiction of court in infringement suit in which decree was entered. [2] Federal Civil Procedure 170A 2739

170A Federal Civil Procedure 170AXIX Fees and Costs 170Ak2739 k. Reference. Most Cited Cases (Formerly 106k357) Master's fees and expenses in connection with investigation of alleged fraud in procuring affirmance of decree of patent infringement were properly taxed against party in whose favor such decree was rendered, where such party appeared and participated in the investigation with knowledge that such fees and expenses would be assessed by court and, as a result of investigation, judgment of affirmance was vacated and case ordered reargued. [3] Federal Civil Procedure 170A 2643.1

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2643 Power of Court 170Ak2643.1 k. In General. Most Cited Cases (Formerly 170Ak2643, 106k354) A federal court has inherent power to investigate whether a judgment was obtained by fraud and may bring before it all those who may be affected by outcome of its investigation. [4] Federal Civil Procedure 170A 2657.1

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2657 Procedure 170Ak2657.1 k. In General. Most Cited Cases (Formerly 170Ak2657, 106k354) If the rights of parties are to be adjudicated in investigation by a federal court to determine whether a judgment was obtained by fraud, the usual safeguards of adversary proceedings must be observed. [5] Federal Civil Procedure 170A 2731

170A Federal Civil Procedure 170AXIX Fees and Costs 170Ak2731 k. Persons Liable. Most Cited Cases (Formerly 106k357) If court finds after proper hearing that fraud has been practiced on it, the entire cost of proceedings resulting in such disclosure may properly be assessed against guilty parties. [6] Federal Civil Procedure 170A 2662

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2657 Procedure 170Ak2662 k. Hearing and Determination. Most Cited Cases (Formerly 106k354)

A court may not deprive a successful party of his judgment on ground that it was obtained by fraud without a proper hearing. [7] Amicus Curiae 27 2

27 Amicus Curiae 27k2 k. Compensation. Most Cited Cases Federal Civil Procedure 170A 2742.1

170A Federal Civil Procedure 170AXIX Fees and Costs 170Ak2742 Taxation 170Ak2742.1 k. In General. Most Cited Cases (Formerly 170Ak2742, 106k357) Expenses and attorneys' fees of amici curiae in conducting investigation for Circuit Court of Appeals to determine whether affirmance of decree of patent infringement was obtained by fraud should not be taxed against party in whose favor decree was rendered without affording it adequate opportunity to be heard in a proper contest, where such party throughout objected to character of investigation if it was to be used as a basis for adjudicating rights. [8] Amicus Curiae 27 1

27 Amicus Curiae 27k1 k. Right to Appear and Act in General. Most Cited Cases Amicus Curiae 27 2

27 Amicus Curiae 27k2 k. Compensation. Most Cited Cases A court undertaking an investigation of fraud upon it may avail itself of amici curiae to represent the public interest in the administration of justice, but compensation is not the normal reward of those who offer such services. [9] Amicus Curiae 27 1

27 Amicus Curiae 27k1 k. Right to Appear and Act in General. Most Cited Cases A federal court may always call on law officers of the United States to serve as amici curiae to represent the public interest in the administration of justice. [10] Amicus Curiae 27 1

27 Amicus Curiae 27k1 k. Right to Appear and Act in General. Most Cited Cases Amici curiae selected by court to vindicate its honor ordinarily ought not to be in the service of those having private interests in the outcome.

[11] Amicus Curiae 27

27 Amicus Curiae 27k2 k. Compensation. Most Cited Cases Federal Civil Procedure 170A 2731

170A Federal Civil Procedure 170AXIX Fees and Costs 170Ak2731 k. Persons Liable. Most Cited Cases (Formerly 106k357) Where attorneys recognized by Circuit Court of Appeals as amici curiae to conduct investigation to determine whether affirmance of patent infringement decree was obtained by fraud were admittedly concerned with interests of private clients who, though they had not subjected themselves to jurisdiction of court, were interested in vacation of infringement decree in order to prevent its use to their disadvantage in pending litigation against them, expenses and attorneys fees of amici curiae were improperly taxed against party in whose favor infringement decree was rendered. Mr. Justice FRANKFURTER delivered the opinion of the Court. Petitioner, **Universal Oil Products Company, is a patent-holding and licensing company. In 1929 and 1931, it brought suits for infringement against the Winkler-Koch Engineering Co. and the Root Refining Company, respectively. The suits were consolidated, the validity of the patents sustained, and decrees for their infringement entered. Universal Oil Products Co. v. Winkler-Koch Engineering Co., D.C., 6 F.Supp. 763. The Circuit Court of Appeals for the Third Circuit, in an opinion by Judge J. Warren Davis, affirmed the decrees, 78 F.2d 991, and this Court, in October, 1935, denied certiorari. Root Refining Co v. Universal Oil Products Co., 296 U.S. 626, 56 S.Ct. 149, 80 L.Ed. 445. Both before and after the decision in the Root case, Universal started similar infringement suits against other oil companies. Universal invoked the Root decisions as res judicata against some of these companies. It maintained that, although these companies had not been parties of record in the Root suit, they were members of a patent club, to which Root belonged and which had been formed *577 to pool money for the defense of any member of the club in an infringement suit against it, and that the Root case had been defended by the attorneys for the patent club. Universal contended that these circumstances made the other oil companies substantial parties to the Root litigation and as such bound by its outcome. On June 2, 1941, during the pendency of these latter cases, attorneys who had represented Root and were representing the other oil companies advised the attorneys of the petitioner that on June 5, 1941, they would bring to the attention of the judges of the Third Circuit Court of Appeals the circumstances surrounding the appeal in the Root case, and, more particularly, the relations of one Morgan S. Kaufman to the outcome of that appeal, and invited petitioner's attorneys to attend. **At the hearing on June 5, the moving attorneys suggested, in substance, that testimony taken at the trial of Judge Davis pointed to bribery of Judge Davis by Kaufman to secure a decision favorable to Universal in the Root appeal. They urged an investigation of the questionable features surrounding affirmance of the Root decree, but expressed doubt as to the capacity in which they could formally make such a request of the Court. Their difficulty was due to the fact that after this Court had denied certiorari in the Root case, Root had settled its controversy with Universal and was unwilling**1178 to disturb the agreement by an attempt to reopen the law suit. The other oil companies who were in litigation with Root insisted that they were neither formal nor substantial parties to the Root case. And so their attorneys, who were the attorneys in the Root litigation and the moving attorneys in the present proceedings, could not move on their behalf to have the Root decree vacated. But these other oil companies had an interest in the Root decree since it might be used in pending cases to their disadvantage. Universal offered *578 to consent to a reargument of the Root case and to preserve to the Root Company the benefits of the existing agreement, even if Universal should prevail upon reargument. Throughout these proceedings Universal stood ready to carry out this offer, but nothing ever came of it, presumably because Root was not represented at these hearings and the other oil companies were not parties of record in the original litigation. [1] The dilemma of the attorneys who initiated these proceedings to set aside a fraudulent judgment but could

not speak for any client prepared to come before the court as a party in interest, was resolved by a suggestion from the presiding judge of the Circuit Court of Appeals. The suggestion was that the court would accept the services of these attorneys as amici curiae. Accordingly, they offered themselves in that role. Upon their acceptance as such by the court they asked for the appointment of a master to investigate the Root appeal. while they thus proceeded as amici they stated quite candidly that they were also concerned with the interests of their clients, the oil companies in pending litigation. As a matter of law, however, their status was only that of amici, for their clients did not subject themselves to the court's jurisdiction. The relation of these lawyers to the court, after it recognized them as amici, remained throughout only that of amici. A master was appointed and he conducted an extensive investigation. He examined records in the possession of the United States Attorney for the Southern District of New York, the records of proceedings before a Philadelphia grand jury, **bank records, and various statements of interested parties. From this mass of material, he selected those documents which he deemed appropriate for submission to the inspection of the amici and of counsel for Universal. Witnesses were also heard and petitioner *579 was given the right to cross-examine. But the investigation was not governed by the customary rules of trial procedure. Petitioner's counsel duly excepted to the manner in which the investigation was being conducted, if it were to involve any property rights of our clients, including the validity of any judgment * * *. The master evidently did not view the proceedings in the light of an adversary litigation. He ruled that the investigation-for that is all it is-should (not) be conducted strictly according to the rules of evidence in litigation. At the conclusion of this investigation, the master rendered a report in which he concluded' that there was in connection with this case such fraud as tainted and invalidated the judgments' in the Root appeal. [2] On the basis of this conclusion, the Court of Appeals on June 15, 1944, entered an order directing that the judgments be vacated and the cause be reargued. The relief thus granted was that to which petitioner had consented before the investigation got under way. On July 24, 1944, the amici applied to the court below for an order directing that the expenses and compensation of the master be taxed against Universal. In view of the fact that Universal appeared and participated in the investigation before the master, with acquiescing knowledge that the master's fees and expenses would be assessed by the court, we do not disturb the taxation of the master's fees and expenses. The amici also asked the Court to assess against Universal their expenses and reasonable attorneys' fees. The court awarded $54,606.57 in expenses, part of which was for the amount they had advanced in payment to the master, and $100,000 as compensation for their services. These amounts had in fact already been paid to the attorneys by **1179 their oil company clients. The awards thus constituted an order for reimbursement of the clients by Universal. The case was heard by the court en banc, *580 and two of the judges thought that the amici were only entitled to a compensation of $25,000. 3 Cir., 147 F.2d 259. Questions of importance in judicial administration were obviously involved by the disposition below, and so we brought the case here. 324 U.S. 839, 65 S.Ct. 1029, 89 L.Ed. 1402. [3][4][5][6][7] The inherent power of a federal court to investigate whether a judgment was obtained by fraud, is beyond question. Hazel-Atlas Co. v. Hartford Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250. The power to unearth such a fraud is the power to unearth it effectively. Accordingly, a federal court may bring before it by appropriate means all those who may be affected by the outcome of its investigation. But if the rights of parties are to be adjudicated in such an investigation, the usual safeguards of adversary proceedings must be observed. No doubt, if the court finds after a proper hearing that fraud has been practiced upon it, or that the very temple of justice has been defiled, the entire cost of the proceedings could justly be assessed against the guilty parties. Such is precisely a situation where for dominating reasons of justice a court may assess counsel fees as part of the taxable costs. Sprague v. Ticonic National Bank, 307 U.S. 161, 167, 59 S.Ct. 777, 780, 83 L.Ed. 1184. But, obviously, a court cannot deprive a successful party of his judgment without a proper hearing. This question is not before us, except as it bears on the order allowing attorneys' fees and costs. But if the judgment could not be nullified without adequate opportunity to be heard in a proper contest, neither is it just to assess the fees of attorneys and their expenses in conducting an investigation where petitioner throughout objected to the character of the investigation if it was to be used as a basis for adjudicating rights. [8][9][10][11] The case may readily be disposed of on a narrower ground. No doubt, a court that undertakes an investigation*581 of fraud upon it may avail itself, as did the court below, of amici to represent the public interest in the administration of justice. But compensation is not the normal reward of those who offer such services. After all, a federal court can always call on law officers of the United States to serve as amici. Here the amici also represented

substantial private interests. Their clients were interested in vacating the Root judgment though they would not subject themselves to the court's jurisdiction and the hazards of an adverse determination. While the amici formally served the court, they were in fact in the pay of private clients. Amici selected by the court to vindicate its honor ordinarily ought not be in the service of those having private interests in the outcome. Certainly it is not consonant with that regard for fastidiousness which should govern a court of equity, to award fees and costs of amici curiae who have already been compensated by private clients so that these be reimbursed for what they voluntarily paid. In No. 48, the judgment is reversed and remanded to the Circuit Court of Appeals for the entry of a judgment in conformity with this opinion. In No. 64, the writ of certiorari invoked under s 262 of the Judicial Code, 28 U.S.C. s 377, 28 U.S.C.A. s 377, is dismissed. Mr. Justice BLACK concurs in the narrower ground of the opinion. Mr. Justice MURPHY and Mr. Justice JACKSON took no part in the consideration or decision of this case.

[Cited 3 times for this legal issue] Pumphrey v. K.W. Thompson Tool Co., 62 F.3d 1128 C.A.9.Idaho,1995 One species of fraud on the court that will justify setting aside judgment occurs when officer of the court perpetrates fraud affecting ability of court or jury to impartially judge case. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A . [Cited 2 times for this legal issue] Pumphrey v. K.W. Thompson Tool Co., 62 F.3d 1128 C.A.9.Idaho,1995 Conduct of products liability defendant, through individual who was its vice president and general counsel, with respect to videotaped tests of product in question amounted to fraud on the court, thus justifying setting aside defense verdict; individual was present when two videotapes were made, one favorable to defendant and one unfavorable, and individual had possession of both videotapes after they were made but failed to disclose existence of unfavorable one to defendant's trial counsel or to plaintiffs despite discovery request; moreover, individual drafted answer to interrogatories that mischaracterized tests and was present during trial when witness testified that he had never seen product malfunction during tests. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A . [Cited 11 times for this legal issue] Luttrell v. U.S., 644 F.2d 1274 C.A.9.Or.,1980 Fraud upon the court confers equitable jurisdiction on a court to set aside a judgment where the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent, as by keeping him away from court, a false promise of a compromise; or where the defendant never had knowledge of the suit, being kept in ignorance by the acts of the plaintiff; or where the attorney fraudulently or without authority assumes to represent a party and connives at his defeat; or where the attorney corruptly sells out his client's interest to the other side. Fed.Rules Civ.Proc. Rule 60(b), 28 U.S.C.A . [Cited 43 times for this legal issue] Chambers v. NASCO, Inc., 111 S.Ct. 2123 U.S.La.,1991 Federal court has inherent power to vacate its own judgment upon proof that fraud has been perpetrated upon court. [Cited 0 times for this legal issue] Hyler v. Investment Grade Loans, Inc., 362 Fed.Appx. 652 C.A.9.Cal.,2010 District court did not abuse its discretion in denying plaintiffs' motion to set aside judgment and refusing to set aside

settlement agreement in action alleging violations of Truth in Lending Act (TILA), despite plaintiffs' contention that defendant's counsel made false statements during course of litigation, where statements amounted at worst to legal arguments about facts that may have been incorrect, and nothing prevented plaintiffs from pursuing rather than settling their claim. Truth in Lending Act, 102 et seq., 15 U.S.C.A. 1601 et seq. ; Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A . [Cited 0 times for this legal issue] Aulmann v. Aulmann, 25 Fed.Appx. 555 C.A.9.Cal.,2001 Evidence related to alleged material nondisclosures was ambiguous, such that denial of motion to reconsider dismissal order on basis of fraud on the court was not an abuse of discretion; claim that defendant's failure to disclose contacts with California through advertising allegedly directed at California, and trucking activity in California, constituted fraud on the court was not proved by clear and convincing evidence. Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.A . [Cited 0 times for this legal issue] Aulmann v. Aulmann, 25 Fed.Appx. 555 C.A.9.Cal.,2001 Fraud on the court so as to justify relief from judgment must be proven by clear and convincing evidence. Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.A . [Cited 0 times for this legal issue] Aulmann v. Aulmann, 25 Fed.Appx. 555 C.A.9.Cal.,2001 A witness's perjury or failure to disclose a material fact ordinarily is not fraud on the court so as to justify relief from judgment, whether the perjury or non-disclosure occurs during discovery or at trial; however, such perjury may constitute fraud on the court in certain circumstances. Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.A .

[Cited 0 times for this legal issue] In re Staff Inv. Co., 146 B.R. 256 Bankr.E.D.Cal.,1992 Although most decisions under rule permitting relief from judgment are couched in terms of fraud, negligent misrepresentation will suffice to entitle movant to relief under the rule. Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.A .

[Cited 0 times for this legal issue] Valerio v. Boise Cascade Corp., 80 F.R.D. 626 N.D.Cal.,1978 Failure of notice in class action to discuss financial condition of defendants did not establish fraud on the court particularly inasmuch as court was fully apprised of defendant's claims of financial distress. [Cited 0 times for this legal issue]

**Valerio v. Boise Cascade Corp., 80 F.R.D. 626

N.D.Cal.,1978 Allegation that class attorneys misrepresented defendant's financial condition, if proven, would establish that a fraud on the court had been committed. [Cited 0 times for this legal issue] Valerio v. Boise Cascade Corp., 80 F.R.D. 626 N.D.Cal.,1978 A party's conduct may be sufficiently egregious, though not involving an officer of the court, to constitute fraud on the court.

[Cited 0 times for this legal issue] Valerio v. Boise Cascade Corp., 80 F.R.D. 626 N.D.Cal.,1978 Affirmative misrepresentations of financial condition in order to obtain court approval of class action settlement would establish fraud on the court. [Cited 0 times for this legal issue] Valerio v. Boise Cascade Corp., 80 F.R.D. 626 N.D.Cal.,1978 As long as parties' positions are taken in good faith and underlying facts are not misstated, that is advocacy, not fraud on the court. Pumphrey v. K.W. Thompson Tool Co., 62 F.3d 1128, 64 USLW 2178, 32 Fed.R.Serv.3d 332, 95 Cal. Daily Op. Serv. 5998, 95 Daily Journal D.A.R. 10,301 (9th Cir.(Idaho),Aug 01, 1995) Plaintiffs in products liability action against handgun manufacturer filed independent action seeking to set aside defense verdict on grounds of fraud on the court in connection with defendant's presentation of videotaped product tests. The United States District Court for the District of Idaho, Edward J. Lodge, Chief Judge, granted motion, and defendant appealed. The Court of Appeals, Skopil, Senior Circuit Judge, held that: (1) individual who was defendant's vice president and general counsel served as officer of the court in litigation even though he did not enter appearance; (2) failure to disclose existence of videotape of unfavorable tests amounted to fraud on the court; (3) plaintiffs' failure to uncover fraud did not bar instant action; and (4) plaintiffs were entitled to new trial on all issues. Affirmed. [1] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases One species of fraud on the court that will justify setting aside judgment occurs when officer of the court perpetrates fraud affecting ability of court or jury to impartially judge case. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [2] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases In context of motion to set aside judgment in products liability action for fraud on the court in presentation of videotaped product tests, individual who was vice president and general counsel of defendant was officer of the court in litigation; although individual did not enter appearance, was not admitted pro hac vice, and did not sign any documents filed with court, he attended trial on defendant's behalf, gathered information in response to discovery requests, and participated in videotaping. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A.

[3] Federal Civil Procedure 170A

2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Conduct of products liability defendant, through individual who was its vice president and general counsel, with respect to videotaped tests of product in question amounted to fraud on the court, thus justifying setting aside defense verdict; individual was present when two videotapes were made, one favorable to defendant and one unfavorable, and individual had possession of both videotapes after they were made but failed to disclose existence of unfavorable one to defendant's trial counsel or to plaintiffs despite discovery request; moreover, individual drafted answer to interrogatories that mischaracterized tests and was present during trial when witness testified that he had never seen product malfunction during tests. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [4] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Failure by plaintiffs in products liability action to uncover alleged fraud on the court in presentation of defense videotape of product tests did not bar plaintiffs' action to have defense judgment set aside; while defendant claimed that plaintiffs should have uncovered alleged fraud after receiving interrogatory answers, defendant's conduct during discovery assured that plaintiffs would have no reason to pursue discovery regarding product tests. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [5] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Even if plaintiffs in products liability action were not diligent in uncovering fraud on the court by defendant, district court could set aside verdict based on fraud inasmuch as court itself was victim. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [6] Federal Civil Procedure 170A 2314.1

170A Federal Civil Procedure 170AXVI New Trial 170AXVI(A) In General 170Ak2314 Partial New Trial or Rehearing 170Ak2314.1 k. In General. Most Cited Cases After defense judgment in products liability action was set aside based on fraud on the court, plaintiffs were entitled to new trial on all issues, despite defendant's contention that fraud did not relate to issue of damages;

plaintiffs were entitled to opportunity to present complete case, unhampered by defendant's fraud. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [7] Federal Civil Procedure 170A 2842

170A Federal Civil Procedure 170AXX Sanctions 170AXX(F) On Appeal 170Ak2837 Grounds 170Ak2842 k. Bad Faith. Most Cited Cases Products liability defendant that appealed district court's order setting aside defense verdict on grounds of fraud on the court would not be required to pay plaintiff's attorney fees as sanction for abusive litigation practices; although defendant did not prevail on appeal, its arguments were not presented in bad faith, vexatiously, wantonly, or for oppressive reasons. On Appeal from the United States District Court for the District of Idaho. Before: SKOPIL, FERGUSON, and THOMPSON, Circuit Judges. SKOPIL, Senior Circuit Judge: We review in this appeal a district court's decision to set aside a verdict in favor of a defendant in a wrongful death action after the court discovered that defendant's in-house counsel participated in a scheme to defraud the court. The court ordered a new trial over defendant's objection that its conduct did not rise to the level of fraud upon the court, and even assuming that it did, that a new trial should be limited solely to the issue of liability. We agree with the district court that defendant's actions constituted fraud on the court, and that a new trial on all issues is appropriate. Accordingly, we affirm. I. Melvin Sparks was killed when he dropped a Thompson P.C. Contender handgun and it fired, sending a bullet through his heart. Sparks' widow and children (Sparks) brought a wrongful death action against **the gun manufacturer, K.W. Thompson Tool Company (Thompson), alleging that the gun's internal and external safety devices were engaged at the time of the accident, but that the gun nevertheless fired when dropped. At trial, Thompson introduced a videotape (trial video) showing the Contender dropped from various heights and angles. The trial video shows that during the tests, the safeties performed as designed, and the gun never fired. **Thompson's production manager, Kendrick French, conducted the tests. Also present were Thompson's vice president and general counsel, Edward Bartlett, and Thompson's president, Robert Gustafson. The jury found that plaintiffs suffered $100,000 in damages, but that the decedent was 80% contributorily negligent. The present action arises as a result of a subsequent, unrelated lawsuit in which another plaintiff claimed injuries resulting from a dropped Thompson Contender. In this lawsuit, a second video (original video) was produced during discovery, showing that the Contender fired when dropped during testing. This video was prepared by Thompson on the same day as the trial video, but was never produced during the Sparks litigation. A magistrate judge conducting a settlement conference in the later lawsuit learned that the original video was never produced in Sparks, and that Thompson's expert witness, Kendrick French, testified several times in Sparks that he had conducted drop-tests of the Contender but it had never fired. The magistrate judge reported these facts to the federal District Court in Idaho; Sparks' attorney was thereafter informed. Sparks filed this independent action pursuant to Federal Rule of Civil Procedure 60(b), seeking to set aside the Sparks verdict. **The district court granted summary judgment in favor of Sparks on the ground that Bartlett was an officer of the court and had committed fraud upon the court. The district court further held that even if Bartlett was not an officer of the court, the conduct was sufficient to constitute fraud upon the court. The district court set aside the verdict, ordered a new trial, and awarded attorney's fees.

II. [1][2] Federal Rule of Civil Procedure 60(b) provides that a judgment may be set aside for fraud upon the court. One species of fraud upon the court occurs when an officer of the court perpetrates fraud affecting the ability of the court or jury to impartially judge a case. See In re Intermagnetics America, Inc., 926 F.2d 912, 916 (9th Cir.1991); Alexander v. Robertson, 882 F.2d 421, 424 (9th Cir.1989). Thompson first contends that Bartlett was not an officer of the court for purposes of the Sparks litigation. Commencing in April, 1982, Edward Bartlett was general counsel and vice president of Thompson. He was not admitted to practice in the District of Idaho, where the Sparks trial occurred. He did not enter an appearance in Sparks, was not admitted pro hac *1131 vice, and did not sign any documents filed with the court . Rather, Thompson was represented at trial by local counsel from Idaho. We note, however, that Bartlett participated significantly in Sparks by attending the trial on Thompson's behalf, gathering information to respond to discovery requests and framing the answers, and participating in the videotaping of both the trial video and the original video. Additionally, Bartlett retained possession of both the trial video and original video after they were made. No one at Thompson differentiated between Bartlett's activities as vice president and his activities as general counsel. We agree with the district court that Bartlett's participation in Sparks was sufficient to render him an officer of the court. Cf. NCK Organization, Ltd. v. Bregman, 542 F.2d 128, 133 (2d Cir.1976) (house counsel, who was also vice president and director, may not avoid disqualification from a matter at least where circumstances indicate that [his] participation consisted of more than action simply in an officer's capacity); E.F. Hutton & Co. v. Brown, 305 F.Supp. 371, 381 (S.D.Tex.1969) (law firm was disqualified from matter due to level of participation in case, notwithstanding firm's failure to enter an appearance). Thompson offers no sound reason why an attorney's participation in a case should not render him an officer of the court. The authority offered by Thompson in support of its position stands only for the propositions that attorneys have a duty to the courts before which they practice, and that courts have the corresponding authority to discipline attorneys who practice before them. See e.g., In re Snyder, 472 U.S. 634, 643, 105 S.Ct. 2874, 2880, 86 L.Ed.2d 504 (1985) (courts have inherent authority to discipline lawyers which derives from lawyer's role as an officer of the court which granted admission); Cord v. Smith, 338 F.2d 516, 524 (9th Cir.1964) (ethical rules of a federal court apply to attorney appearing before a federal court even if state rules differ). Therefore, we conclude that Bartlett was an officer of the court in the Sparks litigation. [3] Thompson next contends that Bartlett's actions do not constitute fraud upon the court.FN1 We disagree. [F]raud upon the court includes both attempts to subvert the integrity of the court and fraud by an officer of the court. Intermagnetics, 926 F.2d at 916. Furthermore, it must involve an unconscionable plan or scheme which is designed to improperly influence the court in its decision. Abatti v. Commissioner, 859 F.2d 115, 118 (9th Cir.1988) (internal quotation omitted). Based upon the following undisputed facts, we agree with the district court's conclusion that Thompson, through Bartlett, perpetrated fraud upon the court. FN1. Thompson argues that the district court erred by granting summary judgment on the issue of fraud upon the court, as Sparks did not specifically move for summary judgment on this ground. Thompson, however, raised the issue of fraud upon the court in its own motion for summary judgment, and fully aired its position on the issue. Moreover, Thompson fails to indicate a single argument or piece of evidence that it did not have the opportunity to present. Accordingly, the district court did not err by considering summary judgment on this issue. See United States v. Grayson, 879 F.2d 620, 625 (9th Cir.1989). Thompson made two videotapes approximately two months before trial. During the filming of the original video, while the Contender's internal safety was being tested, the gun fired after it was dropped. During the filming of the trial video, while the internal safety was being tested, the gun did not fire when dropped. The trial video was made because the test shown on the original video did not turn out as planned. French and Bartlett were present at the filming of these videos. Bartlett had possession of these videos after they were made, yet he never disclosed the existence of the original video to trial counsel for Thompson.

Prior to filming the videos, Thompson answered a request for production by stating that defendant is not presently aware of any records relating to the testing of the Thompson Contender handguns. If records are later discovered, they will be made available pursuant to this request. Contrary to that statement, however, the original video was never disclosed to Sparks at any time, despite the fact that Bartlett participated in filming the video, had possession of the video, and drafted later discovery responses. *1132 Barely one month after the drop-tests were conducted, Bartlett drafted an answer to Sparks' interrogatories which mischaracterized the drop-tests. **The answer admitted that during one test the Contender fired when dropped, but misstated that the drop was from five feet rather than three feet. The answer further misstated that both safeties were intentionally disengaged, when in fact the internal safety was unintentionally disengaged. The answer also misstated that there was no record of the test. Bartlett attended the trial at which French testified several times, without qualification, that he had never seen the Contender fire when dropped during tests. Additionally, French was deposed in two cases subsequent to Sparks involving the same gun. Bartlett was present at both depositions. In one case, French stated that he had never been able to engage the internal safety, disengage the external safety, and then drop the gun and have it fire. In another case, French stated that he had been able to jar the safety out of place when dropping the gun but had not been able to make it fire. These undisputed facts reveal that Thompson, through Bartlett, engaged in a scheme to defraud the jury, the court, and Sparks, through **the use of misleading, inaccurate, and incomplete responses to discovery requests, **the presentation of fraudulent evidence, and **the failure to correct the false impression created by French's testimony. The end result of the scheme was to undermine the judicial process, which amounts to fraud upon the court. Cf. Hazel-Atlas Glass Co. v. Hartford Empire Co., 322 U.S. 238, 245-46, 250, 64 S.Ct. 997, 1001, 1003, 88 L.Ed. 1250 (1944) (deliberately planned scheme to present fraudulent evidence constitutes fraud upon the court), overruled on other grounds, Standard Oil Co. of Cal. v. United States, 429 U.S. 17, 97 S.Ct. 31, 50 L.Ed.2d 21 (1976); Abatti, 859 F.2d at 118 (fraud upon the court involves unconscionable plan or scheme to improperly influence the court). Thompson argues, however, that there was no fraud upon the court because Bartlett believed the original video was taped over, and in 1982, no one at Thompson thought that a videotape was a document or record. Even taking the above as true, we nonetheless conclude that there is ample evidence of fraud upon the court. Bartlett said nothing when trial counsel argued that the trial video should be admitted, because the test was not staged or rigged or anything else. French added to the deception at trial when he engaged in the following colloquy regarding the making of the trial video: Q. Was there any attempt to alter or modify that video tape or edit it? A. No, sir, there was not. Q. Does the video tape fairly and accurately portray the tests you did with the dropping of the gun? A. Yes, it does. **Bartlett, who knew that French's answers were false because he was present at the taping, failed to take action regarding French's false answers at trial and in subsequent depositions. Additionally, Bartlett provided a misleading answer to the interrogatory regarding the drop-test. Thompson further contends that regardless of whether the videotape was knowingly withheld, there was no fraud upon the court because the original video was not material to the issues in Sparks because it revealed only what Thompson's experts conceded at trial; namely, that the internal safety could disengage if the gun was dropped, and that the gun could fire if dropped with both safeties off. We reject this argument for two reasons. First, it is not

as clear as Thompson suggests that the video is immaterial. Thompson appears to argue that the original video shows the gun firing after the internal safety was unintentionally disengaged during a prior drop. Review of the transcript, however, reveals that it is equally plausible that the safety disengaged and the gun fired on the same drop. This is, of course, why it should not have been concealed from the plaintiff or the jury. Second, Thompson's argument misses the point. The issue here is not whether Sparks would have prevailed had the original video been produced. As we noted in Intermagnetics, the inquiry as to whether a judgment *1133 should be set aside for fraud upon the court under Rule 60(b) focuses not so much in terms of whether the alleged fraud prejudiced the opposing party but more in terms of whether the alleged fraud harms the integrity of the judicial process. Intermagnetics, 926 F.2d at 917 (citing Hazel-Atlas, 322 U.S. at 264, 64 S.Ct. at 1010). By failing to disclose the original video, mischaracterizing the results of the drop-tests, and failing to correct the false impression created by French's testimony, Bartlett undermined the judicial process. As the district court noted, Bartlett, as a licensed attorney, is aware of the necessity for compliance with the rules of discovery and the rules of professional responsibility. He is aware of the damage failure to abide by these rules can wreck in the specific case at hand and the larger framework of confidence in the adversary trial system. Moreover, Thompson is in no position to dispute the effectiveness of the scheme in helping to obtain a favorable jury verdict. See Hazel-Atlas at 246-47, 64 S.Ct. at 1001-02 (holding that party who presented fraudulent evidence cannot disclaim its effectiveness after the fact). Thompson further argues that the interrogatory answers regarding the drop-test contained only immaterial and technical inaccuracies, and thus, are insufficient to support a finding of fraud. We disagree. The issue in Sparks was whether the Contender could fire when dropped with one or both safeties engaged. Thus, contrary to Thompson's assertion, whether the internal safety was intentionally or unintentionally disengaged, and whether there was any record of the test, likely affected Sparks' pursuit of discovery. [4][5] Nor do we agree with Thompson that Sparks' failure to uncover the alleged fraud, after receiving Thompson's interrogatory answers admitting that the gun fired during a drop test, should bar this action. Thompson's conduct during discovery assured that Sparks would have no reason to pursue discovery regarding the drop-tests. We note that Thompson failed to update the request for production, and also filed a misleading interrogatory answer regarding its drop-tests. We further note that Thompson did not reveal the fact that the gun fired during a drop-test until less than a month before trial. In addition, Thompson successfully pursued a protective order precluding the deposition of Bartlett and others at Thompson after the drop-test occurred, but before the results were revealed to Sparks. This order made it clear that the only remaining discovery was to be Thompson's answers to Sparks' interrogatories. Moreover, even assuming that Sparks was not diligent in uncovering the fraud, the district court was still empowered to set aside the verdict, as the court itself was a victim of the fraud. In Hazel-Atlas the Supreme Court reasoned that: even if Hazel did not exercise the highest degree of diligence [the] fraud cannot be condoned for that reason alone. This matter does not concern only private parties.... [and] tampering with the administration of justice in the manner indisputably shown here involves far more than injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public, institutions in which fraud cannot complacently be tolerated consistently with the good order of society. Surely it cannot be that preservation of the integrity of the judicial process must always wait upon the diligence of the litigants. The public welfare demands that the agencies of public justice be not so impotent that they must always be mute and helpless victims of deception and fraud. Hazel-Atlas, 322 U.S. at 246, 64 S.Ct. at 1001. Accordingly, Sparks' failure to uncover the fraud during Sparks does not bar this action. III. [6] Thompson argues that a new trial should be limited to the issue of liability, because any fraud that occurred did not relate to the issue of damages. We disagree. Partial trials may not properly be resorted to unless it clearly appears that the issue to be retried is so distinct and separable from others that a trial of it alone may be had without injustice. *1134Gasoline Products Co., Inc. v. Champlin Refining Co., 283 U.S. 494, 500, 51 S.Ct. 513, 515, 75

L.Ed. 1188 (1931). Sparks should be given the opportunity to present a complete case, unhampered by Thompson's fraud. The district court did not abuse its discretion by ordering a new trial on all issues. See d'Hedouville v. Pioneer Hotel Co., 552 F.2d 886, 897 (9th Cir.1977) (whether to limit issues in new trial is within trial court's discretion). IV. [7] Sparks seeks attorney's fees on appeal pursuant to our inherent power to levy sanctions for abusive litigation practices. See Yagman v. Republic Ins., 987 F.2d 622, 628 (9th Cir.1993). Our inherent powers includes the power to assess attorney's fees when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons. Chambers v. NASCO, Inc., 501 U.S. 32, 45-46, 111 S.Ct. 2123, 2133, 115 L.Ed.2d 27 (1991) (internal quotations omitted). Although Thompson did not prevail on appeal, we do not conclude that its arguments were presented in bad faith, vexatiously, wantonly, or for oppressive reasons. Therefore, we decline to award attorney's fees on appeal. AFFIRMED. In re Intermagnetics America, Inc., 926 F.2d 912, 59 USLW 2602, 19 Fed.R.Serv.3d 742, 21 Bankr.Ct.Dec. 631 (9th Cir.(Cal.),Feb 26, 1991) Chapter 11 trustee brought action against subsequent purchaser of debtor's asset for fraud, bid-rigging, breach of fiduciary duty as coconspirator, and fraudulent transfer. The United States District Court for the Central District of California, Richard A. Gadbois, Jr., J., dismissed complaint on res judicata grounds, and trustee appealed. The Court of Appeals, Pro, District Judge, sitting by designation, held that: (1) bankruptcy court order approving sale of debtor's asset subject to debtor's chief executive officer's representations did not bar trustee, under doctrine of res judicata, from bringing fraud action after determining that officer's representations were false; (2) bankruptcy court approval of sale did not bar trustee from seeking to set aside sale on ground of **fraud on the court; (3) debtor's chief executive officer was officer of the court, for fraud on the court purposes; and (4) bankruptcy court approval of sale did not preclude trustee from seeking to avoid sale under statute authorizing trustee to avoid sale if sale price was controlled by agreement among potential bidders and to recover damages and attorney fees from participants in scheme. Reversed and remanded. [2] Judgment 228 542 228 Judgment 228XIII Merger and Bar of Causes of Action and Defenses 228XIII(A) Judgments Operative as Bar 228k541 Courts or Other Tribunals Rendering Judgment 228k542 k. In General. Most Cited Cases Bankruptcy court order approving sale of Chapter 11 debtor's assets subject to debtor's chief executive officer's representations did not bar trustee, under doctrine of res judicata, from later bringing action against subsequent purchaser upon determining that officer's representations were false; subject to language in bankruptcy court order did not mean only that officer's declaration was basis for approval and authorization, but rather meant that its truth was condition for approval. [3] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Fraud upon the court, which allows judgment to be set aside, includes both **attempts to subvert integrity of court and **fraud by officer of court. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A.

[4] Federal Civil Procedure 170A

2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Perjury is characterized as intrinsic fraud, for purpose of determining whether there is fraud upon the court which will allow judgment to be set aside. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [5] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Doctrine of finality with respect to bankruptcy court orders did not preclude district court from setting aside order approving sale of Chapter 11 debtor's assets based upon debtor's chief executive officer's false declaration. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [6] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Officers of debtor-in-possession are officers of the court, for purpose of determining whether there has been fraud on the court which will allow judgment to be set aside, since such officers have responsibility to act in best interests of estate as a whole and have accompanying fiduciary duties. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [7] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Fact that debtor's chief executive officer was acting outside his authority when he committed fraud did not mean that he ceased being officer of the court, and thus that bankruptcy court order could not be set aside based upon fraud on the court. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [8] Bankruptcy 51 3022

51 Bankruptcy 51IX Administration 51IX(A) In General

51k3022 k. Debtor's Duties in General. Most Cited Cases Chapter 11 debtor's chief executive officer continued to owe duty to creditors and estate as a whole until trustee was appointed. [9] Bankruptcy 51 3080

51 Bankruptcy 51IX Administration 51IX(B) Possession, Use, Sale, or Lease of Assets 51k3067 Sale or Assignment of Property 51k3080 k. Setting Aside. Most Cited Cases Bankruptcy court order approving sale of Chapter 11 debtor's asset did not act as res judicata to preclude trustee from subsequently pursuing claim under provision authorizing trustee to avoid sale if sale price was controlled by agreement among potential bidders and to recover damages and attorney fees from participants in scheme. Bankr.Code, 11 U.S.C.A. 363(n). PRO, District Judge: This case arises out of bankruptcy proceedings regarding **Intermagnetics America, Inc. and its subsidiaries (Intermagnetics). The Intermagnetics corporations entered bankruptcy in 1984. Plaintiff-Appellant Leonard Gumport, Trustee in Bankruptcy for Intermagnetics, here appeals the district court's grant of summary judgment in favor of **Defendant-Appellee China International Trust and Investment Corporation (CITIC), on Defendant's motion to dismiss. FACTS Intermagnetics is made up of California corporations organized to manufacture and sell audio and video tapes and related products. Intermagnetics filed petitions for Chapter 11 protection in May 1984 in the *914 United States Bankruptcy Court for the Central District of California. Amarjit Singh Anand became the chief executive officer of Intermagnetics in 1984. On October 22, 1985, the Intermagnetics debtors as debtors-in-possession filed an application under 11 U.S.C. 363(b) for bankruptcy court approval of a lease-option agreement with 3D Media, Inc. In the October 22 application, Intermagnetics proposed to sell its inventory and leases to 3D Media for $1 million and to lease its equipment to 3D for $500,000 per year. In support of the application, Anand submitted a declaration in which he identified himself as the chief executive officer of the Intermagnetics debtors. Anand swore in the declaration that: I believe that 3D Media's offer is in the estate's best interests.... To date, 3D Media's offer is the only substantial written offer the Debtors have received. During October 1985, various creditors of Intermagnetics filed objections to the proposed lease and purchase option agreement between 3D Media and the Intermagnetics debtors. On November 7, 1985, the day before the scheduled hearing on Intermagnetics' application for bankruptcy court approval of the lease-option agreement, Intermagnetics filed an ex parte application for approval of purchase agreement and for authority to sell personal property free and clear of liens and interests in which it sought immediate bankruptcy court approval of a revised agreement which provided for an outright sale of Intermagnetics to 3D Media. On November 8, 1985, the bankruptcy court conducted a hearing on the ex parte sale application. No live testimony was received at the hearing, but various creditors questioned Anand's credibility and the valuation of the assets of Intermagnetics. On December 11, 1985, the bankruptcy court approved the sale. In its order, the bankruptcy court found that the sale was in the best interest of the parties under the circumstances, that the sale price was the best obtainable under the circumstances, and that the notice was sufficient. The court also stated:

IT IS FURTHER ORDERED that the approval and authorization to sell pursuant to this Order **are subject to the representations and warranties set forth in the attached Declaration of Amarjit Singh Anand.... Anand's Declaration included a representation that Anand would receive no direct or indirect benefit from the sale to 3D Media. On January 15, 1986, the sale of Intermagnetics to 3D Media closed. Unknown to the bankruptcy court at the time it entered the December 11, 1985 order was the fact that in January 1985, Anand secretly negotiated with Appellee CITIC, a commercial instrumentality of the People's Republic of China, to sell the Intermagnetics assets for nearly $16 million. In May 1985, 3D Media made an offer to purchase the assets of Intermagnetics for $1 million down and $5 million payable over six years, subject to bankruptcy court approval. Anand secretly owned and controlled 3D Media with his partner Mehdi Karbassi. In September 1985, CITIC secretly agreed to purchase the Intermagnetics assets through 3D Media and another shell corporation owned and controlled by Anand. CITIC refrained from bidding against 3D Media in bankruptcy court and took a 5% commission or discount on its original offer in return. This agreement was concealed from the bankruptcy court. In November 1987, creditors of Intermagnetics applied to the bankruptcy court for appointment of a Trustee based on documented allegations that Anand, Karbassi, and 3D Media had fraudulently manipulated the 1985 Intermagnetics sale. In December 1987, the bankruptcy court appointed Appellant Leonard Gumport as Trustee, thereby terminating Anand's control of Intermagnetics and his status as debtor-in-possession. The Trustee pursued litigation in the bankruptcy court against Anand, Karbassi, 3D Media, and others for their misconduct. The Trustee asserted several claims including one, under 11 U.S.C. 549, to avoid an unauthorized transfer of property of a bankruptcy estate. The Trustee alleged that, because the sale was approved subject *915 to the representations of Anand which turned out to be false, the sale was not authorized and could be rescinded. On June 7, 1988, the bankruptcy court issued a preliminary injunction in that case, based on findings that the claims asserted were likely to succeed on the merits. In October 1988, the Trustee discovered evidence that CITIC was involved in the fraudulent transaction and filed a complaint against CITIC in the bankruptcy court on November 7, 1988. The action was transferred to the district court based on the Foreign Sovereign Immunities Act, 28 U.S.C. 1330, 1602-11, which provides federal jurisdiction for suits against a foreign state. On January 27, 1989, the Trustee filed its amended complaint against CITIC, which includes a claim **for fraud, **for bid-rigging under 11 U.S.C. 363(n), **for breach of fiduciary duty (as a coconspirator), and for fraudulent transfer under 11 U.S.C. 544(b). The first, third and fourth claims seek compensatory and punitive damages. The second, for bid-rigging, seeks damages or, in the alternative, avoidance of the sale and return of the assets of Intermagnetics or their value. On June 2, 1989, CITIC filed a motion to dismiss based on the res judicata effect of the bankruptcy court's 1985 sale order. After a hearing, the district court dismissed the Trustee's complaint on res judicata grounds, characterizing its decision as a summary judgment. The Trustee filed a motion for reconsideration and stay of entry of judgment, which the district court denied. The litigation in bankruptcy court against Anand, Karbassi and 3D Media has been stayed pending the Trustee's appeal from the district court's order of dismissal and denial of reconsideration. DISCUSSION [1] This Court reviews de novo a grant of summary judgment, viewing the evidence in the light most favorable to the party against whom it is granted. Franklin v. Murphy, 745 F.2d 1221, 1235 (9th Cir.1984). Summary judgment is proper if there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c). For the reasons set forth below, this Court finds that the judgment of the district court must be reversed. I. [2] The Trustee argues that the bankruptcy court's 1985 order approving the sale of Intermagnetics to 3D Media subject to Anand's representations, which are now assumed to be false, means that the bankruptcy court's approval

is now rescinded and the doctrine of res judicata should not bar the Trustee's action against CITIC. The district court rejected the Trustee's argument and held that the subject to language in the bankruptcy court's 1985 order meant only that the declaration of Anand was a basis for the approval and authorization, but its truth was not a condition to the approval. This Court must reject the district court's interpretation of the bankruptcy court's 1985 order. The bankruptcy court's order of December 11, 1985, uses the phrase subject to in a variety of places within the order and in a context which strongly indicates that the order of approval was conditioned on the veracity of Anand's declaration. The bankruptcy court authorized the sale of Intermagnetics subject to the terms of this Order. The approval and authorization was further subject to the letter of credit ... being amended to be drawn on the obligation of 3D Media, Inc., and not 3D Video Media, Inc. The approval and authorization was also made subject to the following conditions, representations and warranties by Debtors, including not selling the books of the debtors and providing notice to the creditors when certain acts were done. The foregoing constituted factors upon which the bankruptcy court's approval of the sale of Intermagnetics was conditioned, and not mere bases for the decision. See In re CADA Invs., Inc., 664 F.2d 1158, 1160 (9th Cir.1981). The fact that the bankruptcy court which issued the 1985 order approving the sale of Intermagnetics to 3D Media also granted the Trustee's request for a preliminary injunction*916 on June 7, 1988, based on findings that the Trustee's suit to rescind the sale of Intermagnetics to 3D Media was likely to succeed on the merits, further evidences the intention of the bankruptcy court to make the approval of the sale of Intermagnetics in 1985 conditional upon the truth of Anand's declaration. This Court recognizes the district court's concern regarding the lack of finality of the bankruptcy court's 1985 order approving the sale if it is deemed to be conditioned upon the veracity of Anand's declaration. However, the bankruptcy court was empowered to and, this Court is satisfied, did condition the approval and authorization of the sale of Intermagnetics to 3D Media on the veracity of the representations made in the Anand declaration. See CADA, 664 F.2d at 1160-62; Safe Flight Instrument Corp. v. United Control Corp., 576 F.2d 1340, 1343-44 (9th Cir.1978) (per curiam). See also 11 U.S.C. 363(e). Indeed, the failure of the district court to give the intended effect to the bankruptcy court's order of December 11, 1985, may itself be seen as violating the principles of res judicata. II. The district court also rejected the Trustee's argument that the bankruptcy court's order of December 11, 1985 should be set aside pursuant to Rule 60(b) of the Federal Rules of Civil Procedure, because the admittedly false declaration of Anand constituted a fraud upon the court. [3] Rule 60(b) does not limit the power of a court to entertain an independent action to set aside a judgment for fraud upon the court. This Court recently approved the following definition of fraud upon the court proposed by Professor Moore: Fraud upon the court should, we believe, embrace only that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery can not perform in the usual manner its impartial task of adjudging cases that are presented for adjudication. 7 J. Moore & J. Lucas, Moore's Federal Practice 60.33, at 515 (2d ed. 1978) [hereinafter Moore], quoted in Alexander v. Robertson, 882 F.2d 421, 424 (9th Cir.1989). Thus fraud upon the court includes both **attempts to subvert the integrity of the court and **fraud by an officer of the court. [4] The district court did not actually decide whether Anand was an officer of the court, although it did state that he should be regarded more as a witness accused of perjury. Instead the district court determined that an independent action for fraud upon the court required the presence of extrinsic fraud. Extrinsic fraud occurs where a party is prevented by trick, artifice or other fraudulent conduct from fairly presenting his claim or defenses or introducing relevant and material evidence. 7 J. Moore, supra p. 8, 60.37 [1], at 60-374 to -375. Perjury, on the other hand, is

characterized as intrinsic fraud. The district court found that no extrinsic fraud occurred before the bankruptcy court. The distinction between extrinsic and intrinsic fraud has been criticized by commentators, 7 J. Moore, supra p. 8, 60.37[1], at 60-377 to -380; 11 C. Wright & A. Miller, Federal Practice and Procedure 2868, at 240-41 (1973), and the distinction generally does not apply to fraud upon the court, but only to fraud by the parties. 7 J. Moore, supra p. 8, 60.37[1], at 60-380, 60.33, at 60-356 to -357. In Hazel-Atlas Glass Co. v. Hartford Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250 (1944), overruled on other grounds, Standard Oil of Cal. v. United States, 429 U.S. 17, 18, 97 S.Ct. 31, 31, 50 L.Ed.2d 21 (1976) (district courts may consider Rule 60(b) motions without leave of appellate courts for cases already reviewed on appeal), the Supreme Court granted relief though the complainant had waited nine years to bring the action and had learned about the possibility of fraud during the first proceeding. The fraud in Hazel-Atlas Glass involved the introduction of fraudulent evidence, and the court did not find it necessary to distinguish between extrinsic and intrinsic fraud in setting aside the judgment. There the Supreme Court *917 explained that the inquiry as to whether a judgment should be set aside for fraud upon the court under Rule 60(b) focuses not so much in terms of whether the alleged fraud prejudiced the opposing party **but more in terms of whether the alleged fraud harms the integrity of the judicial process: [T]ampering with the administration of justice in the manner indisputably shown here involves far more than an injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public, institutions in which fraud cannot complacently be tolerated consistently with the good order of society. Surely it cannot be that preservation of the integrity of the judicial process must always wait upon the diligence of litigants. The public welfare demands that the agencies of public justice be not so impotent that they must always be mute and helpless victims of deception and fraud. Id. at 246, 64 S.Ct. at 1001; See also Alexander v. Robertson, 882 F.2d at 424 (9th Cir.1989). [5] The reluctance of the district court to consider the Trustee's efforts to set aside the approved sale of Intermagnetics' assets reflects a recognition of the policy to promote the finality of judicial sales. The record before the district court, however, did not warrant the application of the policy of finality in this case. The policy of finality is not, however, absolute: in limited circumstances the courts have set aside confirmed sales. Courts have generally appeared willing to set aside confirmed sales that were tinged with fraud, error or similar defects which would in equity affect the validity of any private transaction. In re CADA Invs., Inc., 664 F.2d at 1162 (9th Cir.1981) (citations omitted). The Court in CADA went on to say, [A]lthough the policy of finality normally protects confirmed sales from orders to set aside, sales are properly set aside when compelling equities outweigh the interests in finality. Id. [6] The district court also erred in concluding that it was unnecessary to determine whether Anand was an officer of the court at the time he made the admittedly false declaration before the bankruptcy court. Officers of a debtor-in-possession are officers of the court because of their responsibility to act in the best interests of the estate as a whole and the accompanying fiduciary duties. See In re Tri-Cran, Inc., 98 B.R. 609, 617 (Bankr.D.Mass.1989) (setting aside bankruptcy sale for fraud involving debtor-in-possession); In re Tudor Assocs., Ltd., II, 64 B.R. 656, 662 (E.D.N.C.1986). See also In re Sal Caruso Cheese, Inc., 107 B.R. 808, 816-17 (Bankr.N.D.N.Y.1989) (noting fiduciary duties owed by debtor-in-possession to the estate, the creditors, and the court). [7][8] Contrary to the argument made by CITIC, the fact that Anand was acting outside his authority when he committed fraud cannot mean that he therefore ceased being an officer of the court. Such a rule would operate to shield fraudulent activity by an officer of the court by virtue of the fraudulent activity itself. Further, although the creditors challenged the veracity of Anand's declaration at the bankruptcy court hearing in November 1985, he continued to owe duties to them and the estate as a whole until a trustee was subsequently appointed. III.

[9] Finally, in granting summary judgment against the Trustee, the district court failed to address the Trustee's bid-rigging claim under 11 U.S.C. 363(n). That statute expressly authorizes a bankruptcy trustee to avoid a sale [under 11 U.S.C. 363] if the sale price was controlled by an agreement among potential bidders or to recover damages and attorneys fees from the participants in the scheme. Section 363(n) provides a statutory exception to the finality of bankruptcy sale orders for res judicata purposes. A contrary finding would render meaningless the ability of a bankruptcy trustee to avoid a sale under 363(n). Such a result would also be inconsistent with the exception to the finality *918 of otherwise final orders provided by Fed.R.Civ.P. 60(b), and the holding of this court in In re CADA Invs., Inc., 664 F.2d at 1162. CONCLUSION The district court erred in determining that the bankruptcy court's December 11, 1985 order mandated dismissal of the Trustee's complaint on res judicata grounds. The bankruptcy court's order was conditioned on the veracity of the declaration of Armarjit Singh Anand. Anand was an officer of the court at the time he made the admittedly false declaration and under the circumstances the Trustee should be permitted to maintain its independent action to set aside the bankruptcy court's order for fraud upon the court in accordance with Rule 60(b) of the Federal Rules of Civil Procedure. Finally, the district court erred in failing to address the Trustee's bid-rigging claims under 11 U.S.C. 363(n). We therefore vacate the district court's summary judgment and remand the case to the district court for further proceedings consistent with this Opinion. REVERSED and REMANDED. Fraud upon the court by attorney Aoude v. Mobil Oil Corp., 892 F.2d 1115, 15 Fed.R.Serv.3d 482 (1st Cir.(Mass.),Dec 29, 1989) Service station operator brought action against franchisor seeking to compel franchisor to accept transaction in which operator had obtained station. Franchisor moved to dismiss. The United States District Court for the District of Massachusetts, David S. Nelson, J., granted motion, and appeal was taken. The Court of Appeals, Selya, Circuit Judge, held that conduct of operator in filing complaint based upon bogus purchase agreement, and in authorizing attachment of that agreement to complaint, constituted fraud on court warranting dismissal of action. Affirmed. [1] Federal Courts 170B 813

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(K) Scope, Standards, and Extent 170BVIII(K)4 Discretion of Lower Court 170Bk813 k. Allowance of Remedy and Matters of Procedure in General. Most Cited Cases District courts must be accorded considerable latitude in dealing with serious abuses of judicial process, and that trier's determination to dismiss case for such reason should be reviewed only for abuse of discretion. [2] Federal Civil Procedure 170A 1741

170A Federal Civil Procedure 170AXI Dismissal 170AXI(B) Involuntary Dismissal 170AXI(B)2 Grounds in General 170Ak1741 k. In General. Most Cited Cases Although dismissal for abuse of judicial process need not be preceded by other, less drastic sanctions, it is extreme remedy, and should not lightly be engaged.

[3] Federal Civil Procedure 170A

1741

170A Federal Civil Procedure 170AXI Dismissal 170AXI(B) Involuntary Dismissal 170AXI(B)2 Grounds in General 170Ak1741 k. In General. Most Cited Cases Before dismissing for abuse of judicial process, judge should carefully balance policy favoring adjudication on merits with competing policies such as need to maintain institutional integrity and desirability of deterring future misconduct. [4] Federal Courts 170B 41

170B Federal Courts 170BI Jurisdiction and Powers in General 170BI(B) Right to Decline Jurisdiction; Abstention Doctrine 170Bk41 k. Nature and Grounds in General. Most Cited Cases Federal district court possesses inherent power to deny court's processes to one who defiles judicial system by committing fraud on court. [5] Federal Civil Procedure 170A 1741

170A Federal Civil Procedure 170AXI Dismissal 170AXI(B) Involuntary Dismissal 170AXI(B)2 Grounds in General 170Ak1741 k. In General. Most Cited Cases Fraud on the court, upon which dismissal of action can be based, occurs where it can be demonstrated, clearly and convincingly, that party has sentiently set in motion some unconscionable scheme calculated to interfere with judicial system's ability impartially to adjudicate matter by improperly influencing trier or unfairly hampering presentation of opposing party's claim or defense. [6] Federal Civil Procedure 170A 1741

170A Federal Civil Procedure 170AXI Dismissal 170AXI(B) Involuntary Dismissal 170AXI(B)2 Grounds in General 170Ak1741 k. In General. Most Cited Cases Service station operator's conduct in fabricating purchase agreement, and in allowing his counsel to annex bogus agreement to complaint seeking to force franchisor to accept his operation of station, constituted fraud on the court, warranting dismissal of action. [8] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment

170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases (Formerly 170Ak1741) Federal district court can order dismissal or default where litigant has stooped to level of fraud on the court. [9] Federal Civil Procedure 170A 840

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(E) Amendments 170Ak839 Complaint 170Ak840 k. Time for Amendment. Most Cited Cases District court did not abuse its discretion in refusing to allow service station operator to amend complaint seeking to force franchisor into acceptance of operator as franchisee, where motion was made six months after suit was started on basis of bogus purchase agreement that had been attached to complaint and motion was made only after true agreement was discovered by franchisor. Before BREYER, VAN GRAAFEILAND FN* and SELYA, Circuit Judges. FN* Senior Circuit Judge, of the Second Circuit, sitting by designation. SELYA, Circuit Judge. Plaintiff-appellant Salim Aoude rails against the involuntary dismissal of two suits which he filed against defendant-appellee Mobil Oil Corporation and others. The record of the case amply illustrates that, though the bread of deceit is sweet to a man ... afterwards his mouth shall be filled with gravel. Proverbs 20:17. We told a part of the tawdry tale in Aoude v. Mobil Oil Corp., 862 F.2d 890 (1st Cir.1988), and now write the final chapter. I The general scenario of plaintiff's effort surreptitiously to acquire a Mobil franchise from another service station operator, John Monahan, and to force Mobil to accept the transaction, was recounted at some length in our earlier opinion. Id. at 89192. Rather than revisit that narrative, we refer the interested reader to it, noting especially that, to gain bargaining leverage with Mobil, Aoude concocted, backdated, and persuaded Monahan to sign, a bogus purchase agreement. See id. at 891 & n. 2. The counterfeit reflected a price nearly twice what had actually been paid for Monahan's interest. When Mobil refused to bow to this artificially induced pressure, Aoude brought suit in state court, alleging, on a number of theories, that he had become the owner of Monahan's franchise, notwithstanding Mobil's refusalas was its rightto honor the purported assignment. The complaint sought equitable relief and damages. *1117 Plaintiff had given the ersatz agreement to his then-counsel, and it formed the complaint's centerpiece. Aoude knew that counsel had annexed the false agreement to the complaint instead of the real one; indeed, Aoude approved the filing of the suit on that basis. By his own admission, he did not ask [his attorney] to amend the complaint to retract the lie. Mobil, unaware that the agreement was a work of fiction, removed the case to federal district court based on diversity of citizenship and amount in controversy. During the first four months of 1988, numerous depositions were conducted and other discovery undertaken. Aoude participated fully, plying Mobil with interrogatories and requests for document production and responding to Mobil's discovery initiatives. When Monahan's deposition was taken, the truth began to emerge. Later, during his own deposition, Aoude was confronted with Monahan's testimony and only then admitted the scheme. It was not until May 26, 1988 (almost three months after his deposition was taken) that plaintiff moved to amend his complaint to substitute the authentic purchase agreement for the bogus one. In the meantime, discovery had continued and a blizzard of legal documents had fallen. We single out four developments:

1. On February 24, Mobil threatened Monahan with franchise revocation based partly on his dealings with Aoude. 2. Aoude engaged new counsel. 3. On May 5, Aoude filed a second action in the same federal district court. The complaint in the new case adopted all the factual allegations made in the first case and prayed for essentially the same relief, but abandoned plaintiff's earlier reliance on the phony contract. Then, citing Mobil's February 24 letter to Monahan, the new complaint proceeded to allege violations of the Petroleum Marketing Practices Act (PMPA), 15 U.S.C. 2801 2806 (1982). 4. On May 17, Mobil moved to dismiss both actions because of Aoude's fraudulent practices. We need not wax longiloquent as to ensuing events. On June 2, the district court granted preliminary injunctive relief in Mobil's favor; FN1 the court also denied plaintiff's motion to substitute the authentic agreement for the ersatz one. Thereafter, the district court heard arguments on defendant's dismissal motions and took them under advisement. Some months later, the court filed a memorandum decision dismissing both actions. In its rescript, the court observed that plaintiff's entire case rests on a false foundation. FN1. In our earlier opinion, we upheld this injunction. Aoude, 862 F.2d at 89296. These appeals, one for each of plaintiff's two suits, followed. II [1] At the outset, we address the standard of review. We believe that the district courts must be accorded considerable latitude in dealing with serious abuses of the judicial process and that the trier's determination to dismiss a case for such a reason should be reviewed only for abuse of discretion. See, e.g., Link v. Wabash R.R. Co., 370 U.S. 626, 633, 82 S.Ct. 1386, 1390, 8 L.Ed.2d 734 (1962); HMG Property Investors, Inc. v. Parque Indus. Rio Canas, Inc., 847 F.2d 908, 91617 (1st Cir.1988); cf. Fashion House, Inc. v. K mart Corp., 892 F.2d 1076, 1081 (1st Cir. 1989) (district court's choice of sanctions for discovery violation will only be set aside for abuse of discretion); Damiani v. Rhode Island Hospital, 704 F.2d 12, 1516 (1st Cir.1983) (similar). While broad, the trial court's discretion is not unlimited. The judge must consider the proper mix of factors and juxtapose them reasonably. Abuse occurs when a material factor deserving significant weight is ignored, when an improper factor is relied upon, or when all proper and no improper factors are assessed, but the court makes a serious mistake in weighing them. Independent Oil and Chemical Workers of Quincy, Inc. v. Procter & Gamble Mfg. Co., 864 F.2d 927, 929 (1st Cir.1988); see also *1118Anderson v. Cryovac, Inc., 862 F.2d 910, 923 (1st Cir.1988) (to warrant reversal for abuse of discretion, it must plainly appear[ ] that the court below committed a meaningful error in judgment). [2][3] Although dismissal need not be preceded by other, less drastic sanctions, Farm Constr. Services, Inc. v. Fudge, 831 F.2d 18, 20 (1st Cir.1987) (per curiam); Damiani, 704 F.2d at 15, it is an extreme remedy, and should not lightly be engaged. Thus, a district court may dismiss a case only when circumstances make such action appropriate, Link, 370 U.S. at 633, 82 S.Ct. at 1390, and after thoughtful consideration of all the factors involved in a particular case, Damiani, 704 F.2d at 17. Because dismissal sounds the death knell of the lawsuit, district courts must reserve such strong medicine for instances where the defaulting party's misconduct is correspondingly egregious. Id.; see also D.P. Apparel Corp. v. Roadway Express, Inc., 736 F.2d 1, 3 (1st Cir.1984); Corchado v. Puerto Rico Marine Management, Inc., 665 F.2d 410, 413 (1st Cir.1981), cert. denied, 459 U.S. 826, 103 S.Ct. 60, 74 L.Ed.2d 63 (1982). In calibrating the scales, the judge should carefully balance the policy favoring adjudication on the merits with competing policies such as the need to maintain institutional integrity and the desirability of deterring future misconduct. See HMG Property, 847 F.2d at 917; see also National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 643, 96 S.Ct. 2778, 2781, 49 L.Ed.2d 747 (1976) (per curiam). III

[4] Exercising great circumspection, the court below suggested several sources from which it derived authority to enter the dismissal orders. We are not similarly inclined. It strikes us as elementary that a federal district court possesses the inherent power to deny the court's processes to one who defiles the judicial system by committing a fraud on the court. A. [5] A fraud on the court occurs where it can be demonstrated, clearly and convincingly, that a party has sentiently set in motion some unconscionable scheme calculated to interfere with the judicial system's ability impartially to adjudicate a matter by improperly influencing the trier or unfairly hampering the presentation of the opposing party's claim or defense. See, e.g., Alexander v. Robertson, 882 F.2d 421, 424 (9th Cir.1989); Pfizer, Inc. v. International Rectifier Corp., 538 F.2d 180, 195 (8th Cir.1976); England v. Doyle, 281 F.2d 304, 309 (9th Cir.1960); United Business Communications, Inc. v. RacalMilgo, Inc., 591 F.Supp. 1172, 118687 (D.Kan.1984); United States v. ITT Corp., 349 F.Supp. 22, 29 (D.Conn.1972), aff'd mem., 410 U.S. 919, 93 S.Ct. 1363, 35 L.Ed.2d 582 (1973). [6] Because corrupt intent knows no stylistic boundaries, fraud on the court can take many forms. In our estimation, however, the present case is a near-classic example of the genre. Appellant's bad faith is manifest. By Aoude's own admission, he fabricated the purchase agreement; gave it to his lawyer; read the complaint before it was filed; realized that counsel, acting on his behalf, proposed to annex the bogus agreement to the complaint (thus representing it to be authentic); and nevertheless authorized the filing. Thereafter, Aoude and his counsel continued to act out the charade until, in the course of pretrial discovery undertaken by Mobil, Monahan revealed a glimmer of the truth. Even then, Aoude hedged his bets, forcing Mobil to piece together the sordid story bit by bit. Following Monahan's deposition testimony, more than three months elapsed before plaintiff asked to amend his complaint to substitute the real agreement for the invented one. The only conceivable reason for Aoude's elaborate duplicity was to gain unfair advantage, first in the dispute, thereafter in the litigation. **The tactic plainly hindered defendant's ability to prepare and present its case, while simultaneously throwing a large monkey wrench into the judicial machinery. In our view, *1119 this gross misbehavior constituted fraud on the court. See Cleveland Demolition Co. v. Azcon Scrap Corp., 827 F.2d 984, 986 (4th Cir.1987) (fraud on court may exist where witness and attorney conspire to present perjured testimony); Rozier v. Ford Motor Co., 573 F.2d 1332, 1338 (5th Cir.1978) (same, where party, with counsel's collusion, fabricates evidence). B. [7] The next question, of course, requires that we examine the options of a federal district judge confronted by such odious machinations. It is apodictic that federal courts possess plenary authority to manage their own affairs so as to achieve the orderly and expeditious disposition of cases. Link, 370 U.S. at 63031, 82 S.Ct. at 138889 (footnote omitted). The Civil Rules neither completely describe, nor purport to delimit, the district courts' powers. See HMG Property, 847 F.2d at 915; Brockton Savings Bank v. Peat, Marwick, Mitchell & Co., 771 F.2d 5, 11 (1st Cir.1985), cert. denied, 475 U.S. 1018, 106 S.Ct. 1204, 89 L.Ed.2d 317 (1986). Rather, the district courts retain the inherent power to do what is necessary and proper to conduct judicial business in a satisfactory manner. As we have said, that inherent power is rooted in the chancellor's equity powers, to process litigation to a just and equitable conclusion. HMG Property, 847 F.2d at 915 (quoting ITT Community Development Corp. v. Barton, 569 F.2d 1351, 1359 (5th Cir.1978)). The courts' inherent power includes the ability to do whatever is reasonably necessary to deter abuse of the judicial process. Eash v. Riggins Trucking Inc., 757 F.2d 557, 567 (3d Cir.1985) (en banc); see also Brockton Savings Bank, 771 F.2d at 11. There is an irrefragable linkage between the courts' inherent powers and the rarely-encountered problem of fraud on the court. Courts cannot lack the power to defend their integrity against unscrupulous marauders; if that were so, it would place at risk the very fundament of the judicial system. As Justice Black wrote in a case involving a not-dissimilar fraud: [T]ampering with the administration of justice in the manner indisputably shown here involves far more than an injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public, institutions in which fraud cannot complacently be tolerated consistently with the good order of society.... The public welfare demands that the agencies of public justice be not so impotent that they must always be mute and helpless victims of deception and fraud.

HazelAtlas Glass Co. v. HartfordEmpire Co., 322 U.S. 238, 246, 64 S.Ct. 997, 1001, 88 L.Ed. 1250 (1944).FN2 All in all, we find it surpassingly difficult to conceive of a more appropriate use of a court's inherent power than to protect the sanctity of the judicial processto combat those who would dare to practice unmitigated fraud upon the court itself. To deny the existence of such power would, we think, foster the very impotency against which the HazelAtlas Court specifically warned. FN2. In HazelAtlas, the relief awarded took the form of vacating a judgment long after it had become final, and prohibiting the judgment-holder from relitigating its claim. 322 U.S. at 25051, 64 S.Ct. at 1003 04. [8] We find the caselaw fully consonant with the view that a federal district judge can order dismissal or default where a litigant has stooped to the level of fraud on the court. The Supreme Court said so in HazelAtlas, albeit in dicta. Id. at 250, 64 S.Ct. at 1003. The most closely analogous cases we can find, in our own circuit and in a variety of other courts, stand for much the same proposition. See, e.g., Brockton Savings Bank, 771 F.2d at 1112 (affirming district court's entry of default judgment under court's inherent powers in response to defendant's abusive litigation practices); Wyle v. R.J. Reynolds Indus., Inc., 709 F.2d 585, 589 (9th Cir.1983) ( courts have inherent power to dismiss an action when a party has willfully deceived the court and engaged in conduct utterly inconsistent with the orderly administration of justice); *1120Eppes v. Snowden, 656 F.Supp. 1267, 1279 (E.D.Ky.1986) (where fraud committed, court has inherent power [to dismiss] ... to protect the integrity of its proceedings); United States v. MossAmerican, Inc., 78 F.R.D. 214, 216 (E.D.Wis.1978) (similar); see also C.B.H. Resources, Inc. v. Mars Forging Co., 98 F.R.D. 564, 569 (W.D.Pa.1983) (dismissing under Fed.R.Civ.P. 41(b) where party's fraudulent scheme, including use of a bogus subpoena, was totally at odds with ... the notions of fairness central to our system of litigation). In most of these cases, we hasten to add, the challenged conduct seems, arguably, less reprehensible than in the case at bar. C. Plaintiff offers a plethora of reasons why, even if the court had power to dismiss, the remedy ought not to have been employed in his case. We reject all of these asseverations, commenting briefly as to five of them. 1. Materiality. Plaintiff argues that his deceit, if not entirely excusable, falls short of furnishing a basis for dismissal since [t]he attaching of the incorrect agreement to the Complaint ... did not in any way interfere with Mobil's ability to litigate the case nor did it interfere in any way with the District Court's ability to render a rightful decision. Appellant's Brief at 26. We disagree. The bogus agreement clearly had the capacity to influence the adjudication and to hinder Mobil's presentation of its case. The failure of a party's corrupt plan does not immunize the defrauder from the consequences of his misconduct. When Aoude concocted the agreement, and thereafter when he and his counsel annexed it to the complaint, they plainly thought it material. That being so, [t]hey are in no position now to dispute its effectiveness. HazelAtlas, 322 U.S. at 247, 64 S.Ct. at 1002. See also Minneapolis, St. Paul & Sault Ste. Marie Ry. Co. v. Moquin, 283 U.S. 520, 52122, 51 S.Ct. 501, 502, 75 L.Ed. 1243 (1931) (litigant who engages in misconduct will not be permitted the benefit of calculation, which can be little better than speculation, as to the extent of the wrong inflicted upon his opponent). 2. Right to a Hearing. Appellant claims that the district court erred in not conducting an evidentiary hearing. He is wrong. In the first place, motions do not usually culminate in evidentiary hearings. See Fed.R.Civ.P. 43(e) (court may hear motion and determine ancillary facts on affidavits or depositions). Second, we regularly turn a deaf ear to protests that an evidentiary hearing should have been convened but was not, where, as here, the protester did not seasonably request such a hearing in the lower court. This appellant knows the rule at first hand. See Aoude, 862 F.2d at 894 (a matter can adequately be heard on the papers so long as the parties ha[d] a fair opportunity to present relevant facts and arguments to the court, and to counter the opponent's submissions) (discussing necessity for hearing on preliminary injunction); see also MoralesFeliciano v. Parole Board, 887 F.2d 1, 7 (1st Cir.1989) (civil contempt finding does not require evidentiary hearing when none requested below); cf. Beaulieu v. United States Internal Revenue Service, 865 F.2d 1351, 1352 (1st Cir.1989) (it is a party's first obligation to seek any relief that might fairly have been thought available in the district court before seeking it on appeal).

Here, the record before the trial court was compendious; the material facts were undisputed; notice and the opportunity for presentment were abundant (the district court entertained not only evidentiary submissions, such as deposition transcripts and affidavits, but briefs and oral arguments); and the court based its dispositive findings of fact largely on plaintiff's own admissions. No more was required.FN3 FN3. Because of (a) the prejudice accruing to defendant by reason of plaintiff's fraud, (b) the concomitant interference with the court's adjudicatory function, (c) the public interest in the integrity of the judicial system, and (d) the centrality of the fraud to the matters at issue in the litigation, the dismissal orders did not contravene due process or conflict with what might remain of the mere punishment doctrine enunciated in Hovey v. Elliott, 167 U.S. 409, 17 S.Ct. 841, 42 L.Ed. 215 (1897). See HMG Property, 847 F.2d at 918 n. 14 (explicating status of Hovey principle); see also Hammond Packing Co. v. Arkansas, 212 U.S. 322, 34954, 29 S.Ct. 370, 37981, 53 L.Ed. 530 (1909) (limiting Hovey); Puerto Rico v. SS Zoe Colocotroni, 628 F.2d 652, 666 (1st Cir.1980) (upholding qualitatively similar ruling which bore a direct and reasonable relation to the prejudice defendant's irresponsible conduct had already created), cert. denied, 450 U.S. 912, 101 S.Ct. 1350, 67 L.Ed.2d 336 (1981). 18 U.S.C. Section 1503. Influencing or injuring officer or juror generally (a) Whoever corruptly, or by threats or force, or by any threatening letter or communication, endeavors to influence, intimidate, or impede any grand or petit juror, or officer in or of any court of the United States, or officer who may be serving at any examination or other proceeding before any United States magistrate judge or other committing magistrate, in the discharge of his duty, or injures any such grand or petit juror in his person or property on account of any verdict or indictment assented to by him, or on account of his being or having been such juror, or injures any such officer, magistrate judge, or other committing magistrate in his person or property on account of the performance of his official duties, or corruptly or by threats or force, or by any threatening letter or communication, influences, obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice, shall be punished as provided in subsection (b). If the offense under this section occurs in connection with a trial of a criminal case, and the act in violation of this section involves the threat of physical force or physical force, the maximum term of imprisonment which may be imposed for the offense shall be the higher of that otherwise provided by law or the maximum term that could have been imposed for any offense charged in such case. (b) The punishment for an offense under this section is-(1) in the case of a killing, the punishment provided in sections 1111 and 1112; (2) in the case of an attempted killing, or a case in which the offense was committed against a petit juror and in which a class A or B felony was charged, imprisonment for not more than 20 years, a fine under this title, or both; and (3) in any other case, imprisonment for not more than 10 years, a fine under this title, or both. 20 ALR FED 731, Construction and application of 18 U.S.C.A. 1503 making it a federal offense to endeavor to influence, intimidate, impede, or injure witness, juror, or officer in federal court, or to obstruct the due administration of justice ** 6. "Officer" [Cumulative Supplement] Synopsis **A District Court judge, and a prosecuting attorney preparing a recommendation for a judge, have been held to be "officers" protected by 18 U.S.C.A. 1503

**In one case, a court held that a United States District Court judge was an "officer" within the meaning of that term as used in 18 U.S.C.A. 1503 After considering the historical derivation of 1503, the court in United States v Margoles (1961, CA7 Wis) 294 F2d 371, cert den 368 US 930, 7 L Ed 2d 193, 82 S Ct 367, said that it saw no reason why Congress would have intended to exclude a corrupt endeavor to influence a judge from the scope of 1503, and held that a United States District Court judge was an "officer in or of" a United States court within the meaning of that language as used in 1503. The defendant had argued that 18 U.S.C.A. 401, a contempt statute regarding misbehavior in the court's presence or so near thereto as to obstruct justice, was intended to reach the offense of attempting to influence a judge, and not 1503, but the court dismissed this argument, noting that 401 was limited to contempts. In one case, a court determined that a prosecuting attorney preparing a recommendation for a judge with regard to the sentencing of a particular defendant came within the meaning of "officer" in the predecessor statute, Criminal Code 135. Construing the predecessor statute, 135 of the Criminal Code, the court in United States v Polakoff (1940, CA2 NY) 112 F2d 888, 134 ALR 607, cert den 311 US 653, 85 L Ed 418, 61 S Ct 41 (disapproved on other grounds Rathbun v United States, 355 US 107, 2 L Ed 134, 78 S Ct 161, reh den 355 US 925, 2 L Ed 355, 78 S Ct 363), said that a prosecuting attorney preparing a recommendation for a judge of the federal courts with regard to a sentence to be imposed in a particular case is an "officer" acting in the discharge of his duty within the meaning of the statute, since influencing the attorney could influence the judge himself. The suggestions of a prosecuting attorney to a judge regarding sentencing, whether volunteered or requested, said the court, are of the greatest service in fixing the sentence, and no prudent judge likes to forgo their benefit. CUMULATIVE SUPPLEMENT Cases: Where indictment charged that defendant corruptly did endeavor to influence, obstruct, and impede due administration of justice in United States District Court in that defendant, knowing that Chief of Police, Mission, South Dakota, had arrested party, threatened physical injury to said police chief unless party was released from jail, defendant did not commit violation under 18 U.S.C.A. 1503; assumption that police chief was officer of court whose daily work always was in discharge of duty was incorrect, since local police officer's only federal duty in case was to make arrest on behalf of federal officers and duty ended after he gave up custody of prisoner. United States v Knife (DC SD) 371 F Supp 1345. [END OF SUPPLEMENT] 7. "Corruptly" This article has been superseded by the following article(s): Superseded by 8. "Endeavors" [Cumulative Supplement] Synopsis Although one court has defined the word "endeavors," as used in 18 U.S.C.A. 1503, as connoting a "systematic or lasting effort, " most have defined it as "any effort or essay to accomplish an evil purpose which the statute was designed to prevent." Furthermore, some courts have held that the use of the word "endeavors" renders the success or lack of success of the venture immaterial to the offense under 1503. However, some courts have implied that the word connotes some overt act directed at a person who is in a position to affect the outcome of the case which is sought to be obstructed. 62 A.L.R. Fed. 303

Frequently, the courts have held that the word "endeavors" as used in 18 U.S.C.A. 1503 describes any effort or essay to accomplish the evil purpose which the statute was designed to prevent. Comment The word "endeavors" as used in 18 U.S.C.A. 1503 is to be distinguished from what is generally its synonym "attempts." The distinction, which has figured significantly in the construction and application of the statute, does not necessarily lie in the amount of effort involved in the activity, or even in the nature of the activity, but in the fact that the word "endeavors" encompasses activities which might be too remote from the consummation of the evil purpose which the statute is designed to prevent to constitute an "attempt." Thus, activities which are only preparatory to an "attempt," and therefore not punishable as an "attempt," may nevertheless constitute a punishable "endeavor."[62] Thus, with regard to the definition of the word "endeavor," the courts have generally followed the reasoning of United States v Russell (1921) 225 US 138, 65 L Ed 553, 41 S Ct 260, where the United States Supreme Court, in considering the predecessor statute, Criminal Code 135 (Comp St 10305), said: "The word of the section is 'endeavor,' and by using it the section got rid of the technicalities which might be urged as besetting the word 'attempt,' and it describes any effort or essay to do or accomplish the evil purpose that the section was enacted to prevent. Criminality does not get rid of its evil quality by the precautions it takes against consequences, personal or pecuniary." **Section 1503 makes an offense of any corrupt "endeavor," said the United States Supreme Court in Osborn v United States (1966) 385 US 323, 17 L Ed 2d 394, 87 S Ct 429, reh den 386 US 938, 17 L Ed 2d 813, 87 S Ct 951, and it describes any effort or essay to do or accomplish the evil purpose that the section was enacted to prevent. As also holding that the word "endeavors" as used in 18 U.S.C.A. 1503 describes any effort or essay to accomplish the evil purpose which the statute was designed to prevent, see the following cases:Second Circuit United States v Siegel (1957, DC NY) 152 F Supp 370 Sixth Circuit Anderson v United States (1954, CA6 Ky) 215 F2d 84, cert den 348 US 888, 99 L Ed 698, 75 S Ct 208, reh den 348 US 922, 99 L Ed 733, 75 S Ct 291 Ninth Circuit **Kong v United States (1954, CA9 Hawaii) 216 F2d 665 However, a small number of courts have defined the word "endeavors" in different ways.Ninth Circuit For instance, the word has been held to connote a systematic or lasting effort Such was the holding of the court in United States v Zolli (1970, DC NY) 51 FRD 522, where the court was considering whether an indictment which charged the defendant with corruptly endeavoring to obstruct justice sufficiently charged him with performing a knowing act. On the other hand, in the following cases it was implied that the word "endeavors" connotes an overt act directed at some person whose action or failure to act could affect the outcome of a particular case. "While the statute uses the broader term 'endeavor' to define the offense," said the court in United States v Campbell (1972, DC Pa) 350 F Supp 213, "it appears clear that there must be some overt act directed toward some person whose action or failure to act could affect the outcome of the case." The court indicated that the statute might well be broad enough to include any act, corruptly done, to obstruct the due administration of justice, but that some act looking toward that end is required. **In Ethridge v United States (1958, CA9 Wash) 258 F2d 234, the court stated that it had held in a prior case that in order for an "endeavor" to come within the ambit of the statute, the defendant's acts must have been brought to bear upon some person who had legal authority to do, or not to do, some act which would or could affect the final outcome of the trial. In what would seem to be a logical extension of the rule that the word "endeavors," as used in 18 U.S.C.A. 1503, describes any effort or essay to accomplish the evil purpose which the statute was designed to prevent, many courts have deduced that the success of the endeavor is immaterial to an offense under the statute. In United States v Russell (1921) 225 US 138, 65 L Ed 553, 41 S Ct 260, the United States Supreme Court,

construing the predecessor statute, 135 of the Criminal Code, stated that the statute was "not directed at success in corrupting a juror," "but at the 'endeavor' to do so," that "[g]uilt is incurred by the trialsuccess may aggravate; it is not a condition of it." Thus, the court held that even "experimental approaches" to the corruption of a juror were punishable "endeavors" under the statute. This rule, that the success of the "endeavor" is immaterial to the consummation of an offense under 18 U.S.C.A. 1503, was supported in Osborn v United States (1966) 385 US 323, 17 L Ed 2d 394, 87 S Ct 429, reh den 386 US 938, 17 L Ed 2d 813, 87 S Ct 951, where the United States Supreme Court cited the rule as meriting its holding that the doctrine of "impossibility" was inapplicable to the situation in which the defendant hired an intermediary to offer a bribe to a prospective juror, such action on the part of the defendant being a corrupt "endeavor" within the purview of 18 U.S.C.A. 1503, notwithstanding the fact that the intermediary was secretly working with the government and therefore had no intention of actually approaching any juror. in United States v Knohl (1967, CA2 NY) 379 F2d 427, cert den 389 US 973, 19 L Ed 2d 465, 88 S Ct 472, where the court rejected the defendant's contention that where he sought to procure false testimony, the testimony of two witnesses was necessary to prove the falsity of the statements he sought to procure, the court declaring that while the "two-witness rule" had application to the offense of subornation of perjury (18 U.S.C.A. 1622), it had no application to 18 U.S.C.A. 1503, since 1503 punishes merely the endeavor to obstruct justice, the success of the endeavor being immaterial to the offense. in United States v Rosner (1973, CA2 NY) 485 F2d 1213, where the court rejected the argument of the defendant that the crime of endeavoring to obstruct justice was not legally capable of attainment in his case since the government knew of his actions at all times, the court noting that the doctrine of impossibility of success is not applicable to 18 U.S.C.A. 1503 in United States v Brothman (1950, DC NY) 93 F Supp 924, where the court cited the rule to show that no concert of action was necessary to an offense under 1503, thereby establishing that an additional element was necessary to the conspiracy charge also lodged against the defendants, and that it was therefore not improper to convict the defendants of both an offense under 1503 and conspiracy to violate 1503. in United States v Siegel (1957, DC NY) 152 F Supp 370, where the court considered the rule to be one factor in its determination that in order to complete the offense of destroying "evidence" under 1503, it was not necessary to show that the defendant knew that the documents he destroyed were "material" to the subject of the pending grand jury inquiry which he was charged with obstructing, but only that they bore a reasonable relation to the inquiry. in United States v Verra (1962, DC NY) 203 F Supp 87, where the rule was employed by the court in its determination that where the defendants were charged with conspiring to violate 18 U.S.C.A. 1503 by assaulting a witness at a previous trial, the statements made in the indictment as to the outcome of that previous trial should have been stricken as not being essential to the charge. in United States v Mannarino (1956, DC Pa) 149 F Supp 351, where the court reasoned that the rule warranted its finding that it is immaterial to a charge of corruptly endeavoring to obstruct the due administration of justice by seeking to pervert the truth in a pending case, that the person whom the defendant corruptly sought to influence was not, and did not intend to be, a witness in that case. in United States v Missler (1969, CA4 Md) 414 F2d 1293, cert den 397 US 913, 25 L Ed 2d 93, 90 S Ct 912, where the court said that the rule militated that it find that one "endeavors" to obstruct justice when he hires an intermediary to murder a prospective government witness, despite the fact that the intermediary never did, and never intended to, make an attempt on the witness' life. in Knight v United States (1962, CA5 Ga) 310 F2d 305, where the court held that the activity of hiring an intermediary to do an act which would intimidate a witness constituted a corrupt endeavor to obstruct justice

notwithstanding the fact that the intermediary never carried out the plan. in Overton v United States (1968, CA5 Tex) 403 F2d 444, where the rule was one factor in the court's determination that the offense of corruptly endeavoring to influence, intimidate, or impede a witness in violation of 18 U.S.C.A. 1503 was proved, despite the fact that the witness was not ultimately influenced, intimidated, or impeded. in Anderson v United States (1954, CA6 Ky) 215 F2d 84, cert den 348 US 888, 99 L Ed 698, 75 S Ct 208, reh den 348 US 922, 99 L Ed 733, 75 S Ct 291, where the court cited the rule in its holding that where the defendants were charged with corruptly endeavoring to obstruct the due administration of justice by agreeing to alter the testimony of one of the defendants and that of another witness in a pending matter, it was not necessary to show that the other witness was in fact contacted. in United States v Bell (1965, CA6 Tenn) 351 F2d 868, cert den 383 US 947, 16 L Ed 2d 210, 86 S Ct 1200, where the court recognized the rule, by implication, when it affirmed a conviction under 18 U.S.C.A. 1503 based upon the defendant's act of endeavoring to induce an intermediary to influence jurors. in Catrino v United States (1949, CA9 Mont) 176 F2d 884, where the court noted that the offense of endeavoring to procure false testimony under 18 U.S.C.A. 1503 differed from the offense of subornation of perjury (18 U.S.C.A. 1622), in that the latter crime required the actual procurement of perjury; thus, it was held not to be improper to convict the defendant of both crimes upon the same transaction. in Roberts v United States (1956, CA9 Cal) 239 F2d 467, where the court cited the rule to distinguish the offense of corruptly endeavoring to influence a witness from that of attempting to suborn perjury, the court thus rejecting the defendant's argument that the "Two-Witness Rule" should have been applied in proving his crime under 18 U.S.C.A. 1503 in Falk v United States (1966, CA9 Cal) 370 F2d 472, cert den 387 US 926, 18 L Ed 2d 982, 87 S Ct 2044, where the court made note of the rule in its determination that 1503 punishes an unsuccessful attempt to suborn perjury. in Caldwell v United States (1954) 95 App DC 35, 218 F2d 370, cert den 349 US 930, 99 L Ed 1260, 75 S Ct 773, reh den 349 US 969, 99 L Ed 1290, 75 S Ct 880, where the court recognized the rule, by implication, in its determination that 18 U.S.C.A. 1503 was violated by the hiring of an intermediary to ascertain the feelings of jurors regarding a pending case, notwithstanding the fact that there was no evidence that any jurors were approached. CUMULATIVE SUPPLEMENT Cases: See United States v Lazzerini (1979, CA1 Mass) 611 F2d 940, 13[b]. By use of term "endeavor" Congress purged from statute technicalities associated with distinguishing between preparation for attempt and attempt itself, and "endeavor" does not require proof that would support charge of attempt. United States v Buffalano (1984, CA2 NY) 727 F2d 50. 18 U.S.C.A. 1503 calls only for "endeavor," similar to criminal solicitation statute and does not require proof that would support charge of attempt; it was no defense that putative intermediary declined to approach judge or that endeavor was unsuccessful. United States v Fasolino (CA2 NY) 586 F2d 939. "Endeavor" under 18 U.S.C.A. 1503 is any effort or any act, however contrived, to obstruct, impede, or interfere with witness, and any such endeavor is "corrupt." United States v Cioffi (CA2 NY) 493 F2d 1111, cert den 419 US 917, 42 L. Ed. 2d 155, 95 S Ct 195. See United States v Missler (1969, CA4 Md) 414 F2d 1293, cert den 397 US 913, 25 L Ed 2d 93, 90 S Ct 912, 10[a]. Evidence that defendant and another, who was also indicted in one of indictments pending against defendant,

had several times discussed killing witness, and that co-indictee, by then turned government informant, at his last meeting with defendant handed over to defendant expense money to locate witness, showed sufficient "endeavor" within meaning of 18 U.S.C.A. 1503 notwithstanding that federal agents arrested defendant as soon as he was handed expense money and prior to doing anything to witness. United States v Mitchell (CA6 Tenn) 514 F2d 758, cert den 423 US 847, 46 L. Ed. 2d 68, 96 S Ct 86. 18 U.S.C.A. 1503 defining obstruction of justice refers to "endeavors to influence, intimidate, or impede any witness," and does not require that any such "endeavor" prove successful. Re Carr (DC Ohio) 436 F Supp 493. Indictment alleging that defendant knowingly and corruptly interfered with the due administration of justice, without specifically alleging that defendant was aware of pending judicial proceedings, was sufficient to charge offense of influencing an officer. 18 U.S.C.A. 1503. U.S. v. Grossman, 272 F. Supp. 2d 760 (N.D. Ill. 2003). See United States v McCarty (1979, CA8 SD) 611 F2d 220, cert den (US) 63 L Ed 2d 764, 100 S Ct 1319, 16. To satisfy intent requirement for obstruction of justice claims, the alleged "endeavor" to obstruct justice must have the natural and probable effect of interfering with the due administration of justice; where the defendant lacks knowledge that his actions are likely to affect the judicial proceeding, he lacks the requisite intent to obstruct. 18 U.S.C.A. 1503. Lockheed Martin Corp. v. The Boeing Co., 357 F. Supp. 2d 1350 (M.D. Fla. 2005). [END OF SUPPLEMENT] 9. ". . . influence, obstruct, or impede, the due administration of justice, . . ." [Cumulative Supplement] Synopsis While the last clause of 18 U.S.C.A. 1503 has been held to be of an all-embracive nature, inclusive of those means of obstruction which the draftsmen could not have foreseen, it has not been construed to make the statute applicable to obstructions of nonjudicial proceedings. **Thus, it has become well-established that there can be no obstruction of the due administration of justice within the purview [scope of the statute]of 1503, unless justice is being administered, that is to say, unless proceedings are pending in the federal judicial system. In the following cases the courts held that the final clause of the statute was designed to embrace those means of obstructing justice in judicial proceedings that the draftsmen of the statute had not foreseen. Thus, the clause has been considered to be all-embracive with regard to obstructions of justice in judicial proceedings. Comment It has been recognized that 18 U.S.C.A. 1503 protects not only court proceedings, but such proceedings as preliminary hearings and grand jury investigations as well, since the latter-mentioned proceedings serve as extensions of the court. Thus, the "due administration of justice" can begin, at the earliest, with the filing of a complaint with a magistrate, and it does not end, at the latest, until the final disposition of the last appeal. **Obstructive action taken at any point in between, even while there is no judicial proceeding actually in progress, is punishable, since the matter would still be "pending" in the federal courts. Where a defendant argued that his testimony before a grand jury, even if it concealed information relevant and germane to the grand jury's functions, would not support a conviction under 18 U.S.C.A. 1503 for obstructing justice, the court in United States v Cohn (1971, CA2 NY) 452 F2d 881, cert den 405 US 975, 31 L Ed 2d 249, 92 S Ct 1196, stated that although the specific provisions of 1503 relate to tampering, by corruption, threats, or force, with sources of evidence extrinsic to the actor, the final all-embracive language proscribes all conduct which corruptly influences, obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice. While the earlier provisions bring within their reach those who seek to obstruct the administration of justice by efforts directed toward witnesses, jurors, or officers, the last provision of 1503 is an omnibus provision which is all embracing and designed to cover any corrupt conduct in an endeavor to obstruct or interfere with the due administration of justice, said the court in United States v Solow (1956, DC NY) 138 F Supp 812.

The purpose of 18 U.S.C.A. 1503 is to render illegal all interference with the judicial functions of the United States, said the court in United States v Bonanno (1959, DC NY) 177 F Supp 106, noting that the final clause of the statute was added in order to cover those means of interference which the draftsmen were not prescient enough to enumerate. The court rejected the argument that inasmuch as the due administration of justice clause must be construed to embrace only acts similar in nature to those enumerated by the preceding specific clauses, the giving of false and evasive testimony was not covered by the statute. Rejecting defendants' argument that the final clause of 1503 embraces only acts of a similar type to those specifically enumerated in the earlier clauses of the statute, the court in United States v Cohen (1962, DC Conn) 202 F Supp 587, held that this latter provision is all-embracing and designed to meet any corrupt conduct in an endeavor to obstruct or interfere with the due administration of justice. Construing Criminal Code 135, former 18 U.S.C.A. 241, the court in Samples v United States (1941, CA5 Ala) 121 F2d 263, cert den 314 US 662, 86 L Ed 530, 62 S Ct 129, held that the statute was broad enough to cover any act, committed corruptly, in an endeavor to impede or obstruct the due administration of justice, and that therefore persuading a codefendant to absent himself from a trial in order to improperly secure its postponement would be a violation of the statute. The statute was designed to protect witnesses in federal courts and also to prevent a miscarriage of justice by corrupt methods, said the court. To the same effect, see Knight v United States (1962, CA5 Ga) 310 F2d 305. In holding that one endeavors to obstruct the due administration of justice, in violation of 18 U.S.C.A. 1503, by endeavoring to influence persons whom he believes to be prospective witnesses, regardless of whether those persons intend to, or actually do, testify, the court in Falk v United States (1966, CA9 Cal) 370 F2d 472, cert den 387 US 926, 18 L Ed 2d 982, 87 S Ct 2044, noted that the last clause of the statute is a "broad 'catch-all' phrase," and that it has been held to be all-embracive, designed to meet any corrupt conduct in an endeavor to obstruct or interfere with the due administration of justice. An instruction to the jury, which was held not to be erroneous in Courtney v United States (1968, CA9 Cal) 390 F2d 521, cert den 393 US 857, 21 L Ed 2d 126, 89 S Ct 98, reh den 393 US 992, 21 L Ed 2d 457, 89 S Ct 440, stated, in part, that 1503 makes unlawful any act, committed corruptly, in an endeavor to impede or obstruct the due administration of justice, and that the reasonable tendency of the acts done to obstruct the honest and fair administration of justice is the proper criterion to apply. Although the last clause of 18 U.S.C.A. 1503 has generally been held to be an all-embracive provision, it is also well established that an obstruction of the due administration of justice can only arise when justice is being administered, that is to say, when proceedings are pending.[63] In Pettibone v United States (1893) 148 US 197, 37 L Ed 419, 13 S Ct 542, the Supreme Court, construing the predecessor statute, Revised Stat 5399, reversed a conviction for conspiracy to obstruct the due administration of justice for failure of the indictment to allege, and failure of the prosecution to prove, that the defendants knew about the proceedings that they were alleged to have obstructed, the court remarking that the obstruction of the due administration of justice in any court of the United States is indeed criminal, but that such obstruction can only arise when justice is being administered. "Unless that fact exists," said the court, "the statutory offense cannot be committed, and while, with knowledge or notice of that fact, the intent to offend accompanies obstructive action, **without such knowledge or notice the evil intent is lacking." In construing a predecessor statute, 135 of the Criminal Code, the court in Rosner v United States (1926, CA2 NY) 10 F2d 675, held that a letter sent by a United States attorney requesting a person to come to court and enter a plea with respect to charges that had been filed against him, was not encompassed in the "administration of justice," and that the obstruction of justice statute should not be used to give to the attorney's notes or verbal requests the quality of process. Thus, the defendant's conviction for advising the recipient of the note not to comply with the request was reversed, the court noting that since a disregard of the request by the recipient would not have been obstructing the administration of justice, advising the recipient to disregard the note was not a violation of the statute. Section 1503 is a criminal statute and as such must be strictly construed, said the court in United States v Scoratow (1956, DC Pa) 137 F Supp 620; therefore, the phrase "due administration of justice" must be construed so as not to include acts of interference with witnesses in an investigation being conducted by the FBI or any similar investigating, as opposed to judicial, arm of the government, said that the court noting that in order to constitute an offense under the predecessor statute, 135 of the Criminal Code, it has been held that the criminal act must be in relation to a proceeding pending in the federal courts, and that a proceeding is not pending in the courts at least until a complaint is filed with a United States commissioner (now magistrate.) The court emphasized that the phrase "due administration of justice" must be qualified and limited by the enumeration of specific judicial functions concerned with the "administration" of justice in the preceding portion of 1503.

But see Zamloch v United States (1952, CA9 Cal) 193 F2d 889, cert den 343 US 934, 96 L Ed 1342, 72 S Ct 770, where it was held that an investigation being conducted by a United States attorney, who had brought in one conviction on a charge, to ascertain the identity of other principals in the offense was protected by the statute from the concealment of information. Enumerating the specific clauses of 1503 previous to the clause regarding the "due administration of justice," the court in Haili v United States (1958, CA9 Hawaii) 260 F2d 744, **noted that those specific clauses all related to conduct which was designed to interfere with the process of arriving at an appropriate judgment in a pending case and which would disturb the ordinary and proper functions of the court, and that interfering with **witnesses, **jurors, and **parties operated to bring about a miscarriage of justice in specific cases. In the light of the intent of 1503 to protect witnesses in federal courts and to prevent miscarriages of justice by corrupt methods, and the fact that 1503 is a criminal statute that must be strictly construed, the court remarked that under the rule of ejusdem generis, the general words which follow the specific words in the enumeration of prohibited acts in 1503 must be construed to embrace only acts similar in nature to those acts enumerated by the preceding specific words. Therefore, said the court, associating with a person whose conditions of probation forbid such association does not come within the meaning of the statute. Section 1503 is not applicable at least until a complaint has been filed with a United States commissioner (magistrate), said the court in United States v Metcalf (1970, CA9 Wash) 435 F2d 754, where the court reasoned that the statute is designed to protect the participants in a specific proceeding and to prevent a miscarriage of justice in a case pending in a federal court. Thus, the statute does not apply, said the court, to threats made against a potential witness when the threats concern only what the witness might tell investigating authorities, and not what the witness might testify about in judicial proceedings. Recognizing that in order to constitute an offense under 18 U.S.C.A. 1503, the act charged must be in relation to a proceeding pending in the federal courts, the court in United States v Ryan (1971, CA9 Cal) 455 F2d 728, 20 ALR Fed 719, indicated that an investigation by the Internal Revenue Service would not constitute a judicial proceeding, and thus reversed a conviction for obstructing the due administration of justice where the defendant, who was under investigation by the IRS, ordered the alteration of some business records which later were subpoenaed by a grand jury, but where there was no proceeding pending at the time he gave the order. As also recognizing the rule that proceedings must be pending in order for there to be an obstruction of the due administration of justice, see the following cases:Second Circuit United States v Verra (1962, DC NY) 203 F Supp 87 (recognizing rule) Fourth Circuit Hoffler v United States (1956, CA4 Va) 231 F2d 660 (by implication) Fifth Circuit Hunt v United States (1968, CA5 Tex) 400 F2d 306, cert den 393 US 1021, 21 L Ed 2d 566, 89 S Ct 629 Sixth Circuit Anderson v United States (1954, CA6 Ky) 215 F2d 84, cert den 348 US 888, 99 L Ed 698, 75 S Ct 208, reh den 348 US 922, 99 L Ed 733, 75 S Ct 291 (by implication) Sizemore v United States (1958, CA6 Ky) 260 F2d 349 (by implication) Hunt v United States (1965, CA6 Mich) 343 F2d 84 (by implication) Ninth Circuit Doan v United States (1953, CA9 Cal) 202 F2d 674 (by implication) Tenth Circuit Cotton v United States (1969, CA10 Kan) 409 F2d 1049, cert den 396 US 1016, 24 L Ed 2d 507, 90 S Ct 577 United States v Griffin (1972, CA10 Kan) 463 F2d 177 (by implication), cert den 409 US 988, 34 L Ed 254, 93 S Ct 344 Dist Col Circuit Shimon v United States (1965) 122 App DC 152, 352 F2d 449 (by implication) Many courts have explicitly or implicitly recognized that the "due administration of justice" clause of 18 U.S.C.A. 1503 is of such broad scope as to render the statute, as a whole, applicable to the entire judicial process.

[END OF SUPPLEMENT] 9.8. "Knowingly, willfully, or with specific intent" [Cumulative Supplement] CUMULATIVE SUPPLEMENT Cases: Absence of evidence that defendant specifically intended for his statements to brother in which he denied involvement in robbery and shootings to be passed along to grand jury precluded conviction for obstruction of justice under statute making it a crime to corruptly endeavor to influence, obstruct, or impede due administration of justice. 18 U.S.C.A. 1503(a), (b)(3). U.S. v. Bruno, 383 F.3d 65 (2d Cir. 2004). If a defendant lacks knowledge that his actions are likely to affect a pending judicial or grand jury proceeding, he necessarily lacks the requisite intent to obstruct to sustain conviction under omnibus clause of obstruction of justice statute. 18 U.S.C.A. 1503(a). U.S. v. Triumph Capital Group, Inc., 260 F. Supp. 2d 470 (D. Conn. 2003). Knowledge that person whom defendant sought to intimidate was government witness is necessary element under 18 U.S.C.A. 1503 charge. United States v Bufalino (1981, SD NY) 518 F Supp 1190. Defendant's contention that trial court did not properly instruct jury on mens rea necessary to violate 18 U.S.C.A. 1503 has merit since under district court's definition, proof of any act to influence witness under any circumstances and for any purpose would automatically subject accused to criminal penalties, regardless of his intent; however, when viewed as whole, court's instructions could not fairly be said to have misled jury in proper application of law. United States v Johnson (CA5 Tex) 585 F2d 119. Indictment under 18 U.S.C.A. 1503 which is modeled on language of statute need not contain technical terms of knowledge and intent if it recites facts and uses language which, taken as whole, indicate knowledge and intent and that indictment contains sufficient factual data to withstand motion to dismiss. United States v Haas (CA5 Ala) 583 F2d 216. To sustain conviction for corruptly endeavoring to influence, intimidate, or impede administration of justice, government must prove that defendant acted with intent to influence, in sense of interfering with, judicial proceedings; defendant must undertake action from which obstruction of justice was reasonably foreseeable result, but he need not be successful in his endeavor. 18 U.S.C.A. 1503. U.S. v. McBride, 362 F.3d 360, 93 A.F.T.R.2d 2004-1536, 2004 FED App. 0093P (6th Cir. 2004). To prove an obstruction of justice charge, the government must show, beyond a reasonable doubt, that there was a pending judicial proceeding, that the defendant was aware of that proceeding, and that the defendant corruptly intended to impede the administration of that judicial proceeding. 18 U.S.C.A. 1503. U.S. v. Fassnacht, 332 F.3d 440, 91 A.F.T.R.2d 2003-2492 (7th Cir. 2003). Indictment is not insufficient because it charges defendant with threatening witness without alleging that he knew that person threatened was to be witness since law does not require such knowledge on part of defendant. United States v Raineri (1980, WD Wis) 521 F Supp 16. A conviction under statute making it a crime to corruptly endeavor to intimidate a judicial officer in the discharge of her official duties requires proof of a sufficient nexus between the defendant's actions and an intent to impede judicial proceedings; according to the nexus analysis, the act must have a relationship in time, causation, or logic with the judicial proceedings. 18 U.S.C.A. 1503(a). U.S. v. Joiner, 418 F.3d 863 (8th Cir. 2005). Violations of 18 U.S.C.A. 1503 and 1510 both require proof of specific intent to obstruct justice. United States v Carleo (CA10 Colo) 576 F2d 846. **Finding of specific intent to interfere with witness inpending judicial proceeding is essential element of offense of obstructing justice, and this specific intent may be established by circumstantial evidence. United States v White (CA10 Okla) 557 F2d 233. **Instruction in prosecution for obstruction of justice was clear where judge told jury that words "a specific intent," "knowingly," and "willfully," center on purpose that individual has when he does something, that is, his intent, his will, that specific intent is important element of crime, and that to convict on obstruction of justice, jury must find, in addition to other elements, that defendant had specific intent to obstruct, impair, or impede due administration of justice and that his endeavor was not accidental or inadvertent. U.S. v. Haldeman, 559 F.2d 31, 1 Fed. R. Evid. Serv. 1203 (D.C. Cir. 1976).

[END OF SUPPLEMENT] 14[b] Endeavoring to influence performance of court officersBy bribery [Cumulative Supplement] A defendant who endeavored to bribe a federal judge for a corrupt purpose was held to have endeavored to obstruct justice in violation of 18 U.S.C.A. 1503 Following a conviction for attempting to influence a United States District Court judge by offering to him, through an intermediary, a $5, 000 United States Treasury bond with the intent and purpose of endeavoring to influence him to suspend a sentence that he had imposed on the defendant in an earlier case, the defendant challenged the validity of the indictment upon which he had been convicted, stating that it did not charge an offense under 1503 because a judge is not an "officer in or of any court of the United States." The court in United States v Margoles (1961, CA7 Wis) 294 F2d 371, cert den 368 US 930, 7 L Ed 2d 193, 82 S Ct 367, rejected the defendant's argument and affirmed the conviction, noting that there is no reason to believe that Congress had intended to exclude from the scope of 1503 a corrupt endeavor to influence a District Court judge, and that such a judge is an indispensable officer to the court's performance. The court further commented that the defendant had also been convicted for endeavoring to obstruct the due administration of justice, based on the same transaction, and that under that charge the status of the judge as an "officer" of the court was immaterial. CUMULATIVE SUPPLEMENT Cases: Defendant could be convicted under 18 U.S.C.A. 1503 even though facts presented attempt to obtain money by deception from attorney by representation that defendant had juror under his control. United States v Neiswender (CA4 Md) 590 F2d 1269, cert den 441 US 963, 60 L. Ed. 2d 1068, 99 S Ct 2410. Evidence was sufficient to sustain defendant's conviction for violation of 18 U.S.C.A. 1503 where government witness testified that defendant was present during almost all of meeting during which plans were discussed to bribe judge, defendant told government witness that other party would pay for bribe, defendant assured government witness that only persons present at meeting were aware of bribery scheme, and other testimony established that defendant exhibited extreme concern at subsequent time that government witness might be "the heat." United States v Glickman (CA9 Cal) 604 F2d 625, cert den (US) 62 L. Ed. 2d 764, 100 S Ct 1032. [Top of Section] [END OF SUPPLEMENT] 14[c] Endeavoring to influence performance of court officersBy delusive advice or persuasion [Cumulative Supplement] In the following case, where the defendant sought to use his friendship with a prosecuting attorney to affect that prosecutor's performance in a pending case, and where the endeavor was for a corrupt purpose, the defendant was held to have violated 18 U.S.C.A. 1503 Where a bondsman, who was a friend of an attorney prosecuting a narcotics case, approached the attorney repeatedly and tried to persuade him to recommend to the judge in the narcotics case that the defendant be given a reduced sentence, and where the bondsman made the approaches in return for money paid to him by the defendant in the narcotics case, he was convicted of corruptly endeavoring to obstruct justice in violation of 18 U.S.C.A. 241(now 1503), and the conviction was affirmed in United States v Polakoff (1941, CA2 NY) 121 F2d 333, cert den 314 US 626, 86 L Ed 503, 62 S Ct 107, notwithstanding the fact that the endeavor was doomed to failure, since an associate of the bondsman was working with the attorney and the government as an informer, and notwithstanding the fact that the bondsman had used otherwise legitimate arguments to persuade the attorney, and did not try to bribe him.

CUMULATIVE SUPPLEMENT Cases: **Contention that word "corruptly," contained in 18 U.S.C.A. 1503, means any endeavor to influence jurist cannot be literally accepted since probation officers, attorneys, and defendants are all invited to address pleas concerning sentence to sentencing judge, and this cannot be construed as corruptly endeavoring to influence sentencing judge; where, however, submission to sentencing judge relies substantially upon relationship to judge e.g., friendship or past or present associations, such submission would constitute corrupt endeavor within meaning of 1503; defendant who sought to have attorney make oral approach to judge on basis of such relationship could be convicted of violation of 1503. United States v Fasolino (WD NY) 449 F Supp 586, affd (CA2 NY) 586 F2d 939. [END OF SUPPLEMENT] 16. Inducing intermediary to commit obstructive act [Cumulative Supplement] It has been held that the mere act of hiring an intermediary to commit an obstructive act is itself a sufficient "endeavor" to obstruct, influence, or impede the due administration of justice as to constitute a violation of 18 U.S.C.A. 1503, regardless of whether or not the intermediary actually engaged in a corrupt act, or whether or not the intermediary had any intention of so engaging. The Supreme Court held, in Osborn v United States (1966) 385 US 323, 17 L Ed 2d 394, 87 S Ct 429, reh den 386 US 938, 17 L Ed 2d 813, 87 S Ct 951, that the defendant had corruptly endeavored to impede the due administration of justice, in violation of 18 U.S.C.A. 1503, by instructing an intermediary to offer a bribe to a prospective juror in a federal criminal case, despite the fact that the intermediary never in fact approached the juror and never intended to do so. The court noted that the doctrine of "impossibility" was not applicable, since the statute punished any corrupt "endeavor" to obstruct justice in judicial proceedings.[75] In United States v Rosner (1973, CA2 NY) 485 F2d 1213, the court rejected the defendant's defenses of entrapment and "impossibility of success," and affirmed his convictions for, inter alia, conspiracy to obstruct justice (18 U.S.C.A. 371) and violation of 18 U.S.C.A. 1503, where the evidence showed that the defendant had unlawfully obtained, in return for cash payments, certain documents, including transcripts of grand jury testimony and statements of prospective government witnesses in the criminal case then pending against the same defendant, and a draft copy of an indictment (yet to be voted) involving another person, such payments having been made to a man who was later shown to have been an agent of the government, but who represented himself to the defendant as having a "contact" in the United States Attorney's office.[76] Where it was shown that when the defendant and his partner in an alleged hijacking quarreled, and the defendant, following his arrest for the hijacking and fearing that his partner would testify against him, hired another person to cause the murder of, or serious injury to, the partner to prevent his appearance, the court affirmed the defendant's conviction for corruptly endeavoring to obstruct the due administration of justice in violation of 18 U.S.C.A. 1503, in United States v Missler (1969, CA4 Md) 414 F2d 1293, cert den 397 US 913, 25 L Ed 2d 93, 90 S Ct 912, despite the fact that the intermediary never actually made an attempt on the partner's life. The court noted that there can be no question that one "endeavors" to obstruct justice when he arranges to have a prospective government witness murdered. A conviction for conspiracy to corruptly endeavor to influence, intimidate, and impede a witness, and to corruptly endeavor to impede and obstruct justice, in violation of the predecessor statute, 18 U.S.C.A. 241, was affirmed, in Samples v United States (1941, CA5 Ala) 121 F2d 263, cert den 314 US 662, 86 L Ed 530, 62 S Ct 129, where the evidence showed that the defendant, inter alia, had asked an intermediary, to whom he had offered money, to keep a person who intended to testify at a pending trial from so testifying. Where it was shown that a defendant, who was under charges of selling illegal alcohol, had approached a man who was to be a witness against him, had offered him money not to appear in court, and had threatened his life if he did so appear, the defendant's subsequent act of hiring an intermediary to influence, intimidate, and impede the witness by "planting" illegal alcohol on the premises of the witness' drinking establishment was held to have

constituted a corrupt endeavor to impede the due administration of justice in violation of 18 U.S.C.A. 1503, in Knight v United States (1962, CA5 Ga) 310 F2d 305, notwithstanding the fact that the intermediary never carried out the plan. The court noted that since the witness was himself on probation, the discovery of illegal alcohol at his place of business by either officers or himself would have had an intimidating effect, and since the "planting" of the alcohol would have thus tended to influence, obstruct, or impede the due administration of justice, the defendant's specific intent to commit the offense was shown in his intent to have the alcohol "planted." Because of circumstances surrounding the trial of a national labor leader for alleged violations of the TaftHartley Act, the defendant, in United States v Bell (1965, CA6 Tenn) 351 F2d 868, cert den 383 US 947, 16 L Ed 2d 210, 86 S Ct 1200, was convicted for violating 1503 where there was evidence that during the earlier trial he approached a man with an offer of money if he could "tamper" with two of the jurors in the earlier case and get them to vote for acquittal. The conviction of a defendant for obstructing the due administration of justice in violation of 18 U.S.C.A. 1503 was affirmed, in Caldwell v United States (1954) 95 App DC 35, 218 F2d 370, cert den 349 US 930, 99 L Ed 1260, 75 S Ct 773, reh den 349 US 969, 99 L Ed 1290, 75 S Ct 880, where it was shown that the defendant offered a sum of money to a man to talk with the jurors empaneled in a particular criminal case to which the defendant was not a party, and ascertain the jurors' feelings regarding that particular case. There was no evidence regarding the defendant's motive, nor was there any testimony that the offeree accepted any money or approached any juror. The court nevertheless affirmed the conviction, noting that regardless of motive, the defendant's actions constituted an unauthorized invasion of the integrity of jury proceedings and as such was "corrupt" per se. The court emphasized that to complete the crime it was not necessary to have an intent to influence the jury, and that the only intent involved in the crime of obstructing justice is the intent to do a forbidden act. CUMULATIVE SUPPLEMENT Cases: Evidence was sufficient for rational trier of fact to conclude beyond reasonable doubt under catchall provision of obstruction of justice statute that defendant acted with corrupt, wrongful, or immoral intent to obstruct grand jury's administration of justice, when he sent email directing investment bankers to delete computer files according to document retention policy after he became aware of grand jury subpoena's call for documents relating to initial public offering (IPO) allocation process that were in possession of investment bankers, and lied to company's lawyer by stating that he was not aware of regulatory investigations. 18 U.S.C.A. 1503. U.S. v. Quattrone, 441 F.3d 153 (2d Cir. 2006). Solicitation of intermediary to importune judge to impose lenient sentence is endeavor made "to influence" judge or due administration of justice. United States v Fasolino (CA2 NY) 586 F2d 939. Success is not prerequisite to conviction for violation of 18 U.S.C.A. 1503 since all that is necessary to be proven is that defendant "endeavored" to obstruct justice; thus, conviction for violation of 18 U.S.C.A. 1503 was proper where evidence showed that defendant arranged to have prospective government witness murdered, gave conspirator money, and devised and helped implement person's potential escape from authorities. United States v McCarty (1979, CA8 SD) 611 F2d 220, cert den (US) 63 L Ed 2d 764, 100 S Ct 1319. Evidence was sufficient to support conviction for endeavoring to obstruct due adminstration of justice where defendant had kidnapped victim for purpose of convincing her to disclose whereabouts of witness against them in upcoming trial. United States v Johnson (1983, CA11 Ga) 713 F2d 654.

B. Voluntary breach of accused's own duty as violation 17. Giving false, evasive, or incomplete testimony [Cumulative Supplement] The courts, in the following cases, have either explicitly or implicitly recognized that the giving of false or evasive testimony under oath would be an obstruction of justice, punishable under 18 U.S.C.A. 1503 Observation

It would appear that thus far it has been only the courts of the Second Circuit that have recognized that the giving of false or evasive testimony under oath, with a corrupt intent, would be violative of 18 U.S.C.A. 1503 In fact, the court in United States v Rosner (1972, DC NY) 352 F Supp 915, noted the conflict between the Second Circuit and the other circuits with regard to the theory of construction of the statute which has led the courts of the Second Circuit to this result, and other circuits to the conclusion that the statute punishes only activity of an intimidating nature directed against other persons in the judicial process (see, for example, Haili v United States (1958, CA9 Hawaii) 260 F2d 744). But the courts of the Second Circuit have reasoned that the gist of the offense punished by 18 U.S.C.A. 1503 is the intentional concealment of information (by lying), rather than the false swearing which is the essence of the offense of perjury. One Sixth Circuit case, however, supports the rule that the filing of a false affidavit might constitute an offense under 1503, but only if there was present the additional element of an obstruction to the court in the performance of its duty. See also United States v Siegel (1959, CA2 NY) 263 F2d 530, infra 18[a], cert den 359 US 552, 3 L Ed 1035, 79 S Ct 1147, reh den 361 US 871, 4 L Ed 111, 80 S Ct 117, where the defendant had presented false documents to a grand jury, falsely testifying that they were complete and true records of the conversations under investigation, and United States v Curcio (1960, CA2 NY) 279 F2d 681, cert den 364 US 824, 5 L Ed 2d 52, 81 S Ct 59, infra 18[a], where the defendant concealed documents from a grand jury and made false statements as to their whereabouts. Following their conviction for conspiracy to obstruct justice by giving false and evasive testimony, 20 codefendants appealed, and their convictions were reversed for failure of the evidence to show the existence of the criminal conspiracy, in United States v Bufalino (1960, CA2 NY) 285 F2d 408. The reversal was premised partially on the failure of the evidence to show that the defendants had, at the time of the alleged conspiracy, a specific intent to obstruct justice in violation of 18 U.S.C.A. 1503, such intent also being necessary to convict for conspiracy. While not specifically ruling that the giving of false or evasive testimony under oath would be violative of 18 U.S.C.A. 1503, even if the requisite intent were present, the court did say inter alia, that the convictions could not stand, because it was not shown that the defendants, who were reputed underworld leaders, should have envisaged, at the time of the alleged conspiracy, formal proceedings at which they would be called to testify under oath.[77] A conviction for obstructing the due administration of justice under 1503, because the defendant gave false and evasive testimony before a federal grand jury, was affirmed in United States v Cohn (1971, CA2 NY) 452 F2d 881, cert den 405 US 975, 31 L Ed 2d 249, 92 S Ct 1196, where the evidence showed that when the defendant appeared before a federal grand jury and was presented with a document on which were notes, he claimed to have no knowledge of them, when in fact the document had been given to a third party by the defendant, who at the time apprised the third party as to the significance of the notes. The district judge did not err in charging as a matter of law that obstruction of justice includes concealing from a grand jury information relevant and germane to its functions, indicated the court, reasoning that there is no rational basis for construing the all-embracive language which proscribes conduct which corruptly influences, obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice to mean only activity which interferes with other witnesses or documentary evidence. Noting that the job of establishing a distinction between concealing information recorded in documents and concealing information recorded in one's memory belongs to the legislature, the court said, in dismissing the argument that such an interpretation of 1503 would convict the accused, in essence, of perjury without allowing him the benefit of the "two-witness rule," that the gist of the offense is not the falsehood of a witness' statements, but the deliberate concealment of his knowledge.[78] An indictment charging a violation of 1503 because the accused, inter alia, gave, false and evasive testimony before a federal grand jury was held to state facts sufficient to constitute the offense, in United States v Cohen (1962, DC Conn) 202 F Supp 587, where it alleged that the accused had made false statements to the grand jury which was investigating ownership and operation of an illegal still, and that he thus had corruptly endeavored to obstruct and impede the due administration of justice. The accused had argued that if he, as principal, gave false testimony, then his crime was perjury, and that perjury was not an obstruction of justice. The court, rejecting this argument, stated that although the perjury statute (18 U.S.C.A. 1621) and 1503 overlap to some extent, the overlap is not a valid reason to bar a prosecution under either. The latter part of 1503 is an all-inclusive provision, said the court, and the statute is designed to prevent a miscarriage of justice by corrupt methods. But see United States v Essex (1969, CA6 Tenn) 407 F2d 214, where a conviction for juvenile delinquency based on a violation of 1503 was reversed where the defendant, a minor, had filed a false affidavit with the District Court in support of a motion for a new trial in an earlier case, which affidavit alleged that she had had sexual intercourse with several of the members of the jury in that case while they were sequestered for deliberations. The

court, noting that 1503 evolved from the laws concerning contempt, stated that false testimony alone would not constitute contempt without the presence of the additional element of obstructing justice. The very falsity of the defendant's statements establishes that there was no obstruction of justice, said the court, which, in reversing the conviction, remarked that the defendant may well have been guilty of perjury, and that the court would have had little difficulty in finding her guilty of the 1503 violation had the allegations of her affidavit been true. CUMULATIVE SUPPLEMENT Cases: Defendant was properly convicted of obstructing justice in violation of 18 U.S.C.A. 1503 by giving false and evasive answers to questions asked of him while he was witness before grand jury where his testimony was clearly material to grand jury's investigation and where testimony of assistant United States Attorney concerning efforts to refresh defendant's recollection prior to grand jury appearance was not inadmissible hearsay and did not deprive defendant of fair trial. United States v Kanovsky (1980, CA2 NY) 618 F2d 229. Where evidence showed that defendants arranged meeting, took active role in fabricating story about ownership of two horses, and knew that federal grand jury was investigating ownership of horses, inasmuch as evidence established motives for defendants to concoct cover story, jury could properly infer that defendants' object was to obstruct grand jury proceedings in violation of 18 U.S.C.A. 1503, notwithstanding that defendants contended that story was fabricated for purpose of presenting to state racing commission and not to federal grand jury. United States v Turcotte (CA2 NY) 515 F2d 145, cert den 423 US 1032, 46 L. Ed. 2d 406, 96 S Ct 564. Government's burden on obstruction of justice charge is not satisfied merely upon proof that defendant rendered false testimony; rather government must further demonstrate that rendering of such testimony thwarted or impeded grand jury's investigation. United States v Caron (1982, ED Va) 551 F Supp 662. Government did not have to establish that defendant's material false testimony regarding his knowledge of subject matter of grand jury investigation, which necessarily had effect of closing off entirely the avenue of inquiry that grand jury was pursuing during its questioning of defendant, had any other effect, actual, natural, or probable, on grand jury proceeding, in order to demonstrate that defendant had obstructed administration of justice in violation of federal statute; no other proof of impediment was required under obstruction-of-justice statute. (Per E. Grady Jolly, Circuit Judge, with one Circuit Judge concurring.) 18 U.S.C.A. 1503(a). U.S. v. Brown, 459 F.3d 509 (5th Cir. 2006). 18 U.S.C.A. 1503 gives fair notice that it outlaws giving of false testimony before grand jury; perjurious witness can bring about miscarriage of justice envisioned by 18 U.S.C.A. 1503; witness' testimony is "evasive" when he deliberately conceals knowledge and "false" when he blocks flow of truthful information. United Staes v Griffin (CA5 Fla) 589 F2d 200, cert den 444 US 825, 62 L. Ed. 2d 32, 100 S Ct 48. Defendant is entitled to evidentiary hearing to determine whether government's prosecution of defendant for obstruction of justice violates plea agreement by possibly using defendant's immunized testimony as basis for prosecution. United States v Brimberry (1984, CA7 Ill) 744 F2d 580, 16 Fed Rules Evid Serv 1078, later proceeding (CA8) 779 F2d 1339, CCH Fed Secur L Rep 92460, 19 Fed Rules Evid Serv 1204 and later app (CA7 Ill) 803 F2d 908, cert den (US) 95 L Ed 2d 817, 107 S Ct 1977. Whether criminal defendant who gives false name to magistrate can be prosecuted for violating 18 U.S.C.A. 1503 is question of law subject to de novo review on appeal. United States v Plascencia-Orozco (1985, CA9 Cal) 768 F2d 1074. Allegation that defendant knowingly and willfully corruptly endeavored to influence, obstruct and impede the due and proper administration of law at an Immigration Court proceeding in which he provided testimony, by making false and misleading statements, was sufficient to support indictment for obstruction of justice; defendant was sufficiently informed of the nature of the accusation against him. 18 U.S.C.A. 1505. U.S. v. Hassoun, 477 F. Supp. 2d 1210 (S.D. Fla. 2007). [END OF SUPPLEMENT] 18[b] Abuse or misuse of evidenceFalsifying evidence [Cumulative Supplement] Like corruptly influencing the testimony of a witness, the falsification of evidence might easily achieve a

miscarriage of justice, and, reflecting this fact, some courts have held that the falsification of evidence with corrupt intent is an endeavor to obstruct justice and punishable under 18 U.S.C.A. 1503 Comment When documents which may have some bearing on a pending case are altered or destroyed, the question arises as to whether it is necessary to a conviction under 18 U.S.C.A. 1503 for such alteration or destruction that it be shown that the documents were in fact relevant to the pending case. Although it seems clear that it is necessary to a showing of corrupt intent that the accused have had reason to believe that the alteration bore some reasonable relationship to the pending judicial matter, it is not clear whether it is necessary that it did in fact bear such a relationship.[80] An indictment charging a violation of 1503 because the accused presented false statements and caused to be presented false documents to a federal grand jury, thus corruptly endeavoring to obstruct and impede the due administration of justice, was held sufficient to charge the offense, in United States v Cohen (1962, DC Conn) 202 F Supp 587. The indictment alleged that the defendant had presented to the grand jury a falsely signed lease contract, but did not allege whether the false lease concealed information relevant to the inquiry or how the defendant had caused the document to be presented to the jury. However, the court, noting the broad scope of the statute, remarked that it certainly is as much an obstruction of justice to cause a false document to be presented as it is to destroy a document which is the subject of a grand jury investigation. Furthermore, said the court, the proffering of misleading documents intended to deceive the grand jury is no less corrupt than the fraudulent concealment of facts by the wilful destruction of documents, since the obstruction of justice may well take the form of concealing from an authorized tribunal information germane to its functions. Where a defendant plied the plaintiff in a civil action with liquor, thereby, and otherwise, obtaining from the plaintiff letters to the court and to the plaintiff's attorney requesting that the action be dismissed, the defendant's conviction for obstructing justice by causing the false and fraudulently obtained letter to be filed with the court, thereby causing delay and expense to the court, in violation of the predecessor statute, 18 U.S.C.A. 241, was affirmed in Nye v United States (1943, CA4 NC) 137 F2d 73, cert den 320 US 755, 88 L Ed 449, 64 S Ct 62. **See also Smith v United States (1956, CA5 Fla) 234 F2d 385, supra 12[c], where it was held, inter alia, that the defendant's presentment of what he knew to be a false affidavit to an Assistant United States Attorney regarding a pending judicial matter was violative of the due administration of justice clause of 18 U.S.C.A. 1503 In the following case, the court, implicitly recognizing that the knowing and wilful alteration of documents which are clearly relevant to a pending judicial matter would be punishable under 18 U.S.C.A. 1503, held that the evidence did not show a sufficient relationship between the documents and the subject of the pending judicial proceeding to make of the defendant's alteration of the documents a punishable offense, nor did the evidence show a corrupt intent. A conviction for obstructing justice in violation of 18 U.S.C.A. 1503 was reversed in United States v Ryan (1971, CA9 Cal) 455 F2d 728, 20 ALR Fed 719, where it was shown that the Internal Revenue Service had been investigating the defendant for some time regarding possible violations of federal tax laws, and, having failed in an attempt to force the defendant to produce certain business records under its own subpoena power, the IRS arranged to have the documents subpoenaed by a grand jury. However, there was no evidence that the grand jury was investigating any matters relative to the defendant, and in fact it was not shown that the grand jury knew anything about the matter of the subpoenas. Several months prior to the issuance of the subpoenas, the defendant had ordered his secretary to delete a particular name from a particular set of records wherever it appeared, and after the subpoenas were served, the defendant, finding out that the work had not been completed, ordered that it be done. However, he gave no order to similarly alter certain other documents, also eventually presented to the grand jury, which contained the same name that he had ordered deleted from the documents in question. The defendant's conviction, based upon his order to complete the alteration given after the subpoenas duces tecum had been served upon him, was reversed, the court noting that the prosecution had failed to show that the defendant had the specific intent to obstruct justice. Furthermore the court was of the opinion that IRS had used the subpoenas as a device to obtain the documents it had been unable to obtain by administrative subpoena, and said that the alteration of the document did not bear a reasonable relationship to the subject of the grand jury investigation, it being clear that there was no relation between the grand jury inquiry and the IRS' difficulties with the defendant. CUMULATIVE SUPPLEMENT

Cases: **Providing grand jury with disguised and misleading handwriting exemplars, and counseling grand jury witnesses to give false testimony, is criminal conduct contemplated by 18 U.S.C.A. 1503. United States v Beatty (1984, ED NY) 587 F Supp 1325. [Top of Section] [END OF SUPPLEMENT] 19. Selling judicial favors In the following cases, where the defendants were acting in legal capacities in which they had the power to affect the outcome of a pending case, and where it was shown that they used this power corruptly, that is to say, for money paid to them, the courts held or implied that their activities were corrupt endeavors to obstruct the due administration of justice, proscribed by 18 U.S.C.A. 1503 **In United States v Kahaner (1963, CA2 NY) 317 F2d 459, cert den 375 US 835, 11 L Ed 2d 65, 84 S Ct 62, reh den 375 US 982, 11 L Ed 2d 429, 84 S Ct 478, cert den 375 US 836, 11 L Ed 2d 65, 84 S Ct 73, cert den 375 US 836, 11 L Ed 2d 65, 84 S Ct 74, reh den 375 US 926, 11 L Ed 2d 169, 84 S Ct 263, the court, in an appeal from a conviction for conspiring to obstruct the due administration of justice in violation of 1503, considered whether certain overt acts done by the conspirators constituted violations of 1503. One defendant had served as an Acting United States Attorney, and another was a state court justice. The former had been approached by a friend who sought to have him use his influence to gain leniency for certain parties against whom an action was pending regarding the concealment of assets in a bankruptcy matter, and he agreed to help for financial remuneration. The latter was enlisted by the defendant attorney to aid in this matter, and he too agreed to help in return for money paid. While the defendant attorney exercised discreet influence on the office of the United States Attorney, the defendant justice consulted with the judge who was sitting in the bankruptcy case, endeavoring to influence him regarding the severity of the sentence. While the court implied that the charge to the jury had not been erroneous where it stated, in part, that it was not wrongful for one justice to consult with another regarding a pending case unless it was done for financial remuneration, and that, in like manner, it was not wrongful for a member of the staff of the office of the United States Attorney to consult with another member of the staff regarding the actions that office would take regarding a prosecution, unless the consultation was an attempt to influence for money paid, the court nevertheless affirmed the conspiracy conviction in the instant case, noting that the evidence, under the circumstances of the case, was sufficient to support the verdict of the jury.[81] Convictions of two defendants for corruptly endeavoring to impede the due administration of justice were affirmed in Anderson v United States (1954, CA6 Ky) 215 F2d 84, cert den 348 US 888, 99 L Ed 698, 75 S Ct 210, reh den 348 US 922, 99 L Ed 733, 75 S Ct 291, supra, 9 where the defendants, one of whom was a material witness in a pending judicial matter, approached the accused in that matter and agreed with him that for $500 they would arrange to alter the testimony of that witness-defendant as well as that of another witness in the case. The charge to the jury, which the court cited as being correct, implied that the indictment charged that it was the corrupt receipt of money in return for the promise to alter testimony which was the corrupt endeavor proscribed by the statute, but the defendants argued that no offense was charged because there was no contact with a witness. The court asserted that the indictment charged all essential elements of the crime, noting that there can be no reasonable doubt that an effort to alter testimony of witnesses for a corrupt purpose would be an endeavor to obstruct the due administration of justice. Recognizing that the statute used the word "endeavor" instead of the word "attempt," the court explained that techinicalities relating to "attempts" as a legal concept had been thereby avoided in the statute, which covered all efforts to accomplish the evil purpose which the section was designed to prevent. The defendants had also argued that the indictment did not charge knowledge of the pending prosecution of the accused whom they approached. But the court stated that the indictment alleged that one of the defendants was a material witness, as was another named individual whose testimony the defendants promised to alter in a case pending against the accused upon an indictment specified by number; and such allegations, the court reasoned, impliedly charged knowledge of a pending prosecution. The courts in the following cases held that while the defendants' soliciting of money in return for promising to

"fix" a case might have constituted another crime, it was not an endeavor to obstruct justice proscribed by 18 U.S.C.A. 1503, because no effort was made to carry out the promise, and because the defendants did not themselves have the power to affect the outcome of the case. Noting that 18 U.S.C.A. 1503 is a contempt statute, and that before a court may punish for contempt there must be present the element of obstruction of the court in the performance of its duty, the court in United States v Campbell (1972, DC Pa) 350 F Supp 213, granted a motion to dismiss an attorney-defendant who was charged with violating the statute by allegedly promising his client, a defendant in a criminal matter, that he could and would use money paid by her to him to obtain a favorable disposition of her case, ostensibly by unlawful means. The court rejected the government's argument that since the client was also a potential witness, any dealings with her to secure an unlawful disposition of her case would impair her right to a fair trial and thus would be an endeavor to obstruct justice. While attempts to persuade a party to abscond or to commit perjury have been held to be violative of the statute, said the court, the defendant was not charged with any act directed toward his client or any other person which would tend to obstruct the process of justice in any way. Furthermore, the court continued, the statute, being a criminal statute, must be strictly construed so as to be upheld against a charge of vagueness, and since it refers to such specified activities as threats or force, it would ordinarily seem to be limited to intimidating actions, such actions not having been alleged here. However, see also Astwood v United States (1924, CA8 Mo) 1 F2d 639, supra 10[d], where the defendant promised to "fix" a case, but in so doing induced the victim not to attend her trial, thus obstructing the due administration of justice. Where a defendant approached a man who had been convicted for income tax evasion, represented himself as being affiliated with certain federal officials, and told the man that for the sum of $1,000 the defendant could see to it that the man would get probation and not have to serve his sentence, and that he would use the $1,000 to make the necessary arrangements with the proper authorities, and where the defendant had no intention of actually attempting to influence any court or officials in this regard, intending only to "shake-down" the man, the court in Ethridge v United States (1958, CA9 Wash) 258 F2d 234, reversed the defendant's conviction for a violation of 1503, stating that in order to be guilty the defendant must have the intent to do some act which would tend to corruptly impede or influence the administration of justice, and that such intent was lacking here. The government's argument, that the plain and natural consequence of the defendant's solicitation, had the man been "taken in" by the solicitation, would have been the cessation of any further effort by the man to perfect an appeal from his conviction and that by this stoppage the administration of justice would have been impeded, was to no avail, since the court emphasized that such an argument would rest on an assumption of facts not shown in evidence. The court emphasized that the evidence showed that the man was suspicious of the defendant from the beginning and believed him to be a fake, placing no credence in the solicitation. The court considered it to be important that no evidence existed that the defendant ever intended, even if the solicited money was paid to him, to contact any person who at any time had any connection whatever with the prosecution of the man. 62 A.L.R. Fed. 303 Meaning of term "corruptly" for purposes of 18 U.S.C.A. 1503 making it a federal offense to corruptly endeavor to influence, intimidate, impede, or injure witness, juror, or officer in federal court, or to obstruct the due administration of justice [END OF SUPPLEMENT] 6[a] View that "corruptly" requires certain mental stateImproper, wicked, or evil motive as necessary [Cumulative Supplement] Frequently, the courts have imputed to the word "corruptly", as used in 18 U.S.C.A. 1503, a requirement for an improper, evil, or wicked purpose or motive. Although the exact language employed has varied somewhat, the requirement of such a wrongful purpose has been recognized in the following cases.[5] See United States v Zolli (1970, ED NY) 51 FRD 522, where the court denied a motion to dismiss an indictment charging a violation of 18 U.S.C.A. 1503, the court commenting that the word "corruptly" has been held to mean with "an improper motive." But for Second Circuit cases holding that any attempt to influence a juror, witness, or court official is "corrupt" within the meaning of 18 U.S.C.A. 1503, and that an evil motive is not necessary, see 5, supra.

Thus, in Martin v United States (1948, CA4 Va) 166 F2d 76, the court, construing the predecessor statute, former 18 U.S.C.A. 241, the predecessor to 18 U.S.C.A. 1503, noted that there was no merit in the defendant's argument that the instruction to the jury had failed correctly to charge the elements of knowledge and corrupt intent, since the instruction stated that "corruptly" means for an improper motive, and that the motive may be caused either by the desire to aid someone else, or by the hope of pecuniary reward or benefit. Noting that the defendant had attempted to bribe a juror, the court held that the requisite motive had been shown and affirmed the defendant's conviction for violation of the statute. As also recognizing, by implication, the rule that "corruptly" means for an improper purpose, see Holland v United States (1957, CA5 Fla) 245 F2d 341 (disapproved on other grounds Moore v United States (CA5 Tex) 254 F2d 213, 58-1 USTC 9371, cert den 357 US 926, 2 L Ed 1370, 78 S Ct 1371). In United States v Partin (1977, CA5 Ga) 552 F2d 621, cert den 434 US 903, 54 L Ed 2d 189, 98 S Ct 298, the court approved jury instructions which stated that the word "corruptly" in 18 U.S.C.A. 1503 means a defendant acted with improper motive or with bad or evil or wicked purpose, noting that this instruction, standing alone, was sufficient to inform a jury that 1503 did not encompass an attempt to influence a witness to testify truthfully. The court in United States v Haas (1978, CA5 Ala) 583 F2d 216, reh den (CA5 Ala) 588 F2d 829 and cert den 440 US 981, 60 L Ed 2d 240, 99 S Ct 1788, stated that the term "corruptly," as used in 18 U.S.C.A. 1503, means for an improper motive or an evil or wicked purpose. The challenged indictment alleged that defendant "corruptly did endeavor to influence and impede" a member of the federal grand jury considering the circumstances surrounding a death which was under investigation by the grand jury, by communicating information over the telephone about the matter being considered in an effort to influence and impede the juror in the discharge of her duty as a grand juror in violation of 1503. Stating that the indictment recited facts and used language which indicated knowledge and intent and contained sufficient factual data to withstand a motion to dismiss, the court reversed the District Court's dismissal of the indictment for failure to allege essential elements of the crime charged. The word "corrupt" in the statute means for an evil or wicked purpose, said the court in United States v Ryan (1971, CA9 Cal) 455 F2d 728, 20 ALR Fed 719, noting further that a specific intent to impede the administration of justice is an essential element of the offense. In United States v Haldeman (1976) 181 App DC 254, 559 F2d 31, cert den 431 US 933, 53 L Ed 2d 250, 97 S Ct 2641, reh den 433 US 916, 53 L Ed 2d 1103, 97 St 2992, an appeal from convictions for, inter alia, violations of 18 U.S.C.A. 1503, the court held that the term "corruptly", as used in the statute, simply meant having an evil or improper purpose or intent. Holding that the trial court's instructions to the jury had been adequate to assure that this requirement would be met, the court affirmed the defendant's convictions. Caution Although the cases in this section hold that the term "corruptly", within the meaning of 18 U.S.C.A. 1503, requires an evil or wicked purpose or motive, **some of those cases further hold that this requirement is met where the attempt to influence a person is intentional or willful. In this regard, see United States v Zolli (1970, ED NY) 51 FRD 522; United States v Hass (1978, CA5 Ala) 583 F2d 216, reh den (CA5 Ala) 588 F2d 829 and cert den 440 US 981, 60 L Ed 2d 240, 99 S Ct 1788; Cole v United States (1964, CA9 Cal) 329 F2d 437, cert den 377 US 954, 12 L Ed 2d 497, 84 S Ct 1630; United States v Haldeman (1976) 181 App DC 254, 559 F2d 31, cert den 431 US 933, 53 L Ed 2d 250, 97 S Ct 2641, reh den 433 US 916, 53 L Ed 2d 1103, 97 S Ct 2992, all infra 6[b]. Thus, the proposition presented in this section is not necessarily inconsistent with the principle presented by the cases in 6[b]. [END OF SUPPLEMENT] 6[b] View that "corruptly" requires certain mental stateWillfulness, knowledge, or intent as sufficient [Cumulative Supplement] A number of courts have held that the use of the term "corruptly" in 18 U.S.C.A. 1503 imposes a willfulness requirement on the proscriptions thereof. In the following cases, it was held that conduct, in order to be violative of the statute, must be performed knowingly and with requisite intent.Eleventh Circuit United States v Barfield (1993, CA11 Ala) 999 F2d 1520, 7 FLW Fed C 754 (adding that obstruction of justice must also be reasonably foreseeable result, and rejecting view that "corruptly" involves some element of personal gain for defendant)

United States v Weiss (1974, CA2 NY) 491 F2d 460, cert den 419 US 833, 42 L Ed 2d 59, 95 S Ct 58, where the defendants were charged with, inter alia, violating 18 U.S.C.A. 1503 by failing to produce documents which they had been commanded to produce by a subpoena issued by a grand jury investigating an alleged fraudulent scheme involving the defendants, the court holding that the term "corruptly," as used in the statute, required proof of more than the mere failure to produce documents, stating that some affirmative conduct on the part of the defendants was necessary, such as the destruction, concealment, or removal of the documents. However, finding that the evidence had been sufficient to justify a finding of such affirmative conduct, the court affirmed the defendants' convictions. See United States v Fayer (1975, CA2 NY) 523 F2d 661, supra 4, where the court stated that to establish a violation of 18 U.S.C.A. 1503, it would have to be found that protection of the defendant attorney's clients themselves was "corrupt", that is, that the defendant attorney was acting with knowledge of crimes committed by his clients as opposed to giving innocent counsel and that at the very least factual findings that the attorney had endeavored corruptly to influence a witness would have to be made. See United States v Zolli (1970, ED NY) 51 FRD 522, where the court apparently regarded conduct to be "corruptly" performed, within the meaning of 18 U.S.C.A. 1503, when it is intentionally and knowingly undertaken by a person charged with violating the statute. The defendant sought to have the indictment, charging violation of the statute, dismissed on the ground that the indictment did not charge that the defendants acted willfully or intentionally but merely that they "corruptly endeavored" to perform allegedly proscribed acts. Stating that the word "corruptly" had been held to mean with an improper motive, the court said that it fairly could be said that the use of the words "corruptly endeavored" did charge the defendants with committing an intentional and knowing act, and that such use in the indictment rendered it sufficient. In United States v Walasek (1975, CA3 Pa) 527 F2d 676, the court stated that one who intentionally withholds or destroys tangible evidence which he knows to be the target of a grand jury investigation can reasonably be said to be one who "corruptly. . . obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice. . . ." And see United States v Johnson (1981, CA4 NC) 657 F2d 604, where the court, in affirming the defendant's conviction for violations of 18 U.S.C.A. 1503, held that the trial court properly had charged the jury that specific intent to do the act must be proved beyond a reasonable doubt before there can be a conviction under the statute. The court noted with approval that the trial court also had charged that willfulness must be evidenced, and that the act is done willfully where it is done voluntarily and intentionally with the specific intent to do so something the law forbidsthat is to say, with bad purpose, either to disobey or disregard the law. However, the court did not expressly associate these requirements with the statutory term "corruptly." In United States v Haas (1978, CA5 Ala) 583 F2d 216, reh den (CA5 Ala) 588 F2d 829 and cert den 440 US 981, 60 L Ed 2d 240, 99 S Ct 1788, the court regarded intent to be an essential element of the "corrupt" conduct proscribed under 18 U.S.C.A. 1503, but held that the indictment adequately had alleged such intent and reversed the District Court's dismissal of the action on the basis of its contrary conclusion in that regard. The court noted that it could be fairly said that the use of the words "corruptly endeavored" charged the defendant with committing an intentional act, and such use in an indictment rendered it sufficient. The court continued by stating that although the term "intent" or its derivatives were not used, the language of the indictment adequately demonstrated intent. The court explained that the term "corruptly", as used in 18 U.S.C.A. 1503, was interchangeable with the term "willful", and recognized that the use of the term "willfully" in an indictment rendered the term "corruptly" unnecessary. The court held that at the indictment, modeled on the language of 1503, did not have to contain technical terms of knowledge and intent where it recited facts and used language which, taken as a whole, indicated knowledge and intent, further holding that the indictment in the case contained sufficient factual data to withstand a motion to dismiss, reversing the District Court's dismissal of the indictment. The court also stated that although the term "knowledge" or its derivatives were not used, the language of the indictment adequately demonstrated knowledge. The court explained that the plain and sensible meaning of the language used in the indictment fairly charged an exertion toward an unlawful purpose, noting that the recital that the defendant sought to influence and impede the juror by communicating information over the telephone about the matter being considered by the grand jury was a sufficient allegation of knowledge. In United States v Jackson (1979, CA8 Ark) 607 F2d 1219, cert den 444 US 1080, 62 L Ed 2d 763, 100 S Ct 1032, the court upheld as proper an instruction to the effect that in a case charging violation of 18 U.S.C.A. 1503 the word "corruptly" meant willfully, knowingly, and with specific intent to influence a juror to abrogate his or her legal duties as a petit juror, and affirmed the defendant's conviction on two counts of corruptly endeavoring to

influence and impede petit jurors in violation of 1503. The court rejected the defendant's contention that the instruction was inadequate because it failed to define "corruptly" to mean that a defendant acted with improper motive or with bad or evil or wicked purpose. And see Cole v United States (1964, CA9 Cal) 329 F2d 437, cert den 377 US 954, 12 L Ed 2d 497, 84 S Ct 1630, where the court, in affirming the defendant's conviction for violation of 18 U.S.C.A. 1503, noted that the trial court had instructed in the language of the statute and had emphasized that only corrupt methods were prohibited, and that the trial court thoroughly had instructed on the specific intent necessary to be found in a case such as the one before it. It was held that the word "corruptly," as used in 18 U.S.C.A. 1503, means that an act must be done with the purpose of obstructing justice in United States v Rasheed (1981, CA9 Cal) 663 F2d 843, 62 ALR Fed 284, cert den 454 US 1157, 71 L Ed 2d 315, 102 S Ct 1031, where the court affirmed the defendant's conviction for violation of the statute based upon a defendant's concealment and destruction of certain records which had been subpoenaed by a grand jury. Under such a definition of "corruptly", said the court, the destruction or concealment of documents can fall within the prohibition of the statute. It was pointed out that the trial court had instructed the jury that, to convict the defendant, the jury must find **that the grand jury was engaged in the due administration of justice, **that the defendant knew that the grand jury was conducting an investigation, **that the defendant knew what documents were covered by the subpoena, and **that the defendant concealed or endeavored to conceal them from the grand jury. There was no error in such instructions, taken as a whole, concluded the court. In affirming convictions for violations, inter alia, of 18 U.S.C.A. 1503, the court in United States v Haldeman (1976) 181 App DC 254, 559 F2d 31, cert den 431 US 933, 53 L Ed 2d 250, 97 S Ct 2641, reh den 433 US 916, 53 L Ed 2d 1103, 97 S Ct 2992, said that "corruptly" as used in the statute, simply meant having an evil or improper purpose or intent, and suggested that the crime can be proved only by a showing of specific intent. CUMULATIVE SUPPLEMENT Cases: Corrupt action, for purposes of 18 U.S.C.A. 1503, is action taken with intent to influence, obstruct, or impede proceeding in due administration of justice. West Virginia v Moore (1995, SD W Va) 897 F Supp 276, partial summary judgment gr, in part, partial summary judgment den, in part (SD W Va) 895 F Supp 864, subsequent app (SD W Va) 902 F Supp 715. In prosecution in which court reversed defendant's conviction under 1503 for obstructing justice by making threatening statements to two jurors who had served on jury in his brother's trial because statements had been made after jurors had completed service so there could have been no obstruction, court stated that one who "corruptly" seeks to obstruct justice is one who impedes due administration of justice with "the general intent of knowledge as well as the specific intent of purpose to obstruct." United States v Bashaw (1992, CA6 Tenn) 982 F2d 168. Word "corruptly," as used in 18 U.S.C.A. 1503, making it federal offense to corruptly obstruct administration of justice, means that act must be done with purpose of obstructing justice; 1503 is not unconstitutional for vagueness, United States v Jeter (1985, CA6 Ky) 775 F2d 670, cert den (US) 90 L Ed 2d 341, 106 S Ct 1796. Word "corruptly" in 1503, making it offense to corruptly endeavor to obstruct administration of justice, means that act must have been done with purpose of obstructing justice; concealing documents falls within that definition. United States v Laurins (1988, CA9 Cal) 857 F2d 529, 89-1 USTC 9250, 63 AFTR 2d 89-767. "Corruptly" as used in 18 U.S.C.A. 1503 means that act must be done with purpose of obstructing justice. United States v Rasheed (1981, CA9 Cal) 663 F2d 843, 62 ALR Fed 284, cert den 454 US 1157, 71 L Ed 2d 315, 102 S Ct 1031, later proceeding (ND Cal) 584 F Supp 868. To convict defendant under 18 U.S.C.A. 1503, government must prove that defendant knowingly and intentionally undertook action from which obstruction of justice was reasonably foreseeable result. United States v Saget (1993, CA11 Ga) 991 F2d 702, 37 Fed Rules Evid Serv 643, 7 FLW Fed C 346, cert den (US) 126 L Ed 2d 344, 114 S Ct 396. Meaning of "corruptly" within 1503, describes specific intent of crime and can vary in meaning with context of 1053 prosecution; generally, government must show that defendant knowingly and intentionally undertook action from which obstruction of justice was reasonably foreseeable result; although government is not required to prove that defendant had specific purpose of obstructing justice, it must establish that conduct was prompted, at least in part, by corrupt motive. United States v Thomas (1990, CA11 Ga) 916 F2d 647. Term "corruptly," as used in 18 U.S.C.A. 1503, making it federal offense to corruptly obstruct administration of

justice, is specific intent of crime, and term takes on different meanings in various contexts. United States v Brand (1985, CA11 Ala) 775 F2d 1460 III. Particular factors 7. Defendant's acceptance of payment In the following cases, it was held that, where a defendant sold his services and, in return for the payment of money to him, attempted to influence a person encompassed by 18 U.S.C.A. 1503, his conduct was "corrupt" so as to constitute a violation of that statute. By implication, the court in United States v Kahaner (1963, CA2 NY) 317 F2d 459, cert den 375 US 835, 11 L Ed 2d 65, 84 S Ct 62, reh den 375 US 982, 11 L Ed 2d 429, 84 S Ct 478 and cert den 375 US 836, 11 L Ed 2d 65, 84 S Ct 73 and cert den 375 US 836, 11 L Ed 2d 65, 84 S Ct 74, reh den 375 US 926, 11 L Ed 2d 169, 84 S Ct 263, recognized that actions which would otherwise not be wrongful under 1503 would become wrongful if done in return for money paid. In Anderson v United States (1954, CA6 Ky) 215 F2d 84, cert den 348 US 888, 99 L Ed 698, 75 S Ct 208, reh den 348 US 922, 99 L Ed 723, 75 S Ct 291, the court, affirming convictions of corruptly impeding the due administration of justice in violation of 18 U.S.C.A. 1503, noted that the trial judge was correct in stating his instructions to the jury that the charge was that the defendants had acted "corruptly", that is, in consideration of money paid to them, in promising that they would alter testimony of witnesses in a pending federal case. Holding that a conspiracy to induce a person to withhold information from officers charged with the administration of the law constituted impeding and obstructing the administration of justice and that, if it were done for the payment of a price, it was "corruptly" done, for purposes of 18 U.S.C.A. 1503, the court in Zamloch v United States (1952, CA9 Cal) 193 F2d 889, cert den 343 US 934, 96 L Ed 1342, 72 S Ct 770, affirmed the conviction of the defendant attorney for conspiracy to procure false testimony from a witness represented by the defendant in a federal proceeding. 8[a] BriberyAs not essential to violation The proposition that bribery need not be shown in order to prove that an act was done "corruptly" under 18 U.S.C.A. 1503 is supported by the following cases. In Bosselman v United States (1917, CA2 NY) 239 F 82, the defendant argued that while he did direct a witness to alter testimony before a grand jury, he did not do so "corruptly" because he did not do it by bribery. Construing the predecessor to 18 U.S.C.A. 1503 the court, noting that the word "corruptly" was capable of different meanings in different connections, said that as used in that statute, any endeavor to impede and obstruct the due administration of justice in such a proceeding was corrupt. To construe the act as requiring that such an effort should be accompanied by payment or promises of payment of money to the person sought to be influenced, continued the court, would unreasonably restrict the obvious purpose of the legislation. That portion of 18 U.S.C.A. 1503 proscribing any corrupt endeavor to influence a juror in the discharge of his duties does not require for its violation an offer or promise of a thing of value, said the court in United States v De Alesandro (1966, CA2 NY) 361 F2d 694, cert den 385 US 842, 17 L Ed 2d 74, 87 S Ct 94, in distinguishing between that provision of 1503 and the bribery statute (18 U.S.C.A. 201). The defendant had allegedly attempted corruptly to sway a juror by means of noncoercive persuasion with respect to the juror's decision in the pending case, the court holding the evidence to be sufficient to support a conviction under both 1503 and the bribery statute, pointing out that the prosecution had shown that the defendant met a juror serving in a conspiracy case in which an acquaintance of the defendant was on trial and attempted to influence the juror by speaking of the unfairness of the machinery of justice against accused persons and implying that a sum of money would be paid to the juror if at the right time he "remembered who his friends were." Such conduct satisfied the statutory requirements for both crimes, the court concluded, although those requirements differed from each other. Although the court did not discuss the meaning of the term "corruptly" under 1503, it clearly did not regard bribery to be an essential element of the conduct proscribed under that section. See United States v Cioffi (1974, CA2 NY) 493 F2d 1111, cert den 419 US 917, 42 L Ed 2d 155, 95 S Ct 195, supra 5, where it was said that there is no requirement that any sort of money or other consideration be received before an endeavor can be considered "corrupt" within the intendment of 18 U.S.C.A. 1503 It was stated in United States v Partin (1977, CA5 Ga) 552 F2d 621, cert den 434 US 903, 54 L Ed 2d 189, 98 S

Ct 298, that to construe 18 U.S.C.A. 1503 as requiring that an effort to impede or otherwise obstruct justice should be accompanied by payment or promises of payment of money by the accused to the person sought to be influenced would quite unreasonably restrict the obvious purpose of the legislation. 8[b] BriberyAs rendering conduct corrupt per se The following cases support the proposition that an attempt to subvert justice through influencing someone by bribery is "corrupt" conduct within the meaning of 18 U.S.C.A. 1503Second Circuit United States v Polakoff (1941, CA2 NY) 121 F2d 333, cert den 314 US 626, 86 L Ed 503, 62 S Ct 107 Third Circuit United States v Walasek (1975, CA3 Pa) 527 F2d 676 Fourth Circuit Martin v United States (1948, CA4 Va) 166 F2d 76 Seventh Circuit United States v Nicosia (1980, CA7 Ind) 638 F2d 970, cert den 452 US 961, 69 L Ed 2d 972, 101 S Ct 3110 Ninth Circuit **United States v Rasheed (1981, CA9 Cal) 663 F2d 843, 62 ALR Fed 284, cert den 454 US 1157, 71 L Ed 2d 315, 102 S Ct 1031 Dist Col Circuit United States v Haldeman (1976) 181 App DC 254, 559 F2d 31, cert den 431 US 933, 53 L Ed 2d 250, 97 S Ct 2641, reh den 433 US 916, 53 L Ed 2d 1103, 97 S Ct 2992 Noting that "corruptly", within the meaning of the predecessor to 18 U.S.C.A. 1503, meant with an improper motive, the court in Martin v United States (1948, CA4 Va) 166 F2d 76, found that the defendant's attempt to bribe a juror demonstrated such "corrupt" conduct. Upon meeting with the juror, the defendant had said that the juror could make some easy money if he would "hang that jury with another jury man." In view of such conduct, the court affirmed the defendant's conviction for violation of the statute, characterizing the defendant's conduct as a brazen and outrageous attempt to corrupt and bribe a juror in violation thereof. In United States v Nicosia (1980, CA7 Ind) 638 F2d 970, cert den 452 US 961, 69 L Ed 2d 972, 101 S Ct 3110, the court rejected the defendant's objection to an instruction on the issue of obstruction of the due administration of justice based on an assertion that some threat or intimidation is necessary to fall within the offense proscribed by the terms of 18 U.S.C.A. 1503, stating that such an interpretation ignored the "or" in the phrase "corruptly or by threats or force" and adding that a noncoercive but corrupt attempt to influence, as by bribery, was within the conduct proscribed by 1503. The court affirmed the defendant's conviction for obstruction of justice under 1503. Although suggesting that specific intent must be shown in order to demonstrate that conduct was performed "corruptly", within the meaning of 18 U.S.C.A. 1503, the court in United States v Haldeman (1976) 181 App DC 254, 559 F2d 31, cert den 431 US 933, 53 L Ed 2d 250, 97 S Ct 2641, reh den 433 US 916, 53 L Ed 2d 1103, 97 S Ct 2992, regarded the showing of bribery or attempted bribery on the part of a defendant to be sufficient to demonstrate such an intent. In affirming the defendants' convictions for violation of the statute, the court rejected the argument that it had been prejudicial for the trial court to expressly charge that the defendants' conduct must have been performed "with bad purpose either to disobey or to disregard the law." The instructions to the jury were adequate, the court concluded, in that they had pointed out that if the jurors found that a defendant had participated in the payment of money to certain persons for the purpose of keeping them quiet, the jury would be justified in finding a corrupt endeavor to obstruct due administration of justice.

18 U.S.C. 1503 obstruction of justice, 9th circuit, from 18_usc_1503_obstructing_interfering_w_judicial_proceedings_digest.doc

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U.S. v. Gonzalez-Mares, 752 F.2d 1485 C.A.9.Cal.,1985 Making false statements to magistrate at time of sentencing, and thereby seeking to mislead magistrate about probation status, constituted obstruction of justice. 18 U.S.C.A. 1503 .

18 U.S.C. Section generally westlaw.

1503

Influencing

or

injuring

officer

or

juror

65. Knowledge, elements of offenses The only intent involved in the crime of corruptly endeavoring to influence, obstruct and impede due administration of justice is the intent to do the forbidden act, and an accused must have had knowledge of the facts, though not necessarily the law, that made his act criminal. Caldwell v. U.S., C.A.D.C.1954, 218 F.2d 370, 95 U.S.App.D.C. 35, certiorari denied 75 S.Ct. 773, 349 U.S. 930, 99 L.Ed. 1260, rehearing denied 75 S.Ct. 880, 349 U.S. 969, 99 L.Ed. 1290. Obstructing Justice 6 51. Generally, elements of offenses 151U.S. v. Neal, 951 F.2d 630, 631+ (5th Cir.(La.) Jan 13, 1992) (NO. 91-4261) 152Smith v. U.S., 234 F.2d 385, 386+, 30 Lab.Cas. P 69,990, 69990+ (5th Cir.(Fla.) May 25, 1956) (NO. 15645, 15646)
I.IN GENERAL 1. Generally **18 USCS 1503 makes unlawful any act, committed corruptly, in endeavor to impede or obstruct due administration of justice, and proper criterion to apply to acts is their reasonable tendency to obstruct honest and fair administration of justice. Courtney v United States (1968, CA9 Cal) 390 F2d 521, cert den (1968) 393 US 857, 21 L Ed 2d 126, 89 S Ct 98, reh den (1968) 393 US 992, 21 L Ed 2d 457, 89 S Ct 440. 6. Relationship with other federal laws Failure to provide court with documents in compliance with summons and court order was violation of 18 USCS 1505, since it would have been violation of 18 USCS 1503, for statutes are similar in language, and cases interpreting 1503 are relevant to construction of 1505. United States v Laurins (1988, CA9 Cal) 857 F2d 529, 89-1 USTC P 9250, 26 Fed Rules Evid Serv 1346, 63 AFTR 2d 767, cert den (1989) 492 US 906, 109 S Ct 3215, 106 L Ed 2d 565. II.ELEMENTS OF CRIME A.In General 12. Generally Although not expressly included in text of 18 USCS 1503, materiality is requisite element of conviction under 1503. United States v Thomas (2010, CA9 Cal) 612 F3d 1107. 13. "Corrupt" or "corruptly" "Corruptly" as used in 18 USCS 1503 means that act must be done with purpose of obstructing justice. United States v Rasheed (1981, CA9 Cal) 663 F2d 843, 9 Fed Rules Evid Serv 360, 62 ALR Fed 284, cert den (1982) 454 US 1157, 71 L Ed 2d 315, 102 S Ct 1031.

Criminal defendant who gives false name to magistrate at trial acts corruptly in violation of 18 USCS 1503. United States v Plascencia-Orozco (1985, CA9 Cal) 768 F2d 1074. 14.--Payment of money; bribery If person, for payment of price, conspires to induce another to withhold information from officers charged with administration of law in order to impede and obstruct administration of justice, action is corruptly done within meaning of 18 USCS 1503. Zamloch v United States (1952, CA9 Cal) 193 F2d 889, cert den (1952) 343 US 934, 96 L Ed 1342, 72 S Ct 770. Defendant's conduct was "corrupt" within meaning of 18 USCS 1503 where he sold his services and in return for payment of money attempted to influence person encompassed by 1503. United States v Kahaner (1963, CA2 NY) 317 F2d 459, cert den (1963) 375 US 835, 11 L Ed 2d 65, 84 S Ct 62, reh den (1964) 375 US 982, 11 L Ed 2d 429, 84 S Ct 478 and cert den (1963) 375 US 836, 11 L Ed 2d 65, 84 S Ct 73 and cert den (1963) 375 US 836, 11 L Ed 2d 65, 84 S Ct 74, reh den (1963) 375 US 926, 11 L Ed 2d 169, 84 S Ct 263. Noncoercive but corrupt attempt to influence, e.g., by bribery, is within conduct proscribed by 18 USCS 1503. United States v Walasek (1975, CA3 Pa) 527 F2d 676. Non-coercive but corrupt attempt to influence as through bribery is within proscribed conduct of 18 USCS 1503. United States v Nicosia (1980, CA7 Ind) 638 F2d 970, cert den (1981) 452 US 961, 69 L Ed 2d 972, 101 S Ct 3110. 18. Endeavor Term "endeavor," as used in 18 USCS 1503, describes any effort or essay to do or accomplish evil purpose that section was enacted to prevent. Osborn v United States (1966) 385 US 323, 17 L Ed 2d 394, 87 S Ct 429, reh den (1967) 386 US 938, 17 L Ed 2d 813, 87 S Ct 951. In order for "endeavor" to come within ambit of 18 USCS 1503, defendant's acts must have been brought to bear upon some person who had legal authority to do, or not to do, some act which would or could affect final outcome of trial. Ethridge v United States (1958, CA9 Wash) 258 F2d 234. Fact that false declaration was withdrawn before anything was done by court with respect to motion for protective order did not preclude defendant's prosecution for endeavoring to obstruct justice under 18 USCS 1503. United States v Savoy (1998, DC Md) 38 F Supp 2d 406. 19.--Materiality of success That government informer with whom defendant-attorney arranged to bribe member of jury never in fact approached juror and had no intention of so doing did not render defendant's endeavor to bribe juror so impossible of accomplishment as to keep his conduct from being violation of 18 USCS 1503. Osborn v United States (1966) 385 US 323, 17 L Ed 2d 394, 87 S Ct 429, reh den (1967) 386 US 938, 17 L Ed 2d 813, 87 S Ct 951.

Activity of hiring intermediary to do act which would intimidate witness constitutes corrupt endeavor to obstruct justice, in violation of 18 USCS 1503, notwithstanding fact that intermediary never carried out plan. Knight v United States (1962, CA5 Ga) 310 F2d 305. 18 USCS 1503 calls only for "endeavor", similar to criminal solicitation statute and does not require proof that would support charge of attempt; it was no defense that putative intermediary declined to approach judge or that endeavor was unsuccessful. United States v Fasolino (1978, CA2 NY) 586 F2d 939. 21.--Civil actions 18 USCS 1503 is broad enough to cover attempted corruption of prospective witness in civil action in Federal District Court. Roberts v United States (1956, CA9 Cal) 239 F2d 467. 23. Pendency of proceedings Judicial proceeding was pending at time defendant made false statements to probation officer where, even assuming that no complaint had actually been filed, defendant had been in custody and had signed consent form agreeing to waive her right to trial and sentencing before district court judge before interview occurred. United States v Gonzalez-Mares (1985, CA9 Cal) 752 F2d 1485, cert den (1985) 473 US 913, 87 L Ed 2d 663, 105 S Ct 3540. 25. Influence, obstruct, or impede due administration of justice 18 USCS 1503 proscribes only that which produces or which is capable of producing effect that prevents justice from being duly administered. Cole v United States (1964, CA9 Cal) 329 F2d 437, cert den (1964) 377 US 954, 12 L Ed 2d 497, 84 S Ct 1630. Solicitation of intermediary to importune judge to impose lenient sentence is endeavor made "to influence" judge or due administration of justice. United States v Fasolino (1978, CA2 NY) 586 F2d 939. 18 USCS 1503 applies to cases in which witness asks defendant to aid him in attempt to avoid testifying as well as to cases in which defendant improperly induces witness not to testify, and it does not require showing that defendants actually impeded justice since statutory focus is on endeavor. United States v Washington Water Power Co. (1986, CA9 Wash) 793 F2d 1079. Given evidence presented by government that defendant's testimony was false, and jury's apparent acceptance of that evidence, defendant's perjurious testimony had effect of closing off entirely avenue of inquiry being pursued; consequently, defendant's testimony was corruptly attempting to influence administration of justice in violation of 18 USCS 1503. United States v Brown (2006, CA5 Tex) 459 F3d 509, reh den, reh, en banc, den (Oct 18, 2006) and cert den (2007, US) 127 S Ct 2249, 167 L Ed 2d 1089. 26. Injure

Forcing witness out of business is injury to witness in his person or property for 18 USCS 1503 purposes. United States v Campanale (1975, CA9 Cal) 518 F2d 352, 77 CCH LC P 10948, cert den (1976) 423 US 1050, 96 S Ct 777, 46 L Ed 2d 638, 77 CCH LC P 11163, 78 CCH LC P 11180, reh den (1976) 424 US 950, 96 S Ct 1422, 47 L Ed 2d 356. 27. Intent Specific intent to have violated predecessor to 18 USCS 1503 must exist to justify conviction, but doctrine allowing transfer of intent in regard to crimes flowing from general malevolence has no applicability to this offense; if unintended wrong was not nature and probable consequence of intended wrongful act, artificial character cannot be ascribed to it as basis of guilty intent. Pettibone v United States (1893) 148 US 197, 37 L Ed 419, 13 S Ct 542. Defendant who approached man convicted for income tax evasion and told him that for certain sum of money defendant would see to it that man got probation did not thereby violate 18 USCS 1503 where defendant had no intention of actually attempting to influence any court officials in this regard, intending only to "shakedown" man. Ethridge v United States (1958, CA9 Wash) 258 F2d 234. Defendant's knowing and willful alteration of documents which IRS had arranged to have subpoenaed by grand jury did not violate 18 USCS 1503 where prosecution had failed to show that defendant had specific intent to obstruct justice. United States v Ryan (1971, CA9 Cal) 455 F2d 728, 20 ALR Fed 719. Finding of specific intent to interfere with witness in pending judicial proceeding is essential element of offense of obstructing justice, and this specific intent may be established by circumstantial evidence. United States v White (1977, CA10 Okla) 557 F2d 233. 28. Knowledge Knowledge or notice that justice was being administered by court was necessary on part of defendant in order to sufficiently charge him with obstructing administration of justice in such court. Pettibone v United States (1893) 148 US 197, 37 L Ed 419, 13 S Ct 542. B.Persons Who May Be Influenced or Injured 30. Court officers Prosecuting attorney preparing recommendation for judge of federal courts with regard to sentence to be imposed in particular case is "officer" acting in discharge of his duty within meaning of 135 of Criminal Code, predecessor of 18 USCS 1503, since influencing attorney could influence judge himself. United States v Polakoff (1940, CA2 NY) 112 F2d 888, 134 ALR 607, cert den (1940) 311 US 653, 85 L Ed 418, 61 S Ct 41.

United States district court judge is officer in or of any court of United States within meaning of that language as used in 18 USCS 1503. United States v Margoles (1961, CA7 Wis) 294 F2d 371, cert den (1961) 368 US 930, 7 L Ed 2d 193, 82 S Ct 367. III.PARTICULAR ACTS AS CONSTITUTING OFFENSE A.Influencing, Intimidating, Impeding or Injuring Particular Persons

1.Court Officers 36. Improperly using influence to reduce sentence Where defendant was attempting to influence assistant district attorney in charge of case to recommend reduced sentence therein and to bring it before certain judge who would reduce it still more following his custom with respect to prosecutors' recommendations and giving supposedly disinterested reasons for his attempts while actually he was acting in expectation of financial gain, such attempts were corrupt because they were fraud. United States v Polakoff (1941, CA2 NY) 121 F2d 333, cert den (1941) 314 US 626, 86 L Ed 503, 62 S Ct 107. Defendants conspired to obstruct due administration of justice in violation of 18 USCS 1503 where, for money paid to them to use their influence in bankruptcy matter, defendant acting United States attorney exercised discreet influence on office of United States attorney, and where defendant state court justice consulted with judge sitting in bankruptcy case, endeavoring to influence him regarding severity of sentence. United States v Kahaner (1963, CA2 NY) 317 F2d 459, cert den (1963) 375 US 835, 11 L Ed 2d 65, 84 S Ct 62, reh den (1964) 375 US 982, 11 L Ed 2d 429, 84 S Ct 478 and cert den (1963) 375 US 836, 11 L Ed 2d 65, 84 S Ct 73 and cert den (1963) 375 US 836, 11 L Ed 2d 65, 84 S Ct 74, reh den (1963) 375 US 926, 11 L Ed 2d 169, 84 S Ct 263. Criminal defense attorney's alleged conduct in knowingly making false representations to prosecutor as part of scheme to induce prosecutor to file postjudgment motion under 18 USCS 1503 to reduce sentence of defendant convicted of narcotics trafficking and murder would constitute obstruction of justice, even though convicted defendant had been sentenced, where there still were "pending proceedings" in which convicted defendant could file postjudgment motion to reduce his sentence. United States v Baum (1999, SD NY) 32 F Supp 2d 642. 38. Miscellaneous Defendant who endeavored to bribe federal judge for corrupt purpose endeavored to obstruct justice in violation of 18 USCS 1503. United States v Margoles (1961, CA7 Wis) 294 F2d 371, cert den (1961) 368 US 930, 7 L Ed 2d 193, 82 S Ct 367. 4.Witnesses 44. Inducing witness to give false, evasive, or incomplete testimony Attorney violates 18 USCS 1503 by having his client-witness knowingly testify falsely and contrary to oath on material subjects. United States v Root (1966, CA9 Cal) 366 F2d 377, cert den (1967) 386 US 912, 17 L Ed 2d 784, 87 S Ct 861. 55. Falsifying or altering documents Defendant's presentment of what he knew to be false affidavit to assistant United States attorney regarding pending judicial matter violated due administration clause of 18 USCS 1503. Smith v United States (1956, CA5 Fla) 234 F2d 385, 30 CCH LC P 69990. Fraudulent judgment given by lawyer to his client constitutes endeavor to impede due administration of justice even though such obstruction occurred after resolution of lawsuit. United States v London (1983, CA11 Ga) 714 F2d 1558, 71 ALR Fed 914.

56. False testimony Materiality element of 18 USCS 1503(a) was satisfied because jury found that defendant obstructed justice by making materially false statements before grand jury. United States v Thomas (2010, CA9 Cal) 612 F3d 1107. Government sufficiently stated obstruction of justice charge where charge was based on defendant's alleged false testimony, because government must also prove additional element that false testimony served to thwart court in performance of its duties. United States v Muniz (1988, ED Va) 690 F Supp 482. 59. Miscellaneous Defendant cannot commit offense under 18 USCS 1503 for claiming constitutional right against self-incrimination. Cole v United States (1964, CA9 Cal) 329 F2d 437, cert den (1964) 377 US 954, 12 L Ed 2d 497, 84 S Ct 1630. False records which defendant was subpoenaed to produce, and subsequently directed to produce within 72 hours, were sufficient to support conviction for obstructing justice, even though he never presented them to grand jury, since conduct is punishable where defendant acts with intent to obstruct justice and in manner likely to do so. United States v Ladum (1998, CA9 Or) 141 F3d 1328, 98 CDOS 2851, 98 Daily Journal DAR 3937, 98-1 USTC P 50345, 81 AFTR 2d 1576, cert den (1998) 525 US 898, 119 S Ct 225, 142 L Ed 2d 185 and cert den (1998) 525 US 1021, 119 S Ct 549, 142 L Ed 2d 457. IV.INCLUDED AND RELATED CRIMES 60. Attempt Use of word "endeavor" in predecessor to 18 USCS 1503 got rid of technicalities which might be urged as besetting word "attempt," and it described any effort or essay to accomplish evil purpose section was enacted to prevent. United States v Russell (1921) 255 US 138, 65 L Ed 553, 41 S Ct 260. 18 USCS 1503 punishes unsuccessful attempt to suborn perjury. Falk v United States (1966, CA9 Cal) 370 F2d 472, cert den (1967) 387 US 926, 18 L Ed 2d 982, 87 S Ct 2044 and (superseded by statute as stated in United States v Simpkins (1986, NMCMR) 22 MJ 924). 61. Conspiracy Conspiracy to obstruct due administration of justice through bribery of federal officials by agreement to pay sum of $ 50,000 for dismissal of indictments was completed crime although money was never paid over. Craig v United States (1936, CA9 Cal) 81 F2d 816, reh den (1936, CA9) 83 F2d 450 and cert dismd (1936) 298 US 637, 80 L Ed 1371, 56 S Ct 670 and cert den (1936) 298 US 690, 80 L Ed 1408, 56 S Ct 959 and reh den (1936) 299 US 620, 81 L Ed 457, 57 S Ct 6. It is not only court officials who are capable of corruptly administering justice, therefore persons can be guilty of conspiracy to procure corrupt administration of justice even though no court official is corrupted. United States v Johnson (1947, CA3 Pa) 165 F2d 42, cert den (1948) 332 US 852, 92 L Ed 421, 68 S Ct 355, reh den (1948) 333 US 834, 92 L Ed 1118, 68 S Ct 457. Circumstantial evidence was sufficient to prove that defendant conspired to conceal assault and obstruct investigation into resulting death, in violation of 18 USCS

371 and 1503, where he gave investigators contradictory accounts of events, failed to provide information to hospital personnel, and testified untruthfully before grand jury; "perjury" before federal grand jury constituted single overt act necessary to prove conspiracy to obstruct justice, despite inconsistency of defendant's acquittal of perjury, since there was sufficient evidence of perjury to support jury's finding of conspiratorial act. United States v Messerlian (1987, CA3 NJ) 832 F2d 778, cert den (1988) 485 US 988, 99 L Ed 2d 501, 108 S Ct 1291. 65. Impossibility of success Defendant corruptly endeavored to impede due administration of justice, in violation of 18 USCS 1503, by instructing intermediary to offer bribe to prospective juror in federal criminal case, despite fact that intermediary never in fact approached juror and never intended to do so, doctrine of "impossibility" not being applicable since statute punishes any corrupt "endeavor" to obstruct justice in judicial proceedings. Osborn v United States (1966) 385 US 323, 17 L Ed 2d 394, 87 S Ct 429, reh den (1967) 386 US 938, 17 L Ed 2d 813, 87 S Ct 951. 2.Necessity and Sufficiency of Particular Allegations 76. Conspiracy Conviction for conspiracy to obstruct due administration of justice in violation of predecessor to 18 USCS 1503 was improper where there were no **averments in indictment that it was purpose of conspiracy to obstruct course of justice in federal court or that defendants were notified of pendency of any proceedings in federal court. Pettibone v United States (1893) 148 US 197, 37 L Ed 419, 13 S Ct 542. 77. Corrupt act Indictment properly alleges obstruction of justice under 18 USCS 1503, where indictment alleges judge attempted to thwart grand jury bribery investigation by soliciting attorney to assist him in concealing bribery scheme. United States v McDonnell (1988, ND Ill) 696 F Supp 356. 78. Details of conduct Such details as conduct by which defendant corruptly endeavored to obstruct justice need not be alleged as long as indictment furnishes sufficient information as to time, place and essential elements of crime to enable defendant to prepare for trial and avoid claim of double jeopardy. United States v Weiss (1974, CA2 NY) 491 F2d 460, cert den (1974) 419 US 833, 42 L Ed 2d 59, 95 S Ct 58. Indictment charging only that defendant unlawfully, knowingly and willfully, did corrupt, obstruct, impede and attempt to obstruct and impede administration of justice, without alleging any facts to alert accused to conduct specifically in issue is insufficient to charge offense under 18 USCS 1503. United States v Goldberg (1984, SD NY) 587 F Supp 302, vacated on other grounds, remanded (1985, CA2 NY) 756 F2d 949, cert den (1985) 472 US 1009, 86 L Ed 2d 721, 105 S Ct 2706.

Elements from U.S. v. Rasheed 1. Federal judicial proceeding existed. 2. Perpetrator aware (knew, knowingly) of the federal judicial Proceeding. 3. Perpetrator intentionally or willfully as opposed to accidently obstructed the judicial proceeding (justice). 18 U.S.C. Section 371, Conspiracy to obstruct justice under 18 U.S.C.

1503 elements. U.S. v. Schwarz 283 F.3d 76, 106, In order to convict for conspiracy Intent need to be shown to justice plead 18 U.S.C. 1503 obstruction of

Cole v. U.S., 329 F.2d 437 (9th Cir.(Cal.),Mar 16, 1964) At p. 442, specific intent, knowingly and willfully, is stated by the Cole Court, to be shown to plead as an element of 18 U.S.C. 1503 obstruction of justice. Defendant was convicted of obstructing the due administration of justice, and from the judgment of the United States District Court for the Southern District of California, Central Division, Harry C. Westover, J., the defendant appealed. The Court of Appeals, Barnes, Circuit Judge, held, inter alia, that whether obstruction of due administration of justice had taken place by defendant's advice to witness before a grand jury investigation in connection with testimony he might give to plead Fifth Amendment, and whether defendant had, corruptly, and by influence and threats and consideration paid, caused it were for jury. Affirmed. [1] Obstructing Justice 282 4

282 Obstructing Justice 282k4 k. Preventing Witness from Attending or Testifying. Most Cited Cases Under statute prohibiting the endeavor to influence any witness corrputly or by threats or force, or by any threatening letter, only that is proscribed which produces or which is capable of producing an effect that prevents justice from being duly administered. 18 U.S.C.A. 1503. [2] Obstructing Justice 282 6

282 Obstructing Justice 282k6 k. Obstructing or Interfering with Judicial Proceedings. Most Cited Cases Witnesses 410 297(1)

410 Witnesses 410III Examination 410III(D) Privilege of Witness 410k297 Self-Incrimination 410k297(1) k. In General. Most Cited Cases The constitutional privilege against self-incrimination is designed to protect innocent as well as the guilty, and is an inalienable right that every witness has and a witness who claims it exercises only his constitutional right, and when he does so, he does not obstruct the due administration of justice or do anything contrary to his duties as a witness. 18 U.S.C.A. 1503. [3] Obstructing Justice 282 282 Obstructing Justice 4

282k4 k. Preventing Witness from Attending or Testifying. Most Cited Cases Defendant was not **improperly convicted of corruptly endeavoring to influence, intimidate, and impede a witness before grand jury investigation in connection with certain testimony he might give by influencing witness to plead the Fifth Amendment on ground that witness had right to plead privilege against self-incrimination and that it could not be a crime for one to persuade witness to do that which was lawful. 18 U.S.C.A. 1503; U.S.C.A.Const. Amend. 5. [4] Obstructing Justice 282 4

282 Obstructing Justice 282k4 k. Preventing Witness from Attending or Testifying. Most Cited Cases Under statute prohibiting the endeavor to influence any witness corruptly or by threats or force, or by any threatening letter, **the intent or motive of party charged as an inducer is of importance. 18 U.S.C.A. 1503. [5] Obstructing Justice 282 4

282 Obstructing Justice 282k4 k. Preventing Witness from Attending or Testifying. Most Cited Cases Witnesses 410 297(1)

410 Witnesses 410III Examination 410III(D) Privilege of Witness 410k297 Self-Incrimination 410k297(1) k. In General. Most Cited Cases The constitutional privilege against self-incrimination is an integral part of due administration of justice, designed to do and further justice, and to exercise of which there is an absolute right in every witness, and a witness violates no duty to claim it, but one who bribes, coerces, forces or threatens a witness to claim it, or advises with **corrupt motive the witness to take it, can and does himself obstruct or influence the due administration of justice. 18 U.S.C.A. 1503; U.S.C.A.Const. Amend. 5. [6] Obstructing Justice 282 17.2

282 Obstructing Justice 282k17 Trial 282k17.2 k. Questions for Jury. Most Cited Cases (Formerly 282k171/2, 282k17) Whether obstruction of due administration of justice had taken place by defendant's advice to witness before a grand jury investigation in connection with testimony he might give to plead Fifth Amendment, and whether defendant had, corruptly, and by influence and threats and consideration paid, caused it were for jury. 18 U.S.C.A. 1503. *438 Before BARNES, MERRILL and KOELSCH, Circuit Judges. BARNES, Circuit Judge: An indictment in two counts was found by a grand jury charging appellant Marvin R. Cole with obstructing the due administration of justice, made a crime by 18 U.S.C. 1503.

That section reads as follows: Influencing or injuring officer, juror or witness generally. Whoever corruptly, or by threats or force, or by any threatening letter or communication, endeavors to influence, intimidate, or impede any witness, in any court of the United States or before any United States Commissioner or other committing magistrate, or any grand or petit juror, or officer in or of any court of the United States, or officer who may be serving at any examination or other proceeding before any United States commissioner or other committing magistrate, in the discharge of his duty, or injures any party or witness in his person or property on account of his attending or having attended such court or examination before such officer, commissioner, or other committing magistrate, or on account of his testifying or having testified to any matter pending therein, or injures any such grand or petit juror in his person or property on account of any verdict or indictment assented to by him, or on account of his being or having been such juror, or injures any such officer, commissioner, or other committing magistrate in his person or property on account of the performance of his official duties, or corruptly or by threats or force, or by any threatening letter or communication, influences, obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice, shall be fined not more than $5,000 or imprisoned not more than five years, or both. Count I charges appellant with corruptly endeavoring to influence, intimidate and impede one Joel R. Benton (who was a witness before a certain grand jury investigation) in connection with certain testimony he might give, and Count II charges appellant with corruptly and by threats' endeavoring to influence, intimidate and impede the same Benton (a witness before a second grand jury) in connection with certain testimony he might give. Cole was found guilty by a jury on both counts. Appellant was fined $1,000 on each count concurrently, or a total fine of $1,000. To understand appellant's theory, we quote from the Introductory Statement appearing in appellant's brief: Joel R. Benton was a friend and former employee of Cole. Benton had been orally requested to appear before a Federal grand jury. He was, however, deeply concerned and frightened over the prospect of such an appearance because he had executed and filed with a committee of the United States Senate, the so-called McClellan Committee, a false statement and affidavit. He came to Cole for advice, telling him about this perjury and of his intention simply to stand on the false statement, thus in effect repeating the perjury, before the grand jury. Cole advised Benton against this obviously improper course, and offered as the solution of Benton's problem the suggestion that he claim his constitutional privilege against self incrimination. Benton did. Later he turned informer; and as a consequence of Cole's advice to Benton to do what the latter admittedly had a perfect and lawful right to do, Mr. Cole finds himself convicted on two counts of violating section 1503. (note) It is from that judgment of conviction that he appeals. The basic and determinative question raised by this appeal is **whether advice to claim the constitutional privilege, which advice does *439 not have and was not designed to have any consequence in the way of influencing the witness to violate any of his duties as a witness or in the way of bringing about an effect upon the administration of justice that is undue, corrupt or unlawful, can be as a matter of law the crime defined by section 1503. It is the appellant's contention that there is not and cannot be any obstruction of justice within the meaning of that section when there is no endeavor or effort to get the witness to do anything wrong in relation to his duties as a witness. Every witness has the constitutional right to refuse to testify on grounds of possible self-incrimination; accordingly, he violates no duty as a witness when he invokes that right; and one who tries to influence or induce or persuade him to invoke it, therefore, does not endeavor to get the witness to do anything wrong. The errors claimed are two: One, that the court erred in denying appellant's motion for an acquittal, and two, the evidence is insufficient to support the verdict of guilty. Jurisdiction existed below, and appeal lies here. 28 U.S.C. 1291 and 1294(1).

[1] I- FACTS The facts are many and complicated. Appellant's recital covers twenty-three pages of its brief; appellee's covers fifteen. The latter recital, slightly modified and corrected to be less argumentative, is attached hereto as Appendix A, and we adopt it as part of this opinion. We note also it was stipulated that during all the times herein mentioned Cole knew he was under investigation by a grand jury for possible perjury and the obstruction of the due administration of justice. II- ARGUMENT Appellant first urges that 1503 has implicit in it a limitation of its literal language; that it cannot proscribe criminal acts consistent with the due administration of justice, such as influencing a witness to tell the truth. We agree. (That is not this case. Cole here never urged or advised Benton to tell the truth.) We likewise agree with appellant that the limitation on the literal language of the statute must be that only that is proscribed which produces or which is capable of producing an effect that prevents justice from being duly administered. (Emphasis, except as to the word duly, is this court's. Appellant's Opening Brief, p. 28.) [2] Appellant then argues to us (and again we agree): The constitutional privilege against self-incrimination is designed to protect the innocent as well as the guilty. It is an inalienable right that every witness has. It is, therefore, an important and integral part of the due administration of justice. A witness who claims it exercises only his constitutional right. When he does so, he does not, therefore, obstruct the due administration of justice or do anything contrary to his duties as a witness. (Emphasis added.) [3] Again, we concur emphatically. But it is from here on that this court parts company with appellant's argument. Appellant continues: That being so, it cannot be a crime for one to advise or persuade him to do that which is lawful and his absolute right, and which, because of that fact, is not a corrupt or otherwise wrongful obstruction of the due administration of justice. **With that conclusion, we cannot agree. It neither necessarily nor logically follows. What the statute attempts to prohibit is the endeavor * * * to influence * * * any witness' corruptly or by threats or force or by any threatening letter. **Many acts which are not in themselves unlawful, and which do not make the actor a criminal, may make another a criminal who sees that the innocent act is *440 accomplished for a corrupt purpose, or by threat or by force. If in a kidnapping for ransom case X hires or by force and/or threat requires a messenger boy to pick up a box containing the ransom money at a certain spot and deliver it to the kidnapper, can the kidnapper escape liability for his corrupt act, by claiming it was lawful because the person he influenced was acting within his legal rights, and was himself innocent? Should either a despotic leader of a financially strong labor union, or an extremely successful manipulator in big business operations on Wall Street, be permitted to effect the withholding of testimony in a court of law or before a grand jury which might aid in convicting him of some violation of law, by permitting him to pay any sum, or intimidate in any way, one to one hundred witnesses who might testify against him, and who themselves are not being investigated, because they have the right, individually, to invoke the Fifth Amendment when called upon to testify? Such a thesis is not morally, and in our opinion, not legally sound. According to appellant's theory, no matter how much money one pays a witness not to testify before a grand jury- whether $1,000 or $100,000; nor how many witnesses are paid such sums, and no matter what threats or force

are used, and no matter how corrupt the purpose which the payer of such money may have for urging the witness to claim his (the witness') Fifth Amendment right- is of no consequence. It exercise (that of the constitutional privilege) is lawful and effective regardless of the inducing cause. (Emphasis added. Opening Brief, p. 29.) That the inducing cause is immaterial insofar as the witness is concerned, we affirm. **That this lawfulness wipes out the criminality of the inducer, acting with corrupt motive, we cannot agree. It is the witness' privilege which our inspired Constitution protects and which any person in our courts may invoke, whether he be upright citizen or foul criminal; not someone else's privilege to capture by force or threat or bribe; and thus be enabled to prostitute one of the great cornerstones of our freedom under law. To hold otherwise, would obstruct the due administration of justice, and we refuse to so hold. The sacred right to guard against self-incrimination is not negotiable, any more than is virtue. It is an absolute personal right, and as appellant urges, truly inalienable, insofar as any attempt may be made to transfer it for or to the benefit of someone else. Nor need we become involved here with advice to claim the privilege, whether given by attorney to client, doctor to patient, priest to penitent,- one spouse to another, or even the honest advice of one friend to another. The advice by the attorney relates to and is an exercise of the client's right; not the attorney's- the advice by the priest relates to and is an exercise of the penitent's right, not the priest's. Even the husband and wife's confidential privilege rests upon the theory the two are one in the eyes of the law. Whether, if such advice were corruptly given by attorney, priest or doctor, the policy of the law would uphold the privilege despite the resultant obstruction of the due administration of justice, we need not here decide. Suffice it to say, neither the attorney's nor the doctor's privilege, nor the privilege of one spouse, is absolute in all cases. If the claim of the privilege, urges appellant, is not a wrongful obstruction of the due administration of justice, the giving of advice to claim it obviously cannot be. **If by this, reference is had to honest, uncorrupt, disinterested advice, we agree. If it is not, we do not agree, for reasons appearing above. Appellant urges his position is supported by various cases, particularly United States v. Herron, N.D.Cal., 1928, 28 F.2d 122, 123, as well as Rosner v. United States, 2 Cir. 1926, 10 F.2d 675, 676; Harrington v. United States, 8 Cir. 1920, 267 F. 97; Taran v. United States, 8 Cir. 1959, 266 F.2d 561, 567. Only the first of these seems in point. *441 We do not read Harrington v. United States, supra, as contrary to our position here. There the court said, and properly so: It is not an unlawful attempt to influence or impede a witness, or the due administration of justice, for one to seek to obtain from a witness a statement of the facts as he believes them to be, without the exercise of undue influence, even though such a statement may conflict with prior testimony given by the one making the statement. Such an effort is not regarded with favor, because of the temptation to influence the witness unduly; but the mere request for a statement believed to be true does not offend against the statute * * * because it is not corrupt conduct. (Emphasis added. Id. 267 F. at 101.) Again, the court said: But there was no evidence tending to show that Scattergood was consciously attempting to obtain a statement of a falsehood. ( Id. 267 F. at 101.) [4] Thus the intent or motive of the party charged as an inducer is of importance. FN1 Taran v. United States, supra, involved the false statements as to arrests and convictions made by the defendant to the Minnesota Board of Pardons which induced that Board to grant him a pardon. He was convicted for his false statements, but his conviction was reversed, upon the ground that the jury could not make a collateral exploration into why the defendant was pardoned; that the deportation statute accords a pardon legal finality and conclusiveness. That case is inapplicable to the facts here present.

In Rosner v. United States, supra, the defendant was convicted, having been charged with advising another person to disregard a letter from a United States Attorney requesting that other person to plead to an information against him. Was such advice an attempt to obstruct the due administration of justice? It was not, said the Third Circuit, for: Since a disregard by (the defendant) of an oral request by the United States attorney would not have been obstructing the administration of justice, because justice is not administered that way, so advising Miller to disregard substantially the same request is not a violation of the statute. The letter was not process, nor is it specifically authorized by any statute of the United States. ( Id. 10 F.2d at 676.) That may well be sound law, but has no applicability here. In United States v. Herron, supra, appellant presents a case whose facts and holding seem directly in point. There, in the last two paragraphs of the opinion, Judge Louderback stated: The witness himself, therefore, is protected in his claim of privilege by being allowed the privilege, irrespective of his motive for claiming the same. With this we agree. He then stated: In this case the defendant Herron (the attorney) is charged with influencing, by advising, the witness Rasmussen to claim a lawful privilege, and I do not believe it is the law or the policy of the law to make criminal, no matter what the motive might have been, the advising of a witness to do that which was lawful and would in fact have protected the witness from disclosing self-incriminating matter. ( Id. 28 F.2d at 123. Emphasis by the court.) Except for proof of the fact that the plea of privilege would in fact have protected the witness from selfincriminating matter,FN2 the facts in Herron are similar to those here existing- for Herron *442 was charged with a conspiracy to corruptly endeavor to influence and impede the due administration of justice, because Rasmussen's claim was alleged to have been made, apparently, but not really, for his personal protection, and * * * (was) for the purpose of corruptly giving shelter, behind the said privilege, to the said J. H. Madden and the said Hans Strittmatter, under the pretext of shielding the said witness Rasmussen. ( Id. 28 F.2d at 122.) **This case, of course, is not binding on this court, and we refuse to follow it for reasons heretofore stated. We need not discuss the additional cases plaintiff cites that hold that a witness' motives for exercising his privilege are immaterial. We agree with them, on their facts. United States v. Courtney, 2 Cir. 1956, 236 F.2d 921. But see Judge Lumbard's dissent in United States v. Courtney, as well as his concurrence in United States v. Gordon, 2 Cir. 1956, 236 F.2d 916 (which is to be read together with the first Courtney case mentioned), and his reference to Judge Learned Hand's language in United States v. St. Pierre, 2 Cir. 1942, 132 F.2d 837, 840, 147 A.L.R. 240, that while the privilege of refusing to answer expresses recognition of the high value our democracy puts on the individual's right of privacy: The result of using this, like any other privilege, is to deprive people of evidence which would be otherwise available; at best a disastrous necessity * * *. ( Id. 132 F.2d at 840.) Implicit in such reasoning is the requirement that there are needs on both sides of the privilege- one requiring its extension and one requiring its contraction. We here, in a case of apparent first impression, do not think it wise to render a valuable, proper and decent privilege a carte blanche license to be utilized to influence, obstruct or impede- not justice- but the due administration of justice.

After oral argument, appellant's counsel submitted a letter (to which we permitted the government to reply) urging upon us (1) that the jury * * * could not properly find that Cole's advice was given (to Benton) for some ulterior or self-serving motive, because no such question was submitted to the jury. (2) The record does not show that Cole had any reason to want to protect himself, or that Benton knew anything that Cole did not want him to testify to. (1) Admittedly, the prosecution's theories (a) of Cole's threats, (b) his advice to Benton to leave town, and (c) that the obstruction of due administration of justice took place by advice which was unlawful if Cole went over the imaginary line between **asking Benton to take the Fifth, and **insisting or **imploring or **demanding that he do so,' were all submitted to the jury. Nor can we agree that the jury was not instructed on Cole's motive. A reading of 18 U.S.C. 1503 limits the acts proscribed to those done with a corrupt motive. The court instructed in the language of the statute, and emphasized that only corrupt methods were prohibited; that corrupt influence was the only influence proscribed;- that only any act, committed corruptly, was to be considered. (Tr. pp. 920-922.) **The court thoroughly instructed on the specific intent necessary to be found in a case such as this. (Tr. p. 918.) (2) Nor is the record bare of evidence of any reason why Cole would want Benton not to testify. **An inference could be drawn that Cole remembered both the statements that he had made to government agents and to the grand jury under oath, and the contradictory statements he had made to Benton as testified to by Benton at trial. The Cole statement to Benton that Stacher was the *443 number two man in the syndicate, and he, Cole, was Stacher's boy, is at variance with Cole's statement that his relationship with Stacher was purely a social one engendered by a friendship between their wives by reason of a P.T.A. meeting; and that there was no business relationship between the two men. Further, Cole gave instructions to others, including his maid, to likewise claim the Fifth Amendment privilege before the grand jury. He influenced W. Jack Bernard and W. Levin to take the Fifth Amendment in other matters. He himself left town when the Attorney General of the United States was in town. He kept himself informed, at least after Benton's first appearance before the grand jury, as to when the grand jury was meeting and what, so he thought, the government was interested in. We need not, and the jury did not need to know why Cole was interested in what the jury investigated, nor what it was he did not want brought up or testified about, nor need there be direct word of mouth testimony on these subjects. **Inferences could well have been legitimately drawn by the jury that Cole wanted to keep the jury as far away as possible from any investigation of any relationship between Stacher and Cole. III- CONCLUSION [5] We hold the constitutional privilege against self-incrimination is an integral part of the due administration of justice, designed to do and further justice, and to the exercise of which there is an absolute right in every witness. A witness violates no duty to claim it, **but one who bribes, coerces, forces or threatens a witness to claim it, or **advises with corrupt motive the witness to take it, can and does himself obstruct or influence the due administration of justice. [6] We hold there here existed evidence from which the trier of facts, the jury, could conclude such an obstruction of the due administration of justice had taken place, and that appellant had, corruptly, and by influence and threats and consideration paid, caused it. Affirmed. Appendix A Statement of Facts During the spring of 1962, a Federal Grand Jury, sitting in Los Angeles, was engaged in the investigation of (one) Joseph Doc Stacher, against whom deportation proceedings had previously been instituted, in an endeavor to determine whether he had obtained a secret interest in the Casino of the Sands Hotel, Las Vegas, Nevada (R.T. 135136; 486-487; 560). (n. 1, which we omit.)

The Appellant Marvin R. Cole (n. 2, which we omit), a friend and associate of Mr. Stacher's was subpoenaed to appear on April 26, 1963, before the Stacher Grand Jury (R.T. 212-223; 478-479; 486-487; 499; 564). Prior to his appearance, Cole, the head of the advertising agency of Cole, Fischer & Rogow, Inc., and the advertising man for the Sands Hotel since 1953 (R.T. 502-505), had been interviewed on a number of occasions by agents of the Federal Bureau of Investigation in an effort to determine what Cole knew of Stacher's activities, and what was the nature of their association (R.T. 93, 487). In answer to the agents' questions, Cole stated: * * * I know him socially. His wife and my wife are very good friends, they belong to the same PTA. Occasionally I see him through that connection. That's all I know about him. I never had any dealings with him, any business dealings or association.' (R.T. 487.) **During his Grand Jury appearance on April 26, 1962, Cole was asked the same questions, and it is apparent from his discussion with his attorney, immediately preceding and subsequent to his appearance, that he gave the same answers (R.T. 487; 498). Subsequently, a Grand Jury commenced investigating Cole for possible perjury during his testimony before the Stacher Grand Jury (137-138). The investigation of Stacher continued through June 7, 1962 (R.T. 136). In May 1962, the United States Attorney's Office contacted the witness Joel *444 Benton by telephone to arrange for his Grand Jury appearance on June 7, 1962. Benton was informed that he personally was not the subject of the Grand Jury investigation. Benton then indicated that he would testify, and no subpoena would be necessary to obtain his attendance (R.T. 148-151; 433). When Benton finished this conversation, he phoned Marvin Cole and told him what had just taken place. Cole said he would pick Benton up for lunch, so they could discuss the situation (R.T. 150-151). The reason that Benton phoned Cole was that, for a number of years, he had been under Cole's instruction that Cole was to be notified whenever agents or officers of the Government contacted Benton. Though Cole and Benton were not friends as such, and had not seen each other for a long time prior to Benton's call (R.T. 281; 378; 515; 573-574), they were acquainted because Cole had employed Benton as a copy writer and an account executive from the time Cole, Fischer & Rogow, Inc. opened in the Sands Reservation Office in late 1954, until June 1957, when a court order put a major client out of business (R.T. 142-143; 373; 506; 512). During that period Benton had seen Stacher in Cole's private office on a number of occasions-usually on Saturdays (R.T. 213), and Cole made a number of remarks to Benton that sharply conflicted with the statements he later gave to agents of the Federal Bureau of Investigation (R.T. 212-223). On the first occasion that Benton saw Stacher in Cole's office, Cole introduced Benton to Stacher, and then, later asked Benton if he knew who Stacher was. When Benton said he didn't, **Cole told him that Stacher was the No. 2 man in the syndicate and that he, Cole, was Stacher's boy. (R.T. 217.) * * * On the same day that he received Benton's phone call, Cole and Irving Reiss, a former investigator for the New York Liquor Authority who became a business associate and a close friend of Cole (R.T. 45-49; 88-89), picked up Benton and drove to the Bantam Cock Restaurant on LaCienega Boulevard in Los Angeles (R.T. 151-153). **Once there, Cole informed Benton that he, Benton, had to take the Fifth Amendment (R.T. 153-154; 181). Benton was reluctant to do so because of his job (R.T. 154). Cole argued There is nothing to worry about on that score. Besides that, you know they have that other thing hanging over your head (R.T. 154). That other thing was the Nate Stein matterFN3 (R.T. 155-156). Benton then expressed a desire to call an attorney named Marshall Sevin for legal representation. Cole * * * (felt Benton should) use one of Cole's attorneys which he would arrange for; but Benton preferred to consult an attorney of his own (R.T. 154-155). Cole acquiesced, but then * * * (told) Benton to keep Sevin uninformed concerning *445 the details surrounding his appearance before the Grand Jury, urging that Sevin was to be retained merely to hold (Benton's) hand in case something should occur during the Grand Jury appearance (R.T. 177).

Benton then called Sevin and made an appointment for the following afternoon (R.T. 177-178). On the day following the first meeting at the Bantam Cock Restaurant, the second meeting (n. 4, which we omit) took place between Cole and his friend Reiss on the one hand, and Benton on the other. This second meeting * * * was held a few hours prior to Benton's conference with Marshall Sevin * * *. Again Cole and his companion Reiss picked Benton up at his office and drove him to the Bantam Cock. **Again Cole informed Benton that he must take the Fifth Amendment. And again Cole urged Benton to keep his attorney, Marshall Sevin, uninformed (R.T. 179-181). When lunch was finished, Cole and Reiss drove Benton to Marshall Sevin's office and left him there (R.T. 186). Benton was a very frightened man when he entered his attorney's office (R.T. 194; 440). His hands were shaking, his manner and appearance were one of great nervousness' (R.T. 429). **Benton was well aware of Cole's association with Stacher (R.T. 212-223). * * * Three weeks later * * * he came to the Government and asked for physical protection for his family and himself (R.T. 396; 401). The conversation between Benton and Sevin took something over half an hour, (R.T. 445) and was interrupted near the end by Cole who phoned into the office to find out why the conference wasn't finished (n. 5, which we omit). Benton and Sevin went downstairs where Sevin entered Cole's car * * *. (R.T. 188-189). Sevin told Cole that he didn't want Benton to take the Fifth Amendment (R.T. 190; 431). **Cole * * * (said): No, he has got to take the Fifth Amendment (R.T. 190). He repeated this two or three times (R.T. 191), and **then said they have something on him that would lead to an investigation (R.T. 191; 431). Cole was referring to the Stein matter (R.T. 527). In fact, but unbeknownst to Cole, * * * Sevin (knew) about the false affidavit (R.T. 437-438), and Sevin said that he saw no necessity for Benton's pleading the Fifth Amendment (R.T. 431). **Mr. Cole again insisted that Benton take the Fifth Amendment. * * * (R.T. 432; 436.) He got white around the mouth, Marvin Cole got white around the mouth, his eyes looked- his eyes changed in their appearance and his voice rose from a conventional tone, it became louder, it rose in pitch and became louder. * * * He appeared to be worn. He appeared to be in a state of upset. He appeared to be very emotional about this, very tense, very excited. * ** His manner of speaking was not that of a person merely making suggestions or giving advice * * * his statements were not * * * in the form of questions as much as they were a manner of a demanding nature, they were urgent insistence. * * * (R.T. 191-192; 434-436). Marshall Sevin suddenly changed his position and told Benton that he should take the Fifth Amendment. In truth, Sevin received no new information from Cole and never changed his mind about the course that Benton should follow, but after being in the car with Cole, he verbalized an opinion that he did not really hold (R.T. 438439). At that point Mr. Sevin advised Benton to leave the car and call the United States Attorney's Office to request a subpoena for June 7, 1962, since he had previously indicated that he was going to testify and was now not going to do so (R.T. 433). On June 7, 1962, Benton appeared and took the Fifth Amendment to the following questions: Q. Sir, will you please state your full name? A. Joel Robert Benton. Q. What is your business *446 address? A. 9060 Santa Monica Boulevard. Q. Is that known as Space and Time, Inc.? A. Known as Space and Time Advertising, Inc. Q. Advertising, thank you. Were you ever an employee of a firm known as Cole, Fischer & Rogow? A. I claim the privilege given me by the Constitution of the United States, that I not be compelled to testify against myself. I therefore respectfully decline to answer the same question. Q. Mr. Benton, have you ever seen an individual named Joseph Stacher? A. I claim the privilege given me by the Constitution of the United States, that I not be compelled to testify against myself. I therefore respectfully decline to answer the question.

Q. Mr. Benton, is it your feeling that any question this Grand Jury might ask might have the tendency to incriminate you so that you will resort to the privilege? A. Again, I claim the privilege given me by the Constitution of the United States, that I not be compelled to testify against myself. I therefore respectfully decline to answer the question. Mr. Farber: Thank you, Mr. Benton. That's all.' (R.T. 136-137.) Benton pleaded the Fifth Amendment solely because of the insistence of Marvin Cole that he do so (n. 6, which we omit), (if Sevin is to be believed). (R.T. 226.) Upon concluding his Grand Jury appearance, Benton left the Federal Building and drove directly to Frascati's Grill on Sunset Boulevard in Los Angeles. From there, pursuant to earlier instructions from Cole, he phoned him (R.T. 227-228). A few minutes later Cole and * * * Reiss arrived. Cole (asked) * * * Benton concerning the questions asked of him by the Grand Jury (R.T. 228). When Benton mentioned that his attorney, Mr. Sevin had conversed with an Assistant United States Attorney but that he didn't know what was the topic of conversation, Cole directed Benton to phone his attorney, Mr. Sevin, and determine what had been discussed. Benton did as he was told and reported back that the conversation was merely lawyer talk (R.T. 228-230). During the same meeting Cole maintained that he wanted to pay the attorney's fee incurred by Benton (R.T. 230), which he did a few days later by giving Benton a $100 bill (R.T. 265). It was ten days, or two weeks, after the meeting at Frascati's that Cole phoned Benton and informed him that he, Cole, and the boys' were getting out of Los Angeles for the duration of Attorney General Robert Kennedy's visit which was scheduled for the following week. (N. 7: * * * The Attorney General did come to Los Angeles during the week of June 26, 1962, and Marvin Cole did leave and go to New York for that week (R.T. 607-608).') He suggested that Benton also, * * * Take a little run out of town. * * * (n. 8, which we omit) (R.T. 232.) On June 21, 1962, only two weeks after his Grand Jury appearance, Benton contacted the United States Attorney's Office, voluntarily came to the Federal Building and gave a sworn statement, part of which concerned the false affidavit submitted on behalf of Nate Stein (R.T. 396-397). It was at this time that, as mentioned above, Benton requested protection be given his family and himself. He requested nothing else of the Government and nothing was promised (R.T. 401). There was no contact by telephone, or otherwise, between Cole and Benton from the middle of June 1962 until October 9, 1962 (R.T. 398-399; 574). On the latter date Benton, who was working with the Government, called Cole, under Governmental instructions, to inform him that he had been subpoenaed again. This time for October 18, 1962 (R.T. 240-241; 244; 251). During the talk, Benton told Cole that he didn't want to *447 plead the Fifth Amendment because of his job. Cole answered that the Grand Jury wasn't about him, but about Nate Stein. Then Cole suggested that he meet Benton for lunch. * * * The discussions produced nothing inculpatory on Cole's part. But in that conversation * * * Cole * * * asserted that the Grand Jury was investigating Benton and the Stein matter, * * * (and) recommended that Benton not call his attorney, Marshall Sevin, until after Cole and Benton had met FN4 (R.T. 243-249). On October 10, 1962, Cole again in the company of Mr. Reiss, picked up Benton at his office (R.T. 252-253). When they had entered the restaurant, Marvin R. Cole started the conversation by demanding to know where Benton had gotten * * * such a silly idea as not to go down and take the Fifth * * * He told Benton it was very foolish, that he * * * should go down, must go down and take the Fifth' (R.T. 253). Benton answered that he didn't wish to (R.T. 253). Cole wondered to whom Benton had been listening (R.T. 253).

Benton said his wife and brother (R.T. 253). Cole wanted to know what qualified them to give Benton advice (R.T. 253). He argued that Benton was a stand-up guy, and wouldn't get in any trouble if he kept his mouth shut. * * * Everybody is taking the Fifth Amendment, * * * You think you have been under a little pressure. * * * Everybody in my office, they have had down there to testify. They have all taken the Fifth. Even the maid in my home, * * *.' (R.T. 260). He went on to inform Benton just how stupid he was to go down and tell the Grand Jury anything (R.T. 261). He then told Benton of other witnesses that he had tampered with (R.T. 261). He pointed out that other people had had that idea and that fortunately he had been able to talk them out of it. He mentioned two cases in particular. One was Jack Bernard, head of Foods, Plus, and the other was Jack Lewin, formerly president of Trans American Airlines. He told me that both of these men, and he said, They are both important, as you know, big men, he said, as a matter of fact, Jack Bernard was very indignant when we suggested to him that he take the Fifth Amendment. He wanted to answer certain questions, even though there were certain other questions which he did not want to answer, but he did definitely want to answer certain questions. He said also that the Government had expected that when Jack Lewin testified, that he would say definitely that Marvin Cole, that he knew that Marvin Cole had an undisclosed interest in the Sands Hotel, and that is what the Government expected Jack Lewin would testify to. But Marvin said that after they talked with his, Marvin's attorney, they changed their mind on it, and Jack Lewin did not answer questions- I mean Jack Bernard did not answer questions as the Government expected he would answer, and Jack Lewin, instead of saying definitely that Marvin Cole did have an undisclosed interest in the Sands Hotel, changed it to say that he had heard that Marvin Cole did have an undisclosed interest in the Sands Hotel. Marvin Cole also mentioned a check which came about this same time, a check as I recall that he had *448 given to Eddie Torres, or that Eddie Torres had given to him, I don't recall which it was, but there was a $25,000 check, and the testimony on that was not forthcoming from either Jack Bernard or Jack Lewin, so nothing happened on that. He said that both Jack Lewin and Jack Bernard were mighty happy that they did not answer the questions put to them at the time they were to testify' (R.T. 261-263). The entire meeting between Cole, his friend Reiss, and Benton took close to two hours (R.T. 638, 640). Towards the end of the conversation, Benton protested that he didn't know what to do. Cole informed Benton he had already told him what to do, and in conclusion, in a loud, excited tone of voice, he threatened, Now, don't forget this Joel * * * if you do testify, you will lose your job. He mentioned Harry Karl's name and then promised, I will see to it that if you do take the Fifth, you do not lose your job (R.T. 632-633). During the whole meeting Benton was wearing a concealed radio transmitter which was broadcasting to a receiver and a tape recorder under the control of Special Agent Hal Rassi (R.T. 252, 623-624). Because the tape was in large part unintelligible, it was not played for the jury (R.T. 59-63, 625-638). But at the time Marvin Cole and Irving Reiss testified they knew the tape's failings, because they had previously heard it played (R.T. 34-35). On the other hand, Benton, when he took the stand, knew only that he had worn a radio transmitter and recording had been made, but he did not know the contents of the tape or that it was unintelligible (R.T. 139-140, 273). The final meeting between Cole, Reiss and Benton took place in the parking lot behind Benton's office building on October 17, 1962, the day before Benton's scheduled Grand Jury appearance (R.T. 269-270; 574). It took place, at Cole's insistence, after the following events transpired (R.T. 270); Subsequent to the meeting at the Bantam Cock on October 10, 1962, Cole, with Benton's reluctant approval, had phoned Ziffren to set up an appointment for Benton. Cole then phoned Benton to tell him of the appointment. During this conversation Benton told Cole that he wouldn't need Ziffren because he was definitely going to testify. Cole then requested that Benton

call Ziffren and cancel the appointment, which Benton did (R.T. 263-264; 268-269). Later Cole placed an urgent call to Benton to arrange a meeting, asserting that it was important for him to talk to Benton, and suggesting that they go for lunch. (n. 10, which we omit.) Benton agreed, but later changed the meeting place to the parking lot behind his building (R.T. 270) because agents of the Federal Bureau of Investigation did not want him taking a ride with Cole (R.T. 413). At approximately 12:30 P.M. Irving Reiss drove up with Cole sitting beside him (R.T. 270; 549). Cole began the conversation by thanking Benton for calling Paul Ziffren and cancelling an appointment (R.T. 271). Then, after displaying a subpoena issued to Irving Reiss and telling Benton that he would have company before the Grand Jury, Cole argued that Benton was very foolish to testify. Finally, he urged Benton to get in touch with Nate Stein. Benton answered that Stein had been in Benton's office a few days before. Cole exclaimed that Stein was a damn fool for coming to Benton's office, but that he ought to see him. **He then warned Benton, Joel, even if you don't care about what happens to yourself, remember this, you have got a lovely wife and family, and * * * you wouldn't want anything to happen to them, would you? He added, Well, remember, Jimmie Hoffa's boys are mighty rough * * * I highly recommend you get in touch with Nate Stein right away. He told Benton that Stein could be reached through May Skinner at the Sands Hotel office and, if not, for Benton to recontact him, Cole (R.T. 271-272). **The next day, October 18, 1962, Cole was indicted by a Federal Grand Jury *449 for obstructing and attempting to obstruct the due administration of justice (C.T. 2). Cole's defense at his trial was that Benton had a problem and all he, Cole, did was give Benton friendly advice (R.T. 33-108; 501-600; 763-866). FN1. We note the conviction was reversed on errors in the admission of evidence, and other errors, not here material. FN2. The record here discloses (as set forth in full in the Appendix) no reason exists to believe the witness Benton would have incriminated himself had he answered the questions asked. They were but two in number: (1) Were you ever an employee of Cole, Fischer & Rogow? and (2) Have you ever seen an individual named Joseph Stacher? There is no showing the answer to either of these questions bore any relation to the Stein payments; or would otherwise incriminate Benton. FN3. The Nate Stein matter was a club that Cole raised over Benton's head every time there was an indication that Benton might testify before the Grand Jury (R.T. 154; 191; 246-247; 271-272; 432). In its simplest form, the Nate Stein matter concerned a false affidavit that Benton had submitted to the United States Senate Committee on Improper Activities in the Labor Management Field (the McClellan Committee) on behalf of Nate Stein. In that affidavit Benton attested to the fact that he had received certain checks from the Teamsters Union for performing a truck survey for that Union, and he had shared the money with no one (R.T. 161-163; 168-169). The affidavit was false (R.T. 156). In fact, Stein brought four checks to Benton which were made out in Benton's name. Benton endorsed the checks, and turned them over to Stein. Benton had performed no survey and received no money from the checks (R.T. 155-158; 163; 166). At the time that Benton submitted the false affidavit to the McClellan Committee, he showed it to Marvin Cole because, even though he knew Stein and Cole disliked each other, he believed that they were associated together in some manner not involving the advertising agency (R.T. 175). It would be proper for this Court to take judicial notice of the fact that on August 12, 1963 Stein filed a notice of appeal in this circuit, from his conviction for obstructing justice by inducing Joel Benton to submit the false affidavit on his behalf. FN4. When they did meet the next day, Cole attempted to dissuade Benton from consulting Sevin entirely. He insisted that Benton needed a heavyweight- like Paul Ziffren, one of Cole's attorneys. When it was pointed out that Benton couldn't afford such an attorney, Cole said he would assume the cost if Benton would go see Ziffren (R.T. 263-264).'

U.S. v. Rasheed, 663 F.2d 843, 62 A.L.R. Fed. 284, 9 Fed. R. Evid. Serv. 360 (9th Cir.(Cal.) Oct 05, 1981) Defendants, the founder of a church and his associate, were convicted in the United States District Court for the Northern District of California, Stanley A. Weigel, J., on federal mail fraud counts, and the associate was also convicted on obstruction of justice charges, and defendants appealed. The Court of Appeals, Wallace, Circuit Judge, held that: (1) evidence was sufficient to support conclusion that defendants were engaged in conduct they knew was deceitful and did not have sincere religious beliefs in allegedly fraudulent aspects of their donation program; (2) admission of computerized summaries of the church's records, even if error, was harmless; (3) obstruction of justice statute proscribes concealment of subpoenaed documents; (4) prosecutor's excusing defendant from further production was not a defense; (5) evidence was sufficient to support obstruction of justice conviction; (6) prosecutor committed no misconduct as would authorize the court's exercise of supervisory authority to dismiss indictment for prosecutorial misconduct; and (7) district judge did not abuse his discretion in denying associate's motion to sever. Affirmed. [1] Constitutional Law 92

1292

92 Constitutional Law 92XIII Freedom of Religion and Conscience 92XIII(A) In General 92k1292 k. Beliefs Protected; Inquiry Into Beliefs. Most Cited Cases (Formerly 92k84.2, 92k84(2), 92k84) First Amendment protects all religious beliefs, no matter how preposterous they may seem to majority of the population. U.S.C.A.Const. Amend. 1. [2] Constitutional Law 92 1290

92 Constitutional Law 92XIII Freedom of Religion and Conscience 92XIII(A) In General 92k1290 k. In General. Most Cited Cases (Formerly 92k84.1, 92k84(1), 92k84) First Amendment protects religiously grounded conduct, but such conduct is subject, in some situations, to police power of the government. U.S.C.A.Const. Amend. 1. [3] Constitutional Law 92 1290

92 Constitutional Law 92XIII Freedom of Religion and Conscience 92XIII(A) In General 92k1290 k. In General. Most Cited Cases (Formerly 92k84.1, 92k84(1), 92k84) First Amendment does not protect fraudulent activity performed in name of religion. U.S.C.A.Const. Amend. 1. [4] Postal Service 306 35(5)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(5) k. Knowledge and Intent in General. Most Cited Cases

**Specific intent to defraud is an element of crime of mail fraud. 18 U.S.C.A. 1341. [5] Criminal Law 110 1144.13(3)

110 Criminal Law 110XXIV Review 110XXIV(M) Presumptions 110k1144 Facts or Proceedings Not Shown by Record 110k1144.13 Sufficiency of Evidence 110k1144.13(2) Construction of Evidence 110k1144.13(3) k. Construction in Favor of Government, State, or Prosecution. Most Cited Cases In determining sufficiency of evidence of criminal conviction, Court of Appeals must view evidence in light most favorable to government. [6] Fraud 184 58(3)

184 Fraud 184II Actions 184II(D) Evidence 184k58 Weight and Sufficiency 184k58(3) k. Intent. Most Cited Cases Fraudulent intent may be, and often must be, proven by circumstantial evidence. [7] Postal Service 306 49(11)

306 Postal Service 306III Offenses Against Postal Laws 306k49 Evidence 306k49(8) Weight and Sufficiency 306k49(11) k. Use of Mails to Defraud. Most Cited Cases **Evidence, including false impression defendants created concerning source of funds received by those donating to defendants' religious organization and their concealing true source of the funds, was sufficient to support conclusion that defendants were engaged in conduct they knew was deceitful and did not have sincere religious beliefs in allegedly fraudulent aspects of their donation program, as required to support convictions for mail fraud. 18 U.S.C.A. 1341; U.S.C.A.Const. Amend. 1. [8] Criminal Law 110 1162

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1162 k. Prejudice to Rights of Party as Ground of Review. Most Cited Cases Error, not of constitutional dimension, is harmless unless it is more probable than not that error materially affected verdict. [9] Postal Service 306 49(5)

306 Postal Service 306III Offenses Against Postal Laws 306k49 Evidence 306k49(2) Admissibility 306k49(5) k. Use of Mails to Defraud. Most Cited Cases Mail fraud statute does not require proof that anyone has been defrauded, but such evidence may be relevant to show that scheme to defraud existed. 18 U.S.C.A. 1341, 1503, 1623. [10] Criminal Law 110 1169.1(10)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1169 Admission of Evidence 110k1169.1 In General 110k1169.1(10) k. Documentary and Demonstrative Evidence. Most Cited Cases In prosecution for mail fraud and other crimes, admission of computerized summaries of church records to show that donation program was a Ponzi scheme that had collapsed, even if error, was harmless, where there was other substantial evidence of fraudulent activities of defendants, including their knowingly false misrepresentations and concealments, so that summaries were not necessary to jury's verdict of guilt. 18 U.S.C.A. 1341. [11] Obstructing Justice 282 1

282 Obstructing Justice 282k1 k. Nature and Elements of Offenses in General. Most Cited Cases **Word corruptly as used in obstruction of justice statute means that act must be done with purpose of obstructing justice. 18 U.S.C.A. 1503. [12] Obstructing Justice 282 6

282 Obstructing Justice 282k6 k. Obstructing or Interfering with Judicial Proceedings. Most Cited Cases Concealment of documents is a corrupt means of influencing, obstructing or impeding administration of justice, and thus, obstruction of justice statute proscribes concealment of subpoenaed documents. 18 U.S.C.A. 1503. [13] Obstructing Justice 282 6

282 Obstructing Justice 282k6 k. Obstructing or Interfering with Judicial Proceedings. Most Cited Cases To convict defendant of obstruction of justice for concealed subpoenaed documents, **grand jury must have been engaged in due administration of justice, **defendant must have known that jury was conducting investigation and what documents were covered by subpoena, and, **knowing particular documents were covered by subpoena, defendant must have willfully concealed or endeavored to conceal them from grand jury. 18 U.S.C.A. 1503. [14] Obstructing Justice 282 6

282 Obstructing Justice 282k6 k. Obstructing or Interfering with Judicial Proceedings. Most Cited Cases Crime of obstruction of justice was complete when subpoenaed documents were directed to be destroyed or concealed, and prosecutor's excusing defendant from further production was not a defense. 18 U.S.C.A. 1503. [15] Obstructing Justice 282 1

282 Obstructing Justice 282k1 k. Nature and Elements of Offenses in General. Most Cited Cases Obstruction of justice statute proscribed endeavors to obstruct, and actual obstruction is not an element of proof. 18 U.S.C.A. 1503. [16] Obstructing Justice 282 16

282 Obstructing Justice 282k13 Evidence 282k16 k. Weight and Sufficiency. Most Cited Cases Conviction for obstruction of justice, based on concealment of subpoenaed documents, was supported by sufficient evidence, including substantial evidence that at time documents were ordered destroyed or concealed, defendant had intent to obstruct justice and endeavored to do so. 18 U.S.C.A. 1503. Before WALLACE and POOLE, Circuit Judges, and CORDOVA,[FN**] District Judge. FN** Honorable Valdemar A. Cordova, United States District Judge, District of Arizona, sitting by designation. WALLACE, Circuit Judge: Rasheed, the founder of a church, was indicted on six counts of mail fraud, 18 U.S.C. s 1341, one count of obstruction of justice, 18 U.S.C. s 1503, and one count of making a material false declaration to a grand jury, 18 U.S.C. s 1623. Phillips, his associate, was charged with five counts of aiding and abetting Rasheed in the conduct of his mail fraud scheme, two counts of obstruction of justice, and one count of making a material false declaration to a grand jury. They were tried together on all counts. The jury convicted Rasheed and Phillips on all the mail fraud counts. The jury also convicted Phillips, but acquitted Rasheed, on the obstruction of justice charges. The jury acquitted both on the false statement counts. Both raise several contentions on appeal, including charges that their First Amendment rights have been violated. We affirm the convictions. I In early 1977, Rasheed founded the Church of Hakeem. The Church was incorporated under California law, and received tax exempt status as a religious institution. Rasheed preached about the importance of a positive self-image through belief in one's self. He taught that one could achieve one's desires by focusing and concentrating on those desires. The central tenet of the Church was the belief in the God within you. One of the aspects of the Church's beliefs was the law of increase, or the law of cosmic abundance, which provided that if one gave freely one would receive returns greater than the initial gift. Shortly after the Church was founded, Rasheed established the Dare to be Rich program. Rasheed preached that this program was consistent with the law of cosmic abundance. He taught that if one donated money to the Church, one would receive an increase of God of four times that amount within a particular period of time. The time period of the increase of God varied depending on the amount of the donation. Fourfold increases for donations of $1 to $249 were received in 70 days; increases for donations from $250 to $24,999 in 90 days; increases from

$25,000 to $999,999*846 in 9 months; and increases for donations of $1,000,000 or more in 3 years. These time periods were based on psychic birth cycles, which Rasheed claimed had a basis in scripture. The cycles were supposed to coincide with levels of consciousness. The shortest cycle indicated that the donor had not transcended greed. Thus, donors were encouraged to give large amounts and to redonate their increases to the program to reach higher levels of consciousness. Rasheed taught Church beliefs and about the Dare to be Rich program at frequent Church gatherings called celebrations. Rasheed preached that members should spread the word regarding the Church and the Dare to be Rich program. There were also mailings to Church members that contained information about upcoming Church celebrations, and contained some of the teachings of the Church. Donations to the Dare to be Rich program were made primarily at the Church celebrations themselves. Only Church ministers were permitted to participate in the program. To become a minister, one had to pay an enrollment fee to the Church. Once a minister, a person was entitled to make weekly donations to the Dare to be Rich program. At the end of an increase cycle, an increase letter stating the amount of the increase was prepared and given to the donor publicly at a celebration. If the minister was not present at the celebration, the letter would be mailed to him or her. The minister then made an appointment to consult with a Church counselor, at which time he or she could receive the increase completely in cash, or redonate all or part of it to the Dare to be Rich program. The counselors generally encouraged redonation. At the outset of the program, Rasheed represented, through Church literature and through his aides at the Church, that the increases of God were from profits that the Church made on investments. The Church, according to Rasheed, chose not to keep these profits, but to distribute them to its active ministers. Subsequently, Rasheed downplayed the source of the funds. References to investments disappeared, and potential donors who questioned the source of the money were told they could not yet donate to the program because they lacked sufficient faith. Further, Rasheed never indicated that increase payments were coming solely from the donations of other members. Rasheed was apparently very careful not to create the impression that a donation to the Dare to be Rich program created a legal obligation on the part of the Church to pay the increases of God. He instructed his aides never to tell potential donors that the Church was making any promise or guarantee of payment. He also instructed them not to use words like security or stock. Nonetheless, many of his aides testified that Rasheed never indicated that there was any doubt that a donor would receive his increase. Phillips became a minister of the Church in April 1978. In June 1978, she became a full-time employee of the Church, with the title of Enlightenment Coordinator. Subsequently, she was appointed to the Church's Board of Directors. Phillips' responsibilities at the Church included oversight of the financial operations of the Church. She had control over the Church's bookkeeping, and set up ledger books that kept track of the cash flow of the Dare to be Rich program. She was also involved in the oversight of the program itself, in that she advised ministers on the operations of the program and told them what to tell potential donors. Throughout 1978, the Church prospered. The Church purchased many expensive items, including a $900,000 yacht, and a $100,000 Rolls-Royce automobile. In January 1979, the Dare to be Rich program ceased to operate. The Internal Revenue Service seized the assets of the Church, which was the reason the Church gave for the stoppage of payments of increases of God. The increases never resumed. A grand jury began to investigate the activities of the Church in late 1978, and continued into 1979, when the indictments forming the basis of this case were handed down. *847 The essence of the mail fraud charges against Rasheed and Phillips is that the Dare to be Rich program was a fraud. The government alleged, and the defendants have never denied, that there were never investments that provided the source of increase of God funds. The government alleged, rather, that the Dare to be Rich program was based on pyramid planning, by which increases paid to early donors were paid from the funds provided by subsequent donors. The obstruction of justice and perjury counts involve events surrounding the grand jury investigation of the Dare to be Rich program. We shall discuss the facts surrounding those counts when we address the legal issues.

II Rasheed and Phillips contend that the free exercise clause of the First Amendment bars their convictions for mail fraud. The premise of their argument is that the Dare to be Rich program is a religious tenet of the Church of Hakeem, and that the First Amendment prevents the government from proving the falsity of a religious tenet. United States v. Ballard, 322 U.S. 78, 86-87, 64 S.Ct. 882, 886, 88 L.Ed. 1148 (1944). They conclude that the government may not assert the falsity of the Dare to be Rich program, and that the government's mail fraud case must therefore fail. [1][2] Rasheed and Phillips are correct that the First Amendment protects absolutely the freedom of belief. Cantwell v. Connecticut, 310 U.S. 296, 303, 60 S.Ct. 900, 903, 84 L.Ed. 1213 (1940). The government is foreclosed from interference with one's faith. The First Amendment protects all religious beliefs, no matter how preposterous they may seem to the majority of the population. United States v. Ballard, supra, 322 U.S. at 87, 64 S.Ct. at 886. What one does with one's faith, however, may not necessarily enjoy the same absolute protection. The First Amendment protects religiously grounded conduct, but such conduct is subject, in some situations, to the police power of the government. Wisconsin v. Yoder, 406 U.S. 205, 220, 92 S.Ct. 1526, 1535, 32 L.Ed.2d 15 (1972); Cantwell v. Connecticut, supra, 310 U.S. at 303-04, 60 S.Ct. at 903. Therefore, inquiry into the conduct of Rasheed and Phillips in the operation of the Dare to be Rich program is not absolutely barred by the First Amendment. Recognizing this, Rasheed and Phillips still contend that the government's case necessarily requires inquiry into the truth or falsity of the doctrine underlying the Dare to be Rich program, and is therefore improper. The nature of the Church of Hakeem, and its teachings as a whole, are not issues in this case. The government has conceded that the Church is a bona fide religious organization. Rather, the government contends that Rasheed and Phillips engaged in conduct based on knowingly false representations to induce others to donate money to the Church through the Dare to be Rich program. So analyzed, the issue in this case becomes whether Rasheed and Phillips held sincere religious beliefs in the allegedly fraudulent aspects of the Dare to be Rich program. If they made assertions with knowledge of the falsity of those assertions, then they could not have been acting pursuant to sincere religious belief. It, therefore, is not a question of whether the Dare to be Rich tenet is true or false. The focus is on the intent of Rasheed and Phillips in carrying out the program. It is this distinction that is critical in our First Amendment analysis. [3][4] Thus, the Court has held that although the validity of religious beliefs cannot be questioned, the sincerity of the person claiming to hold such beliefs can be examined. United States v. Seeger, 380 U.S. 163, 185, 85 S.Ct. 850, 863, 13 L.Ed.2d 733 (1965). The First Amendment does not protect fraudulent activity performed in the name of religion. Cantwell v. Connecticut, supra, 310 U.S. at 306, 60 S.Ct. at 904. The district judge properly instructed the jury that specific intent to defraud is an element of the crime of mail fraud. Williams v. United States, 278 F.2d 535, 537 (9th Cir. 1960). To convict Rasheed and Phillips of mail fraud, the jury must have found that they knew of the falsity of their *848 statements pertaining to particular aspects of the Dare to be Rich program. It follows, of course, that the jury could not have believed that they had a sincere religious belief in those aspects of the program. [5][6] Because the jury necessarily found that Rasheed and Phillips lacked a sincere religious belief in certain aspects of the Dare to be Rich program, the only analysis left in the First Amendment claim is whether there was sufficient evidence to support this conclusion. In determining the sufficiency of the evidence of a criminal conviction, we must view the evidence in the light most favorable to the government. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed.2d 680 (1942). Fraudulent intent may be, and often must be, proven by circumstantial evidence. United States v. Piepgrass, 425 F.2d 194, 199 (9th Cir. 1970). The evidence showed that, initially, all information concerning the Dare to be Rich program came directly from Rasheed. Later, Phillips also had a hand in dispensing information about the program. Several ministers who assisted in disseminating information about the program and in collecting donations testified that they never told any prospective donor anything that Rasheed or Phillips had not instructed them to say. They were told to state that donors would receive a fourfold increase of God after the appropriate time period, as determined by the amount of the donation. They were further instructed not to use words like promise, guarantee, investment, or security. Nonetheless, there was never any element of doubt, chance, or faith connected with the possibility of getting an

increase. There was never any language in written solicitations of Church celebrations that one might receive an increase, or that one's increase was contingent on the strength of his belief in the teachings of the Church. Rather, typical statements were that one would receive an increase, or that, even though there was no guarantee, the increases always came. **The principal evidence of the fraudulent nature of the program, and of Rasheed's and Phillips' knowledge of the deceit, is the false impression they created concerning the source of the funds for the payments of the increases. At the outset of the program, Rasheed represented to his ministers and to potential ministers that the increases of God were gifts from the Church to ministers derived from profits that the Church made from its foreign investments in gold, diamonds, and oil. There is no evidence that any such foreign investments ever existed, that Rasheed ever believed that such investments existed, or that belief in the existence of foreign investments was part of Church doctrine. Indeed, Rasheed has not made any claim to the contrary. Subsequently, Rasheed instructed his aides not to respond to questions concerning the source of the increases. The stated reason for this was that one who made such an inquiry lacked sufficient faith to be permitted to participate in the program. After she joined the Church, Phillips had the primary responsibility for the financial dealings of the Church. The Church kept two bank accounts, one called expenses and the other called secular increases. The payment of increases of God to church ministers came from the secular increase account. All of the funds that ever appeared in the secular increase account were transferred from the expense account. All the money that ever appeared in the expense account came from enrollment fees and donations to the Church from its ministers. There was no evidence of any Church income or any source of funds for the payment of increases other than payments made by the Church ministers. Thus, Phillips knew that the money used for increases of God came not from foreign investments but solely from money paid by other ministers. [7] The evidence is sufficient that a jury could find beyond a reasonable doubt that Rasheed and Phillips engaged in conduct that they knew was deceitful. They made representations concerning the source of the increase funds, and concealed the true source of the funds. See Cacy v. United States, 298 F.2d 227, 229 (9th Cir. 1961) *849 (concealment of a material fact is fraud within the scope of the mail fraud statute). They both continued to operate the program over a period of time with knowledge of their failure to disclose the true source of the increase funds. This intentional misrepresentation created valuable undue advantage for them, and thus was a scheme or artifice to defraud within the meaning of the mail fraud statute. See United States v. Mandel, 415 F.Supp. 997, 1005 (D.Md.1976). If the truth had been revealed, a reasonably prudent person would have known that the Dare to be Rich program was essentially a Ponzi scheme,[FN1] and that the fourfold increases could not possibly continue. See United States v. Louderman, 576 F.2d 1383, 1388 (9th Cir.) (citing United States v. Mandel, supra), cert. denied, 439 U.S. 896, 99 S.Ct. 257, 58 L.Ed.2d 243 (1978). Thus, contrary to the position of Rasheed and Phillips, it is immaterial whether the Church had any legal obligation to pay the fourfold increase.

FN1. The Fifth Circuit has described the operation of a Ponzi scheme as follows: **In a Ponzi scheme, a swindler promises a large return for investments made with him. The swindler actually pays the promised return on the initial investments in order to attract additional investors. The payments are not financed through the success of the underlying venture, but are taken from the corpus of the newly attracted investments. The swindler then takes an appropriate time to abscond with the outstanding investments. As one author has described it, he borrowed from Peter to pay Paul. And it worked ... until Peter got wise. United States v. Cook, 573 F.2d 281, 282 n.3 (5th Cir.), cert. denied, 439 U.S. 836, 99 S.Ct. 119, 58 L.Ed.2d 132 (1978). See also Cunningham v. Brown, 265 U.S. 1, 7-8, 44 S.Ct. 424, 425, 68 L.Ed. 873 (1924). We conclude that the jury, instructed properly, had sufficient evidence before it to find that Rasheed knew that he was misrepresenting the source of the funds for the payment of increases, and that Phillips knowingly aided and abetted Rasheed in the perpetration of the scheme. Thus, Rasheed and Phillips could have had no sincere religious

belief in this aspect of the program, which they knew they were misrepresenting. Therefore, their First Amendment defense must fail. Rasheed and Phillips also contend that the mailings were so far removed from the fraud that the jurisdictional requirement of the mail fraud statute was not met. This claim is without merit. [9][10] The summaries were admitted to show that the Dare to be Rich program was a Ponzi scheme that had collapsed. They tended to demonstrate that the Church's ministers had been defrauded. The mail fraud statute does not require proof that anyone has been defrauded. Farrell v. United States, 321 F.2d 409, 419 (9th Cir. 1963), cert. denied, 375 U.S. 992, 84 S.Ct. 631, 11 L.Ed.2d 478 (1964). Such evidence may be relevant to show that a scheme to defraud existed. Farrell v. United States, supra, 321 F.2d at 419. There was other substantial evidence of the fraudulent activities of Rasheed and Phillips, including their knowingly false misrepresentations and concealments concerning the source of increase funds. The summaries were not necessary to the jury's verdict of guilt. Therefore, even if the admission of the summaries was error (and we offer no view on this issue), it would be harmless. IV A. Phillips contests her conviction for obstruction of justice. She was charged with concealing and attempting to conceal certain ledgers and notebooks after receiving a grand jury subpoena duces tecum requesting production of church documents. A Church minister, Slack, testified that Phillips ordered him to conceal certain blue ledgers, which contained a page for each minister and reflected dates and amounts of each donation and increase of that minister, and to destroy certain red notebooks, which contained increase lists. Slack complied with this order, except he retained duplicates of the red notebooks. Phillips does not contest Slack's testimony. She does not claim that the ledgers and notebooks were not covered by the subpoena, though she claims they were secondary records that contained no information that was not found in the other records that she did produce. She does not dispute that she failed to turn the ledgers and notebooks over to the grand jury. Phillips contends, however, that this conduct is not within the reach of the obstruction of justice statute, 18 U.S.C. s 1503,[FN2] and that the district *851 judge improperly instructed the jury on this issue. She further contends that, even if the statute does proscribe such conduct, the evidence was insufficient to support her conviction. FN2. Section 1503 provides: s 1503. Influencing or injuring officer, juror or witness generally Whoever corruptly, or by threats or force, or by any threatening letter or communication, endeavors to influence, intimidate, or impede any witness, in any court of the United States or before any United States commissioner or other committing magistrate, or any grand or petit juror, or officer in or of any court of the United States, or officer who may be serving at any examination or other proceeding before any United States commissioner or other committing magistrate, in the discharge of his duty, or injures any party or witness in his person or property on account of his attending or having attended such court or examination before such officer, commissioner, or other committing magistrate, or on account of his testifying or having testified to any matter pending therein, or injures any such grand or petit juror in his person or property on account of any verdict or indictment assented to by him, or on account of his being or having been such juror, or injures any such officer, commissioner, or other committing magistrate in his person or property on account of the performance of his official duties, or corruptly or by threats or force, or by any threatening letter or communication, influences, obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice, shall be fined not more than $5,000 or imprisoned not more than five years, or both. (Emphasis added.) Phillips argues the obstruction of justice statute covers only activities obstructing the administration of justice that involve force, threats, or intimidation. She contends that the statutory construction principle of ejusdem generis requires that the final catch-all clause of the statute be construed in light of the prior language concerning injuring or threatening people. She concludes that the statute cannot proscribe the concealment of subpoenaed documents.

We disagree with this position, but not on the basis argued by the government. The government contends that we have clearly held that concealment of documents is within the scope of section 1503, citing United States v. Ryan, 455 F.2d 728, 733-34 (9th Cir. 1972). In Ryan, we did not explicitly state that failure to comply with the subpoena duces tecum was a violation of section 1503. Even if this proposition is implicit in the opinion, which is highly doubtful, it is dicta. In Ryan, we reversed the defendant's conviction because the subpoenaed documents were immaterial to the grand jury proceedings. Id. at 734-35. Phillips is correct that we have applied the principle of ejusdem generis to section 1503. In Haili v. United States, 260 F.2d 744 (9th Cir. 1958), we held that the phrase due administration of justice in the catch-all provision was limited by the prior enumeration of specific judicial functions. Therefore, we held that the interference with the terms of another's probation was not an interference with the due administration of justice within the meaning of the statute. Id. at 745-46. Some confusion has been caused by too literal a reading of United States v. Metcalf, 435 F.2d 754 (9th Cir. 1970). There we held that a defendant's attempt to obtain possession of an automobile that had been purchased with the proceeds of a bank robbery was not within the scope of section 1503. We reasoned that the automobile had not yet become involved in a specific judicial proceeding and, thus, there was no obstruction of the due administration of justice within the meaning of section 1503, as interpreted in Haili. Id. at 757. In addition, we observed that there were no threats or intimidation involved. We commented: (T)he general provision (of section 1503), although it refers to the broad range of due administration of justice, prohibits only specified types of impeding acts-i. e., by threats or force, or by threatening letter or communication. Thus, not only must the broad term due administration of justice be limited to pending judicial proceedings, but also the manner in which the statute may be violated would ordinarily seem to be limited to intimidating actions. Id. Our statement in Metcalf that section 1503 would ordinarily seem to be limited to intimidating actions does not compel the conclusion that section 1503 does not encompass concealment of documents. First, the entire statement appears to be dicta. We were focusing upon whether a judicial *852 proceeding was involved. Second, we did not consider in Metcalf the specified type of impeding act on which the jury was instructed in this case. Indeed, in our statement in Metcalf, we did not even discuss the statutory alternative of impediment to due administration of justice by corruption. In contrast, in the case before us the district judge, quoting from section 1503, instructed the jury that Phillips could be found guilty for corruptly influencing, obstructing or impeding the due administration of justice or endeavoring to do so. The use of the word corruptly in the statute is a clear indication that not every violation of section 1503 involves threats or intimidation. For example, bribing a witness would certainly be a corrupt method of obstructing justice, but would involve no threat or intimidation. **We have observed that the obstruction of justice statute was designed to proscribe all manner of corrupt methods of obstructing justice. Catrino v. United States, 176 F.2d 884, 887 (9th Cir. 1949). Our analysis must turn, then, to whether concealment of documents is a corrupt means of influencing, obstructing or impeding the administration of justice. [11] In United States v. Ryan, supra, we said, in dicta, that (t)he word corrupt in (section 1503) means for an evil or wicked purpose. United States v. Ryan, supra, 455 F.2d at 734. Black's Law Dictionary defines corruptly to mean with a wrongful design to acquire some pecuniary or other advantage. Black's Law Dictionary 414 (4th ed. rev. 1968). We hold that the word corruptly as used in the statute means that the act must be done with the purpose of obstructing justice. Decisions of other circuits support this position. United States v. Ogle, 613 F.2d 233, 238 (10th Cir. 1979), cert. denied, 449 U.S. 825, 101 S.Ct. 87, 66 L.Ed.2d 28 (1980); United States v. Haas, 583 F.2d 216, 220 (5th Cir. 1978), cert. denied, 440 U.S. 981, 99 S.Ct. 1788, 60 L.Ed.2d 240 (1979). [12] Using this definition of corruptly, the destruction or concealment of documents can fall within the prohibition of the statute. This holding does no violence to our rule that the catch-all provision of section 1503 is limited by the prior specific prohibitions of the statute. The act of destroying or concealing subpoenaed documents is

similar in nature, Haili v. United States, supra, 260 F.2d at 746, to the enumerated acts. The destruction or concealment of subpoenaed documents results in the improper suppression of evidence, and thus the influencing, obstructing and impeding of judicial proceedings, just as much as does the intimidation of a witness. United States v. Walasek, 527 F.2d 676, 679 n.11 (3d Cir. 1975). That one act suppresses testimonial evidence, while the other act suppresses real evidence is of no importance. See generally United States v. Faudman, 640 F.2d 20, 23 (6th Cir. 1981); United States v. Griffin, 589 F.2d 200, 203 (5th Cir.), cert. denied, 444 U.S. 825, 100 S.Ct. 48, 62 L.Ed.2d 32 (1979); United States v. Cohn, 452 F.2d 881, 883-84 (2d Cir. 1971), cert. denied, 405 U.S. 975, 92 S.Ct. 1196, 31 L.Ed.2d 249 (1972); United States v. Solow, 138 F.Supp. 812, 815 (S.D.N.Y.1956). B. [13] Having determined that the statute encompasses the acts charged, the issues of jury instructions and sufficiency of the evidence require little analysis. The district judge quoted pertinent parts of the statute to the jury, instructed that corruptly meant any endeavor to obstruct justice, and defined due administration of justice. He instructed that to convict the defendant, the jury must find **that the grand jury was engaged in the due administration of justice, **that Phillips knew the grand jury was conducting an investigation, **that Phillips knew what documents were covered by the subpoena, and **that, knowing that the particular documents were covered by the subpoena, she willfully concealed or endeavored to conceal them from the grand jury. There is no error in these instructions taken as a whole. Phillips' arguments on the district court's failure to give a proffered instruction and on the sufficiency of the evidence are similar.*853 She argues that when she appeared before the grand jury, she testified that she had not produced all the documents called for by the subpoena. She claims that the government excused her from further production, and that she had never concealed the fact that there were records that had not been produced. She argues that there was insufficient evidence of concealment, and that the jury should have been instructed that the government's oral modification of the subpoena was a defense. [14][15][16] This position ignores the fact that the section 1503 violation was complete when the documents were directed to be destroyed or concealed. Phillips had already ordered the destruction or concealment of documents that she was required to produce. Aside from the prosecutor's possible lack of awareness that the destroyed or concealed documents had ever existed when he excused Phillips from further production, his actions in no way negate the commission of the crime. At best, his relieving Phillips of further production indicates that justice was not, in fact, obstructed. This is not a defense. Section 1503 proscribes endeavors to obstruct and actual obstruction is not an element of proof. Osborn v. United States, 385 U.S. 323, 333, 87 S.Ct. 429, 434, 17 L.Ed.2d 394 (1966). There is substantial evidence that at the time the documents were ordered destroyed or concealed, Phillips had the intent to obstruct justice and endeavored to do so. This is sufficient for guilt under section 1503. The district judge, thus, did not err in refusing to instruct that if Phillips believed the documents were no longer called for, her prior intent to obstruct would be negated.

U.S. v. Cueto, 151 F.3d 620 (7th Cir.(Ill.),Jul 31, 1998) Following jury trial, defendant, who was attorney, was convicted in the United States District Court for the Southern District of Illinois, Stephen N. Limbaugh, J., of **conspiracy to defraud the United States and **obstruction of justice. Defendant appealed. The Court of Appeals, Bauer, Circuit Judge, held that: (1) obstruction of justice statute was not vague as applied to defendant's litigation-related conduct; (2) evidence supported obstruction of justice convictions; (3) conspiracy statute was not vague as applied to defendant's conduct; (4) conspiracy conviction rested on valid theory; (5) district court did not err in its evidentiary rulings; (6) defendant's Sixth Amendment right of confrontation was not compromised; and (7) obstruction of justice convictions did not have to be grouped under sentencing guidelines. Affirmed.

[1] Criminal Law 110

1159.2(7)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(7) k. Reasonable Doubt. Most Cited Cases Appellate review of a jury's verdict is limited; if any rational trier of fact could have found the elements of the crime beyond a reasonable doubt, Court of Appeals is bound to affirm the verdict. [1] Criminal Law 110 1159.2(7)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(7) k. Reasonable Doubt. Most Cited Cases Appellate review of a jury's verdict is limited; if any rational trier of fact could have found the elements of the crime beyond a reasonable doubt, Court of Appeals is bound to affirm the verdict. [2] Criminal Law 110 1159.2(7)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(7) k. Reasonable Doubt. Most Cited Cases In reviewing the sufficiency of the evidence in a criminal case, the relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. [3] Criminal Law 110 1159.2(7)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(7) k. Reasonable Doubt. Most Cited Cases Criminal Law 110 1159.2(8)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General

110k1159.2(8) k. Inferences or Hypotheses from Evidence. Most Cited Cases Criminal Law 110 1159.2(9)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(9) k. Weighing Evidence. Most Cited Cases Criminal Law 110 1159.4(1)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.4 Credibility of Witnesses 110k1159.4(1) k. In General. Most Cited Cases In reviewing sufficiency of evidence in criminal case, Court of Appeals defers to the jury's credibility determinations, its weighing of the evidence, and its drawing of reasonable inferences and overturns a verdict only when the record contains no evidence, regardless of how it is weighed, from which a jury could find guilt beyond a reasonable doubt. [1] Criminal Law 110 1159.2(7) 110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(7) k. Reasonable Doubt. Most Cited Cases Appellate review of a jury's verdict is limited; if any rational trier of fact could have found the elements of the crime beyond a reasonable doubt, Court of Appeals is bound to affirm the verdict. [2] Criminal Law 110 1159.2(7)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(7) k. Reasonable Doubt. Most Cited Cases In reviewing the sufficiency of the evidence in a criminal case, the relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. [3] Criminal Law 110 110 Criminal Law 110XXIV Review 1159.2(7)

110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(7) k. Reasonable Doubt. Most Cited Cases Criminal Law 110 1159.2(8)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(8) k. Inferences or Hypotheses from Evidence. Most Cited Cases Criminal Law 110 1159.2(9)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.2 Weight of Evidence in General 110k1159.2(9) k. Weighing Evidence. Most Cited Cases Criminal Law 110 1159.4(1)

110 Criminal Law 110XXIV Review 110XXIV(P) Verdicts 110k1159 Conclusiveness of Verdict 110k1159.4 Credibility of Witnesses 110k1159.4(1) k. In General. Most Cited Cases In reviewing sufficiency of evidence in criminal case, Court of Appeals defers to the jury's credibility determinations, its weighing of the evidence, and its drawing of reasonable inferences and overturns a verdict only when the record contains no evidence, regardless of how it is weighed, from which a jury could find guilt beyond a reasonable doubt. [6] Criminal Law 110 13.1

110 Criminal Law 110I Nature and Elements of Crime 110k12 Statutory Provisions 110k13.1 k. Certainty and Definiteness. Most Cited Cases (Formerly 110k13.1(1)) The mere fact that a term covers a broad spectrum of conduct does not render it vague, and the requirement that a statute must give fair notice as to what conduct is proscribed cannot be used as a shield by one who is already bent on serious wrongdoing. [7] Obstructing Justice 282 1

282 Obstructing Justice 282k1 k. Nature and Elements of Offenses in General. Most Cited Cases

Correct application of omnibus provision in obstruction of justice statute requires fact finder to discern, **by direct evidence or **from inference, the motive which led an individual to perform particular actions; intent may make any otherwise innocent act criminal, if it is a step in a plot. 18 U.S.C.A. 1503. [8] Obstructing Justice 282 1

282 Obstructing Justice 282k1 k. Nature and Elements of Offenses in General. Most Cited Cases It is not the means employed by the defendant that are specifically prohibited by the omnibus provision of the obstruction of justice statute, but is, instead, the defendant's corrupt endeavor which motivated the action; otherwise lawful conduct, even acts undertaken by an attorney in the course of representing a client, can transgress statute if employed with the corrupt intent to accomplish that which the statute forbids. 18 U.S.C.A. 1503. [9] Obstructing Justice 282 2

282 Obstructing Justice 282k2 k. Statutory Provisions. Most Cited Cases Omnibus provision of obstruction of justice statute was not unconstitutionally vague as applied to attorney's litigation-related criminal conduct in course of various legal proceedings, which was motivated by attorney's personal financial interest in protecting third party's illegal gambling enterprise; attorney's financial interest formed basis of attorney's requisite corrupt intent. 18 U.S.C.A. 1503. [10] Attorney and Client 45 33

45 Attorney and Client 45I The Office of Attorney 45I(B) Privileges, Disabilities, and Liabilities 45k33 k. Offenses in Exercise of Professional Functions. Most Cited Cases Individual's status as an attorney engaged in litigation-related conduct does not provide protection from prosecution for criminal conduct. [11] Obstructing Justice 282 6

282 Obstructing Justice 282k6 k. Obstructing or Interfering with Judicial Proceedings. Most Cited Cases In order to establish a violation of obstruction of justice statute, the government must demonstrate that: (1) there was a pending judicial proceeding; (2) the defendant knew of the proceeding; (3) he influenced, obstructed, or impeded, or endeavored to influence, obstruct or impede the due administration of justice; and (4) he did so corruptly. 18 U.S.C.A. 1503. [12] Obstructing Justice 282 6

282 Obstructing Justice 282k6 k. Obstructing or Interfering with Judicial Proceedings. Most Cited Cases To demonstrate obstruction of justice, there must be a nexus between the defendant's efforts and the judicial proceeding sought to be corruptly influenced, but defendant's actions need not be successful in order to be

prosecuted under the statute; all that is required is that the defendant has knowledge or notice that his actions are likely to affect the just administration of the subject proceedings. 18 U.S.C.A. 1503. [13] Obstructing Justice 282 6

282 Obstructing Justice 282k6 k. Obstructing or Interfering with Judicial Proceedings. Most Cited Cases Attorney's conduct in filing pleadings in federal district court, appeal in Court of Appeals and petition for certiorari in United States Supreme Court, which related to attempts to prevent law enforcement official from interfering with business of attorney's client and which effectively exposed ongoing investigation, supported conviction for obstruction of justice, in view of evidence that attorney's conduct was motivated by his attempt to protect client from prosecution and to safeguard attorney's own financial interest. 18 U.S.C.A. 1503. [14] Obstructing Justice 282 6

282 Obstructing Justice 282k6 k. Obstructing or Interfering with Judicial Proceedings. Most Cited Cases Conduct of attorney who advised but did not represent client in racketeering prosecution, in preparing and filing and causing defense counsel to prepare and file false pleadings and other court papers in that prosecution, supported attorney's obstruction of justice conviction. 18 U.S.C.A. 1503. [15] Obstructing Justice 282 6

282 Obstructing Justice 282k6 k. Obstructing or Interfering with Judicial Proceedings. Most Cited Cases Attorney's conduct in encouraging state's attorney to investigate and indict law enforcement officer who had investigated business of attorney's client supported attorney's obstruction of justice conviction, as conduct was linked to prosecution of client for racketeering, even if some conduct took place before client was actually indicted. 18 U.S.C.A. 1503. [16] Constitutional Law 92 1620

92 Constitutional Law 92XVIII Freedom of Speech, Expression, and Press 92XVIII(D) False Statements in General 92k1620 k. In General. Most Cited Cases (Formerly 92k90.1(5)) **Speech which is false and misleading is not protected by the First Amendment's right to freedom of speech. U.S.C.A. Const.Amend. 1. [17] Constitutional Law 92 1435

92 Constitutional Law 92XV Right to Petition for Redress of Grievances 92k1435 k. In General. Most Cited Cases (Formerly 92k91) Constitutional Law 92 1620

92 Constitutional Law 92XVIII Freedom of Speech, Expression, and Press 92XVIII(D) False Statements in General 92k1620 k. In General. Most Cited Cases (Formerly 92k90.1(5)) Constitutional Law 92 2085

92 Constitutional Law 92XVIII Freedom of Speech, Expression, and Press 92XVIII(V) Judicial Proceedings 92XVIII(V)1 In General 92k2085 k. In General. Most Cited Cases (Formerly 92k90.1(1)) Just as false statements are not immunized by the First Amendment, meritless litigation based on false accusations and criminal intentions does not fall within the scope of protected speech and is not immunized by the First Amendment right to petition. U.S.C.A. Const.Amend. 1. [18] Conspiracy 91 33(1)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k33 Conspiracy to Defraud Government 91k33(1) k. In General. Most Cited Cases To sustain a conviction for conspiracy to defraud the United States, the record must demonstrate: **(1) an agreement to accomplish an illegal objective against the United States; **(2) one or more overt acts in furtherance of the illegal purpose; and **(3) an intent to commit the substantive offense. 18 U.S.C.A. 371. [19] Conspiracy 91 44.2

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence 91k44.2 k. Presumptions and Burden of Proof. Most Cited Cases In prosecution for conspiracy to defraud the United States, **intent, as well as the agreement, may be inferred from circumstantial evidence concerning the relationship of the parties, their overt acts, and the totality of their conduct. 18 U.S.C.A. 371. [20] Conspiracy 91 23.5

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k23.5 k. Constitutional and Statutory Provisions. Most Cited Cases Statute prohibiting conspiracy to defraud the United States was not unconstitutionally vague as applied to

prosecution of attorney for litigation-related conduct, where indictment alleged **with particularity **the essential nature of the alleged fraud and **identified attorney's specific conduct which furthered the conspiracy. 18 U.S.C.A. 371. [21] Criminal Law 110 13.1

110 Criminal Law 110I Nature and Elements of Crime 110k12 Statutory Provisions 110k13.1 k. Certainty and Definiteness. Most Cited Cases (Formerly 110k13.1(1)) A statute can be unambiguous without addressing every interpretative theory offered by a party; it need only be plain to anyone reading the Act that the statute encompasses the conduct at issue. [22] Conspiracy 91 33(2.1)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k33 Conspiracy to Defraud Government 91k33(2) Particular Offenses and Acts 91k33(2.1) k. In General. Most Cited Cases Attorney's conviction for conspiracy to defraud the United States, which was based on attorney's litigationrelated conduct, did not rest on legally or constitutionally invalid theory, even if attorney's actions initially may have stemmed from routine, even vigorous, advocacy, in view of evidence **that representation was also undertaken for criminal purpose in attempt to protect client's illegal gambling operation, **that attorney's role in conspiracy was to use power of his office as attorney for corrupt purpose of impairing, impeding, and obstructing the investigation, indictment, and prosecution of illegal gambling and racketeering enterprise, and **that attorney agreed to participate in scheme for his personal financial gain. 18 U.S.C.A. 371. [23] Criminal Law 110 26

110 Criminal Law 110I Nature and Elements of Crime 110k26 k. Criminal Act or Omission. Most Cited Cases **Acts which are themselves legal lose their legal character when they become constituent elements of an unlawful scheme. [24] Criminal Law 110 1153.1

110 Criminal Law 110XXIV Review 110XXIV(N) Discretion of Lower Court 110k1153 Reception and Admissibility of Evidence 110k1153.1 k. In General. Most Cited Cases (Formerly 110k1153(1)) Court of Appeals reviews a district court's evidentiary rulings for an abuse of discretion. [25] Criminal Law 110 1141(2)

110 Criminal Law 110XXIV Review 110XXIV(M) Presumptions 110k1141 In General 110k1141(2) k. Burden of Showing Error. Most Cited Cases The defendant has a heavy burden in challenging a trial court's evidentiary rulings on appeal, and the trial court's rulings are given special deference because of the trial judge's first-hand exposure to the witnesses and the evidence as a whole, and because of his familiarity with the case and ability to gauge the likely impact of the evidence in the context of the entire proceeding. [26] Criminal Law 110 1156.2

110 Criminal Law 110XXIV Review 110XXIV(N) Discretion of Lower Court 110k1156.1 Sentencing 110k1156.2 k. In General. Most Cited Cases (Formerly 110k1147) Under an abuse of discretion standard, reversal is warranted only when the trial judge's decision is based on an erroneous conclusion of law or where the record contains no evidence on which he rationally could have based that decision. [27] Criminal Law 110 429(2)

110 Criminal Law 110XVII Evidence 110XVII(P) Documentary Evidence 110k429 Public or Official Acts, Proceedings, Records, and Certificates 110k429(2) k. Judicial Acts, Proceedings, and Records. Most Cited Cases Defendant, who was attorney, was not entitled to introduce transcript of hearing resulting in injunction preventing state law enforcement officer from interfering with business of defendant's client, in subsequent prosecution of defendant for conspiracy and obstruction of justice, to show that defendant, who pursued proceedings against officer, had reasonable belief that officer was in fact a corrupt agent, where hearing, initiated by attorney, was conducted in violation of officer's due process rights. [28] Criminal Law 110 419(1.5)

110 Criminal Law 110XVII Evidence 110XVII(N) Hearsay 110k419 Hearsay in General 110k419(1.5) k. Particular Determinations, Hearsay Inadmissible. Most Cited Cases Defendant, who was attorney, was not entitled to introduce testimony to demonstrate his reasonable belief that state law enforcement officer perjured himself at hearing in prosecution of third party, in subsequent prosecution of defendant for conspiracy and obstruction of justice based in part on defendant's attempts to initiate investigation and indictment of officer, as such testimony would be hearsay, and officer's credibility was not at issue in instant prosecution. Fed.Rules Evid.Rule 801, 28 U.S.C.A.

[29] Criminal Law 110

663

110 Criminal Law 110XX Trial 110XX(C) Reception of Evidence 110k663 k. Introduction of Documentary and Demonstrative Evidence. Most Cited Cases Redaction of documents offered by defendant in prosecution for conspiracy and obstruction of justice was proper where admission of documents in their entirety would have impermissibly placed allegations of prosecutorial conduct before the jury. [30] Criminal Law 110 1168(2)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1168 Rulings as to Evidence in General 110k1168(2) k. Reception of Evidence. Most Cited Cases Even if the district court's evidentiary rulings were erroneous, reversal is not required so long as the errors were harmless, and harmful error results only if the error has a substantial and injurious effect or influence on the jury's verdict. [31] Criminal Law 110 1170(1)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1170 Exclusion of Evidence 110k1170(1) k. In General. Most Cited Cases A defendant is entitled to a new trial only if there is a reasonable possibility that the exclusion of the evidence had a prejudicial effect upon the jury's verdict. [32] Criminal Law 110 1170(1)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1170 Exclusion of Evidence 110k1170(1) k. In General. Most Cited Cases Even if district court erred in excluding certain evidence in prosecution for conspiracy and obstruction of justice, errors were harmless because admission of excluded evidence would not have produced a different result; jury possessed more than enough evidence to convict defendant. [33] Criminal Law 110 1139

110 Criminal Law 110XXIV Review 110XXIV(L) Scope of Review in General 110XXIV(L)13 Review De Novo 110k1139 k. In General. Most Cited Cases

Criminal Law 110

1153.16(2)

110 Criminal Law 110XXIV Review 110XXIV(N) Discretion of Lower Court 110k1153 Reception and Admissibility of Evidence 110k1153.16 Reception of Evidence 110k1153.16(2) k. Confrontation. Most Cited Cases (Formerly 110k1153(4)) Criminal Law 110 1153.18(2)

110 Criminal Law 110XXIV Review 110XXIV(N) Discretion of Lower Court 110k1153 Reception and Admissibility of Evidence 110k1153.18 Examination 110k1153.18(2) k. Cross-Examination. Most Cited Cases (Formerly 110k1153(4)) Normally, Court of Appeals reviews a trial court's restriction on or limitation of cross-examination for an abuse of discretion, but, where the restriction impacts the defendant's Sixth Amendment right to confrontation, the review is de novo. U.S.C.A. Const.Amend. 6. [34] Criminal Law 110 662.7

110 Criminal Law 110XX Trial 110XX(C) Reception of Evidence 110k662 Right of Accused to Confront Witnesses 110k662.7 k. Cross-Examination and Impeachment. Most Cited Cases The Confrontation Clause guarantees an opportunity for effective cross-examination, not cross-examination that is effective in whatever way, and to whatever extent, the defense may wish; so long as cross-examination elicits adequate information to allow a jury to assess a witness's credibility, motives, or possible bias, the Sixth Amendment is not compromised by a limitation on cross-examination. U.S.C.A. Const.Amend. 6. [35] Criminal Law 110 662.7

110 Criminal Law 110XX Trial 110XX(C) Reception of Evidence 110k662 Right of Accused to Confront Witnesses 110k662.7 k. Cross-Examination and Impeachment. Most Cited Cases District court's refusal to allow defense counsel to impeach witness with his grand jury testimony during crossexamination did not violate defendant's Sixth Amendment right of confrontation, where witness admitted that he had perjured himself in his grand jury testimony, and defendant had ample opportunity to demonstrate witness's lack of credibility during cross-examination. U.S.C.A. Const.Amend. 6. Before BAUER, FLAUM, and MANION, Circuit Judges.

BAUER, Circuit Judge. After a jury trial, Amiel Cueto was convicted of one count of conspiracy to defraud the United States, in violation of 18 U.S.C. 371, and three counts of obstruction of justice, in violation of the omnibus clause of 18 U.S.C. 1503. The district court sentenced Cueto to 87 months imprisonment and imposed monetary penalties. Cueto now appeals his convictions and sentence, arguing that: (1) the conviction for conspiracy to defraud is invalid because of constitutional infirmities as well as insufficiency of the evidence; (2) the convictions for obstruction of justice are also invalid because of constitutional infirmities and insufficiency of the evidence; (3) he is entitled to a new trial because the district court erroneously excluded certain defense evidence; and (4) his sentence should be vacated and remanded because the district court erroneously calculated his sentence. For the following reasons, we affirm. BACKGROUND Thomas Venezia owned **B & H Vending/Ace Music Corporation (B & H), a vending and amusement business, and operated an illegal video gambling business through a pattern of racketeering activities and illegal gambling payouts, in violation of state and federal anti-gambling and racketeering laws. Venezia hired Amiel Cueto, an attorney, to represent him as well as to defend the tavern owners associated with B & H in the event of any arrests and/or criminal charges for their participation in the illegal gambling operation. In March of 1995, Venezia and B & H were indicted on federal racketeering charges, in addition to other related charges including illegal gambling.FN1 Throughout the investigation and prior to Venezia's indictment, Cueto served as Venezia's lawyer and advisor. Cueto was not Venezia's attorney of record during the trial; nonetheless, the record indicates that Venezia continued to rely on Cueto's advice throughout the prosecution of the racketeering case. FN1. The charges alleged that B & H supplied video poker games to various liquor-selling establishments on which the tavern owners provided illegal gambling payouts to its customers. B & H then reimbursed the tavern owners for the money they paid out on the video games and shared with the owners any profits the games earned. On December 2, 1995, Venezia and B & H were convicted of racketeering, illegal gambling, and conspiracy arising out of the operation*625 of the illegal gambling business. United States v. B & H Vending/Ace Music Corp. & Thomas Venezia, et al., No. 95-30024. Seven months later, another federal grand jury returned a second indictment naming Cueto, Venezia, and Robert Romanik, a local public official and investigator who worked for Cueto and Venezia. They were charged with, inter alia: (1) conspiracy to defraud the United States, in violation of 18 U.S.C. 371, and (2) obstruction of justice, in violation of the omnibus clause of 18 U.S.C. 1503, for their conduct throughout the investigation of Venezia and his illegal gambling operation and the indictment and prosecution of the racketeering case. This second indictment is the impetus for the current appeal. To understand the context of the instant indictment, convictions, and appeal, we examine the nature and scope of Cueto's relationship with Venezia, his association with the illegal gambling operation, and his involvement in the investigation, indictment, and prosecution of Venezia, the illegal gambling operation, and the racketeering enterprise. In 1987, Venezia purchased a vending and amusement business, later known as B & H, which operated an illegal video gambling business for about eight years. B & H supplied video poker games to local bars in the metropolitan area of East St. Louis, Illinois, including a Veterans of Foreign Wars Post (VFW) on Scott Air Force Base, and the tavern owners agreed to make illegal gambling payouts to its customers. FN2 State agents believed the video games were being used for illegal gambling purposes, and beginning in 1992, **the Illinois Liquor Control Commission (ILCC) and the State Police initiated a joint investigation in St. Clair County, which targeted illegal gambling operations in Southern Illinois. FN2. Video games that swallow pocket change and pay off in game replays are unobjectionable; but if the owner of an establishment pays winners in cash or liquor, then it is a violation of Illinois anti-gambling laws. The ILCC has broad investigatory powers to supervise liquor licensees, and ILCC Agent Bonds Robinson worked on the task force and investigated the gambling operations in cooperation with the state police. Initially, Robinson worked in a non-undercover capacity as part of the state investigation to determine, in the course of

routine liquor inspections, whether any establishment was making illegal gambling payouts. Agents of the ILCC began to strictly enforce the gambling regulations and frequently visited the taverns to ensure compliance. Eventually, the FBI became interested in the state's investigation, and ultimately decided to use Robinson in a federal investigation of illegal gambling operations in St. Clair County, particularly Venezia's gambling operation.FN3 At some later point, Robinson assumed an undercover role for the FBI as a corrupt liquor agent in an attempt to gather evidence against Venezia and B & H. Soon thereafter, the state police raided the VFW Post, seized B & H's video poker games, and arrested two VFW employees for maintaining an illegal gambling establishment. After the raid, Venezia and B & H supplied additional video games to the VFW, which continued to provide its customers with illegal gambling payouts. FN3. When the FBI decided to use Robinson in its investigation of the illegal gambling operations, he was already working for the FBI in an undercover capacity in an unrelated investigation involving illegal prostitution and racketeering. In an attempt to gather evidence, Robinson, who was present at the VFW raid, indicated that Venezia could avoid further interruptions of his illegal gambling operation if he were to offer a bribe to discourage the investigation and the interference, and he suggested to Venezia that they meet. Venezia consulted with Cueto, who instructed Venezia to meet with Tom Daley, one of his law partners at the time. In an attempt to portray Robinson as a dishonest agent, Daley reported to the ILCC that Robinson had solicited a bribe at the VFW. A meeting was then scheduled between Venezia and Robinson, who met at B & H corporate headquarters. Robinson taped the conversation at the FBI's request, and the tape was introduced into evidence in the racketeering case and at Cueto's trial.FN4 Soon after the meeting, the *626 VFW was raided again; B & H video poker games were seized, and two employees were arrested. The ILCC issued an administrative violation to the VFW as well as a warning to remove the illegal gambling machines, otherwise, its liquor license would be revoked. Again, Venezia consulted with Cueto about the raids, the criminal charges, and the prosecutions, and they discussed available options and courses of action. FN4. Of course, the defendant and the government have conflicting opinions about the substance of the conversation and whether a bribe was solicited for investigatory or criminal purposes. First, Cueto and Venezia drafted a letter, detailing Robinson's alleged corrupt conduct and accusing him of soliciting bribes, and delivered it to St. Clair County State's Attorney Robert Haida. **Cueto also filed a complaint in state court against Robinson, in which Cueto alleged that Robinson was a corrupt agent. See Venezia v. Robinson, No. 92-CH 299. Cueto obtained a court order that required Robinson to appear for a hearing in People v. Moore, one of the gambling prosecutions arising from the VFW raid.FN5 Pursuant to the order, Robinson appeared in state court, and Cueto immediately served him with a subpoena, which required him to appear in court within fifteen minutes for an injunction hearing in Venezia v. Robinson. Cueto had prepared a petition, requesting either a temporary restraining order or a preliminary and permanent injunction against alleged extortion and other vexation to prevent Robinson from interfering with the operation of Venezia's business. Robinson had not seen a copy of the complaint, had not been served with process, and was not represented by counsel. FN5. At trial, Cueto admitted that he obtained the court order for unlawful purposes and that he fraudulently used the court order to lure Robinson to court for the injunction proceedings. See Trial Transcript, Volume 27 at 72-73, 95 (hereinafter all references to the transcript of the trial are cited as Transcript, Volume: Page). At the hearing, Robinson's requests for an attorney were denied, and the state court judge permitted Cueto to question Robinson about the FBI's investigation (which at that point was still a covert operation) and the evidence it had obtained in the course of the investigation. Without permitting Robinson to put on a defense and without articulating any findings of fact or conclusions of law, the state court entered a preliminary injunction against Robinson, which indefinitely enjoined him from interfering with Venezia's business operations. Venezia then returned to the VFW, as well as other taverns affiliated with the gambling operation, to advise them that a state court judge had entered an injunction against Robinson and that he could no longer interfere with their establishments and the illegal gambling operation.

Notwithstanding the injunction and pursuant to instructions from the Director of ILCC to continue his routine liquor inspections, Robinson visited another establishment associated with B & H's gambling operation and discovered that the tavern owner was providing illegal gambling payouts on some of the video machines. Thereafter, Dorothy McCaw was arrested for operating and maintaining an illegal gambling establishment, and she signed a written confession for her participation in illegal gambling activities. Upon learning of the inspection and arrest, Venezia contacted Cueto, who arranged for Venezia and Romanik, the third individual charged in the instant indictment, to obtain another statement from McCaw. Cueto then drafted a letter to the ILCC, State's Attorney Haida, the Office of the United States Attorney for the Southern District of Illinois, and the FBI, claiming that his client was suffering damage as a result of Robinson's unlawful interference with the operation of Venezia's business and threatened that if the conduct continued, he would file suit against the ILCC, in addition to Robinson, for damages incurred. Without McCaw's knowledge, Cueto attached to that letter the statement she had given to Venezia and Romanik, which supported Cueto's allegations of interference. Cueto also filed a rule to show cause in state court, which described Robinson's violations of the injunction and requested the court to find him in contempt; McCaw's statement also was attached to the rule to show cause, again without her knowledge. Represented by the Office of the United States Attorney for the Southern District of Illinois, Robinson filed a motion to remove the rule to show cause in Venezia v. Robinson to federal district court pursuant to *62728 U.S.C. 1442(a)(1). In the removal proceeding, the district court determined that Robinson had been working for the FBI under the control of a federal agent during the VFW raids, which therefore established federal jurisdiction. After removal, the district court dissolved the injunction and dismissed the complaint. Venezia v. Robinson, No. 92 CV 867. Cueto filed an appeal in this court, challenging the dissolution of the injunction and the dismissal of the complaint. **Recognizing that the injunction hearing had violated Robinson's rights to due process, we affirmed the district court's order. Venezia v. Robinson, 16 F.3d 209 (7th Cir.1994). Cueto filed a petition for certiorari in the Supreme Court, which also was denied. See 513 U.S. 815, 115 S.Ct. 71, 130 L.Ed.2d 26 (1994). **During the investigation, the record indicates that Cueto and Venezia developed more than a professional attorney-client relationship, entering into various financial transactions and business deals, some of which involved secret partnerships. A few examples include: **(1) they purchased unimproved real estate, **developed the real estate, **built and managed a topless nightclub (Club Exposed), which operated some of B & H's illegal gambling machines; **(2) Venezia and Cueto incorporated Millennium III, an asbestos removal company, and applied for and obtained a $600,000 line of credit to complete the purchase acquisition; and **(3) Venezia purchased Cueto's office building and moved B & H corporate headquarters into it. **The record demonstrates that in order to obtain financing, Venezia reported B & H as a principal asset on his financial statements and loan applications to establish the necessary credit he and Cueto needed to become joint borrowers on various loans. **Moreover, the record indicates that the lender in the Millennium purchase relied upon Venezia's financial statement in its decision to loan the money for the acquisition. See Transcript, 19:112-113. About the time the Millennium purchase was finalized, state police and Robinson arrested George Vogt, a B & H customer, for gambling. At a hearing in the state's prosecution of Vogt, Robinson testified and Cueto crossexamined him. After the hearing, Cueto again approached State's Attorney Haida, provided him with the transcripts from the Vogt hearing, and urged Haida to indict Robinson for perjury. Thereafter, Haida commenced an investigation of Robinson's activities. Nothing came of Cueto's allegations of perjury, and the investigation ended without any charges being filed. The investigation of Venezia and B & H began in early 1992, and the events discussed above occurred over a period of approximately three years. We briefly mentioned some of the initial business and financial dealings between Venezia and Cueto, but to avoid an even longer discussion of these background facts, we think it unnecessary to specifically discuss every financial transaction contained in the record except to point out that together Venezia and Cueto participated in various business transactions, in which millions of dollars exchanged hands to finance the purchases of various real estate interests and construction costs relating to various development projects, including certain gambling operations.FN6 The indictment specifically charged that Club Exposed, the nightclub owned by Venezia and Cueto, Millennium III, as well as other business transactions in which they were involved, depended upon the continued operation of B & H and the illegal gambling business to secure and to cover the various loans and debts they incurred in their financial ventures.

FN6. The government submitted a summary exhibit of the joint business transactions engaged in by Venezia and Cueto from 1991 until 1995. See Trial Exhibit # 276. Even after Cueto became a business partner of Venezia and invested in various real estate and development projects with him, he continued to give Venezia legal advice. Although Cueto was not an attorney of record, he participated in the preparation of Venezia's defense in the racketeering prosecution. Cueto continued to urge State's Attorney Haida to indict Robinson for perjury. He also contacted Congressman Jerry Costello, who owned an equal one-third partnership interest in a gambling development project with Cueto and Venezia, and asked the Congressman to contact Haida and to offer him a seat on the judiciary in exchange for Haida's *628 recommendation that Cueto be appointed as the next State's Attorney. Cueto also began to publish a newspaper, the East Side Review, and authored an article in which he indicated that in the next election he intended to run for St. Clair County State's Attorney, and in the event he was elected, he would prosecute Robinson. FN7 FN7. In the East Side Review, Cueto also authored and published various articles in which he complained of prosecutorial misconduct in association with the racketeering case and attacked the integrity and reputations of various Assistant United States Attorneys involved in the indictment and prosecution of the racketeering case. In August of 1994, the government empaneled a grand jury to examine the evidence obtained in the FBI's investigation of Venezia and B & H, and the grand jury also initiated its own investigation of these allegations. In response, Cueto prepared and filed various motions to hinder the investigation and to discharge the grand jury, all of which were denied. Notwithstanding the defense tactics and delays, the grand jury indicted Venezia, among others; he was prosecuted, and ultimately, convicted for operating an illegal gambling enterprise, in addition to other related convictions. Seven months after the racketeering convictions in July of 1996, another grand jury returned a separate nine count indictment against Cueto, Venezia, and Romanik. It is this indictment and the subsequent convictions on various counts of this indictment that are the subject of this appeal.FN8 **Count 1 of the indictment charged Cueto in a three-part conspiracy to defraud the United States, in violation of 18 U.S.C. 371, alleging that he misused his office as an attorney and unlawfully and intentionally conspired with Venezia and Romanik to impede, impair, obstruct, and defeat the lawful function of the FBI, the grand jury, and the federal district court in connection with the investigation, indictment, and prosecution of Venezia, B & H, and the illegal gambling operation and racketeering enterprise. The indictment alleged that Cueto and Venezia's business relationship created Cueto's financial motive for his participation in the conspiracy, in which he endeavored to protect the illegal gambling enterprise and to maintain its continued operation in order to safeguard his personal financial interests. FN8. For purposes of this opinion, we only discuss the counts for which Cueto was convicted: Counts **1, **2, **6, and **7. Cueto was acquitted of the charges in Counts 3, 4, and 8. Romanik pleaded guilty to Count 5 of the instant indictment for lying to the grand jury. Pursuant to a deal made with the government, Venezia pleaded guilty to the crimes charged in the indictment and testified at Cueto's trial in exchange for the government's recommendation that his 15 year sentence in the illegal gambling and racketeering case be reduced to the lower end of the Sentencing Guidelines, which would result in a reduction from 15 years to 10 years. In **the first part of the conspiracy, the government charged that Cueto conspired to impede and delay the FBI investigation primarily by attacking the reputation of ILCC Agent Bonds Robinson and by urging the St. Clair County State's Attorney to investigate, indict, and prosecute Robinson for alleged extortion. **Second, the indictment alleged that Cueto conspired to influence and hinder the function of the grand jury by filing false motions, which attacked the operations of the FBI and the Office of the United States Attorney, in an attempt to delay and disrupt the investigation and to discharge the grand jury. Finally, **the third aspect of the conspiracy focused on Cueto's attempts to obstruct the proceedings in federal district court by persuading Venezia's (and his codefendants') defense counsel to file various motions, including a motion to disqualify the district court judge assigned to hear the racketeering case.

Counts **2, **6, and **7 of the indictment charged obstruction of justice in violation of the omnibus clause of 18 U.S.C. 1503,FN9 **alleging that Cueto corruptly endeavored to use his office as an attorney to influence, obstruct, and impair the due administration of justice in various court proceedings in connection with the prosecution of Venezia, his illegal gambling operation, and the racketeering enterprise in United States v. B & H Vending/Ace Music Corp. & Thomas Venezia, et al. Specifically, **Count 2 of the indictment*629 charged that Cueto corruptly endeavored to influence the due administration of justice in Venezia v. Robinson by filing or causing to be filed pleadings in connection with the proceedings in federal district court, an appellate brief in this court, and a petition for certiorari to the United States Supreme Court. **Count 6 involved Cueto's actions in regard to ILCC Agent Bonds Robinson, and the indictment charged that Cueto corruptly endeavored to obstruct the lawful function of the federal grand jury in his attempts to encourage and to persuade State's Attorney Haida to indict Robinson. **Count 7 also focused on the filing of various court papers, and the indictment alleged that Cueto corruptly endeavored to influence, obstruct, and impede the proceedings in federal district court by preparing and filing and urging defense counsel to prepare and file false pleadings and court papers in connection with the racketeering case. FN9. Hereinafter, all statutory references are to Title 18 of the United States Code unless otherwise indicated. After a jury trial, Cueto was convicted of the charges in Counts 1, 2, 6, and 7 and the district court ordered him to serve a prison term of 87 months, to be followed by two years of supervised release, and imposed monetary penalties. Cueto filed a timely notice of appeal. He asserts several arguments on appeal, challenging his convictions and sentence. **First, Cueto contends that the conviction for conspiracy to defraud the government is invalid, arguing that: (1) the meaning of conspiracy to defraud in 371 is unconstitutionally vague as applied to the conduct charged in the indictment; and (2) his conviction may rest on a constitutionally or legally invalid theory because the conduct charged in the indictment includes lawful conduct that was undertaken openly and in public view. Next, Cueto challenges each conviction for obstruction of justice in violation of the omnibus clause of 1503 as invalid, arguing that: (1) the omnibus clause of 1503 is unconstitutionally vague as applied to the conduct charged in the indictment; (2) the omnibus clause of 1503 does not cover either the filing of court papers or attempts to encourage a state prosecutor to investigate another state official for misconduct; (3) the conduct charged fails to satisfy the nexus requirement as articulated by the Supreme Court in United States v. Aguilar, 515 U.S. 593, 115 S.Ct. 2357, 132 L.Ed.2d 520 (1995); and (4) an attempt to persuade a prosecutor to take action against a state officer for misconduct is speech protected by the First Amendment. Cueto also asserts that he is entitled to a new trial because the district court erred when it excluded certain defense evidence: (1) the transcript of the state injunction hearing in Venezia v. Robinson; (2) Robinson's testimony at a hearing in one of the state's gambling prosecutions, People v. Vogt, arising from Venezia's illegal gambling operation; and (3) Venezia's grand jury testimony, which Cueto wanted to use for impeachment purposes. He also claims that the district court erred by redacting portions of certain documents and newspaper articles. Finally, Cueto argues that his sentence should be vacated and remanded because the district court judge erroneously calculated his sentence by not grouping the obstruction of justice convictions. With these facts as background, we now consider the issues presented for review and examine each argument in turn. ANALYSIS [1] Before we begin our analysis, we discuss the appropriate standard of review, our particular role in this review, and the limited scope of this decision. Our ruling today does not interfere with legitimate avenues of advocacy of even the most zealous of attorneys; we do nothing more than consider the constitutionality of certain criminal statutes aimed at protecting the sanctity and integrity of our justice system from corrupt influences and apply them in a sober and impartial fashion. Ultimately, we consider the sufficiency of evidence presented by the prosecution in our review of the jury's guilty verdict. Appellate review of a jury's verdict is limited; if any rational trier of fact could have found the elements of the crime beyond a reasonable doubt, we are bound to affirm the verdict. Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979). We have repeatedly recognized that defendants challenging the sufficiency of the evidence at trial face a nearly insurmountable hurdle. See, *630 e.g., United States v. Moore, 115 F.3d 1348, 1363 (7th Cir.1997) (citing other cases).

[2][3] In reviewing the sufficiency of the evidence in a criminal case, the relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. Jackson, 443 U.S. at 319, 99 S.Ct. 2781 (emphasis in original); see also United States v. Jackson, 103 F.3d 561, 567 (7th Cir.1996). We defer to the jury's credibility determinations, its weighing of the evidence, and its drawing of reasonable inferences and overturn a verdict only when the record contains no evidence, regardless of how it is weighed, from which a jury could find guilt beyond a reasonable doubt. Moore, 115 F.3d at 1363. With that said, we recognize that the defendant asserts various other arguments challenging his convictions and sentence, and we discuss those standards of review at the point in our analysis when we consider those alternative arguments. I. OBSTRUCTION OF JUSTICE [4] Cueto asserts several arguments with respect to his convictions on Counts 2, 6, and 7 for obstruction of justice, contending that the omnibus clause of 1503 is unconstitutionally vague as applied to the conduct charged in the indictment and, alternatively, that the evidence established at trial on these counts is insufficient to support his convictions. We address each argument in turn and begin with the constitutional challenges. Cueto argues that much of what lawyers do-are attempts to influence the justice system, and that the omnibus clause of 1503 was not intended to apply to the type of conduct charged in the indictment. Appellant's Brief at 17 (emphasis in original). Questions regarding the constitutionality or scope of a statute are reviewed de novo. Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 497-98, 102 S.Ct. 1186, 71 L.Ed.2d 362 (1982). [5] [I]n determining the scope of a statute, one is to look first at its language. If the language is unambiguous, ordinarily it is to be regarded as conclusive unless there is a clearly expressed legislative intent to the contrary. Dickerson v. New Banner Institute, Inc., 460 U.S. 103, 110, 103 S.Ct. 986, 74 L.Ed.2d 845 (1983) (internal citations omitted) (quoting Consumer Product Safety Comm'n v. GTE Sylvania, Inc. , 447 U.S. 102, 108, 100 S.Ct. 2051, 64 L.Ed.2d 766 (1980)). The omnibus clause of 1503 is a catch-all provision that states: Whoever ... corruptly or by threats or force, or by any threatening letter or communication, influences, obstructs, or impedes or endeavors to influence, obstruct or impede, the due administration of law, shall be imprisoned.... 18 U.S.C. 1503 (emphasis added). This clause was intended to ensure that criminals could not circumvent the statute's purpose by devising novel and creative schemes that would interfere with the administration of justice but would nonetheless fall outside the scope of 1503's specific prohibitions. United States v. Tackett, 113 F.3d 603, 607 (6th Cir.1997). The obstruction of justice statute was drafted with an eye to the variety of corrupt methods by which the proper administration of justice may be impeded or thwarted, a variety limited only by the imagination of the criminally inclined. United States v. Griffin, 589 F.2d 200, 206 (5th Cir.1979) (citation omitted). [6] Cueto also contends that the vagueness problems are exacerbated by this court's broad construction of the term corruptly, arguing that it fails to provide meaningful and adequate notice as to what conduct is proscribed by the statute. The Seventh Circuit has approved a jury instruction which articulates a definition for the term corruptly, and the district court judge included this definition in its instructions to the jury: Corruptly means to act with the purpose of obstructing justice. The United States is not required to prove that the defendant's only or even main purpose was to obstruct the due administration of justice. The government only has to establish that the defendant should have reasonably seen that the natural and probable consequences of his acts was the obstruction of *631 justice. Intent may be inferred from all of the surrounding facts and circumstances. **Any act, by any party, whether lawful or unlawful on its face, may violate Section 1503, if performed with a corrupt motive. See Transcript, 32:68-69. The mere fact that a term covers a broad spectrum of conduct does not render it vague, and the requirement that a statute must give fair notice as to what conduct is proscribed cannot be used as a shield by one who is already bent on serious wrongdoing. Griffin, 589 F.2d at 206-207. [7][8] There is little case authority directly on point to consider whether an attorney acting in his professional capacity could be criminally liable under the omnibus clause of 1503 for traditional litigation-related conduct that

results in an obstruction of justice. **Correct application of Section 1503 thus requires, in a very real sense, that the factfinder discern-by direct evidence or from inference-the motive which led an individual to perform particular actions.... Intent may make any otherwise innocent act criminal, if it is a step in a plot. United States v. Cintolo, 818 F.2d 980, 991 (1st Cir.1987) (quoting Badders v. United States, 240 U.S. 391, 394, 36 S.Ct. 367, 60 L.Ed. 706 (1916)). Therefore, it is not the means employed by the defendant that are specifically prohibited by the statute; instead, it is the defendant's corrupt endeavor which motivated the action. **Otherwise lawful conduct, even acts undertaken by an attorney in the course of representing a client, can transgress 1503 if employed with the corrupt intent to accomplish that which the statute forbids. See Cintolo, 818 F.2d at 992 (means, though lawful in themselves, can cross the line of illegality if (i) employed with a corrupt motive, (ii) to hinder the due administration of justice, so long as (iii) the means have the capacity to obstruct). [9] We are not persuaded by Cueto's constitutional challenges, and his focus is misplaced. The government's theory of prosecution is predicated on the fact that Cueto held a personal financial interest in protecting the illegal gambling enterprise, which formed the requisite corrupt intent for his conduct to qualify as violations of the statute.FN10 Cueto focuses entirely on the legality of his conduct, and not the requisite criminal intent proscribed by 1503. It is undisputed that an attorney may use any lawful means to defend his client, and there is no risk of criminal liability if those means employed by the attorney in his endeavors to represent his client remain within the scope of lawful conduct.[that is the conduct is unlawful under and in violation of 18 U.S.C. Section 1503, if employed with the corrupt intent to accomplish that which the statute forbids.] However, it is the corrupt endeavor to protect the illegal gambling operation and to safeguard his own financial interest, which motivated Cueto's otherwise legal conduct, that separates his conduct from that which is legal. [In applying this to Adorno & Yoss, it is the corrupt endeavor to further the mail and wire fraud scheme of WELLS FARGO, which motivated Adorno & Yosss otherwise legal conduct, that separates this conduct from that which is legal.] FN10. This theory of prosecution brings us some pause. With the government's emphasis on Cueto's involvement in Venezia's illegal gambling operation and the racketeering enterprise, we are puzzled why the government did not indict and prosecute Cueto in the underlying racketeering case for his participation in the illegal gambling operation. Although the government's decision not to prosecute Cueto in the previous case is fundamentally inconsequential to the instant appeal, we are concerned about the relationship between the instant appeal and the underlying prosecution of the gambling operation and the racketeering enterprise. [10] Even though courts may be hesitant, with good reason and caution, to include traditional litigation-related conduct within the scope of 1503, the omnibus clause has been interpreted broadly in accordance with congressional intent to promote the due administration of justice and to prevent the miscarriage of justice, and an individual's status as an attorney engaged in litigation-related conduct does not provide protection from prosecution for criminal conduct. Aguilar, 515 U.S. at 599, 115 S.Ct. 2357; see also United States v. Goulding, 26 F.3d 656, 665 (7th Cir.1994); Cintolo, 818 F.2d at 990 (a criminal lawyer has no license to act as a lawyer-criminal). Cueto's arguments have no merit. As a lawyer, he possessed a heightened awareness of the law and its scope, and he cannot claim lack of fair notice as to what conduct is proscribed by 1503 to shield himself from criminal liability, particularly when he was already bent on serious wrongdoing. Griffin, 589 F.2d at 206-207. More so than an ordinary individual, an attorney, in particular a criminal defense attorney, has a sophisticated understanding of the type of *632 conduct that constitutes criminal violations of the law. **There is a discernable difference between an honest lawyer who unintentionally submits a false statement to the court and an attorney with specific corrupt intentions who files papers in bad faith knowing that they contain false representations and/or inaccurate facts in an attempt to hinder judicial proceedings. It is true that, to a certain extent, a lawyer's conduct influences judicial proceedings, or at least attempts to affect the outcome of the proceedings. However, that influence stems from a lawyer's attempt to advocate his client's interests **within the scope of the law. It is the corrupt endeavor to influence the due administration of justice that is the heart of the offense, and Cueto's personal financial interest is the heart of his corrupt motive. An amicus brief submitted by the National Association of Criminal Defense Lawyers (Association) also questions the proper scope of the omnibus clause of 1503, and the Association articulates its fears that if we affirm

Cueto's convictions, criminal defense attorneys will be subject to future prosecutions not only for actual misconduct, but also for apparent and inadvertent wrongdoing, notwithstanding a lawyer's good faith advocacy. The Association believes that this type of sweeping prosecution will sufficiently chill vigorous advocacy and eventually destroy the delicate balance between prosecution and defense which is necessary to maintain the effective operation of the criminal justice system. Although the Association discusses valid policy concerns and asserts legitimate arguments, some of which we generally agree with, we are also concerned with the flipside of its argument. If lawyers are not punished for their criminal conduct and corrupt endeavors to manipulate the administration of justice, the result would be the same: the weakening of an ethical adversarial system and the undermining of just administration of the law. We have the responsibility to ensure that the integrity of the criminal justice system is maintained and that protection includes granting to both the prosecution and the defense flexibility and discretion in the conduct of the trial and the presentation of evidence, Imbler v. Pachtman, 424 U.S. 409, 426, 96 S.Ct. 984, 47 L.Ed.2d 128 (1976), in addition to enforcing mechanisms of punishment, which necessarily include criminal prosecution, to prevent abuses of the system. We have carefully examined the fears articulated by the National Association of Criminal Defense Lawyers, in addition to the arguments put forth by the defendant, that a decision upholding the application of the omnibus clause of 1503 to litigation-related conduct may deter or somehow chill the criminal defense lawyers in zealous advocacy, and we find those concerns to be exaggerated, at least as considered in light of the facts in the present case. Although we appreciate that it is of significant importance to avoid chilling vigorous advocacy and to maintain the balance of effective representation, we also recognize that a lawyer's misconduct and criminal acts are not absolutely immune from prosecution. We cannot ignore Cueto's corrupt endeavors to manipulate the administration of justice and his clear criminal violations of the law. As the First Circuit recognized in Cintolo: Nothing in the caselaw, fairly read, suggests that lawyers should be plucked gently from the maddening crowd and sheltered from the rigors of 18 U.S.C. 1503 in the manner urged by appellant and by the amici. Nor is there sufficient public policy justification favoring such a result. To the contrary, the overriding public policy interest is that [t]he attorney-client relationship cannot ... be used to shield or promote illegitimate acts.... [A]ttorneys, just like all other persons, ... are not above the law and are subject to its full application under appropriate circumstances. 818 F.2d at 993-94 (internal citations omitted). Accordingly, we conclude that the omnibus clause of 1503 may be used to prosecute a lawyer's litigation-related criminality and that neither the omnibus clause of 1503 nor this court's construction of the term corruptly is unconstitutionally vague as applied to the conduct charged in the indictment for which Cueto was convicted. [11][12] We now turn to Cueto's argument that his convictions on the obstruction of justice counts were not supported by sufficient*633 evidence. Cueto's task is a formidable one, and an examination of the record illuminates that the evidence presented in this case overwhelmingly supports the jury's verdict. In order to establish a violation of 1503, the government must demonstrate that: **(1) there was a pending judicial proceeding; **(2) the defendant knew of the proceeding; **(3) he influenced, obstructed, or impeded, or endeavored to influence, obstruct or impede the due administration of justice; and **(4) he did so corruptly. United States v. Maloney, 71 F.3d 645, 656 (7th Cir.1995). There must be a nexus between the defendant's efforts and the judicial proceeding sought to be corruptly influenced. Aguilar, 515 U.S. at 598-599, 115 S.Ct. 2357. However, a defendant's actions need not be successful in order to be prosecuted under the statute. All that is required is that the defendant has knowledge or notice that his actions are likely to affect the just administration of the subject proceedings. Id. Again the focus of Cueto's argument is misplaced; he argues that his conduct does not fall within the scope of the omnibus clause of 1503 and that the government presented insufficient evidence to demonstrate his guilt. Cueto, however, fails to address the essence of the government's allegations and, ultimately, the basis for his convictions; it is his corrupt endeavor to obstruct the administration of justice that transforms his traditional litigation-related conduct into criminal violations of the law. The gloss which Cueto places on the evidence manifestly misapprehends both the jury's fact finding function and our role in the review of the verdict.** In light of the considerable circumstantial evidence in support of its assessment of the situation, the jury was reasonably entitled to disbelieve Cueto's characterization of his conduct and to accept the contrary interpretation urged by the government that Cueto, with a corrupt purpose, endeavored to obstruct the due administration of justice. That

finding cannot be lightly overturned. **Indeed, the record adequately supports the conclusion that Cueto's conduct, though nominally litigation-related conduct on behalf of his client, was undertaken with **the corrupt intent to protect Venezia, Venezia's associates, and his business from criminal prosecution and to safeguard his personal financial interest in the illegal gambling operation, whatever the costs and consequences to the due administration of justice. [13] The charges in Count 2 of the indictment included allegations of a corrupt endeavor to obstruct the due administration of justice in Venezia v. Robinson by filing pleadings in federal district court and a continued attempt to hinder the proceedings by filing an appeal in this court and a petition for certiorari in the United States Supreme Court. The evidence demonstrates that Cueto successfully exposed the FBI's investigation, uncovered the evidence it had gathered, obtained the injunction against Robinson, and continued to file frivolous appeals after the district court dismissed the injunction and the complaint. See Transcript, 15:62-63; 16:71-72. Government agents, in fact, testified that the investigation was disrupted and that Cueto blew the lid off the ongoing investigation. See Transcript, 3:44; 16:55-59. The jury was amply justified in concluding that Cueto's repeated filings were motivated by his attempt to protect his client from prosecution and to safeguard his financial interest. Cueto's actions may qualify as traditional litigation-related conduct in form, but not in substance, and the evidence presented at trial demonstrates that Cueto clearly intended and corruptly endeavored to obstruct the due administration of justice in Venezia v. Robinson. [14] Similar to Count 2, Count 7 includes allegations of preparing and filing and causing defense counsel to prepare and file false pleadings and other court papers; the indictment specifically charged Cueto with encouraging defense counsel in the racketeering case to file false motions and pleadings for the purpose of impeding and obstructing the administration of justice in that case. We have no doubt that Cueto in fact intended to interfere with the investigation, attempted to delay the indictment, and endeavored to obstruct the proceedings in federal district court in connection with the prosecution of Venezia. See Transcript, 23:74; 25:17. We simply are not dealing with non-corrupt, legitimate*634 involvement in the preparation of Venezia's (and his co-defendants') defense. Nor are we dealing with inadvertent interference. From the evidence presented at trial, the jury was amply justified in concluding without a doubt that Cueto corruptly endeavored to obstruct the district court's proceedings in the gambling and racketeering prosecution. [15][16][17] In response to his conviction on Count 6, Cueto argues that his conviction should be reversed because the Aguilar nexus is absent; he contends that the government presented insufficient evidence to establish the relationship between his attempts to persuade State's Attorney Haida to investigate and indict Robinson and a pending judicial proceeding. FN11 Cueto contends that at the time the conduct charged in the indictment occurred, the grand jury had not yet been empaneled and that Venezia had not been indicted in the racketeering case, and therefore the nexus is lacking. **His argument, however, mischaracterizes the frame of time at issue in addition to the indictment and the charges therein. It is well established that investigations undertaken with the intention of presenting evidence before a grand jury are sufficient to constitute the due administration of justice under 1503. Maloney, 71 F.3d at 657. FN11. Cueto also asserts an alternative argument that his attempts to persuade the local prosecutor to indict a state official for misconduct are protected by the First Amendment. **Speech which is false and misleading is not protected by the First Amendment's right to freedom of speech. Herbert v. Lando, 441 U.S. 153, 171, 99 S.Ct. 1635, 60 L.Ed.2d 115 (1979); United States v. Walton, 36 F.3d 32, 35 (7th Cir.1994). Just as false statements are not immunized by the First Amendment, **meritless litigation based on false accusations and criminal intentions does not fall within the scope of protected speech and is not immunized by the First Amendment right to petition. Bill Johnson's Restaurants, Inc. v. NLRB, 461 U.S. 731, 743, 103 S.Ct. 2161, 76 L.Ed.2d 277 (1983). Cueto fails to show that his conduct is entitled to First Amendment protection; Cueto's conduct is not the kind of conduct with even a colorable claim to First Amendment protection and his argument must fail. Though Cueto's initial calls and letters to State's Attorney Haida may pre-date the empaneling of the grand jury, the phone call to Congressman Costello occurred after the indictment was unsealed. In addition, his letters to the State's Attorney occurred throughout the investigation, and the evidence indicates that Cueto knew of the investigation. Accordingly, Cueto's conduct prior to the empaneling of the grand jury as well as his subsequent acts to encourage State's Attorney Haida to investigate and prosecute Agent Robinson have the requisite nexus to the

judicial proceedings; there was sufficient evidence presented at trial for a rational trier of fact to conclude beyond doubt that Cueto repeatedly attempted to urge Haida to prosecute Robinson knowing that an investigation into Robinson's conduct would hinder the government's ability to continue to investigate Venezia and the gambling operation. Whatever the contours of the line between traditional lawyering and criminal conduct, they must inevitably be drawn case-by-case. We refuse to accept the notion that lawyers may do anything, including violating the law, to zealously advocate their clients' interests and then avoid criminal prosecution by claiming that they were just doing their job. As the First Circuit stated in Cintolo, [w]e refuse to chip some sort of special exception for lawyers into the brickwork of 1503. 818 F.2d at 996. We respect the importance of allowing defense counsel to perform legitimate activities without hindrance and recognize the potential dangers that could arise if prosecutors were permitted to inquire into the motives of criminal defense attorneys ad hoc. This case, however, does not create that avenue of inquiry; our conclusion is limited to the specific facts of this case. Viewing the facts and inferences most favorably to the government, as we are required to do, there was ample basis for the jury to find that Cueto corruptly endeavored to obstruct the due administration of justice. The jury was justified in concluding that Cueto had the requisite knowledge of the FBI's investigation of Venezia, the grand jury's inquiry, and the district court's proceedings and then acted in a manner that had the natural and probable effect of interfering with the lawful function of those governmental entities and the due administration of justice. His role as a defense attorney did *635 not insulate him from the criminal consequences of his corruptly-motivated actions. Accordingly, we affirm Cueto's convictions on Counts 2, 6, and 7. II. CONSPIRACY TO DEFRAUD THE UNITED STATES Cueto next challenges his conviction on Count 1 for conspiring to defraud the United States in violation of 18 U.S.C. 371, arguing that the statute is unconstitutionally vague as applied to the conduct charged in the indictment. He claims that the conspiracy to defraud clause is void for vagueness in the instant case because neither the statutory language, the legislative history, nor the case law interpreting 371 provides adequate notice to a person of ordinary intelligence that conduct such as that charged in the instant indictment would violate the statute. Cueto also argues that his conviction should be reversed because it may rest on a legally or constitutionally invalid theory. [18][19] Count 1 of the indictment charged Cueto with conspiracy to defraud the United States, in violation of 371, which states: If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined not more than $10,000 or imprisoned not more than five years or both. 18 U.S.C. 371. We have recognized that the statute is broad enough in its terms to include any conspiracy for the purpose of impairing, obstructing or defeating the lawful function of any department of the government; neither the conspiracy's goal nor the means used to achieve it need to be independently illegal. United States v. Jackson, 33 F.3d 866, 870 (7th Cir.1994). To sustain a conviction for conspiracy to defraud, the record must demonstrate: **(1) an agreement to accomplish an illegal objective against the United States; **(2) one or more overt acts in furtherance of the illegal purpose; and **(3) an intent to commit the substantive offense-in this case, the intent to obstruct justice. United States v. Cyprian, 23 F.3d 1189, 1202 (7th Cir.1994). Intent, as well as the agreement, may be inferred from circumstantial evidence concerning the relationship of the parties, their overt acts, and the totality of their conduct. United States v. Marren, 890 F.2d 924, 933 (7th Cir.1989). [20][21] The meaning of conspiracy to defraud is framed in general terms; it is impossible for Congress to anticipate, identify, and define each and every context in which an agreement to act would qualify as a conspiracy to defraud. As the Supreme Court recognized in United States v. Lanier, 520 U.S. 259, 117 S.Ct. 1219, 137 L.Ed.2d 432 (1997), general statements of the law are not inherently incapable of giving fair and clear warning, ... even though the very action in question has [not] previously been held unlawful. 117 S.Ct. at 1227 (quoting Anderson v. Creighton, 483 U.S. 635, 640, 107 S.Ct. 3034, 97 L.Ed.2d 523 (1987)). In Hammerschmidt v. United States, 265 U.S. 182, 44 S.Ct. 511, 68 L.Ed. 968 (1924), the Supreme Court clarified the meaning of conspiracy to defraud:

To conspire to defraud the United States means ... to interfere with or obstruct one of its lawful governmental functions by deceit, craft or trickery, or at least by means that are dishonest. It is not necessary that the Government shall be subjected to property or pecuniary loss by the fraud, but only that its legitimate official action and purpose shall be defeated by misrepresentation, chicane, or the overreaching of those charged with carrying out the governmental intention. 265 U.S. at 188, 44 S.Ct. 511. The fact that 371 has been applied to agreements not expressly anticipated by Congress nor specifically articulated in the statute does not demonstrate ambiguity nor does it create vagueness problems. A statute can be unambiguous without addressing every interpretative theory offered by a party. It need only be plain to anyone reading the Act that the statute encompasses the conduct at issue. Salinas v. United States, 522 U.S. 52, ----, 118 S.Ct. 469, 475, 139 L.Ed.2d 352 (1997) (quoting *636Gregory v. Ashcroft, 501 U.S. 452, 467, 111 S.Ct. 2395, 115 L.Ed.2d 410 (1991)). In fact, the Second Circuit has recognized that an indictment charging a conspiracy to defraud need only articulate with particularity the essential nature of the alleged fraud. United States v. Helmsley, 941 F.2d 71, 90-91 (2d Cir.1991). Although 371 does not specifically articulate that Cueto's various acts, which impaired the FBI's investigation, impeded the inquiries of the grand jury, and delayed and obstructed the proceedings in the district court, fall within its scope, **the instant indictment alleges with particularity the essential nature of the alleged fraud and identifies Cueto's specific conduct which furthered the conspiracy. The allegations in the indictment specifically describe the conduct charged as part of the essential nature of the alleged fraud, which provides the basis of Cueto's conviction for conspiracy to defraud. As applied to the conduct charged in the instant indictment, the conspiracy to defraud clause of 371 is not unconstitutionally vague, and the plain and ordinary meaning of conspiracy to defraud necessarily reaches Cueto's conduct. [22][23] Cueto, however, argues that the specificity of the indictment is problematic and far-reaching because it includes non-criminal conduct, which may not properly be a valid basis for the criminal charges and, ultimately, his conviction on Count 1. Cueto contends that his conduct is lawful lawyering conduct and that he cannot be guilty of a conspiracy to commit acts which are not criminal. To the contrary, the record clearly demonstrates that his conduct, which necessarily includes his corrupt endeavors, was not typical conduct of a lawyer and that it certainly was not lawful lawyering conduct. Based on our earlier determinations that there was sufficient evidence at trial to convict Cueto on the obstruction of justice charges for his litigation-related conduct, we can similarly dispose of the present argument. Although his actions initially may have stemmed from routine, even vigorous, advocacy, at some point his conduct exceeded the scope of lawful lawyering conduct. [A]cts which are themselves legal lose their legal character when they become constituent elements of an unlawful scheme. United States v. Bucey, 876 F.2d 1297, 1312 (7th Cir.1989) (quoting Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 707, 82 S.Ct. 1404, 8 L.Ed.2d 777 (1962)). Indeed, it is evident that many of his actions were prohibited by the rules of professional responsibility and the canons of legal ethics. See Transcript, 22:1-114. Although those violations do not necessarily constitute criminal violations of the law, **they are further evidence of an intent to participate in the conspiracy. We recognize that Cueto may initially have been hired in his professional capacity to provide legal advice and representation, but it was equally reasonable for the jury to conclude from the evidence presented at trial that his representation also was undertaken for a criminal purpose in an attempt to protect the illegal gambling operation [for Adorno & Yoss to advance WELLS FARGO fraudulent scheme to pervert and obstruct justice, and to advance WELLS FARGO mail and wire fraud] and to prevent government interference and that Cueto's role in the conspiracy was to use the power of his office as an attorney for the corrupt purpose of impairing, impeding, and obstructing the investigation, indictment, and prosecution of the illegal gambling and racketeering enterprise. Similarly, it was reasonable for the jury to conclude that Cueto agreed to participate in this scheme for his personal financial gain; the income generated by Venezia's illegal gambling operation was used to fund additional business ventures pursued in partnership with Cueto. Examining the evidence in the light most favorable to the government, we conclude that a rational jury could have found that the government proved the elements of 371 beyond a reasonable doubt and that Cueto conspired with others and purposefully and knowingly participated in a corrupt scheme to defraud the United States. **Accordingly, we find no error with Cueto's conviction on Count 1.

Badders v. U.S., 240 U.S. 391, 36 S.Ct. 367, 60 L.Ed. 706 (U.S.Kan.,Mar 06, 1916) IN ERROR to the District Court of the United States for the District of Kansas to review a conviction for placing letters in the mail for the purpose of executing a scheme to defraud. Affirmed. The facts are stated in the opinion. West Headnotes Sentencing and Punishment 350H 1453

350H Sentencing and Punishment 350HVII Cruel and Unusual Punishment in General 350HVII(C) Criminal Liability 350Hk1451 Declaring Act Criminal 350Hk1453 k. Particular Offenses. Most Cited Cases (Formerly 110k1213.2(1), 110k1214, 110k1213) Cr.Code, 215, 18 U.S.C.A. 1341 held not unconstitutional as imposing cruel and unusual punishment and excessive fines because mailing of each letter in execution of scheme to defraud is made a separate offense. Postal Service 306 35(10)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(10) k. Nature of Scheme or Device in General. Most Cited Cases The mailing of letters in execution of a scheme to defraud could be made a criminal offense, as was done by Cr.Code, 215, 18 U.S.C.A. 1341, though the fraudulent scheme be outside the jurisdiction of Congress. Mr. Justice Holmes delivered the opinion of the court: The case is brought to this court from the district court under 238 of the Judicial Code, act of March 3, 1911, chap. 231, 36 Stat. at L. 1087, Comp. Stat. 1913, 1215, on the ground that it involves the construction and application of the Constitution of the United States. The plaintiff in error was indicted for placing letters in the mail for the purpose of executing a scheme to defraud devised by him, in violation of 215 of the Criminal Code, act of March 4, 1909, chap. 321, 35 Stat. at L. 1088, Comp. Stat. 1913, 10,385. There were twelve counts, on seven of which, each **368 relating to a different letter, he was found guilty. He was sentenced to five year's imprisonment on each count, the periods being concurrent, not cumulative, and also to a fine of $1,000 on each or $7,000 in all. The grounds for coming to this court are, first, that 215 of the Criminal Code is beyond the power of Congress, as applied to what may be a mere incident of a fraudulent scheme that itself is outside the jurisdiction of Congress to deal with; and second, that if it makes the deposit of each letter a separate offense, subject to such punishment as it received in this case, it imposes cruel and unusual punishment and excessive fines. These contentions need no extended answer. The overt act of putting a letter into the postoffice of the United States is a matter that Congress may regulate. Ex parte Jackson, 96 U. S. 727, 24 L. ed. 877. Whatever the limits to the power, it may forbid any such acts done in furtherance of a scheme that it regards as contrary to public policy, whether it can forbid the scheme or not. Re *394Rapier, 143 U. S. 110, 134, 36 L. ed. 93, 102, 12 Sup. Ct. Rep. 374; Public Clearing House v. Coyne, 194 U. S. 497, 507, 48 L. ed. 1092, 24 Sup. Ct. Rep. 789; United States v. Stever, 222 U. S. 167, 173, 56 L. ed. 145, 147, 32 Sup. Ct. Rep. 51. See Lottery Case (Champion v. Ames) 188 U. S. 321, 357, 47 L. ed. 492, 501, 23 Sup. Ct. Rep. 321, 13 Am. Crim. Rep. 561; United States v. Holte, 236 U. S. 140, 144, 59 L. ed. 504, 505, L.R.A.1915D, 281, 35 Sup. Ct. Rep. 271. Intent may make an otherwise innocent act criminal, if

it is a step in a plot. Aikens v. Wisconsin, 195 U. S. 194, 206, 49 L. ed. 154, 160, 25 Sup. Ct. Rep. 3; Swift & Co. v. United States, 196 U. S. 375, 396, 49 L. ed. 518, 524, 25 Sup. Ct. Rep. 276. The acts alleged have been found to have been done for the purpose of executing the scheme, and there would be no ground for contending, if it were argued, that they were too remotely connected with the scheme for the law to deal with them. The whole matter is disposed of by United States v. Young, 232 U. S. 155, 161, 58 L. ed. 548, 551, 34 Sup. Ct. Rep. 303. As to the other point, there is no doubt that the law may make each putting of a letter into the postoffice a separate offense. Ebeling v. Morgan, 237 U. S. 625, 59 L. ed. 1151, 35 Sup. Ct. Rep. 710; Re Henry, 123 U. S. 372, 374, 31 L. ed. 174, 175, 8 Sup. Ct. Rep. 142. And there is no ground for declaring the punishment unconstitutional. Howard v. Fleming. 191 U. S. 126, 135, 48 L. ed. 121, 124, 24 Sup. Ct. Rep. 49; Ebeling v. Morgan, supra. The other matters discussed are before us only as incident to the constitutional questions upon which the case was brought here. As those questions merely attempt to reopen well established and familiar law, it is not necessary to go beyond them. Brolan v. United States, 236 U. S. 216, 222, 59 L. ed. 544, 549, 35 Sup. Ct. Rep. 285. There is the more reason for declining further consideration in the extravagant and unnecessary multiplication of exceptions and assignments of error that often has been condemned by this court. Central Vermont R. Co. v. White, 238 U. S. 507, 509, 59 L. ed. 1433, 1435, 35 Sup. Ct. Rep. 865, 9 N. C. C. A. 265. If there were anything in the objections to the indictment, they are not of a kind to involve constitutional rights ( Lamar v. United States, 240 U. S. 60, 60 L. ed. 526, 36 Sup. Ct. Rep. 255), although the argument attempts to give a constitutional turn to them and to other technical complaints, such as that the judge was absent during a part of the deliberations of the grand jury. We find no error in this or the other particulars mentioned in argument. *395 Jones v. United States, 89 C. C. A. 303, 162 Fed. 417, 421, s. c. 212 U. S. 576, 53 L. ed. 657, 29 Sup. Ct. Rep. 685; Com. v. Bannon, 97 Mass. 214, 220. See Breese v. United States, 226 U. S. 1, 11, 57 L. ed. 97, 102, 33 Sup. Ct. Rep. 1. As to the arraignment, see Garland v. Washington, 232 U. S. 642, 646, 647, 58 L. ed. 772, 775, 776, 34 Sup. Ct. Rep. 456. We deem it unnecessary to go into further detail. Judgment affirmed.

Herbert v. Lando, 441 U.S. 153, 171, 99 S.Ct. 1635, 60 L.Ed.2d 115, 27 Fed.R.Serv.2d 1, 3 Fed. R. Evid. Serv. 822, 4 Media L. Rep. 2575 (U.S.N.Y.,Apr 18, 1979) In a defamation action brought by a public figure, plaintiff sought order compelling discovery. The United States District Court for the Southern District of New York, 73 F.R.D. 387, granted discovery motion, and defendants filed interlocutory appeal. The Court of Appeals for the Second Circuit, 568 F.2d 974, remanded with directions, and petition for certiorari was granted. The Supreme Court, Mr. Justice White, held that where member of the press is alleged to have circulated damaging falsehoods and is sued for injury to reputation of a public figure plaintiff, who is required to prove actual malice, First Amendment does not bar plaintiff from inquiring into editorial process and state of mind of those responsible for publication. Reversed. [1] Libel and Slander 237 51(5)

237 Libel and Slander 237II Privileged Communications, and Malice Therein 237k51 Existence and Effect of Malice 237k51(5) k. Criticism and Comment on Public Matters and Publication of News. Most Cited Cases A public figure or public official plaintiff cannot recover in a defamation suit absent proof that defendants published damaging falsehood with actual malice, that is, with knowledge that it was false or with reckless disregard of whether it was false or not. U.S.C.A.Const. Amends. 1, 14.

[2] Libel and Slander 237

148

237 Libel and Slander 237VI Criminal Responsibility 237VI(A) Offenses 237k148 k. Privileged Communication. Most Cited Cases **A defendant may not be found guilty in a criminal libel prosecution for defaming a public official or a public figure absent proof that defendant published damaging falsehood with actual malice, that is, with knowledge that it was false or with reckless disregard of whether it was false or not. U.S.C.A.Const. Amends. 1, 14. [3] Libel and Slander 237 51(5)

237 Libel and Slander 237II Privileged Communications, and Malice Therein 237k51 Existence and Effect of Malice 237k51(5) k. Criticism and Comment on Public Matters and Publication of News. Most Cited Cases **In a defamation action brought by a public figure or public official, absent proof of knowing falsehood, liability requires proof of reckless disregard for truth, that is, that the defendant in fact entertained serious doubts as to the proof of his publication; such subjective awareness of probable falsity may be found if there are obvious reasons to doubt veracity of informant or accuracy of his reports. U.S.C.A.Const. Amends. 1, 14. [4] Constitutional Law 92 2173

92 Constitutional Law 92XVIII Freedom of Speech, Expression, and Press 92XVIII(X) Defamation 92k2172 Remedies for Defamation 92k2173 k. In General. Most Cited Cases (Formerly 92k90.1(5)) **Given the required proof, damages liability for defamation abridges neither freedom of speech nor freedom of the press. U.S.C.A.Const. Amends. 1, 14. [5] Constitutional Law 92 2163

92 Constitutional Law 92XVIII Freedom of Speech, Expression, and Press 92XVIII(X) Defamation 92k2160 In General 92k2163 k. Public Figures in General. Most Cited Cases (Formerly 92k90.1(5)) Constitutional Law 92 2164

92 Constitutional Law 92XVIII Freedom of Speech, Expression, and Press 92XVIII(X) Defamation 92k2160 In General 92k2164 k. Public Employees and Officials. Most Cited Cases (Formerly 92k90.1(5))

First Amendment does not accord absolute privilege to editorial process of a media defendant in a libel case brought by a public figure or public official who has burden of proving that damaging falsehood was published with actual malice. U.S.C.A.Const. Amends. 1, 14. [6] Constitutional Law 92 2169

92 Constitutional Law 92XVIII Freedom of Speech, Expression, and Press 92XVIII(X) Defamation 92k2167 Particular Issues and Applications 92k2169 k. Public Figures. Most Cited Cases (Formerly 92k90.1(5)) Libel and Slander 237 51(5)

237 Libel and Slander 237II Privileged Communications, and Malice Therein 237k51 Existence and Effect of Malice 237k51(5) k. Criticism and Comment on Public Matters and Publication of News. Most Cited Cases (Formerly 92k90.1(5)) Where public figure plaintiff, a retired Army officer, brought defamation action based upon telecast and magazine article and where plaintiff, as a public figure, had burden of proving that defendants had published damaging falsehoods with actual malice, that is, with knowledge that it was false or with reckless disregard of whether it was false or not, First Amendment did not bar plaintiff from inquiring into editorial process and state of mind of those responsible for publications. U.S.C.A.Const. Amends. 1, 14. [7] Constitutional Law 92 1620

92 Constitutional Law 92XVIII Freedom of Speech, Expression, and Press 92XVIII(D) False Statements in General 92k1620 k. In General. Most Cited Cases (Formerly 92k90.1(5)) Spreading false information in and of itself carries no First Amendment credentials. U.S.C.A.Const. Amend. 1. [7] Nevertheless, we are urged by respondents to override these important interests because requiring disclosure of editorial conversations and of a reporter's conclusions about the veracity of the material he has gathered will have an intolerable chilling effect on the editorial process and editorial decisionmaking. But if the claimed inhibition flows from the fear of damages liability for publishing knowing or reckless falsehoods, those effects are precisely what New York Times and other cases have held to be consistent with the First Amendment. Spreading false information in and of itself carries no First Amendment credentials. [T]here is no constitutional value in false statements of fact. Gertz v. Robert Welch, Inc., supra, 418 U.S., at 340, 94 S.Ct., at 3007. U.S. v. Walton, 36 F.3d 32, 36, (7th Cir.(Ind.),Sep 21, 1994) Defendant was convicted, upon his guilty plea, in the United States District Court for the Northern District of Indiana, Allen Sharp, Chief Judge, of violation of Anti-Tampering Act for altering use-before date on packing slips and invoices that accompanied heart pacemakers. Defendant appealed. The Court of Appeals, Kanne, Circuit Judge, held that: (1) Act is not unconstitutionally vague; (2) Act did not infringe on defendant's First Amendment free speech rights; and (3) defendant was not entitled to withdraw his guilty plea.

Affirmed. [6] Antitrust and Trade Regulation 29T

129

29T Antitrust and Trade Regulation 29TIII Statutory Unfair Trade Practices and Consumer Protection 29TIII(A) In General 29Tk126 Constitutional and Statutory Provisions 29Tk129 k. Validity. Most Cited Cases (Formerly 92Hk2.1 Consumer Protection) Antitrust and Trade Regulation 29T 1013

29T Antitrust and Trade Regulation 29TXIX Offenses and Prosecutions 29Tk1012 Offenses 29Tk1013 k. In General. Most Cited Cases (Formerly 92Hk2.1 Consumer Protection) Constitutional Law 92 1624

92 Constitutional Law 92XVIII Freedom of Speech, Expression, and Press 92XVIII(D) False Statements in General 92k1624 k. Deception; Misrepresentation. Most Cited Cases (Formerly 92k90.2) Health 198H 105

198H Health 198HI Regulation in General 198HI(A) In General 198Hk102 Constitutional and Statutory Provisions 198Hk105 k. Validity. Most Cited Cases (Formerly 92Hk2.1 Consumer Protection) Anti-Tampering Act did not improperly regulate commercial speech in violation of First Amendment, with respect to defendant convicted under Act for altering use-before date on packing slips and invoices that accompanied heart pacemakers; defendant's speech was false and misleading and therefore not protected. 18 U.S.C.A. 1365(a); U.S.C.A. Const.Amend. 1. [6] Walton also makes a futile argument that the Anti-Tampering Act violates the First Amendment by improperly regulating commercial speech. But Walton's own conduct was not improperly regulated; his speech was false and misleading and therefore not protected. Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n, 447 U.S. 557, 563, 100 S.Ct. 2343, 2350, 65 L.Ed.2d 341 (1980). However, he argues that the statute *36 is overbroad because it restricts the speech of others. But the speech implicated by the statute is commercial speech, so his argument collapses because the overbreadth doctrine does not apply to commercial speech. Village of Hoffman Estates v. Flipside, 455 U.S. 489, 497, 102 S.Ct. 1186, 1192, 71 L.Ed.2d 362 (1982) ; see also United States v. Kaufmann, 985 F.2d 884, 895 (7th Cir.), cert. denied, 508 U.S. 913, 113 S.Ct. 2350, 124 L.Ed.2d 259 (1993). There was no plain error, and certainly no miscarriage of justice, in enforcing the Anti-Tampering Act against Walton. His challenge to the constitutionality of the Act fails.

Bill Johnson's Restaurants, Inc. v. N.L.R.B., 461 U.S. 731, 742, 103 S.Ct. 2161, 76 L.Ed.2d 277, 113 L.R.R.M. (BNA) 2647, 97 Lab.Cas. P 10,130 (U.S.,May 31, 1983) Employer sought review of a National Labor Relations Board order, and the Board cross-petitioned for enforcement. The Court of Appeals for the Ninth Circuit, 660 F.2d 1335, enforced the order. Certiorari was granted. The Supreme Court, Justice White, held that: (1) the filing and prosecution of a well-founded lawsuit by an employer may not be enjoined as an unfair labor practice, even if it would not have been commenced but for the employer's desire to retaliate against an employee for exercising protected rights; (2) it is an enjoinable unfair labor practice to prosecute a baseless lawsuit with the intent of retaliating against an employee; (3) in determining whether a state-court suit lacks a reasonable basis, the NLRB is not limited to considering the bare pleadings, but its inquiry must be structured in a manner that will preserve the employer's right to have a state-court jury or judge resolve genuine material factual or state-law legal issues pertaining to the lawsuit; and (4) it was not within the ALJ's province, based on his own evaluation of the evidence, to determine that the libel and business-interference counts in the employer's state-court suit were in fact without merit. Vacated and remanded. we conclude *743 that the Board's interpretation of the Act is untenable. The filing and prosecution of a wellfounded lawsuit may not be enjoined as an unfair labor practice, even if it would not have been commenced but for the plaintiff's desire to retaliate against the defendant for exercising rights protected by the Act. B [3] Although it is not unlawful under the Act to prosecute a meritorious action, **the same is not true of suits based on insubstantial claims-suits that lack, to use the term coined by the Board, a reasonable basis. Such suits are not within the scope of First Amendment protection: The first amendment interests involved in private litigation-compensation for violated rights and interests, the psychological benefits of vindication, public airing of disputed facts-are not advanced when the litigation is based on intentional falsehoods or on knowingly frivolous claims. Furthermore, since sham litigation by definition does not involve a bona fide grievance, **it does not come within the first amendment right to petition.FN10 FN10. Balmer, Sham Litigation and the Antitrust Laws, 29 Buffalo L.Rev. 39, 60 (1980). Accord, Clipper Exxpress v. Rocky Mountain Motor Tariff Bureau, Inc., 674 F.2d 1252, 1265-1266 (CA9 1982); Fischel, Antitrust Liability for Attempts to Influence Government Action: The Basis and Limits of the NoerrPennington Doctrine, 45 U.Chi.L.Rev. 80, 101 (1977). **Just as false statements are not immunized by the First Amendment right to freedom of speech, see Herbert v. Lando, 441 U.S. 153, 171, 99 S.Ct. 1635, 1646, 60 L.Ed.2d 115 (1979); Gertz v. Robert Welch, Inc., 418 U.S. 323, 340, 94 S.Ct. 2997, 3007, 41 L.Ed.2d 789 (1974), **baseless litigation is not immunized by the First Amendment right to petition. Similarly, the State interests recognized in the Farmer line of cases do not enter into play when the state-court suit has no basis. Since, by definition, the plaintiff in a baseless suit has not suffered a legally-protected injury, the State's interest in protecting the health and well-being of its citizens, Farmer, supra, 430 U.S., at 303, 97 S.Ct., at 1065, is not implicated. States have only a *744 negligible interest, if any, in having insubstantial claims adjudicated by their courts, particularly in the face of the strong federal interest in vindicating the rights protected by the national labor laws.

U.S. v. Aguilar, 515 U.S. 593, 115 S.Ct. 2357, 132 L.Ed.2d 520, 63 USLW 4637 (U.S.Cal.,Jun 21, 1995) Federal judge was convicted in the United States District Court for the Northern District of California, Louis Charles Bechtle, Chief Judge, sitting by designation, of disclosing wiretap information and endeavoring to obstruct justice. Judge appealed. On rehearing en banc, the Ninth Circuit Court of Appeals, 21 F.3d 1475, reversed.

Certiorari was granted. The Supreme Court, Chief Justice Rehnquist, held that: (1) catchall provision of obstruction of justice statute required nexus in time, causation or logic between act and judicial proceedings; (2) judge's utterance of false statements to Federal Bureau of Investigation (FBI) agents was not endeavor to obstruct due administration of justice, absent evidence that judge knew statements would be provided to grand jury; and (3) statute prohibiting disclosure of wiretap information could apply to disclosure occurring after wiretap application expired or had been denied. Affirmed in part, reversed in part, and remanded. Justice Stevens filed an opinion concurring in part and dissenting in part. Justice Scalia filed an opinion concurring in part and dissenting in part, in which Justices Kennedy and Thomas joined. [1] Obstructing Justice 282 6

282 Obstructing Justice 282k6 k. Obstructing or Interfering with Judicial Proceedings. Most Cited Cases Catchall provision of obstruction of justice statute requires nexus in time, causation or logic between act and judicial proceedings and, thus, uttering false statements to investigating agent who might or might not testify before grand jury is insufficient; false testimony to investigator who has not been subpoenaed to appear before grand jury would not have natural and probable effect of interfering with due administration of justice. 18 U.S.C.A. 1503. [2] Obstructing Justice 282 6

282 Obstructing Justice 282k6 k. Obstructing or Interfering with Judicial Proceedings. Most Cited Cases Federal judge's utterance of false statements to Federal Bureau of Investigation (FBI) agents did not violate statute prohibiting endeavor to obstruct due administration of justice, absent evidence that judge knew that his false statements would be provided to grand jury; agents had not been subpoenaed or otherwise directed to appear before grand jury at time of judge's statements. 18 U.S.C.A. 1503. [3] Obstructing Justice 282 1

282 Obstructing Justice 282k1 k. Nature and Elements of Offenses in General. Most Cited Cases **Statute prohibiting endeavor to obstruct due administration of justice makes conduct punishable if defendant acts with intent to obstruct justice and in manner likely to obstruct justice, even if he or she is foiled in some way, but use of term does not require criminal liability for any act done with intent to obstruct justice. 18 U.S.C.A. 1503. [4] Telecommunications 372 1477

372 Telecommunications 372X Interception or Disclosure of Electronic Communications; Electronic Surveillance 372X(B) Authorization by Courts or Public Officers 372k1477 k. Notice and Disclosure to Parties. Most Cited Cases (Formerly 372k494.1) Statute prohibiting disclosure of wiretaps refers to possible interception in order to criminalize disclosure of

pending wiretap application or authorization even though defendant could not know whether it would result in actual interception and, thus, statute could apply to disclosure occurring after wiretap application or authorization has expired or been denied; offense is not limited to cases in which interception based upon application or authorization was factually possible. 18 U.S.C.A. 2232(c). [5] Constitutional Law 92 1506

92 Constitutional Law 92XVIII Freedom of Speech, Expression, and Press 92XVIII(A) In General 92XVIII(A)1 In General 92k1506 k. Strict or Exacting Scrutiny; Compelling Interest Test. Most Cited Cases (Formerly 92k90(1)) Government may not generally restrict individuals from disclosing information that lawfully comes into their hands in absence of state interest of highest order. U.S.C.A. Const.Amend. 1. [6] Constitutional Law 92 2089

92 Constitutional Law 92XVIII Freedom of Speech, Expression, and Press 92XVIII(V) Judicial Proceedings 92XVIII(V)1 In General 92k2089 k. Court Documents or Records. Most Cited Cases (Formerly 92k90.1(3)) Protective orders may be imposed in connection with information acquired through civil discovery without violating First Amendment. U.S.C.A. Const.Amend. 1. [7] Constitutional Law 92 1545

92 Constitutional Law 92XVIII Freedom of Speech, Expression, and Press 92XVIII(A) In General 92XVIII(A)3 Particular Issues and Applications in General 92k1545 k. In General. Most Cited Cases (Formerly 92k90.1(1)) Governmental restrictions on disclosure by one who voluntarily assumed duty of confidentiality are not subject to same stringent standards that would apply to efforts to impose restrictions on unwilling members of public. U.S.C.A. Const.Amend. 1. [8] Constitutional Law 92 2157

92 Constitutional Law 92XVIII Freedom of Speech, Expression, and Press 92XVIII(W) Telecommunications and Computers 92k2157 k. Interception or Surveillance; Wiretapping. Most Cited Cases (Formerly 92k90.1(9)) Telecommunications 372 372 Telecommunications 1477

372X Interception or Disclosure of Electronic Communications; Electronic Surveillance 372X(B) Authorization by Courts or Public Officers 372k1477 k. Notice and Disclosure to Parties. Most Cited Cases (Formerly 372k492) Government's interest in maintaining secrecy of wiretaps justified interpretation of wiretap disclosure statute to prohibit disclosure of expired wiretap applications without any artificial narrowing of statute's scope due to First Amendment concerns. U.S.C.A. Const.Amend. 1. *593 Respondent Aguilar, a United States District Judge, was convicted of illegally disclosing a wiretap in violation of 18 U.S.C. 2232(c), even though the authorization for the particular wiretap had expired before the disclosure was made. Because he lied to Federal Bureau of Investigation (FBI) agents during a grand jury investigation, he also was convicted of endeavoring to obstruct the due administration of justice under 1503. The Court of Appeals reversed both convictions, reasoning that Aguilar's conduct in each instance was not covered by the statutory language. Held: 1. Uttering false statements to an investigating agent who might or might not testify before a grand jury is not sufficient to make out a violation of 1503's prohibition of endeavor[ing] to influence, obstruct, or impede ... the due administration of justice. The nexus requirement developed in recent Courts of Appeals decisions-whereby the accused's act must have a relationship in time, causation, or logic with grand jury or judicial proceedings-is a correct construction of 1503's very broad language. Under that approach, the accused must take action with **an intent to influence such proceedings; it is not enough that there be an intent to influence some ancillary proceeding, such as an investigation independent of the court's or grand jury's authority. Moreover, the endeavor must have the natural and probable effect of interfering with the due administration of justice, see, e.g., United States v. Wood, 6 F.3d 692, 695, and a person lacking knowledge that his actions are likely to affect a pending proceeding necessarily lacks the requisite intent to obstruct, Pettibone v. United States, 148 U.S. 197, 206-207, 13 S.Ct. 542, 546-547, 37 L.Ed. 419. The Government did not show here that the FBI agents acted as an arm of the grand jury, that the grand jury had subpoenaed their testimony or otherwise directed them to appear, or that respondent knew that his false statements would be provided to the grand jury. Indeed, the evidence goes no further than showing that respondent testified falsely to an investigating agent. What use will be made of such testimony is so speculative that the testimony cannot be said to have the natural and probable effect of obstructing justice. Pp. 2361-2363. *594 2. Disclosure of a wiretap after its authorization expires violates 2232(c), which provides criminal penalties for anyone who, [1] having knowledge that a Federal ... officer has been authorized or has applied for authorization ... to intercept a wire ... communication, [2] in order to obstruct, impede, or prevent such interception, [3] gives notice or attempts to give notice of the possible interception to any person. Contrary to the Court of Appeals' holding, the statutory language does not require that the wiretap application or authorization be pending or in esse at the time of the disclosure. Such a narrow purpose is not evidenced by the term such interception in the statute's second clause, which merely establishes that the defendant must intend to obstruct the interception made pursuant to the application or authorization of which he has the knowledge required by the first clause. Similarly, the phrase possible interception in the third clause was not designed to limit the punishable offense to cases where the interception was factually possible, but was intended to recognize the fact that at the time the prohibited notice was given it very likely could not be known whether or not there would be an interception. Moreover, without the word possible, the statute would only prohibit giving notice of the interception: It would not reach the giving of notice of an application which has not yet resulted in an authorization or an authorization which has not yet resulted in an interception. Finally, the statute need not be read to exclude disclosures of expired wiretaps because of concern that a broader construction would run counter to the First Amendment. The Government's**2360 interest in nondisclosure by officials in sensitive confidential positions is quite sufficient to justify the construction of the statute as written, without any artificial narrowing because of First Amendment concerns. Pp. 2363-2365. 21 F.3d 1475 (CA9 1994), affirmed in part, reversed in part, and remanded. REHNQUIST, C.J., delivered the opinion of the Court, in which O'CONNOR, SOUTER, GINSBURG, and

BREYER, JJ., joined, in Part I of which STEVENS, J., joined, and in all but Part I and the last paragraph of Part II of which SCALIA, KENNEDY, and THOMAS, JJ., joined. STEVENS, J., filed an opinion concurring in part and dissenting in part, post, p. 2365. SCALIA, J., filed an opinion concurring in part and dissenting in part, in which KENNEDY and THOMAS, JJ., joined, post, p. 2367. Chief Justice REHNQUIST delivered the opinion of the Court. A jury convicted United States District Judge Robert Aguilar of one count of illegally disclosing a wiretap in violation of 18 U.S.C. 2232(c), and of one count of endeavoring to obstruct the due administration of justice in violation of 1503. A panel of the Court of Appeals for the Ninth Circuit affirmed the conviction under 2232(c) but reversed the conviction under 1503. After rehearing en banc, the Court of Appeals reversed both convictions. We granted certiorari to resolve a conflict among the Federal Circuits over whether 1503 punishes false statements made to potential grand jury witnesses, and to answer the important question whether disclosure of a wiretap after its authorization expires violates 2232(c). 513 U.S. 1013, 115 S.Ct. 571, 130 L.Ed.2d 488 (1994). Many facts remain disputed by the parties. Both parties appear to agree, however, that a motion for postconviction relief filed by one Michael Rudy Tham represents the starting point from which events bearing on this case unfolded. Tham was an officer of the International Brotherhood of Teamsters, and was convicted of embezzling funds from the local affiliate of that organization. In July 1987, he filed a motion under 28 U.S.C. 2255 to have his conviction set aside. The motion was assigned to Judge Stanley Weigel. Tham, seeking to enhance the odds that his petition would be granted, asked Edward Solomon and Abraham Chalupowitz, a.k.a. Abe Chapman, to assist him by capitalizing on their respective acquaintances with another judge in the Northern District of California, respondent Aguilar. Respondent knew Chapman as a distant relation by marriage and knew Solomon from law school. **Solomon and Chapman met with *596 respondent [Aguilar] to discuss Tham's case, as a result of which respondent [Aguilar] spoke with Judge Weigel about the matter. Independent of the embezzlement conviction, the Federal Bureau of Investigation (FBI) identified Tham as a suspect in an investigation of labor racketeering. On April 20, 1987, the FBI applied for authorization to install a wiretap on Tham's business phones. Chapman appeared on the application as a potential interceptee. Chief District Judge Robert Peckham authorized the wiretap. The 30-day wiretap expired by law on May 20, 1987, 18 U.S.C. 2518(5), but Chief Judge Peckham maintained the secrecy of the wiretap under 2518(8)(d) after a showing of good cause. During the course of the racketeering investigation, the FBI learned of the meetings between Chapman and respondent[Aguilar]. The FBI informed Chief Judge Peckham, who, concerned with appearances of impropriety, advised respondent[Aguilar]in August 1987 that Chapman might be connected with criminal elements because Chapman's name had appeared on a wiretap authorization. Five months after respondent [Aguilar] learned that Chapman had been named in a wiretap authorization, he noticed a man observing his home during a visit by Chapman. He alerted**2361 his nephew to this fact and conveyed the message (with an intent that his nephew relay the information to Chapman) that Chapman's phone was being wiretapped. Respondent [Aguilar] apparently believed, in error, both that Chapman's phones were tapped in connection with the initial application and that the initial authorization was still in effect. Chief Judge Peckham had in fact authorized another wiretap on Tham's phones effective from October 1987 through the period in which respondent[Aguilar] made the disclosure, but there is no suggestion in the record that the latter had any specific knowledge of this reauthorization. At this point, respondent's [Aguilars] involvement in the two separate Tham matters converged. Two months after the disclosure*597 to his nephew, a grand jury began to investigate an alleged conspiracy to influence the outcome of Tham's habeas case. Two FBI agents questioned respondent[Aguilar]. During the interview, respondent[Aguilar]lied about his participation in the Tham case and his knowledge of the wiretap. The grand jury returned an indictment; a jury convicted Aguilar of one count of disclosing a wiretap, 18 U.S.C. 2232(c), and one count of endeavoring to obstruct the due administration of justice, 1503. A panel of the Court of Appeals for the Ninth Circuit affirmed the 2232(c) conviction but reversed the 1503 conviction. On rehearing en banc, the Court of Appeals reversed both convictions for the reason that the conduct in each instance was not covered by the statutory language. 21 F.3d 1475 (1994). The court concluded that 2232(c)

requires the disclosure of a pending wiretap application or an authorization that had not expired because the purpose of the statute was to thwart interference with the possible interception of the wiretap of which the defendant had knowledge. Id., at 1480. Finding the interception in this case impossible once the authorization had expired, it held respondent's[Aguilars]disclosure was not covered by the plain language of the statute. The Court of Appeals also found that respondent[Aguilar]had not interfered with a pending judicial proceeding under 1503. It first noted that the grand jury had not authorized or directed the FBI investigation. It then held that merely uttering false statements does not corruptly influence within the meaning of the statute. Id., at 1485-1486. It drew this conclusion, in part, from 1988 amendments to 1512, which added a prohibition on corrupt persuasion of witnesses. The court read the corrupt persuasion prohibited by 1512 to require an active attempt to persuade a witness to tell a false story, and used the language in 1512 as a guide to interpret the omnibus clause of 1503 narrowly. *598 I Section 1503 provides: Whoever corruptly, or by threats or force, or by any threatening letter or communication, endeavors to influence, intimidate, or impede any grand or petit juror, or officer in or of any court of the United States, or officer who may be serving at any examination or other proceeding before any United States commissioner or other committing magistrate, in the discharge of his duty, or injures any such grand or petit juror in his person or property on account of any verdict or indictment assented to by him, or on account of his being or having been such juror, or injures any such officer, commissioner, or other committing magistrate in his person or property on account of the performance of his official duties, or corruptly or by threats or force, or by any threatening letter or communication, influences, obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice, shall be fined not more than $5,000 or imprisoned not more than five years, or both. 18 U.S.C. 1503 (emphasis added). The statute is structured as follows: **first it proscribes persons from endeavoring to influence, intimidate, or impede grand or petit jurors or court officers in the discharge of their duties; it then prohibits injuring grand or petit jurors in their person or property because of any verdict or indictment rendered by them; it then prohibits injury of any court officer, commissioner, or similar officer on account of the performance of his official duties; **finally, the Omnibus Clause serves as a catchall, prohibiting persons from **2362 endeavoring to influence, obstruct, or impede the due administration of justice. The latter clause, it can be seen, is far more general in scope than the earlier clauses of the statute. Respondent *599 was charged with a violation of the Omnibus Clause, to wit: with corruptly endeavor[ing] to influence, obstruct, and impede the ... grand jury investigation. App. 106. The first case from this Court construing the predecessor statute to 1503 was Pettibone v. United States, 148 U.S. 197, 13 S.Ct. 542, 37 L.Ed. 419 (1893). There we held that a person is not sufficiently charged with obstructing or impeding the due administration of justice in a court unless it appears that he knew or had notice that justice was being administered in such court. Id., at 206, 13 S.Ct., at 546. The Court reasoned that a person lacking knowledge of a pending proceeding necessarily lacked the evil intent to obstruct. Id., at 207, 13 S.Ct., at 546-547. Recent decisions of Courts of Appeals have likewise tended to place metes and bounds on the very broad language of the catchall provision. The action taken by the accused must be with **an intent to influence judicial or grand jury proceedings; it is not enough that there be an intent to influence some ancillary proceeding, such as an investigation independent of the court's or grand jury's authority. United States v. Brown, 688 F.2d 596, 598 (CA9 1982) (citing cases). Some courts have phrased this showing as a nexus requirement-that the act must have a relationship in time, causation, or logic with the judicial proceedings. United States v. Wood, 6 F.3d 692, 696 (CA10 1993); United States v. Walasek, 527 F.2d 676, 679, and n. 12 (CA3 1975). In other words, the endeavor must have the natural and probable effect of interfering with the due administration of justice. Wood, supra, at 695; United States v. Thomas, 916 F.2d 647, 651 (CA11 1990); Walasek, supra, at 679. This is not to say that the defendant's actions need be successful; an endeavor suffices. United States v. Russell, 255 U.S. 138, 143, 41 S.Ct. 260, 261, 65 L.Ed. 553 (1921). But as in Pettibone, if the defendant lacks knowledge that his actions are likely to affect the judicial proceeding, he lacks the requisite intent to obstruct. U.S. v. Goulding, 26 F.3d 656 (7th Cir.(Ill.),May 25, 1994)

Defendants were convicted in the United States District Court for the Northern District of Illinois, James B. Moran, Chief Judge, of **conspiracy to defraud the United States, **mail fraud, and **illegal transportation of currency and monetary instruments. Defendants appealed. The Court of Appeals, Cummings, Circuit Judge, held that: (1) defendant failed to demonstrate that government was acting selectively or vindictively in prosecuting him; (2) indictment was valid; (3) evidence sustained conviction for conspiracy to defraud the United States; (4) evidence sustained conviction for mail fraud; and (5) defendants failed to establish that they were entrapped. Affirmed. [1] Criminal Law 110 37.15(2)

110 Criminal Law 110II Defenses in General 110k36.5 Official Action, Inaction, Representation, Misconduct, or Bad Faith 110k37.15 Vindictive Prosecution 110k37.15(2) k. Particular Cases. Most Cited Cases Defendant failed to demonstrate that government was acting selectively or vindictively in prosecuting him for conspiracy to defraud the United States, mail fraud, and illegal transportation of currency and monetary instruments, despite defendant's claim that Internal Revenue Service (IRS) revenue agents acted with improper motive in an earlier civil audit of abusive tax shelters; agents were merely fulfilling their duties by investigating potentially abusive tax schemes, and even if agents harbored ill will toward defendant, defendant failed to demonstrate that those agents had any influence in bringing present prosecution. [2] Criminal Law 110 627.6(5)

110 Criminal Law 110XX Trial 110XX(A) Preliminary Proceedings 110k627.5 Discovery Prior to and Incident to Trial 110k627.6 Information or Things, Disclosure of 110k627.6(5) k. F. B. I., Police and Other Investigative Reports. Most Cited Cases Absent showing that there was colorable basis for defendant's claims of selective or vindictive prosecution on charges of conspiracy to defraud the United States, mail fraud, and illegal transportation of currency and monetary instruments, defendant was not entitled to expand discovery regarding his claim that Internal Revenue Service (IRS) agents began criminal investigation of him in retaliation for his filing suit against IRS revenue agents. [3] Conspiracy 91 33(1)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k33 Conspiracy to Defraud Government 91k33(1) k. In General. Most Cited Cases Property requirement of mail fraud statute did not apply to charge of conspiracy to defraud the United States, or any agency thereof, in any manner or for any purpose. 18 U.S.C.A. 371, 1341. [4] Conspiracy 91 33(7)

91 Conspiracy 91II Criminal Responsibility

91II(A) Offenses 91k33 Conspiracy to Defraud Government 91k33(2) Particular Offenses and Acts 91k33(7) k. Relating to Customs or Revenue Laws. Most Cited Cases Defendants could be convicted of conspiracy to defraud the United States based on their attempt to frustrate collection of taxes on illegal gambling income despite their claims that they could be convicted only if they violated a specific tax provision and that they had no general duty to assist Internal Revenue Service (IRS) in its effort to collect taxes. 18 U.S.C.A 371. [5] Conspiracy 91 33(7)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k33 Conspiracy to Defraud Government 91k33(2) Particular Offenses and Acts 91k33(7) k. Relating to Customs or Revenue Laws. Most Cited Cases Statute's prohibition against defrauding the government gave defendant attorneys adequate notice that their scheme to frustrate collection of taxes on illegal gambling income was prohibited, particularly since defendants, throughout course of the conspiracy, claimed they were laundering and cleaning money. 18 U.S.C.A. 371. [6] Postal Service 306 48(4.2)

306 Postal Service 306III Offenses Against Postal Laws 306k48 Indictment or Information 306k48(4) Use of Mails to Defraud 306k48(4.2) k. Scheme or Artifice in General. Most Cited Cases Allegation that defendants engaged in scheme to defraud the United States of money and property by allegedly helping another to evade income tax on unreported illegal income was sufficient to allege deprivation of money or property within meaning of mail fraud statute. 18 U.S.C.A. 1341. [7] Criminal Law 110 1036.8

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1036 Evidence 110k1036.8 k. Sufficiency of Evidence. Most Cited Cases Where neither defendant challenged sufficiency of evidence to show conspiracy to defraud the United States during trial, claim could be reviewed on appeal only for plain error, and defendants were required to demonstrate manifest miscarriage of justice. [8] Conspiracy 91 47(6)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution

91k44 Evidence 91k47 Weight and Sufficiency 91k47(3) Particular Conspiracies 91k47(6) k. Fraud Upon Government. Most Cited Cases Evidence sustained defendants' convictions for conspiracy to defraud the United States; defendants laundered money through the Cayman Islands, aided another in his efforts to evade payment of income taxes on money defendants knew was from illegal bookmaking activity, defendants violated currency laws by transportation of cash and money instruments out of the country, and they admitted they were cleaning and laundering another's illegal unreported income. 18 U.S.C.A 371. [9] Postal Service 306 35(8)

306 Postal Service 306III Offenses Against Postal Laws 306k35 Use of Mails to Defraud 306k35(8) k. Effectiveness of Matter Mailed to Further Fraud. Most Cited Cases Use of mail supports mail fraud conviction if it is essential part or step in scheme. 18 U.S.C.A 1341. [10] Postal Service 306 49(11)

306 Postal Service 306III Offenses Against Postal Laws 306k49 Evidence 306k49(8) Weight and Sufficiency 306k49(11) k. Use of Mails to Defraud. Most Cited Cases There was sufficient evidence to show that mailings were in furtherance of scheme to defraud and, accordingly, evidence was sufficient to sustain mail fraud conviction; defendants mailed bank signature cards for Cayman Islands bank account to another person, signature cards had to be signed and returned to one defendant so he could use them in Cayman Islands to open bank account for deposit of money to be laundered and so that he could subsequently withdraw money to be returned to the United States, he mailed to that other person a bank deposit ticket showing first sum of money to be laundered was deposited into Cayman bank accounts, and second defendant mailed proposed articles of incorporation to the other person to form corporation which would receive laundered money from Cayman Islands. 18 U.S.C.A. 1341. [10] Postal Service 306 49(11) 306 Postal Service 306III Offenses Against Postal Laws 306k49 Evidence 306k49(8) Weight and Sufficiency 306k49(11) k. Use of Mails to Defraud. Most Cited Cases There was sufficient evidence to show that mailings were in furtherance of scheme to defraud and, accordingly, evidence was sufficient to sustain mail fraud conviction; defendants mailed bank signature cards for Cayman Islands bank account to another person, signature cards had to be signed and returned to one defendant so he could use them in Cayman Islands to open bank account for deposit of money to be laundered and so that he could subsequently withdraw money to be returned to the United States, he mailed to that other person a bank deposit ticket showing first sum of money to be laundered was deposited into Cayman bank accounts, and second defendant mailed proposed articles of incorporation to the other person to form corporation which would receive laundered money from Cayman Islands. 18 U.S.C.A. 1341. [11] Criminal Law 110 569

110 Criminal Law 110XVII Evidence 110XVII(V) Weight and Sufficiency 110k569 k. Defenses in General. Most Cited Cases Defendants charged with conspiracy to defraud the United States, mail fraud, and illegal transportation of currency and monetary instruments failed to establish entrapment; defendants failed at any point to demonstrate lack of predisposition or government inducement, and although defendants claimed that they believed their actions were legal, they acknowledged they were cleaning money so that a jury could easily have found that they understood their actions to be illegal. [12] United States 393 34

393 United States 393I Government in General 393k34 k. Mints, Assay Offices, Coinage, and Money. Most Cited Cases Evidence sustained convictions for illegally transporting currency and monetary instruments out of the United States; evidence showed that defendants caused $30,000 in cash and $100,000 in bearer bonds to be transported from the United States to Cayman Islands, that they knew that in those instances a report had to be made to the government, but they made no report and made clear in advance that they were not planning to comply with reporting requirement. 31 U.S.C.A. 5316(a), 5322(a). [13] United States 393 34

393 United States 393I Government in General 393k34 k. Mints, Assay Offices, Coinage, and Money. Most Cited Cases Jury instructions given with respect to ignorance of the law and requisite mental state on charges of illegally transporting currency and monetary instruments out of the United States were entirely adequate to inform jury of applicable law and no more was required. 31 U.S.C.A. 5316(a), 5322(a). [14] Conspiracy 91 41

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k39 Persons Liable 91k41 k. Acts of Coconspirators. Most Cited Cases (Formerly 110k61.1) When one defendant is a member of conspiracy and codefendant commits an offense in furtherance of or as a consequence of conspiracy, defendant can be found guilty of the offense. [15] United States 393 34

393 United States 393I Government in General 393k34 k. Mints, Assay Offices, Coinage, and Money. Most Cited Cases **Defendant's knowledge of currency transaction reporting requirement and his culpability were attributable to

those with whom he had conspired and vice versa. 31 U.S.C.A. 5316(a), 5322(a). [16] Criminal Law 110 2127

110 Criminal Law 110XXXI Counsel 110XXXI(F) Arguments and Statements by Counsel 110k2102 Inferences from and Effect of Evidence 110k2127 k. Tax and Internal Revenue Offenses. Most Cited Cases (Formerly 110k720(7.1)) Government in closing argument did not wrongly tell jury that defendant acted knowing his conduct was illegal; **government merely argued that defendant knew what law was on tax frauds as he was a tax lawyer and other defendant was a certified public accountant and was a former Internal Revenue Service (IRS) special agent. [17] Criminal Law 110 2095

110 Criminal Law 110XXXI Counsel 110XXXI(F) Arguments and Statements by Counsel 110k2093 Comments on Evidence or Witnesses 110k2095 k. Statement of Evidence. Most Cited Cases (Formerly 110k720(2)) Government's summation statement, a paraphrasing of what defendant told informant, was proper in prosecution for conspiracy to defraud the United States, mail fraud, and illegal transportation of currency and monetary instruments. [18] Criminal Law 110 2179

110 Criminal Law 110XXXI Counsel 110XXXI(F) Arguments and Statements by Counsel 110k2164 Rebuttal Argument; Responsive Statements and Remarks 110k2179 k. Comments on Character or Conduct. Most Cited Cases (Formerly 110k726) Government's rebuttal argument in prosecution of attorneys for conspiracy to defraud the United States, mail fraud, and illegal transportation of currency and monetary instruments, **that a honest lawyer would have advised informant to file amended tax returns, declare reported income, and pay taxes, penalties and interest due, was proper and was invited by argument of defense counsel that defendants' conduct was legitimate practice of law. [19] Criminal Law 110 814(8)

110 Criminal Law 110XX Trial 110XX(G) Instructions: Necessity, Requisites, and Sufficiency 110k814 Application of Instructions to Case 110k814(8) k. Matters of Defense in General. Most Cited Cases Evidence did not support giving of defendant attorney's requested instruction outlining defense of good faith reliance upon advice of counsel in prosecution for conspiracy to defraud the United States, mail fraud, and illegal transportation of currency and monetary instruments; there was no evidence that defendant consulted two other

attorneys before initiating his fraudulent scheme or that he made a full report to them of all facts and that he received legal advice to proceed from either. [20] United States 393 34

393 United States 393I Government in General 393k34 k. Mints, Assay Offices, Coinage, and Money. Most Cited Cases Willfulness provision in statute prohibiting willful failure to file currency transaction report means that to convict defendant, jury had to find that he knew structuring in which he engaged was unlawful. 31 U.S.C.A. 5322(a). [21] United States 393 34

393 United States 393I Government in General 393k34 k. Mints, Assay Offices, Coinage, and Money. Most Cited Cases Jury instructions given by trial judge in prosecution for illegal transportation of currency and monetary instruments comported with requirement that for valid conviction defendant must know of duty to report cash transaction; instruction stated that to prove defendant had requisite willful intent required for conviction, government had to prove beyond a reasonable doubt that defendant had knowledge that, if more than $10,000 of currency or other monetary instruments was transported out of the country, defendant was required to file Customs Service Report and that act was done willfully if done voluntarily and intentionally with purpose of avoiding known legal duty. 31 U.S.C.A. 5316(a), 5322(a). Before CUMMINGS, KANNE and ROVNER, Circuit Judges. CUMMINGS, Circuit Judge. Randall S. Goulding and Michael M. Ushijima, both Illinois lawyers, were charged in an 18-count indictment with **conspiracy to defraud the United States, **mail fraud and **illegal transportation of currency and monetary instruments in violation of 18 U.S.C. 371 and 1341 and 31 U.S.C. 5316(a) and 5322(a). A jury found them guilty on all counts. They were each sentenced to six months' incarceration on Count 1 and five years' probation on Counts 2 through 18. Both defendants were ordered to make restitution of $8,000 to the United States and to perform 500 hours of community service. I. Facts In late 1984 or early 1985, Goulding told government informant James Evegelatos that he knew how to move money around the world to hide it from the government in order to avoid paying taxes. Goulding *659 claimed to have bankers in Hong Kong, Switzerland and the Cayman Islands, all of whom were acquainted with his system. Evegelatos reported the conversation to the government in September 1986 and an undercover investigation was commenced. From December 1986 until August 1987, **Internal Revenue Service Special Agent Gregory Myre using the name T.J. Ryder posed as a businessman who had, over the four previous years, acquired $400,000 in illegal income from bookmaking activity in Florida. Ryder was introduced to Goulding by Evegelatos in December 1986. At their initial meeting Ryder informed Goulding that he wished to have use of his income without reporting it to the Internal Revenue Service. Goulding told Ryder that if Ryder declared his unreported income, the taxes, penalties and interest might eat up the entire unreported amount. Goulding explained, however, that for $10,000 he could arrange for Ryder's money to be moved through a corporate account in the Cayman Islands and brought back to the United States as a non-taxable corporate loan. Goulding drew a flow chart to depict the system. He acknowledged that Ryder would be in a lot of trouble if anyone found out about the system, but reassured Ryder that

the system could be set up so that the Internal Revenue Service would not detect it. Goulding claimed his system cleaned the money. In February 1987, Ryder met with Goulding again. Ryder again explained that his unreported cash income came from illegal bookmaking activities. In response, Goulding described Cayman Islands' secrecy laws and explained how, given such laws, corporations and trusts could be established that could hide Ryder's transactions. Goulding again used a chart to explain his system, noting that the trusts could be controlled by Ryder through wish letters of instruction from Ryder to a trustee in the Cayman Islands. Goulding offered to travel there with Ryder to introduce him to lawyers, bankers and trust officers. Ryder, however, told Goulding that he would prefer to transact business by mail and telephone. Goulding warned Ryder of international wire taps that might be involved and that international mail might be opened by the Internal Revenue Service and others. Ryder nonetheless insisted that he would not go to the Caymans (IRS policy prohibited agents from travelling outside the United States), but made clear that he was willing to pay Goulding to take his money there. Goulding claimed not to have available couriers, despite his contacts in the Caymans, and indicated that a second person would need to be enlisted in the scheme. He suggested his associate co-defendant Ushijima, who he claimed had worked with him before on such international tax matters. Later in February 1987, Ryder met with Goulding at the O'Hare Hilton Hotel in Chicago and was introduced to Ushijima. Ryder told Ushijima that he had cash income that had not been reported on his tax returns. Ushijima described his system of trusts and corporations to be set up in the United States and Cayman Islands to move the money. He said that a management company in the Caymans would provide an existing, dormant shell company. The company would be owned by a trust administered by a bank, which would take instructions from Ryder through wish letters. He added that a domestic corporation would be set up in Minnesota to receive funds from the Cayman corporation and convey Ryder's money back to him as a loan. Ushijima indicated that his fee would be $5,000 and that the best way to send the money to the Caymans was in cash by courier rather than international wire transfers or the mails. Ushijima warned Ryder that the courier would not declare the cash taken to the Caymans even though it was illegal to take more than $10,000 out of the United States without declaring it. Ushijima also warned Ryder that the cash could be seized if the courier were caught. The defendants acknowledged that the federal reporting requirement also applied to any negotiable instrument, including bearer bonds. At this same meeting, Ushijima said the fee for Goulding, himself and courier would be $15,000. Thereupon Ryder gave Goulding a $5,000 cashier's check in part payment and *660 made arrangements to deliver $30,000 to the defendants to be sent through the Caymans, with $7,000 additional cash to go to the defendants as their fee and for expenses. In March 1987, Ryder again met with Goulding at the O'Hare Hilton and gave Goulding $37,000 in $100 bills. Goulding recommended that Ryder report the income but added that the taxes, interest and penalties would total close to 100% of Ryder's money. Ryder's $30,000 was transported by courier to the Caymans about March 7, 1987. No Customs Service report was filed. Ushijima also traveled to the Caymans on March 7 and Goulding followed on March 9. The two arranged for the formation there of a trust, a corporation known as Tarbet Investments, Ltd. C.I., and a corporate bank account in Tarbet's name. Ownership of Tarbet was put in the name of local Cayman nominees. Goulding later formed a domestic corporation (Tarbet Investments, Ltd. U.S.) in Minnesota and opened a corporate bank account there for that corporation. On May 13, 1987, Trevor Lloyd, a Cayman resident acting on instructions of Ushijima, caused $28,000 of Ryder's money to be wire-transferred from the corporate account of Tarbet C.I. in the Caymans to the Minnesota bank account of Tarbet U.S. Goulding provided Ryder with fictitious documents showing a $15,000 loan from Tarbet U.S. Goulding also provided Ryder with a blank promissory note to be used to create fictitious loan documents for subsequent money transfers pursuant to the scheme.

On May 18, 1987, Ryder met with Ushijima in his law office in Des Plaines, Illinois, to arrange for the transfer of an additional $120,000 to the Caymans. Ushijima said he would deposit the money into his corporate escrow account in Chicago and convert $100,000 of the $120,000 into bearer bonds through his Chicago broker. Ushijima asserted that he was laundering the money for Ryder. He told Ryder that the bonds would be taken to the Caymans by the same courier who had transported the initial $30,000 and that once the bonds were in the Caymans, he would open an account in the name of Tarbet C.I. to sell the securities. The balance of Ryder's $120,000 was to be wiretransferred to Ushijima's corporate escrow account in the Caymans. When Ryder expressed concern about possible questioning of Ushijima about where the money came from, Ushijima replied that he would say it came from clients but would not identify them under the attorney-client privilege. Ryder and Ushijima made arrangements for the two of them and Goulding to meet the next day for Ryder to deliver the additional $120,000. The next day Ryder met with defendants at an Elk Grove, Illinois, motor lodge. Ryder thereupon gave Goulding $120,000 in cash. Goulding counted the cash and then left to meet Ushijima at his law office. $100,000 in bearer bonds were purchased as Ushijima had described and were transported by courier to the Caymans on June 6, 1987, and sold. Although required, no Customs report was filed when the bearer bonds were transported out of the United States. The additional $20,000 was wire-transferred to the Caymans and deposited, along with the proceeds of the sale of the bearer bonds, into the Tarbet C.I. bank account in the Caymans. On June 29, $118,000 was wiretransferred by Trevor Lloyd from the Tarbet C.I. account in the Caymans to the Tarbet U.S. Minnesota account. **In all, there were 15 uses of the mails to further the defendants' scheme to defraud the Internal Revenue Service of taxes due. At trial the defendants sought to show that they acted in good faith to protect the confidentiality of their client. Ushijima testified that Ryder's money had not been transported by courier to the Caymans. Ushijima, his stepdaughter and her boyfriend testified that $30,000 in cash had been taken to the Caymans by Ushijima and a group of five relatives and friends and that Ushijima had given $5,000 to four of the five before they boarded the plane at O'Hare Airport. Ushijima told the jurors that he had sent the $100,000 in bearer bonds to the Caymans in June 1987 by Federal Express in a package showing the contents to be $100. He denied knowing there was a Customs form for reporting the transportation out of the United States of more than $10,000 in cash or negotiable instruments. *661 II. Analysis A. Defendants' pre-trial motions Prior to trial, Goulding moved to dismiss his indictment on the ground that he was the victim of selective prosecution, vindictive prosecution and outrageous government conduct. Ushijima also filed a motion to dismiss based on the government's alleged misconduct toward Goulding. The government conceded that if Goulding's motion were granted, Ushijima's motion to dismiss should also be granted. In support of his motion to dismiss, Goulding claimed that the government prosecuted him because he had sued Internal Revenue Service agents Thomas Dietz and Irving Feinglass, who had audited various partnerships that Goulding formed for clients in the late 1970s and early 1980s.FN1 See Goulding v. Feinglass, 811 F.2d 1099 (7th Cir.1987), certiorari denied, 482 U.S. 929, 107 S.Ct. 3215, 96 L.Ed.2d 701.FN2 He attached affidavits alleging that those revenue agents made disparaging remarks about him during their civil audits. FN1. The civil audits concerned a string of limited partnerships formed by Goulding. The audits resulted in penalties being assessed against Goulding for negligently preparing income tax returns in connection with three of the partnerships. The penalties were upheld in Goulding v. United States, 717 F.Supp. 545 (N.D.Ill.1989), affirmed, 957 F.2d 1420 (7th Cir.1992). FN2. In the suit Goulding tried to remove Dietz, Feinglass and their supervisor, Irwin Solomon, from the audits of Goulding and his clients. He wrote Internal Revenue Service officials claiming they were prejudiced and were harassing him and eventually filed a $17 million lawsuit against the three, claiming that his Fifth Amendment rights had been violated by their acts. However, the complaint was dismissed by the district court in September 1985 for lack of federal subject matter jurisdiction. We affirmed, holding that Goulding had not been deprived of a liberty interest. This Court mentioned that the Internal Revenue

Service was clearly justified in investigating Goulding's transactions and the limited partnerships because of their potentially abusive tax schemes. Goulding v. Feinglass, 811 F.2d at 1103. In conjunction with his motion to dismiss, Goulding moved for discovery about the earlier civil audits and about each and every tax shelter investigation conducted by the Internal Revenue Service. The government agreed to provide a general description of the tax shelter investigations in the Chicago area and a description of the involvement of Agents Dietz and Feinglass in the audit of Goulding's personal and business tax returns. In opposition to Goulding's motion to dismiss, the government submitted an affidavit of the case agent in the criminal investigation of Goulding. The affidavit showed that in the mid-1980s a group within the Criminal Investigation Division of the Internal Revenue Service investigated 230 allegedly abusive tax shelter schemes. Of that number, criminal investigations were begun against 46 persons, and 10 of these investigations, including the one against Goulding, resulted in the initiation of an undercover operation. During the criminal investigation, the Internal Revenue Service learned that James Evegelatos, a cooperating defendant in the Springfield, Illinois, district of the Internal Revenue Service, had information about Goulding's criminal tax shelter and money-laundering activities. Evegelatos told an Internal Revenue Service agent that Goulding claimed to have an elaborate scheme to move money around the world to hide it from the government. The Internal Revenue Service thereupon initiated the undercover investigation described above. In view of the aforesaid information, the district court denied defendants' motions to dismiss for selective and vindictive prosecution and outrageous government conduct. The court explained that there was no evidence that the Internal Revenue Service was wrong in any of its activities and that the mere fact that defendant Goulding sued the Internal Revenue Service and was later the subject of a criminal indictment did not justify granting his motion to dismiss. The judge also concluded that Goulding was treated no differently than other attorneys who set up similar tax shelters. At the same time, however, the district court found that Goulding was entitled to limited discovery. Because of a dispute between the parties as to the type of discovery warranted, the matter was referred to a magistrate, who narrowed the discovery to *662 four categories. After the magistrate's report was rendered, the district court allowed discovery of certain statistical information but forbade discovery as to the fraud referral of Goulding to the Criminal Investigation Division. Goulding filed a motion to reconsider, but it was denied. In a post-trial motion, Goulding attempted to re-visit the discovery issue. His motion and a subsequent motion to reconsider were, however, denied. Defendants now appeal both the district court's denial of the motion to dismiss and its denial of expansive discovery regarding Goulding's claim of retaliation. To prevail on his claim of selective prosecution, Goulding needed to show that the Internal Revenue Service's criminal investigation of him had both a discriminatory purpose and a discriminatory effect. Wayte v. United States, 470 U.S. 598, 608, 105 S.Ct. 1524, 1531, 84 L.Ed.2d 547 . To prevail on his claim of vindictive prosecution, Goulding needed to show that he was prosecuted to punish him for exercising a protected right. United States v. Goodwin, 457 U.S. 368, 372, 102 S.Ct. 2485, 2488, 73 L.Ed.2d 74 . To compel discovery on either claim, Goulding had to show that there was a colorable basis for the claims. United States v. Heidecke, 900 F.2d 1155, 1159 (7th Cir.1990). [1] The district court correctly determined that Goulding failed to demonstrate that the government was acting selectively or vindictively in the present case. Goulding failed to show either discriminatory purpose behind the prosecution or a discriminatory effect. To support his claim of discriminatory intent, Goulding offered evidence that Agents Dietz and Feinglass acted with improper motives in their original investigation. This Court, however, previously reviewed this evidence and ruled that the agents were merely fulfilling their duties in investigating potentially abusive tax schemes. Goulding v. Feinglass, 811 F.2d 1099, 1104 (7th Cir.1987). Moreover, even if Goulding could convince this Court that Agents Dietz and Feinglass harbored ill will towards Goulding, Goulding failed to demonstrate that these agents had any influence on the bringing of this prosecution. In fact, it is clear the agents were not involved in the decisions to begin a criminal investigation or to prosecute-Goulding, however, makes no claim that the prosecutors who actually made the decision to bring charges against him acted vindictively. Furthermore, Goulding made no showing of discriminatory effect (he failed to show, for example, that other similarly situated persons were not prosecuted). In the end, Goulding's claims rest on little more than the fact that

the criminal investigation was started sometime after he brought suit against the IRS agents and only meager evidence that those agents disliked him. Given the flimsiness of his claims, the district court was completely within its authority when it denied Goulding's motions to dismiss the prosecution. [2] The district court's determinations regarding discovery were also correct. Since Goulding had not shown that he would not have been prosecuted absent a retaliatory motivation, the district courts determination regarding discovery is in accord with the controlling case in this Circuit, United States v. Benson, 941 F.2d 598, 612 (7th Cir.1991), amended, 957 F.2d 301 (1992); accord United States v. Greene, 698 F.2d 1364, 1368 (9th Cir.1983); United States v. Cyprian, 23 F.3d 1189, 1195-96 (7th Cir.1994). Moreover, to the extent that Goulding sought to discover internal government documents, the district court correctly held that Federal Rule of Criminal Procedure 16(a)(2) precluded the production of the Internal Revenue Service's criminal referral documents. In conclusion, this Court, like Chief Judge Moran, remains unconvinced by Goulding, Ushijima or the amici curiae FN3 claims that Goulding's civil rights suit against Dietz and Feinglass prompted this indictment. FN3. The National Association of Criminal Defense Lawyers and the Illinois Attorneys for Criminal Justice filed briefs supporting a probe of the government's motives in indicting the defendants, but our conclusion is that the matter was satisfactorily handled below. B. Validity of indictment [3] The defendants next make various attacks on the validity of the indictment *663 against them. These claims, however, are without merit. Relying on McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292, defendants first claim that their convictions for conspiracy under Count One must be overturned because the indictment failed to charge them with conspiracy to defraud the government out of property. McNally, however, concerned the scope of the mail fraud statute. The defendants here, on the other hand, were charged under 18 U.S.C. 371 with a conspiracy to defraud the United States, or any agency thereof in any manner or for any purpose. And McNally makes clear that the property requirement of the mail fraud statute does not apply to 18 U.S.C. 371. 483 U.S. at 358 n. 8, 107 S.Ct. at 2881 n. 8. [4] Relying upon United States v. Minarik, 875 F.2d 1186 (6th Cir.1989), defendants next argue that they could be convicted under 18 U.S.C. 371 only if they violated a specific tax provision since they have no general duty to assist the IRS in its effort to collect taxes. Minarik, however, has been narrowly limited to its own facts. United States v. Sturman, 951 F.2d 1466, 1473-1474 (6th Cir.1991), certiorari denied, --- U.S. ----, 112 S.Ct. 2964, 119 L.Ed.2d 586. And unlike Minarik, the government here did not shift its theory between the to commit any offense against the United States clause and the to defraud the United States clause in 18 U.S.C. 371. An extension of Minarik beyond its facts is not warranted here. Cf. United States v. Reynolds, 919 F.2d 435, 438-439 (7th Cir.1990), certiorari denied, 499 U.S. 942, 111 S.Ct. 1402, 113 L.Ed.2d 457. [5] The defendants also argue that they lacked fair warning that their actions violated 18 U.S.C. 371. **However, 18 U.S.C. 371's prohibition against defrauding the government gives any person of reasonable intelligence adequate notice that a scheme to frustrate the collection of taxes on illegally derived income is prohibited. United States v. Harriss, 347 U.S. 612, 617, 74 S.Ct. 808, 812, 98 L.Ed. 989; cf. United States v. Hurley, 957 F.2d 1, 4-5 (1st Cir.1992), certiorari denied, 506 U.S. 817, 113 S.Ct. 60, 121 L.Ed.2d 28. Moreover, since the defendants throughout the course of their conspiracy claimed that they were laundering and cleaning money, they had actual notice that their conduct was illegal. The defendants' various attacks on Count One of the indictment are thus without merit. [6] The defendants next challenge the mail fraud charged in Counts Two through Sixteen on the ground that 18 U.S.C. 1341 does not apply to intangible property.FN4 This challenge fails because Count Two charged a scheme to obtain money and property, namely income taxes. As we held in United States v. Bucey, 876 F.2d 1297, 1310 (7th Cir.1989), certiorari denied, 493 U.S. 1004, 110 S.Ct. 565, 107 L.Ed.2d 560, a similar indictment charging a scheme to defraud the United States of money and property, that is, income taxes was sufficient to state a valid charge. FN4. See Ushijima's App. A 12, and the same charge was incorporated by reference in Counts Three

through Sixteen (Ushijima's App. A 17-30). C. Sufficiency of evidence to show conspiracy to defraud the United States [7] Although neither defendant challenged the sufficiency of the evidence as to Count One during the trial, both make such claims to this Court (Goulding raised the issue for the first time in a post-trial motion and Ushijima raised it only in an untimely post-trial motion). In such circumstances, we review only for plain error, and defendants must demonstrate a manifest miscarriage of justice. United States v. Caudill, 915 F.2d 294, 296 (7th Cir.1990). [8] Viewing the evidence in the light most favorable to the government, there was overwhelming evidence that from December 1986 until August 1987 defendants engaged in a conspiracy to defraud the federal government of taxes by laundering money from the United States through the Cayman Islands. They aided Ryder in his efforts to evade the payment of income taxes on $400,000, money they knew was from illegal bookmaking activity. They arranged for the formation of fictitious corporations and for corporate *664 bank accounts here and in the Cayman Islands to launder money and to show that actual taxable income was only non-taxable corporate loans. The defendants warned Ryder to avoid using the international mails and telephones as to the Caymans while suggesting to him how to make the newly formed corporations appear legitimate, although they had no purpose except to clean Ryder's money. **They violated currency laws about transportation of cash and monetary instruments out of the country; **they admitted unethical and illegal conduct on behalf of other clients; **they admitted they were cleaning and laundering Ryder's illegal unreported income and that the attorney-client privilege was inapplicable to their conduct but nevertheless would be used by them to avoid investigation. Taken together, this evidence is clearly sufficient to establish that the defendants conspired to defraud the government. The evidence also showed that defendants believed that Ryder owed taxes and that they conspired to deprive the government of information needed to collect the taxes and to deprive the government of those taxes. Goulding recognized that taxes, penalties and interest due on Ryder's $400,000 might total $400,000 and stated that his fee for laundering the money was cheaper than paying Ryder's taxes, penalties and interest. The defendants did not report the monetary transfers out of the United States and concealed the ownership of Ryder's money by creating bank accounts, corporations, nominee stockholders and false loan documents. They also coached Ryder to prevent the government from learning of his untaxed hoard of illegally obtained money. This was all done to keep the government from assessing and collecting taxes on Ryder's $400,000 of illegal income. There was clearly adequate evidence to support defendants' convictions under the conspiracy to defraud clause in 18 U.S.C. 371. Cf. United States v. Bucey, 876 F.2d at 1312. D. Sufficiency of evidence to show the mailings were in furtherance of the scheme to defraud [9][10] The defendants also contend that their mail fraud convictions must be reversed because the charged mailings in Counts Two through Sixteen were not in furtherance of any scheme to defraud. A use of the mails supports a mail fraud conviction if, as here, it is an essential part or a step in the scheme. And a review of the mailings involved here makes clear that they were essential to the scheme. Ushijima mailed bank signature cards for the Caymans' bank account to Ryder, and those signature cards had to be signed and returned to Ushijima so that he could use them in the Caymans to open a bank account for a deposit of the money to be laundered, and so that he could subsequently withdraw money to be returned to the United States. He also mailed to Ryder a bank deposit ticket showing that the first sum of money to be laundered was deposited into the Cayman bank accounts. **These mailings were definitely in furtherance of Ushijima's and Goulding's scheme. **Goulding mailed proposed articles of incorporation to Ryder to be filed in Minnesota in order to form Tarbet U.S., the Minnesota corporation which received the laundered money from the Caymans and transferred it back to Ryder in the guise of a loan from Tarbet U.S.**Goulding also mailed Ryder promissory notes showing the purported loans of Ryder's laundered money. **In addition, he mailed Ryder a promissory note to be used for future money laundering. There can be no doubt but that these mailings too were in furtherance of the scheme to defraud. Ushijima mailed to Ryder a wish letter to be signed by Ryder and returned to Ushijima, to be sent to the shell corporation in the Caymans. At his request, Ryder mailed the signed wish letter along with additional instructions

and the account number of the Minnesota corporate bank account back to Ushijima. These mailings also clearly furthered the return of laundered money to the United States without taxation. Mailings in other mail fraud counts included billing invoices for alleged professional legal services sent to Ryder from Goulding and from Ushijima. Another mailing was a letter demanding payment for such services. *665 These mailings concealed defendants' illegal activity behind the practice of law. As Ushijima stated, by acting as lawyers representing a client, defendants could use a claim of attorney-client privilege to avoid a criminal investigation. Indeed Goulding used such a claim to avoid answering one question by an Internal Revenue agent about his dealings with Ryder. In order to make the scheme look legitimate, defendants had Goulding do some nominal legal work for Ryder to provide a cover for the $5,000 paid to Goulding on February 24, 1987. They also suggested having Tarbet C.I. engage in a nominal business transaction with Ryder's employer or make a small real estate investment in the Caymans, again for legitimacy. Goulding's fee was characterized as a less expensive alternative for Ryder than paying taxes, penalties and interest to the Internal Revenue Service. The billing invoices clearly served to conceal Ushijima's and Goulding's scheme from the government. Ushijima also mailed various documents to Ryder, stating in the cover letters that it was necessary for Ryder to sign and return them to Ushijima to arrange the movement of the second amount of money through the Caymans. Goulding mailed to Ryder an Internal Revenue Service form containing a new federal employer identification number. The number was necessary for Ryder to maintain a corporate bank account in Minnesota in the name of Tarbet U.S. and to receive the laundered money from Tarbet C.I. in the Caymans. Ushijima likewise mailed a letter to Ryder informing him that another sum of money, $118,000, would soon be received in the Tarbet U.S. account. Ryder was also instructed in that letter to complete and return the fictitious promissory notes regarding the two transfers of money. Again, these documents were obviously a part of the defendants' scheme. Although Ryder supposedly insisted that materials be sent by mail instead of some other means, defendants voluntarily used the mails for their correspondence. Ryder had only requested that some documents be mailed and the defendants offered to mail other documents. They also mailed all the billing invoices without any discussion with Ryder. While Ryder may have provided the defendants with an opportunity to commit the crime, that is no basis for invalidating the mail fraud convictions. United States v. Peters, 952 F.2d 960, 963 (7th Cir.1992), certiorari denied, 503 U.S. 911, 112 S.Ct. 1277, 117 L.Ed.2d 503; United States v. Anderson, 809 F.2d 1281, 1287-1288 (7th Cir.1987). E. Entrapment defense [11] Goulding insists that he and Ushijima should have been acquitted because they were entrapped. However, they did not raise the defense of entrapment below even though Chief Judge Moran suggested the possibility. Neither defendant offered evidence as to entrapment, and Goulding withdrew his entrapment jury instruction at the jury instruction conference. Moreover, Goulding and Ushijima have failed at any point to demonstrate a lack of predisposition or government inducement. In fact, **Goulding's predisposition is shown because the laundering scheme through the Caymans originated with him. It was Goulding who told Ryder that he had a system to move money around the world to hide it from government taxation. The possibility of Ryder's filing amended returns and declaring the unreported income was only mentioned while pressing the advantages of his Cayman Islands scheme. **Ushijima's predisposition was shown by his presentation to Ryder on February 24, 1987; and in his conversation with him on May 18 he admitted that he had been concealing assets and laundering money, including illegal untaxed income, in almost every tax haven around the world for more than 20 years. **The defendants also failed to establish government inducement. Unlike the cases relied on by the defendants, Sherman v. United States, 356 U.S. 369, 78 S.Ct. 819, 2 L.Ed.2d 848, and Jacobson v. United States, 503 U.S. 540, 112 S.Ct. 1535, 118 L.Ed.2d 174, there was no resort here to sympathy, no elaborate inducement by the government or any refusal or hesitancy by either defendant. **Nor is this Court convinced by defendants' claim that they believed their actions were legal. Although Ushijima once stated that the corporations they formed were not phony *666 and that it was not illegal to form them or to open bank accounts in the Caymans, he admitted that the purpose for which they were opened and what was done thereafter determines whether their use is legal or illegal. **As stated in United States v. Bucey, Acts which are themselves legal lose their legal character when they become constituent elements of an unlawful scheme. 876 F.2d at 1312 (quoting Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 82 S.Ct. 1404, 8

L.Ed.2d 777). And since the defendants acknowledged that they were cleaning the money, a jury could easily find that they understood their actions to be illegal. Finally, since the defendants showed their readiness and willingness to engage in this crime, defendants' reliance on United States v. Hollingsworth, 9 F.3d 593 (7th Cir.1993), rehearing en banc granted and decision vacated January 10, 1994, is of no avail (no matter what the eventual disposition of that case is). And despite the suggestion of one of the amici, this decision will not impair the attorney-client privilege. That privilege does not cover conduct by attorneys and clients or communications between them which were made in furtherance of fraud. United States v. Noriega, 917 F.2d 1543, 1550-1551 (11th Cir.1990). Here dishonest lawyers attempted to use the attorney-client privilege to conceal their scheme. Both defendants took the opportunity to commit an offense when offered the chance. An entrapment defense cannot prevail in such circumstances. See, e.g., United States v. Evans, 924 F.2d 714, 717 (7th Cir.1991). F. International monetary transportation reporting requirements Defendants submit that their convictions on Counts Seventeen and Eighteen for illegally transporting currency and monetary instruments out of the United States were unwarranted under 31 U.S.C. 5316(a) and 5322(a). They assert lack of evidence and inadequate jury instructions and question whether the requisite mental state was established. (a) Sufficiency of the evidence [12] Despite the defendants' arguments to the contrary, there was sufficient evidence to convict. The evidence shows that they caused $30,000 in cash and $100,000 in bearer bonds to be transported from the United States to the Cayman Islands in March and June 1987. The evidence established that they knew that in such instances reports of the transportation had to be made to the government. Moreover, they made clear in advance that they were not planning to comply with the reporting requirement. Their convictions under Counts Seventeen and Eighteen were therefore justified. (b) Jury instructions [13] Defendants complain that the trial court should have more fully instructed the jury regarding ignorance of the law and requisite mental state. In particular, they assail Goulding Instruction 22-even though it was tendered by Goulding himself.FN5 Defendants contend that the district court should have instructed the jury that the government had a duty to inform the defendants of Customs form 4970 and that it had to find that the defendants knowingly failed to file that form. Goulding Instruction 22 permitted the jurors to convict the defendants for the non-filing of any currency declaration form. Since both defendants agreed to the text of this instruction, they may not attack it now. United States v. Olano, 507 U.S. 725, 113 S.Ct. 1770, 1777, 123 L.Ed.2d 508. FN5. Goulding Instruction 22 stated that the government had to prove that the defendant had knowledge that if more than $10,000 in currency or other monetary instruments was transported out of the country in a manner shown by the evidence, he was required to file a Customs Service report (R. 121 and Tr. 1077). In any event, the instructions given pertaining to Counts Seventeen and Eighteen were entirely adequate to inform the jury of the applicable law. No more is required. United States v. Rice, 995 F.2d 719, 724 (7th Cir.1993). (c) Goulding's knowledge Goulding states that there was no evidence he had knowledge of the general reporting *667 requirement, but this is untrue. The evidence showed that Goulding knew it was illegal to transport more than $10,000 out of the country without reporting it to the government. Ushijima told Ryder that in Goulding's presence on February 24, 1987. Goulding also knew that bearer bonds were negotiable instruments and had to be reported because on February 24 he and Ushijima discussed that very subject. Goulding's knowledge also was shown by his refusal to take the bearer bonds to the Caymans on behalf of Ryder, saying that an attorney should know it was illegal to do so. [14][15] Moreover, when one defendant is a member of the conspiracy and his co-defendant commits an offense in furtherance or as a consequence of the conspiracy, the defendant can be found guilty of the offense.

Pinkerton v. United States, 328 U.S. 640, 647-648, 66 S.Ct. 1180, 1184, 90 L.Ed. 1489 (1946). Under the Pinkerton instruction which was given here, if the jury convicted both defendants of the Count One conspiracy, and convicted either on Counts Seventeen and Eighteen, the jury was entitled to convict the other defendant on Counts Seventeen and Eighteen. Such an instruction is still permissible. United States v. Macey, 8 F.3d 462, 468 (7th Cir.1993). Consequently, Ushijima's knowledge of the reporting requirement and his culpability were attributable to Goulding and vice versa. G. Goulding's cross-examination of government witnesses Goulding argues that his convictions must be reversed because Chief Judge Moran granted the government's pre-trial motion in limine to bar arguments or evidence by the defense counsel regarding government misconduct and entrapment. There was, however, no abuse of discretion. The claim that the court prevented the defense from presenting an entrapment defense is simply not correct. Although the district court did not allow the defense to mount an inquiry into the mental states of the investigating officers since such evidence was irrelevant, the court denied the government's motion to prohibit the defendants from raising an entrapment defense at all. The court made clear that it would not rule in advance that the defendants could not argue entrapment, even if at the end of trial they might not be entitled to an entrapment instruction (Tr. 28). Nor were the court's rulings regarding government misconduct erroneous. Goulding was not-despite his claimsprevented from cross-examining any witnesses regarding an animus against him. In fact Goulding did not attempt such cross-examination or make any such offer of proof. Moreover, since Goulding never demonstrated at trial that he had any lines of cross-examination about bias which he was prevented from pursuing, he has therefore waived the right to do so now. United States v. Junne, 458 F.2d 1156, 1157 & n. 5 (3d Cir.1972). The various other claims of error suggested by defendants' briefs are equally meritless and do not warrant discussion. Moreover, in light of the overwhelming evidence of guilt, the assailed evidentiary rulings were harmless. United States v. Saunders, 973 F.2d 1354, 1359 (7th Cir.1992), certiorari denied, 506 U.S. 1070, 113 S.Ct. 1026, 122 L.Ed.2d 171. H. Government's closing argument [16] Goulding attacks the government's closing argument, claiming that the jury was twice wrongly told that Goulding acted knowing his conduct was illegal. He also assails the government's rebuttal statement that it would have been appropriate for him to advise Ryder to file amended returns and pay back taxes. The claim that the government twice argued that Goulding acted knowing his conduct was illegal is incorrect. Instead, the prosecutor only argued that defendants knew what the law was on tax fraud since both were tax lawyers and Goulding had been a former Internal Revenue Service special agent and Certified Public Accountant. The government did not state that Goulding admitted that what he was doing for Ryder was illegal. [17] Goulding next attacks the government's summation statement that I [Goulding]*668 am laundering it, and that's illegal. There was no objection. Goulding had told Ryder that being an attorney, Goulding had to assume that the $400,000 has been or already is, you know, reported income. However, Ryder had already told Goulding that the money had not been reported as income. **Therefore it was permissible for the government to argue that [Goulding] tells this to [Ryder] because he is covering himself. I have to assume it is legal because if it is not legally reported income, I am laundering it and that's illegal. (Tr. 925) Given the context in which this statement was made, it is not an impermissible characterization of the evidence. At any rate, the government attorney was paraphrasing what Goulding told Ryder on December 18, 1986, that when the bank returned the money from the Caymans in the form of a loan, it cleaned the money. [18] Goulding also challenges the government's rebuttal argument that an honest lawyer would have advised Ryder to file amended tax returns, declare the unreported income and pay the taxes, penalties and interest due.

Goulding now contends that this argument was unfair because such advice from Goulding to Ryder was not available since if Ryder had filed amended returns, he would be incriminated and exposed to criminal prosecution. Goulding, however, had acknowledged in his conversations to Ryder that reporting the income was the safest course of action. Moreover, **the government attorney's argument was invited because defendants' lawyers had argued that their conduct was the legitimate practice of law. In any event, Goulding's conviction should be upheld because in view of the overwhelming evidence of his guilt, the isolated comments of the government attorney did not inject any unfairness into the proceedings-especially since the trial court instructed the jury to base its decision on the evidence alone, and not on counsel's statements. I. Refusal to give Goulding's advice of counsel instruction [19] Goulding alleges that the trial court erred in refusing to give his tendered instruction No. 20, outlining a defense of good faith reliance upon advice of counsel. **However, by failing to make an objection below, Goulding did not preserve the issue for appeal. Moreover, the evidence did not support such an instruction: there is no evidence that Goulding consulted two other attorneys, Ushijima and Fred Harbecke, before initiating this scheme or that he made a full report to them of all the facts and **that he received legal advice to proceed from either. Indeed when he consulted Harbecke, Goulding did not tell him that Ryder's money was untaxed income from an illegal source, even though Ryder had already told Goulding so. Furthermore, Ushijima testified that he was not an attorney for Goulding and did not meet with Goulding until after Goulding had devised the fraudulent scheme and described it to Ryder. Since the tendered good faith instruction was not supported by the evidence in the record, the trial court's refusal to give it was not error. United States v. Martinez, 988 F.2d 685, 698 (7th Cir.1993), certiorari denied, 510 U.S. 841, 114 S.Ct. 125, 126 L.Ed.2d 89. J. Adequacy of wilfulness instructions [20][21] Count Seventeen of the superseding indictment charged defendants with transporting $37,000 in cash from Chicago to the Cayman Islands on March 17, 1987, and wilfully failing to file the report required by 31 U.S.C. 5316(a) and Section 5322(a). The latter section punishes wilful violations of Section 5316. Count Eighteen charged defendants with transporting $118,000 in cash and bearer bonds from Chicago to the Cayman Islands and with wilfully failing to file the required report. Defendants now dispute the validity of the wilful instructions given by Chief Judge Moran in view of Ratzlaf v. United States, 510 U.S. 135, 114 S.Ct. 655, 126 L.Ed.2d 615, which was decided after this trial. The wilfulness provision in Section 5322(a) means that to convict a defendant the jury had to find he knew the structuring in which he engaged was unlawful. 510 U.S. at ----, 114 S.Ct. at 663. Earlier the Ratzlaf opinion stated that for valid convictions under Section 5322(a), a defendant must know of his duty not to avoid *669 triggering such a report. 510 U.S. at ----, 114 S.Ct. at 662 (emphasis supplied). Here Chief Judge Moran gave the following instructions on wilfulness without any objection by defendants: (1) An act is done willfully if done voluntarily and intentionally with the purpose of avoiding a known legal duty. (2) In order to prove the defendant had the requisite willful intent required for conviction under Counts Seventeen and Eighteen, the government must prove beyond a reasonable doubt that the defendant had knowledge that, if more than $10,000 in currency or other monetary instruments was transported out of the country-in the manner in which you find from the evidence that the currency or monetary instruments was transported out of the country-he was required to file a Customs Service Report. The instructions comported exactly with the Ratzlaf requirement that for a valid conviction a defendant must know of his duty to report a cash transaction and of his duty not to avoid triggering such a report. 510 U.S. at ----, 114 S.Ct. at 662. Chief Judge Moran's use of avoiding in the first instruction comported with Ratzlaf and also with the Seventh Circuit's pattern jury instructions. The second instruction given below also comports with Ratzlaf because it provided that the government must prove beyond a reasonable doubt that the defendant had knowledge of his duty to report the transportation of cash in excess of $10,000 out of the country. **Defendants cannot say that they were ignorant of the reporting requirement because Ushijima, in Goulding's presence, told Ryder on February 24, 1987:

The law states that ... if you take more than $10,000 out of this country you're suppose ... to declare it.... And [the courier's] not gonna declare it. And if he's caught then it can be seized. That's a risk. (Transcript of 2-24-87 at 45). **In addition, both defendants acknowledged that the reporting requirement applied to any negotiable instrument, including bearer bonds. Since they knew the structuring transaction in which ... [they] engaged was unlawful, Ratzlaf, 510 U.S. at ----, 114 S.Ct. at 663, their knowledge of the law was shown. III. Conclusion The convictions and sentences of both defendants are affirmed. U.S. v. Cintolo, 818 F.2d 980 (1st Cir.(Mass.) May 01, 1987) Defendant, a defense attorney, was found guilty by a jury of conspiring to obstruct justice, in the United States District Court for the District of Massachusetts, W. Arthur Garrity, Jr., Senior District Judge. Defendant appealed. The Court of Appeals, Selya, Circuit Judge, held that: (1) evidence supported jury conclusion that defendant, a defense attorney, joined a powerfully coercive campaign, with corrupt purpose, to preclude his client from testifying before grand jury concerning operation of illegal gambling and loansharking businesses; (2) fact finder is not limited to evaluating behavior of attorney on basis of attorney's facially legitimate explanation for conduct performed in course of defense of client; **(3) act by any party, whether lawful or unlawful on its face, may abridge conspiracy to obstruct justice statute if performed with corrupt motive; and (4) evidence of order to murder defendant's client, of FBI agents' warning of client of that order, of attorney's proposal of tax dodge, and of attorney's suggestion that material being sought, pursuant to warrant, be placed in his briefcase to safeguard items, was admissible. Affirmed. [1] Obstructing Justice 282 16

282 Obstructing Justice 282k13 Evidence 282k16 k. Weight and Sufficiency. Most Cited Cases Preclusion of use of immunity testimony in prosecution for past perjury, coupled with defendant's candid admissions to third party that witness would not be saved from contempt charges by argument that immunity bestowed upon witness was somehow inadequate, undermined credibility of defendant's claim that he gave legal advice to his client, the witness, not to testify, in good faith. U.S.C.A. Const.Amend. 5. [2] Criminal Law 110 16

110 Criminal Law 110I Nature and Elements of Crime 110k12 Statutory Provisions 110k16 k. Offenses Against United States and State or Territory. Most Cited Cases Jury in obstructing justice prosecution was reasonably entitled to disbelieve attorney's self-serving testimony regarding his motives in advising his client not to testify and to credit entirely plausible contrary interpretation urged by Government, that attorney was involved in conspiracy to procure his client's silence. [3] Obstructing Justice 282 16

282 Obstructing Justice 282k13 Evidence 282k16 k. Weight and Sufficiency. Most Cited Cases

Evidence supported jury conclusion that defendant, a defense attorney, joined powerfully coercive campaign, with corrupt purpose, to preclude his client from testifying before grand jury concerning operation of illegal gambling and loansharking businesses. 18 U.S.C.A. 371, 1503; U.S.C.A. Const.Amend. 5.

282 Obstructing Justice 282k8 k. Defenses. Most Cited Cases **Even if client voluntarily acceded to attorney's actions aimed at sending client to jail in order to protect persons allegedly involved in operation of illegal gambling and loansharking businesses, this did not give rise to defense to obstruction of justice charges leveled against attorney. 18 U.S.C.A. 371, 1503. [5] Conspiracy 91 28(3)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k28 Conspiracy to Commit Crime 91k28(3) k. Particular Crimes. Most Cited Cases Fact finder is not limited to evaluating behavior of attorney on basis of attorney's facially legitimate explanation for conduct performed in course of defense of client; statute governing conspiracy to obstruct justice requires that fact finder discern, by direct evidence or **by inference, motive which led attorney to perform particular actions. 18 U.S.C.A. 1503. [6] Conspiracy 91 28(3)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k28 Conspiracy to Commit Crime 91k28(3) k. Particular Crimes. Most Cited Cases If reasonable jurors could conclude, from circumstances of conversations, that defendant had sought, however cleverly and with whatever cloaking of purpose, to influence improperly a witness, offense of conspiracy to obstruct justice was complete. 18 U.S.C.A. 1503. [7] Conspiracy 91 28(3)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k28 Conspiracy to Commit Crime 91k28(3) k. Particular Crimes. Most Cited Cases **Means, though lawful in themselves, can cross line of illegality and amount to conspiracy to obstruct justice if employed by corrupt motive, to hinder due administration of justice, so long as means have capacity to obstruct. 18 U.S.C.A. 1503. [8] Conspiracy 91 91 Conspiracy 28(3)

91II Criminal Responsibility 91II(A) Offenses 91k28 Conspiracy to Commit Crime 91k28(3) k. Particular Crimes. Most Cited Cases In absence of facially legitimate and bona fide basis for interposition of Fifth Amendment, once witness has been granted immunity, i.e., in absence of good faith on lawyer's part, guilt of conspiracy to obstruct justice may be predicated on attorney's conduct in urging assertion of privilege. U.S.C.A. Const.Amend. 5; 18 U.S.C.A. 1503. [9] Conspiracy 91 28(3)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k28 Conspiracy to Commit Crime 91k28(3) k. Particular Crimes. Most Cited Cases Attorney who spurns interest of his own client and conspires to subject him to prison term for benefit of third party is not performing traditional functions of defense counsel and is not entitled to special perquisites and privileges that might preclude conviction for conspiring to obstruct justice. 18 U.S.C.A. 1503. [10] Conspiracy 91 28(3)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k28 Conspiracy to Commit Crime 91k28(3) k. Particular Crimes. Most Cited Cases Whatever contours of line between traditional lawyering and corrupt intent may be, they must inevitably be drawn case by case, for purpose of determining whether attorney has conspired to obstruct justice. 18 U.S.C.A. 1503. [11] Attorney and Client 45 14

45 Attorney and Client 45I The Office of Attorney 45I(B) Privileges, Disabilities, and Liabilities 45k14 k. Nature and Term of Office. Most Cited Cases As sworn officers of court, lawyers should not seek to avail themselves of relaxed rules of conduct, but should be held to very highest standards in promoting cause of justice. 18 U.S.C.A. 1503; ABA Code of Prof.Resp., EC15, EC9-6. [12] Conspiracy 91 23.5

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k23.5 k. Constitutional and Statutory Provisions. Most Cited Cases (Formerly 91k23)

Statute governing conspiracy to obstruct justice gives fair and conspicuous notice of what behavior it interdicts and is neither vague nor overbroad. U.S.C.A. Const.Amends. 5, 14; 18 U.S.C.A. 1503. [13] Conspiracy 91 45

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence 91k45 k. Admissibility in General. Most Cited Cases Evidence that individual, with whom attorney had allegedly conspired in order to prevent his client from testifying, had issued command that client be killed, was relevant in prosecution of attorney under indictment charging participation in conspiracy to obstruct grand jury's investigation. Fed.Rules Evid.Rule 401, 28 U.S.C.A. [14] Criminal Law 110 363

110 Criminal Law 110XVII Evidence 110XVII(E) Res Gestae 110k362 Res Gestae; Excited Utterances 110k363 k. In General. Most Cited Cases (Formerly 110k362, 110k419(1)) Third party's order that client of defendant, a defense attorney, be killed, was properly admissible into evidence in prosecution for conspiracy to obstruct justice as verbal act not offered for truth of matter asserted. Fed.Rules Evid.Rule 801(c), 28 U.S.C.A. [15] Criminal Law 110 1153.3

110 Criminal Law 110XXIV Review 110XXIV(N) Discretion of Lower Court 110k1153 Reception and Admissibility of Evidence 110k1153.3 k. Relevance. Most Cited Cases (Formerly 110k1153(1)) Absent abuse of discretion, district court's determination of admissibility, after balancing or to value of evidence against risk of unfair prejudice, will not be disturbed on appeal. Fed.Rules Evid.Rule 403, 28 U.S.C.A. [16] Criminal Law 110 338(7)

110 Criminal Law 110XVII Evidence 110XVII(D) Facts in Issue and Relevance 110k338 Relevancy in General 110k338(7) k. Evidence Calculated to Create Prejudice Against or Sympathy for Accused. Most Cited Cases Evidence that order had been given that client of defendant, an attorney, be killed, was not so unfairly prejudicial as to preclude its admissibility in prosecution of attorney on charges of conspiracy to obstruct grand jury's investigation of gambling and loansharking enterprises by convincing client not to testify. Fed.Rules Evid.Rule 403, 28 U.S.C.A.

[17] Criminal Law 110

1038.3

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1038 Instructions 110k1038.3 k. Necessity of Requests. Most Cited Cases Defendant, who did not request limiting instruction, could not complain of any alleged omission on part of district court in this regard. [18] Criminal Law 110 419(1.10)

110 Criminal Law 110XVII Evidence 110XVII(N) Hearsay 110k419 Hearsay in General 110k419(1.10) k. Exceptions to Hearsay Rule, and Non-Hearsay Distinguished in General. Most Cited Cases (Formerly 110k419(1)) Since evidence of FBI agents' conversations with client of defendant, a defense attorney, was not offered to prove truth of content thereof, evidence of that conversation, in which client was warned of plan to kill him, was not inadmissible hearsay in prosecution of attorney for conspiring to obstruct justice by convincing client not to testify before grand jury. Fed.Rules Evid.Rule 801(c), 28 U.S.C.A. [19] Conspiracy 91 45

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence 91k45 k. Admissibility in General. Most Cited Cases Admission of evidence of FBI's warning to client of defendant, an attorney, regarding plan to kill client in order to prevent his testifying before grand jury in connection with investigation of illegal gambling and loansharking operations, was not unfairly prejudicial in prosecution for conspiring to obstruct justice by convincing client not to testify. 18 U.S.C.A. 1503. [20] Obstructing Justice 282 15

282 Obstructing Justice 282k13 Evidence 282k15 k. Admissibility. Most Cited Cases Evidence that attorney had proposed tax dodge scheme to third party, for whose benefit attorney conspired to influence witness not to testify before grand jury, **was relevant in attorney's prosecution for obstruction of justice, as it reflected clearly on his corrupt intentions. Fed.Rules Evid.Rule 404(b), 28 U.S.C.A. [21] Obstructing Justice 282 15

282 Obstructing Justice 282k13 Evidence 282k15 k. Admissibility. Most Cited Cases Coconspirator's testimony of attorney's suggestion, urging that grand jury target's material be placed in his briefcase in order to safeguard items and frustrate successful execution of search warrant, which suggestion was, by fair implication, an offer to commit frankly criminal act of concealing incriminating evidence from FBI, was relevant, in prosecution of attorney for obstruction of justice, to prove attorney's corrupt intention in regard to ongoing investigation of the target's illegal gambling and loansharking operations. Fed.Rules Evid.Rules 401, 801(d) (2)(E), 28 U.S.C.A. [23] Privileged Communications and Confidentiality 311H 311H Privileged Communications and Confidentiality 311HI In General 311Hk1 k. In General. Most Cited Cases (Formerly 410k184(1)) Federal courts retain power to develop common-law witness privileges in criminal trials on case-by-case basis. Fed.Rules Evid.Rule 501, 28 U.S.C.A. [24] Privileged Communications and Confidentiality 311H 359 1

311H Privileged Communications and Confidentiality 311HVI Public Officers and Records 311Hk359 k. Surveillance Positions and Locations. Most Cited Cases (Formerly 410k216(1)) Policy of qualified privilege is entirely appropriate in context of criminal trials where defendant seeks disclosure of confidential government surveillance information. Fed.Rules Evid.Rule 501, 28 U.S.C.A. [25] Privileged Communications and Confidentiality 311H 359

311H Privileged Communications and Confidentiality 311HVI Public Officers and Records 311Hk359 k. Surveillance Positions and Locations. Most Cited Cases (Formerly 410k216(1)) Qualified privilege to which confidential government surveillance information is entitled can be overcome by sufficient showing of need. Fed.Rules Evid.Rule 501, 28 U.S.C.A. [26] Privileged Communications and Confidentiality 311H 359

311H Privileged Communications and Confidentiality 311HVI Public Officers and Records 311Hk359 k. Surveillance Positions and Locations. Most Cited Cases (Formerly 410k216(1)) Attorney, defendant in prosecution for conspiring to obstruct justice, failed to show necessity that would overcome qualified privilege against disclosure of location of electronic surveillance devices which had recorded conversations in which attorney took part as there were alternative means to support his contentions that persons inside apartment were not necessarily all involved in same conversation or in position to hear statements made by persons elsewhere in room. Fed.Rules Evid.Rule 501, 28 U.S.C.A.

[27] Conspiracy 91

48.2(2)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k48 Trial 91k48.2 Instructions 91k48.2(2) k. Particular Conspiracies. Most Cited Cases Jury instructions on standard of proof, that attorney's membership in conspiracy had to be proved on basis of his own words and actions, on liability of conspirator for acts of his coconspirators performed in furtherance of conspiracy, and necessity of finding that attorney had specific intent both to join conspiracy and to corruptly obstruct to administration of justice, viewed in entirety, were unexceptionable, as they were accurate in content and fair in delivery. 18 U.S.C.A. 1503. Before CAMPBELL, Chief Judge, BREYER and SELYA, Circuit Judges. SELYA, Circuit Judge. This case deals with the manner in which one member of the criminal defense bar chose, in his own sense, to read and to act upon the bitter letter of the law. In the bargain, the case presents important questions concerning **the relation of an attorney to the fabric of federal law which Congress has woven to prevent obstruction of justice. In December 1984, a grand jury sitting in the District of Massachusetts returned an indictment against William J. Cintolo, a practicing criminal defense attorney, charging him with **one count of conspiracy to obstruct justice, 18 U.S.C. 371, 1503, and **two substantive counts of obstruction of justice, 18 U.S.C. 1503. After a lengthy trial, the jury found the defendant guilty on the conspiracy count, but not guilty on the substantive obstruction counts. Cintolo was thereafter sentenced to a prison term, the execution of which was stayed pending appeal. We affirm. When the sufficiency of the proof is challenged on postconviction appeal in a criminal case, we necessarily view the evidence in the light most favorable to the government. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942); United States v. Medina, 761 F.2d 12, 16 n. 3 (1st Cir.1985); United States v. Tierney, 760 F.2d 382, 384 (1st Cir.), cert. denied, 474 U.S. 843, 106 S.Ct. 131, 88 L.Ed.2d 108 (1985); United States v. Davis, 623 F.2d 188, 195 (1st Cir.1980). Drawing all legitimate inferences which tend to support the government's case, United States v. Patterson, 644 F.2d 890, 893 (1st Cir.1981), and resolving any conflicts in the evidence against the appellant, United States v. DeLucca, 630 F.2d 294, 300 (5th Cir.1980), cert. denied, 450 U.S. 983, 101 S.Ct. 1520, 67 L.Ed.2d 819 (1981), our task is to determine whether the evidence in its totality, taken in the light most flattering to the government, together with all legitimate inferences to be drawn therefrom, [are enough that] a rational trier of the facts could have found the appellant guilty beyond any reasonable doubt. Tierney, 760 F.2d at 384. See also United States v. Drougas, 748 F.2d 8, 15 (1st Cir.1984); Dirring v. United States, 328 F.2d 512, 515 (1st Cir.), cert. denied, 377 U.S. 1003, 84 S.Ct. 1939, 12 L.Ed.2d 1052 (1964). With that standard in mind, we proceed to survey the evidence adduced in this case. I. Cintolo's indictment and ultimate conviction grew out of the judicially sanctioned electronic surveillance of an apartment at 98 Prince Street in Boston's North End. These premises were used by **Gennaro Angiulo*984 and his associates FN1 as a headquarters and office for the operation of illegal gambling and loansharking businesses . Loansharking is a term of criminal art which may roughly be defined as the unlawful lending of money at usurious rates of interest, repayment being encouraged by the employment (or threatened employment) of unorthodox collection measures, involving, inter alia, the breaking of bones. FN1. Several of Gennaro Angiulo's relatives, many bearing the family surname, figure in the events at issue. Members of the Angiulo organization with whom Cintolo is alleged to have conspired included,

among others, Gennaro Angiulo's four brothers-**Donato, **Francesco, **Michele and **Nicolo-and his son, **Jason Angiulo. Wherever the context permits, we will refer to Gennaro Angiulo simply as Angiulo, and will refer to other persons named Angiulo either by their first names or by their full names. The Federal Bureau of Investigation (FBI) monitored the conversations which took place on the premises from January 19 to May 3, 1981. The surveillance was conducted primarily by means of hidden microphones clandestinely emplaced within the apartment. These devices recorded conversations between Angiulo and his confederates, including Cintolo. In addition, a concealed exterior camera surreptitiously photographed persons entering and leaving the headquarters. What this intensive scrutiny revealed vis-a-vis the appellant can usefully be summarized by reference to the true bill which the grand jury returned. The indictment charged that Cintolo conspired with Angiulo and others to violate 18 U.S.C. 1503.FN2 **The gravamen of the accusation was that Cintolo did corruptly endeavor to influence, obstruct and impede the due administration of justice by befouling the proceedings of a federal grand jury investigating the criminal activities of the Angiulo gang. According to the indictment, Cintolo set out to accomplish this nefarious end through the use of his position **as attorney of record for **Walter LaFreniere, a witness before the grand jury, to acquire information about the ongoing investigation for Angiulo's benefit. The indictment further charged Cintolo with knowingly assisting Angiulo in his efforts to inhibit LaFreniere, after the latter had been granted immunity, from testifying truthfully before the grand jury, or from cooperating in any way with the investigation. FN2. The statute provides in material part that: Whoever ... corruptly or by threats or force, or by any threatening letter or communication, influences, obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice, shall be fined not more than $5,000 or imprisoned not more than five years, or both. 18 U.S.C. 1503. Tape recordings played for the jury at Cintolo's trial FN3 established that LaFreniere and his father-in-law, **Louis Venios, possessed damaging information linking various members of Angiulo's organization to illegal gambling and loansharking activities. Among other things, the evidence disclosed that both Venios and LaFreniere had been extended substantial credit to cover unpaid gambling debts, and that each had been subjected to exacting pressure from various of Angiulo's minions to remit the overdue sums. When subpoenas issued to Venios and LaFreniere indicating that the grand jury was investigating possible violations of 18 U.S.C. 892-94 (making, financing, and collecting extortionate extensions of credit), Angiulo recognized the legal peril which faced him and his confreres. Notwithstanding that on March 12, 1981, after first being interviewed by FBI agent Quinn, LaFreniere appeared before the grand jury and refused to testify on fifth amendment grounds, Angiulo remonstrated with his brother, Donato: FN3. The tape-recorded conversations which are in evidence are punctuated throughout with profanity of every sort imaginable. We will routinely delete (without employing any special signal) all expletives from the portions of these conversations which we have reason to quote, unless the use of such cursewords is in our judgment essential to place the remarks in perspective. Remember, they're not sayin' this or this or that. They're saying, Angiulo ... Angiulo. It might be me, you, him, him, and him, too. Nobody knows. Under RICO, no matter who ... we are, if *985 we're together, they'll get every ... one of us. We've been sleepin'.... As soon as that ... guy got that ... summons, shoulda got a kid like Cintolo and said, You hire a ... detective and tell him to stand at that grand jury. I want to know everybody that goes in there. Following extended discussions among Angiulo and his cohorts, assessing the extent of LaFreniere's knowledge and speculating on the possible foci of the grand jury's investigation, Donato Angiulo sent LaFreniere to meet with

the appellant. Shortly thereafter, the lawyer assembled with Gennaro Angiulo and others-not including LaFreniere-to discuss the sweep of the grand jury inquiry and Cintolo's newfound client. At this session, Angiulo told Cintolo that about three and a half, four weeks ago, ... these guys should have gotten you and told you what I wanted. Angiulo explained that LaFreniere had been delivering payments to him on behalf of Venios, and that LaFreniere's name appeared on a cuff sheet, i.e., a written list kept to show amounts of borrowings and identities of borrowers . (The cuff sheet in question related to an illegal barbooth game operated by Angiulo's son, Jason.) Angiulo then told Cintolo the questions which had been propounded to Venios before the grand jury. These questions concerned, inter alia, whether Venios had ever okay[ed] Walter LaFreniere for money with someone or anyone on the shylock. (In the vernacular, shylock and loanshark are roughly synonymous terms.) Venios's discretion and loyalty had been tested over time, and Angiulo appeared to have considerable confidence in him. Yet, Angiulo was plainly apprehensive over the family's potential exposure should LaFreniere fail to stand up, i.e., to go to jail rather than to testify truthfully before the grand jury. Angiulo mused, why is this worrying me? This kid owes money on the shark.... [H]e's gotta be protected. This kid should never have gone to the grand jury by himself. The appellant immediately reassured Angiulo. Cintolo told him that he had already got out of LaFreniere a list of the questions asked both in the FBI interview and in the grand jury. Cintolo then recounted these questions and LaFreniere's responses thereto for Angiulo's benefit. The conversation concluded with Angiulo instructing the appellant to call LaFreniere in and size him up. Angiulo told Cintolo: I got a decision to make. I want to have it all in front of me. Louis I can believe. This kid? Double talks. On March 19, 1981, Wendy Collins, a federal prosecutor, notified LaFreniere to report to the grand jury the following Thursday. That evening, Cintolo spoke with Angiulo: Angiulo: You going to explain to him that you feel that he's gonna get immunity? There's no other way out of it, is there? Huh? Cintolo: No. I, I'll explain it to him. Figured somebody else might want to talk to him first.... Angiulo: His father-in-law says already that as far as this kid is concerned, one thing you can say he's a ... man. If he's got time to do, he'll do it. But I don't think they figure on immunity. You understand? They're not that ... smart. Did we find out anything about this grand jury? Cintolo: Nothing yet. Angiulo: I would say you call him in, have a good talk, and give me a reaction. Cintolo: Yeah. Angiulo: So that this kid understands that he might just go and do eighteen ... months. Later that evening, Angiulo conferred with two of his henchmen, **Richard Gambale and **Peter Doc Limone, soliciting their views as to whether LaFreniere would stand up. Apparently uneasy at what he heard, Angiulo ordered them to kill LaFreniere: Tell him to take a ride, Okay? Went somewhere, the kid will just say to you, get out of the car and you stomp him. *986 Bing! You hit him in the ... head and leave him.... Meet him tonight.... Just hit him in the ... head and stab him, okay. The jeopardy is just a little too much for me. FBI agents monitoring the electronic surveillance equipment overheard Angiulo hand down this death sentence.

They moved immediately to warn the intended victim. LaFreniere acknowledged that he had been contacted and was scheduled to meet with someone later that day. He refused to disclose the identity of the person who had made the overture, but Gambale subsequently revealed himself to the government's electronic ear as the mystery caller, informing Angiulo that LaFreniere had resisted his suggestion that they meet for a drink. On March 20, Angiulo was told that LaFreniere had been attempting to reach Cintolo. Angiulo advised the lawyer that LaFreniere had been tipped about the contract which had been placed on his life: [T]he Feds called him and said to him, we got an informant in the North End. He just informed us that you have been placed on the hit list down there.... Words to that effect. Cintolo's only response to this grisly piece of news was to mention calmly that he had instructed LaFreniere to talk with no one, and to refer all calls to him. Angiulo continued: They, supposedly, they told him, look, what we're telling you, don't repeat it, cause you'll blow the cover of the guy we got down there talking to these people who knows what it's all about. Very, very interesting. Because, nowhere along the line did anyone talk about handling it. More important than that, if someone did talk about it, though ... no way would they talk where it would be, aah, susceptible to anyone excepting individuals that would be interested in it to begin with. This particular conversation concluded with Angiulo instructing Cintolo to meet with LaFreniere again and to evaluate [the situation] very carefully. There followed a series of discussions at the apartment in which Angiulo voiced grave (and mounting) concern over his organization's vulnerability vis-a-vis LaFreniere. The recurring theme of each conversation, significantly, was that LaFreniere be coerced into standing up-to serve an eighteen month sentence for contempt-rather than to accept immunity gracefully and testify freely before the grand jury. Angiulo ordered that pressure of divers kinds be brought to bear. At one juncture, he suggested that LaFreniere be told: Hey you, you answer these ... questions you're gonna get yourself in trouble, you're gonna get everybody in trouble. Do yourself a ... favor.... Go to the can until we find out a little more about this ... thing. At another point, Angiulo instructed **William Skinny Kazonis, another crony, that he was not to allow LaFreniere to tell the truth under any circumstances: He's gotta be taken out and told ... he's not answering.... First, we're gonna try to find out, to know a little more than what they found. Second, it's your ... responsibility to make sure this kid keeps his ... mouth shut.... Much the same sentiments were communicated to Venios: Angiulo: He's got immunity. Venios: Yah. Angiulo: In plain English, he either answers or he's going to jail. Venios: .... to jail, yah. Angiulo: We're all set up for him? Venios: Yah. During this same meeting, Angiulo explained that his own son, Jason, was in an equivalent position. He can answer until they ask him the $64 question, which is the question that will get somebody in trouble. After that, just pack it in and go to the can. Angiulo repeatedly reminded Venios of the jeopardy which any cooperation by LaFreniere with the grand jury would pose, and for good measure added a thinly-veiled threat:

If this kid has got the smarts, I'm gonna tell him to go in and answer some of these questions. Then Billy will defend *987 him for perjury. What ... is the difference whether he does eighteen for the grand jury or he gets three years for perjury? Angiulo later told the appellant of Venios's continued assurances that LaFreniere would stand up. According to Angiulo, Venios had been ordered to remind his son-in-law that this was no avuncular request, but a command from the organization: You got to tell this kid that we said it, not you. Us. No guy will go to the can here for any reason. So, Angiulo indicated, Cintolo's client fully appreciated the personal risk he would run by cooperating with the grand jury. In the course of the conversation, Angiulo remarked to Kazonis, Drink up, Skinny, you might go away tomorrow ... obstructing justice. Right, Billy? The following exchange then took place: Cintolo: .... And I went over that with him very, very carefully. That the maximum you can do is eighteen months or the life of the grand jury, whichever is shorter. Unknown Male: Yeah. Angiulo: Coming from you. Cintolo: And then he said to me, how long does the grand jury sit? I said, the grand jury sits for thirty-six months. Angiulo: Well he's thick, he doesn't understand about thirty-six months. But you gotta understand, coming from you that's the story. Coming from him, that's saying Listen I was there, ..., and no matter where you go, might take, might take a week, two weeks, three weeks to get to you, but we'll get to ya. Do you understand? Do you understand what I'm talking about? The difference. Kazonis: Well I convinced him already, for tomorrow forget about.... Angiulo: In fact, what he wanted to do was, when he got through with Skinny, he wanted to just go home and get his ... underwear and go, go, go away. On March 26, in Cintolo's absence, Angiulo described how LaFreniere had reacted to Kazonis's importunings: The lawyer told me I had to go do thirty-six months. I told my wife, I gotta go away for three years. Crazy, my lawyer expects that. Don't tell me, he says, [the] lawyer talked to me; he told me to go away for thirty-six months. (Emphasis supplied). On March 31, the appellant met briefly with Angiulo to plot strategy. By this time, it was obvious that Jasonwho had been subpoenaed by the grand jury-was a target of the investigation and would not be offered immunity. Cintolo was, according to the plan which he and Angiulo had mapped out, to represent Jason as well as LaFreniere. The lawyer suggested that he could have [Jason] plead the fifth. To this, Angiulo responded: Not yet, we shouldn't. No, sir. We didn't learn nothing. You understand, I want the questions specifically, and somewhere along the line he'll be indoctrinated by me, if you wanna call it that. When Cintolo said that he would like to try to appeal any court order disqualifying him from dual representation of both of these clients, Angiulo rejoined: Why would you like to do anything? We are here only to discuss all of the ultimate measures to tell them to go [perform an anatomically unlikely act upon] themselves. On April 1, LaFreniere received immunity, thereby stripping him of the fifth amendment's protection against compelled self-incrimination. Nothing daunted, Cintolo continued to participate in discussions with Angiulo and his

subordinates in which the anticipated commission of contempt before the grand jury was frankly acknowledged as an objective. At one point Cintolo remarked, they've got to figure if they can isolate [LaFreniere] in a sense ... if they can pull him away from me,.... Okay. If they can pull him away from me, then maybe they get something out of him. Whether he's gonna voluntarily do it, or just by sheer ignorance he's gonna blurt it out. I think that's what they want. (Emphasis supplied). Moments later, Cintolo added: *988 I talked to him.... to evaluate what he's saying to me-in fact, it was like I do with everybody: instill confidence in them, you know. I kept telling him, I might not be able to help you out, but I can tell ya, I'll fight like a son of a.... To get him into a confident situation, making him think that we can do what we're saying we can do, and all of a sudden smack, he's a ... goner. (Emphasis supplied).FN4 FN4. During this same conversation, **Cintolo sought Angiulo's permission to change the subject, and proposed a scheme whereby he would use his position as an attorney to shield members of Angiulo's illegal gambling and loansharking enterprises from their just deserts as tax evaders. The admissibility of this evidence is discussed infra at Part IV (3). Discussions regarding the grand jury investigation continued throughout the month of April. The appellant was a regular participant. In one conversation, the group attempted to identify an individual whom they had spotted and believed to be an informant. In response to a query by Cintolo, Angiulo gave the following chilling command: I don't want to know about this guy no more. I want [Kazonis] to go see him.... We'll ... kill him once and for all. [1] On April 23, LaFreniere appeared before the grand jury and, reading a statement prepared for him by Cintolo, refused to testify. Notwithstanding the immunity which had been conferred, the refusal was predicated on fifth amendment grounds. At a hearing on the government's ensuing motion to compel, the duty judge dismissed Cintolo's argument that the immunity bestowed upon LaFreniere was somehow inadequate as clearly frivolous. FN5 Upon leaving court, the appellant went directly to 98 Prince Street. Angiulo greeted him with the question, Is he in jail, just say yes or no? Cintolo responded, Not yet. The two men then dissected what had transpired at the grand jury in minute detail. At one point, the appellant informed Angiulo that the grand jury had queried LaFreniere about the contract on his life, volunteering that I think they know about Richie [Gambale] and Peter [Limone]. When Cintolo mentioned that LaFreniere had already admitted having received an invitation to meet, Angiulo remarked that Gambale had indeed ventured such an initiative. The dirty part of this, there's no fiction here. They don't have to fictionalize. He'll give them the pieces. They'll put the puzzle together. Then, Cintolo adverted to LaFreniere's professed desire to answer a few of the grand jury's questions. The following exchange took place: FN5. We note, at this juncture, that we have never been offered any plausible explanation of how-if at allthe grant of immunity to LaFreniere was deficient. The district court and the jury were similarly unenlightened. Cintolo had argued, and persists in contending on this appeal, that the grant of immunity was somehow not coextensive with LaFreniere's fifth amendment rights, i.e., that the immunization did not foreclose the possibility that inconsistencies with prior grand jury testimony could subject him to charges of perjury. **This argument was-and is-a transparently invalid one. The law is settled that a grant of immunity precludes the use of immunized testimony in a prosecution for past perjury (though affording no protection against future perjury). See, e.g., In re Bianchi, 542 F.2d 98, 100 (1st Cir.1976). This well established law, coupled with Cintolo's candid admissions to Angiulo that the tactic would not save LaFreniere from contempt charges, undermines the credibility of the appellant's claim that he gave the legal advice in question to his nominal client (LaFreniere) in good faith. Angiulo: That's why I think it's starting to enter his mind, Billy. I don't like the answers. Cintolo: Maybe a couple of times, couple of ... Why couldn't I answer these questions? Angiulo: Your answer to him is gonna be, when he says that to you, Hey Walter, let me tell you something, huh: don't ever come back to haunt me. With one of these questions, you're gonna commit perjury because instead of doing eighteen months you gonna ... go for five years. But how you give it back you better be very ... careful.... You hear me: very important, Billy, you gotta feel him out.

**On June 2, 1982, LaFreniere was held in contempt in federal district court and was sentenced to an eighteen month term of incarceration, which he served in full. Cintolo*989 represented him throughout the entire period of his immurement. He was disqualified by court order, however, from continuing to appear for Jason Angiulo. At his own trial, appellant testified that, although he was aware of Angiulo's involvement in illegal businesses, he had not acted with the intent corruptly to obstruct or impede justice while representing LaFreniere. To the contrary, he claimed to have been cooperating-or pretending to cooperate-with Angiulo solely to enhance his ability to counsel his true client (LaFreniere). The jury obviously disbelieved these assertions and drew a different set of inferences. II. From the facts established at trial, a sampling of which we have set out above, we find overwhelming evidence of a conspiracy among Angiulo and his associates to pressure LaFreniere-at all costs and by the nearest means-so as to prevent his testifying before the grand jury; **in short, a conspiracy to violate 18 U.S.C. 1503. **Drawing reasonable inferences from the evidence in the light most hospitable to the government, we have no difficulty recognizing that the defendant lent his informed assistance to this conspiracy. Indeed, Cintolo's counsel conceded as much at oral argument of this appeal, when he stated: Cintolo knew that Gennaro Angiulo was doing his level best to influence Walter LaFreniere through other people, including Walter LaFreniere's father-in-law, Louis Venios, to persuade Walter LaFreniere to stand up-in the vernacular, to refuse to testify-even though immunized, and to do an eighteen month sentence for contempt. There is no question that the evidence makes out a conspiracy, of which Gennaro Angiulo was at the head, to influence LaFreniere. And there is no question that Cintolo, knowing that, continued to represent LaFreniere ... partly with a purpose to gain time and partly with a purpose to obtain information. Secondly, he passed on such information as he did have to the Angiulos-as, for example, what questions were being asked [in the grand jury]. Indeed, most everything he did played into the hands of Gennaro Angiulo. Cintolo argues, however, that appearances are deceiving in this case; that his authentic motive in pursuing this perilous course of conduct was to obtain information from Angiulo that would assist him in representing the interests of LaFreniere. He portrays himself as a double agent of sorts, using the ringleader of the mob as the ringleader was attempting to manipulate him. While admitting that his behavior conferred benefits on Angiulo and on the hoped-for conspiracy of silence, the appellant maintains that those rewards were incidental to his obligation to represent LaFreniere as he thought best. Inasmuch as he did not intend to obstruct justice, the thesis runs, he cannot be guilty of conspiring to commit the substantive offense. [2][3] The short answer to this plaint [lamentation, wail] is that the jurors, armed with considerable circumstantial evidence to support their assessment of the situation, deemed these protestations to be apocryphal [spurious]. The slightly longer-but no less damning-answer is that the self-serving gloss which appellant thus places on the evidence manifestly misapprehends both the jury's factfinding function and our role in the review of the verdict. The jury was reasonably entitled to disbelieve Cintolo's testimony regarding his motives and to credit the (entirely plausible) contrary interpretation urged by the government. E.g., United States v. Cisneros, 448 F.2d 298, 305 (9th Cir.1971) (A trier of fact is not compelled to accept and believe the self serving stories of vitally interested defendants. Their evidence may not only be disbelieved, but from the totality of the circumstances, including the manner in which they testify, a contrary conclusion may be properly drawn.). Accord United States v. Machado, 804 F.2d 1537, 1549 (11th Cir.1986); United States v. Allen, 797 F.2d 1395, 1399 (7th Cir.), cert. denied, 479 U.S. 856, 107 S.Ct. 196, 93 L.Ed.2d 128 (1986); United States v. Robinson, 774 F.2d 261, 278-79 (8th Cir.1985). Given that appellate oversight of this conviction*990 must presume that the jury bought what the prosecution was selling, and recognizing that, in order to convict, the evidence need not exclude every reasonable hypothesis of innocence, we find adequate record evidence to sustain the conclusion that Cintolo knowingly and intentionally furthered the corrupt ends which Angiulo and his companions sought to achieve. Indeed, the evidence makes abundantly clear the sentient [aware], purposeful participation by Cintolo in the scheme to envelop LaFreniere in pressure and intimidation so as to forestall any cooperation on his part with the grand jury. **The fact that this participation was clothed, at least in part, in the mantle of superficially professional conduct does not exonerate the lawyer from

culpability. [4] We understand the defendant's argument that all of his conduct in the course of representing LaFrenieremeeting with Angiulo and his crew, shuttling information from the grand jury investigation to them, urging LaFreniere to invoke the fifth amendment privilege long after immunity had dissipated it-was performed with LaFreniere's consent. But, even were we inclined to credit the claim that LaFreniere voluntarily acceded to actions by Cintolo aimed at sending him to jail in order to protect the Angiulo clan, no effective defense avails to Cintolo as a result. In any realistic light, the most authentic victim of Cintolo's behavior was not his nominal client, but the due administration of justice. When federal law was violated, LaFreniere was powerless to legitimate the infraction by consenting to the commission of a crime. This notwithstanding, appellant and the amici beseech us to announce an unprecedented rule of law designed, they contend, to insulate lawyers from encroachments on the zealous representation of clients accused of crime. So long as an attorney tenders a facially legitimate explanation for conduct performed in the course of his defense of a client, they urge, a factfinder must evaluate the behavior on that basis. In constructing this sort of paradigm, the lawyer's word alone creates what amounts to an irrebuttable presumption which debars the jury-despite the existence of mounds of circumstantial evidence-from drawing contradictory inferences as to the attorney's motives or intent. Put another way, if defense counsel's actions of and by themselves do not amount to a crime, then a factfinder may not criminalize the conduct on the basis of conclusions reached, no matter how reasonably, about why the actions were performed. Hidden motivations, howsoever corrupt, remain forever hidden in a world where veniremen are not allowed to peer beneath the surface of things. [5] We find no support in precedent, principle, or policy for such an anti-lapsarian rule, and decline to cleave so deep a chasm in the criminal law for the exclusive benefit of attorneys who knowingly involve themselves in the corruption of their clients. As important a role as defense counsel serve-and we do not minimize its importance one whit-the acceptance of a retainer by a lawyer in a criminal case cannot become functionally equivalent to the lawyer's acceptance of a roving commission to flout the criminal law with impunity. **A criminal lawyer has no license to act as a lawyer-criminal. The omnibus clause of 28 U.S.C. 1503 makes it a felony to corruptly endeavor to influence, obstruct or impede ... the due administration of justice. We have previously held that [a]n effort to alter the testimony of a witness for corrupt purposes is plainly an endeavor to impede the due administration of justice. United States v. Tedesco, 635 F.2d 902, 907 (1st Cir.1980), cert. denied, 452 U.S. 962, 101 S.Ct. 3112, 69 L.Ed.2d 974 (1981). It is altogether clear that interference with a grand jury investigation fits snugly within the contemplation of 1503. E.g., United States v. Howard, 569 F.2d 1331, 1337 (5th Cir.), cert. denied, 439 U.S. 834, 99 S.Ct. 116, 58 L.Ed.2d 130 (1978); United States v. Walasek, 527 F.2d 676, 678 (3d Cir.1975); United States v. Campanale, 518 F.2d 352, 366 (9th Cir.1975), cert. denied, 423 U.S. 1050, 96 S.Ct. 777, 46 L.Ed.2d 638 (1976); United States v. Hubbard, 474 F.Supp. 64, 77 (D.D.C.1979). It is equally clear, from *991 both the plain meaning of the statutory language and the caselaw interpreting it, that 1503 criminalizes conduct which obstructs or impedes the due administration of justice, provided such conduct is undertaken with a corrupt or improper purpose. [6] We have held before, and reaffirm now, that [i]f reasonable jurors could conclude, from the circumstances of the conversation[s], that the defendant had sought, however cleverly and with whatever cloaking of purpose, to influence improperly a [witness], the offense was complete. Tedesco, 635 F.2d at 907 (quoting United States v. Lazzerini, 611 F.2d 940, 941 (1st Cir.1979)). See also United States v. Lazzerini, 611 F.2d 940, 941 (1st Cir.1979) (quoting United States v. Roe, 529 F.2d 629, 632 (4th Cir.1975)). **Correct application of 1503 thus requires, in a very real sense, that the factfinder discern-by direct evidence or from inference-the motive which led an individual to perform particular actions. As Justice Holmes once aptly observed, [i]ntent may make an otherwise innocent act criminal, if it is a step in a plot. Badders v. United States, 240 U.S. 391, 394, 36 S.Ct. 367, 368, 60 L.Ed. 706 (1916). The appellant's suggestion that the jury be precluded, as a matter of law, from drawing its own (reasonable) conclusions as to why any defendant-or, more narrowly put, a lawyer-defendant-committed acts not unlawful in and of themselves would do enormous violence to the statute and play unwarranted havoc with its enforcement. We decline the invitation to rewrite the obstruction statute in such a sweeping fashion. Adoption of the rule

which the appellant and the amici urge upon us would effectively divest the jury of the critical factfinding role which Congress, in the enactment of 1503, specifically entrusted to it. Professors LaFave and Scott accurately note that there are a number of instances in which ... inquiry into why an act was committed is crucial in determining whether or not the defendant has committed a given crime. W. LaFave & A. Scott, Handbook on Criminal Law 204 (1972). **We find such an inquiry to be appropriate, indeed statutorily required, in the precincts patrolled by 18 U.S.C. 1503.FN6 FN6. Having made the argument that a jury may never draw inferences of corrupt intent from a lawyer's actions performed within the scope of an attorney-client relationship, the appellant nevertheless concedes that attorneys ... whose nonprotected conduct constitutes an endeavor to obstruct justice within the purview of the omnibus clause may be prosecuted under 1503. The amici likewise hypothesize that an attorney who sought to delay the grand jury, in order to afford his client additional time lawlessly to flee the jurisdiction, could be subject to prosecution under the obstruction statute. We find those positions in accord with our own reading of 1503-and curiously at variance with the defense's central thesis. It seems to us that these concessions belie the notion that a lawyer's actions in the course of representing a client are presumptively immune from a finding of malevolent intent sufficient to criminalize the conduct. [7] Once it is conceded that the existence vel non of intent under 1503 is a question of fact for the jury, it remains to define the parameters of behavior that can fairly be labelled as corrupt, ergo, criminal under the statute. General definitions tend to be circular. It has been said, for instance, that [t]he term corruptly is the specific intent of the crime. United States v. Brand, 775 F.2d 1460, 1465 (11th Cir.1985). Yet, the term is admittedly susceptible to different meanings in different contexts. See United States v. Partin, 552 F.2d 621, 642 n. 26 (5th Cir.) , cert. denied, 434 U.S. 903, 98 S.Ct. 298, 54 L.Ed.2d 189 (1977). Courts have tended to interpret the requirement broadly, holding that it applies to the ends of an actor's conduct rather than merely the means. E.g., United States v. Howard, 569 F.2d at 1334-35 (the omnibus clause aims at obstruction of justice itself, regardless of the means used), and cases cited therein. Thus, any act by any party-whether lawful or unlawful on its face-may abridge 1503 if performed with a corrupt motive. Our sister circuits have spoken to this subject with a single voice. Any corrupt endeavor whatsoever, to influence, intimidate or impede any ... witness, ... whether successful or not, is proscribed by the obstruction of justice statute. *992Catrino v. United States, 176 F.2d 884, 887 (9th Cir.1949) (footnote omitted). Accord Falk v. United States, 370 F.2d 472, 476 (9th Cir.1966), cert. denied, 387 U.S. 926, 87 S.Ct. 2044, 18 L.Ed.2d 982 (1967). The statute reaches all corrupt conduct capable of producing an effect that prevents justice from being duly administered, regardless of the means employed. United States v. Silverman, 745 F.2d 1386, 1393 (11th Cir.1984). See also United States v. Howard, 569 F.2d at 1335 (similar); Samples v. United States, 121 F.2d 263, 266 (5th Cir.) ( 1503 is broad enough to cover any act, committed corruptly, in an endeavor to impede or obstruct the due administration of justice.), cert. denied, 314 U.S. 662, 62 S.Ct. 129, 86 L.Ed. 530 (1941). These formulations sound a common theme: they uniformly signal that means, though lawful in themselves, can cross the line of illegality if **(i) employed with a corrupt motive, **(ii) to hinder the due administration of justice, so long as (iii) the means have the capacity to obstruct. The appellant and the amici pay lip service to this principle, but maintain that different considerations come into play where criminal defense lawyers are concerned. In those purlieus, they assert, a corrupt motive may not be found in conduct which is, itself, not independently illegal. We regard this argument as being in conflict with persuasive caselaw, and as wrongheaded from the standpoint of sound public policy. In Cole v. United States, 329 F.2d 437 (9th Cir.), cert. denied, 377 U.S. 954, 84 S.Ct. 1630, 12 L.Ed.2d 497 (1964), the court affirmed the 1503 conviction of an individual who had pressed a grand jury witness to stand mute by invocation of his fifth amendment prerogative. The defendant's motive, the prosecution contended, was to protect both himself and a close friend from the slings and arrows of a pending grand jury investigation. **The Ninth Circuit noted that: the constitutional privilege against self-incrimination is an integral part of the due administration of justice, designed to do and further justice, and to the exercise of which there is an absolute right in every witness. Id. at 443. Nevertheless, while [a] witness violates no duty to claim it, ... one who **bribes, **coerces, **forces or threatens a witness to claim it, or **advises with corrupt motive the witness to take it, can and does himself obstruct or influence the due administration of justice. Id.

Cole, to be sure, did not involve a lawyer-client relationship. Yet the case explicitly suggested that an attorney who corruptly advised a client to wind the toga of the fifth amendment about him could well be subject to obstruction of justice liability notwithstanding any privilege he might claim to have in rendering such advice. Id. at 440 (dictum). After all, the highminded purposes which underlie the constitutional protection are disserved, not furthered, if a third party-lawyer or not-has carte blanche to manipulate an individual's use of the privilege corruptly to impede the due administration of justice. To like effect is the decision in United States v. Cioffi, 493 F.2d 1111 (2d Cir.), cert. denied, 419 U.S. 917, 95 S.Ct. 195, 42 L.Ed.2d 155 (1974). There, the Second Circuit affirmed a conviction for conspiracy to obstruct justice. The defendant, Cioffi, was a man who had tried to induce a grand jury witness, one Scheer, to take the fifth amendment rather than inculpate certain third parties who were under investigation for loansharking. The court observed that, [k]nowing that the loan had in fact been made and the extortionate interest paid, all to the personal knowledge of Scheer, an endeavor to induce Scheer ... to plead the Fifth Amendment for the purpose of protecting [the shylock] was obviously corrupt. Id. at 1119. The Second Circuit flatly rejected the hypothesis that advising a witness to do that which he possessed a constitutional right to do could not be criminalized. **In charting such a course, the court reaffirmed the prevailing principle that [t]he focus [under 18 U.S.C. 1503] is on the intent or motive of the party charged as an inducer. **The lawful behavior of the person invoking the [Fifth] Amendment cannot be used to protect the *993 criminal behavior of the inducer. Id.FN7 **Cioffi, like Cole, stands ultimately for the proposition that otherwise lawful means can transgress 1503 if employed with the corrupt intent to accomplish that which the statute forbids. FN7. The Second Circuit addressed this issue again in United States v. Fayer, 523 F.2d 661 (2d Cir.1975). There, the defendant, an attorney representing targets of a grand jury investigation, advised a non-client witness who possessed damaging information not to testify before the grand jury. He claimed that he was merely offering the witness legal advice. The trial judge, sitting without a jury, found reasonable doubt as to the lawyer's motives in urging this course of action. Id. at 663. On that basis, he acquitted Fayer. But, the judge noted that if the whole thing were set up to protect the [clients] rather than [the witness], I would have found [the attorney] guilty.... Id. On appeal, the Second Circuit held that it was constrained to affirm on account of the district court's findings of fact. Id. Nevertheless, the panel took pains to point out that advising a witness to plead the fifth amendment could violate 1503 if done in whole or in part for an improper purpose. Id. In illustrating the sort of motive which it thought could support an obstruction charge in such a context, the court cut fairly close to the bone of contention before us, mentioning examples like helping [clients] to cover up crimes to avoid indictment, id., and acting with knowledge of crimes committed, as opposed to giving innocent counsel. Id. at 664. These cases are instructive for the purposes at hand. Notwithstanding that the means used by the appellant might be regarded as lawful, if viewed in a vacuum, clear proof of improper motive could surely serve to criminalize that conduct. And, Cintolo's corrupt intent seems especially evident when contrasted with the actions scrutinized in the foregoing cases. Viewing the facts and the inferences therefrom most favorably to the government, as we are required to do, there was an ample basis for the jury to find-in significant contradistinction to Cole and Cioffi -that the appellant was not counseling LaFreniere to invoke legitimate rights for his own benefit. On this unhappy record, a factfinder could well have believed beyond a reasonable doubt that Cintolo acted as part of a high pressure, noholds-barred campaign to induce his nominal client, LaFreniere, to commit a criminal contempt. Though Cintolo's acts in fostering the intimidation of LaFreniere were not in themselves overtly unlawful, they seem to us, in this context, to have been fully actionable under 18 U.S.C. 1503. A few simple illustrations may be useful. Purchasing a chisel at a hardware store is, usually, a lawful act, commonplace in the extreme. Yet, if an individual were to purchase the same chisel at the same hardware store with the avowed (evil) purpose that it be used as part of a planned break-in by persons in league with him, the iniquitous motive alone would transmogrify the innocent transaction into an overt act carrying undeniable criminal consequences. To step even closer to the case at bar, it is lawful-again, commonplace-to offer an acquaintance a lift to the airport. Nevertheless, if a person were to provide such transportation at precisely the same time and in precisely the same way, but with the corrupt purpose that the prospective passenger be spirited away so as to thwart his scheduled appearance before a grand jury, the impure motive alone would convert the otherwise-lawful gesture

into an outright obstruction of the grand jury's mission-an obstruction which, most would concede, would be criminalized by 1503. That sort of alchemy-the conversion of innocent acts to guilty ones by the addition of improper intent-is what this case is all about. In the most fundamental sense, the advice given by Cintolo in the manipulation of his own client was a commodity no different than the chisel or the free ride. It was legal to traffic in the wares, but illegal corruptly to put them to felonious use. Nothing in the caselaw, fairly read, suggests that lawyers should be plucked gently from the madding crowd and sheltered from the rigors of 18 U.S.C. 1503 in the manner urged by appellant and by the amici. Nor is there any sufficient public policy justification favoring such a result. To the contrary, the overriding policy interest is that [t]he attorney-client relationship cannot ... be used to shield or promote illegitimate acts.... United States v. Klubock, No. 86-1413, slip op. at 11 n. 12 (1st Cir. March 25, 1987). [A]ttorneys, just *994 like all other persons, ... are not above the law and are subject to its full application under appropriate circumstances. Id. at 21 (citation omitted). The authority upon which Cintolo relies for a contrary conclusion is readily distinguishable. In United States v. Herron, 28 F.2d 122 (N.D.Cal.1928), for example, the court reversed the conviction of an attorney who had advised a witness to plead his fifth amendment privilege, stating that it was not the policy of the law to make criminal, no matter what the motive might have been, the advising a witness to do that which was lawful and would in fact have protected the witness from disclosing self-incriminating matter. Id. at 123 (emphasis original). We note, first, that the conclusion reached by the district court in Herron is a dubious one. See, e.g., Cioffi, 493 F.2d at 1119; Cole, 329 F.2d at 440, 443. Moreover, Herron distinguishes itself from the instant case because the lawyer-defendant advised a witness to invoke a right against compelled self-incrimination which the witness (irrespective of his actual guilt or innocence) in fact possessed. Cintolo, by contrast, helped press LaFreniere to invoke a supposed right which-as Cintolo well knew-was no longer LaFreniere's to claim. The distinction is obvious; it is predicated not upon the actual guilt or innocence of the recipients of the advice, but upon the divergent motives of the advisors. To urge another-whether guilty or not-to plead the fifth amendment because immunity has been withheld and because a reasonable fear of self-inculpation exists is one thing. It is quite another to advise a fully immunized client to claim fifth amendment rights which are no longer live, not because of any fear of self-inculpation, but for the sole purpose of shielding other individuals. Cintolo falls at the latter pole. [8] The remaining cases hawked by the appellant offer no sturdier support for his position. In Maness v. Meyers, 419 U.S. 449, 95 S.Ct. 584, 42 L.Ed.2d 574 (1975), for instance, the Court reversed the conviction of an attorney who had counseled his client not to respond to a subpoena duces tecum in a civil case, citing fifth amendment grounds. The Court noted, however, that the lawyer had acted in the good-faith belief that if [his] client produced the materials he would run a substantial risk of self-incrimination. Id. at 455, 95 S.Ct. at 589. See also id. at 465-66, 95 S.Ct. at 594-95 (The privilege against compelled self-incrimination would be drained of its meaning if counsel ... could be penalized for advising his client in good faith to assert it.). The Court quoted an earlier decision, In re Watts, 190 U.S. 1, 29, 23 S.Ct. 718, 725, 47 L.Ed. 933 (1903) , to the effect that if an attorney acts in good faith and in the honest belief that his advice is well founded and in the just interests of his client, he cannot be held liable for error in judgment. 419 U.S. at 467, 95 S.Ct. at 595. The clear implication of these comments is that, in the absence of a facially legitimate and bona fide basis for interposition of the fifth amendment, i.e., in the absence of good faith on the lawyer's part, guilt may be predicated on the conduct. In our view, we are scrupulously faithful to Maness and to Watts, insofar as they have pertinence, when we lay stress on the evidence from which the jury could logically have inferred Cintolo's corrupt motive, want of good faith, and lack of any honest belief that LaFreniere had any residual right, after receiving immunity, to maintain his silence-or that doing so would benefit LaFreniere in any legally cognizable sense. Appellant's reliance on McNeal v. Hollowell, 481 F.2d 1145 (5th Cir.1973), cert. denied, 415 U.S. 951, 94 S.Ct. 1476, 39 L.Ed.2d 567 (1974), is likewise misplaced. The language of that decision undermines, rather than supports, the defense's reading of 1503. In McNeal, the court acknowledged counsel's right to contact a codefendant to ensure that the latter knew of his constitutional rights before testifying against counsel's client. The court start[ed] from the premise that an individual may not bribe, coerce, force, or threaten a witness to claim the privilege against self-incrimination, id. at 1152, and went on to observe that [n]one of these forms of conduct has been even tangentially attributed*995 to [defense] counsel. Id. What springs instantly to mind, of course, is that precisely the type of conduct which was not even tangentially attributed to the defense attorney in McNeal lies at the very heart

of the government's case against Cintolo. We do not read McNeal as intimating in any way that a lawyer should receive kid-glove treatment under 1503. [9] There is yet another aspect to the pleas which we have heard, an aspect rooted more in policy than in the caselaw. Both appellant and the amici focus a portion of their arguments on the fact that Cintolo's representation of LaFreniere included many traditional lawyering functions-e.g., the filing of motions, appearances in court, and the like-the potential criminalization of which under 1503 could imperil the effectiveness of the defense bar. They point out, with some persuasive force, the dangers of permitting jurors to draw inferences from such traditional conduct as to the barrister's underlying motive. We need not enter this thicket today. Even if we were inclined to credit the surrealistic view that juries should never be permitted to draw inferences of corrupt intent solely from traditional attorney conduct performed in the course of representing a criminal defendant-and we are plainly not so inclined, see supra -this case would present no occasion for the implementation of such a rule. Here, as we have already noted, Cintolo's representation of LaFreniere was in no sense traditional; the evidence makes manifest that he acted less as an attorney for LaFreniere than as a minion of Angiulo. Indeed, the jury heard recorded conversations which revealed, from Cintolo's own mouth, that he was laboring mightily to get his ostensible client into jail, rather than to keep him out of it. Far from using the wonted tools of the lawyer's trade to ameliorate LaFreniere's legal position, the defendant helped Angiulo to place him in a vise and to turn the screw. An attorney who spurns the interests of his own client and conspires to subject him to a prison term for the benefit of a third party is not performing the traditional functions of defense counsel. Such an attorney is not, on any view of the matter, entitled to special perquisites and privileges. [10] Whatever the contours of the line between traditional lawyering and corrupt intent may be, they must inevitably be drawn case-by-case. The question of whether an attorney who does no more than file motions, make court appearances, and the like-however dilatory they may seem, however much they may slow the progress of a grand jury probe-can ever be subject to 1503 liability for such conduct alone, is not before us. We recognize the dangers that are present if prosecutors can be allowed to inquire into motive in such confined circumstances, and we respect the importance of allowing defense counsel to perform legitimate activities without let or hindrance. We do not see this case, however, edging into that forbidden terrain. Where, as here, it is proven beyond any reasonable doubt that a lawyer has purposefully acted as an advisor to third-party criminals and as a participant in the illegal plot which they have hatched, that he has served knowingly and willingly as a go-between linking the conspirators to his nominal client, that he has performed functions apart from (and alien to) the traditional chores of a lawyer, and that he has done all of this with the corrupt aim of frustrating a federal grand jury on its appointed rounds, then he cannot hide behind his law degree when the presence or absence of the essential elements of an obstruction of justice charge are considered. Having called the tune, Cintolo cannot be excused from paying the piper on the basis of his vocation. When all is said and done, what separates the wheat from the chaff in this case is the plentitude of evidence developed at trial from which the jury could have concluded that Cintolo, with corrupt purpose, joined a powerfully coercive campaign to muzzle LaFreniere. In the last analysis, the jury did so conclude. That finding cannot lightly be overturned. Indeed, the record evidence preponderates strongly to the view that Cintolo's conduct, though nominally on behalf of his erstwhile client, was undertaken with the intent of protecting*996 Angiulo and Angiulo's associates, whatever the cost to LaFreniere and whatever the consequences to the due administration of justice. The fact that the client had to be encouraged to commit contempt and to serve a prison term was a routine expense of doing businessthe business of safeguarding the interests of Angiulo and his henchmen. The jury was amply justified in determining that, vis-a-vis the due administration of justice, Cintolo acted sterilissima infidelitas. Seen in this gloomy light, the cases relied upon by appellant and the amici are inapposite, and the policies which they elucidate land wide of the mark. [11] For the foregoing reasons, we emphatically reject the notion that a law degree, like some sorcerer's amulet, can ward off the rigors of the criminal law. No spells of this sort are cast by the acceptance of a defendant's retainer. We decline to chip some sort of special exception for lawyers into the brickwork of 1503. By our reckoning, attorneys cannot be relieved of obligations of lawfulness imposed on the citizenry at large. Acceptable notions of evenhanded justice require that statutes like 1503 apply to all persons, without preferment or favor. As sworn officers of the court, lawyers should not seek to avail themselves of relaxed rules of conduct. To the exact contrary, they should be held to the very highest standards in promoting the cause of justice. See ABA Model Code of

Professional Responsibility EC 1-5 (A lawyer should maintain high standards of professional conduct and should encourage fellow lawyers to do likewise.); EC 9-6 (Every lawyer owes a solemn duty to uphold the integrity and honor of his profession; to encourage respect for the law and for the courts and judges thereof; ... to conduct himself so as to reflect credit on the legal profession and to inspire the confidence, respect t, and trust of his clients and of the public). We have carefully examined the avowed fears of the appellant and the amici that a decision upholding Cintolo's conviction in this case may deter counsel from multiple representation of defendants, or somehow chill the criminal defense bar in zealous advocacy on behalf of clients. We find such concerns to be grossly overstated. Our ruling today does not interfere with legitimate avenues of advocacy or the ethical conduct of even the most vigorous representation. We do nothing more than apply a criminal statute, aimed at protecting the sanctuary of justice from malevolent influences, in a sober and impartial fashion. Shorn of hyperbole, appellant's argument reduces to the thoroughly unsupportable claim that 1503 has two levels of meaning-one (more permissive) for attorneys, one (more stringent) for other people. We see nothing to recommend the proposition that attorneys can be of easier virtue than the rest of society in terms of the criminal code. As citizens of the Republic equal under law, all must comply with the same statute in the same manner. In sum, the government presented plethoric evidence from which the jury could reasonably have found the appellant guilty of conspiring to obstruct the due administration of justice. His role as a defense attorney did not insulate him from the criminal consequences of his corruptly-motivated actions. Accordingly, the district court did not err in denying the defendant's motion for judgment of acquittal. III. Though the analysis contained in Part II, supra, disposes of the defendant's principal thesis, Cintolo has essayed a constitutional challenge to the omnibus clause of 1503 as well. We have patiently considered the vagueness and overbreadth grounds which undergird this foray, and find them to be without merit. We discuss them briefly. Given the absence of any first amendment considerations, the appellant cannot plausibly attack 1503 as unconstitutionally vague on its face. United States v. Powell, 423 U.S. 87, 92, 96 S.Ct. 316, 319, 46 L.Ed.2d 228 (1975). Thus, we test the statute's clarity only as applied to the facts of this case. In Robinson v. Berman, 594 F.2d 1 (1st Cir.1979), we stated that a law may not hold an individual criminally responsible for conduct which he could not reasonably understand to be proscribed. *997 Id. at 2 (quoting United States v. Harriss, 347 U.S. 612, 617, 74 S.Ct. 808, 811, 98 L.Ed. 989 (1954)). Accord United States v. Anzalone, 766 F.2d 676, 678 (1st Cir.1985). So long as a criminal law is specific enough to give fair notice of what conduct is prohibited, Colten v. Kentucky, 407 U.S. 104, 110, 92 S.Ct. 1953, 1957, 32 L.Ed.2d 584 (1972), and gives the challenger adequate warning that his contemplated conduct would be unlawful, United States v. Mazurie, 419 U.S. 544, 553, 95 S.Ct. 710, 715, 42 L.Ed.2d 706 (1975), the enactment passes constitutional muster. The omnibus clause of 1503, as we read it, easily satisfies these criteria. It is, indeed, aposematic-giving fair and conspicuous notice of what behavior it interdicts. Because other courts have dwelt on the subject at length, we need not reinvent the analytic wheel. See, e.g., United States v. Howard, 569 F.2d at 1336-37 (Since the omnibus clause of the statute quite clearly proclaims that all obstructions of justice are prohibited, we conclude that section 1503 gives fair notice of the offending conduct ..., which is all the constitution requires....) (citations omitted); Anderson v. United States, 215 F.2d 84, 90 (6th Cir.) (It is perfectly apparent that no unconstitutional vagueness inheres in 1503), cert. denied, 348 U.S. 888, 75 S.Ct. 208, 99 L.Ed. 698 (1954). Suffice it to say that we echo these sentiments. [12] On the record before us, there is no doubt that appellant in fact knew-or was chargeable with knowledgethat his conduct fell within the statute's proscriptions. To borrow an exceedingly apt phrase from the Fifth Circuit, [i]f anyone unwittingly runs afoul of 1503, it will not be on account of a misconstruction but because of an ignorance for which there is no excuse. Howard, 569 F.2d at 1336 n. 9. The law is, in our view, neither vague nor overbroad. IV.

Cintolo next espouses the notion that the trial court misjudged the relevancy vel non of certain items of proffered proof and/or impermissibly calibrated the relevancy/prejudice balance. Although this aspect of the appeal has many facets, none pave the way to reversal of the conviction. We believe that the district court acted within the bounds of its discretion in making its evidentiary rulings and we reject all of these assignments of error. Only four of them require any elaboration. 1. The Order to Murder LaFreniere. As mentioned earlier, the indictment charged that Cintolo participated in a conspiracy to obstruct the grand jury's investigation of Angiulo's gambling and loansharking enterprises. In the verbiage of the bill, a primary objective of the conspiracy was to ensure that LaFreniere did not testify truthfully or otherwise cooperate with the investigation. The indictment described several overt acts purportedly undertaken to implement the conspiracy. Included among them was Angiulo's March 19, 1981 order to kill LaFreniere. According to the appellant, admission of evidence about this directive necessitates that his conviction be upset. We disagree. The first contention which Cintolo addresses to this point is that Angiulo's homicidal command constituted inadmissible hearsay because the statement fell outside the scope-and was not in furtherance-of any conspiracy which Cintolo can be said to have joined. This argument relies principally on the trial judge's Petrozziello finding, see United States v. Petrozziello, 548 F.2d 20 (1st Cir.1977), to the effect that Cintolo neither knew in advance, nor at the time he joined the conspiracy, of Angiulo's edict. It is settled law, however, that one who joins an ongoing conspiracy is deemed to have adopted the prior acts and declarations of coconspirators, made after the formation and in furtherance of the conspiracy. See United States v. Baines, 812 F.2d 41, 42 (1st Cir.1987) ([A] conspiracy is like a train. When a party knowingly steps aboard, he is part of the crew, and assumes conspirator's responsibility for the existing freight-or conduct-regardless of whether he is aware of just what it is composed.). See also United States v. United States Gypsum Co., 333 U.S. 364, 393, 68 S.Ct. 525, 541, 92 L.Ed. 746 (1948); *998 United States v. Masse, 816 F.2d 805, 810-11 (1st Cir.1987); United States v. Sarno, 456 F.2d 875, 878 (1st Cir.1972). As the Fifth Circuit observed in the analogous case of United States v. Brasseaux, 509 F.2d 157, 161 (5th Cir.1975), once having entered into a common scheme with the other conspirators, appellant is bound by all acts committed by them in furtherance thereof, including those acts committed without his knowledge before he joined the conspiracy. [13][14] In the case at bar, the jury could well have inferred that the execution order, issued at a time when Angiulo felt jittery and insecure, was part of the overall conspiracy which had as its explicit objective preventing LaFreniere from cooperating with the grand jury. Then, too, there was other evidence-including one recorded conversation in which Angiulo essentially confessed to Cintolo that he had ordered LaFreniere's murder-which tended to show that the appellant was aware that violent methods were being contemplated to ensure his client's silence. So, evidence of the death sentence was indisputably relevant in the Fed.R.Evid. 401 sense. See United States v. Moreno Morales, 815 F.2d 725, 739-40 (1st Cir.1987).FN8 FN8. Angiulo's order was properly admissible into evidence on another theory as well, as a verbal act not offered for the truth of the matter asserted under Fed.R.Evid. 801(c). See, e.g., Curreri v. International Brotherhood of Teamsters, 722 F.2d 6, 11 (1st Cir.1983); United States v. Ciampaglia, 628 F.2d 632, 643 (1st Cir.), cert. denied, 449 U.S. 956, 101 S.Ct. 365, 66 L.Ed.2d 221 (1980). See generally McCormick, Evidence 246, 249 (3d ed. 1984). [15][16] Yet, relevancy alone is not the ultimate test. The appellant argues that, even if marginally relevant, the probative value of the evidence was sufficiently outweighed by the risk of unfair prejudice that it should have been barred. As we have noted before, the trial judge has a front row seat which gives him a unique vantage point. [He] is Johnny-on-the-spot; he has savored the full taste of the fray, and his considerable discretion [in conducting the balancing test required under Rule 403] must be respected so long as he does not stray entirely beyond the pale. United States v. Tierney, 760 F.2d at 388. See also Moreno Morales, supra; United States v. Marler, 756 F.2d 206, 217 (1st Cir.1985); United States v. Strahl, 590 F.2d 10, 12 (1st Cir.1978), cert. denied, 440 U.S. 918, 99 S.Ct. 1237, 59 L.Ed.2d 468 (1979). Absent an abuse of discretion, a district court's determination of admissibility under Fed.R.Evid. 403 will not be disturbed on appeal. United States v. Gonsalves, 668 F.2d 73, 75 (1st Cir.), cert. denied, 456 U.S. 909, 102 S.Ct. 1759, 72 L.Ed.2d 168 (1982); Dente v. Riddell, Inc., 664 F.2d 1, 5 (1st Cir.1981). The record before us establishes that the trial judge meticulously weighed probative value against the danger of unfair prejudice to the defendant before admitting evidence of the order to murder LaFreniere.FN9 The court's conclusion that the worth of the evidence exceeded any authentic risk of confusing, misleading, or biasing the jury is a

supportable one. In an instance such as this-where the evidence in question was highly relevant to establishing the existence of the conspiracy and its particular workings, United States v. Crocker, 788 F.2d 802, 806-07 (1st Cir.1986), and shed light on the conspirators' roles [and] method of operation ..., id. at 807-it would be folly for us to second guess the district court. We will not do so.

At p. 1005,
*1005 We do not see this case as sowing the seeds for such an horrific harvest. Cintolo did not merely defend an accused. The evidence demonstrated that he came upon an ongoing criminal enterprise, adopted it as his own, and willingly (sad to say, eagerly) participated in it. The facts of record are not pretty: they show with stark clarity a defendant who used his license to practice law as a means of assisting an ongoing criminal conspiracy, consciously and corruptly-just as, say, the driver of a getaway car might use his driver's license to a similar end. Under these grim circumstances, it would strike a far more deadly blow to the justice system were we to treat a defense lawyer's entry of appearance as an impenetrable suit of armor which shielded him from the consequences of his own voluntary acts, no matter how nefarious or corrupt. Affirmed. U.S. v. Bucey, 876 F.2d 1297 (7th Cir.(Ill.),Jun 08, 1989)

Extortion by means of threat of economic harm in violation of Title 18 U.S.C. 1951, the Hobbs Act. Extortion by means of fear of economic loss, in violation of 18 U.S.C. Section 1951, the Hobbs Act, against racketeering in interstate or foreign commerce.
18 U.S.C. Section 1951. Interference with commerce by threats or violence (a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined under this title or imprisoned not more than twenty years, or both. (b) As used in this section-(1) The term robbery means the unlawful taking or obtaining of personal property from the person or in the presence of another, against his will, by means of actual or threatened force, or violence, or fear of injury, immediate or future, to his person or property, or property in his custody or possession, or the person or property of a relative or member of his family or of anyone in his company at the time of the taking or obtaining. (2) The term extortion means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. (3) The term commerce means commerce within the District of Columbia, or any Territory or Possession of the United States; all commerce between any point in a State, Territory, Possession, or the District of Columbia and any point outside thereof; all commerce between points within the same State through any place outside such State; and all other commerce over which the United States has jurisdiction.

(c) This section shall not be construed to repeal, modify or affect section 17 of Title 15, sections 52, 101-115, 151166 of Title 29 or sections 151-188 of Title 45. 1. Constitutionality--Generally This section is constitutional and need not be interpreted to be inapplicable to cases in which the extortion is induced by threat of economic harm rather than fear of force and violence. United States v. Postma, C.A.2 (N.Y.) 1957, 242 F.2d 488, certiorari denied 77 S.Ct. 1380, 354 U.S. 922, 1 L.Ed.2d 1436, certiorari denied 77 S.Ct. 1381, 354 U.S. 922, 1 L.Ed.2d 1436. Extortion And Threats 25.1 10. Elements of offense Elements of a violation of this section are extortion and a nexus with interstate commerce. U. S. v. Zemek, C.A.9 (Wash.) 1980, 634 F.2d 1159, certiorari denied 101 S.Ct. 1359, 450 U.S. 916, 67 L.Ed.2d 341, certiorari denied 101 S.Ct. 1525, 450 U.S. 985, 67 L.Ed.2d 821, certiorari denied 101 S.Ct. 3031, 452 U.S. 905, 69 L.Ed.2d 406. See, also, U.S. v. Nadaline, C.A.Fla.1973, 471 F.2d 340, certiorari denied 93 S.Ct. 1924, 411 U.S. 951, 36 L.Ed.2d 414; U.S. v. Howe, D.C.Mo.1973, 353 F.Supp. 419. Extortion And Threats 25.1 13. Attempt Doctrine of impossibility did not prevent finding that defendants had attempted to violate this section even though defendants did not know that business allegedly threatened was not engaged in commerce, since acts of defendants alleged in the indictment strongly and unequivocally corroborated an intent to violate this section. U. S. v. Brooklier, C.D.Cal.1978, 459 F.Supp. 476. Extortion And Threats 25.1 14. Conspiracy

A federal prisoner who was convicted under this section of the substantive crime of obstructing commerce by extortion, and who was also convicted under this section of conspiracy to commit the same crime, was convicted of two distinct crimes, and under this chapter it was within the discretion of the trial judge to fix separate consecutive sentences for each crime. Callanan v. U.S., U.S.Mo.1961, 81 S.Ct. 321, 364 U.S. 587, 5 L.Ed.2d 312, rehearing denied 81 S.Ct. 687, 365 U.S. 825, 5 L.Ed.2d 703. Sentencing And Punishment 606 Violation of this section is substantive offense, separable from conspiracy under this section. U. S. v. Phillips, C.A.9 (Cal.) 1978, 577 F.2d 495, certiorari denied 99 S.Ct. 107, 439 U.S. 831, 58 L.Ed.2d 125. Conspiracy 28(2) The conspiracy and substantive offenses under this section proscribing extortion affecting commerce do not merge. Carbo v. U. S., C.A.9 (Cal.) 1963, 314 F.2d 718, certiorari denied 84 S.Ct. 1625, 377 U.S. 953, 12 L.Ed.2d 498, rehearing denied 84 S.Ct. 1902, 377 U.S. 1010, 12 L.Ed.2d 1058, certiorari denied 84 S.Ct. 1626, 377 U.S. 953, 12 L.Ed.2d 498, rehearing denied 84 S.Ct. 1903, 377 U.S. 1010, 12 L.Ed.2d 1058, certiorari denied 84 S.Ct. 1627, 377 U.S. 953, 12 L.Ed.2d 498. Conspiracy 37 **Each act of extortion affecting interstate commerce is a separate indictable offense, notwithstanding that each act is linked to, and furtherance of, a conspiracy. U. S. v. Addonizio, D.C.N.J.1970, 313 F.Supp. 486, affirmed 451 F.2d 49, certiorari denied 92 S.Ct. 949, 405 U.S. 936, 30 L.Ed.2d 812, rehearing denied 92 S.Ct. 1309, 405 U.S. 1048, 31 L.Ed.2d 591. Extortion And Threats 25.1 **Like section 201 of this title proscribing bribery of federal employees, and unlike those directed at conspiracy, this section proscribing punishment for obstructing commerce by extortion makes each obstruction of interstate commerce by means of extortion a crime. U. S. v. Tolub, S.D.N.Y.1960, 187 F.Supp. 705. Extortion And Threats 25.1

22. RICO actions--Generally Four predicate acts of mail fraud by former prosecutor, as defendant, that spanned more than one year with regard to two separate grant programs obtained by prosecuting attorney's office, were sufficiently related so that they could be considered parts of same overarching criminal enterprise, and thus closed ended continuity existed for pattern of racketeering activity in violation of Racketeer Influenced and Corrupt Organizations Act (RICO), where defendant was common central participant, State of Arkansas was common victim, defendant's enrichment was common purpose and result, and defendant's abuse of his power as prosecuting attorney provided common method of commission. U.S. v. Hively, C.A.8 (Ark.) 2006, 437 F.3d 752, rehearing denied. Racketeer Influenced And Corrupt Organizations 29 26. ---- Extortion, RICO actions Lender did not commit extortion, alleged as predicate offense in borrowers' Racketeer Influenced and Corrupt Organizations Act (RICO) suit; lender was entitled to recover checking account overdrafts at reasonable interest rate, and lender's hard bargaining was reasonable given amount of debt and length of time it had gone unpaid. Center Cadillac, Inc. v. Bank Leumi Trust Co. of New York, S.D.N.Y.1994, 859 F.Supp. 97, affirmed 99 F.3d 401. Extortion And Threats 34; Torts 436 If victim of alleged extortion relinquishes property to defendant out of fear of economic loss, but receives in exchange something which is of no value to victim, defendant has no lawful claim to property received and conduct amounts to extortion. Center Cadillac, Inc. v. Bank Leumi Trust Co. of New York, S.D.N.Y.1992, 808 F.Supp. 213, affirmed 99 F.3d 401. Extortion And Threats 25.1 27. ---- Force, violence, or fear, RICO actions The fear element of extortion as a predicate act under the Racketeer Influenced and Corrupt Organizations Act (RICO) can be satisfied by putting the victim in fear of economic loss. DeFalco v. Bernas, C.A.2 (N.Y.) 2001, 244 F.3d 286, certiorari denied 122 S.Ct. 207, 534 U.S. 891, 151 L.Ed.2d 147. Extortion And Threats 4 Allegations that financing officer threatened to lose successful bidder's requisition forms unless bidder entered joint venture on Housing and Urban Development project, was use of fear of economic loss needed for extortion claim under Hobbs Act and predicate act of attempted extortion for purposes of civil Racketeer Influenced and Corrupt Organizations Act (RICO) claim. McLaughlin v. Anderson, C.A.2 (Conn.) 1992, 962 F.2d 187. Extortion And Threats 34; Torts 436 Construction contractor's fear of economic loss in connection with loan transactions with two savings and loan associations was insufficient to establish Hobbs Act violation, as predicate act in contractor's civil RICO action, where fear of loss was not separate and distinct from performance on contract. Robert Suris General Contractor Corp. v. New Metropolitan Federal Sav. & Loan Ass'n, C.A.11 (Fla.) 1989, 873 F.2d 1401. Extortion And Threats 25.1 Shipowners' threat to bring action against parent and parent's lender if parent did not pay subsidiary ship lessee's debt or inject capital into lessee was not threatened fear within definition of extortion under this section, nor did two threats to file civil action or one threat to file civil action and one instance of travel for purpose of making such threat constitute pattern of racketeering activity under section 1961 of this title. I.S. Joseph Co., Inc. v. J. Lauritzen A/S, C.A.8 (Minn.) 1984, 751 F.2d 265. Racketeer Influenced And Corrupt Organizations 26 For conviction under Hobbs Act to stand, statutorily identified means--actual or threatened force, violence or fear-must have been employed to obtain money or property to which alleged extortionist had no lawful claim. Center Cadillac, Inc. v. Bank Leumi Trust Co. of New York, S.D.N.Y.1992, 808 F.Supp. 213, affirmed 99 F.3d 401. Extortion And Threats 25.1 Ordinary use of legal process does not rise to level of wrongful use of force or fear within meaning of Hobbs Act.

Peterson v. Philadelphia Stock Exchange, E.D.Pa.1989, 717 F.Supp. 332, on reconsideration. Extortion And Threats 25.1 28. ---- Economic injury, RICO actions Fear of economic harm can be basis of extortion. Cardwell v. Sears Roebuck and Co., D.S.C.1993, 821 F.Supp. 406. Extortion And Threats 25.1 Existence of fear of economic loss is determined from perspective of victim, not from perspective of extortionist; victim must have had reasonable belief that alleged extortionist had power to harm victim and would exploit that power to victim's detriment. Center Cadillac, Inc. v. Bank Leumi Trust Co. of New York, S.D.N.Y.1992, 808 F.Supp. 213, affirmed 99 F.3d 401. Extortion And Threats 25.1 Fear of economic harm satisfies the requirement for extortion claim that property of another be obtained with his consent induced by wrongful use of fear. Tryco Trucking Co., Inc. v. Belk Stores Services, Inc., W.D.N.C.1986, 634 F.Supp. 1327. Extortion And Threats 25.1 29. ---- Exploitation of fear, RICO actions Exploitation of fear of economic loss in order to obtain property to which defendant is not entitled violates Hobbs Act. Center Cadillac, Inc. v. Bank Leumi Trust Co. of New York, S.D.N.Y.1992, 808 F.Supp. 213, affirmed 99 F.3d 401. Extortion And Threats 25.1 31. ---- Threats, RICO actions Sufficient threat of repetition existed to show open ended continuity for pattern of racketeering activity in violation of Racketeer Influenced and Corrupt Organizations Act (RICO), despite cessation of activity by former prosecutor, as defendant, with regard to mail fraud scheme that was associated with grant program obtained by prosecuting attorney's office, where defendant was still in office and was still receiving grant money on monthly basis at time that search warrant was executed on his firm. U.S. v. Hively, C.A.8 (Ark.) 2006, 437 F.3d 752, rehearing denied. Racketeer Influenced And Corrupt Organizations 28 **Threats inducing fear of economic loss, although not inherently wrongful, qualify as extortion if threats are made in pursuit of wrongful goal. Center Cadillac, Inc. v. Bank Leumi Trust Co. of New York, S.D.N.Y.1992, 808 F.Supp. 213, affirmed 99 F.3d 401. Extortion And Threats 25.1 32. ---- Pleading, RICO actions Allegation of RICO complaint that defendants threatened to withhold trust assets from beneficiary if she refused to release fraud claims against defendants was sufficient to allege violation of Hobbs Act, as predicate racketeering act; complaint alleged that defendants deliberately sought to obtain property by putting beneficiary in reasonable fear of economic loss. Turkish v. Kasenetz, C.A.2 (N.Y.) 1994, 27 F.3d 23, on remand 964 F.Supp. 689. Extortion And Threats 4 Tenants in mobile home park who brought suit against landlord for violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) failed to allege sufficient predicate acts of extortion to support a RICO claim; alleged threats that tenants who did not sign lease would have to pay their own utility bills, and that they would be subject to future rent increases of unspecified amounts did not amount to wrongful use of force or fear within the meaning of either federal or California law. Rothman v. Vedder Park Management, C.A.9 (Cal.) 1990, 912 F.2d 315. Racketeer Influenced And Corrupt Organizations 70 Allegations that landlord obtained money from commercial tenants for phony construction and for rent above their contracted amount by threatening tenants sufficiently alleged two occasions of attempted extortion and, thus, two

predicate acts constituting a pattern of racketeering activity under Racketeer Influenced and Corrupt Organizations Act (RICO), as required for tenants' RICO claim. Trevino v. Pechero, S.D.Tex.2008, 592 F.Supp.2d 939. Racketeer Influenced And Corrupt Organizations 26 In context of civil claim under Racketeer Influenced and Corrupt Organizations Act (RICO), plaintiff's allegation that defendants, in proposing release of defendants in prior lawsuit in return for grant to religious institution, deliberately sought to obtain property by putting plaintiff in reasonable fear of economic loss adequately alleged attempt to extort. Turkish v. Kasenetz, E.D.N.Y.1993, 832 F.Supp. 565, reversed 27 F.3d 23, on remand 964 F.Supp. 689. Extortion And Threats 4 61. Generally, interstate commerce Crimes directed toward an individual violate the Hobbs Act, which prohibits interference with commerce by threats or violence, only if: (1) the acts deplete the assets of an individual who is directly and customarily engaged in interstate commerce; (2) the acts cause or create the likelihood that the individual will deplete the assets of an entity engaged in interstate commerce; or (3) the number of individuals victimized or the sum at stake is so large that there will be some cumulative effect on interstate commerce. U.S. v. Lynch, C.A.9 (Mont.) 2002, 282 F.3d 1049, on remand 207 F.Supp.2d 1133, overruled in later appeal 437 F.3d 902, certiorari denied 127 S.Ct. 89, 549 U.S. 836, 166 L.Ed.2d 62. Extortion And Threats 25.1 This section not only forbids extortion which interferes with interstate commerce but also extortion which affects interstate commerce. U. S. v. Gill, C.A.7 (Ill.) 1973, 490 F.2d 233, certiorari denied 94 S.Ct. 3171, 417 U.S. 968, 41 L.Ed.2d 1139. Extortion And Threats 25.1 **Where both defendants and federal plaintiffs engaged in activities of interstate character and jurisdiction had already been established by nature of activities themselves, there was sufficient nexus with interstate commerce to satisfy federal jurisdictional requirements despite defense contention that federal agents demanded payment in Nevada for sole purpose of manufacturing jurisdiction. U. S. v. Brooklier, C.A.9 (Cal.) 1982, 685 F.2d 1208, certiorari denied 103 S.Ct. 1194, 459 U.S. 1206, 75 L.Ed.2d 439, certiorari denied 103 S.Ct. 1195, 459 U.S. 1206, 75 L.Ed.2d 439. Commerce 82.60 For jurisdiction under this section to exist, there must be a nexus between alleged extortionate conduct and interstate commerce; such nexus may be established by proof of an actual impact on commerce, even if the impact is only arguably de minimis or, in absence of proof of an actual impact, by showing a realistic probability that the extortionate transaction had some effect on interstate commerce. U. S. v. Blakey, C.A.7 (Ill.) 1979, 607 F.2d 779. Extortion And Threats 4 Essential element of crime in prosecution for robbery under Hobbs Act is that robbery obstruct, delay, or affect interstate commerce, and like all other elements of offense, jurisdictional element must be proved to jury beyond a reasonable doubt. U.S. v. Woodruff, N.D.Cal.1996, 941 F.Supp. 910, vacated 122 F.3d 1185, certiorari denied 118 S.Ct. 866, 522 U.S. 1082, 139 L.Ed.2d 764. Robbery 1; Robbery 24.10 **Taxi companies in Hawaii had sufficient connections to interstate and international tourism to meet de minimis level of interstate commerce required for federal court to exercise jurisdiction over extortion claims under Hobbs Act. Young v. JTB Corp., C.A.9 (Hawai'i) 2003, 81 Fed.Appx. 656, 2003 WL 22736608, Unreported. Extortion And Threats 25.1 63. Actual effect, interstate commerce Congress intended this section to apply where there is threatened effect on interstate commerce notwithstanding absence of any actual effect, and Congress had ample power to effectuate that intent. U. S. v. Staszcuk, C.A.7 (Ill.) 1975, 517 F.2d 53, certiorari denied 96 S.Ct. 65, 423 U.S. 837, 46 L.Ed.2d 56. Commerce 82.10; Extortion And Threats 25.1

Under this section providing for punishment to anyone who in any way delays or affects commerce or the movement of any article or commodity in commerce by extortion or conspires so to do, it need not be proven that any interstate commerce was affected or delayed and it was only necessary to prove that delay would have been caused by the conspiracy. U. S. v. Pranno, C.A.7 (Ill.) 1967, 385 F.2d 387, certiorari denied 88 S.Ct. 1028, 390 U.S. 944, 19 L.Ed.2d 1132, certiorari denied 88 S.Ct. 1094, 390 U.S. 972, 19 L.Ed.2d 1183. Conspiracy 28(3) 64. Adverseness of effect, interstate commerce Requirement that, in order to sustain conviction under this section, it must be shown that the extortion affects commerce does not include a showing that commerce is adversely affected. U. S. v. Staszcuk, C.A.7 (Ill.) 1974, 502 F.2d 875, on rehearing 517 F.2d 53, certiorari denied 96 S.Ct. 65, 423 U.S. 837, 46 L.Ed.2d 56. Extortion And Threats 4 65. Degree of effect, interstate commerce--Generally Hobbs Act violation can occur even without adverse effect on interstate commerce as long as there is some effect on interstate commerce; jurisdictional predicate of act may be satisfied even though impact on commerce is small. U.S. v. Bailey, C.A.4 (S.C.) 1993, 990 F.2d 119. Extortion And Threats 4 Given sweeping power of Congress under U.S.C.A. Const. art. 1, 8, cl. 3 and particularly evident in this section concerning extortion obstructing interstate commerce, it is enough that extortion in any way or degree affects commerce though its effect be merely potential or subtle. U. S. v. Augello, C.A.2 (N.Y.) 1971, 451 F.2d 1167, certiorari denied 92 S.Ct. 1518, 405 U.S. 1070, 31 L.Ed.2d 802. Extortion And Threats 25.1 Under this section as distinguished from Sherman Antitrust Act, sections 1 to 7 of Title 15, it is not necessary that subject of extortion constitute commerce; all that is required is that trade or commerce be affected by extortion in any way or degree. Carbo v. U. S., C.A.9 (Cal.) 1963, 314 F.2d 718, certiorari denied 84 S.Ct. 1625, 377 U.S. 953, 12 L.Ed.2d 498, rehearing denied 84 S.Ct. 1902, 377 U.S. 1010, 12 L.Ed.2d 1058, certiorari denied 84 S.Ct. 1626, 377 U.S. 953, 12 L.Ed.2d 498, rehearing denied 84 S.Ct. 1903, 377 U.S. 1010, 12 L.Ed.2d 1058, certiorari denied 84 S.Ct. 1627, 377 U.S. 953, 12 L.Ed.2d 498. Extortion And Threats 25.1 In order to be convicted of attempted extortion through exploitation of fear of economic loss under this section, actions of defendant must in some way or degree affect interstate commerce. U. S. v. Furey, E.D.Pa.1980, 491 F.Supp. 1048, affirmed 636 F.2d 1211, certiorari denied 101 S.Ct. 1987, 451 U.S. 913, 68 L.Ed.2d 304. Extortion And Threats 4 De minimis effect on interstate commerce required for convictions under Hobbs Act for aiding and abetting interference with interstate commerce by robbery was satisfied by evidence that robbed jewelry stores conducted approximately 95 percent of their business with out-of-state firms, more than 90 percent of merchandise they sold was manufactured out-of-state, and stores were owned by company incorporated in Delaware, and its parent company was based in Toronto, Canada. U.S. v. Nelson, C.A.9 (Cal.) 1998, 137 F.3d 1094, certiorari denied 119 S.Ct. 231, 525 U.S. 901, 142 L.Ed.2d 190, certiorari denied 119 S.Ct. 232, 525 U.S. 901, 142 L.Ed.2d 190, habeas corpus denied 2006 WL 2228955. Robbery 1 **To establish de minimis effect on interstate commerce necessary for Hobbs Act conviction, government need not show that defendant's acts actually affected interstate commerce, but rather may satisfy jurisdictional requirement by proof of probable or potential impact. U.S. v. Atcheson, C.A.9 (Idaho) 1996, 94 F.3d 1237, amended on denial of rehearing , certiorari denied 117 S.Ct. 1096, 519 U.S. 1156, 137 L.Ed.2d 229. Extortion And Threats 25.1

68. Potential or probable effect, interstate commerce Interstate commerce requirement for extortion, under Hobbs Act, was satisfied in conviction of county attorney for

obtaining money from alleged bookmaker and poker game proprietor in return for not cracking down on operations; there was realistic probability that some of the money paid to attorney would come from proceeds of interstate gambling. U.S. v. Carmichael, C.A.6 (Ky.) 2000, 232 F.3d 510, rehearing and suggestion for rehearing en banc denied, certiorari denied 121 S.Ct. 1607, 532 U.S. 974, 149 L.Ed.2d 472. Extortion And Threats 25.1 It is potential effect on interstate commerce at time of offense which is relevant to determining jurisdictional element of Hobbs Act offense; later developments which negate or lower potential effect on interstate commerce do not undermine the jurisdictional element. U.S. v. Stillo, C.A.7 (Ill.) 1995, 57 F.3d 553, rehearing denied, certiorari denied 116 S.Ct. 383, 516 U.S. 945, 133 L.Ed.2d 306, habeas corpus denied 1999 WL 89660. Extortion And Threats 25.1 In prosecution for conspiracy to violate Hobbs Act, while actual effect on interstate commerce is not required, defendants must have reasonable probability to believe that extortion would affect interstate commerce, and, thus, intent to extort money from victim personally and not from business would not support conviction under Hobbs Act. U.S. v. Buffey, C.A.4 (W.Va.) 1990, 899 F.2d 1402. Extortion And Threats 25.1 Where defendants agreed to do acts which, had they been attainable, would have affected commerce, at that point, regardless of whether an actual effect on commerce was reasonably probable, a sufficient federal interest was implicated to support federal jurisdiction over that agreement under this section. U.S. v. Jannotti, C.A.3 (Pa.) 1982, 673 F.2d 578, certiorari denied 102 S.Ct. 2906, 457 U.S. 1106, 73 L.Ed.2d 1315. Extortion And Threats 4 The extortion set forth in this section under color of official right falls within the purview of the statutory description even if its effect on commerce is merely potential or subtle. U. S. v. Scacchetti, C.A.2 (N.Y.) 1982, 668 F.2d 643, certiorari denied 102 S.Ct. 2957, 457 U.S. 1132, 73 L.Ed.2d 1349. Extortion And Threats 6 **In a prosecution under this section, effect on interstate commerce need only be de minimis and an actual effect is not required; the effect need only be probable or potential. U. S. v. Zemek, C.A.9 (Wash.) 1980, 634 F.2d 1159, certiorari denied 101 S.Ct. 1359, 450 U.S. 916, 67 L.Ed.2d 341, certiorari denied 101 S.Ct. 1525, 450 U.S. 985, 67 L.Ed.2d 821, certiorari denied 101 S.Ct. 3031, 452 U.S. 905, 69 L.Ed.2d 406. Extortion And Threats 25.1

Only de minimis effect on interstate commerce is necessary to invoke jurisdiction under this section, and effect need be only probable or potential, not actual. U. S. v. Phillips, C.A.9 (Cal.) 1978, 577 F.2d 495, certiorari denied 99 S.Ct. 107, 439 U.S. 831, 58 L.Ed.2d 125. Extortion And Threats 25.1 70. Depletion of assets, interstate commerce Threatened depletion of resources from a business engaged in interstate commerce provides an adequate jurisdictional basis for a prosecution under this section. U. S. v. Zemek, C.A.9 (Wash.) 1980, 634 F.2d 1159, certiorari denied 101 S.Ct. 1359, 450 U.S. 916, 67 L.Ed.2d 341, certiorari denied 101 S.Ct. 1525, 450 U.S. 985, 67 L.Ed.2d 821, certiorari denied 101 S.Ct. 3031, 452 U.S. 905, 69 L.Ed.2d 406. Extortion And Threats 25.1 Extortion of money from an interstate business, thus depleting its funds, suffices to show an effect upon interstate commerce within meaning of this section. U. S. v. Gates, C.A.9 (Nev.) 1980, 616 F.2d 1103. Extortion And Threats 4 Requisite effect on interstate commerce to provide jurisdictional basis for prosecution under this section was satisfied where defendants threatened depletion of resources from business engaged in interstate commerce. U. S. v. Phillips, C.A.9 (Cal.) 1978, 577 F.2d 495, certiorari denied 99 S.Ct. 107, 439 U.S. 831, 58 L.Ed.2d 125. Extortion And Threats 25.1 86. ---- Bribery, particular activities interfering with interstate commerce

Evidence was sufficient to establish that extortion, pursuant to which attorney bribed judge, affected interstate commerce, sufficient to sustain conviction of judge under the Hobbs Act; if judge accepted bribe from attorney, assets of attorney's law firm, which it was established purchased items in interstate commerce, would have been depleted and would thus have had a potential to affect firm's ability to purchase goods in interstate commerce. U.S. v. Stillo, C.A.7 (Ill.) 1995, 57 F.3d 553, rehearing denied, certiorari denied 116 S.Ct. 383, 516 U.S. 945, 133 L.Ed.2d 306, habeas corpus denied 1999 WL 89660. Extortion And Threats 15 Attorney's bribery of state court judge affected interstate commerce as required for Hobbs Act convictions, even though FBI supplied bribe money through attorney's former law partner, who was working as government informant in bribery investigation; judge's acceptance of bribes would have depleted assets of informant's law firm which regularly purchased items from other states. U.S. v. Shields, C.A.7 (Ill.) 1993, 999 F.2d 1090, rehearing and suggestion for rehearing en banc denied, certiorari denied 114 S.Ct. 877, 510 U.S. 1071, 127 L.Ed.2d 74, denial of post-conviction relief affirmed 30 F.3d 137, certiorari denied 115 S.Ct. 515, 513 U.S. 1002, 130 L.Ed.2d 421. Bribery 1(1) Defendant's activities of orchestrating deals with attorneys to fix cases for monetary payments while he was county associate judge had sufficient effect on interstate commerce to support conviction under Hobbs Act [18 U.S.C.A. 1951]. U.S. v. Devine, C.A.7 (Ill.) 1986, 787 F.2d 1086, certiorari denied 107 S.Ct. 170, 479 U.S. 848, 93 L.Ed.2d 107, rehearing denied 107 S.Ct. 612, 479 U.S. 1001, 93 L.Ed.2d 610. Extortion And Threats 1 87. ---- Civil rights, particular activities interfering with interstate commerce This section proscribes all forms of extortion which affect interstate commerce including militant civil rights activity. U. S. v. Mitchell, C.A.8 (Mo.) 1972, 463 F.2d 187, certiorari denied 93 S.Ct. 1449, 410 U.S. 969, 35 L.Ed.2d 705. Extortion And Threats 25.1 97. ---- Loans, particular activities interfering with interstate commerce Effect on interstate commerce for purposes of showing a violation of this section was shown by evidence that defendants participated in a scheme in which borrower was induced by a reasonable fear to make payment on his extortionate loan and that borrower was consequently unable to make payments to suppliers who were engaged in interstate commerce. U. S. v. Nakaladski, C.A.5 (Fla.) 1973, 481 F.2d 289, certiorari denied 94 S.Ct. 570, 414 U.S. 1064, 38 L.Ed.2d 469. Extortion And Threats 32 122. Bribery and extortion distinguished Recurrent question in dealing with extortion by public officials is not whether every extortion implies a bribe but whether every bribe implies extortion, and, at least formally, only bribery contains element that money was offered with intention of influencing recipient. U.S. v. Holzer, C.A.7 1988, 840 F.2d 1343, certiorari denied 108 S.Ct. 2022, 486 U.S. 1035, 100 L.Ed.2d 608. Bribery 1(1); Extortion And Threats 4 Notwithstanding prior law in other circuits holding that initiative and purpose on part of official, and fear and lack of voluntariness on part of victim, were essential to distinction between bribery and extortion, only latter of which was cognizable under this section, and in light of almost unanimous holding by circuits that bribery and extortion were not mutually exclusive, the United States Court of Appeals for Sixth Circuit held that any wrongful use of a public official's power for private personal gain was proscribed by this section. U. S. v. Butler, C.A.6 (Tenn.) 1980, 618 F.2d 411, certiorari denied 100 S.Ct. 3024, 447 U.S. 927, 65 L.Ed.2d 1121, certiorari denied 101 S.Ct. 881, 449 U.S. 1089, 66 L.Ed.2d 816. Extortion And Threats 6 For purposes of this section, bribery and extortion need not be mutually exclusive. U. S. v. Rabbitt, C.A.8 (Mo.) 1978, 583 F.2d 1014, certiorari denied 99 S.Ct. 1022, 439 U.S. 1116, 59 L.Ed.2d 75. See, also, U.S. v. Hathaway, C.A.Mass.1976, 534 F.2d 386, certiorari denied 97 S.Ct. 64, 429 U.S. 819, 50 L.Ed.2d 79. Extortion And Threats 25.1

Where extortion under color of official right is alleged, bribery and extortion are not mutually exclusive under this section. U. S. v. Phillips, C.A.9 (Cal.) 1978, 577 F.2d 495, certiorari denied 99 S.Ct. 107, 439 U.S. 831, 58 L.Ed.2d 125. Extortion And Threats 1 Acceptance of a bribe does not constitute extortion in violation of this section. U. S. v. Duhon, C.A.5 (La.) 1978, 565 F.2d 345, certiorari denied 98 S.Ct. 1580, 435 U.S. 952, 55 L.Ed.2d 802. Extortion And Threats 25.1 Difference between commercial bribe taking and extortion is only that extortion involves initiative of defendant and coercion of victim. U. S. v. Brecht, C.A.2 (N.Y.) 1976, 540 F.2d 45, certiorari denied 97 S.Ct. 1160, 429 U.S. 1123, 51 L.Ed.2d 573. Extortion And Threats 25.1 Bribery and extortion, although they are distinct crimes, are not mutually exclusive; it cannot be said that in bribery case there is never aspect of coercion on part of bribee. U. S. v. Hall, C.A.10 (Okla.) 1976, 536 F.2d 313, certiorari denied 97 S.Ct. 313, 429 U.S. 919, 50 L.Ed.2d 285. Bribery 1(1); Extortion And Threats 25.1 Mere advance knowledge by public contractor that kickbacks will be required does not conclusively establish bribery rather than extortion under this section. U. S. v. Addonizio, C.A.3 (N.J.) 1971, 451 F.2d 49, certiorari denied 92 S.Ct. 949, 405 U.S. 936, 30 L.Ed.2d 812, rehearing denied 92 S.Ct. 1309, 405 U.S. 1048, 31 L.Ed.2d 591. Extortion And Threats 25.1 Distinction between extortion by public official and acceptance of bribe is initiative and purpose on part of official and fear and lack of voluntariness on part of victim. U. S. v. Hyde, C.A.5 (Ala.) 1971, 448 F.2d 815, certiorari denied 92 S.Ct. 736, 404 U.S. 1058, 30 L.Ed.2d 745, certiorari denied 92 S.Ct. 737, 404 U.S. 1058, 30 L.Ed.2d 745. Bribery 1(1); Extortion And Threats 1 If victim initiated contact with alleged extorter and induced payments to be made to extorter, this would constitute bribery on part of victim. U. S. v. Furey, E.D.Pa.1980, 491 F.Supp. 1048, affirmed 636 F.2d 1211, certiorari denied 101 S.Ct. 1987, 451 U.S. 913, 68 L.Ed.2d 304. Bribery 1(1) 131. ---- Quid pro quo, color of official right, extortion Offense of extortion under color of official right in violation of Hobbs Act is completed at time when public official receives payment in return for his agreement to perform specific official acts, and fulfillment of the quid pro quo is not an element of offense. Evans v. U.S., U.S.Ga.1992, 112 S.Ct. 1881, 504 U.S. 255, 119 L.Ed.2d 57. Extortion And Threats 6 Quid pro quo is necessary for conviction under Hobbs Act when official receives campaign contribution, regardless of whether it is legitimate contribution; property is extorted in violation of Hobbs Act only when official asserts that his official conduct will be controlled by terms of promise or undertaking. McCormick v. U.S., U.S.W.Va.1991, 111 S.Ct. 1807, 500 U.S. 257, 114 L.Ed.2d 307. Extortion And Threats 4 Proof that public official obtained payment to which he or she was not entitled with knowledge that payment was made in return for official act or exercise of official authority is sufficient to sustain conviction for extortion under Hobbs Act concerning receipt of campaign contributions or other payments, regardless of whether terms of quid pro quo were expressly articulated. U.S. v. Blandford, C.A.6 (Ky.) 1994, 33 F.3d 685, rehearing and suggestion for rehearing en banc denied, certiorari denied 115 S.Ct. 1821, 514 U.S. 1095, 131 L.Ed.2d 743. Extortion And Threats 15 Quid pro quo must be clear and unambiguous, leaving no uncertainty about terms of bargain, to satisfy explicitness and official act requirements for Hobbs Act prosecution arising from campaign contributions allegedly received in exchange for promises to perform or not perform official acts; understanding need not be verbally explicit. U.S. v. Carpenter, C.A.9 (Cal.) 1992, 961 F.2d 824, certiorari denied 113 S.Ct. 332, 506 U.S. 919, 121 L.Ed.2d 250. Extortion And Threats 4; Extortion And Threats 6

It is not necessary, to support a charge under this section, to show that public official offered a quid pro quo in form of some specific exercise of power of his office or forbearance to carry out a duty; public official may be guilty of obtaining money under color of official right if payments are motivated as result of his exercise of powers of his public office and he is aware of this fact. U. S. v. Margiotta, C.A.2 (N.Y.) 1982, 688 F.2d 108, rehearing denied 811 F.2d 46, certiorari denied 103 S.Ct. 1891, 461 U.S. 913, 77 L.Ed.2d 282. Extortion And Threats 6 There was no requirement of a quid pro quo in order to prove extortion under color of official right in case involving request for consulting job for spouse and alleged interest free loan funneled through relative; case did not involve conduct that had long been thought to be lawful or conduct unavoidable in election campaigns financed by private contributions or expenditures. U.S. v. Garcia, S.D.N.Y.1991, 774 F.Supp. 848, reversed 992 F.2d 409. Extortion And Threats 4 132. ---- Inducement, color of official right, extortion Inducement required for Hobbs Act extortion offense can be in the form of a demand, or can manifest itself in a more subtle form, such as a custom or expectation. U.S. v. Ward, C.A.9 (Cal.) 1990, 914 F.2d 1340. Extortion And Threats 7 Passive acceptance of benefit by public official is sufficient to form basis of Hobbs Act violation, for extortion under color of official right, if official knows that he is being offered payment in exchange for specific requested exercise of his official power; official need not take any specific action to induce offering of benefit. U.S. v. Evans, C.A.11 (Ga.) 1990, 910 F.2d 790, certiorari granted 111 S.Ct. 2256, 500 U.S. 951, 114 L.Ed.2d 709, affirmed 112 S.Ct. 1881, 504 U.S. 255, 119 L.Ed.2d 57. Extortion And Threats 7 Public official violates color of official right prong of federal extortion statute when he or she encourages or accepts payments prompted by hope that official will be influenced in exercise of his or her powers. U.S. v. Davis, C.A.7 (Ill.) 1989, 890 F.2d 1373, certiorari denied 110 S.Ct. 1165, 493 U.S. 1092, 107 L.Ed.2d 1068. Extortion And Threats 6 For purposes of establishing inducement as an element of extortion under the Hobbs Act, reliance on system of expecting payments in exchange for public favors can itself be the necessary act of inducement if the public official has previously established or acquiesced in the system and the donor is sufficiently aware of the expectation created by prior acts of extortion. U.S. v. Aguon, C.A.9 (Guam) 1988, 851 F.2d 1158. Extortion And Threats 7 While government is not required to prove that public official accused of extortion under color of official right demanded or directly solicited the benefits received, or that he offered a specific quid pro quo in exchange for benefits, the government must show that the power of public office was misused in such a way as to induce the giving of benefits. U.S. v. O'Grady, C.A.2 (N.Y.) 1984, 742 F.2d 682. Extortion And Threats 4 In prosecution under this section for extortion under color of official right, it is unnecessary to show that defendant induced the extortionate payment or that the payor was entitled to the benefit obtained from such payment; the government is merely required to prove that a public official obtained money to which he was not entitled and which he obtained only because of his official position. U. S. v. Hedman, C.A.7 (Ill.) 1980, 630 F.2d 1184, certiorari denied 101 S.Ct. 1481, 450 U.S. 965, 67 L.Ed.2d 614. Extortion And Threats 4 143. Force, violence, or fear, extortion--Generally In cases of extortion based upon fear of violence, the facts of fear, actual or anticipated, and of its reasonableness, are vital factors; to prove a substantive act of extortion it is essential to show generation of fear in victim; to prove substantive act of attempted extortion it is necessary to prove attempt to instill fear; to prove a conspiracy to extort it is necessary to show a plan to instill fear. Carbo v. U. S., C.A.9 (Cal.) 1963, 314 F.2d 718, certiorari denied 84 S.Ct. 1625, 377 U.S. 953, 12 L.Ed.2d 498, rehearing denied 84 S.Ct. 1902, 377 U.S. 1010, 12 L.Ed.2d 1058, certiorari

denied 84 S.Ct. 1626, 377 U.S. 953, 12 L.Ed.2d 498, rehearing denied 84 S.Ct. 1903, 377 U.S. 1010, 12 L.Ed.2d 1058, certiorari denied 84 S.Ct. 1627, 377 U.S. 953, 12 L.Ed.2d 498. Conspiracy 31; Extortion And Threats 25.1 146. ---- Coercion, force, violence, or fear, extortion While term fear includes fear of economic loss, for purposes of violation of Hobbs Act, proscribing interference with commerce by threats or violence, there is no extortion unless payments were made under some form of compulsion. U.S. v. Sturm, D.Mass.1987, 671 F.Supp. 79, affirmed in part , vacated in part 870 F.2d 769. Extortion And Threats 25.1 147. ---- Economic injury, force, violence, or fear, extortion In the context of Hobbs Act's definition of extortion, fear includes economic fear, but only if the fear is independently shown to be wrongful, inasmuch as there is nothing inherently wrongful about the use of economic fear to obtain property, as opposed to the use of threatened force or violence to do so. Sanchez v. Triple-S Management, Corp., C.A.1 (Puerto Rico) 2007, 492 F.3d 1, certiorari denied 128 S.Ct. 806, 552 U.S. 1076, 169 L.Ed.2d 606. Extortion And Threats 25.1 In Hobbs Act prosecution, government provided sufficient evidence for the jury to conclude that defendant government official was guilty of extortion induced by fear of economic loss; purchaser of hospital had a reasonable economic fear that noncompliance with defendant's economic demands would result in the foreclosure of a lucrative business opportunity. U.S. v. Cruz-Arroyo, C.A.1 (Puerto Rico) 2006, 461 F.3d 69, certiorari denied 127 S.Ct. 1169, 549 U.S. 1182, 166 L.Ed.2d 997. Extortion And Threats 15 Fear of economic harm can support extortion conviction. U.S. v. Sturman, C.A.7 (Ill.) 1995, 49 F.3d 1275, postconviction relief denied 1997 WL 264389. Extortion And Threats 25.1 Extortion by wrongful use of fear under Hobbs Act includes fear of economic harm; however, the fear must be of a loss, and fear of losing a potential benefit does not suffice. U.S. v. Tomblin, C.A.5 (Tex.) 1995, 46 F.3d 1369. Extortion And Threats 25.1 Fear element under Hobbs Act can be satisfied by threats other than threats of bodily harm, such as threat putting victim in fear of economic harm. U.S. v. DeLuca, C.A.1 (Mass.) 1994, 17 F.3d 6. Extortion And Threats 25.1 Fear required in extortion cases can be established by putting victim in fear of economic loss. U.S. v. Garcia, C.A.2 (N.Y.) 1990, 907 F.2d 380, on remand. Extortion And Threats 25.1 Extortion through threats of economic loss from violence or work stoppage falls within Hobbs Act's prohibitions. U.S. v. Stolfi, C.A.2 (N.Y.) 1989, 889 F.2d 378. Extortion And Threats 25.1 **In prosecution for extortion and attempted extortion, it is not necessary to prove victims' actual fear of retaliation, but only an attempt to instill fear; moreover, Government need not prove attempt to instill fear of violence but need only prove attempt to instill fear of economic harm. U.S. v. Salerno, C.A.2 (N.Y.) 1989, 868 F.2d 524, certiorari denied 109 S.Ct. 3192, 491 U.S. 907, 105 L.Ed.2d 700, certiorari denied 110 S.Ct. 56, 493 U.S. 811, 107 L.Ed.2d 24, certiorari denied 110 S.Ct. 56, 493 U.S. 811, 107 L.Ed.2d 25, denial of habeas corpus affirmed 964 F.2d 172, habeas corpus denied , affirmed 990 F.2d 623. Extortion And Threats 25.1 Threat of economic harm is not per se wrongful, and thus prohibited under Hobbs Act; legal right to funds or property at issue may justify threat of pecuniary harm, depending on sort of harm threatened. U.S. v. Kattar, C.A.1 (Mass.) 1988, 840 F.2d 118. Extortion And Threats 25.1

Fear of economic loss is type of fear within purview of this section. U.S. v. Haimowitz, C.A.11 (Fla.) 1984, 725 F.2d 1561, certiorari denied 105 S.Ct. 563, 469 U.S. 1072, 83 L.Ed.2d 504. Extortion And Threats 25.1 Fear of economic harm is sufficient to sustain violation under this section; fear need not be consequence of direct or implicit threat by defendant, and government's burden of proof is satisfied if it shows that victim feared economic harm, and that circumstances surrounding alleged extortionist conduct rendered that fear reasonable. U.S. v. Billups, C.A.4 (Va.) 1982, 692 F.2d 320, certiorari denied 104 S.Ct. 84, 464 U.S. 820, 78 L.Ed.2d 93. Extortion And Threats 25.1; Extortion And Threats 32 Conduct constituting use of actual or threatened violence is not a necessary element of conviction under this section; it is well settled that fear of economic loss is sufficient to support a conviction. U. S. v. Cusmano, C.A.6 (Mich.) 1981, 659 F.2d 714. Extortion And Threats 25.1 Money withheld from contractor by municipality belonged to contractor's company even though it was not in his actual possession and even though municipal council had power to assess penalty for delay in completion, and thus it could be found that there was fear of economic loss, as opposed to mere hope of unlawful gain, for purposes of determining whether this section was violated by attempted extortion. U. S. v. Gerald, C.A.5 (La.) 1980, 624 F.2d 1291, rehearing denied 629 F.2d 1350, certiorari denied 101 S.Ct. 1369, 450 U.S. 920, 67 L.Ed.2d 348. Extortion And Threats 7 Fear of economic loss is covered by this section governing prosecution for obstruction of interstate commerce by extortion. U. S. v. Sander, C.A.5 (Tex.) 1980, 615 F.2d 215, rehearing denied 618 F.2d 781, certiorari denied 101 S.Ct. 108, 449 U.S. 835, 66 L.Ed.2d 41. See, also, U.S. v. Hathaway, C.A.Mass.1976, 534 F.2d 386, certiorari denied 97 S.Ct. 64, 429 U.S. 819, 50 L.Ed.2d 79; U.S. v. Quinn, C.A.Ga.1975, 514 F.2d 1250, certiorari denied 96 S.Ct. 1430, 424 U.S. 955, 47 L.Ed.2d 361; U.S. v. Jacobs, C.A.Fla.1971, 451 F.2d 530, certiorari denied 92 S.Ct. 1170, 405 U.S. 955, 31 L.Ed.2d 231, rehearing denied 92 S.Ct. 1309, 405 U.S. 1049, 31 L.Ed.2d 591; U.S. v. Iozzi, C.A.Va.1970, 420 F.2d 512, certiorari denied 91 S.Ct. 1607, 402 U.S. 943, 29 L.Ed.2d 111; U.S. v. Tropiano, C.A.Conn.1969, 418 F.2d 1069, certiorari denied 90 S.Ct. 1258, 1262, 397 U.S. 1022, 25 L.Ed.2d 530; U.S. v. Kramer, C.A.Ill.1966, 355 F.2d 891, certiorari denied in part and granted in part , 86 S.Ct. 1366, 384 U.S. 100, 16 L.Ed.2d 396; U.S. v. Sweeney, C.A.Pa.1959, 262 F.2d 272; U. S. v. Shine, E.D.N.Y.1981, 526 F.Supp. 717; U.S. v. Kubacki, D.C.Pa.1965, 237 F.Supp. 638. Extortion And Threats 25.1 For purposes of this section fear of economic loss is sufficient to constitute extortion even if interest threatened is only an anticipated one. U. S. v. Rabbitt, C.A.8 (Mo.) 1978, 583 F.2d 1014, certiorari denied 99 S.Ct. 1022, 439 U.S. 1116, 59 L.Ed.2d 75. Extortion And Threats 25.1 In prosecution for extortion by former member of state Liquor Control Commission, evidence was sufficient for jury on issue of fear of economic loss by victim. U. S. v. Adcock, C.A.8 (Iowa) 1977, 558 F.2d 397, certiorari denied 98 S.Ct. 395, 434 U.S. 921, 54 L.Ed.2d 277. Extortion And Threats 16 Conduct of controllers and operators of a trade group in intentionally creating in their victims a fear of economic loss if the victims failed to kickback constituted extortion, notwithstanding that relationship with victims may have appeared amicable. U. S. v. Rastelli, C.A.2 (N.Y.) 1977, 551 F.2d 902, certiorari denied 98 S.Ct. 115, 434 U.S. 831, 54 L.Ed.2d 91. Extortion And Threats 25.1 Single incident of use of economic fear by private corporation's purchasing agent in obtaining sum form president of prospective subcontractor by attempting to convince president that he would be denied any change to obtain contract with corporation unless he paid the sum violated this section. U. S. v. Brecht, C.A.2 (N.Y.) 1976, 540 F.2d 45, certiorari denied 97 S.Ct. 1160, 429 U.S. 1123, 51 L.Ed.2d 573. Extortion And Threats 25.1 Conduct of public officials in receiving payments from third parties out of fear of economic harm comes within type of coercive extortion prohibited by subsec. (a) of this section and not by subsec. (b) (2) of this section. U. S. v. Braasch, C.A.7 (Ill.) 1974, 505 F.2d 139, certiorari denied 95 S.Ct. 1561, 421 U.S. 910, 43 L.Ed.2d 775, certiorari

denied 95 S.Ct. 1562, 421 U.S. 910, 43 L.Ed.2d 775. Extortion And Threats

25.1

Fear, as used in this section defining extortion as the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened fear, or under color of an official right, includes not only fear of physical violence but fear of economic harm; it is not necessary that fear be a consequence of a direct threat; it is enough that circumstances surrounding alleged extortion render victim's fear reasonable. U. S. v. DeMet, C.A.7 (Ill.) 1973, 486 F.2d 816, rehearing denied 94 S.Ct. 1991, 416 U.S. 969, 40 L.Ed.2d 558. Extortion And Threats 25.1 Business may be threatened through people who operate it and a threat toward financial interest in a business is clearly harmful to that business, and, consequently, is violative of this section proscribing interference with commerce by threats or violence. U. S. v. Biondo, C.A.8 (Mo.) 1973, 483 F.2d 635, certiorari denied 94 S.Ct. 1468, 415 U.S. 947, 39 L.Ed.2d 563. Extortion And Threats 25.1 Fear, within extortion definition of this section, may be fear of economic loss as well as of physical harm. U. S. v. Addonizio, C.A.3 (N.J.) 1971, 451 F.2d 49, certiorari denied 92 S.Ct. 949, 405 U.S. 936, 30 L.Ed.2d 812, rehearing denied 92 S.Ct. 1309, 405 U.S. 1048, 31 L.Ed.2d 591. Extortion And Threats 25.1 To support verdict of guilty on counts charging violation of this section, government needed to introduce sufficient proof to establish that defendant who was president of construction trade council obtained or attempted to obtain money from building contractors by causing contractors to fear financial and economic loss if they did not pay him, and that in doing so defendant obstructed, delayed, or affected interstate commerce. U. S. v. Iozzi, C.A.4 (Va.) 1970, 420 F.2d 512, certiorari denied 91 S.Ct. 1607, 402 U.S. 943, 29 L.Ed.2d 111. Extortion And Threats 25.1 Insurer's use of economic fear to force its will on subscriber medical service providers and pharmacies was not violation of Hobbs Act, as alleged predicate act to claim under Racketeer Influenced and Corrupt Organizations Act (RICO), since subscribers did not have pre-existing statutory right to be network providers or to receive referrals from insurer; such tactics constituted, at most, lawful hard-bargaining, despite insurer's overwhelming market dominance. Sanchez v. Triple-S Management Corp., D.Puerto Rico 2006, 446 F.Supp.2d 48, affirmed 492 F.3d 1, certiorari denied 128 S.Ct. 806, 552 U.S. 1076, 169 L.Ed.2d 606. Extortion And Threats 25.1 Alleged statement by employee of third-party administrator (TPA) for health plans that subcontractor could charge less by hiding its commissions did not actively induce subcontractor to participate in alleged scheme to fraudulently take plans' assets, and, thus, TPA's alleged statement did not amount to extortion under the Hobbs Act and Maryland law, as would support civil Racketeer Influenced and Corrupt Organizations Act (RICO) claim, where statement was more akin to hard bargaining than extortion. Corporate Healthcare Financing, Inc. v. BCI Holdings Co., D.Md.2006, 444 F.Supp.2d 423. Extortion And Threats 25.1 Automobile distributor's alleged threat to withhold access to vehicles which were either initially withheld from initial allocation process or rejected by dealers unless a dealer agreed to purchase accessories did not give rise to the kind of economic fear that the Hobbs Act was designed to address, where dealers did not have a preexisting right to such discretionary or turndown vehicles. George Lussier Enterprises, Inc. v. Subaru of New England, Inc., D.N.H.2003, 286 F.Supp.2d 86, affirmed 393 F.3d 36, certiorari denied 126 S.Ct. 395, 546 U.S. 926, 163 L.Ed.2d 274. Extortion And Threats 25.1 Defendant who organized and led legitimate legal and political opposition to proposed land development did not engage in wrongful use of economic fear within ambit of Hobbs Act when defendant offered to drop his opposition in exchange for developer's $20,000 sponsorship of defendant's semi-pro football team, as developer stood to receive something of value in return for sponsorship; defendant offered developer opportunity to make considerable headway on already-level playing field, and developer was free to walk away with impunity, losing nothing to which he was legally entitled. U.S. v. Albertson, D.Del.1997, 971 F.Supp. 837, affirmed 156 F.3d 1225. Extortion And Threats 25.1 Subcontractor was not wrongfully threatened as result of developer's statement to subcontractor that if subcontractor

did not pay developer percentage of contractor's profits from contractor's site preparation work on project as per oral agreement as condition to awarding contract, developer would see that contractor did not get any future work, and thus, payment by contractor to developer of $8,000 in response to threat was not extorted, for purposes of Hobbs Act violation; agreement between subcontractor and developer, although perhaps constituting questionable business practices, and perhaps being immoral, was not extortionate under Hobbs Act, and threat not to give contractor future work, used as leverage to obtain compliance with admitted agreement, was not wrongful and was not extortionate. U.S. v. Waters, N.D.Ala.1994, 850 F.Supp. 1550. Extortion And Threats 25.1 To prove Hobbs Act charge against state court judge in connection with alleged acceptance of bribes, Government was not required to prove that attorney, who cooperated with Government in its undercover investigation of judicial corruption, actually experienced fear of economic harm. U.S. v. Shields, N.D.Ill.1991, 783 F.Supp. 1091. Extortion And Threats 4 Preclusion from or diminished opportunity for some existing or potential economic benefit cannot stand alone as violation of Hobbs Act, proscribing interference with commerce by threats or violence, which recognizes three species of inducement which can lead to extortionate interference with interstate commerce, on fear of economic harm theory without foundation of illegitimate claim of right, nor would preclusion or diminished opportunity in the abstract necessarily prove fear. U.S. v. Sturm, D.Mass.1987, 671 F.Supp. 79, affirmed in part , vacated in part 870 F.2d 769. Extortion And Threats 25.1 Attempted extortion through exploitation of fear of economic loss is committed when defendant or a third person attempts to instill fear in victim by commission of various acts, which could include threat of economic loss to victim unless victim bows to defendant's demands which is followed by defendant alone attempting to extort property by exploiting this previously instilled fear in the victim. U. S. v. Furey, E.D.Pa.1980, 491 F.Supp. 1048, affirmed 636 F.2d 1211, certiorari denied 101 S.Ct. 1987, 451 U.S. 913, 68 L.Ed.2d 304. Extortion And Threats 4 Where having contract with redevelopment authority enabled principals of civil engineering corporation to improve their standard of living, and curtailment of that contract would have forced them to lower their standard of living, threat of executive director of city redevelopment authority, charged with violation of this section, which forbids interference with interstate commerce by extortion, would have put principals in fear of economic harm for that reason alone. U. S. v. Salvitti, E.D.Pa.1979, 464 F.Supp. 611. Extortion And Threats 7 Extortion can be established either when property is obtained through use of fear or by one acting under color of official rights; fear within meaning of this section embraces fear of economic loss as well as fear of physical violence. U. S. v. Reilly, E.D.Pa.1978, 456 F.Supp. 211, affirmed 601 F.2d 577, certiorari denied 100 S.Ct. 216, 444 U.S. 903, 62 L.Ed.2d 140. Extortion And Threats 1; Extortion And Threats 25.1 149. ---- Reasonableness of fear, force, violence, or fear, extortion In order to convict under this section, government need only show that the defendant received property of another without any lawful claim to such property and that the person who made the payment did so out of fear; the fear experienced by the victim does not have to be the consequence of a direct threat and it is sufficient if the government can show circumstances surrounding act of extortion that render victim's fear reasonable, including fear of economic loss. U. S. v. Kopituk, C.A.11 (Fla.) 1982, 690 F.2d 1289, certiorari denied 103 S.Ct. 2089, 461 U.S. 928, 77 L.Ed.2d 300, certiorari denied 103 S.Ct. 2090, 461 U.S. 928, 77 L.Ed.2d 300, certiorari denied 103 S.Ct. 3542, 463 U.S. 1209, 77 L.Ed.2d 1391. Extortion And Threats 25.1 Preclusion from existing or potential economic benefit is significant evidence that victim's fear of economic harm was reasonable and that payments made or proffered were compulsory, rather than voluntary selection of legitimate commercial alternatives, for purposes of prosecution under the Hobbs Act, proscribing interference with commerce by threats or violence. U.S. v. Sturm, D.Mass.1987, 671 F.Supp. 79, affirmed in part , vacated in part 870 F.2d 769. Extortion And Threats 32

In order to be convicted of attempted extortion through exploitation of fear of economic loss under this section, victim's fear must be a reasonable fear, under all the circumstances of each particular case. U. S. v. Furey, E.D.Pa.1980, 491 F.Supp. 1048, affirmed 636 F.2d 1211, certiorari denied 101 S.Ct. 1987, 451 U.S. 913, 68 L.Ed.2d 304. Extortion And Threats 4 153. Intent or knowledge, extortion Government must demonstrate, among other things, that public official knew that payment he received was motivated by hope of influence in order to secure conviction under the Hobbs Act. U.S. v. Evans, C.A.11 (Ga.) 1990, 910 F.2d 790, certiorari granted 111 S.Ct. 2256, 500 U.S. 951, 114 L.Ed.2d 709, affirmed 112 S.Ct. 1881, 504 U.S. 255, 119 L.Ed.2d 57. Extortion And Threats 5 For purposes of official right extortion prosecution, it is extortion if the official knows that the bribe, gift, or other favor is motivated by a hope that it will influence him in the exercise of his office and if, knowing this, he accepts the bribe, even if it was not solicited. U.S. v. Marcy, N.D.Ill.1991, 777 F.Supp. 1393, reconsideration denied 777 F.Supp. 1398. Extortion And Threats 4

9th Cir. controlling case on 18 U.S.C. 1951; specific intent, plead willingly and knowingly
156. State of mind, extortion Although economic extortion charge requires evidence that victim possessed reasonable fear of economic harm, victim's state of mind is not important to charge of attempted extortion; all that is required for latter charge is that defendant intended to instill fear in victim. U.S. v. Marsh, C.A.9 (Cal.) 1994, 26 F.3d 1496. Extortion And Threats 25.1 Fact that the victim was aware, at least before he handed defendant a check, the defendant was not an undercover agent investigating the victim did not preclude conviction for attempted extortion on theory that the victim was not in fear at that time. U.S. v. Ward, C.A.9 (Cal.) 1990, 914 F.2d 1340. Extortion And Threats 7 157. Wrongfulness of actions, extortion In order to prove extortion under this section the government must not only show that a person involved in interstate commerce has parted with his property out of fear but it must also establish that the payment was wrongful in that the alleged extortionist had no lawful claim to the property. U.S. v. Quinn, C.A.5 (Ga.) 1975, 514 F.2d 1250, certiorari denied 96 S.Ct. 1430, 424 U.S. 955, 47 L.Ed.2d 361. Extortion And Threats 25.1 161. ---- Political contributions, activities constituting extortion The following circumstances should be considered in making determination whether money given to elected officials violates Hobbs Act; whether money was recorded by payor as campaign contribution; whether money was recorded and reported by official as campaign contribution; whether payment was in cash; whether it was delivered to official personally or to campaign; whether official acted in official capacity at or near time of payment for benefit of payor or supported legislation that would benefit payor; whether official had supported similar legislation before time of payment; and whether official had directly or indirectly solicited payor individually for payment. U.S. v. McCormick, C.A.4 (W.Va.) 1990, 896 F.2d 61, rehearing denied , certiorari granted 111 S.Ct. 37, 498 U.S. 807, 112 L.Ed.2d 14, reversed on other grounds 111 S.Ct. 1807, 500 U.S. 257, 114 L.Ed.2d 307. Extortion And Threats 1 296. ---- Intent or knowledge, necessary and requisite allegations, indictment or information

In a prosecution for extortion and conspiracy to extort affecting commerce in violation of this section it is unnecessary to use the term specific intent or to give any particular form of instruction; the important aspect is that the total term of specific intent be defined and its applicability to the case be made clear. U. S. v. Arambasich, C.A.7 (Ill.) 1979, 597 F.2d 609. Extortion And Threats 33 Charge of conspiracy to obstruct commerce by extortion requires that a defendant whose guilt or innocence is being considered must have acted knowingly, willfully and unlawfully. U. S. v. Warledo, C.A.10 (Okla.) 1977, 557 F.2d 721. Conspiracy 28(3) Defendant's substantial rights were not prejudiced by absence of express allegation in indictment that he acted with criminal intent with respect to charge of attempted extortion in violation of Hobbs Act when jury was specifically instructed on government's burden of proving that defendant acted knowingly and willfully and evidence that defendant had acted with requisite intent was overwhelming, and therefore omission in indictment did not divest district court of subject matter jurisdiction. Hughes v. U.S., D.R.I.2003, 241 F.Supp.2d 148. Extortion And Threats 30

Penal Code Section 518 Extortion.

2. Elements of Offense If property is obtained thereby, extortion may be committed by a union organizer threatening employers with strikes, labor unrest, discord, and a destruction of business and property. People v. Bolanos (1942, Cal App) 49 Cal App 2d 308, 121 P2d 753, 1942 Cal App LEXIS 809.
229. ---- Economic injury, weight and sufficiency of evidence, practice and procedure generally Evidence did not support conviction for economic extortion absent showing that victim reasonably feared economic harm; though victim testified to his fear for his life, he was not asked and did not testify that he feared economic harm. U.S. v. Marsh, C.A.9 (Cal.) 1994, 26 F.3d 1496. Extortion And Threats 32
Lexis annotated 15. Attempt For purposes of "obtaining of property" requirement under 18 USCS 1951(b)(2), offense of attempted extortion is complete when defendant has attempted to induce his victim to part with property; proof of attempt to arouse fear is sufficient proof of attempted extortion under 18 USCS 1951. United States v Frazier (1977, CA8 Mo) 560 F2d 884, cert den (1978) 435 US 968, 56 L Ed 2d 58, 98 S Ct 1605. Attempted extortion victim's cooperation with federal authorities does not preclude defendant's conviction under Hobbs Act (18 USCS 1951) where defendant exploited victim's reasonable fear of economic loss. United States v Haimowitz (1984, CA11 Fla) 725 F2d 1561, 15 Fed Rules Evid Serv 441, cert den (1984) 469 US 1072, 83 L Ed 2d 504, 105 S Ct 563.

16. Intent Mens rea is essential element of crime of extortion under 18 USCS 1951. United States v Aguon (1988, CA9 Guam) 851 F2d 1158 (ovrld in part as stated in United States v Capati (1997, SD Cal) 980 F Supp 1114). Specific intent is not element of offense under 18 USCS 1951. United States v Furey (1980, ED Pa) 491 F Supp 1048, affd without op (1980, CA3 Pa) 636 F2d 1211, cert den (1981) 451 US 913, 68 L Ed 2d 304, 101 S Ct 1987. 27. Obtaining property of another In specific intent required to prove wrongfulness element of extortion based on wrongful use of economic fear under 18 USCS 1951 (Hobbs Act) is special mental element required above and beyond any mental state necessary with respect to actus reus of extortion, which requires government to establish that defendant knew that he had no legitimate claim of right to property in question. United States v Sturm (1989, CA1 Mass) 870 F2d 769 (criticized in Rendelman v State (2007) 175 Md App 422, 927 A2d 468) and (criticized in State v Rendelman (2008) 404 Md 500, 947 A2d 546). It was significant that four Mafia coconspirators sought not only to put auto repair store owner out of business, but to get his business for themselves, since under Hobbs Act, 18 USCS 1951, it is not sufficient when victim is merely forced to part with property; there must be "obtaining;" that is, someone, either extortioner or third person, must receive property of which victim is deprived. United States v Panaro (2001, CA9) 266 F3d 939, 2001 CDOS 8328, 2001 Daily Journal DAR 10257, 57 Fed Rules Evid Serv 415. Defendants' convictions under Hobbs Act were reversed because they used their own money to bribe court clerk, they did not obtain money from someone outside conspiracy. United States v Brock (2007, CA6 Tenn) 501 F3d 762, 2007 FED App 365P (criticized in United States v Kott (2007, DC Alaska) 625 F Supp 2d 854) and post-conviction relief gr (2008, ED Tenn) 2008 US Dist LEXIS 8862. Not every claim of right will preclude prosecution of would-be extortionists under Hobbs Act; only where claim of right is manifest or beyond dispute will Hobbs Act prosecution be precluded; defendant had no manifest claim of right to things of value when he attempted to coerce publisher to re-edit and republish his book upon his terms since contract with publisher vests publisher with broad discretion with respect to printing, publication and distribution of book. United States v Baudin (1980, SD NY) 486 F Supp 403, 5 Media L R 2677. It is only necessary that property which defendant attempted to extort could have been obtained; in order for violation of 18 USCS 1951 to occur, property need not actually be obtained. United States v Furey (1980, ED Pa) 491 F Supp 1048, affd without op (1980, CA3 Pa) 636 F2d 1211, cert den (1981) 451 US 913, 68 L Ed 2d 304, 101 S Ct 1987. 32. "Wrongful" defined Under 18 USCS 1951, which defines extortion as "the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear," word "wrongful" limits coverage to those instances where obtaining of property would itself be "wrongful" because alleged extortionist has no lawful claim to that property. United States v Enmons (1973) 410 US 396, 93 S Ct 1007, 35 L Ed 2d 379, 82 BNA LRRM 2625, 70 CCH LC P 13425.

In order to prove Hobbs Act (18 USCS 1951) extortion, government must not only show that person involved in interstate commerce has parted with his property out of fear but it must also establish that payment was wrongful in that alleged extortionist had no lawful claim to property. United States v Quinn (1975, CA5 Ga) 514 F2d 1250, 89 BNA LRRM 2691, 77 CCH LC P 10956, cert den (1976) 424 US 955, 96 S Ct 1430, 47 L Ed 2d 361, 91 BNA LRRM 2749, 78 CCH LC P 11277. Wrongful use of fear does not require threat; wrongful use of fear is satisfied if extortioner extorts victim's fear of economic loss. United States v Lisinski (1984, CA7 Ill) 728 F2d 887, cert den (1984) 469 US 832, 83 L Ed 2d 64, 105 S Ct 122. In proving "wrongful use" element of offense of extortion induced through wrongful use of economic fear, government must prove that defendant did not have claim of right to property in question that he received, and knew that he was not legally entitled to property. United States v Sturm (1989, CA1 Mass) 870 F2d 769 (criticized in Rendelman v State (2007) 175 Md App 422, 927 A2d 468) and (criticized in State v Rendelman (2008) 404 Md 500, 947 A2d 546). Defendants' threat to file litigation against county, even if made in bad faith and supported by false affidavits, was not "wrongful" within meaning of Hobbs Act, 18 USCS 1951. United States v Pendergraft (2002, CA11 Fla) 297 F3d 1198, 15 FLW Fed C 821. In reference to Hobbs Act, 18 USCS 1951, term wrongful applies to scenarios where defendant employs, or attempts to employ, one of extortion methods enumerated in 18 USCS 1951(b)(2) and has no lawful claim to property that is subject of extortion (or, in case of attempt, attempted extortion). United States v Vigil (2007, DC NM) 478 F Supp 2d 1285. 35. Fear Term "fear" as used in 18 USCS 1951(b)(2), in defining extortion, should be given its ordinary meaning, including fear of economic loss. United States v Dale (1955, CA7 Ill) 223 F2d 181, 28 CCH LC P 69417. To prove substantive act of extortion under 18 USCS 1951 it is essential to show generation of fear in victim; to prove substantive act of attempted extortion, it is necessary to prove attempt to instill fear; and to prove conspiracy to extort, it is necessary to show plan to instill fear. Carbo v United States (1963, CA9 Cal) 314 F2d 718, cert den (1964) 377 US 953, 12 L Ed 2d 498, 84 S Ct 1625, reh den (1964) 377 US 1010, 12 L Ed 2d 1058, 84 S Ct 1902 and cert den (1964) 377 US 953, 12 L Ed 2d 498, 84 S Ct 1626, reh den (1964) 377 US 1010, 12 L Ed 2d 1058, 84 S Ct 1902 and reh den (1964) 377 US 1010, 12 L Ed 2d 1058, 84 S Ct 1903 and cert den (1964) 377 US 953, 12 L Ed 2d 498, 84 S Ct 1627 and (criticized in United States v Woodruff (1996, ND Cal) 941 F Supp 910). 36.--Economic loss Word "fear" appearing in extortion definition in 18 USCS 1951 should be given its ordinary meaning, and is not restricted to fear of physical violence or property damage, but also includes fear of economic loss; hence, extortion of money from employer by representatives of labor unions under compulsion of threats of labor troubles on their jobs and stoppage of work, constituted violation of 18 USCS 1951. Bianchi v United States (1955, CA8 Mo) 219 F2d 182, 35 BNA LRRM 2491, 27 CCH LC P 68979, cert den (1955) 349 US 915, 75 S Ct 604, 99 L Ed 1249, 36 BNA LRRM 2049, reh den (1955) 349 US 969, 75 S Ct 879, 99 L Ed 1290.

Conduct that brings about state of mind of fear of financial loss constitutes extortion under 18 USCS 1951. United States v Kramer (1966, CA7 Ill) 355 F2d 891, 61 BNA LRRM 2234, 52 CCH LC P 16831, cert den, in part, vacated, in part (1966) 384 US 100, 86 S Ct 1366, 16 L Ed 2d 396, 62 BNA LRRM 2045, 53 CCH LC P 11236. Term fear as used in definition of "extortion" may be fear of economic loss as well as of physical harm. United States v Addonizio (1971, CA3 NJ) 451 F2d 49, cert den (1972) 405 US 936, 30 L Ed 2d 812, 92 S Ct 949, reh den (1972, US) 31 L Ed 2d 591, 92 S Ct 1309. In prosecution under 18 USCS 1951, where evidence was that money was obtained through fear of economic loss and that proprietor offered to pay money because he reasonably feared that if he did not, he would be cited for liquor violations or lose his license, extortion, not bribery, was proved. United States v Gill (1973, CA7 Ill) 490 F2d 233, cert den (1974) 417 US 968, 41 L Ed 2d 1139, 94 S Ct 3171. Where proprietors of bowling lanes recognized that if adequate police service was not forthcoming financial ruin would become reality, and defendant police officer took money from proprietors assuring them that police service would improve, defendant could be convicted of violating 18 USCS 1951 through fear or threat as exploitation of victims' reasonable fears constitutes extortion regardless of source creating fear and despite absence of any threats. United States v Crowley (1974, CA7 Ill) 504 F2d 992. Fear of economic loss is within kinds of fear contemplated by Hobbs possibility of lost business opportunities can create fear of economic States v Hathaway (1976, CA1 Mass) 534 F2d 386, cert den (1976) 429 US 79, 97 S Ct 64; United States v Brecht (1976, CA2 NY) 540 F2d 45, cert US 1123, 51 L Ed 2d 573, 97 S Ct 1160. Act, and loss. United 819, 50 L Ed 2d den (1977) 429

Word "fear" as used in definition of extortion under 18 USCS 1951(b)(2), means obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force and as so used embraces fear of economic loss. United States v Jacobs (1971, CA5 Fla) 451 F2d 530, cert den 405 US 955, 31 L Ed 2d 231, 92 S Ct 1170, reh den 405 US 1049, 31 L Ed 2d 591, 92 S Ct 1309; United States v Braasch (1974, CA7 Ill) 505 F2d 139, cert den 421 US 910, 43 L Ed 2d 775, 95 S Ct 1561, 95 S Ct 1562; United States v Duhon (1978, CA5 La) 565 F2d 345, 97 BNA LRRM 2388, 82 CCH LC P 10274, cert den 435 US 952, 55 L Ed 2d 802, 98 S Ct 1580, 111 BNA LRRM 2896, 83 CCH LC P 10496; United States v Rabbitt (1978, CA8 Mo) 583 F2d 1014, 3 Fed Rules Evid Serv 983, cert den 439 US 1116, 59 L Ed 2d 75, 99 S Ct 1022 and (disagreed with by United States v Silvano (CA1 Mass) 812 F2d 754, 22 Fed Rules Evid Serv 1345); United States v Sander (1980, CA5 Tex) 615 F2d 215, reh den (1980, CA5 Tex) 618 F2d 781 and cert den (1980) 449 US 835, 66 L Ed 2d 41, 101 S Ct 108. Requirements of 18 USCS 1951 are satisfied where extortionist merely intends to exploit victim's fear of economic loss arising from liquidated damages provision of construction contract. United States v Gerald (1980, CA5 La) 624 F2d 1291, reh den (1980, CA5 La) 629 F2d 1350 and cert den (1981) 450 US 920, 67 L Ed 2d 348, 101 S Ct 1369. It is well settled that fear of economic loss is sufficient to support conviction under 18 USCS 1951; wrongful use of force and fear constituting extortion element of offense is not necessary element of 1951 conviction. United States v Cusmano (1981, CA6 Mich) 659 F2d 714. Intent to exploit fear of economic loss is within purview of 18 USCS 1951. United States v Haimowitz (1984, CA11 Fla) 725 F2d 1561, 15 Fed Rules Evid Serv 441, cert den (1984) 469 US 1072, 83 L Ed 2d 504, 105 S Ct 563.

Job-peddling scheme which invoked no fear of negative hiring if money was not paid, only hope that job would result if money constitute extortion under 18 USCS 1951, but rather state-law since there was no fear of economic loss. United States v Capo 947.

influence in victims was paid, did not commercial bribery, (1987, CA2 NY) 817 F2d

Cleaning company's kickback payments to county commissioners were induced by fear of economic loss rather than, as defendant argued, motivated by hope of illegal financial gain, within meaning of 18 USCS 1951, where company offered to make larger illegal payments than another company in order to assure receiving contract. United States v Stodola (1992, CA7 Ind) 953 F2d 266, cert den (1992) 506 US 834, 121 L Ed 2d 63, 113 S Ct 104 and (criticized in United States v Pistone (1999, CA11 Fla) 177 F3d 957, 12 FLW Fed C 917). Evidence was sufficient to convict defendant of attempted extortion in violation of Hobbs Act, 18 USCS 1951, for having demanded money in exchange for testimony in civil suit challenging distribution of decedent's estate; jury could have found that victims had reasonable belief that suit could succeed and that defendant's demands caused them reasonable fear of economic harm by significantly diminishing likelihood of success. United States v Mitov (2006, CA7 Ill) 460 F3d 901. 38.--Reasonableness Fear as used in 18 USCS 1951, includes not only fear of physical violence but also fear of economic harm; it is not necessary that fear be a consequence of a direct threat; it is enough that the circumstances surrounding alleged extortion render victim's fear reasonable. United States v De Met (1973, CA7 Ill) 486 F2d 816, cert den (1974) 416 US 969, 40 L Ed 2d 558, 94 S Ct 1991. Element of fear required by 18 USCS 1951 need not be direct consequence of threat by defendant; subtle extortions are covered by Act and all that is necessary is to show that circumstances surrounding alleged extortion of conduct rendered victim's fears reasonable. United States v Sander (1980, CA5 Tex) 615 F2d 215, reh den (1980, CA5 Tex) 618 F2d 781 and cert den (1980) 449 US 835, 66 L Ed 2d 41, 101 S Ct 108. Fear of economic harm is sufficient to sustain 18 USCS 1951 et seq. violation; fear need not be consequence of direct or implicit threat by defendant and government's burden of proof is satisfied if it shows that victim feared economic harm, and that circumstances surrounding alleged extortionate conduct rendered such fear reasonable. United States v Billups (1982, CA4 Va) 692 F2d 320, 111 BNA LRRM 2962, 95 CCH LC P 13831, 11 Fed Rules Evid Serv 1198, corrected (1982, CA4 Va) 112 BNA LRRM 3352, 97 CCH LC P 10012 and cert den (1983) 464 US 820, 104 S Ct 84, 78 L Ed 2d 93, 114 BNA LRRM 2568, 98 CCH LC P 10449. In prosecution of 18 USCS 1951, government need only prove that victim reasonably believed defendant had ability to carry out threats; defendant need not have actual ability to carry out such threats; however, victim's fear must be reasonable under all circumstances. United States v Furey (1980, ED Pa) 491 F Supp 1048, affd without op (1980, CA3 Pa) 636 F2d 1211, cert den (1981) 451 US 913, 68 L Ed 2d 304, 101 S Ct 1987. Fear of economic loss is type of fear prescribed by 18 USCS 1951; it is sufficient if government can show circumstances surrounding alleged extortion which renders victim's fear reasonable. United States v Shine (1981, ED NY) 526 F Supp 717.

61. Other conduct Evidence supports violation of 18 USCS 1951 where borrower, whose airplane was repossessed by lender, kept airplane's logbooks, which were part of collateral and important to value of airplane, and where borrower offered to "find" logbooks if lender paid $ 20,000, because government showed borrower lacked legitimate claim of right to receive payment for logbooks and lender reasonably feared economic loss since lack of logbooks would greatly decrease airplane's value. United States v Sturm (1987, DC Mass) 671 F Supp 79, vacated on other grounds (1988, CA1) 1988 US App LEXIS 17206 and affd in part and revd in part on other grounds (1989, CA1 Mass) 870 F2d 769 (criticized in Rendelman v State (2007) 175 Md App 422, 927 A2d 468) and (criticized in State v Rendelman (2008) 404 Md 500, 947 A2d 546). 83. Entitlement to property For purposes of Hobbs Act (18 USCS 1951), use of legitimate economic threats to obtain property is wrongful only if defendant has no claim of right to property; defendant's conduct was not protected by claim of right defense, where he demanded $ 20,000 fee from his creditor in exchange for return of aircraft log books which he retained when creditor repossessed aircraft, since jury was entitled to disbelieve that defendant could not find logbooks, and to find that he was therefore not entitled to fee for making extra efforts to locate them. United States v Sturm (1989, CA1 Mass) 870 F2d 769 (criticized in Rendelman v State (2007) 175 Md App 422, 927 A2d 468) and (criticized in State v Rendelman (2008) 404 Md 500, 947 A2d 546). Defendant's belief in his entitlement to property does not constitute legal defense for violation of 18 USCS 1951. United States v Zappola (1981, SD NY) 523 F Supp 362, affd (1982, CA2 NY) 677 F2d 264, 10 Fed Rules Evid Serv 572, cert den (1982) 459 US 866, 74 L Ed 2d 122, 103 S Ct 145. Defendant's lawful right to, or belief in right to property involved in 18 USCS 1951 prosecution does not constitute affirmative defense. United States v Agnes (1984, ED Pa) 581 F Supp 462, 16 Fed Rules Evid Serv 1202, affd (1985, 110. Sufficiency of particular indictments Contention by defendants charged with violation of Hobbs Act, 18 USCS 1951, that their conduct was not within scope of Act was without merit since indictment, by charging conspiracy to commit extortion, under fear of economic loss and/or color of official right, set forth classic case of violation of Act, as shown by adjudicated cases which were similar to case in question, in that, in each one public official was engaged in extracting money from another person through use of fear of economic loss and/or color of official right. United States v Phillips (1978, CA9 Cal) 577 F2d 495, cert den (1978) 439 US 831, 58 L Ed 2d 125, 99 S Ct 107 and (criticized in United States v Woodruff (1996, ND Cal) 941 F Supp 910) and (criticized in United States v Sherwood (1996, CA9 Nev) 98 F3d 402, 96 Daily Journal DAR 13022). 151.--Miscellaneous Evidence was sufficient to establish nexus to interstate commerce, where defendant made credible threat to deliver embarrassing materials directly to victim's employer, who was then engaged in interstate commerce, even though his plan was ruined when he was caught, since he introduced potential impact on interstate commerce, and scheme need not be successful, especially where he was charged with attempted extortion. United States v Pascucci (1991, CA9 Ariz) 943 F2d 1032, 91 CDOS 6818, 91 Daily Journal DAR 10355 (criticized in United States v Woodruff (1996, ND Cal) 941 F Supp 910). 154.--Police Defendant's conviction on three counts of extortion in violation of 18 USCS 1951 was supported by evidence that extortion victim's trucks were subjected to increased

stoppings and tickets by state police after victim had refused defendant's request that he should either pay campaign contribution or buy tires from company incorporated by defendant and others who were elected officials of the state, and that the harassment stopped after victim gave defendant various amounts of money on different dates. United States v Emalfarb (1973, CA7 Ill) 484 F2d 787, cert den (1973) 414 US 1064, 38 L Ed 2d 469, 94 S Ct 571. Jury was warranted in finding that defendant, police officer, committed extortion "under color of official right," where defendant obtained money to which he was not entitled while in uniform and in performance of official duties, and victims feared that if adequate police protection was not provided, their bowling lane business would be plagued by financial loss. United States v Crowley (1974, CA7 Ill) 504 F2d 992. No coercion need be shown to convict public official of extortion under color of official right; accordingly, deputy sheriff responsible for enforcement of writs of execution may be convicted of extortion where he accepts money from business in return for allowing business to remain open instead of closing it and executing writ of execution. United States v Schmidt (1985, CA7 Ill) 760 F2d 828, cert den (1985) 474 US 827, 88 L Ed 2d 71, 106 S Ct 86. 155.--Other officials Evidence was sufficient to support conviction of state officials for demanding political contributions as condition for award of state contract where 11 witnesses testified as to "shake-down" techniques of defendants, basic pattern of which was demand for specific amount of money based on percentage of income under state contracts, and evidence further established that all victims had purchased fuel, equipment or supplies which had traveled in interstate commerce; additionally, there was testimony from another state official that 3 defendants gave instructions to him with respect to obtaining money from victims and all 3 discussed fund raising frequently during official meetings. United States v Cerilli (1979, CA3 Pa) 603 F2d 415, cert den (1980) 444 US 1043, 62 L Ed 2d 728, 100 S Ct 728. Private citizen who is not in process of becoming public official may be convicted of Hobbs Act extortion under "color of official right" theory only if that private citizen either conspires with, or aids and abets, public official in acts of extortion. United States v Saadey (2005, CA6 Ohio) 393 F3d 669, 66 Fed Rules Evid Serv 191, 2005 FED App 2P, 32 ALR6th 769. 156. Fear: economic loss There was sufficient evidence of fear in prosecution for extortion in violation of 18 USCS 1951 where officers of victim company testified that by reason of defendants' conduct, they were placed in fear of economic loss, of injury to employees, and of damage to equipment where such fear was not unreasonable. Bianchi v United States (1955, CA8 Mo) 219 F2d 182, 35 BNA LRRM 2491, 27 CCH LC P 68979, cert den (1955) 349 US 915, 75 S Ct 604, 99 L Ed 1249, 36 BNA LRRM 2049, reh den (1955) 349 US 969, 75 S Ct 879, 99 L Ed 1290. Evidence of payment, induced solely by wrongful use of fear of economic loss, is sufficient to constitute violation of 18 USCS 1951. United States v Sweeney (1959, CA3 Pa) 262 F2d 272, 43 BNA LRRM 2349, 36 CCH LC P 65144. Jury could reasonably find that defendants were guilty of extortion under Hobbs Act where they obstructed, delayed, or affected commerce or movement of article or commodity in commerce by using fear of economic loss to obtain property to which they had no lawful claim. United States v Wilford (1983, CA8 Iowa) 710 F2d 439, 114 BNA LRRM 2257, 97 CCH LC P 10247, 13 Fed Rules Evid Serv 1163, cert den (1984) 464 US 1039, 104 S Ct 701, 79 L Ed 2d 166, 115 BNA LRRM 2248, 99 CCH LC P 10659.

There is sufficient evidence to show that purveyor agreed to make payments, and continue to do so during term of contract, due to fear of economic loss if they stopped payments where each purveyor testified that serious damage would occur to his business if contract was lost and that they believed that extortionist had authority to terminate their contracts. United States v Greger (1983, CA9 Nev) 716 F2d 1275, 83-2 USTC P 9654, cert den (1984) 465 US 1007, 104 S Ct 1002, 79 L Ed 2d 234. Absence or presence of fear of economic loss must be considered from perspective of victim, not extortionist; the proof need establish that victim reasonably believed that (1) defendant had power to harm victim; and (2) defendant would exploit that power to victim's detriment. United States v Capo (1987, CA2 NY) 817 F2d 947. Evidence was sufficient to prove that victim made payment to defendant out of fear that defendant would adversely affect his business opportunities, even where fear may have included that of possibility of losing future business, without deciding whether fear of loss of ongoing business relationship would suffice, since jury instructions, which were not challenged, defined fear to include future loss, and there was ample evidence of adverse effects. United States v Dischner (1992, CA9 Alaska) 974 F2d 1502, 92 CDOS 7769, 92 Daily Journal DAR 12621, 92 Daily Journal DAR 12901, cert den (1993) 507 US 923, 122 L Ed 2d 682, 113 S Ct 1290 and (criticized in United States v Brumley (1996, CA5 Tex) 79 F3d 1430) and (ovrld as stated in Loral Infared & Imaging Sys. v ERA Helicopters (1997, CA9 Cal) 1997 US App LEXIS 14850). Evidence of attempted extortion was sufficient, where defendant threatened to put victim in "same spot back" if he didn't pay up, regardless of victim's state of mind, since rational jury could have inferred intent to instill fear of economic harm. United States v Marsh (1994, CA9 Cal) 26 F3d 1496, 94 CDOS 4875, 94 Daily Journal DAR 8945, 39 Fed Rules Evid Serv 972. Element of extortion was proven by testimony of corporation officers to effect that defendant obtained money from them by putting them in fear of personal and corporate bankruptcy; fear of mere lowering of standard of living would have been enough to prove extortion. United States v Salvitti (1979, ED Pa) 464 F Supp 611. There need be no direct threat by defendant in order for violation of 18 USCS 1951 to occur, since fear of economic loss can be shown from surrounding circumstances. United States v Furey (1980, ED Pa) 491 F Supp 1048, affd without op (1980, CA3 Pa) 636 F2d 1211, cert den (1981) 451 US 913, 68 L Ed 2d 304, 101 S Ct 1987. Unpublished Opinions Unpublished: violation of 18 conduct, victim reasonable fear 971. Evidence established extortion under threat of economic loss in USCS 1951(a) where record showed that in response to defendant's gave him money, to which he had no lawful claim, out of victim's of economic loss. United States v Mathis (2006, CA11 Ga) 186 Fed Appx

Unpublished: Evidence was sufficient for defendant's convictions under 18 USCS 1951 because district court correctly instructed jury, and defendant did not object, that it was not necessary that government prove actual generation of fear in order for conviction on charge of attempting to commit extortion under color of official right or by wrongful use of fear of economic harm. United States v Parkin (2009, CA3 NJ) 319 Fed Appx 101. 159.--Public officials Where evidence at trial indicated that defendant did threaten victim with economic loss if he failed to supply promised bribe money, defendant telephoned victim

subsequent to favorable vote on application for temporary use permit, during conversation he informed victim that failure to pay might result in "some grief down the line" and that Zoning Board "could back this thing up through channels", victim's fear of economic loss focused on defendant's demand for payment and victim's belief that payment would prevent feared economic injury is reasonable in light of surrounding circumstances. United States v Sander (1980, CA5 Tex) 615 F2d 215, reh den (1980, CA5 Tex) 618 F2d 781 and cert den (1980) 449 US 835, 66 L Ed 2d 41, 101 S Ct 108. Threat of economic harm pursuant to 18 USCS 1951(b)(2) was proven as to contract applicant who testified that, based on conversation with defendant, state treasurer, it became his understanding that if he did not hire contributor's wife he would not be considered for position; applicant, like any other investment manager that might submit bid, had legal entitlement to be considered on level-playing field, and without coercion. United States v Vigil (2007, DC NM) 478 F Supp 2d 1285. Unpublished Opinions Unpublished: Former lobbyist and local elected official was properly convicted of attempted extortion and conspiracy to commit extortion in violation of 18 USCS 1951 because sufficient evidence of defendant's "wrongful" conduct was presented to jury; record established that defendant's threatened opposition to company's project had nothing to do with legitimate concerns about merits of project and everything to do with compelling payments to which defendant was not entitled. United States v McFall (2009, CA9 Cal) 319 Fed Appx 528, supp op, remanded (2009, CA9 Cal) 558 F3d 951. 165. Intent In prosecution for conspiracy to commit extortion under 18 USCS 1951, it was plain error to omit instruction on mens rea, since mens rea is essential element of offense. United States v Aguon (1988, CA9 Guam) 851 F2d 1158 (ovrld in part as stated in United States v Capati (1997, SD Cal) 980 F Supp 1114). In prosecution under 18 USCS 1951 for extortion under color of official right, jury charge which failed to specifically instruct on mens rea was yet adequate, where it required jury to find that defendant promised or threatened official action in order to extract donation, since it would be impossible to do so without intending to wrongfully obtain property from another without his consent. United States v Egan (1988, CA9 Cal) 860 F2d 904. Jury instruction which permitted jury to find defendant guilty of extortion through "wrongful use" of economic fear in violation of 18 USCS 1951, based on objective definition of "wrongful" which did not consider whether defendant knew that he had no legal right to $ 20,000 fee he demanded from creditors in exchange for return of collateral, was in plain error, since it allowed conviction without certainty that jury found that defendant possessed mental state required for crime; jury instruction which failed to instruct jury that extortion through fear of economic loss under 18 USCS 1951 (Hobbs Act) requires special mental element above and beyond any mental state necessary with respect to actus reus of crime, which is knowledge of lack of legitimate claim to property in question, was plain error. was plain error. United States v Sturm (1989, CA1 Mass) 870 F2d 769 (criticized in Rendelman v State (2007) 175 Md App 422, 927 A2d 468) and (criticized in State v Rendelman (2008) 404 Md 500, 947 A2d 546). Jury instruction which required government to prove that defendant knowingly and willfully induced payment by means of extortion encompassed knowledge of lack of lawful claim to property under plain error analysis, regardless of whether government must prove lack of entitlement. United States v Dischner (1992, CA9 Alaska) 960 F2d 870, 92 CDOS 2854, 92 Daily Journal DAR 4590, 35 Fed Rules Evid Serv 485, amd, reh den

(1992, CA9 Alaska) 974 F2d 1502, 92 CDOS 7769, 92 Daily Journal DAR Journal DAR 12901, cert den (1993) 507 US 923, 122 L Ed 2d 682, 113 (criticized in United States v Brumley (1996, CA5 Tex) 79 F3d 1430) stated in Loral Infared & Imaging Sys. v ERA Helicopters (1997, CA9 LEXIS 14850).

12621, 92 Daily S Ct 1290 and and (ovrld as Cal) 1997 US App

**Although the first defendant contended that the district court's failure to give a requested good faith instruction was error, the failure to give an instruction on a good faith defense was not fatal so long as the court clearly instructed the jury as to the necessity of specific intent as an element of a crime; court instructed the jury that a violation of 18 USCS 1951 could be found only if the first defendant obtained money for the benefit of the second defendant which he knew neither he nor the second defendant was entitled to, and it was not error to instruct the jury that circumstantial evidence could support such a finding. United States v Inzunza (2009, CA9 Cal) 580 F3d 894. Unpublished Opinions Unpublished: Even if, when describing elements of Hobbs Act robbery, district court should have included instruction on specific intent to steal, error was harmless because under definition given by court jury was required to find that defendants conspired to take victim's property, against his will, by means of force or fear of injury. United States v Lu (2006, CA9 Cal) 174 Fed Appx 390, cert den (2006) 549 US 939, 127 S Ct 329, 166 L Ed 2d 246 and cert den (2006) 549 US 939, 127 S Ct 330, 166 L Ed 2d 247. 169.--Inducement In prosecution of local politician for accepting improper campaign contributions in violation of 18 USCS 1951, instruction on requirement of inducement was adequate, although it did not use word "demand" or "inducement," where it required proof that he promised or threatened official action in order to extract donation and did not permit conviction based on mere acceptance of contribution. United States v Egan (1988, CA9 Cal) 860 F2d 904. 170.--Quid pro quo Jury instruction adequately described quid pro quo requirement under 18 USCS 1951, even though it did not include statement that affirmative step was element of offense, since offense is completed when public official receives payment in return for his agreement to perform specific official acts; nor is fulfillment of quid pro quo element of offense. Evans v United States (1992) 504 US 255, 112 S Ct 1881, 119 L Ed 2d 57, 92 CDOS 4443, 92 Daily Journal DAR 7130, 6 FLW Fed S 251 (criticized in United States v Tucker (1998, CA9 Cal) 133 F3d 1208, 98 CDOS 306, 98 Daily Journal DAR 413, 98-1 USTC P 50147, 81 AFTR 2d 555). In prosecution of senator under 18 USCS 1951, jury instructions which failed to instruct that prosecution must prove that payments were made in return for explicit promise or undertaking by official to perform or not to perform official act required reversal. United States v Montoya (1991, CA9 Cal) 945 F2d 1068, 91 CDOS 7541 (criticized in United States v Jolivet (2000, CA8 Mo) 224 F3d 902, 55 Fed Rules Evid Serv 670). Court improperly instructed jury that no explicit quid pro quo was required to establish "official right" extortion under 18 USCS 1951. United States v Carpenter (1992, CA9 Cal) 961 F2d 824, 92 CDOS 3048, 92 Daily Journal DAR 4811, 92 Daily Journal DAR 4953, cert den (1992) 506 US 919, 121 L Ed 2d 250, 113 S Ct 332.

Jury instructions dictating when person who was not himself elected official could be found to have acted "under color of official right" were neither misleading nor inadequate to guide jury's deliberations, where district court repeatedly emphasized that Government must prove both that defendant demonstrated corrupt intent to induce payment and that there was quid pro quo, not simply campaign contribution. United States v Freeman (1993, CA9 Cal) 6 F3d 586, 93 CDOS 7051, 93 Daily Journal DAR 12045, 39 Fed Rules Evid Serv 772, cert den (1994) 511 US 1077, 114 S Ct 1661, 128 L Ed 2d 378 and cert den (1994) 511 US 1147, 114 S Ct 2177, 128 L Ed 2d 896 and (criticized in United States v Tucker (1998, CA9 Cal) 133 F3d 1208, 98 CDOS 306, 98 Daily Journal DAR 413, 98-1 USTC P 50147, 81 AFTR 2d 555). 171. Fear of economic loss It is valid instruction for judge to instruct jury that wrongfulness element of crime would be satisfied upon finding that fear of economic loss was employed by defendants to obtain money to which they were not lawfully entitled. United States v Clemente (1981, CA2 NY) 640 F2d 1069, 106 BNA LRRM 2673, 7 Fed Rules Evid Serv 1318, cert den (1981) 454 US 820, 70 L Ed 2d 91, 102 S Ct 102, 132 BNA LRRM 2960.

4 ALR Fed 881 Elements of offense proscribed by the Hobbs Act (18 U.S.C.A. 1951) against racketeering in interstate or foreign commerce 6[b] Extortion as means of interfering with commerce"Fear" as including fear of economic loss [Cumulative Supplement] The following cases expressly held or recognized that an offense under the extortion provisions of the Hobbs Act may be committed even though the defendant does not generate in his victim a fear of personal injury or property damage, since it is sufficient under the act if the defendant instils in the victim a fear of economic loss. Ninth Circuit Cape v United States (1960, CA9 Wash) 283 F2d 430 Cape v. U.S., 283 F.2d 430, 47 L.R.R.M. (BNA) 2016, 41 Lab.Cas. P 16,588 (9th Cir.(Wash.) Oct 06, 1960)

Placing the victim in fear of economic loss constitutes extortion. Case does not provide instruction of the elements of extortion.
Prosecution for two counts of extortion from agents of certain corporations engaged in interstate pipeline construction. The United States District Court for the Eastern District of Washington, Northern Division, A. Sherman Christenson, J., entered judgment on one count of extortion, and defendant appealed; The Court of Appeals, Koelsch, Circuit Judge, held that admission into evidence of a tape recording of a conversation between defendant and one of the persons from whom he allegedly extorted money, was not prejudicial error, even though portions of the recording were inaudible and unintelligible, in view of fact that many significant parts of the recording were intelligible, the thread, though thin in places, was never completely broken, and the inaudible portions could not be deemed so substantial as to render the whole untrustworthy. Affirmed. [4] Extortion and Threats 165 32

165 Extortion and Threats 165II Threats 165k32 k. Evidence. Most Cited Cases

(Formerly 377k7 Threats) Evidence sustained conviction for extortion. 18 U.S.C.A. 1951. *431 KOELSCH, Circuit Judge; This is an appeal by Woodrow W. Cape from a judgment of conviction under the Hobbs Anti-Racketeering Act, 18 U.S.C.A. 1951. The indictment was in two counts: **the first charged appellant with extorting $1,000 from A. J. Curtis and Ben Mapes, agents of certain corporations engaged in pipeline construction in interstate commerce; **the second charged him with extortion by attempting to obtain an automobile from A. J. Curtis; both counts alleged that appellant accomplished the extortion with consent of the victims * * * by wrongful use of actual and threatened force, violence, and fear * * *. The jury acquitted Cape of the second count, but found him guilty of the first; he was sentenced to one year imprisonment; We have jurisdiction under 28 U.S.C.A. 1291 and 1294. There are two primary grounds for reversal urged on this appeal: **(1) that the District Court erred by refusing to grant the appellant's timely motions for judgment of acquittal when the evidence was and is insufficient to support a verdict of guilty, and **(2) that the court committed prejudicial error by admitting in evidence a tape recording of a conversation between appellant and A. J. Curtis when portions of it were inaudible and unintelligible.FN1 The evidence adduced at the trial shows that appellant was a business agent and employee representative of Local 598, Plumbers and Steamfitters Labor Union (A.F.L.), at Pasco, Washington; he supplied skilled and unskilled laborers to various pipeline construction companies in the area and adjusted labor disputes over working conditions with particular employers. In February, 1956, the Curtis Construction Company through its owner, A. J. Curtis, obtained a contract with Pacific Northwest Pipeline Company to construct a pipeline distribution and connection system for natural gas, linking the cities of Pasco and Kennewick in the State of Washington with Pacific Northwest's interstate pipeline, then under construction, extending from New Mexico throughout the Northwest. Curtis also obtained separate construction contracts for other phases of the pipeline system in Washington as well as Idaho and Colorado; we are concerned here only with the contract in the Pasco-Kennewick area. To accomplish the pipeline construction, Curtis formed tow additional corporations, the C.B.C. Construction Company, Inc., and Cascade Constructors, Inc.; he transported equipment valued in excess of $300,000 from central offices in Casper, Wyoming to the State of Washington. Appellant, as business agent of Local 598, furnished Curtis with the employees required in the lineup and welders gang; their job was to lay and weld pipe after a right-of-way and ditch had been cleared. The heart of the government's case is centered upon the testimony of Curtis and O. F. Brandford, the superintendent in charge of the Pasco-Kennewick project. Curtis testified that he estimated the job would require ten men, five skilled and five unskilled, in the lineup and welders gang, that they would lay 2,000-3,000 feet of pipe per day, and that the project would be completed in 120 days. He further testified, however, that Cape required him to use sixteen men, all skilled, that the crew averaged only 500-700 feet per day, that the job took over six months to *432 complete, and that at one point the corporations were losing $2,500 per day. The total loss finally suffered was $150,000. The major factor, according to Curtis and Bradford, in causing the slow progress on the job was the inefficiency of the workers. Curtis testified that they just wouldn't work, and after approximately two weeks of construction, some of them were fired, but Cape informed Curtis that unless these men were rehired no one would work. Curtis discussed these problems several times with Cape. On one occasion, during the latter part of April, 1956, Curtis stated that he asked Cape what could be done to alleviate the problems he was having; Cape replied that if he received an automobile, Curtis would cease having troubles' and would be permitted to bring in some of his own specialists to complete the work on the project. Shortly afterward a meeting was arranged at Curtis; apartment, and at his suggestion, to further discuss the matter; Cape, Curtis and Bradford were present. Curtis had prepared for this meeting by concealing a small wire recording machine, capable fo being lodged on his person unnoticed, and proceeded to record the conversation

which ensued. Curtis testified, and his recollection is supported by Bradford's testimony, that he again asked Cape what could be done to halt the slow-ups' and other troubles on the job; Cape again replied that if Curtis bought him an automobile, a Ford, before the job was half-completed, the trouble would cease. Curtis and Bradford both testified that Cape had explained the troubles other contractors had had: sugar placed in the gas tanks of their vehicles, equipment found in the bottom of Columbia River, tractors blown up, and other machines simply that operating at all. Curtis testified that he agreed to buy the car for Cape because he was fearful of economic loss on the job and loss or damage to his equipment. Curtis also stated that he had another meeting with Cape at a restaurant called Frank's Bar and Grill in Pasco, Washington during the early part of July, 1956. The automobile was discussed again and Cape wanted something done about it; in answer to Curtis' inquiry regarding cost, Cape stated that he could purchase an automobile for $3,600. Curtis testified that he agreed to meet Cape at the Black Angus Motel at 4 P.M. on the same day and pay $800 of the total amount; he then obtained the money from his corporation by check and after cashing it, turned the money over to Cape in front of the Black Angus Motel; no one else was present. Curtis stated that after this payment the progress on the job improved somewhat and he was allowed to employ two or three of his own specialists at the Pasco-Kennewick job site. The next meeting, according to Curtis, occurred at the American Legion Club in Pasco where Curtis was eating dinner with Ben Mapes, an employee of the company. Cape approached their table and informed Curtis that he needed $200 by the next morning. Curtis stated that he was leaving town but instructed Mapes to obtain the money and give it to Cape. Mapes testified that he arranged to meet Cape at 11:30 A.M. the next morning at Frank's Bar and Grill; at 9:00 A.M. the next day he obtained a $200.00 check from the corporation's office man, Mr. Bieghle, cashed it, and handed the money to Cape at Frank's'. Curtis testified that he met Cape again after the job had been completed, sometime in the fall of 1957. Cape had phoned him in Ontario, Oregon, from Casper, Wyoming and stated that he wanted to return the $1,000,FN2 Curtis was then departing*433 for Casper by airplane; when he arrived, Cape was waiting at the airport with one Raymond Ridders, a pipefitter. Cape offered, and Curtis accepted, the money, but Curtis returned $200 to Cape in order to make the return trip home. Curtis at that time signed a statement prepared by Cape to the effect that Cape had not received any personal gain in their dealings. Cape testified in his own behalf: he denied causing trouble or making threats of any kind; he denied receiving any money from either Curtis or Mapes; he stated that he drank a considerable amount of liquor before and during the meeting in Curtis' apartment and could not remember much of the conversation; he did recall that Curtis had once offered to give him an automobile at Frank's Bar and Grill, and Bradford later mentioned the offer to him, but asserted that nothing further was said or done about it. There was other testimony on behalf of Cape by three employees of the company, who explained that there were no slowdowns' on the Pasco-Kennewick project and that the delays were due to striking rock and water mains, as well as the lack of a sufficient ditch to lay the pipeline. This testimony was controverted not only by Curtis and Bradford, but by William E. Hansen, City Manager of Kennewick, who testified that from his observation of the work in the Kennewick area there would be men standing around, and it looked like the whole job was featherbedded. [1] The appellant's first contention raises a question of the sufficiency of the above evidence, which is both direct and circumstantial. We must view this evidence in the light most favorable to the government, including the reasonable inferences to be drawn therefrom. Schino v. United States, 9 Cir., 1954, 209 F.2d 67. We are guided by the following rule: The test to be applied on motion for judgment of acquittal in such a case, however, is not whether in the trial court's opinion the evidence fails to exclude every hypothesis but that of guilt, but rather whether as a matter of law reasonable minds, as triers of the fact, must be in agreement that reasonable hypotheses other than guilt could be drawn from the evidence. * * * If reasonable minds could find that the evidence excludes every reasonable

hypothesis but that of guilt, the question is one of fact and must be submitted to the jury. Remmer v. United States, 9 Cir., 1953, 205 F.2d 277, 287; see also, Stoppelli v. United States, 9 Cir;, 1950, 183 F.2d 391. [2] We believe that from the evidence presented here reasonable minds could exclude every reasonable hypothesis but that of guilt. The evidence was largely testimonial and squarely in conflict; they jury could, as it eventually did, believe the story of extortion as unfolded by the testimony of Curtis and Bradford. That story, in essence, disclosed that appellant had caused Curtis considerable labro [labor] troubles in the early part of the construction; Cape clearly indicated that these troubles would end if he received an automobile and at the same time mentioned the destruction and damage to the equipment of other contractors who had come into the area. It could be reasonably inferred from this testimony that Cape threatened to use the same methods against Curtis if he did not receive the automobile. Thus, the fear of economic loss was not only real, but sufficiently compelling to require Curtis to comply with Cape's demands by payments totalling $1,000. [3][4] Since the lower court was correct in submitting the case to the jury, their decision is normally binding under the usual rule that the verdict is final if supported by substantial evidence. See *434 Elwert v. United States, 9 Cir., 1956, 231 F.2d 928; Stoppelli v; United States, supra. The basic facts recited above, coupled with the inherent credibility resolution by the jury against appellant in favor of Curtis and Bradford, Fully and substantially support the guilty verdict.FN3 Appellant nevertheless argues that the government has not sustained its burden of establishing extortion by consent of the victim * * * induced by wrongful use of actual or threatened force, violence, or fear * * *, as required by 18 U.S.C.A. 1951(b)(2). He maintains that there was no evidence of threatened force or violence on his part, nor a rational fear of economic loss on Curtis' part. He cites Curtis' testimony to the effect that the latter had no personal fear of appellant, but merely expressed a late and weak off-hand concern for his equipment. The answer to this argument is that the evidence presented sufficient facts from which it could reasonably be inferred that Cape actually threatened trouble and possible force or violence, and that as a result Curtis was placed in reasonable fear not only of loss or damage to $300,000 worth of equipment, but of continuing economic loss as well (he in fact lost $150,000). A reasonable fear of the latter type alone is clearly sufficient to support a conviction of extortion under the statute. See Bianchi v. United States, 8 Cir., 1955, 219 F.2d 182; Callanan v. United States, 8 Cir., 1955, 223 F.2d 171. We agree with Judge Medina's reasoning in a similar case, which is controlling here: * * * appellant's argument is merely a variant of contentions we hear so often in extortion cases to the effect that, unless the threat which induces fear in the victim is spelled out in words of one syllable and in plain terms of a threat, there is no case for the jury. But common sense must be used in this class of cases as well as others; If the jury believed (the employer's) testimony of what appellant said to him, it was certainly within their province to infer that appellant intended to give (the employer) the impression that he was faced with the practical certainty that appellant would picket the job site and cause work stoppage if (the employer) did not accede to his demands. When appellant said there would be no trouble on the job if (the employer) paid up, the jury had a right to infer that, if (the employer) did not pay up, there would be trouble * * *.' United States v. Palmiotti, 2 Cir., 1958, 254 F.2d 491, 495. Appellant's second contention, concerning the admission into evidence of the wire recording, is equally without merit. There were three such recordings offered in evidence by the government: **the first (Pl.Ex. No. 6) was admitted without objection; **the second (Pl.Ex. No. 7) was rejected as unaudible; the third (Pl.Ex. No. 8), and the one at issue, was admitted over appellant's objection. The conversation recorded was between Cape, Bradford and Curtis at the latter's apartment in April, 1956. A proper foundation was laid for its admission by showing that the machine was attached to a tape recorder and re-recorded for better sound projection. It was first played before court and counsel outside the presence of the jury: parts of the recording were found by the court to be inaudible while others were found to be clearly intelligible. The court admitted the recording for purposes of corroborating the testimony of Curtis and Bradford concerning the purported conversation as well as providing background information. Extensive cautionary instructions were twice given to the jury concerning the weight to be given the

recording because of its inaudible portions, once *435 prior to its initial playing during the trial, and again in the court's final instructions before the jury retired for its deliberation. [5] The admissibility of a recorded conversation is addressed to the sound discretion of the trial judge. Monroe v. United States, 1956, 98 U.S.App.D.C. 228, 234 F.2d 49. The appellant does not complain of the manner in which the recording was prepared and we find no error in respect to its authenticity or the foundation laid before it was presented to the jury. See, Brandow v. United States, 9 Cir., 1959, 268 F.2d 559. Appellant's chief objection is that the recording is inaudible and therefore inadmissible, but this has been succinctly rebutted in Monroe v. United States, supra, 234 F.2d at pages 54, 55: No all embracing rule on admissibility should flow from partial inaudibility or incompleteness. The Court of Appeals for the Third Circuit, in United States v. Schanerman, 150 F.2d 941, 944, had said that partial inaudibility is no more valid reason for excluding recorded conversations than the failure of a personal witness to overhear all of a conversation should exclude his testimony as to those parts he did hear. Unless the unintelligible portions are so substantial as to render the recording as a whole untrustworthy the recording is admissible * * *. See also, State v. Slater, 1950, 36 Wash.2d 357, 218 P,2d 329; Annotation, 58 A.L.R.2d 1024, 1037. [6] We have listened to the recording carefully; although some portions are unintelligible, many significant parts are not. The thread, though thin in places, is never completely broken. We cannot unhesitatingly say that the inaudible segments are so substantial as to render the whole untrustworthy or that the lower court abused its discretion in admitting it in evidence. The appellant relies on United States v. Schanerman, 3 Cir., 1945, 150 F.2d 941, where the appellate court affirmed the exclusion of transcribed notes which were prepared only after repeated playings of the record; he stresses the fact that the court reporter in this case was required to play the tape twelve times before an intelligible transcription could be effected and still he made eighteen entries of inaudible. Schanerman is distinguishable, however, because there the attempt was made to offer the transcribed notes in evidence, while here only the recording itself was offered. Moreover, the court in that case affirmed the admission of the recordings from which the notes were transcribed, stating, * * * the mere fact that certain portions of the mechanically recorded conversations were less audible than others did not call for exclusion of what the jurors personally heard from the playing of the records.' 150 F.2d at page. 944. It is also urged that the recording here was admitted as independent testimony of what had occurred in Curtis' apartment, and therefore the unintelligible portions require closer scrutiny than if the recording were admitted only for corroborative purposes, citing People v. Stephens, 1953, 117 Cal.App.2d 653, 256 P.2d 1033, where the court reversed a judgment of conviction because the only independent evidence of the purported conversation was the recording, and it was so defective that the portions which could be heard by the jurors were subject to different versions and varying interpretations. [7] This is not the situation presented here. It appears clear from the statements of the trial court to both counsel and jury that the recording was admitted for purposes of corroborating the testimony of Curtis and Bradford, who had previously testified from their own recollection regarding the conversation; appellant does not attack the validity of this purpose. See State v. Slater, 1950 36 Wash.2d 357, 218 P.2d 329; Annotation 58 A.L.R.2d 1024, 1045. But whether the recording is treated as independent or merely corroborative evidence, the test of admissibility is basically the same, and where, as here, it is clear that the *436 inaudible portions are not substantial and do not render the audible parts unintelligible, the recording is admissible for either purpose. Monroe v. United States, 1956, 98 U.S.App.D.C. 228, 234 F.2d 49; see also, People v. Jackson, 1954, 125 Cal.App.2d 776, 271 P.2d 196. [8] Finally, appellant urges that the jury verdict is inconsistent because he was acquitted of Count II involving the same basic acts alleged to constitute extortion in respect to the automobile as the acts in respect to the extortion of $1,000 in Count I, of which he was found guilty. We see no such inconsistency: the jury could have believed that appellant's basic demand for an automobile was converted into a demand for the money or the car, and thus the final, and only, extortion or attempted extortion was with respect to the $1,000. Also, it is clear that any

inconsistency would not be fatally defective because consistency in the verdict is not necessary. Each count in an indictment is regarded as if it was a separate indictment. * * * Dunn v. United States, 1932, 284 U.S, 390, 393, 52 S.Ct. 189, 190, 76 L.Ed. 356; Bryson v. United States, 9 Cir;, 1956, 238 F;2d 657. Affirmed. U.S. v. Marsh, 26 F.3d 1496, 39 Fed. R. Evid. Serv. 972 (9th Cir.(Cal.),Jun 27, 1994)

Elements of economic extortion are (1) threats of economic harm that is (2) made with the purpose of obtaining money from victim (3) that puts victim in reasonable fear of economic harm. 18 U.S.C. 1951 Evidence supported conviction for attempted economic extortion, defendant demanding money, threatened to call victims customers and employer, though he did not specify what he would say to those parties.
Defendant was convicted, in the United States District Court for the Northern District of California, Robert F. Peckham, J., of attempted economic extortion, and he appealed. The Court of Appeals, Canby, Circuit Judge, held that: (1) evidence supported conviction; (2) expert psychiatric testimony regarding victim was properly excluded; and (3) evidence did not support upward sentence departure. Affirmed in part, vacated in part and remanded. [1] Extortion and Threats 165 25.1

165 Extortion and Threats 165II Threats 165k25 Nature and Elements of Offenses 165k25.1 k. In General. Most Cited Cases Elements of economic extortion are **(1) threat of economic harm that is **(2) made with purpose of obtaining money from victim **(3) that puts victim in reasonable fear of economic harm. 18 U.S.C.A. 1951. [1] Extortion and Threats 165 25.1

165 Extortion and Threats 165II Threats 165k25 Nature and Elements of Offenses 165k25.1 k. In General. Most Cited Cases Elements of economic extortion are **(1) threat of economic harm that is **(2) made with purpose of obtaining money from victim **(3) that puts victim in reasonable fear of economic harm. 18 U.S.C.A. 1951. [2] Extortion and Threats 165 32

165 Extortion and Threats 165II Threats 165k32 k. Evidence. Most Cited Cases Evidence did not support conviction for economic extortion **absent showing that victim reasonably feared economic harm; though victim testified to his fear for his life, **he was not asked and did not testify that he feared economic harm. 18 U.S.C.A. 1951. [3] Extortion and Threats 165 25.1

165 Extortion and Threats 165II Threats 165k25 Nature and Elements of Offenses 165k25.1 k. In General. Most Cited Cases Although economic extortion charge requires evidence that victim possessed reasonable fear of economic harm, **victim's state of mind is not important to charge of attempted extortion; **all that is required for latter charge is that defendant intended to instill fear in victim. 18 U.S.C.A. 1951. [4] Extortion and Threats 165 25.1

165 Extortion and Threats 165II Threats 165k25 Nature and Elements of Offenses 165k25.1 k. In General. Most Cited Cases Evidence supported conviction for **attempted economic extortion; defendant, demanding money, threatened to call victim's customers and employer, though he did not specify what he would say to those parties. 18 U.S.C.A. 1951. [8] Criminal Law 110 474.4(1)

110 Criminal Law 110XVII Evidence 110XVII(R) Opinion Evidence 110k468 Subjects of Expert Testimony 110k474.4 Character Traits or Profiles; Syndromes 110k474.4(1) k. In General. Most Cited Cases Exclusion of expert evidence that attempted extortion victim had dependent personality disorder was not abuse of discretion; victim's reason for submitting to defendant's threats, i.e., his state of mind, was irrelevant, and nature of victim's relationship with defendant was before jury. Fed.Rules Evid.Rule 702, 28 U.S.C.A. Appeal from the United States District Court for the Northern District of California. *1498 Before: CANBY and NOONAN, Circuit Judges, HUFF FN*, District Judge. FN* The Honorable Marilyn L. Huff, United States District Judge for the Southern District of California, sitting by designation. Opinion by Judge CANBY; Concurrence and Dissent by Judge NOONAN. CANBY, Circuit Judge: Following a jury trial, David Peter Marsh was convicted on one count of extortion or attempted extortion and sentenced to five years in prison. Marsh now appeals his conviction, contending that the evidence was insufficient to support the conviction for extortion by threat of economic harm and that the district court erred in instructing the jury and in preventing him from introducing expert testimony regarding the complaining witness's dependent personality disorder. Marsh also appeals his sentence, arguing that the district court erred in departing upward from the guidelines. We affirm Marsh's conviction. We vacate the sentence, however, and remand for resentencing. BACKGROUND

Marsh was indicted for attempting to extort and for extorting money from a San Francisco businessman, whose privacy we will protect by referring to him only as Doe. The extortionate threats were alleged to have been made in the course of a series of telephone calls made by Marsh to Doe, and recorded on Doe's answering machine. The indictment contained three counts: **Count I, alleging threats of economic harm in telephone calls made on September 4, 1991; **Count II, alleging threats to kill in calls of October 7, 1991; and **Count III, alleging threats to kill in calls of October 9, 1991. The jury convicted Marsh on Count I, but acquitted him on Counts II and III. This appeal consequently focuses on the calls of September 4, 1991. Because the meaning of those calls is disputed, and because the jury was entitled to interpret the meaning of those calls in light of all the evidence, we set forth excerpts of several of the other calls as well. We also relate the history of the relationship between Marsh and Doe. Marsh and Doe first met more than 25 years ago when Doe responded to Marsh's newspaper advertisement for male models. On more than one occasion thereafter, Doe engaged in a sexual relationship in which he paid Marsh for prostitution. Eventually, a friendship developed. Doe, who lived in San Francisco, and Marsh, in Los Angeles, saw each other three or four times a year. Although the relationship remained sexual, Marsh no longer required payment for sex. Marsh often asked Doe for money and Doe was glad to help him out. Doe's financial support of Marsh grew to be substantial and Marsh eventually became financially dependent on him. For a short time, Doe employed Marsh in his business. However, Doe kept his relationship with Marsh a secret. Doe operated a business selling a line of specialty items out of his residence in San Francisco. His primary customers were hotels, including the Fairmont and the St. Francis. In the spring of 1991, Doe's sales began to decline and he was forced to accept a part-time job with a fraternal organization, the Scottish Rite, to supplement his income. He was fired a short time later, allegedly because of Marsh's numerous calls to the organization's office. During 1991, Doe had borrowed over $20,000 from his family, apparently to continue to provide money to Marsh. On September 1, 1991, Doe, now an elderly man, attempted suicide and was hospitalized for 10 days. After the suicide attempt, family members discovered why Doe cut his wrists. Said Doe, I was all out of money. Eventually, concerned family members learned about his relationship with Marsh. Suspecting that Marsh was criminally blackmailing Doe, they contacted the F.B.I. When criminal proceedings began, the two men had not seen one another for about four years. However, they had maintained a constant relationship by telephone. Typically, Marsh called Doe collect and requested Doe to call him back at one of several pay phones *1499 in the Los Angeles area. During the ensuing conversations, Marsh usually requested Doe to wire him money via Western Union. The pattern of Doe's payments to Marsh was peculiar and erratic. On a single day in April of 1991, for example, Doe sent Marsh nine separate payments via Western Union in amounts ranging from $35 to $145. When Doe's ability to pay began to decline, the tenor and frequency of Marsh's phone calls began to change. The messages Marsh left on Doe's answering machine became violent and threatening. After his family members contacted the F.B.I., federal agents instructed Doe to save the telephone messages that Marsh had been leaving on Doe's answering machine. Marsh left the first of the recorded messages on September 4, 1991, the date on which this appeal focuses. In the first message, Marsh said, Please have a hundred dollars down here in 15 minutes. Or I'll be ... on my way to San Francisco. A few minutes later he called again: Yeah, I just found out you might be in the country for the week. Well, that's fine, [victim's name]. I'll break into your place. But, uh, so don't worry about that. I'll, I'll, I'll find a way in. Now second of all, um, I'll be calling the Thurman [an apparent mistranscription of Fairmont, one of Doe's customers] Hotel ... and, uh, St. Francis, and I'll find a location (unintelligible), um, if you don't want to help me, at a time that ... you put me in this fucking spot, you've put me in this miserable motherfucking spot, Mister. So I'm gonna ... put you in the same spot back.... I've just got done calling the Scottish (unintelligible) and leaving a message. Uh, Steve (unintelligible) ... Marsh and I'm going to call the Thurman Hotel. And then I'm gonna call ... (unintelligible) and I'm gonna call Ev ... [end of message]. In the third message, Marsh apologized but asked Doe again to send the money he had requested earlier. **These three calls formed the basis for Marsh's conviction on Count I of the indictment, extortion and attempted

extortion by wrongfully threatening economic loss in violation of 18 U.S.C. 1951. On October 7, 1991, Marsh left eight messages on Doe's machine. In the first, at approximately 1:00 a.m., Marsh asked for $100 and said that Doe was the most caring and kindest person that I've ever met in my life. Marsh called back again several hours later saying that the money had not arrived and that he was being chewed out, apparently by his landlord for not having the rent money. Marsh's tone was angry and he threatened to continue calling every few minutes or even seconds. Ten minutes later, Marsh called again, threatening in course terms to clog up Doe's telephone line. In the next message, an hour-and-a-half later, Marsh hurled numerous epithets at Doe and concluded by saying Just get ready to die,.... I'm going to kill ya. Minutes later, Marsh called again and said You don't deserve to live. I'm comin to San Francisco. When I get up there you're gonna die. And so on. An hour later Marsh called and resorted again to pleading for the money. Minutes later he called back yet again begging and pleading for money. In the final message five-and-a-half hours later, Marsh insulted Doe's mother and his religion. He also claimed that he had a knife with which he planned to stab a woman at a real estate agency. These October 7 calls formed the basis for Count II of the indictment, of which Marsh was acquitted. Count II alleged extortion and attempted extortion through the use of threatened force, violence or fear, as distinguished from the economic threat alleged in Count I. Count III essentially mirrored Count II, except that it was supported by four messages Marsh left on October 9, 1991. In the first of these October 9 messages, Marsh said that he was desperate for money and told Doe to call him back right away. If Doe did not comply, Marsh threatened: I might call the Triple A up right now. I'm gonna call the Fairmont Hotel, the Shriner's Hospital. I'm gonna call, I'm gonna call every single mother fucker that I know and every person you do business with. I will call every account that you have. *1500 Triple A was one of Doe's suppliers. In the next message, three minutes later, Marsh called Doe a pig and his mother a liar. In another message, Marsh stated, I'm going to kill you.... I'm going to kill you with my own bare hands. I'm comin' to San Francisco. He then added expletives and additional threats to kill. In the final message, Marsh said he was being threatened with a knife and implored Doe to call. Marsh was soon arrested and indicted on the three counts of extortion or attempted extortion. Shortly after trial was under way, the defense filed a motion seeking permission to inspect Doe's psychiatric records and to force Doe to submit to a psychiatric examination. Marsh argued that this evidence would support his defense that Doe gave Marsh money not because of the threats, but because of an independent motive; Marsh alleged that Doe had a dependent personality disorder that caused him to give Marsh the money. The district court denied the motion because it lacked foundation. Later, the defense proffered expert testimony regarding Doe's psychiatric condition. The expert, who had been observing Doe's testimony during trial and had read the trial transcripts, was prepared to testify that Doe might possess a dependent personality disorder. The district court denied this motion as well. At the end of the trial, the government submitted jury instructions drawn from the Ninth Circuit jury instruction manual and a standard treatise. The defense requested an additional jury instruction to clarify that the government must prove that Doe feared economic loss, not simply a fear of loss of reputation. The district court refused to give the modified instruction. However, the defense made no objection to the instructions that were given. After deliberating for approximately three hours, the jury sought additional guidance on whether the harm required under Counts II and III might include exposure or defamation. According to the defense, the jury's uncertainty indicated a misunderstanding of the distinction between fear of exposure and fear of economic loss as those terms applied to Count I. The district court, however, refused to reinstruct the jury. When the jury returned, it acquitted Marsh of Counts II and III (threats to life) and convicted him on Count I, which alleged threats of economic harm on September 4.

At sentencing, the district court calculated the base offense for Marsh's conviction at 11. Citing numerous factors not adequately considered in the Sentencing Guidelines, the judge then departed sharply upward, imposing a total sentence of five years. Marsh now appeals both the conviction and the sentence. DISCUSSION I. Sufficiency of the evidence. A. Standard of review. We review the sufficiency of the evidence under the Jackson standard. The relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979). [1][2] The elements of economic extortion are **(1) a threat of economic harm that is **(2) made with the purpose of obtaining money from the victim **(3) that puts the victim in reasonable fear of economic harm. United States v. Greger, 716 F.2d 1275, 1278 (9th Cir.1983), cert. denied, 465 U.S. 1007, 104 S.Ct. 1002, 79 L.Ed.2d 234 (1984). Marsh first argues that the evidence is insufficient to support a conviction for extortion under Count I because the evidence failed to establish that Doe possessed a reasonable fear of economic harm. We agree that the evidence is insufficient to establish a reasonable fear of economic harm based on the September messages; although Doe freely testified to fear for his life, **he simply was not asked whether he feared economic harm. **Nevertheless, Count I also alleged attempted extortion, and the jury was instructed on its elements. [3] An extortion conviction requires evidence that Doe possessed a reasonable fear *1501 of economic harm. **For attempted extortion, on the other hand, **the victim's state of mind is not important. **What is important is that the defendant attempted to instill fear in the victim. United States v. Ward, 914 F.2d 1340, 1347 (9th Cir.1990). Consequently, we must affirm Marsh's conviction of attempted extortion if the facts are sufficient that a rational jury could find that Marsh had the intent to extort money and that he took a substantial step to accomplish this end . See United States v. Runco, 873 F.2d 1230, 1232 (9th Cir.1989). In interpreting threatening statements, we give considerable deference to juries, especially if the speaker's words are ambiguous. United States v. Pascucci, 943 F.2d 1032, 1036-37, n. 3 (9th Cir.1991) (Especially when ambiguous, the existence of a threat depends on the circumstances, which the jury interprets). When considering the meaning of Marsh's words on September 4, the jury was entitled to take into account all of the evidence properly admitted. [4] On September 4, Marsh left a message, telling Doe to have a hundred dollars down here in 15 minutes. Or I'll be ... on my way to San Francisco. Minutes later, he called again, saying (among other things), I'll be calling the Thurman [an apparent mistranscription of Fairmont, one of R's customers] Hotel ... and, uh, St. Francis ... you put me in this fucking spot, you've put me in this miserable motherfucking spot, Mister. So I'm gonna ... put you in the same spot back.... I've just got done calling the Scottish (unintelligible) and leaving a message. A reasonable interpretation of these statements is that Marsh was threatening economic harm when he said he would call Doe's customers and his employer. It can scarcely be doubted that the purpose of the calls was to obtain money from Doe. Marsh's statements demonstrate that he was facing a difficult economic situation. He threatened to put Doe in the same spot back. A rational jury could have inferred intent to instill a fear of economic harm from these words. The fact that Marsh did not specify what he would say to Doe's business customers does not necessarily militate against a finding that he attempted to instill a fear of economic loss; the jury could easily draw from Marsh's many communications that he was a loose cannon and might say almost anything damaging to Doe. Although the jury, if it had chosen to do so, might reasonably have inferred that Marsh attempted to instill only a fear of embarrassment, the

jury was equally entitled to infer as it did that Marsh intended to instill a fear of economic harm, especially in light of Marsh's threat to put Doe in the same spot back. This fear would have been reasonable. After all, Marsh targeted Doe's customers, not his friends. The jury was entitled also to consider Marsh's October statements to determine the meaning of the September 4 conversation. In the midst of a scatological diatribe in one of the messages on October 9, Marsh said, I might call Triple A up right now. I'm going to call the Fairmont Hotel, the Shriner's Hospital. I'm gonna call every single mother fucker that I know and every person that you do business with. I will call every account that you have . These statements certainly sound like an economic threat. The jury could rationally have determined that Marsh's similar statements in September reflected an intent to instill fear of economic harm in Doe. The only benign interpretations of Marsh's statements are that he somehow did not intend the natural meaning of his words or that he somehow abandoned his attempt when he followed some of the threatening calls with apologetic ones. Doe's long relationship with Marsh could have supported an inference that Marsh's economic threats were not intended to be taken seriously, but the jury refused to make that inference. The jury was entitled to interpret the circumstances and the meaning of Marsh's words and whether the relationship became abusive toward the end. And although voluntary abandonment is a valid defense to an extortion attempt, **Marsh failed to present such a defense to the jury. In addition to providing ample evidence of Marsh's intent, the phone calls are unequivocal and substantial steps in furtherance of *1502 the extortion attempt. Undisputed evidence supports the jury's conclusion that Marsh attempted to obtain money from Doe by instilling economic fear in him. U.S. v. Greger, 716 F.2d 1275, 83-2 USTC P 9654 (9th Cir.(Nev.),Sep 26, 1983) Defendant was convicted in the United States District Court for the District of Nevada, Edward C. Reed, Jr., J., of extortion and income tax charges. The Court of Appeals, John W. Peck, Circuit Judge, sitting by designation, held that: (1) statute prohibiting the willful aiding and abetting of preparation of false income tax returns was intended breach of contract such as defendant's, and (2) evidence was sufficient to sustain finding that defendant was guilty of extortion. Affirmed. [4] Extortion and Threats 165 32

165 Extortion and Threats 165II Threats 165k32 k. Evidence. Most Cited Cases Evidence that defendant, who was employed as food and beverage director for the owner of three hotels and gambling casinos demanded that each of the five purveyors of food and beverages make periodic payments to him in order to retain their contracts, that he had the exclusive power to terminate the contract, and that each of the purveyors would suffer severe adverse impact if it lost its contract was sufficient to sustain defendant's Hobbs Act extortion conviction. 18 U.S.C.A. 1951(b)(2). Appeal from the United States District Court for the District of Nevada. Before BROWNING, PECK FN*, and ALARCON, Circuit Judges. FN* Honorable John W. Peck, Senior United States Circuit Judge for the Sixth Circuit, sitting by designation. JOHN W. PECK, Circuit Judge:

Appellant Victor Greger was convicted of falsely preparing and assisting in the preparation of federal income tax returns and of extortion in violation of the Hobbs Act, 18 U.S.C. 1951 et seq. The indictment charged Greger with willfully and knowingly underreporting his income in federal tax returns covering 1974, 1975, and 1976. Counts I and III of an eight-count indictment charged Greger with falsely preparing his 1974 and 1976 returns in violation of 26 U.S.C. 7206(1). Count II charged Greger with knowingly supplying false information used in the preparation of his 1975 return.FN1 The remaining five counts charged Greger with extortion resulting from his actions as food and beverage director for the Argent Corporation, owner of three fashionable Las Vegas hotels and casinos. FN1. The difference in charges stems from the fact that Greger signed his 1974 and 1976 returns, but failed to subscribe his 1975 return. The 1975 return was signed by his accountant as preparer, with no knowledge of the information's inaccuracy. Greger appeals the judgment of conviction under Count II, involving his assistance in the preparation of the 1975 tax return, and the judgment of conviction under each of the five extortion charges. After careful review, we affirm. In 1973 Greger became food and beverage director for the Argent Corporation, owner and operator of the Stardust, Fremont, and Hacienda Hotels and Casinos. Greger was in charge of selecting and contracting with various suppliers to provide the Stardust Hotel with food and beverage products. Between 1973 and 1976 he contracted*1277 with a number of purveyors. The agreements were frequently accompanied by questionable dealings, however. Before agreeing to purchase foodstuffs and beverages from five purveyors, enumerated at trial, Greger demanded that certain sums be paid to him. Specifically, before agreeing to contract with Schulman Meats and Provisions, Incorporated, Best Sausage Company and Holiday Meats and Provision, he demanded that a percentage of the sale price be paid directly to him. Highland Dairy Company was told to rebate 10% of its sale price to do business with him. Lux Seafoods, Incorporated was required to pay 2% to 3% of its gross sale price as well as various other sums. Each purveyor at first hesitated, but then reluctantly agreed to such terms. Payments were generally made monthly in cash or by specially directed check. Each purveyor was continually aware that failure to make a payment would most likely result in the termination of the lucrative contract with Argent Corporation and that Greger had exclusive power to terminate at any time. Each purveyor testified at trial that the termination of the Argent Corporation account would substantially injure its business. After a seven-day jury trial Greger was found guilty on all eight counts of the indictment. The district judge sentenced Greger to concurrent terms of eighteen months imprisonment and a fine of $3,000 for each tax conviction and to concurrent terms of four years imprisonment and a fine of $4,000 for each Hobbs Act conviction. The two sentences are to run consecutively. On appeal, though the question was not raised at trial, Greger initially argues his conviction for falsely assisting in the preparation of his 1975 tax return should be reversed since 26 U.S.C. 7206(2) does not proscribe such conduct. Greger urges that since this statute is identical in scope to the traditional criminal aider or abettor provision of 18 U.S.C. 2, it must be similarly construed. Since the only other person involved in the preparation of the return, his accountant, was unaware that information supplied by Greger was false, Greger argues that he could not be convicted of aiding or abetting absent some proof of a principal actor. Greger contends that even though the matter was not raised at trial this court should consider the question plain error and reverse his conviction. [1] The rule is well settled that a reviewing court will not generally consider a matter not first raised in the trial court. United States v. Larson, 507 F.2d 385, 387 (9th Cir.1974). Review is possible, however, even absent an objection at trial in the exceptional case where it would appear necessary to prevent a miscarriage of justice or to preserve the integrity and reputation of the judicial process. United States v. Segna, 555 F.2d 226, 231 (9th Cir.1977); Larson, supra; Marshall v. United States, 409 F.2d 925, 927 (9th Cir.1969). In this case we perceive no such exceptional situation. [2][3] The language of 7206(2) is plainly broader in scope than the traditional aider and abettor statute, 18 U.S.C. 2.FN2 It was clearly intended to encompass such cases as the one presented here. See United States v. Wolfson, 573 F.2d 216 (5th Cir.1978) (where donor of yachts to university falsely and willfully inflates their value

in statements to university's tax preparer, with knowledge that charitable deduction will be taken, donor subject to prosecution *1278 under 7206(2)); United States v. Crum, 529 F.2d 1380, 1382 (9th Cir.1976) (Section 7206(2) applies to one who supplies false information which he knows will be included in the tax return even if he is not the preparer of a return or the taxpayer); Strangway v. United States, 312 F.2d 283 (9th Cir.), cert. denied, 373 U.S. 903, 83 S.Ct. 1291, 10 L.Ed.2d 199 (1963); United States v. Siegel, 472 F.Supp. 440, 444 (N.D.Ill.1979) (even where indictment does not name taxpayer or preparer as co-conspirators, defendant may be convicted under 7206(2) for supplying false information which he knows will be included in tax return). FN3 There is therefore no occasion to consider the application of the plain error rule to this case. FN2. Section 7206(2) provides in pertinent part: Any person who.... (2) Aid or assistance. Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document ... .... shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 3 years, or both, together with the costs of prosecution. FN3. The statement in Cosgrove v. United States, 224 F.2d 146, 151 (9th Cir.1954), that under 26 U.S.C. 3793(b), a predecessor of 7206(2), the person who is aided [other than the taxpayer] must concur in the falsity or fraud, just as every conspirator must share in the unlawful intent is dictum which we need not and do not follow. Cosgrove held that acquittal of a conspiracy charge supported a defense of res judicata by a defendant who was later tried for aiding and assisting his alleged co-conspirator in the same way to further the same scheme as the government had sought but failed to prove in the earlier conspiracy trial. The court found that as the issues were actually framed in both cases, and tried in the conspiracy case, existence of the alleged agreement between the two defendants was central to both charges, and the nonexistence of such an agreement therefore was necessarily adjudicated in the conspiracy trial. The court held that under the authority of Sealfon v. United States, 332 U.S. 575, 68 S.Ct. 237, 92 L.Ed. 180 (1948) , the government was barred from attempting to prove the existence of the same agreement in a second trial charging aiding and assisting. 224 F.2d at 153-55. Sealfon and Cosgrove both rest on the basic res judicata principle that resolution of an issue in a first trial-the lack of an illegal agreement-precludes the consideration of that identical issue in a second trial independent of the overall similarity in the offenses charged at the two trials. Sealfon, 332 U.S. at 578, 68 S.Ct. at 239; Cosgrove, 224 F.2d at 150. The Cosgrove court's remarks that a sharing of criminal purpose by two or more persons was an essential element of the offense under both statutes was obviously unnecessary to the holding. Greger contends that the evidence presented at trial was insufficient to show extortion for purposes of the Hobbs Act. Since each purveyor agreed to make the payments to him voluntarily in order to secure the Argent Corporation accounts, Greger argues that such payments constituted at most bribes, not extortion. We disagree. [4] The Hobbs Act defines extortion as the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. 18 U.S.C. 1951(b) (2). Courts interpreting this language have focused on the intent of the defendant to induce payment through the use of threats or the exploitation of fears in his victim, and the reasonable state of mind of the victim based on his words, actions, and perceptions. United States v. French, 628 F.2d 1069 (8th Cir.), cert. denied, 449 U.S. 956, 101 S.Ct.

364, 66 L.Ed.2d 221 (1980); United States v. Duhon, 565 F.2d 345, 351 (5th Cir.), cert. denied, 435 U.S. 952, 98 S.Ct. 1580, 55 L.Ed.2d 802 (1978); United States v. Brecht, 540 F.2d 45 (2d Cir.1976), cert. denied, 429 U.S. 1123, 97 S.Ct. 1160, 51 L.Ed.2d 573 (1977). Fear in this context has been held to include fear of economic loss. French, supra at 1075; Duhon, supra; United States v. Addonizio, 451 F.2d 49, 59 (3d Cir.), cert. denied, 405 U.S. 936, 92 S.Ct. 949, 30 L.Ed.2d 812 (1972); United States v. Furey, 491 F.Supp. 1048, 1062-63 (E.D.Pa.), aff'd, 636 F.2d 1211 (3d Cir.1980), cert. denied, 451 U.S. 913, 101 S.Ct. 1987, 68 L.Ed.2d 304 (1981). Viewing the evidence in a light most favorable to the government, the jury could reasonably have found extortion. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942); United States v. Rodriguez, 546 F.2d 302, 306 (9th Cir.1976). Greger, during negotiations and throughout the period of the contract, demanded that each of the five purveyors of foodstuffs and beverages make periodic payments to him. He was obviously aware that the Argent Corporation account was lucrative and would be anxiously sought. More importantly, once acquired, he had the *1279 exclusive power to terminate each of the five contracts, which he knew would have an inescapably adverse impact. Clearly there was sufficient evidence for the jury to conclude reasonably that Greger intended to induce payments from each of the five purveyors enumerated in the indictment, through threats or through fear of economic loss. We correlatively hold there was sufficient evidence to show each purveyor agreed to make payments, and continued to do so during the term of the contract, due to fear of economic loss if they stopped payments to Greger. Each purveyor testified that serious damage would occur to his business if the Argent Corporation contract was lost, and that Greger, they believed, had the authority to terminate their contract. Given this evidence, the jury could find that payments were made involuntarily as a result of the fear that not to do so could cause Greger to terminate their contract, substantially injuring their business. United States v. Margiotta, 688 F.2d 108, 133 (2d Cir.1982), cert. denied, 461 U.S. 913, 103 S.Ct. 1891, 77 L.Ed.2d 282 (1983); Brecht, supra; Furey, supra at 1061-62. U.S. v. Ward, 914 F.2d 1340 (9th Cir.(Cal.),Sep 19, 1990)

Intent and inducement [at p. 1346, Inducement can be in the form of a

demand, or it can manifest itself in a more subtle form, such as custom or expectation.] are essential elements of the offense of extortion

defined in 18 U.S.C. 1951 (b) but are not elements of the offense of attempted extortion.
Defendant was convicted in the United States District Court for the Northern District of California, John P. Vukasin, Jr., J., of **attempted extortion and he appealed. The Court of Appeals, Kelleher, Senior District Judge, sitting by designation, held that: (1) any inadequacies in instructions on mens rea and inducement were not plain error; (2) evidence was sufficient to sustain the conviction; but (3) court did not adequately set forth reasons for upward departure. Affirmed in part and remanded for resentencing. [3] Criminal Law 110 1038.1(2) 110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1038 Instructions 110k1038.1 Objections in General 110k1038.1(2) k. Plain or fundamental error. Most Cited Cases When defendant fails to object to jury instructions at trial, court reviews instructions under plain error standard. [4] Criminal Law 110 1030(1)

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1030 Necessity of Objections in General 110k1030(1) k. In general. Most Cited Cases Reversal of criminal conviction on basis of plain error is exceptional remedy, which court should invoke only when it appears necessary to prevent miscarriage of justice or to preserve integrity and reputation of judicial process. [5] Criminal Law 110 1038.1(2)

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1038 Instructions 110k1038.1 Objections in General 110k1038.1(2) k. Plain or fundamental error. Most Cited Cases Availability of a better instruction is not a ground for reversal on claim of plain error in court's instructions. Fed.Rules Cr.Proc.Rule 30, 18 U.S.C.A. [6] Criminal Law 110 1038.1(4)

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1038 Instructions 110k1038.1 Objections in General 110k1038.1(3) Particular Instructions 110k1038.1(4) k. Elements of offense and defenses. Most Cited Cases Extortion and Threats 165 16

165 Extortion and Threats 165I Official Extortion 165k16 k. Trial. Most Cited Cases Failure to give mens rea instruction in Hobbs Act extortion case is plain error. 18 U.S.C.A. 1951; Fed.Rules Cr.Proc.Rule 30, 18 U.S.C.A. [7] Criminal Law 110 1038.1(4)

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1038 Instructions 110k1038.1 Objections in General 110k1038.1(3) Particular Instructions 110k1038.1(4) k. Elements of offense and defenses. Most Cited Cases

Failure to give mens rea instruction in Hobbs Act **attempted extortion case was not plain error where the jury was instructed that defendant's culpable intent had to be that of instilling fear in the victim and that the defendant had to have acted deliberately. 18 U.S.C.A. 1951; Fed.Rules Cr.Proc.Rule 30, 18 U.S.C.A. [8] Criminal Law 110 44

110 Criminal Law 110III Attempts 110k44 k. In general. Most Cited Cases **Crime of attempt consists of culpable intent and conduct constituting a substantial step toward commission of the crime that strongly corroborates that intent. [9] Extortion and Threats 165 7

165 Extortion and Threats 165I Official Extortion 165k3 Elements of Offenses 165k7 k. Duress or exaction. Most Cited Cases Inducement required for Hobbs Act extortion offense can be in the form of a demand, or can manifest itself in a more subtle form, such as a custom or expectation. 18 U.S.C.A. 1951. [10] Extortion and Threats 165 16

165 Extortion and Threats 165I Official Extortion 165k16 k. Trial. Most Cited Cases District court is not required to use the word inducement in its instructions in a Hobbs Act extortion prosecution. 18 U.S.C.A. 1951. [11] Extortion and Threats 165 15

165 Extortion and Threats 165I Official Extortion 165k15 k. Evidence. Most Cited Cases Instruction that the definition of the crime of extortion specifically states that defendant must induce the victim to turn over his property by actual or threatened force or fear was adequate with respect to the element of inducement, in prosecution of person charged with falsely representing himself as government official for attempted extortion. 18 U.S.C.A. 1951. [12] Criminal Law 110 1044.1(7)

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1044 Motion Presenting Objection 110k1044.1 In General; Necessity of Motion 110k1044.1(7) k. Sufficiency of evidence. Most Cited Cases In order to preserve for appeal claim that evidence is insufficient, defendant must move for judgment of

acquittal during the trial. Fed.Rules Cr.Proc.Rule 29(a), 18 U.S.C.A. [13] Criminal Law 110 1044.1(7)

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1044 Motion Presenting Objection 110k1044.1 In General; Necessity of Motion 110k1044.1(7) k. Sufficiency of evidence. Most Cited Cases Defendant who did not move for judgment of acquittal after Government rested its case-in-chief, after the defense rested, or after the Government's rebuttal case waived his right to challenge the sufficiency of the evidence on appeal. Fed.Rules Cr.Proc.Rule 29(a), 18 U.S.C.A. [14] Extortion and Threats 165 7

165 Extortion and Threats 165I Official Extortion 165k3 Elements of Offenses 165k7 k. Duress or exaction. Most Cited Cases Fact that the victim was aware, at least before he handed defendant a check, the defendant was not an undercover agent investigating the victim did not preclude conviction for attempted extortion on theory that the victim was not in fear at that time. 18 U.S.C.A. 1951(b)(2). [15] Extortion and Threats 165 7

165 Extortion and Threats 165I Official Extortion 165k3 Elements of Offenses 165k7 k. Duress or exaction. Most Cited Cases Evidence that defendant pretended to be an undercover agent for Department of Transportation who could cause victim substantial financial harm if victim did not make requested payment to defendant was sufficient to show an attempt to instill fear in the victim and thus to sustain conviction for attempted extortion under the Hobbs Act. 18 U.S.C.A. 1951(b)(2). Appeal from the United States District Court for the Northern District of California. Before CHAMBERS and FLETCHER, Circuit Judges, and KELLEHER,FN1 District Judge. FN1. The Honorable Robert J. Kelleher, Senior United States District Judge for the Central District of California, sitting by designation. KELLEHER, Senior District Judge: Jimmie L. Ward appeals from his judgment of conviction and from his sentence of sixty months in custody under the Sentencing Guidelines. A jury found Ward guilty on three counts, and a judgment and commitment order was filed on March 29, 1989. On appeal, Ward raises three issues. First, he argues that the district court gave erroneous jury instructions. **Second, he challenges the sufficiency of the evidence to sustain his convictions on the extortion charges. Third, he maintains that the district court erred in its upward departure from the Sentencing Guidelines. We affirm the convictions, but remand to the district court for resentencing.

*1343 FACTUAL AND PROCEDURAL HISTORY On September 9, 1988, a federal grand jury returned an indictment charging Ward with three offenses. Count One charged Ward with falsely representing himself to be an officer of the United States, and under pretense of that office, knowingly attempting an act of extortion. Count Two charged Ward with demanding money by falsely representing himself to be an officer of the United States. Count Three charged the defendant with extortion and **attempted extortion affecting interstate commerce. The victim of these crimes, Vincent Bagala, was the owner of Bagala Transportation, a trucking company that was engaged in interstate commerce. Bagala hired Ward as a driver on July 27, 1988. On August 24, 1988, Bagala Transportation employee John Henricksen received a telephone call from an anonymous caller. The caller asked Henricksen if Jimmie Ward was working for Bagala Transportation. Henricksen responded in the affirmative. The caller inquired whether Henricksen knew that Ward was an undercover agent working for the Department of Transportation. The caller then stated that he (the caller) had been working with Ward in a company which had been busted by Ward for over half a million dollars for logbook violations. Henricksen immediately relayed this conversation to Bagala. Shortly thereafter, the defendant telephoned Bagala. Bagala asked Ward if he was an undercover agent for the Department of Transportation; Ward replied in the affirmative. Ward then told Bagala that Bagala Transportation was in violation of several Department of Transportation regulations. After this conversation between Ward and Bagala, Bagala checked Ward's employment file and found that it was lacking in certain information. At that point, Bagala became scared and started to panic. Bagala contacted someone at the Department of Transportation, who informed him that the Department did not plant undercover agents at trucking companies to discover regulation violations and that Jimmie Ward was not employed by the Department of Transportation or the government.FN2 FN2. The defendant stipulated at trial that he had never been employed by the Department of Transportation. On this same day, Bagala met in his office with Ward face to face. During this meeting, Ward told Bagala that he was in violation of certain regulations, and the fine for each such violation was $10,000. Ward said that he had the authority to make it as easy on [Bagala] or as bad on [Bagala] as he wanted to make it. Before leaving, Ward inquired of Bagala his ability to pay the fines. Bagala responded that it probably would render him bankrupt. On August 25, 1988, Bagala was contacted by Bryant Watkins of the FBI. FN3 On August 26, 1988, Ward and Bagala spoke over the telephone. This conversation was recorded by the FBI. During this conversation, Ward continued to represent himself as an undercover agent, and he arranged to meet with Bagala later that day. FN3. The Department of Transportation contacted the FBI. Ward came to Bagala's office at around 3:00 p.m. that day. During this meeting, which the FBI taped, Ward told Bagala that he was facing about $60,000 in fines, but that he (Ward) would give Bagala a clean slate in exchange for $5,000. Bagala gave Ward a check for $5,000. As Ward was leaving the office, Ward turned to Bagala and stated: My word is gold and like I say, ya know, if it goes any farther than this office we'd both wind up in the federal penitentiary. FBI Agent Watkins arrested Ward after he left Bagala's office. Ward subsequently was indicted. Ward pleaded not guilty, and maintained his innocence throughout the trial. On January 18, 1989, the jury returned a verdict of guilty on all three counts. The district court imposed a sentence of sixty months in custody, followed by five years of supervised conditional release. *1344 DISCUSSION A. Jury Instructions Ward argues that the district court's instructions to the jury on the extortion counts were erroneous for two

reasons. First, the district court failed to instruct the jury on the requisite state of mind. Second, the district court failed to instruct the jury on the inducement element of the crime of extortion. For each of these reasons, the appellant contends that his convictions on Counts One and Three must be reversed. [1][2] The Federal Rules of Criminal Procedure require a party to object to jury instructions before the jury retires to deliberate its verdict. No party may assign as error any portion of the charge or omission therefrom unless that party objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which that party objects and the grounds of the objection. Fed.R.Crim.P. 30. **Ward did not object to the jury instructions as given. In fact, the court gave the government's and Ward's joint jury instructions.FN4 FN4. The government argues on appeal that, because the court gave the government's and the appellant's joint jury instructions, Ward invited any error that may be present in the instructions. A party is precluded from arguing on appeal errors which he invited. See United States v. Alexander, 695 F.2d 398, 402 (9th Cir.1982), cert. denied, 462 U.S. 1108, 103 S.Ct. 2458, 77 L.Ed.2d 1337 (1983). The record is not entirely clear as to the extent of the appellant's role in formulating the jury instructions, however. Therefore, the standard of review applicable when a party fails to object will govern the disposition of this issue. [3][4][5] When the defendant fails to object to the jury instructions at trial, the court reviews the instructions under a plain error standard. United States v. Bustillo, 789 F.2d 1364, 1367 (9th Cir.1986). A plain error is a highly prejudicial error affecting substantial rights. Id. (quoting United States v. Giese, 597 F.2d 1170, 1199 (9th Cir.), cert. denied, 444 U.S. 979, 100 S.Ct. 480, 62 L.Ed.2d 405 (1979)). The reversal of a criminal conviction on the basis of plain error is an exceptional remedy, which the court should invoke only when it appears necessary to prevent a miscarriage of justice or to preserve the integrity and reputation of the judicial process. Id. The availability of a better instruction is not a ground for reversal. Id. at 1368. 1. Failure to Instruct on Mens Rea The appellant argues that his convictions on Counts One and Three must be reversed because the district court failed to instruct the jury on the requisite state of mind. Ward was charged in Count Three with violating 18 U.S.C. 1951, commonly known as the Hobbs Act. The indictment specifically read: JIMMIE L. WARD, defendant herein, did obtain and attempt to obtain a sum of money from Vincent Baggla [sic] by means of extortion and attempted extortion as defined in 18 U.S.C. 1951(b) (2).... Section 1951(b)(2) defines extortion as the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence or fear, or under color of official right. 18 U.S.C. 1951(b)(2). [6] The appellant asserts that the jury must be given an instruction on intent in a Hobbs Act extortion case. The Ninth Circuit has so held: [C]riminal intent must be submitted to the jury in a case charging extortion under the Hobbs Act. Willful or corrupt were the common law terms focusing on and emphasizing the specific intention the extortionist must be shown to have.... The corrupt intention must be proved to prove the crime. The court's failure to give an instruction on a vital element of the crime was plain error. A miscarriage of justice would result if the error was passed over as harmless. United States v. Aguon, 851 F.2d 1158, 1168 (9th Cir.1988) (en banc) (Aguon II ) (quoting United States v. Aguon, 813 F.2d 1413, 1419 (9th Cir.1987) (Aguon I )). [U.S. v. Aguon 851 F.2d 1158, overruled on other grounds by Evans v. U.S. 504 U.S. 255, Affirmative act of inducement by public official, such as demand was not element of offense of extortion under color of official right prohibited by Hobbs Act; gov was only required to show that public official obtained payment to which he was not entitled, knowing that payment was made in return for official acts;] Thus, the failure to give a mens rea instruction in a Hobbs Act extortion case is plain error; however, this is not an extortion case, but an attempted extortion case.

[7][8] Because the indictment charged the defendant in the conjunctive, that is, *1345 extortion and attempted extortion, the jury instructions must be examined to determine the crime upon which the jury deliberated. The district court instructed the jury on Count Three by reading the indictment and 18 U.S.C. 1951.FN5 The court then stated the following: FN5. The court also instructed the jury as follows: In order for the defendant to be found guilty of interfering with interstate commerce by attempted extortion as charged in Count III of the indictment, the government must prove two things beyond a reasonable doubt: First, the defendant attempted to cause Vincent Bagala to part with money by the wrongful use or threat of force or fear; and Second, that the defendant's acts affected or had the potential of affecting commerce. .... The term extortion means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence or fear. The term wrongful as used in U.S.C. 1951(b)(2) means that the defendant has no lawful claim to the money demanded from Vincent Bagala. In order to convict the defendant of attempted extortion as charged in Count III of the indictment, the government does not have to prove that Mr. Bagala actually feared economic loss. However, the government must prove an attempt to instill fear, that is, that the threat made by the defendant was reasonably calculated to instill fear of economic loss in Mr. Bagala. A person may be guilty of an attempt for deliberately doing some act to try to commit an extortion even though no extortion is in fact carried out. An attempt is more than mere planning or preparation. The evidence must show that the defendant took such a substantial step to indicate a firm intent to commit the crime. (Emphasis added). Thus, the court limited the instruction to the crime of attempted extortion. The crime of attempt consists of two elements. **First, the government must prove culpable intent. United States v. Snell, 627 F.2d 186, 187 (9th Cir.1980), cert. denied, 450 U.S. 957, 101 S.Ct. 1416, 67 L.Ed.2d 382 (1981). In other words, the defendant must have been acting with the kind of culpability otherwise required for the commission of the crime which he is charged with attempting. United States v. Mandujano, 499 F.2d 370, 376 (5th Cir.1974), cert. denied, 419 U.S. 1114, 95 S.Ct. 792, 42 L.Ed.2d 812 (1975). **The second element is conduct constituting a substantial step toward commission of the crime that strongly corroborates that intent. Snell, 627 F.2d at 187. The jury instructions given by the district court must be viewed as a whole to determine whether they were adequate. See United States v. Egan, 860 F.2d 904, 907 (9th Cir.1988). We acknowledge that the instructions given were not perfect. Nevertheless, the district court did refer to the defendant's state of mind that must be shown beyond a reasonable doubt in order to convict: **an attempt to instill fear, that is, that the threat made by the defendant was reasonably calculated to instill fear of economic loss in Mr. Bagala. Thus, the jury was instructed that Ward's culpable intent must be to instill fear in the victim. The district court further instructed that the defendant must act deliberately. The district court made references to the intent required to convict Ward of attempted extortion under the Hobbs Act. To be sure, the district court failed to give a clear and succinct jury instruction on the requisite state of mind. The error in this case, however, is not so plain as to require the exceptional remedy of reversing the appellant's

conviction on Count Three. The appellant also challenges the instructions given in Count One, which charged Ward with Attempted Extortion by False Representation in violation of 18 U.S.C. 872. The appellant argues that, because the judge gave erroneous instructions in Count Three, there was spill-over prejudice. See United States v. Bordallo, 857 F.2d 519, 528 (9th Cir.1988) (reversing convictions for conspiracy to commit extortion because of spill-over prejudice from an erroneous extortion instruction), cert. denied, 493 U.S. 818, 110 S.Ct. 71, 107 L.Ed.2d 38 (1989). Because there was no plain error in the trial court's jury instructions on Count *1346 Three, there can be no spill-over prejudice requiring the automatic reversal of the conviction on Count One. An examination of the jury instructions given on Count One reveals that the instructions given were adequate,FN6 except for any deficiencies that may have existed as a result of the court's instruction on the intent required for a conviction of the crime of attempt. The district court committed no plain error in the jury instructions on Count One. FN6. The court instructed the jury on Count One by reading the statute, followed by a recitation of the elements that the government must prove beyond a reasonable doubt: 1. That the defendant falsely represented himself to be an employee of the United States. 2. That he acted while under color or pretense of this employment. 3. That while so acting he attempted to commit an act of extortion. The court defined both extortion and attempt. 2. Failure to Instruct on Inducement [9][10] The appellant also argues that his convictions on Counts One and Three must be reversed because the district court failed to give an instruction on the element of inducement. In Aguon II, 851 F.2d at 1166, the Ninth Circuit held that inducement is an essential element of the crime of extortion under the Hobbs Act. Inducement can be in the form of a demand, or it can manifest itself in a more subtle form, such as custom or expectation. Id. Thus, the district court is not required to use the word inducement in the jury instructions. See United States v. Egan, 860 F.2d at 907. [11] The district court did not instruct the jury on the essential elements of the crime of extortion because the trial judge specifically narrowed the charges to attempted extortion. **Thus, the district court was required to instruct and did instruct the jury only on the elements of the crime of attempt. **Furthermore, the jury instruction given on the definition of the crime of extortion specifically states that the defendant must induce the victim to turn over his property by actual or threatened force or fear. Thus, the jury instructions were adequate. The appellant has not sustained his burden of showing plain error in the jury instructions requiring the reversal of his convictions on Counts One and Three. Therefore, we affirm the convictions. B. Sufficiency of the Evidence The appellant argues that there was insufficient evidence to sustain a conviction on the extortion charges. According to the appellant, there was no proof on the element of fear as required for a Hobbs Act conviction. Thus, the evidence adduced at trial supported a conviction of blackmail, not extortion. In reviewing the evidence adduced at trial to assess its sufficiency to support a conviction, this court must consider the evidence in the light most favorable to the Government and determine whether any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. United States v. Arriaga-Segura, 743 F.2d 1434, 1435 (9th Cir.1984). The court must draw all reasonable inferences from the evidence. Id. [12][13] The appellee argues that the defendant waived all rights to appeal the sufficiency of the evidence on Counts One and Three. In order to preserve this issue on appeal, the defendant must move for a judgment of

acquittal during the trial pursuant to Fed.R.Crim.P. 29(a). See United States v. Harden, 846 F.2d 1229, 1232 (9th Cir.), cert. denied, 488 U.S. 910, 109 S.Ct. 264, 102 L.Ed.2d 252 (1988); United States v. Curtis, 568 F.2d 643, 647 (9th Cir.1978). The record reveals that the defendant failed to move for a judgment of acquittal after the government rested its case-in-chief, after the defense rested, and after the government's rebuttal case. Therefore, the appellant waived his right to challenge the sufficiency of the evidence on appeal. Nevertheless, a brief examination of the appellant's argument will demonstrate that there was sufficient evidence in the record to sustain his convictions. [14][15] The Hobbs Act defines extortion as the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, *1347 violence, or fear, or under color of official right. 18 U.S.C. 1951(b)(2). The appellant maintains that fear is an essential element of the crime of extortion. The victim in this case was aware, at least before he handed Ward a check for $5,000, that the defendant was not an undercover agent for the Department of Transportation. Thus, the appellant argues, Bagala could not have been induced by fear to turn over his property. The appellant's argument must fail because the defendant was not convicted of extortion. His convictions on Counts One and Three were for attempted extortion. That being so, the victim's state of mind is not important. **What is important is that the defendant attempted to instill fear in the victim. See Carbo v. United States, 314 F.2d 718, 741 (9th Cir.1963) (To prove a substantive act of attempted extortion it is necessary to prove an attempt to instill fear.), cert. denied sub nom. Palermo v. United States, 377 U.S. 953, 84 S.Ct. 1625, 12 L.Ed.2d 498 (1964). The evidence adduced at trial shows that the defendant attempted to obtain money from Mr. Bagala by pretending to be an undercover agent for the Department of Transportation who could cause the victim substantial financial harm if Mr. Bagala did not make the requested payment. Clearly the appellant attempted to instill fear in the victim and his argument on appeal is without merit. The appellant waived his right to appeal the convictions on Counts One and Three based upon the insufficiency of the evidence because he failed to move for a judgment of acquittal at trial. Even if he had preserved his right to appeal, there is sufficient evidence in the record to sustain his convictions. We affirm the judgment of conviction on Counts One and Three. U.S. v. Aguon, 851 F.2d 1158, 57 USLW 2063 (9th Cir.(Guam),Jul 01, 1988)

Specific intent is an essential element to be proved in the offense of 18 U.S.C. 1951 extortion, attempt, conspiracy. The statement of law that inducement is an essential element of the offense of 18 U.S.C. 1951 extortion has been overruled by the Supreme Court in Evans v.
U.S., 504 U.S. 255, 112 S.Ct. 1881, 119 L.Ed.2d 57, 60 USLW 4411 (U.S.Ga.,May 26, 1992), in which the Supreme Court held that inducement is not an essential element required for conviction under 18 U.S.C. 1951. Defendant was convicted of extortion and conspiracy in violation of the Hobbs Act and of making false statements before a grand jury and conspiracy to obstruct justice, following trial in the United States District Court for the District of Guam, Laughlin E. Waters, J., and she appealed. Following reversal by three-judge panel, 813 F.2d 1413,rehearing en banc was granted, 831 F.2d 1487. The Court of Appeals, O'Scannlain, Circuit Judge, withdrew panel opinion and held that: (1) inducement is an element required for conviction under the Hobbs Act; (2) reliance on system of expecting payments in exchange for public favors can itself be the necessary act of inducement; **(3) failure to instruct on mens rea was plain error; (4) failure to distinguish in instructions between general conspiracy statute and conspiracy under the Hobbs Act was plain error; but (5) defendant was not deprived of an impartial jury. Affirmed in part, reversed in part, and remanded. Reinhardt, Circuit Judge, filed a concurring opinion in which Nelson, Circuit Judge, joined. Wallace, Circuit Judge, filed a concurring and dissenting opinion in which Goodwin, Chief Judge, and James R.

Browning, Norris and Wiggins, Circuit Judges, joined. [1] Extortion and Threats 165 7

165 Extortion and Threats 165I Official Extortion 165k3 Elements of Offenses 165k7 k. Duress or Exaction. Most Cited Cases Inducement is an element required for conviction of extortion under the Hobbs Act, including extortion by unlawfully obtaining property under color of official right; overruling United States v. McClelland, 731 F.2d 1438 (9th Cir.). 18 U.S.C.A. 1951, 1951(b)(2). [2] Statutes 361 226

361 Statutes 361VI Construction and Operation 361VI(A) General Rules of Construction 361k226 k. Construction of Statutes Adopted from Other States or Countries. Most Cited Cases When one jurisdiction adopts the statute of another jurisdiction as its own, there is a presumption that the construction placed on the borrowed statute by the courts of the original jurisdiction is adopted along with the statute and treated as incorporated therein. [3] Extortion and Threats 165 7

165 Extortion and Threats 165I Official Extortion 165k3 Elements of Offenses 165k7 k. Duress or Exaction. Most Cited Cases For purposes of establishing inducement as an element of extortion under the Hobbs Act, reliance on system of expecting payments in exchange for public favors can itself be the necessary act of inducement if the public official has previously established or acquiesced in the system and the donor is sufficiently aware of the expectation created by prior acts of extortion. 18 U.S.C.A. 1951. [4] Bribery 63 1(1)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(1) k. In General. Most Cited Cases Extortion and Threats 165 7

165 Extortion and Threats 165I Official Extortion 165k3 Elements of Offenses 165k7 k. Duress or Exaction. Most Cited Cases Federal officials' inducement of payment of money for performance of public act is bribery as well as extortion, while acceptance of payment which is not induced can still be bribery, but is not extortion under the Hobbs Act. 18 U.S.C.A. 201, 1951(b)(2).

[5] Criminal Law 110

1038.2

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1038 Instructions 110k1038.2 k. Failure to Instruct in General. Most Cited Cases Extortion and Threats 165 16

165 Extortion and Threats 165I Official Extortion 165k16 k. Trial. Most Cited Cases In prosecution of public official for extortion under the Hobbs Act, instruction which, though using the word wrongful, failed to enlighten the jury on mens rea was inadequate, and failure to give instruction on this vital element of the crime was plain error. 18 U.S.C.A. 1951. [6] Criminal Law 110 1038.1(4)

110 Criminal Law 110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1038 Instructions 110k1038.1 Objections in General 110k1038.1(3) Particular Instructions 110k1038.1(4) k. Elements of Offense and Defenses. Most Cited Cases In prosecution for conspiring to commit extortion under the Hobbs Act and other alleged conspiracies, failure in instructions to distinguish between the general conspiracy statute, providing maximum penalty of five years, and the relevant special conspiracy statute, carrying maximum penalty of 20 years, was plain error. 18 U.S.C.A. 371, 1951. [11] Criminal Law 110 2095

110 Criminal Law 110XXXI Counsel 110XXXI(F) Arguments and Statements by Counsel 110k2093 Comments on Evidence or Witnesses 110k2095 k. Statement of Evidence. Most Cited Cases (Formerly 110k720(2)) In prosecution under the Hobbs Act, prosecuting attorney's references to defendant's political activity did not deprive her of a fair trial, where, on direct examination, defendant herself had discussed her political activity at length and her political involvement was germane to the defense. 18 U.S.C.A. 1951. Appeal from the United States District Court for the District of Guam. Before GOODWIN, Chief Judge, and BROWNING, WALLACE, HUG, TANG, FARRIS, NELSON, NORRIS, REINHARDT, WIGGINS and O'SCANNLAIN, Circuit Judges.

O'SCANNLAIN, Circuit Judge: A three-judge panel of this court reversed Aguon's convictions for extortion and conspiracy in violation of the Hobbs Act, 18 U.S.C. 1951 and her convictions for making false statements before a grand jury and conspiracy to obstruct justice. United States v. Aguon, 813 F.2d 1413 (9th Cir.1987) ( Aguon I ). At the suggestion of the government, the case was taken en banc. 831 F.2d 1487 (9th Cir.1987). Upon rehearing en banc, we are presented with three questions: (1) whether we should retain the rule established in United States v. McClelland, 731 F.2d 1438 (9th Cir.1984), cert. denied, 472 U.S. 1010, 105 S.Ct. 2708, 86 L.Ed.2d 723 (1985), which held that inducement need not be proven in an extortion conviction when property obtained from another by a public official was obtained under color of official right, (2) whether the jury instructions on mens rea were adequate, and (3) whether bias was established when a juror had previously committed an offense similar to the one being tried. As did the three-judge panel, we reverse and remand to the district court. In doing so, we overrule McClelland because we conclude that proof of inducement is a prerequisite to conviction of extortion. As a separate ground for reversal of the Hobbs Act convictions, we adopt the panel's view that the mens rea instructions were inadequate. Contrary to the panel, we find no juror bias proven and therefore we affirm the non-Hobbs Act convictions. While we adopt extensive portions of the three-judge panel's opinion, we modify it in several respects. Therefore, we withdraw the opinion of this court in Aguon I at 813 F.2d 1413 and replace it herewith. I Extortion: The Jury Instructions The relevant facts and proceedings regarding the jury instructions on the extortion charge are taken verbatim from Judge Noonan's opinion in Aguon I: Katherine B. Aguon, the defendant, was the Director of the Department of Education (DOE) of Guam between February 1980 and December 1982. A co-defendant was Pyong Hok Han, a Korean businessman, whose company, Hando Enterprises, Inc., was a vendor to DOE. Han testified that he gave Aguon dresses,*1161 a washing machine, a gas dryer, a microwave oven, and a refrigerator to make her happy. He gave them without payment because like I said, I'm vendor it's to me hard to ask money and because I don't want the people don't like my, don't like company to do business with DOE. He testified that he also bought a carpet selected by Aguon in Los Angeles and installed it in her house in Guam. He did this so he would have no trouble with his maintenance contract with DOE. Finally, he testified that he also put central air-conditioning in her home. The total value of these offerings was at least $8,500. **Aguon was charged under Count Two of the indictment with having knowingly and wilfully committed extortion under 18 U.S.C. 1951 in that she did obtain and cause to be obtained these goods, and she was convicted of that crime.FN1 FN1. In relevant part 18 U.S.C. 1951 reads: 1951 Interference with commerce by threats or violence (a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined not more than $10,000 or imprisoned not more than twenty years, or both.... (b) As used in this section

(2) The term extortion means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. At the beginning of the case before any evidence was introduced, the trial court read what it characterized as instructions which go to the essential elements of the criminal conduct that is charged here in order to give the jury some feel for the nature of the case. The jury was told that the government had to prove the case beyond a reasonable doubt. The jury was told that to prove extortion the government would have to prove that the defendant caused or attempted to cause another to part with money or property by threatening to withhold official action unless he did so. The giving of preliminary instructions was well within the practice permitted by this circuit. Manual of Model Jury Instructions for the Ninth Circuit 29 (1985). The court's instructions to the jury at the close of the case were that the government must prove beyond a reasonable doubt three essential elements in its case: First, that the defendant induced another under color of official right to part with property. Second, that she did so by extortion as defined in these instructions. Third, that in doing so, interstate commerce was delayed, interrupted or adversely affected. [Italics supplied] The court defined wrongful as the obtaining of property by an alleged extortionist to which he has no lawful claim. Therefore, the court said, proof that the defendant obtained property under color of official right and that he was not lawfully entitled to this property was sufficient to establish that this property was wrongfully obtained by the defendant. As to color of official right, the court charged: This type of extortion does not require proof of any specific acts on the part of the public official demonstrating force, threats, use of fear or inducement. The wrongful use of otherwise valid official power converts dutiful action into extortion ... So long as the motivation for the payment focuses on the recipient's office, the conduct falls within the ambit of Section 1951 of Title 18, United States Code. [Italics supplied] We determine the adequacy of jury instructions by examining them in their entirety. United States v. Feldman, 788 F.2d 544, 555 (9th Cir.1986) [, cert. denied, 479 U.S. 1067, 107 S.Ct. 955, 93 L.Ed.2d 1003 (1987) ]. We review a district court's decision as to particular instructions for abuse of discretion. Id. *1162 II Extortion: The Meaning of Induced We agree with the three-judge panel's conclusion that: The instructions in this case were fundamentally flawed. First, in line with the court's preliminary instructions, they told the jury that the defendant had to induce the payment. Then the instructions told the jury that no proof of acts demonstrating inducement was necessary. The government now argues that the instruction requiring proof of inducement was more favorable to the defendant than the law required, so she lost nothing in having the instruction canceled by the later instruction. But the instructions are contradictory. The difficulty with contradictory instructions is the confusion they must have generated in the jury. Did it matter whether the payments were induced or not induced? The jury was left without guidance on this question. The Aguon I opinion suggests a reason for the confusion in the trial court's instructions: We have construed the Hobbs Act not to require inducement by the government official.... McClelland, 731

F.2d [at] 1440 [citation omitted]. The court has observed that the statutory definition of extortion is in the disjunctive: induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right (emphasis supplied). This construction of the Hobbs Act is concurred in by almost all other circuits. Id. at 1439. This court has held that violations of the Hobbs Act may be proved by demonstrating nothing more than that the payment in question was obtained under color of official right. Id. at 1440. [1] But here we must part company with the analysis of Aguon I. As Judge Haynsworth stated, and we agree, [t]he meaning of induced ... under color of official right is the question in this case. United States v. Paschall, 772 F.2d 68, 71 (4th Cir.1985) (emphasis supplied), cert. denied, 475 U.S. 1119, 106 S.Ct. 1635, 90 L.Ed.2d 181 (1986). To answer this question we shall examine the grammatical construction, plain meaning, legislative history, and judicial interpretation of the Hobbs Act. A Grammatical Construction In United States v. Hathaway, 534 F.2d 386, 393 (1st Cir.), cert. denied, 429 U.S. 819, 97 S.Ct. 64, 50 L.Ed.2d 79 (1976), the First Circuit focused on the disjunctive nature of the statutory definition of extortion at 18 U.S.C. 1951(b)(2) and particularly emphasized the use of the word or preceding the last phrase, under color of official right. Our court in McClelland purported to follow this reasoning and concluded that inducement need not be shown in a Hobbs Act prosecution of a public official. McClelland, 731 F.2d at 1440. But, in a very recent postHathaway opinion, the First Circuit states the disjunction more accurately: [w]e have interpreted the definition in the disjunctive, finding that the prosecution can establish a violation by showing that a defendant induced payment either through use of actual or threatened force, violence or fear , or under color of official right. United States v. Bucci, 839 F.2d 825, 827 (1st Cir., 1988) (emphasis in original). We believe that the First Circuit's newly added emphasis on the word either is consistent with our view of statutory construction. Upon close grammatical analysis, it appears that, correctly parsed, the verb induced is modified by two prepositional phrases: by wrongful use of actual or threatened force, violence, or fear, and under color of official right. Both prepositional phrases modify the one verb, induced. An accurate grammatical reading is that several methods of inducement are permitted by the Act. The prepositions by and under are parallel. The prepositional phrases have a parallel disjunctive function in modifying induced. Only induced payments are thus proscribed. See Comment, *1163Prosecuting Public Officials Under the Hobbs Act: Inducement as an Element of Extortion Under Color of Official Right, 52 U. Chi. L.Rev. 1066, 1087 (1985). We are persuaded that our McClelland court, in focusing on the disjunctive construction of the prepositional phrases, failed to consider the significance of the verb such phrases modified. While the grammatical analysis may not be entirely dispositive, we are convinced that proper interpretation of the Hobbs Act cannot ignore the original statutory command that the alleged activity must induce the alleged payment. B Plain Meaning of Induced The ordinary meaning of induce is to move and lead (as by persuasion or influence). Webster's Third New International Dictionary (1986). Black's Law Dictionary (5th ed. 1979) defines induce: To bring on or about, to effect, cause, to influence to an act or course of conduct, lead by persuasion or reasoning, incite by motives, prevail on. All definitions of induce are active. Something is done. The payee must have done something to activate the payor. In construing the statute we begin with the premise that Congress meant each word it incorporated into a definition to have meaning. Legislative words presumably have meaning and so we must try to find it.... And so we assume that Congress uses common words in their popular meaning, as used in the common speech of men. Frankfurter, Some Reflections on the Reading of Statutes, 47 Col.L.Rev. 527, 534, 536 (1947). The background and legislative history of the Hobbs Act support the conclusion that Congress, in defining the

elements of the crime, intended the extortionist to have more than an inert role in the transaction. C Historical Background and Legislative History The validity of our analysis is reinforced by Judge Noonan's development of historical background and legislative history in Aguon I: The ancient phrase under color of official right (the equivalent of ex colore officii ) had a distinct meaning at common law. It meant an act badly done under the countenance of an office under a dissembling visage of duty. Dive v. Maningham, 75 Eng.Rep. 96, 108 (Common Pleas, 1550). Without amplification the phrase is used by Blackstone to define extortion. 4 Commentaries on the Laws of England (1765) 141 (any officer's unlawful taking, by color of his office, from any man, any money or value that is not due to him, or more than is due, or before it is due.). As applied at common law in the United States the phrase by or under color of office or official right was construed to mean that the official made a demand. If money was paid voluntarily, it was not obtained by the officer by color of his office. See, e.g., Commonwealth v. Dennie, Thacher's Criminal Cases (Boston Mun.Ct.1827) 165. Demand on the part of the payee, unwillingness on the part of the payor, were correlative. The ordinary meaning of to extort is to obtain from an unwilling person. This ordinary meaning was preserved by the interpretation the courts gave to color of office. See LaTour v. Stone, 139 Fla. 681, 190 So. 704 (1939) and the authorities cited therein; Daniels v. United States, 17 F.2d 339 (9th Cir.), cert. denied, 274 U.S. 744, 47 S.Ct. 591, 71 L.Ed. 1325 (1927). Some courts insisted that there must be an express request for payment by an official before he could be guilty of extortion. E.g., United States v. Harned, 43 F. 376 (D.Wash.1890). Other courts found demand in a course of conduct that conveyed the official's messsage to his victim. E.g., Commonwealth v. Wilson, 30 Pa.Super. 26 (1906). However subtly the official communicated, a demand was what was necessary to constitute common law extortion. See Comment, United States v. Mazzei: Hobbs Act Extortion Under Color of Official *1164 Right 62 Va.L.Rev. 439, 441 (1976) (common law extortion consisted of corruptly demanding). Congress has used the terms extort or extortion in a variety of statutes without any indication of an intention to eliminate the common law requirement of demand. E.g., 18 U.S.C. 875 (transmission with intent to extort); 18 U.S.C. 876 (mailing with intent to extort); 18 U.S.C. 872 (extortion by federal officials). This last statute makes it a crime for any officer of the United States under color of his office to commit extortion. As the statute uses a term already contained in the common law meaning of extortion, it has been reasoned that Congress must have meant to require more-the commission of official acts which brought pressure on the one subject to them. United States v. Sutter, 160 F.2d 754 (7th Cir.1947). The statute, so interpreted, does not abandon the common law requirement of a demand, but rather, emphasizes its necessity for proof of commission of the crime. We find it particularly significant that the word induced is common to the extortion definition in the Hobbs Act and two source statutes. The New York Penal Code of 1909 defined extortion as the obtaining of property from another, ... with his consent, induced by a wrongful use of force or fear, or under color of official right. N.Y. Penal Law 850 (1909), as amended, 1917 N.Y. Laws 1545 (emphasis supplied). This definition had been carried forward from the proposed 1864 Penal Code which was not enacted until 1881. See Commissioners of the Code The Penal Code of the State of New York tit. XV ch. VI 613 at 220 (1864); N.Y. Penal Code tit. XV ch. V 552 at 139 (1881).FN2 FN2. As the dissent points out, David Field's commentary to his 1864 proposed N.Y.Penal Code definition of extortion ( 613) refers us to People v. Whaley, 6 Cow. 661 (1827), which affirmed the extortion conviction of Judge Whaley. The dissent fails, however, to provide the context for its quoted extract: Extortion signifies, in an enlarged sense, any oppression under color of right. In a stricter sense, it signifies the taking of money by any officer by color of his office ... [Whaley] received and demanded

the money by color of his office, with the corrupt intent charged in the indictment. These facts being proved, the offense was complete. Id. at 663, 664. Contrary to the dissent, demand (demanded the money) was expressly required as far back as 1827. The Anti-Racketeering Act of 1934 defined extortion as: [o]btains the property of another, with his consent, induced by wrongful use of force and fear, or under color of official right.... 48 Stat. 979, 980 (1934) (emphasis supplied). As pointed out in Aguon I, the latter statute: was amended in 1946 by the Hobbs Act, where extortion was defined in terms of these prohibited acts: the term extortion means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. 18 U.S.C. 1951(b)(2). Congressman Hobbs said explicitly that the definitions of robbery and extortion were modeled on the New York Penal Code. 91 Cong.Rec. 11,900 (1945). Other congressmen observed that the congressional definitions were in harmony with the understanding of extortion in all of the states, 89 Cong.Rec. 3205 (1943) (statement of Rep. Graham); 91 Cong.Rec. 11,906 (1945) (statement of Rep. Robsion).... When Congress borrows terms of art in which are accumulated the legal tradition and meaning of centuries of practice, it presumably knows and adopts the cluster of ideas that were attached to each borrowed word.... Morissette v. United States, 342 U.S. 246, 263 [72 S.Ct. 240, 250, 96 L.Ed. 288] (1952). [2] It is a well-established principle of statutory construction that when one jurisdiction adopts the statute of another jurisdiction as its own, there is a presumption that the construction placed upon the borrowed statute by the courts of the original jurisdiction is adopted along with the statute and treated as incorporated therein. Tucker v. Oxley, 9 U.S. (5 Cranch) 34, 42, 3 L.Ed. 29 (1809) ; *1165Vela v. Government Employees Insurance Company, 395 F.2d 437, 439 (9th Cir.1968). At the time the Hobbs Act was passed, New York law had explicitly recognized the distinction between extortion and bribery, and the need to prove inducement as an element of the former. See, e.g., Hornstein v. Paramount Pictures, 22 Misc.2d 996, 1002-04, 37 N.Y.S.2d 404, 412-13 (N.Y.Sup.Ct.1942), aff'd, 266 A.D. 659, 41 N.Y.S.2d 210 (1943), aff'd, 292 N.Y. 468, 55 N.E.2d 740 (1944); Simpson v. Coastwise Lumber & Supply, 239 N.Y. 492, 498-500, 147 N.E. 77, 79 (1925) . The New York Code also had a separate statute prohibiting the crime of oppression, defined as the misuse of public office by act rather than by threat. N.Y. Penal Law 854 (1909); see also New York v. Learman, 261 A.D. 748, 752, 28 N.Y.S.2d 360, 364 (1941). That the New York Code of the time so recognized and distinguished the similar crimes of bribery, extortion, FN3 and oppression, but required inducement only for the crime of extortion, is strong evidence that Congress also intended to require inducement as an element for conviction under the Hobbs Act. FN3. That demand is implicit in the concept of extortion is also illustrated by N.Y.Penal Law 855 (1909) (formerly N.Y.Penal Code 557 (1881)), which the dissent quotes (in part) at 1181, infra. Why would someone pay an illegal fee in excess of the statutory amount other than in response to some form of demand having been made? As stated in Aguon I: Courts are not to create new crimes by changing the accepted meaning. [See Morissette, 342 U.S. at 263, 72 S.Ct. at 250]. If the core common law concept is abandoned, the meaning of extortion becomes uncertain. The statute is set adrift upon a sea of prosecutorial discretion and becomes unconstitutionally vague. United States v. Mazzei, 521 F.2d 639, 655 (3d Cir.) (en banc) (Gibbons, J. dissenting), cert. denied, 423 U.S. 1014 [96 S.Ct. 446, 46 L.Ed.2d 385] (1975). Judge Gibbons' fears were not idle. The Second Circuit was informed by the United States Attorney for the Eastern District of New York in 1983 that the Hobbs Act may be viewed as enacting a special code of integrity for public officials although that as a matter of prosecutorial discretion ambiguous de minimis conduct by public officials would not be prosecuted. United States v. O'Grady, 742 F.2d 682, 694 (2d Cir.1984). As that court pointed out, rejecting this interpretation of the statute, the fact that ambiguous conduct

could be prosecuted was alien to basic concepts of criminal justice. Id.; see also Comment, [52 U.Chi.L.Rev. at 1087]. The government's construction of the Hobbs Act equates it with the federal statute commonly called the antigratuities statute, 18 U.S.C. 201(g) [1962]. Under this statute a federal official who receives money for or because of any official act performed or to be performed is subject to imprisonment for two years. Under the Hobbs Act any public official, federal or state, is subject to imprisonment of twenty years. The enactment of the antigratuity statute in 1962 was a clear indication that Congress did not believe that the Hobbs Act prohibits such conduct. O'Grady, 742 F.2d at 691. The enactment of the anti-gratuity statute, which deliberately eliminates common law concepts, is also a clear indication that Congress did not intend to eliminate the common law core when in the Hobbs Act it employed the common law phrase under color of official right. There has been development under the statute as to proof of demand by an official-a development by modern case law consistent with the common law core. Demand may be proved not by the words of the defendant but by the custom of the system in which the official operates. E.g., United States v. Kenny, 462 F.2d 1205 (3d Cir.) (Gibbons, J.), cert. denied, 409 U.S. 914 [93 S.Ct. 233, 34 L.Ed.2d 176] (1972). The Kenny machine, longentrenched, had established a system whereby no one could do business with Jersey City or Hudson County without a kickback, usually 10 percent, of the contract price. At the head of this system was the boss who held no official or party position, yet controlled everything. In this system, the officeholders*1166 did not have to make individual demands for the money. A thoroughly meshed arrangement produced the kickbacks for Kenny. Id. at 1211. Demand for payment was built in. Not surprisingly, Judge Noonan's analysis is consistent with the history of this subject set forth in the recognized authority in the field: Noonan, Bribes, 564-91 (1984). D Judicial Construction We find ourselves in accord with the Second Circuit's conclusion that inducement is an element required for conviction under the Hobbs Act. [This rule of law interpreting 18 U.S.C. 1951 has been overruled in Evans v. U.S., 504 U.S. 255, 112 S.Ct. 1881, 119 L.Ed.2d 57, 60 USLW 4411 (U.S.Ga.,May 26, 1992), in which the Supreme Court held that inducement is not an essential element required for conviction under 18 U.S.C. 1951] We note with approval that the Second Circuit has analyzed the facts of cases in which other courts of appeals have explicitly rejected the necessity of proof of inducement and concluded that the facts of those cases, and of most reported decisions construing extortion under color of official right, establish conduct from which inducement can readily be inferred. O'Grady, 742 F.2d at 689. Writing for the Seventh Circuit, Judge Posner noted: There is an air of the academic about this intercircuit conflict because, as a matter of fact, in none of the cases in which the issue has been pressed was the official passive.... U.S. v. Holzer, 816 F.2d 304, 311 (7th Cir.), vacated, 484 U.S. 807, 108 S.Ct. 53, 98 L.Ed.2d 18 (1987), aff'd in part on remand, 840 F.2d 1343 (1988). In our pre-McClelland holdings we have found sufficient evidence of inducement without questioning whether inducement was an essential element under the Hobbs Act. See United States v. Gates, 616 F.2d 1103, 1106 (9th Cir.1980); United States v. Phillips, 577 F.2d 495, 500-01 (9th Cir.), cert. denied, 439 U.S. 831, 99 S.Ct. 107, 58 L.Ed.2d 125 (1978). Indeed, inducement can take many forms, some more subtle than others. Proof of a request, demand or solicitation, no matter how subtle, will establish wrongful use of public office. O'Grady, 742 F.2d at 691. Thus, we are persuaded to adopt the reasoning of O'Grady in its main points which, as suggested by Aguon I, are: [T]hat the Hobbs Act punishes a fundamentally different offense than the anti-gratuities statute, [ O'Grady,] 742 F.2d at 691; that proof of actions under color of office is essential to proof of the crime, id. [at 689]; and that in short, this offense requires the jury to find that the public official did something, under color of his office, to cause the giving of benefits. Id. at 693.

The government is free to prove that a system was in place in the Department of Education in Guam such that no words were necessary for Aguon to utter to get a payoff. The government did prove at the trial that Granich and Camacho were so regularly paid off by Han that no repetition of demands was necessary by them: a system as to them was in place and at work. But in the case of Aguon, who came into office after Granich and Camacho had embarked on extortion, the evidence of a system of which she was aware was different. Nevertheless, the government may be able to show that Aguon was part of a system whose customary operation demanded that a share go to the head honcho.... The instruction, So long as the motivation for the payment focuses on the recipient's office, the conduct falls with the orbit of Section 1951 of Title 18 is not erroneous if properly qualified by surrounding language making a correlation between the payor's motivation and the payee's conduct. See United States v. Scacchetti, 668 F.2d 643 (2d Cir.), cert. denied, 457 U.S. 1132, 102 S.Ct. 2957, 73 L.Ed.2d 1349 (1982). No such language qualified the instruction here. [3] **We hold that proof that the defendant induced the improper payment is an essential element in the crime of extortion and that inducement can be in the overt form of a demand, or in a more subtle form such as custom or expectation such as might have been communicated by the nature of defendant's prior conduct of his office. Reliance on a system of expecting payments in exchange for public favors can itself be the necessary act of inducement if the public official previously establishes or acquiesces in the system and if the donor is sufficiently aware of the expectation*1167 created by prior acts of extortion. Accordingly, the jury instructions must incorporate inducement, which may be explicit or implicit, as a required element of the crime of extortion under the Hobbs Act. [4] Perhaps an observation on the distinction between bribery and extortion in the federal law is warranted. Bribery is committed by both the bribe giver and the recipient; extortion is only committed by the recipient. Bribery and extortion will still overlap in some situations. As Judge Aldisert noted: At their tangent, the offenses of bribery and extortion may both arise out of the same nucleus of operative facts. A public official who corruptly accepts an unauthorized fee for the performance of his official duty may be guilty of both bribery and extortion. At the opposite extreme, however, the offenses bear little resemblance. United States v. Cerilli, 603 F.2d 415, 435 (3d Cir.1979) (Aldisert, J., dissenting), cert. denied, 444 U.S. 1043, 100 S.Ct. 728, 62 L.Ed.2d 728 (1980). Under modern federal law, a public official's inducement of a payment of money for performance of a public act is bribery. See 18 U.S.C. 201. Such conduct by a public official is also extortion under the Hobbs Act, 18 U.S.C. 1951(b)(2). But there is a difference. If the official accepts the payment to perform a public act, it is bribery under section 201; however, if the payment is not induced, it can still be bribery but not extortion under the Hobbs Act. The distinction is reasonable. Until a 1965 statutory change, New York law accepted extortion as a defense to a charge of bribery. People v. Dioguardi, 8 N.Y.2d 260, 203 N.Y.S.2d 870, 881-82, 168 N.E.2d 683, 692 (1960) . FN4 Indeed, as Judge Aldisert explains: FN4. The defense is still available to the bribe-giver. See N.Y.Penal Law 200.05 (McKinney 1975) and Hechtman, A. Practice Commentaries at 418. A public official charged with extortion under the Hobbs Act should be able to argue that although he did in fact receive something of value, it was given at the initiative of the donor, and not as a result of force, fear or duress emanating from the defendant. Thus, in an indictment for extortion, it is logically and jurisprudentially sound to permit a defense of bribery. To hold otherwise is to blur completely the distinction between the two crimes. Cerilli, 603 F.2d at 435 (Aldisert, J., dissenting). The distinction makes sense also because it may be more objectionable for an official to coerce or to demand and thereby to obtain money than for an official to succumb to temptation in accepting money offered him. Public officials who tell members of the public that favors are for sale commit a more serious offense than those who accept unsolicited payments. Under McClelland, a prosecutor could convert a less serious offense, bribery, in which the recipient did no more than accept payment initiated by

the bribe-giver, into a more serious offense, extortion, in which conviction could result in a ten-times greater punishment. Prosecutorial discretion should not be permitted to go that far. Stated another way, when there are two rational readings of a criminal statute, one harsher than the other, we are to choose the harsher only when Congress has spoken in clear and definite language. McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 2881, 97 L.Ed.2d 292 (1987). Because we are persuaded that our previous analysis of the extortion statute fails to evaluate properly its common law background and more recent developments in legal scholarship, we hereby overrule McClelland to the extent it is inconsistent with our conclusions in this opinion.FN5 FN5. Like the Lorelei, the dissent echoes and re-echoes the theme that prudential stare decisis should prevent us from overruling McClelland. We resist the lure of this siren song. The province and obligation of the en banc court is to review the current validity of challenged prior decisions. III Extortion: Role of Mens Rea [5] We agree with Judge Noonan in Aguon I that the instructions on mens rea were inadequate: *1168 The government on appeal argues that mens rea was implicit in the court's use of wrongful. But the court's own definition of the term negates this argument. The court told the jury that the defendant obtained property wrongfully if it was obtained under color of official right and she was not lawfully entitled to this property. This statement of the elements of the crime was incomplete. Intention was omitted. A homely example will illustrate the deficiency. A judge taking a colleague's robe by mistake does so under color of official right and he is not lawfully entitled to the robe. The taking is wrongful. But it is no crime: the judge acts without mens rea. One searches the instructions on extortion almost in vain for any instructions enlightening the jury on mens rea. One finds: It is not necessary for the government to show that the defendant actually intended to delay, obstruct or affect interstate commerce. Thus the jury was told what intention the government need not prove. It was not told what intention the government must prove. The general instruction that was given, You may consider it reasonable to draw the inference and find that a person intends the natural and probable consequences of acts knowingly done or knowingly omitted, has no bearing on the specific intention to commit the crime with which Aguon was charged. Criminal intent was a necessary element that the government had to prove. No act standing alone is a crime under the Hobbs Act. A guilty mind has to be proved as well as a wrongful deed. In an historic opinion, Justice Jackson, the ... international prosecutor of the misdeeds of a regime without any respect for individual rights, vindicated this regular requirement of Anglo-American criminal law as no provincial or transient notion. Invoking William Blackstone, Roscoe Pound and Max Radin, and writing for the Court, Justice Jackson found mens rea a cornerstone of our criminal jurisprudence. As he observed, the intense individualism of Americans had set this element deep within our criminal law. Morissette, [342 U.S. at] 251-53 [72 S.Ct. at 243]. Justice Jackson drew the clear corollary: the question of intent must be submitted to the jury. Id. at 274 [72 S.Ct. at 255]. A fortiori, criminal intent must be submitted to the jury in a case charging extortion under the Hobbs Act . Willful or corrupt were the common law terms focusing on and emphasizing **the specific intention the extortionist must be shown to have.... The corrupt intention must be proved to prove the crime. The court's failure to give an instruction on a vital element of the crime was plain error. A miscarriage of justice would result if the error was passed over as harmless. United States v. Young, 470 U.S. 1, 15-16, [105 S.Ct. 1038, 1046-47, 84 L.Ed.2d 1] (1985). The confusing instructions on inducement, on motivation, and on color of official right, ... and the lack of an instruction on specific intent require reversal of Aguon's conviction on Count Two.

**Count Three charged Aguon and co-defendants Frank Granich and Ike Camacho with extortion in obtaining and causing to be obtained $42,000 from Kelly Song. Granich was the Supervisor of Buildings and Grounds of DOE. Camacho was the Business Administrator. Song, doing business as K.S. Enterprises, Inc., obtained a contract to paint the JFK school. Granich, confronted by a government tape recording of a conversation between Song and himself, decided to cooperate with the government. He testified that Song paid him $35,000 in cash to get the contract and that he, Granich, gave $15,000 of this amount to Camacho and $5,000 or $7,000 to Aguon. Granich testified that he gave the $5,000 or $7,000 to Aguon in two cash installments. He characterized the first amount when he gave it to her with these words: This is a political contribution for you. The second installment he delivered at a political meeting for the *1169 re-election of Governor Calvo. At neither time did he tell Aguon that the money came from Song. No instruction was given the jury on the meaning of under color of official right. Mens rea, which had to be proved if receipt of political contributions was to be converted into extortion, was never set before the jury. Plain error was committed. The conviction on this count must also be reversed. IV Conspiracy to Extort. The Jury Instructions [6] We adopt Judge Noonan's treatment of the conspiracy issue in Aguon I. **Count One charged Aguon, Granich, Han, Song and several other employees of DOE and private contractors with conspiring to commit extortion under 18 U.S.C. 1951. The overt acts in furtherance of the conspiracy alleged to have been committed by Aguon were the receipt of Han's offerings and the cash from Song. In the court's preliminary instructions before the introduction of evidence, the court explained the elements of conspiracy in terms of the general conspiracy statute, 18 U.S.C. 371. A jury listening to these instructions would have gathered that Aguon was being tried under the general conspiracy statute not under the much more specific conspiracy to commit extortion statute. Despite the language of the indictment, the more general statute was alone the focus. In the court's final instructions to the jury the court gave an instruction on conspiracy which covered conspiracy to commit extortion under the Hobbs Act, conspiracy to commit mail fraud and conspiracy to obstruct justice. The court declared, The following instruction on conspiracy applies to both counts. The court then quoted the language of the general conspiracy statute, 18 U.S.C. 371: If two or more persons conspire ... to commit any offense against the United States.... The court continued with instructions applicable to the general conspiracy statute. After about five pages of instruction on the general law of conspiracy, the court said: The defendant may be found guilty of the crimes of conspiracy to extort in Count 1, extortion in Count 3, and fraud in Counts 13 and 14, and the conspiracy to obstruct justice in Count 37, even if the defendant personally did not do the acts but aided and abetted in their commission. The conspiracy instruction also included the instruction that the government must show that the defendant had wilfully become a member of the conspiracy. Mens rea as to conspiracy was adequately dealt with by this instruction. At no point in the instruction, however, did the court state that conspiracy to extort with which Aguon was charged is a crime under 18 U.S.C. 1951. **The jury was given no inkling of this particular crime. Conspiracy to obstruct justice and conspiracy to commit mail fraud were treated as identical with conspiracy to extort, as though all three crimes of conspiracy were offenses under 18 U.S.C. 371. The general conspiracy statute, for whose violation Congress has provided a maximum penalty of five years, was not distinguished from the relevant statute, whose violation carries with it a maximum penalty of twenty years. The confusion of the two statutes in

the instruction of the court was plain error. In addition, as the jury had been erroneously instructed on the crime of extortion, there was substantial prejudice to the defendant on the charge of conspiracy to extort-prejudice that spilled over from the instruction on extortion. Believing that it could convict on extortion without corrupt intent, the jury may well have concluded that the extortion Aguon was convicted of under Counts Two and Three was evidence of her participation in the conspiracy under Count One. Facing conviction on three crimes all charged under 18 U.S.C. 1951, Aguon was entitled to a jury not affected by *1170 error as to two of the three Hobbs Act crimes. Viewing the jury instructions as a whole and evaluating the adequacy of the entire charge, United States v. Frazin, 780 F.2d 1461, 1468 (9th Cir.1986) [cert. denied, 479 U.S. 844, 107 S.Ct. 158, 93 L.Ed.2d 98] we hold that the court committed plain error in the instructions on Counts One, Two and Three. We reverse the conviction on each of these counts. U.S. v. Capati, 980 F.Supp. 1114 (S.D.Cal. Sep 29, 1997)

18 U.S.C. 1951(a) extortion, attempt, and conspiracy requires specific intent to as an essential element of the predicate criminal offense.
Defendants moved for a judgment of acquittal or a new trial after the jury found them guilty of Hobbs Act robberies and conspiracy. The District Court, Rhoades, J., held that: (1) the application of Pinkerton to hold the defendants vicariously liable for coconspirators' use of firearms during the robberies did not violate due process; (2) the evidence was sufficient to link the defendants to the robberies; (3) the failure to instruct on the intent element of a Hobbs Act robbery was error, but it was harmless; and (4) a new trial was necessary where the only evidence linking the defendants to the robberies was the testimony of one witness and where his testimony was demonstrably false, particularly with respect to underlying agreement. Motion for judgment of acquittal denied; motion for new trial granted. [1] Extortion and Threats 165 32

165 Extortion and Threats 165II Threats 165k32 k. Evidence. Most Cited Cases Government must prove only de minimis effect on interstate commerce to support Hobbs Act robbery conviction. 18 U.S.C.A. 1951. [2] Conspiracy 91 41

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k39 Persons Liable 91k41 k. Acts of Coconspirators. Most Cited Cases Application of Pinkerton to hold defendants vicariously liable for coconspirators' use of firearms during robberies, even though defendants neither physically used nor carried firearms, did not violate due process; whether or not defendants explicitly agreed that firearm would be used during robberies, testimony established that it was foreseeable that gun would be used. U.S.C.A. Const.Amend. 5; 18 U.S.C.A. 924(c). [3] Conspiracy 91 47(11)

91 Conspiracy 91II Criminal Responsibility

91II(B) Prosecution 91k44 Evidence 91k47 Weight and Sufficiency 91k47(3) Particular Conspiracies 91k47(11) k. Larceny, Embezzlement, Burglary, and Robbery; Stolen Property. Most Cited Cases Robbery 342 24.20

342 Robbery 342k24 Weight and Sufficiency of Evidence 342k24.20 k. Participation in Offense. Most Cited Cases Evidence was sufficient for jury to conclude beyond a reasonable doubt that defendants agreed to commit jewelry store robberies; jury reasonably could have concluded that defendants made monetary payments to induce commission of robberies and, therefore, that defendants were guilty of aiding and abetting robberies. 18 U.S.C.A. 1951. [5] Extortion and Threats 165 25.1

165 Extortion and Threats 165II Threats 165k25 Nature and Elements of Offenses 165k25.1 k. In General. Most Cited Cases Specific intent to deprive another of his or her property permanently is element of Hobbs Act robbery; statute incorporated New York robbery statute. 18 U.S.C.A. 1951(b). [6] Criminal Law 110 660

110 Criminal Law 110XX Trial 110XX(B) Course and Conduct of Trial in General 110k660 k. Objections and Exceptions. Most Cited Cases Although party must make specific, clear objection to preserve error, there is no ritualistic incantation needed to make effective objection; party must merely direct trial court's attention to existence of objection and to specific ground that underlies objection. Fed.Rules Cr.Proc.Rule 30, 18 U.S.C.A. [7] Criminal Law 110 922(7)

110 Criminal Law 110XXI Motions for New Trial 110k922 Instructions and Failure or Refusal to Instruct 110k922(7) k. Objections and Exceptions at Trial. Most Cited Cases Defendants adequately articulated their objection to instruction on intent element of Hobbs Act robbery and, thus, harmless error standard, rather than more stringent plain error analysis, applied to their posttrial motions. 18 U.S.C.A. 1951(b). [8] Criminal Law 110 110 Criminal Law 1043(2)

110XXIV Review 110XXIV(E) Presentation and Reservation in Lower Court of Grounds of Review 110XXIV(E)1 In General 110k1043 Scope and Effect of Objection 110k1043(2) k. Necessity of Specific Objection. Most Cited Cases Specific objection that related to substance of definition of Hobbs Act robbery and that referenced the most relevant Ninth Circuit case on the issue was adequate to preserve error, even if it arguably occurred in broader context of conspiracy instructions. 18 U.S.C.A. 1951(b); Fed.Rules Cr.Proc.Rule 30, 18 U.S.C.A. [9] Criminal Law 110 763(1)

110 Criminal Law 110XX Trial 110XX(F) Province of Court and Jury in General 110k754 Instructions Invading Province of Jury 110k763 Weight and Sufficiency of Evidence 110k763(1) k. In General. Most Cited Cases [10] Criminal Law 110 1173.2(2)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1173 Failure or Refusal to Give Instructions 110k1173.2 Instructions on Particular Points 110k1173.2(2) k. Elements and Incidents of Offense. Most Cited Cases Harmless error analysis applies when district court completely fails to instruct jury on element, as opposed to when it instructs jury that element is satisfied as a matter of law; failure to mention element of crime does not completely remove from jury's consideration the evidence relating to that element, but simply fails to alert jurors they must consider it. [11] Criminal Law 110 1173.2(2)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1173 Failure or Refusal to Give Instructions 110k1173.2 Instructions on Particular Points 110k1173.2(2) k. Elements and Incidents of Offense. Most Cited Cases Failing to instruct on element of offense is harmless error when facts necessarily found by jury are so closely related to omitted element that no rational jury could find those facts without also finding omitted element; making underlying findings is functionally equivalent to finding element. [12] Criminal Law 110 1173.2(2)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1173 Failure or Refusal to Give Instructions 110k1173.2 Instructions on Particular Points

110k1173.2(2) k. Elements and Incidents of Offense. Most Cited Cases In deciding whether failure to instruct on intent element of Hobbs Act robbery was harmless error, district court must decide whether rational jury could have found the facts that the jury found without also finding that defendants intended to deprive another of his or her property permanently. 18 U.S.C.A. 1951(b). [13] Criminal Law 110 1173.2(2)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1173 Failure or Refusal to Give Instructions 110k1173.2 Instructions on Particular Points 110k1173.2(2) k. Elements and Incidents of Offense. Most Cited Cases Failure to instruct jury on intent element of Hobbs Act robbery was harmless error where jury convicted defendants of conspiracy, requiring jury to have found that defendants conspired to take or obtain victims' personal property, against victims' will, by means of force or fear of injury; no rational jury could have found those facts without also concluding that defendants intended to deprive owners of property permanently. 18 U.S.C.A. 1951(b). [14] Criminal Law 110 423(1)

110 Criminal Law 110XVII Evidence 110XVII(O) Acts and Declarations of Conspirators and Codefendants 110k423 Furtherance or Execution of Common Purpose 110k423(1) k. In General. Most Cited Cases Statements by coconspirator were made in furtherance of conspiracy and, thus, were admissible, even if overt act of dividing proceeds may not have been a criminal act; conduct was nevertheless within scope of conspiracy. *1124 i. Principles Of Statutory Construction Create A Presumption That The Hobbs Act Incorporates New York's Requirement Of Specific Intent [5] The Third Circuit confronted this precise issue in United States v. Nedley, 255 F.2d 350 (3d Cir.1958). The Third Circuit noted: Where Congress borrows terms of art in which are accumulated the legal tradition and meaning of centuries of practice, it presumably knows and adopts the cluster of ideas that were attached to each borrowed word in the body of learning from which it was taken and the meaning its use will convey to the judicial mind unless otherwise instructed. In such case, absence of contrary direction may be taken as satisfaction with widely accepted definitions, not as a departure from them. Id. at 357 (quoting Morissette v. United States, 342 U.S. 246, 263, 72 S.Ct. 240, 250, 96 L.Ed. 288 (1952)). The Third Circuit applied this reasoning to conclude that because Congress had used the New York statutory definition of robbery and had not indicated that specific intent was not an element, a Hobbs Act robbery requires specific intent. This approach accords with the approach the Ninth Circuit took in a closely analogous case. In United States v. Aguon, 851 F.2d 1158, 1162-67 (9th Cir.1988) (en banc), the Ninth Circuit decided whether a conviction for extortion under the Hobbs Act requires proof of inducement. The Ninth Circuit explained that Congress had taken the Hobbs Act's definition of extortion from the New York Code, and that in construing the state statute, New York courts had required proof of inducement. The Ninth Circuit echoed Nedley by stating:

It is a well-established principle of statutory construction that when one jurisdiction adopts the statute of another jurisdiction as its own, there is a presumption that the construction placed upon the borrowed statute by the courts of the original jurisdiction is adopted along with the statute and treated as incorporated therein. Id. at 1164 (citing Tucker v. Oxley, 9 U.S. (5 Cranch) 34, 42, 3 L.Ed. 29 (1809) ). The Ninth Circuit followed this principle to conclude that Congress had adopted the New York courts' interpretation of extortion when it borrowed the New York statutory definition, and so a conviction for extortion under the Hobbs Act requires proof of inducement.FN7 FN7. **The Supreme Court later disagreed with the Ninth Circuit's conclusion on this issue. Evans v. United States, 504 U.S. 255, 260-66, 112 S.Ct. 1881, 1885-88, 119 L.Ed.2d 57 (1992) . In doing so, however, the Supreme Court reaffirmed the principles of statutory construction the Ninth Circuit followed and specifically noted that Congress had taken the Hobbs Act's definition of extortion substantially from the New York Code. Id. The Supreme Court found, however, that the New York statute ... makes clear that extortion could be committed [without inducement]. Id. at 264-65, 112 S.Ct. at 1887. The Court found that the Hobbs Act's legislative history's reference to New York law is consistent with an intent to apply the common-law definition [of extortion, which does not require inducement]. Id. at 264, 112 S.Ct. at 1887. Thus, although **the Supreme Court has overruled Aguon 's holding that proof of inducement is required, it has reaffirmed Aguon 's reasoning insofar as it is relevant to the case at bar. The Supreme Court merely disagreed with the Ninth Circuit that New York law required proof of inducement. Applying the principles of statutory construction articulated in Nedley and Aguon to the instant case, the proper outcome becomes *1125 clear. The legislative history of the Hobbs Act indicates that Congress took its definition of robbery from the New York statute. Congress manifested no intention to alter that definition substantially. Thus, a presumption exists that Congress intended to incorporate New York's interpretation of its robbery statute, which includes a requirement of **specific intent. See Aguon, 851 F.2d at 1164; see also Justice Felix Frankfurter, Reflections on the Reading of Statutes, 47 Colum.L.Rev. 527, 537 (1947) (stating that if a word is obviously transplanted from another legal source, whether the common law or other legislation, it brings the old soil with it). ii. The Legislative History Of The Hobbs Act Confirms The Presumption That The Hobbs Act Incorporates New York's Requirement Of Specific Intent The accuracy of this presumption becomes apparent when one analyzes the legislative history of the Hobbs Act. During House debates on the bill, Representative Hobbs stated that there is nothing clearer than the definition of robbery and extortion in this bill. They have been construed by the Courts not once, but a thousand times. 91 Cong.Rec. 11,900 (1945). For this reason, Representative Hobbs stated that [e]verybody knows that [the definitions] mean. Id. at 11,912. Obviously, if Congress had redefined robbery by eliminating the requirement of specific intent, then no court would yet have construed the Hobbs Act's definition. It would have been disingenuous at best to claim that the courts had construed it a thousand times or that everybody knows what [the definition] means[s]. Representative Hobbs' statements thus indicate that one should look to judicial constructions of the state statute to interpret the Hobbs Act's definition of robbery. Moreover, Representative Michener stated: [T]here has been and will be so much talk about what constituted robbery and extortion and it is well to remember that the New York definitions are being used in this bill. Id. at 11,843. Representative Michener's statement indicates that, to ascertain the meaning of robbery under the Hobbs Act, one should look to New York law. However, because the New York statute was virtually identical to the Hobbs Act's definition, looking to the state statute's text would not help someone interpret the federal statute. Therefore, Representative Michener's statement must mean that one should look to judicial constructions of the state statute to interpret the Hobbs Act's definition of robbery. In sum, principles of statutory construction create a presumption that Congress intended to incorporate judicial constructions of New York's robbery statute into the Hobbs Act. The legislative history of the Hobbs Act confirms

the accuracy of that presumption. Additionally, as discussed below, case law leads to the same conclusion. iii. Case Law Compels The Conclusion That The Hobbs Act Requires Specific Intent In addition to holding that a Hobbs Act extortion requires inducement, the Ninth Circuit held in Aguon that it requires specific intent, despite the statute's failure to mention mens rea. The government argues, however, that Aguon is not controlling. The government notes that Aguon dealt only with whether specific intent is an element of a Hobbs Act extortion, and did not address whether the Hobbs Act requires specific intent for robbery. The government notes that extortion, unlike robbery, involves taking property with the owner's consent. Therefore, the government argues, proof of an evil motive is necessary in extortion cases in order not to convict individuals who believed they were acting innocently, but such proof is not as important in robbery cases. However true all this may be, it does not compel the conclusion that Aguon does not apply to the case at bar. Aguon 's reasoning sweeps broadly; in addition to articulating venerable principles of statutory construction, the Ninth Circuit bottomed its opinion on the fundamental requirement of mens rea in Anglo-American jurisprudence: [This] regular requirement of Anglo-American criminal law [is] no provincial or transient notion. Invoking William *1126 Blackstone, Roscoe Pound and Max Radin, and writing for the [Supreme] Court [in Morissette v. United States ], Justice Jackson found mens rea a cornerstone of our criminal jurisprudence . As he observed, the intense individualism of Americans had set this element deep within our criminal law. Justice Jackson drew the clear corollary: the question of intent must be submitted to the jury. Aguon, 851 F.2d at 1168 (citations omitted). On this basis, the Ninth Circuit broadly held that [n]o act standing alone is a crime under the Hobbs Act. A guilty mind has to be proved as well as a wrongful deed. Id. This reasoning applies equally to the case at bar. Unsuccessful in its attempt to distinguish Aguon, the government next claims that Nedley was wrongly decided. The government relies on United States v. Thomas, 8 F.3d 1552 (11th Cir.1993), which held that robbery does not require specific intent under the Hobbs Act. An analysis of Thomas reveals that it contains no reasoning of its own on this issue. Rather, it merely stated its conclusion after quoting extensively from the Supreme Court's opinion in United States v. Culbert, 435 U.S. 371, 98 S.Ct. 1112, 55 L.Ed.2d 349 (1978), which the government also cites. In Culbert, the Supreme Court addressed whether the Hobbs Act's definition of extortion requires proof of racketeering. The Supreme Court stated: Nothing on the face of the statute suggests a congressional intent to limit its coverage to persons who have engaged in racketeering. To the contrary, the statutory language sweeps within it all persons who have in any way or degree ... affect[ed] commerce by robbery or extortion. These words do not lend themselves to restrictive interpretation; as we have recognized, they manifest ... a purpose to use all the constitutional power Congress has to punish interference with interstate commerce by extortion, robbery or physical violence. The statute, moreover, carefully defines its key terms, such as robbery ... Id. at 373, 98 S.Ct. at 1113 (citations omitted). Read broadly and superficially, this language would seem to support the government's position. On closer analysis, however, Culbert (and therefore Thomas ) offers the government little help, for several reasons. First, the quoted language merely expresses the unexceptional proposition that the statute criminalizes all activity that falls within its language. All criminal statutes seek to do this, and many attempt to define their key terms. This may prohibit courts from grafting a highly specific, additional element onto a statute, such as proof of racketeering. However, it generally does not prohibit courts from requiring a mens rea element where one does not appear from the face of the statute. Courts regularly require proof of mens rea in such cases. E.g., Aguon, 851 F.2d at 1168.

Second, the Culbert Court did not confront the issue of whether the Hobbs Act requires mens rea , or what that mens rea might be. It is highly implausible that the Culbert Court intended to foreclose any possibility of requiring a mens rea for robbery or extortion. Such a holding would make such crimes (punishable by years in prison) strict liability offenses. Yet that is what the government's hyper-literal reading of Culbert would require. FN8 Clearly then, the Supreme Court did not intend the above-quoted language to offer guidance on the issue of mens rea. FN8. It is equally unrealistic to attribute such an intention to Congress where the legislative history evinces no such intention and in fact is to the contrary. Third, other language in Culbert cuts sharply against the government's argument. The Court stated that there is no question that Congress intended to define as a federal crime conduct that it knew was punishable under state law.... [C]onduct punishable under the Hobbs Act was already punishable under state robbery and extortion statutes. Id. at 379, 98 S.Ct. at 1117 (emphasis added). Thus, Culbert indicates that Congress intended to criminalize only those robberies that *1127 the states already punished-robberies that involved specific intent.FN9 FN9. Congress apparently decided to criminalize acts that the states already criminalized because the States had not been effectively prosecuting robbery and extortion affecting interstate commerce and [Congress believed that] the Federal Government had an obligation to do so. Culbert, 435 U.S. at 380, 98 S.Ct. at 1117. For all these reasons, Culbert (and therefore Thomas ) does not compel the conclusion that specific intent is not an element. To the extent that Culbert offers any guidance at all, it leads to the opposite conclusion. FN10 FN10. The Ninth Circuit decided Aguon long after the Supreme Court had decided Culbert. However, Aguon does not cite Culbert or discuss its implications. Perhaps it simply did not occur to the Ninth Circuit that Culbert could be stretched so far so as to eliminate the requirement of specific intent, or for that matter, any mens rea requirement for a serious felony. In any event, the Ninth Circuit apparently did not feel itself bound by Culbert on an issue that is virtually identical to the one confronting this Court today. In short, case law, legislative history, and principles of statutory construction lead to the same conclusion: Conviction for robbery under the Hobbs Act requires proof of the specific intent to deprive another of his or her property permanently. Because the Court did not instruct the jury on this element (either in the instructions for the substantive robbery offense or elsewhere), the Court erred.FN11 Accordingly, the Court now turns to the issue of the appropriate standard of review to apply to the error. U.S. v. Collins, 78 F.3d 1021, 77 A.F.T.R.2d 96-1274, 44 Fed. R. Evid. Serv. 144, 1996 Fed.App. 0082P (6th Cir.(Ky.),Mar 11, 1996) Defendant was convicted in the United States District Court for the Eastern District of Kentucky, Joseph M. Hood, J., of conspiracy to violate the Hobbs Act and conspiracy to defraud the United States by impeding the Internal Revenue Service (IRS) function, and he appealed. The Court of Appeals, Robert Holmes Bell, District Judge, sitting by designation, held that: **(1) evidence was sufficient to establish that the victims of the alleged conspiracy to extort acted out of fear of economic loss, despite the defendant's claim that the victims were in fact motivated to make payments by their desire for economic gain; **(2) the defendant as a private citizen could be convicted of a Hobbs Act conspiracy, even though the public official named as a coconspirator left office before the conspiracy allegedly ended and another public official was not charged with the conspiracy; **(3) the Supreme Court McCormick decision's quid pro quo requirement applies in extortion prosecutions that involve noncampaign contribution cases as well as campaign contribution cases; (4) the Government's questioning of an expert witness did not improperly use the expert to make credibility determinations or withdraw from the jury the simple issue of whether the defendant and others conspired to defraud United States; (5) there was ample circumstantial evidence to allow the jury to infer the existence of a conspiracy to impair the IRS' ability to collect income taxes; (6) instances of laughter, gestures and facial expressions by the prosecutor may have been improper, but fell short of being reversible error; and (7) the prosecutor's improper statements that injected his personal opinion as to the credibility of witnesses and defense counsel during his rebuttal argument did not undermine jury's ability to view the evidence

independently and fairly and, thus, the error was harmless and did not warrant a new trial. Affirmed. [15] Criminal Law 110

823(5)

110 Criminal Law 110XX Trial 110XX(G) Instructions: Necessity, Requisites, and Sufficiency 110k823 Error in Instructions Cured by Withdrawal or Giving Other Instructions 110k823(5) k. Intent, Malice, and Motive. Most Cited Cases Instruction on definition of wrongful in context of fear of economic loss branch of extortion was sufficient to inform jury of required mens rea, even if jury was not instructed that wrongful meant that defendant believed he had no lawful right to property obtained; in addition to instruction on wrongful, jury received standard instruction on proof of defendant's state of mind and specific intent and jury was instructed that government needed to prove that defendant conspired to accept payments in manner which would violate the law. 18 U.S.C.A. 1951. [16] Extortion and Threats 165 4

165 Extortion and Threats 165I Official Extortion 165k3 Elements of Offenses 165k4 k. In General. Most Cited Cases Supreme Court McCormick decision's quid pro quo requirement, under which receipt of political contributions violates Hobbs Act only if payments are made in return for explicit promise or undertaking by public official to perform or not to perform official act, applies in extortion prosecutions that involve non-campaign contribution cases as well as campaign contribution cases. 18 U.S.C.A. 1951. [17] Criminal Law 110 822(1)

110 Criminal Law 110XX Trial 110XX(G) Instructions: Necessity, Requisites, and Sufficiency 110k822 Construction and Effect of Charge as a Whole 110k822(1) k. In General. Most Cited Cases Jury instruction should not be judged in artificial isolation; rather, it must be considered in context of instructions as a whole and of trial record. [18] Criminal Law 110 822(6)

110 Criminal Law 110XX Trial 110XX(G) Instructions: Necessity, Requisites, and Sufficiency 110k822 Construction and Effect of Charge as a Whole 110k822(6) k. Elements and Incidents of Offense. Most Cited Cases Instructions in Hobbs Act extortion prosecution satisfied requirement of quid pro quo, even if they were not models of clarity for non-campaign contribution extortion cases; immediately before allegedly objectionable paragraph, jurors were instructed that as element of offense of conspiracy to commit extortion by obtaining money under color of official right, they would have to find unanimously that government proved that conspirators agreed to acquire or attempt to acquire money or property in return for official act or exercise of official authority by public

officials. 18 U.S.C.A. 1951. [23] Conspiracy 91 23.1

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k23.1 k. In General. Most Cited Cases General conspiracy statute reaches any conspiracy for purpose of impairing, obstructing, or defeating lawful function of any department of Government. 18 U.S.C.A. 371. [24] Conspiracy 91 33(2.1)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k33 Conspiracy to Defraud Government 91k33(2) Particular Offenses and Acts 91k33(2.1) k. In General. Most Cited Cases General conspiracy statute has been given very broad meaning so that defraud extends beyond its common law usage and includes interference or obstruction of lawful governmental function by deceit, craft or treachery or at least by means that are dishonest. 18 U.S.C.A. 371. [25] Conspiracy 91 23.1

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k23.1 k. In General. Most Cited Cases Conviction for conspiracy under general conspiracy statute cannot be sustained unless there is proof of agreement to commit offense against United States. 18 U.S.C.A. 371. [26] Conspiracy 91 47(2)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence 91k47 Weight and Sufficiency 91k47(2) k. Circumstantial Evidence. Most Cited Cases Participation in conspiracy need not be proved by direct evidence. 18 U.S.C.A. 371. [27] Conspiracy 91 24(1)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses

91k23 Nature and Elements of Criminal Conspiracy in General 91k24 Combination or Agreement 91k24(1) k. In General. Most Cited Cases Under general conspiracy statute, government need not prove formal agreement; tacit or mutual understanding to engage in common plan is sufficient. 18 U.S.C.A. 371. [28] Conspiracy 91 33(7)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k33 Conspiracy to Defraud Government 91k33(2) Particular Offenses and Acts 91k33(7) k. Relating to Customs or Revenue Laws. Most Cited Cases Conspiracy may have multiple objectives, but if one objective, even a minor one, is evasion of federal taxes, offense is made out under general conspiracy statute, even though primary objective may be concealment of another crime. 18 U.S.C.A. 371. [29] Conspiracy 91 33(7)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k33 Conspiracy to Defraud Government 91k33(2) Particular Offenses and Acts 91k33(7) k. Relating to Customs or Revenue Laws. Most Cited Cases If tax evasion motive plays any part in scheme, offense under general conspiracy statute can be made out even though scheme may have other purposes such as concealment of other crimes, but it is not sufficient for government to show merely that defendant's actions had incidental effect on Internal Revenue Service (IRS). 18 U.S.C.A. 371. [30] Conspiracy 91 33(7)

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k33 Conspiracy to Defraud Government 91k33(2) Particular Offenses and Acts 91k33(7) k. Relating to Customs or Revenue Laws. Most Cited Cases Intent element of conspiracy to defraud United States by obstructing and impeding the ability of Internal Revenue Service (IRS) to ascertain and collect taxes does not require government to prove that conspirators were aware of criminality of their objective, but it does require government to show that conspirators knew of liability for federal taxes. 18 U.S.C.A. 371. [31] Conspiracy 91 47(9)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence

91k47 Weight and Sufficiency 91k47(3) Particular Conspiracies 91k47(9) k. Internal Revenue Violations. Most Cited Cases Ample circumstantial evidence allowed jury to infer existence of conspiracy to impair Internal Revenue Service's (IRS) ability to collect income taxes could be inferred, even though there was no evidence that defendant ever discussed effect of alleged extortion scheme and its financial transactions on the IRS; **there was evidence that defendant and conspirators obtained extortion money under guise of legal payments as political contributions, gifts and business investments, and that disguise effectively foreclosed ability of IRS to attribute, ascertain, compute and collect taxes properly. 18 U.S.C.A. 371. 1. Instruction on Wrongful Defendant contends the court improperly instructed the jury on the definition of the term wrongful in the context of the fear of economic loss branch of extortion because it failed to include an instruction on mens rea. Defendant contends that the court should have instructed that the term wrongful means that the defendant believed he had no lawful right to the property obtained. FN7 FN7. The court instructed on wrongful as follows: The term wrongful means that the defendant had no lawful right to the property obtained and that the property was obtained because of the victim's fear of economic loss. If the object or purpose of the defendant was to obtain money to which the defendant was lawfully entitled, then the defendant did not act in a wrongful manner. Thus if you find that the defendant accepted or received money or fees in exchange for legitimate services that he performed, you must find that the defendant did not obtain these monies wrongfully. Furthermore, if you find that the individual investors made voluntary investments in the horse partnerships without fear of economic loss, you must find that the defendant did not obtain these investments wrongfully. [13][14] *18 Because Collins made no objection to this instruction at trial, the instruction is reviewed for plain error.FN8 Plain error is defined as an egregious error, one that directly leads to a miscarriage of justice. United States v. Frazier, 936 F.2d 262, 266 (6th Cir.1991)(quoting United States v. Busacca, 863 F.2d 433, 435 (6th Cir.1988)). The instruction is reviewed in the context of the jury instructions as a whole to determine whether they fairly and adequately submitted the issues and applicable law to the jury. United States v. Williams, 952 F.2d 1504, 1512 (6th Cir.1991). FN8. In fact, the government contends that because Defendant submitted this instruction he should not be heard to complain about it. See United States v. Sharpe, 996 F.2d 125, 129 (6th Cir.1993). The government, however, has failed to support this contention with the relevant portion of the record. We are accordingly unable to assess the merits of this argument. [15] In addition to the instruction on wrongful, the jury received the standard instruction on proof of a defendant's state of mind and specific intent.FN9 The jury was also instructed that because the partnerships were legitimate, viable and operating horse businesses, and because the solicitation and making of political contributions in and of itself is not a crime, the government must prove beyond a reasonable doubt that the defendant conspired to accept the payments in a manner which would violate the law. FN9. **To establish **specific intent, the government must prove beyond a reasonable doubt that the defendant knowingly did an act which the law forbids or knowingly failed to do an act which the law requires, purposely intending to violate the law. Upon review we are satisfied that the jury was adequately instructed on the required mens rea.

At p. 1033,

*19 2. Instruction on Quid Pro Quo Defendant asserts that the instruction on extortion under color of official right was inadequate because it permitted conviction based on mere influence rather than on an explicit promise and official acts, the quid pro quo requirements identified in McCormick v. United States, 500 U.S. 257, 271-73, 111 S.Ct. 1807, 1816, 114 L.Ed.2d 307 (1991), and Evans v. United States, 504 U.S. 255, 267-69, 112 S.Ct. 1881, 1889, 119 L.Ed.2d 57, 72 (1992).

In McCormick the Supreme Court held that in a prosecution for extortion under color of official right , the receipt of political contributions violates the Hobbs Act only if the payments are made in return for an explicit promise or undertaking by the official to perform or not to perform an official act. McCormick, 500 U.S. at 273, 111 S.Ct. at 1816. In Evans the Supreme Court clarified that fulfillment of the quid pro quo is not an element of the offense. Evans, 504 U.S. at 268, 112 S.Ct. at 1889. [T]he offense is *1034 completed at the time when the public official receives a payment in return for his agreement to perform specific official acts; fulfillment of the quid pro quo is not an element of the offense . Id. [T]he Government need only show that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts. Id. What the Hobbs Act proscribes is the taking of money by a public official in exchange for specific promises to do or refrain from doing specific things.... In other words, there must be a quid pro quo. United States v. Farley, 2 F.3d 645, 651 (6th Cir.1993)(quoting United States v. Bibby, 752 F.2d 1116, 1127 n. 1 (6th Cir.1985), cert. denied, *20475 U.S. 1010, 106 S.Ct. 1183, 89 L.Ed.2d 300 (1986)) (emphasis in original), cert. denied, --- U.S. ----, 114 S.Ct. 649, 126 L.Ed.2d 607 (1993).FN10 FN10. The official and the payor need not state the quid pro quo in express terms, for otherwise the law's effect could be frustrated by knowing winks and nods. The inducement from the official is criminal if it is express or if it is implied from his words and actions, so long as he intends it to be so and the payor so interprets it. Evans, 504 U.S. at 274, 112 S.Ct. at 1892 (Kennedy, J., concurring)(cited with approval in United States v. Blandford, 33 F.3d 685, 696 (6th Cir.1994)). The trial court gave the following jury instruction on extortion under color of official right: If you find than [sic] there were such payments in the form of political contributions to Democrats Together and Kentucky Democratic party, you must find that the conspiratorial agreement contemplated that a public official would perform or agree to perform the requested act or exercise of official authority or would be influenced in the performance of his duties, or that the subsequent operation of the conspiracy in fact caused the exercise or influence of official authority or duties. However, with respect to all other payments, for example, horse lease payments, limited partnership payments and payments for a piano, it is enough if the defendant conspired to acquire or cause the acquisition of that property or payment, knowing it was being given for such exercise or influence, and that the government need not prove that the conspiratorial agreement actually contemplated the performance of the requested act, exercise or influence of official authority or duty. Collins contends that the district court's quid pro quo instruction was inadequate because it did not include a quid pro quo requirement in the non-campaign context, and because its use of the term influence in both the campaign contribution and non-campaign contribution contexts failed to adequately state the quid pro quo requirement. *21 Although Defendant objected to the instruction at trial, his objections were based upon different grounds than he raises here. Because he did not raise the current objections at trial, the instructions are reviewable only for plain error. United States v. Pearce, 912 F.2d 159, 163 (6th Cir.1990), cert. denied, 498 U.S. 1093, 111 S.Ct. 978, 112 L.Ed.2d 1063 (1991). Whether or not there is a quid pro quo requirement in the non-campaign context is an issue that has not been directly addressed by the Supreme Court. In United States v. Blandford, 33 F.3d 685 (6th Cir.1994), cert. denied, 514 U.S. 1095, 115 S.Ct. 1821, 131 L.Ed.2d 743 (U.S.1995), we questioned whether the quid pro quo requirements of McCormick and Evans apply when a public official's acceptance of non-campaign payments forms the basis for that official's extortion charge. Id. at 697. Although this Court expressed the view that Evans was limited to the campaign contribution context, Blandford did not require resolution of the issue because the instruction at issue tracked the relevant language of Evans and inured to the defendant's benefit. Id. at 698.FN11

FN11. Because quid pro quo is required for a campaign contribution case, it follows a fortiori that in noncampaign contribution cases, which are perhaps less, but clearly not more, difficult to prove from the government's standpoint, the same showing of a quid pro quo also would suffice. Blandford, 33 F.3d at 697. In effect, the instruction at issue in Blandford required the government prove a campaign contribution case even though no campaign contributions had in fact been made. Id. *1035 Judge Nelson filed a concurring opinion in Blandford in which he expressed his understanding that the quid pro quo requirement of McCormick is not limited to campaign fund cases. Evans involved a hybrid campaign contribution and non-campaign contribution. As Justice Kennedy stated in his concurring opinion in Evans: Readers of today's opinion should have little difficulty in understanding that the rationale underlying the Court's holding applies not only in campaign contribution cases, but all 1951 *22 prosecutions. 504 U.S. at 278, 112 S.Ct. at 1894 (Kennedy, J., concurring). [16] Although the Supreme Court has not directly ruled on the quid pro quo requirement outside the context of campaign contributions, most circuits that have addressed the issue have determined that the quid pro quo requirement applies in non-campaign contribution cases as well as campaign contribution cases. See, e.g., United States v. Hairston, 46 F.3d 361, 365 (4th Cir.1995); United States v. Martinez, 14 F.3d 543, 553 (11th Cir.1994); United States v. Garcia, 992 F.2d 409, 414 (2d Cir.1993). We now join these circuits in holding that the quid pro quo requirement applies to all 1951 extortion prosecutions, not just to those involving campaign contributions. Hobbs Act convictions have been reversed where the jury was improperly instructed on the quid pro quo requirement. See, e.g., Taylor, 993 F.2d at 384-85 (jury instructed that there need be no promise with respect to official action in return for the payment); United States v. Martinez, 14 F.3d 543, 552 (11th Cir.1994)(jury instructed that they could find extortion under color of official right where the official accepted a benefit knowing such payment was motivated by hope of influence); Garcia, 992 F.2d at 415 (jury instructed that they could convict on the basis that the defendant solicited the payment of money in connection with his official duties, or if the acceptance of benefits could reasonably have affected the defendant's exercise of his duties). [17] An instruction, however, should not be judged in artificial isolation. It must be considered in the context of the instructions as a whole and the trial record. Estelle v. McGuire, 502 U.S. 62, 72, 112 S.Ct. 475, 482, 116 L.Ed.2d 385, 399 (1991). In United States v. Hairston, 46 F.3d 361 (4th Cir.1995), the jury was instructed in part, that if a public official accepts things of significant value to which he was not entitled, and which he knows were given to him with the expectation of influencing his conduct of his public *23 office, such action would constitute extortion. The court read the instruction in the context of the instructions as a whole and the trial record, and determined that although the district court's instruction was not a model for future cases, it adequately conveyed the necessity of proof of a quid pro quo. Id. at 372-73. [18] Immediately prior to the paragraph Defendant contends is objectionable, the jury was instructed that as an element of the offense of conspiracy to commit extortion by obtaining money under color of official right, they would have to unanimously find that the government proved beyond a reasonable doubt that the conspirators agreed to acquire or attempt to acquire money or property in return for an official act or exercise of official authority by public officials. Later in the instructions they were instructed as follows: The solicitation and making of political contributions in and of itself is not a crime. As you are all aware, most political activity is financed through voluntary contributions and such contributions are commonly made by those who have the greatest interest in the outcome of the process. Accordingly you must bear in mind that contributions by interested parties are not, standing alone, in any way illegal. **Rather, the government must prove more than just the mere solicitation and making of political contributions for you to find the defendant guilty of conspiracy to commit extortion under color of official right. **The government must prove beyond a reasonable doubt that the defendant conspired to extort political contributions in exchange for influence in the award of state bond underwriting and engineering contracts.

**The government's evidence and argument in this case were directed at Defendant's *1036 promises to insure that donors were put on a level playing field regarding specific governmental projects such as road contracts, bridge contracts, housing issues, and bond issues in exchange for their contributions and investments. *24 The instruction in this case, like the instruction in Hairston, is not a model for future cases. Nevertheless, when the instructions are viewed as a whole, and in the context of the entire trial, it appears that the instruction satisfies the requirement of quid pro quo set forth in Evans.

At p. 1037,

III. **Count II of the indictment charges Defendant with conspiracy to defraud the United States by obstructing and impeding the ability of the IRS to ascertain and collect *27 taxes in violation of the general conspiracy statute, 18 U.S.C. 371.FN13 FN13. Title 18 U.S.C. 371 provides, in relevant part: If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under the title or imprisoned not more than five years, or both. Defendant contends that his conviction on Count II must be set aside because the evidence was not sufficient to support a finding of intent to defraud the IRS. [23][24][25] Section 371 reaches any conspiracy for the purpose of impairing, obstructing, or defeating the lawful function of any department of Government. United States v. Jerkins, 871 F.2d 598, 602 (6th Cir.1989) (quoting Dennis v. United States, 384 U.S. 855, 861, 86 S.Ct. 1840, 1844, 16 L.Ed.2d 973 (1966) ). The statute has been given a very broad meaning so that defraud extends beyond its common law usage and includes interference or obstruction of a lawful governmental function by deceit, craft or treachery or at least by means that are dishonest. United States v. Licciardi, 30 F.3d 1127, 1131 (9th Cir.1994)(quoting Hammerschmidt v. United States, 265 U.S. 182, 188, 44 S.Ct. 511, 512, 68 L.Ed. 968 (1924)). Although the statute is broadly construed, [i]t is fundamental that a conviction for conspiracy under 18 U.S.C. 371 cannot be sustained unless there is proof of an agreement to commit an offense against the United States. Ingram v. United States, 360 U.S. 672, 677-78, 79 S.Ct. 1314, 1319, 3 L.Ed.2d 1503 (1959). [26][27] Participation in a conspiracy need not be proved by direct evidence. United States v. Shermetaro, 625 F.2d 104, 108 (6th Cir.1980). The nature of the agreement comprising a conspiracy may be inferred from circumstantial evidence. *28United States v. Spears, 49 F.3d 1136, 1142 (6th Cir.1995). Thus, the government need not prove a formal agreement-a tacit or mutual understanding to engage in a common plan is sufficient. United States v. Ellzey, 874 F.2d 324, 328 (6th Cir.1989). [28] Moreover, the conspiracy to defraud the United States need not be the main objective of the conspirators. A conspiracy may have multiple objectives, but if one of the objectives, even a minor one, is the evasion of federal taxes, the offense is made out, even though the primary objective may be *1038 concealment of another crime. Ingram, 360 U.S. at 679-80, 79 S.Ct. at 1320. If a tax evasion motive plays any part in a scheme, the offense can be made out even though the scheme may have other purposes such as the concealment of other crimes. Shermetaro, 625 F.2d at 109. [29] Nevertheless, it is not sufficient for the government to merely show that Defendant's actions had an incidental effect on the IRS. As the Ninth Circuit stated in United States v. Licciardi, 30 F.3d 1127 (9th Cir.1994), [t]hat the incidental effects of Licciardi's actions would have been to impair the functions of the BATF does not confer upon him the mens rea of accomplishing that object. Id. at 1132.

[30] In this case, the government was required to show that Defendant and his co-conspirators intended, as at least one of their objectives, to impair the functions of the IRS. The intent element of 371 does not require the government to prove that the conspirators were aware of the criminality of their objective, but it does require the government to show that they knew of the liability for federal taxes. Ingram, 360 U.S. at 678, 79 S.Ct. at 1319. [31] According to the government, the object of the conspiracy charged in Count II was to obtain the extortion money under the guise of legal payments as **political contributions, gifts and business investments, and that disguise effectively foreclosed the ability of the IRS properly to attribute, ascertain, compute and collect taxes. *29 The government offered no direct evidence of an agreement to impair the IRS function. It did, however, offer ample circumstantial evidence from which a conspiracy to impair the IRS' ability to collect income taxes could be inferred. As an initial matter, the jury could consider the financial sophistication of those allegedly involved in the tax conspiracy. The jury could easily conclude that Collins was aware of his income tax obligations. As reflected by his involvement in political fundraising and horse partnerships, Collins was fairly conversant in the area of the obligations and tax write-offs. Moreover, he stated himself during a television broadcast that the IRS had to approve of everything he did. There was also ample evidence of the financial sophistication of the partners at DLJ and Cranston who did business with Collins. As investment bankers, complex financial transactions and the tax implications of those transactions was at the heart of their professional expertise. Along with the participants' financial sophistication, the jurors could consider the unconventional manner in which payments were structured. DLJ's initial investment in Collins Partners No. 2 was returned with express instructions that the investment would have to be made in the names of individuals rather than the corporation. DLJ complied with Collins' instructions and the partnership units were parcelled out among members of the firm. The corporate nature of the investment, however, was apparent by the fact that DLJ loaned the purchase money to the investors and held them harmless from any loss associated with the Collins Partners investment. This evidence supports an inference that DLJ understood Collins' desire to conceal any connection between the source of the investments in his partnerships from the entities who were obtaining business from the Commonwealth and that DLJ tacitly agreed to help this endeavor. Because of the way the transaction was structured, **DLJ undoubtedly understood that Collins was *30 not intending to report this investment as personal income, because to do so would be tantamount to informing the government that he was extorting money from those who sought to do business with the Commonwealth. Collins' request for contributions towards a piano for his wife was also unconventional enough to make it obvious to DLJ that this was yet another Collins scheme for obtaining income that would not be reported to the IRS. Collins had DLJ pay for the piano, then concealed the true donor by presenting the piano from friends and family. Additional evidence to support a finding of a conspiracy to defraud the IRS is Collins' periodic receipt of envelopes of cash from the *1039 Democratic Party Chairman. Again, the jury could have inferred that all participants in this arrangement understood that these kickbacks would not be reported to the IRS, because to do so would have been to alert the IRS to the illegal scheme. While there is no evidence that Defendant ever discussed the effect of the financial transactions on the IRS, **based upon the financial sophistication of Collins and those he dealing with and the nature in which the payments were structured, a rational juror could conclude that the participants had at least a tacit or mutual understanding that the IRS would not be informed of the true nature of the transactions and that the IRS' functions would accordingly be impaired. As previously stated, in evaluating the sufficiency of the evidence, we review the evidence in the light most favorable to the prosecution, and consider whether any rational trier of fact could find the essential elements of the crime beyond a reasonable doubt. See Jackson, 443 U.S. at 319, 99 S.Ct. at 2789; Spears, 49 F.3d at 1140. Upon

review of this record in the light most favorable to the government, we are convinced that the evidence was sufficient to enable a reasonable juror to find the essential elements of a conspiracy to impair the functions of the IRS in violation of 18 U.S.C. 371, beyond a reasonable doubt.

Alliance Title threatened Soon W. Chey with the economic harm of C.C. foreclosure for the purpose of obtaining money Sample allegation from Garcia v. GMAC, filename, garcia_v_gmac.doc By regularly threatening foreclosure, scheduling and carrying out foreclosure 228. at all relevant times, Defendants and the Conspirators were each a person within the meaning of RICO, 18 U.S.C. 1961(3) and 1962(d) 229 at all relevant times, the Defendants and the Conspirators formed an association-in-fact for the purpose of defrauding the plaintiffs and the other victims. The association-in-fact was an enterprise Within the meaning of RICO, 18 U.S.C. 1961(4). 230 at all relevant times, the enterprise was engaged in , and its activities affected, interstate and foreing commerce, within the meaning of RICO, 18 U.S.C. 1962(c). 231. As set forth in Count Three, Defendants and each of the other Conspirators associated with this enterprise conducted or participated, directly or indirectly, in the conduct of the enterprise's affairs through a "pattern of racketeering activity" within the meaning of RICO, 18 U.S.C. 1961(5), in violation of RICO, 18 U.S.C. 1962(c). 232. At all relevant times, Defendants and the other Conspirators each were associated with the enterprise and agreed and conspired to violate 18 U.S.C. 1962(c), that is, agreed to conduct and participate, directly and indirectly, in the conduct of the affairs of the enterprise through a pattern of racketeering activity, in violation of 18 U.S.C. 1962(d). 233. Defendants and the other Conspirators committed and caused to be committed a series of overt acts in furtherance of the Conspiracy and to affect the objects thereof, including but not limited to the acts set forth above and including repeated threats of foreclosure in an effort to deprive Plaintiffs of their legal and beneficial interest in their homes if they did not pay the unlawful loans that Defendants created for Plaintiffs. 234. As a result of Defendants and the other Conspirators' violations of 18 U.S.C. 1962(b)(c), the Plaintiffs and the class members they represent have lost millions of dollars in the fraudulent schemes Defendants created, organized, serviced, and continue to operate and run. The threat of imminent foreclosure is but one of the unlawful activities that Defendants engage in through a pattern of racketeering activity and the collection of unlawful debts.

235. As a result of the Defendants actions and associations with an enterprise engaged in interstate and foreign commerce, Defendants are liable to the Plaintiffs for their losses in an amount to be determined at trial. 236. Pursuant to RICO, 18 U.S.C. 1964(c), the Plaintiffs and the class members they represent are entitled to recover threefold their damages plus costs and attorneys' fees from Defendants. Case authority pleading 18 U.S.C. 1951 extortion by attempting to collect payments that are not due by the threat of foreclosure And complaint plead with adequate particularity to withstand the defendants bank/mortgage servicers frcp 12(b)(6) motion for failure to state claim upon which relief may be granted. 18 U.S.C. 1951 Interference with commerce by threats or violence Keyword search words: extortion threat of foreclosure to find case law.
U.S. v. Zemek, 634 F.2d 1159, 7 Fed. R. Evid. Serv. 216 (9th Cir.(Wash.),Oct 06, 1980)

At p. 1174,
*1174 1. Intangible Property [20] The concept of property under the Hobbs Act has not been limited to physical or tangible things. The right to make business decisions and to solicit business free from wrongful coercion is a protected property right. See, e. g., United States v. Santoni, 585 F.2d 667 (4th Cir. 1978), cert. denied, 440 U.S. 910, 99 S.Ct. 1221, 59 L.Ed.2d 459 (1979) (right to make business decisions free from outside pressure wrongfully imposed); United States v. Nadaline, 471 F.2d 340 (5th Cir.), cert. denied, 411 U.S. 951, 93 S.Ct. 1924, 36 L.Ed.2d 414 (1973) (right to business accounts and unrealized profits); United States v. Tropiano, 418 F.2d 1069 (2d Cir. 1969), cert. denied, 397 U.S. 1021, 90 S.Ct. 1258, 25 L.Ed.2d 530 (1970) (right to solicit business free from territorial restrictions wrongfully imposed by competitors). Cf. United States v. Hathaway, 534 F.2d 386, 395 (1st Cir.) cert. denied, 429 U.S. 819, 97 S.Ct. 64, 50 L.Ed.2d 79 (1976) (rejection of narrow perception of property); Battaglia v. United States, 383 F.2d 303 (9th Cir. 1967), cert. denied, 390 U.S. 907, 88 S.Ct. 817, 19 L.Ed.2d 874 (1968) (right to lease space in bowling alley free from threats). [21] The trial court instructed the jury using the following language from United States v. Tropiano, supra, 418 F.2d at 1075: property includes any valuable right considered as a source or element of wealth. No exception was noted. Chase's right to solicit business free from threatened destruction and physical harm falls within the scope of protected property rights under the Hobbs Act. 2. Coercion [22] It is difficult to view the acts directed against the Night Moves and its proprietor as non-coercive. Threatened force may encompass fear of economic loss as well as physical violence. See Instruction No. 36. Cf. United States v. Gates, 616 F.2d 1103, 1106 (9th Cir. 1980) (inducing payments to avoid county business tax).

18 U.S.C. violence (a)

Section in

1951. way

Interference or degree

with

commerce

by

threats or

or

Whoever

any

obstructs,

delays,

affects

commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined under this title or imprisoned not more than twenty years, or both. (b) As used in this section-(1) The term robbery means the unlawful taking or obtaining of personal property from the person or in the presence of another, against his will, by means of actual or threatened force, or violence, or fear of injury, immediate or future, to his person or property, or property in his custody or possession, or the person or property of a relative or member of his family or of anyone in his company at the time of the taking or obtaining. (2) The term extortion means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. (3) The term commerce means commerce within the District of Columbia, or any Territory or Possession of the United States; all commerce between any point in a State, Territory, Possession, or the District of Columbia and any point outside thereof; all commerce between points within the same State through any place outside such State; and all other commerce over which the United States has jurisdiction. Definition of wrongful, element of 18 U.S.C. 1951 Extortion
U.S. v. Enmons, 410 U.S. 396, 93 S.Ct. 1007, 35 L.Ed.2d 379, 82 L.R.R.M. (BNA) 2625, 70 Lab.Cas. P 13,425 (U.S.La.,Feb 22, 1973) The United States District Court for the Eastern District of Louisiana, 335 F.Supp. 641, dismissed indictment under the Hobbs Act, which makes it a federal crime to obstruct interstate commerce by robbery or extortion, and the United States appealed. The Supreme Court, Mr. Justice Stewart, held that damage to utility company property allegedly caused by defendant union members and officials during a legal strike against the utility for the purpose of securing higher wages for utility company employees was not within the reach of the Hobbs Act. Affirmed. Mr. Justice Blackmun filed concurring opinion. Mr. Justice Douglas dissented and filed opinion in which Mr. Chief Justice Burger, Mr. Justice Powell, and Mr. Justice Rehnquist concurred. [2] Extortion and Threats 165 25.1

165 Extortion and Threats 165II Threats 165k25 Nature and Elements of Offenses

165k25.1 k. In General. Most Cited Cases (Formerly 165k25, 377k1(1) Threats) The Hobbs Act, which makes it a federal crime to obstruct interstate commerce by robbery or extortion, reaches instances where union officials threaten force or violence against an employer in order to obtain personal payoffs and instances where unions use the proscribed means to exact wage payments from employers in return for imposed, unwanted, superfluous and fictitious services. 18 U.S.C.A. 1951, 1951(b)(2). [3] Extortion and Threats 165 25.1

165 Extortion and Threats 165II Threats 165k25 Nature and Elements of Offenses 165k25.1 k. In General. Most Cited Cases (Formerly 165k25, 377k1(1) Threats) The Hobbs Act, which makes it a federal crime to obstruct interstate commerce by robbery or extortion, does not reach the use of violence to achieve legitimate union objectives; in that situation, there is no wrongful taking of the employer's property. 18 U.S.C.A. 1951, 1951(b)(2). [4] Statutes 361 217.2

361 Statutes 361VI Construction and Operation 361VI(A) General Rules of Construction 361k213 Extrinsic Aids to Construction 361k217.2 k. Legislative History of Act. Most Cited Cases Interpretation placed by the sponsor of a bill on the very language subsequently enacted by Congress was appropriately part of the legislative history of the bill enacted, though the interpretation was given two years prior to the enactment with respect to a previous bill, the operative language of which was substantially carried forward into the Act. [5] Extortion and Threats 165 5

165 Extortion and Threats 165I Official Extortion 165k3 Elements of Offenses 165k5 k. Intent. Most Cited Cases Extortion requires an intent to obtain that which in justice and equity the party is not entitled to receive, and does not extend to the use of force to obtain a legitimate union demand for higher wages. 18 U.S.C.A. 1951(b)(2); Penal Law N.Y. 1909, 850. [6] Statutes 361 241(1)

361 Statutes 361VI Construction and Operation 361VI(B) Particular Classes of Statutes 361k241 Penal Statutes 361k241(1) k. In General. Most Cited Cases Criminal statute must be strictly construed, and any ambiguity must be resolved in favor of lenity.

[7] States 360

4.16(1)

360 States 360I Political Status and Relations 360I(A) In General 360k4.16 Powers of United States and Infringement on State Powers 360k4.16(1) k. In General. Most Cited Cases (Formerly 360k4.16) In construing a federal criminal statute, the Supreme Court would not be quick to assume that Congress meant to effect a significant change in the sensitive relation between federal and state criminal jurisdiction. [8] Extortion and Threats 165 25.1

165 Extortion and Threats 165II Threats 165k25 Nature and Elements of Offenses 165k25.1 k. In General. Most Cited Cases (Formerly 165k25, 377k1(1) Threats) Damage to utility company property allegedly caused by defendant unionmembers and officials during a legal strike against utility for the purpose of securing higher wages for utility company employees was not within the reach of the Hobbs Act, which makes it a federal crime to obstruct interstate commerce by robbery or extortion. 18 U.S.C.A. 1951, 1951(b)(2). *396 The Hobbs Act, which makes it a federal crime to obstruct interstate commerce by robbery or extortion, does not reach the use of violence (which is readily punishable under state law) to achieve legitimate union objectives, such as higher wages in return for genuine services that the employer seeks. Pp. 1009-1016. 335 F.Supp. 641, affirmed. Mr Justice STEWART delivered the opinion of the Court. A one-court indictment was returned in the United States District Court for the Eastern District of Louisiana*397 charging the appellees with a violation of the Hobbs Act , 18 U.S.C. s 1951. In pertinent part, that Act provides: (a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined not more than $10,000 or imprisoned not more than twenty years, or both. Extortion is defined in the Act, as the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear . . .. 18 U.S.C. s 1951(b)(2). At the time of the alleged conspiracy, the employees of the Gulf States Utilities Company were out on strike. The appellees are members and officils of labor unions that were seeking a new collective-bargaining agreement with that company. The indictment charged that the appellees and two named coconspirators conspired to obstruct commerce, and that as part of that conspiracy, they would obtain the property of the Gulf States Utilities Company in the form of wages and other things of value with the consent of the Gulf States Utilities Company . . ., such consent to be induced by the wrongful use of actual force, violence and fear of economic injury by (the appellees) and co-conspirators, in that (the appellees) and the coconspirators did commit acts of physical violence and destruction against property owned by the Gulf States Utilities Company in order to force said *398 Company to agree to a contract with Local 2286 of the International

Brotherhood of Electrical Workers calling for higher wages and other monetary benefits. Five specific acts of violence were charged to have been committed in furtherance of the conspiracy-**firing high-powered rifles at three Company transformers, **draining the oil from a Company transformer, and **blowing up a transformer substation owned by the Company. In short, the indictment charged that the appellees had conspired to use and did in fact use violence to obtain for the striking employees higher wages and other employment benefits from the Company. The District Court granted the appellees' motion to dismiss the indictment for **1009 failure to state an offense under the Hobbs Act. 335 F.Supp. 641. The court noted that the appellees were union members on strike against their employer, Gulf States, and that both the strike and its objective of higher wages were legal. **The court expressed the view that if the wages sought by violent acts are wages to be paid for unneeded or unwanted services, or for no services at all, then that violence would constitute extortion within the meaning of the Hobbs Act. Id., at 645. But in this case, by contrast, the court noted that the indictment alleged the use of force to obtain legitimate union objectives: The union had a right to disrupt the business of the employer by lawfully striking for higher wages. Acts of violence occurring during a lawful strike and resulting in damage to persons or property are undoubtedly punishable under State law. To punish persons for such acts of violence was not the purpose of the Hobbs Act. Id., at 646. The court found no case where a court has gone so far as to hold the type of activity involved here to be a violation of the Hobbs Act. Id., at 645. *399 [1] We noted probable jurisdiction of the Government's appeal, 406 U.S. 916, 92 S.Ct. 1774, 32 L.Ed.2d 114,FN1 to determine whether the Hobbs Act proscribes violence committed during a lawful strike for the purpose of inducing an employer's agreement to legitimate collective-barganing demands. The Government contends that the statutory language unambiguously and without qualification proscribes interference with commerce by extortion, and that in terms of the statute, extortion is the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear . . .. Wages are the property of the employer, the argument continues, and strike violence to obtain such property thus falls within the literal proscription of the Act. But the language of the statute is hardly as clear as the Government would make it out to be. Its interpretation of the Act slights the wording of the statute that proscribes obtaining property only by the **wrongful use of actual or threatened force, violence, or fear. The term wrongful, which on the face of the statute modifies the use of each of the enumerated means of obtaining property-actual or threatened force, violence, or fearFN2-would be superfluous if it only served to describe the means used. For it would be redundant to speak of wrongful violence or wrongful force since, *400 as the Government acknowledges, any violence or force to obtain property is wrongful.'FN3 Rather, wrongful has meaning in the Act only if it limits the statute's coverage to those instances where the obtaining of the property would itself be **1010 WRONGFUL BECAUSE THE ALLEGED EXTORTIONIST has no lawful claim to that property. FN2. Congressman Hobbs indicated that wrongful was to modify the entire section. 91 Cong.Rec. 11908. FN3. The Government suggests a convoluted construction of wrongful. It concedes that when the means used are not wrongful, such as where fear of economic loss from a strike is employed, then the objective must be illegal. If, on the other hand, wrongful force and violence are used, even for a legal objective, the Government contends that the statute is satisfied. But that interpretation simply accepts the redundancy of the term wrongful whenever it applies to force and violence in the statute. [2][3] Construed in this fashion, the Hobbs Act has properly been held to reach instances where union officials threatened force or violence against an employer in order to obtain personal payoffs,FN4 and where unions used the proscribed means to exact wage payments from employers in return for imposed, unwanted, superfluous and fictitious services' of workers.FN5 For in those situations, the employer's property has been misappropriated. But the literal language of the statute will not bear the Government's semantic argument that the Hobbs Act reaches the use of violence to achieve legitimate union objectives, such as higher wages in return for genuine services which the employer seeks. In that type of case, there has been no wrongful taking of the employer's property; he has paid for the services he bargained for, and the workers receive the wages to which they are entitled in compensation for their

services. FN4. See, e.g., United States v. Iozzi, 4 Cir., 420 F.2d 512; United States v. Kramer, 7 Cir., 355 F.2d 891, cert. granted and case remanded for resentencing, 384 U.S. 100, 86 S.Ct. 1366, 16 L.Ed.2d 396; Bianchi v. United States, 8 Cir., 219 F.2d 182. FN5. See, e.g., United States v. Green, 350 U.S. 415, 417, 76 S.Ct. 522, 524, 100 L.Ed. 494; United States v. Kemble, 3 Cir., 198 F.2d 889. *401 II The legislative framework of the Hobbs Act dispels any ambiguity in the wording of the statute and makes it clear that the Act does not apply to the use of force to achieve legitimate labor ends. The predecessor of the Hobbs Act, s 2 of the Anti-Racketeering Act of 1934, 48 Stat. 979, FN6 proscribed, in connection with interstate commerce, the exaction of valuable consideration by force, violence, or coercion, not including, however, the payment of wages by a bona-fide employer to a bona-fide employee . . . FN7 In United States v. Local 807, 315 U.S. 521, 62 S.Ct. 642, 86 L.Ed. 1004, the Court held that this exception covered*402 the members of a New York City truck drivers union who, by violence or threats, exacted payments for themselves from out-of-town truckers in return for the unwanted and superfluous service of driving out-of-town trucks to and from the city. The New York City teamsters would lie in wait for the out-of-town trucks, and then demand payment from the owners and drivers in return **1011 for allowing the trucks to proceed into the city. The teamsters sometimes drove the arriving trucks into the city, but in other instances, the out-of-town truckers paid the fees but rejected the teamsters' services and drove the trucks themselves. In several cases there was evidence that, having exacted their fees, the city drivers disappeared without offering to perform any services at all. Id., at 526, 62 S.Ct., at 644. See also id., at 539, 62 S.Ct., at 649 (Stone, C.J., dissenting). The Court held that the activities of the city teamsters were included within the wage exception to the Anti-Racketeering Act although what work they performed was unneeded and unwanted, and although in some cases their work was rejected. FN6. Section 2 of the Act provided: Any person who, in connection with or in relation to any act in any way or in any degree affecting trade or commerce or any article or commodity moving or about to move in trade or commerce(a) Obtains or attempts to obtain, by the use of or attempt to use or threat to use force, violence, or coercion, the payment of money or other valuable considerations, or the purchases or rental of property or protective services, not including, however, the payment of wages by a bona-fide employer to a bona-fide employee; or (b) Obtains the property of another, with his consent, induced by wrongful use of force or fear, or under color of official right; or (c) Commits or threatens to commit an act of physical violence or physical injury to a person or property in furtherance of a plan or purpose to violate sections (a) or (b); or (d) Conspires or acts concertedly with any other person or persons to commit any of the foregoing acts; shall, upon conviction thereof, be guilty of a felony and shall be punished by imprisonment from one to ten years or by a fine of $10,000, or both. FN7. See s 2(a) quoted in n. 6, supra. While the specific wage exception was found only in s 2(a) of the Act, s 3(b) excluded wages paid by a bona-fide employer to a bona-fide employee from the definition of property, money, or other valuable considerations. The wage exception thus permeated the entire Act. United States v. Green, 350 U.S., at 419 n. 4, 76 S.Ct., at 525; United States v. Local 807, 315 U.S. 521, 527 n. 2, 62 S.Ct. 642, 644, 86 L.Ed. 1004. Congressional disapproval of this decision was swift. Several billsFN8 were introduced with the narrow purpose

of correcting the result in the Local 807 case.FN9 H.R. 32, which became the Hobbs Act, 60 Stat. 420, eliminated the wage exception that had been the basis for the Local 807 decision. FN10 But, as frequently emphasized *403 on the floor of the House, the limited effect of the bill was to shut off the possibility opened up by the Local 807 case, that union members could use their protected status to exact payments from employers for imposed, unwanted, and superfluous services. As Congressman Hancock explained: FN8. S. 2347, 77th Cong., 2d Sess.; H.R. 6872, 77th Cong., 2d Sess.; H.R. 7067, 77th Cong., 2d Sess.; H.R. 653, 78th Cong., 1st Sess.; H.R. 32, 79th Cong., 1st Sess. See Callanan v. United States, 364 U.S. 587, 591 n. 5, 81 S.Ct. 321, 324, 5 L.Ed.2d 312; United States v. Green, supra, 350 U.S., at 419 n. 5, 76 S.Ct., at 525. FN9. See United States v. Green, supra, at 419 n. 5, 76 S.Ct., at 525; Note, Labor Faces the Amended AntiRacketeering Act, 101 U.Pa.L.Rev. 1030, 1033-1034 (1953). FN10. The Hobbs Act also eliminated the proviso in s 6 of the Anti-Racketeering Act of 1934: That no court of the United States shall construe or apply any of the provisions of this Act in such manner as to impair, diminish, or in any manner affect the rights of bona-fide labor organizations in lawfully carrying out the legitimate objects thereof, as such rights are expressed in existing statutes of the United States. That proviso was one of the supports for the Local 807 decision, see 315 U.S., at 535, 62 S.Ct., at 648, and it was eliminated to prevent reliance on that clause as a means of resuscitating the Local 807 decision. See 91 Cong.Rec. 11912 (remarks of Rep. Hobbs). This bill is designed simply to prevent both union members and nonunion people from making use of robbery and extortion under the guise of obtaining wages in the obstruction of interstate commerce. That is all it does. (T)his bill is made necessary by the amazing decision of the Supreme Court in the case of the United States against Teamsters' Union 807, 3 years ago. That decision practically nullified the anti-racketeering bill of 1934 . . .. In effect the Supreme Court held that . . . members of the Teamsters' Union . . . were exempt from the provisions of that law when attempting by the use of force or the threat of violence to obtain wages for a job whether they rendered any service or not. 91 Cong.Rec. 11900. Congressman Hancock proceeded to read approvingly from an editorial which characterized the teamsters' action in the Local 807 case as compelling the truckers to pay day's wages to local union drivers whose services were neither wanted nor needed. Ibid. Congressman Fellows stressed the fact that the facts of the Local 807 *404 case showed that these stick-up men disappeared as soon as the money was paid without rendering or offering to render any service. Id., at 11907. And Congressman Rivers characterized the facts of the Local 807 case as nothing short of hijacking,**1012 intimidation, extortion, and out-and-out highway robbery. Id., at 11917.FN11 FN11. See also 91 Cong.Rec. 11842 (remarks of Rep. Michener); id., at 11905 (remarks of Rep. Robsion); id., at 11909 (remarks of Rep. Gwynne); id., at 11909 (remarks of Rep. Vursell). In its report on the bill, the House Committee on the Judiciary reproduced this Court's decision in the Local 807 case and concluded that (t)he need for the legislation was emphasized by the opinion of the Supreme Court in . . . United States v. Local 807 . . .. H.R.Rep. No. 238, 79th Cong., 1st Sess., 10. See also S.Rep.No.1516, 79th Cong., 2d Sess. But by eliminating the wage exception to the Anti-Racketeering Act, the Hobbs Act did not sweep within its reach violence during a strike to achieve legitimate collective-bargaining objectives. It was repeatedly emphasized in the debates that the bill did not interfere in any way with any legitimate labor objective or activity; FN12 there is not a thing in it to interfere in the slightest degree with any legitimate activity on the part of labor people or labor unions . . ..'FN13 And Congressman Jennings, in responding to a question concerning the Act's coverage, made it clear that the Act does not have a thing in the world to do with strikes. Id., at 11912. FN12. 91 Cong.Rec. 11841 (remarks of Rep. Walter).

FN13. Id., at 11908 (remarks of Rep. Sumners). See also id., at 11900 (remarks of Rep. Hancock); id., at 11904 (remarks of Rep. Sumners); id., at 11912-11913 (remarks of Rep. Whittington). [4][5] Indeed, in introducing his original bill, Congressman Hobbs FN14 explicitly refuted the suggestion that strike violence*405 to achieve a union's legitimate objectives was encompassed by the Act:FN15 FN14. The remarks with respect to that bill, H.R. 653, 78th Cong., 1st Sess., which passed only the House, are wholly relevant to an understanding of the Hobbs Act, since the operative language of the original bill was substantially carried forward into the Act. The congressional debates on the Hobbs Act in the 79th Congress repeatedly referred to the legislative history of the original bill. See 91 Cong.Rec. 11842 (remarks of Rep. Michener); id., at 11899-11900 (remarks of Rep. Hancock); id., at 11900 (remarks of Rep. Hobbs). Surely an interpretation placed by the sponsor of a bill on the very language subsequently enacted by Congress cannot be dismissed out of hand, as the dissent would have it, simply because the interpretation was given two years earlier. FN15. See also 89 Cong.Rec. 3202 (remarks of Rep. Gwynne) (Act does not cover a clash between strikers and scabs during a strike). Mr. MARCANTONIO. All right. In connection with a strike, if an incident occurs which involvesMr. HOBBS. The gentleman need go no further. This bill does not cover strikes or any question relating to strikes. Mr. MARCANTONIO. Will the gentleman put a provision in the bill stating so? Mr. HOBBS. We do not have to, because a strike is perfectly lawful and has been so described by the Supreme Court and by the statutes we have passed. This bill takes off from the springboard that the act must be unlawful to come within the purview of this bill. Mr. MARCANTONIO. That does not answer my point. My point is that an incident such as a simple assault which takes place in a strike could happen. Am I correct? Mr. HOBBS. Certainly. Mr. MARCANTONIO. That then could become an extortion under the gentleman's bill, and *406 that striker as well as his union officials could be charged with violation of sections is this bill. **1013 Mr. HOBBS. I disagree with that and deny it in toto. 89 Cong.Rec. 3213. FN16 FN16. The proponents of the Hobbs Act defended the Act as no encroachment on the legitimate activities of labor unions on the ground that the statute did no more than incorporate New York's conventional definition of extortion-the obtaining of property from another . . . with his consent, induced by a wrongful use of force or fear, or under color of official right. N.Y. Penal Law s 850 (1909). See 91 Cong.Rec. 11842 (remarks of Rep. Walter); id., at 11843 (remarks of Rep. Michener); id., at 11900 (remarks of Rep. Hancock); ibid., (remarks of Rep. Hobbs); id., at 11906 (remarks of Rep. Robsion). See also United States v. Caldes, 9 Cir., 457 F.2d 74, 77; United States v. Provenzano, 3 Cir., 334 F.2d 678, 686. Judicial construction of the New York statute reinforces the conclusion that, however militant, union activities to obtain higher wages do not constitute extortion. For extortion requires an intent to obtain that which in justice and equity the party is not entitled to receive. People v. Cuddihy, 151 Misc. 318, 324, 271 N.Y.S. 450, 456, aff'd, 243 App.Div. 694, 277 N.Y.S. 960; see People v. Weinseimer, 117 App.Div. 603, 616, 102 N.Y.S. 579, 588, aff'd, 190 N.Y. 537, 83 N.E. 1129. An accused would not be guilty of extortion for attempting to achieve legitimate labor goals; he could not be convicted without sufficient

evidence that he was actuated by the purpose of obtaining a financial benefit for himself . . . and was not attempting in good faith to advance the cause of unionism . . .. People v. Adelstein, 9 A.D.2d 907, 908, 195 N.Y.S.2d 27, 28, aff'd sub nom. People v. Squillante, 8 N.Y.2d 998, 205 N.Y.S.2d 332, 169 N.E.2d 425. Hence, New York's highest court has interpreted its extortion statute to apply to a case where the accused received a pay-off to buy an end to labor picketing. People v. Dioguardi, 8 N.Y.2d 260, 203 N.Y.S.2d 870, 168 N.E.2d 683. The picketing here . . . may have been perfectly lawful in its inception (assuming it was part of a bona fide organizational effort) and may have remained so-despite its potentially ruinous effect on the employers' businesses-so long as it was employed to accomplish the legitimate labor objective of organization. Its entire character changed from legality to criminality, however, when it was used as a pressure device to exact the payment of money as a condition of its cessation . . . Id., at 271, 203 N.Y.S.2d, at 880, 168 N.E.2d, at 690-691. In short, when the objectives of the picketing changed from legitimate labor ends to personal payoffs, then the actions became extortionate. *407 The Government would derive a different lesson from the legislative history. It points to statements made during the floor debates that the Act was meant to have broad coverage and, unlike its predecessor, to encompass the employer-employee relationship. But that proves n more than that the achievement of illegitimate objectives by employees or their representatives, such as the exaction of personal payoffs, or the pursuit of wages' for unwanted or fictitious services, would not be exempted from the Act solely because the extortionist was an employee or union official and the victim an employer.FN17 The Government would also find support for its expansive interpretation of the statute in the rejection of two amendments, one proposed by Congressman Celler, the other by Congressman LaFollette, which would have inserted in the Act an exception for cases where violence was used to obtain the payment of wages by a bonafide employer to a bona-fide employee. **1014 See 91 Cong.Rec. 11913, 11917, and 11919, 11922. But both amendments were rejected *408 solely because they would have operated to continue the effect of the Local 807 caseFN18 Their rejection thus proves nothing more than that Congress was intent on undoing the restrictive impact of that case. FN17. The Government relies heavily on a statement by Congressman Michener, in a dialogue with two of his colleagues, to the effect that union members who by robbery or exploitation collect a day's wage-a union wage-they are not exempted from the law solely because they are engaging in a legitimate union activity. 91 Cong.Rec. 11843-11844. But Congressman Michener was referring to the activity of robbery or exploitation, and his statement continued: I cannot understand how any union man can claim that the conduct described by Mr. Justice Stone is a legitimate union activity. Id., at 11844. Mr. Chief Justice Stone's dissenting opinion in the Local 807 case described payoffs for the superfluous and unwanted work involved in that case. See 315 U.S., at 539, 62 S.Ct., at 649, 86 L.Ed. 1004. FN18. See 91 Cong.Rec. 11914 (remarks of Rep. Hobbs); ibid. (remarks of Rep. Walter); id., at 11920 (remarks of Rep. Gwynne). III In the nearly three decades that have passed since the enactment of the Hobbs Act, no reported case has upheld the theory that the Act proscribes the use of force to achieve legitimate collective-bargaining demands. The only previous case in this Court relevant to the issue, United States v. Green, 350 U.S. 415, 76 S.Ct. 522, 100 L.Ed. 494, held no more than that the Hobbs Act had accomplished its objective of overruling the Local 807 case. **The alleged extortions in that case, as in Local 807, consisted of attempts to obtain so-called wages for imposed, unwanted, superfluous and fictitious services of laborers . . .. Id., at 417, 76 S.Ct., at 524. The indictment charged that the employer's consent was obtained by the wrongful use, to wit, the use for the purposes aforesaid, of actual and threatened force, violence and fear . . . Ibid. The Government thus did not rely, as it does in the present

case, solely on the use of force in an employer-employee relationship; it alleged a wrongful purpose-to obtain money from the employer that the union officials had no legitimate right to demand. We concluded that the Hobbs Act could reach extortion in an employer-employee relationship and that personal profit to the extortionist was not required, but our holding was carefully limited to the charges in that case: We rule only on the allegations of the indictment and hold that the acts charged against appellees fall within the terms of the Act. Id., at 421, 76 S.Ct., at 526. *409 A prior decision in the Third Circuit, United States v. Kemble, 198 F.2d 889, on which the Government relied in Green, also concerned the exaction, by threats and violence of wages for superfluous services. In affirming a conviction under the Hobbs Act of a union business agent for using actual and threatened violence against an outof-town driver in an attempt to force him to hire a local union member, the Court of Appeals carefully limited its holding: We need not consider the normal demand for wages as compensation for services desired by or valuable to the employer. It is enough for this case, and all we decide, that payment of money for imposed, unwanted and superfluous services . . . is within the language and intendment of the statute. Id., at 892. Most recently, in United States v. Caldes, 457 F.2d 74, the Court of Appeals for the Ninth Circuit was squarely presented with the question at issue in this case. Two union officials were convicted of Hobbs Act violations in that they damaged property of a company with which they were negotiating for a collective-bargaining agreement, in an attempt to pressure the company into agreeing to the union contract. Concluding that the Act was not intended to reach militant activity in the pursuit of legitimate unions ends, the court reversed the convictions and ordered the indictment of dismissed. Indeed, not until the indictments were returned in 1970 in this and several other cases has the Government even sought to prosecute under the Hobbs Act actual or threatened violence employed to secure a union contract calling for higher wages and other monetary benefits.'FN19 *410 Yet, **1015 throughout this period, the Nation has witnessed countless economic strikes, often unfortunately punctuated by violence. It is unlikely that if Congress had indeed wrought such a major expansion of federal criminal jurisdiction in enacting the Hobbs Act, its action would have so long passed unobserved. See United States v. Laub, 385 U.S. 475, 485, 87 S.Ct. 574, 580, 17 L.Ed.2d 526. FN19. As noted above, the indictment in United States v. Caldes, 457 F.2d 74, was ordered to be dismissed by the Ninth Circuit. Two similar indictments returned in the Southern District of Florida were dismissed by the District Court without opinion in June 1970. United States v. Rutcofsky, No. 70-101-CR-JE, June 24, 1970; United States v. Schiffman, No. 70-102-CR-JE, June 25, 1970. An additional indictment, based on a similar theory of the Hobbs Act, was filed in the Eastern District of New York on January 12, 1972, and is currently pending. United States v. Spero, No. 72-CR-17. The briefs in the present case advise us of the other Hobbs Act prosecution that may have been brought under this theory-a 1962 indictment in United States v. Webb, ND Ala., No. 15080. IV The Government's broad concept of extortion-the wrongful use of force to obtain even the legitimate union demands of higher wages-is not easily restricted. It would cover all overtly coercive conduct in the course of an economic strike, obstructing, delaying, or affecting commerce. The worker who threw a punch on a picket line, or the striker who deflated the tires on his employer's truck would be subject to a Hobbs Act prosecution and the possibility of 20 years' imprisonment and a $10,000 fine.FN20 FN20. Realizing the breadth of its argument, the Government's brief concedes that there might be an exception for the incidental injury to person or property that not infrequently occurs as a consequence of the charged atmosphere attending a prolonged labor dispute . . .. But nothing, either in the language or the history of the Act, justifies any such exception. Similarly, there is nothing to support the dissent's exception for mischievous' conduct, post, at 1019 n. 17,

even if we could begin to define the meaning and limits of such a term. *411 [6] Even if the language and history of the Act were less clear than we have found them to be, the Act could not properly be expanded as the Government suggests- for two related reasons. First, this being a criminal statute, it must be strictly construed, and any ambiguity must be resolved in favor of lenity. United States v. Wiltberger, 5 Wheat. 76, 95, 5 L.Ed. 37; United States v. Halseth, 342 U.S. 277, 280, 72 S.Ct. 275, 276, 96 L.Ed. 308; Bell v. United States, 349 U.S. 81, 83, 75 S.Ct. 620, 622, 99 L.Ed. 905; Arroyo v. United States, 359 U.S. 419, 424, 79 S.Ct. 864, 867, 3 L.Ed.2d 915; Rewis v. United States, 401 U.S. 808, 812, 91 S.Ct. 1056, 1059, 28 L.Ed.2d 493. Secondly, it would require statutory language much more explicit than that before us here to lead to the conclusion that Congress intended to put the Federal Government in the business of policing the orderly conduct of strikes. Neither the language of the Hobbs Act nor its legislative history can justify the conclusion that Congress intended to work such an extraordinary change in federal labor law or such an unprecendented incursion into the criminal jurisdiction of the States. See San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 247-248, 79 S.Ct. 773, 780-782, 3 L.Ed.2d 775; United Constr. Workers v. Laburnum Constr. Corp., 347 U.S. 656, 665, 74 S.Ct. 833, 838, 98 L.Ed. 1025; Garner v. Teamsters Local 776, 346 U.S. 485, 488, 74 S.Ct. 161, 164, 98 L.Ed. 228; UAW Local 232 v. Wisconsin Employment Relations Bd., 336 U.S. 245, 253, 69 S.Ct. 516, 521, 93 L.Ed. 651. [7] As we said last Term: (U)nless Congress conveys its purpose clearly, it will not be deemed to have significantly changed the federalstate balance. Congress has traditionally been reluctant to define as a federal crime conduct readily denounced as criminal by the States. . . . (W)e will not be quick to assume that Congress has meant to effect a significant change in the **1016 sensitive *412 relation between federal and state criminal jurisdiction. United States v. Bass, 404 U.S. 336, 349, 92 S.Ct. 515, 523, 30 L.Ed.2d 488 (footnotes omitted). [8] The District Court was correct in dismissing the indictment. Its judgment is affirmed. Affirmed Center Cadillac, Inc. v. Bank Leumi Trust Co. of New York, 808 F.Supp. 213, RICO Bus.Disp.Guide 7992 (S.D.N.Y. Apr 13, 1992) Dolan v. Fairbanks Capital Corp., 2008 WL 4515932 (E.D.N.Y.,Sep 30, 2008) West KeySummaryFederal Civil Procedure 170A 636

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(A) Pleadings in General 170Ak633 Certainty, Definiteness and Particularity 170Ak636 k. Fraud, Mistake and Condition of Mind. Most Cited Cases A mortgagor's allegations of mail fraud were pled with sufficient particularity to withstand the mortgage servicing company's motion to dismiss. **The mortgagor asserted that the amount of arrears detailed in a forbearance agreement between him and the company that was mailed to his home was false, and that this agreement was used as part of a scheme to extort money from the mortgagor under the threat of foreclosure. The allegation of fraud was sufficiently particularized and made a connection to an overall scheme by the company to wrongfully collect money from the mortgagor. Fed.Rules Civ.Proc.Rule 9(b), 28 U.S.C.A MEMORANDUM AND ORDER HURLEY, Senior District Judge. *1 Presently before the Court is the motion by **defendant Fairbanks Capital Corporation (FCC) to dismiss the Third Amended Complaint of pro se **plaintiff Michael T. Dolan (Plaintiff) and to strike portions of the pleading as irrelevant and prejudicial. On December 4, 2007, the Court referred FCC's motion to Magistrate Judge A. Kathleen Tomlinson for a Report and Recommendation. On September 8, 2008, Judge Tomlinson issued a

Report and Recommendation (the Report) that FCC's motion to dismiss be denied and that specified allegations in the Third Amended Complaint be struck. Plaintiff has filed objections to that part of the Report that recommends that his allegations be struck.FN1 For the reasons stated below, the Court adopts the Report in its entirety. FN1. Pursuant to 28 U.S.C. 636(b)(1)(C) and Federal Rules of Civil Procedure 6(d) and 5(b)(2)(C), the parties had ten days from service to file objections, plus three days for mail. Here, FCC served Plaintiff with a copy of the Report by Federal Express. Assuming Federal Express constitutes mail under Rule 5(b)(2) (C), Plaintiff's objections are timely. Even if they are not, the Court considers them anyway, given Plaintiff's pro se status. In any event, as explained infra in the text, Plaintiff's objections are denied. DISCUSSION I. Standard of Review Federal Rule of Civil Procedure 72(b) provides that when a magistrate judge issues a report and recommendation on a matter dispositive of a claim or defense of a party, the district court judge shall make a de novo determination of any portion of the magistrate judge's disposition to which specific written objection has been made. Fed.R.Civ.P. 72(b). Accordingly, the Court applies de novo review to those portions of the Report to which objections were raised. See id. The Court reviews those portions to which no objections have been filed for clear error. See, e.g., Kenneth Jay Lane, Inc. v. Heavenly, Apparel Inc., No. 03 CV 2132, 2006 WL 728407, at *1 (S.D.N.Y. Mar. 21, 2006); Fed.R.Civ.P. 72(b) advisory committee's note. II. The Report is Adopted A. FCC's Motion to Dismiss is Denied Judge Tomlinson recommended that FCC's motion to dismiss be denied. No party has objected. This Court has reviewed the Report for clear error, and finding none, now concurs in both its reasoning and result. Accordingly, the Court adopts Judge Tomlinson's recommendation in its entirety and FCC's motion is denied. B. FCC's Motion to Strike is Granted in Part FCC moved to strike portions of the Third Amended Complaint as irrelevant to Plaintiff's claims and highly prejudicial. Judge Tomlinson recommended that FCC's application be granted in part. Plaintiff objects, arguing that these allegations relate to the process used in the racketeering schemes and are not irrelevant or prejudicial. Upon de novo review, the Court agrees with Judge Tomlinson and Plaintiff's objections are denied. Federal Rule of Civil Procedure 12(f) provides that: The court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter. Fed.R.Civ.P. 12(f). Typically, to prevail on a Rule 12(f) motion, the defendant must demonstrate that no evidence in support of the allegation would be admissible, that the allegations have no bearing on the issues in the case, and that to permit the allegations to stand would result in prejudice to the movant. Dent v. U.S. Tennis Ass'n, Inc., No. CV-08-1533, at * 1 (E.D.N.Y. June 17, 2008) (citations and internal quotation marks omitted). *2 Here, the allegations that Judge Tomlinson recommended striking have nothing to do with Plaintiff or his dealings with FCC. Although the Court recognizes that pro se pleadings are to be construed liberally, the Court concludes that these allegations should be struck pursuant to Rule 12(f) as wholly immaterial and prejudicial to FCC. See Salahuddin v. Cuomo, 861 F.2d 40, 42 (2d Cir.1988) (When a complaint does not comply with the requirement that it be short and plain, the court has the power, on its own initiative or in response to a motion by the defendant, to strike any portions that are redundant or immaterial.). CONCLUSION The Court adopts Magistrate Judge Tomlinson's September 8, 2008 Report and Recommendation (docket no. 186) in its entirety. Accordingly, FCC's motion to dismiss the Third Amended Complaint (docket no. 104) is denied.FN2 FCC's motion to strike is granted in part and denied in part. The following allegations are struck from Plaintiff's Third Amended Complaint: (1) all but the first sentence of paragraph 30; (2) paragraphs 31, 32, 36, and 37; and (3) all but the first sentence of paragraph 41.

FN2. As noted by Judge Tomlinson, although Plaintiff's Third Amended Complaint does not specifically re-allege the causes of action found by this Court to be adequately pled in his Second Amended Complaint, because the Court granted Plaintiff leave to submit a Third Amended Complaint for the limited purpose of curing the defects in his pleading, Plaintiff likely understood that the Third Amended Complaint was to address only those issues. Accordingly, the Court finds that the surviving allegations of the Second Amended Complaint shall be read together with the Third Amended Complaint and shall not be considered abandoned. SO ORDERED. REPORT & RECOMMENDATION A. KATHLEEN TOMLINSON, United States Magistrate Judge. I. PRELIMINARY STATEMENT This matter was referred to me by District Judge Hurley for a Report and Recommendation on Defendant Fairbanks Capital Corporation's (FCC) motion to dismiss the Pro Se Plaintiff's Third Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). In order to arrive at a recommendation, it was necessary for me to review the extensive chronology of this case, and particularly the prior motions to dismiss, so that the current motion could be placed in context. Therefore, I reviewed the pleadings as well as the following documents: (1) FCC's moving papers [DE 104]; (2) Pro Se Plaintiff Michael T. Dolan's opposition papers [DE 105]; (3) FCC's counsel's affirmation in further support of its motion to dismiss [DE 106]; (4) Judge Hurley's August 16, 2005 Order, granting in part and denying in part Defendants FCC and Thomas Basmajian's motions to dismiss the Amended Complaint, and granting Plaintiff further leave to file a Second Amended Complaint [DE 44]; and (5) Judge Hurley's December 15, 2006 Order, granting in part and denying in part Defendants FCC and PMI Mortgage Insurance Company's motion to dismiss the Second Amended Complaint, and granting Plaintiff further leave to file a Third Amended Complaint [DE 75]. Having concluded my consideration of the instant motion and the prior history of this case, and for the reasons stated below, I respectfully recommend to District Judge Hurley that FCC's motion to dismiss the Third Amended Complaint be DENIED. II. BACKGROUND A. The Original Complaint On July 7, 2003, Plaintiff Pro Se and former plaintiff Donna M. Dolan commenced this action pursuant to the USA Patriot Act of 2001 against FCC and all affiliated financial services or monetary organizations functioning for or associate (sic) and staff [DE 1]. By Memorandum of Decision and Order dated April 23, 2004, Judge Hurley dismissed the Complaint without prejudice and gave Plaintiff Pro Se permission to file an Amended Complaint within thirty (30) days [DE 11]. The Court warned that [f]ailure to address the pleading concerns enunciated in this order may result in dismissal with prejudice. Id. B. The Amended Complaint *3 On May 24, 2004, Plaintiff Pro Se filed an Amended Complaint, again naming FCC as a Defendant as well as adding three additional Defendants: **Fairbanks Capital Holding Corporation (FCHC), Thomas D. Basmajian, and **PMI Mortgage Insurance Company (PMI) [DE 12]. The Amended Complaint asserted eleven causes of action under the Patriot Act, the Clayton and Sherman Acts, the Fair Credit Reporting Act (FCRA), the Federal Trade Commission Act (FTCA), the Fair Debt Collection Practices Act (FDCPA), the Real Estate Settlement and Procedures Act (RESPA), the RICO statute, and various civil rights laws. **The thrust of the Amended Complaint was that FCC, a company servicing various mortgage loans (including Plaintiff's), committed various acts of fraud with respect to consumers generally. For example, Plaintiff alleged that FCC failed to post customers' timely mortgage payments, **charged consumers fraudulent fees, **engaged in

dishonest and abusive tactics to collect debts, and **reported inaccurate consumer payment information to credit bureaus. Plaintiff also alleged that FCC intentionally lapsed customers' insurance coverage, which then allowed PMI to issue new policies, thereby force placing such insurance coverage upon consumers. As Judge Hurley noted, the only specific allegation as to Plaintiff in the Amended Complaint was that FCC acquired the right to service Plaintiff's residential mortgage in November 2000 and continued to do so until July 2003 [DE 75 at 3 (citing Am. Compl. 6) ]. In January 2005, all four Defendants moved to dismiss the Amended Complaint, pursuant to Federal Rule 12(b) (6). By Memorandum of Decision and Order dated August 16, 2005 [DE 44], Judge Hurley: (1) granted the motions by FCHC and Basmajian to dismiss the Amended Complaint in its entirety as against them; (2) granted PMI's motion to dismiss the Amended Complaint with respect to all of Plaintiff's claims against PMI except for Plaintiff's antitrust claims; and (3) granted FCC's motion to dismiss the Amended Complaint with respect to all of Plaintiff claims against FCC except for Plaintiff's RESPA and antitrust claims. Thus, only Plaintiff's RESPA claim against FCC and his antitrust claims against both FCC and PMI survived the motion to dismiss. The Court granted Plaintiff leave to amend his FDCPA claims against FCC and to amend his fraud and RICO claims against all Defendants. C. The Second Amended Complaint On March 2, 2006, Plaintiff timely filed his Second Amended Complaint against all four Defendants [DE 58]. Plaintiff asserted RICO claims, antitrust claims, violations of the FDCPA, violations of RESPA, violations of the Truth in Lending Act (TILA),FN1 and various state law claims. FN1. Plaintiff's TILA claims were raised for the first time in the Second Amended Complaint, and no permission to assert such claims was requested. Because none of the Defendants made an application to dismiss this claim, however, and because Judge Hurley's preliminary review of the claim indicated that it was properly pled, the Court took no action with respect to this claim [DE 75 at 20-21]. In June 2006, FCC and PMI moved to dismiss the Second Amended Complaint pursuant to Federal Rule 12(b) (6). In its Memorandum of Decision and Order dated December 15, 2006 [DE 75], the Court noted that this new pleading raises many, if not all, of the same allegations asserted in his previous complaint (DE 75 at 4), the thrust of which was that FCC and PMI conspired to extract mortgage payments from [him] through abusive, unlawful and deceptive loan servicing practices. 2d Am. Compl. 10. Judge Hurley denied these motions to dismiss, with the two exceptions described below. Accordingly, upon the Court's disposition of the Defendants' motions to dismiss, the following claims remained viable: (1) Plaintiff's claims against both FCC and PMI under RICO (including claims based on extortion and loan sharking as well as conspiracy claims ), antitrust claims, and violations of the TILA; and (2) Plaintiff's claims against FCC for violations of RESPA and various state laws. *4 Judge Hurley did, however, dismiss Plaintiff's fraud-based RICO claims against PMI and FCC because Plaintiff failed to plead the circumstances surrounding such alleged fraud with the particularity required by Federal Rule 9(b). The Court also dismissed Plaintiff's FDCPA claim against FCC because the Second Amended Complaint failed to allege that FCC was a debt collector within the meaning of the FDCPA.FN2 FN2. The Court dismissed all claims made in the Second Amended Complaint against Defendants FCHC and Basmajian in their entirety, and instructed Plaintiff that his amended pleading should name only FCC and PMI as Defendants [DE 75 at 22]. In granting Plaintiff further leave to amend for the limited purpose of curing these [two] defects, id. at 21-22, Judge Hurley turned to Plaintiff's fraud-based RICO claims against both FCC and PMI and directed Plaintiff to specifically identify any statement, whether oral or in writing, which he claims was fraudulent, allege where and when the statement was made, and identify which defendant made the statement. Id. at 22. With respect to Plaintiff's FDCPA claim against FCC, the Court directed Plaintiff to specifically allege whether or not his loan was in default when acquired by FCC. Id. The Court expressly cautioned Plaintiff that failure to address the pleading concerns enunciated in this order may result in dismissal of his fraud-based RICO claim and his FDCPA claim with prejudice. Id.

D. The Third Amended Complaint and Present Motion On January 12, 2007, Plaintiff timely filed his Third Amended Complaint against FCC and PMI [DE 76]. The Third Amended Complaint addresses the two directives given by Judge Hurley in the December 15, 2006 Order, and its allegations relate exclusively to Plaintiff's fraud-based RICO claim against both FCC and PMI as well as Plaintiff's FDCPA claim against FCC.FN3 Presently before the Court is FCC's motion to dismiss the Third Amended Complaint pursuant to Federal Rule 12(b)(6). FN3. Plaintiff's Third Amended Complaint does not specifically re-allege causes of action for violations of RICO (based upon extortion and loan sharking), RICO conspiracy, antitrust laws, the TILA, RESPA, or the various state laws-allegations that Judge Hurley found were adequately pled in the Second Amended Complaint. Because the Court granted Pro Se Plaintiff leave to submit a Third Amended Complaint for the limited purpose of curing the defects with his fraud-based RICO claim against both FCC and PMI, and his FDCPA claim against FCC, there is some likelihood that the Pro Se Plaintiff understood this directive to mean that the third amended pleading was to address only the issues the Court raised in its December 2006 Decision and Order. Therefore, I respectfully recommend that the surviving allegations of the Second Amended Complaint be read together with the Third Amended Complaint and that the surviving claims not be considered abandoned. III. STANDARD OF REVIEW A court may grant a motion to dismiss for failure to state a claim under Rule 12(b)(6) only when it appears beyond a doubt that plaintiff can prove no set of facts in support of his claim that would entitle him to relief. Levitt v. Bear Stearns & Co., 340 F.3d 94, 101 (2d Cir.2003) (internal quotations and citations omitted). In reviewing such motions, a court must accept the allegations in the complaint as true, and draw all reasonable inferences in the plaintiff's favor. See Cleveland v. Caplaw Enter., 448 F.3d 518, 521 (2d Cir.2006); Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 100 (2d Cir.2005). On a motion to dismiss, the function of a court is not to weigh the evidence that might be presented at trial but merely to determine whether the complaint itself is legally sufficient. Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir.1985). The issue is not whether a plaintiff will ultimately prevail but whether he or she is entitled to offer evidence to support the claims. Muzio v. Incorp. Vill. of Bayville, No. CV-99-8605, 2006 WL 39063, at *3 (E.D.N.Y. Jan. 3, 2006) (citing New v. Ashcroft, 293 F.Supp.2d 256, 257 (E.D.N.Y.2003)). Where, as here, the plaintiff proceeds pro se, the court is obliged to construe his pleadings liberally. See McEachin v. McGuinnis, 357 F.3d 197, 200 (2d Cir.2004). *5 A court, however, need not accept as true mere conclusions of law or unwarranted deductions of fact when deciding a motion to dismiss under Rule 12(b)(6). First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 771 (2d Cir.1994); see also Smith v. Local 819 I.B.T. Pension Plan, 291 F.3d 236, 240 (2d Cir.2002) (noting that conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss) (internal alteration excluded) (quoting Gebhardt v. Allspect, Inc., 96 F.Supp.2d 331, 333 (S.D.N.Y.2000)). A plaintiff's burden to set forth the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Bell Atl. Corp. v. Twombly, 550 U.S. 544, ----, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007) (internal alteration and citation omitted). Rather, a plaintiff's [f]actual allegations must be enough to raise a right to relief above the speculative level. Id. The Court remains mindful, however, that [a] document filed pro se is to be liberally construed and a pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers. Boykin v. KeyCorp, 521 F.3d 202, 214 (2d Cir.2008) (quoting Erickson v. Pardus, --- U.S. ----, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam)). In deciding a motion to dismiss pursuant to Federal Rule 12(b) (6), a court must look to the allegations on the face of the complaint, but may also consider [d]ocuments that are attached to the complaint or incorporated in it by reference.... Roth v. Jennings, 489 F.3d 499, 509 (2d Cir.2007); Gillingham v. GEICO Direct, No. 06-CV-2915, 2008 WL 189671, at *2 (E.D.N.Y. Jan. 18, 2008) (noting that a court considering a motion to dismiss must limit itself to the facts stated in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint) (internal quotation marks omitted). IV. DISCUSSION

A. Fraud-Based RICO Claims To state a valid RICO claim, a plaintiff must allege: (1) a violation of 18 U.S.C. 1962; (2) an injury to business or property; and (3) causation of the injury by the violation. See Pinnacle Consultants, Ltd. v. Leucadia Nat'l Corp., 101 F.3d 900, 904 (2d Cir.1996). In order to establish a violation of Section 1962, a plaintiff must prove a pattern of racketeering activity. Id. (quoting 18 U.S.C. 1962). Section 1961(1) defines racketeering activity as certain criminal acts under state and federal law, including mail fraud, 18 U.S.C. 1341, and wire fraud, 18 U.S.C. 1343. See Pinnacle, 101 F.3d at 904 (noting that racketeering activity includes conduct indictable under various provisions within Title 18 of the United States Code, including mail and wire fraud). In order to plead a pattern, a plaintiff must plead at least two predicate acts of racketeering activity. 18 U.S.C. 1961(5). *6 In his December 15, 2006 Order, Judge Hurley found that Plaintiff's Second Amended Complaint contained sufficient allegations to support extortion and loan sharking as predicate acts upon to base Plaintiff's RICO claims [DE 75 at 8-9]. In addition, the Court noted that the Second Amended Complaint could be inferred as attempting to predicate a RICO claim on allegations that FCC and PMI engaged in mail fraud by fraudulently extract [ing] inflated and false fees from [Plaintiff] under the threat of foreclosure, when [p]resumably, these payments were demanded via mail. Id. at 9. The Court found, however, that Plaintiff failed to allege fraud with the particularity required by Federal Rule 9(b). See Moore v. PaineWebber, Inc., 189 F.3d 165, 172 (2d Cir.1999) (noting that the requirement in Federal Rule 9(b) that fraud allegations be pled with particularity applies to RICO claims for which fraud is the predicate illegal act). In particular, the Court noted that RICO claims based on mail and wire fraud should state the contents of the communications, who was involved, where and when they took place, and explain why they were fraudulent. See Mills v. Polar Molecular Corp., 12 F.3d 1170, 1176 (2d Cir.1993). This particularized pleading requirement applies to pro se litigants as well as those represented by counsel. See, e.g., Rivera v. Golden Nat'l Mortgage Banking Corp., No. 04 Civ. 4545, 2005 WL 1514043, at *3 (S.D.N.Y. June 27, 2005) ([T]he Court is also aware that pro se status does not exempt a party from compliance with relevant rules of procedural and substantive law.) (quoting Iwachiw v. N.Y. City Bd. of Educ., 194 F.Supp.2d 194, 204 (E.D.N.Y.2002)). Judge Hurley granted Plaintiff leave to amend his fraud-based RICO allegations specifically to comply with Federal Rule 9(b) [DE 75 at 11]. To plead claims of mail and wire fraud sufficiently, Plaintiff must establish: (1) the existence of a scheme to defraud; (2) the use of United States mails or interstate wire communications to further that scheme; and (3) evidence that FCC did so with a specific intent to defraud. Am. Arbitration Ass'n, Inc. v. Defonseca, No. 93 Civ. 2424, 1996 WL 363128, at *9 (S.D.N.Y. June 28, 1996); see also Mathon v. Feldstein, 303 F.Supp.2d 317, 323 (E.D.N.Y.2004). With respect to the first prong, the complaint must allege the existence of a fraudulent scheme with the requisite specificity, so that Plaintiff must specify **what statements were made, **who made them, **when and **where, and the respect in which those statements were fraudulent. Am. Arbitration Ass'n, Inc., 1996 WL 363128 at *9. Regarding the second prong, there is no need to specify the time and place of each mail or wire communication as long as the mechanics of the underlying scheme are pled with particularity. Id. Plaintiff, however, must specifically allege the nature of each mail or wire communication, and identify the role of the communications in furthering defendants' fraudulent scheme. Id. 1. Mail Fraud Allegations *7 FCC asserts that the Third Amended Complaint does not contain sufficiently particularized allegations of mail fraud. Def. Mem. at 7-10. Based upon a review of the Third Amended Complaint, the Court notes that Plaintiff sets forth the following items as alleged instances of mail fraud: (A) FCC [d]emanded payment by use through mail. 3d Am. Compl. 7. (B) On September 24, 2002, Plaintiff and FCC entered into a forbearance agreement, which stated that Plaintiff owed $87,567.71 on his mortgage, and provided that so long as Plaintiff made timely payments pursuant to a schedule set forth in the agreement, the foreclosure of Plaintiff's home would be held in abeyance. Id., Ex. 5. Plaintiff alleges that the amount of arrears stated in this forbearance agreement ($87,567.71) was a complete

falsehood. Id. 9. Plaintiff further alleges that this agreement was mailed to his home. Id. (C) An August 23, 2003 letter, which was mailed from FCC to the New York State Attorney General, allegedly contained a false statement that [a]t the time of transfer [of Plaintiff's loan from FCC to Whilshire Credit Corporation], Mr. Dolan's loan was 32 months delinquent. Id. 14, 15, Ex. 11. (D) A seventeen-page loan activity statement, which was attached to the August 23, 2003 letter mailed from FCC to the New York State Attorney General, fraudulently failed to reflect Plaintiff's November or December 2000 payments. Id. 14, 16, Ex. 11. (E) An escrow statement dated October 29, 2003, which was mailed from FCC to Plaintiff, fraudulently failed to reflect Plaintiff's December 2000 payment, which Plaintiff alleges negatively affected his mortgage amortization, escrow and default status as well as his credit. Id. 13, Ex. 9. (F) A Key Loan Transactions spreadsheet, which was attached to a November 10, 2003 letter mailed from FCC to Plaintiff, allegedly: (i) did not reflect Plaintiff's November 2000 payment, and (ii) demonstrated that FCC double-billed Plaintiff on June 21, 2001 for insurance on a force-placed policy. Id. 14, 21, 34, Ex. 10.FN4 FN4. Plaintiff's allegations of fraud in paragraphs 7, 10, 12, 18, 39, and 49 of the Third Amended Complaint cannot suffice to establish mail or wire fraud because Plaintiff fails to allege the use of the United States mail service or a telephone or other wire communication. See Rivera, 2005 WL 1514043 at *3. Allegation (A) fails to sufficiently particularize when or where payments were demanded of Plaintiff through the mail system, and fails to specify the fraudulent nature of these demands. Accordingly, this allegation does not meet Plaintiff's burden under Rule 9(b) and cannot survive as a viable allegation of mail fraud. Allegation (B) specifically asserts that the amount of arrears detailed in the September 24, 2002 forbearance agreement between Plaintiff and FCC is false, and that this agreement was used as part of a scheme to extort money from Plaintiff under threat of foreclosure. Thin though it may be, I find that this allegation of fraud is sufficiently particularized and makes a connection to an overall scheme by FCC to wrongfully collect money from Plaintiff. Accordingly, this allegation is sufficient to withstand a motion to dismiss. *8 Allegation (C) specifies the alleged false statement (i.e., that Plaintiff's loan was 32 months delinquent when the servicing of that loan was transferred from FCC to Wilshire), as well as the who, where, and when elements with respect to this statement. Plaintiff has also sufficiently alleged that this statement was made to cover up the frauds in servicing, and [to] try to degrade and destroy Plaintiff's credibility by slander to throw off authorities ... and to dissuade authorities from pursuing Plaintiff's complaints, 3d Am. Compl. 15, thus furthering FCC's alleged scheme. Accordingly, this allegation is sufficient to withstand a motion to dismiss. Allegations (D), (E), and (F) relate to statements Plaintiff claims are assertedly false by omission in three separate documents prepared by FCC that allegedly fail to reflect payments Plaintiff made in November and/or December 2000. These allegations are pled with adequate particularity, and Plaintiff sufficiently alleges a connection between these fraudulent omissions-which indicate FCC's attempt to cover up its failure to properly apply these payments to his loan-and an overall fraudulent scheme by FCC. Accordingly, these allegations are sufficient to sustain Plaintiff's claim based upon mail fraud. For the reasons stated above, Plaintiff has pleaded a claim for mail fraud with sufficient particularity. Accordingly, I respectfully recommend that FCC's motion to dismiss Plaintiff's RICO claim based upon mail fraud be DENIED. 2. Wire Fraud Allegations FCC does not specifically address the adequacy of the allegations of wire fraud contained in the Third Amended Complaint. Plaintiff sets forth the following as alleged instances of wire fraud: (1) FCC threaten[ed] Plaintiff over

the phone, to pay them or FCC will foreclose on you and sell your house (3d Am.Compl. 7); (2) the forbearance agreement between FCC and Plaintiff, entered into on September 24, 2002, contained false arrears amounts and was faxed to Plaintiff's home (Id. 9); (3) FCC's customer service representatives continuously made false statements and demands for payments under threat of foreclosure (Id. 11); and (4) in February 2002, FCC customer services representatives stated that FCC had falsely and intentionally raised the amount of arrears owed to keep [Plaintiff] from refinancing (Id. 45). Without exception, Plaintiff fails to identify **specific dates on which these alleged telephone conversations (and fax transmissions) took place or **where the phone calls took place. See Mathon, 303 F.Supp.2d at 324. With respect to the allegations concerning telephone calls, Plaintiff fails to identify **the customer representatives with whom he spoke. The pleading requirements of Rule 9(b) are designed to provide a defendant with sufficient information to formulate a defense. FCC, who makes the instant motion to dismiss, is entitled to some indication as to **the identities of the customer service representatives mentioned or, if nothing else, **the dates of the telephone calls so that it might determine which representatives were on duty. See Am. Arbitration Association, Inc., 1996 WL 363 128 at * 10; Mathon, 303 F.Supp.2d at 323 (To plead wire fraud with particularity as required by Fed.R.Civ.P. 9(b), the plaintiff must identify **the number of telephone calls that were made, **the dates on which they were made, **the identity of the persons making them, and **the nature of the alleged misrepresentation.) (citing Qantel Corp. v. Niemuller, 771 F.Supp. 1361, 1369 (S.D.N.Y.1991)). Plaintiff has not done so here, despite having been given multiple opportunities to provide this information. Accordingly, Plaintiff's allegations regarding his telephone conversations with FCC's customer service representatives cannot sustain a claim for wire fraud. *9 On the other hand, Plaintiff's allegation with respect to the September 24, 2002 forbearance agreement between Plaintiff and FCC, which was faxed to Plaintiff's home, is sufficiently particularized and makes a connection to an overall intentionally fraudulent scheme by FCC to wrongfully collect money from Plaintiff. Accordingly, this allegation is sufficient to withstand a motion to dismiss the wire fraud claim. For these reasons, Plaintiff has pleaded a claim for wire fraud with sufficient particularity as to the September 24, 2002 forbearance agreement faxed to Plaintiff's home. Accordingly, I respectfully recommend that FCC's motion to dismiss Plaintiff's RICO claims based upon wire fraud be DENIED. 3. FCC's Arguments as to the Sufficiency of Plaintiff's Allegations of Damages FCC contends that the Third Amended Complaint fails to specify the actual harms suffered as a result of FCC's clearly defined acts. Def. Mem. at 5. To the contrary, the Court finds that Plaintiff specifically alleges that the September 24, 2004 forbearance agreement between FCC and Plaintiff contained a false statement (e.g., that Plaintiff owed $87,567.71 of arrears) and that Plaintiff paid $15,000 to FCC under threat of foreclosure.3d Am. Compl. 9, 10, Ex. 6. FCC's reliance on American Home Mortgage Corporation v. UM Securities Corporation, 05 Civ. 2279(RCC), N.Y.L .J., Apr. 20, 2007 at 27 (S.D.N.Y. Apr. 9, 2007), a case in which the plaintiff mortgage lender brought RICO claims against the defendant mortgage broker based upon an alleged conspiracy by the defendant to defraud the plaintiff by fraudulently obtaining loans for nine different properties, is misplaced here. In American Home Mortgage Corporation, the court found the plaintiff had failed to allege that the purported fraud proximately caused any loss sustained by the plaintiff, and further failed to allege any facts that would allow the court to assess the extent of the misrepresentations or the amount of the loss. Id. Here, by contrast, Plaintiff has specifically identified several alleged misrepresentations and fraudulent omissions made by FCC and has articulated that the alleged fraudulent scheme caused him to pay at least $15,000 in order to avoid foreclosure. B. FDCPA Claims The FDCPA prohibits the use of any false, deceptive, or misleading representation or means in connection with the collection of any debt. 15 U.S.C. 1692e. By its terms, the FDCPA applies only to debt collectors. See id. 1692b (Any debt collector communicating with any person other than the consumer for the purpose of acquiring location information about the consumer shall ...). A debt collector, in turn, is defined as any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Id. 1692a(6). The FDCPA expressly excludes from this definition creditors seeking to collect their own debts. Id. 1692a(6)(A). **Moreover, an assignee of a debt is only treated as a debt collector if the debt sought to be collected was in default at the time it was obtained by such person. Id. 1692a(6)(F)(iii).

*10 The Court has already found that the allegations in Plaintiff's Second Amended Complaint, which are largely echoed in the Third Amended Complaint, were sufficiently particularized to allege a violation of the FDCPA against FCC [DE 75 at 13]. Specifically, Plaintiff alleges, inter alia, that FCC, as the entity which began servicing Plaintiff's mortgage on November 22, 2000, falsely represented **the character, **amount, or **legal status of his debt, **wrongfully threatened to foreclose, and **communicated or threatened to communicate false credit information. See, e.g., 3d Am. Compl. 7 (alleging that FCC did not apply Plaintiff's November 22, 2000 payment to the note and mortgage and did not apply Plaintiff's December 2000 payment to the mortgage or real estate taxes, thereby yielding the false impression that Plaintiff was in arrears); 8, 13 (alleging that FCC threatened Plaintiff with foreclosure if he did not make payments on fraudulently created arrears); 39 (alleging that FCC communicated false information regarding **Plaintiff's arrears, **delinquencies, and **foreclosures to various credit rating agencies, which negatively impacted his credit score); see also TMS Mortgage, Inc., d/b/a The Money Store v. Michael T. Dolan, Index No. 26575-01 (Sup.Ct. Suffolk County 2005) (Willen, JHO) (finding FCC used false and deceptive means to collect Plaintiff's debt) (copy attached to Second Amended Complaint). In response to Judge Hurley's direction to specify whether Plaintiff's loan was in default at the time it was transferred to FCC, thus making FCC a debt collector within the meaning of the FDCPA, Plaintiff alleges in the Third Amended Complaint that his loan was in default and that on August 11, 2000, he had entered into a forbearance agreement with **The Money Store (TMS), which was the holder and owner of the note and mortgage on Plaintiff's home.3d Am. Compl. 4, Ex. 1. Plaintiff attached to the Third Amended Complaint a copy of the Default Forbearance Agreement between him and TMS. **That document reflects that Plaintiff was indebted to TMS in connection with loan number 40295412 and that the loan was in default. It also sets forth a monthly payment schedule running from August 14, 2000 through August 25, 2002-a schedule that Plaintiff would have to meet in order to avoid foreclosure. Id. at Ex. 1. Plaintiff further alleges that FCC took over the servicing of his mortgage from TMS on November 22, 2000, and that Plaintiff's loan was still in default at the time. See id. 4. Plaintiff attached to the Third Amended Complaint a copy of a November 7, 2000 letter from TMS to Plaintiff stating that the servicing of his mortgage loan (referenced as Loan # 0040295412) is being transferred from HomEq-The Money Store to Fairbanks Capital Corp. as of November 22, 2000. Id. at Ex. 1. FCC asserts that the Third Amended Complaint fails to specifically allege that Plaintiff's loan was in default when FCC acquired it. According to FCC, Plaintiff's allegation that his loan was in default and thus the subject of the forbearance agreement with TMS does not constitute an allegation of FCC's knowledge of Plaintiff['s] default when [FCC] began servicing [Plaintiff's] accounts. Def. Mem. at 4. FCC argues that Plaintiff has failed to set forth [w]hy FCC should be considered bound by what was in an agreement to which it was not a party. Id. The Court rejects this argument as meritless. Based on the allegations on the face of the Third Amended Complaint and the documentation attached to that pleading, it is clear that Plaintiff has alleged that his loan defaulted, that he entered into a forbearance agreement with TMS to prevent foreclosure on his home, and that on November 22, 2000, the servicing of his loan was assigned to FCC. Moreover, the loan number on the August 11, 2000 forbearance agreement is identical to the loan number referenced in the November 7, 2000 letter informing Plaintiff that FCC was taking over the servicing of his loan. The Court rejects FCC's contention that it was unaware of the default status of a loan that it began servicing in November 2000 simply because it was not a party to the August 11, 2000 forbearance agreement between TMS and Plaintiff. *11 Therefore, the factual allegations set forth in and documentation attached to the Third Amended Complaint are sufficient to satisfy the pleading requirement that FCC was a debt collector within the meaning of the FDCPA. See Farber v. NP Funding II L.P., No. CV-96-4322, 1997 WL 913335, at *3 (E.D.N.Y. Dec. 9, 1997) (Courts interpret [the FDCPA] to mean that those who are assigned a defaulted debt are not exempt from the FDCPA if their principal purpose is the collection of debts or if they regularly engage in debt collection); Cirkot v. Diversified Fin. Sys., Inc., 839 F.Supp. 941, 944-45 (D.Conn.1993) (finding defendant to be a debt collector under FDCPA because it acquired the debt after default and its principal purpose was the provision of debt collection services) (collecting cases). Because Plaintiff has sufficiently alleged FCC was a debt collector and has made sufficiently particularized allegations that FCC violated the FDCPA, I respectfully recommend to Judge Hurley that FCC's motion to dismiss

this cause of action be DENIED. C. FCC's Motion to Strike FCC maintains that [t]here are substantial portions of the complaint which are irrelevant to Plaintiff's claims; on their face without even a claim to be substantiated by any knowledge of Plaintiff and inserted solely to prejudice, and asks the Court to strike certain paragraphs from the Third Amended Complaint. Def. Mem. at 12-13. Federal Rule 12(f) permits the court, upon timely motion or its own initiative, to strike from a pleading ... any redundant, immaterial, impertinent, or scandalous matter. Fed.R.Civ.P. 12(f). Motions to strike are generally disfavored, and should be granted only when there is a strong reason for doing so. M'Baye v. World Boxing Ass'n, No. 05 Civ. 9581, 2007 WL 844552, at *4 (S.D.N.Y. Mar. 21, 2007) (quoting Lipsky v. Commonwealth United Corp., 551 F.2d 887, 893 (2d Cir.1976)). A party seeking to strike portions of the complaint must state with particularity the grounds for [its] motion and set forth the nature of relief or type of order sought. Arias-Zeballos v. Tan, No. 06 Civ. 1268, 2006 WL 3075528, at *9 (S.D.N.Y. Oct. 26, 2006) (internal quotation marks omitted). To prevail on such a motion, a defendant must demonstrate that: (1) no evidence in support of the allegations would be admissible; (2) the allegations are irrelevant; and (3) permitting the allegations to stand would prejudice the defendant. M'Baye, 2007 WL 844552 at *4 (quotation marks omitted). FCC requests that the Court strike paragraphs 26 through 37 inter alia and paragraph 41 of the Third Amended Complaint on the grounds that such paragraphs bear no relevance to Plaintiff's claims in this action. Def. Mem. at 12-13. Applying the principle that [a]llegations should be struck as irrelevant ... only when they have no possible relevance ... and are clearly prejudicial to FCC, and mindful that the Court is required to view a pro se pleading leniently, Garcia v. Court Employment Project (Cases), No. 95 Civ. 2623, 1995 WL 422266, at *2 (S.D.N.Y. July 17, 1995), I nonetheless respectfully recommend that the following allegations be struck from the Third Amended Complaint: (1) all but the first sentence of paragraph 30; (2) Paragraphs 31, 32, 36, and 37; and (3) all but the first sentence of paragraph 41. V. CONCLUSION *12 For all the reasons set forth in this Report, it is my recommendation to District Judge Hurley that FCC's motion to dismiss the Third Amended Complaint be DENIED. I further recommend the allegations specified in Section IV(C) herein be struck from the Third Amended Complaint.

Vaughn v. Consumer Home Mortgage, Inc., 2003 WL 21241669 (E.D.N.Y.,Mar 23, 2003)

Positive outcome case on fraud and rico on a loan QUESTION: THE DIFFERENCE BETWEEN 18 U.S.C. 1962(C) AND 1962(D) conspiracy to violate subsection (a), (b), or (c)? QUESTION: HOW MANY RICO PREDICATE ACTS MUST EACH MEMBER OR OUTSIDER BE ESTABLISHED TO HAVE ENGAGE/COMMITTED TO BE CONVICTED? 2? RICO INJURY: FROM DEPRIVATION OF THE RIGHT TO HONEST SERVICES Hope v. Warren 721 F.Supp.2d 1079

QUESTION: HOW IS CONSPIRACY TO COMMIT A SPECIFIC CRIMINAL OFFENSE THAT IS PRESCRIBED AS A PREDICATE OFFENSE UNDER 18 U.S.C. 1961 APPLIED; WHEN THE STATUTE OF THE PREDICATE OFFENSE ITSELF CONTAINS A PROVISION PRESCRIBING AN ATTEMPT OR A CONSPIRACY TO COMMITT AS IN IN 18 U.S.C. 1951 interference with commerce by threats or violence.
18 U.S.C. Section 1951. Interference with commerce by threats or violence

(a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or **extortion or **attempts or **conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined under this title or imprisoned not more than twenty years, or both. (b) As used in this section-(1) The term robbery means the unlawful taking or obtaining of personal property from the person or in the presence of another, against his will, by means of actual or threatened force, or violence, or fear of injury, immediate or future, to his person or property, or property in his custody or possession, or the person or property of a relative or member of his family or of anyone in his company at the time of the taking or obtaining. (2) The term extortion means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. (3) The term commerce means commerce within the District of Columbia, or any Territory or Possession of the United States; all commerce between any point in a State, Territory, Possession, or the District of Columbia and any point outside thereof; all commerce between points within the same State through any place outside such State; and all other commerce over which the United States has jurisdiction.

TREATED UNDER 18 U.S.C. 1962. As two predicate offenses, the substantive underlying offense, and conspiracy to commit the offense? FROM CRIMINAL RICO: 18 U.S.C. 1961-1968 A Manual for Federal Prosecutors FIFTH REVISED EDITION OCTOBER 2009 Prepared by the Staff of the Organized Crime and Racketeering Section U.S. Department of Justice, Washington, D.C. 20005 (202) 514-1214 WHAT STATE LAW CRIMINAL OFFENSES CONSTITUTE RACKETEERING ACTIVITY 18 U.S.C. SECTION 1961(A) CRIMINAL OFFENSES THAT ARE PREDICATE OFFENSES. II DEFINITIONS: 18 U.S.C. 1961 A. Racketeering Activity

Section 1961(1) defines racketeering activity as any crime enumerated in subdivisions A, B, C, D, E, F, or G of that subsection.18 No crime can be a part of a RICO pattern of racketeering activity unless it is included in this subsection.19 Subdivision A includes any act

or threat involving the listed types of state offenses; subdivisions B, C, E, F, and G include any act which is indictable under the listed federal statutes; and subdivision D includes any offense involving three categories of federal offenses. The different introductory wording of the subdivisions is significant. **For example, courts have interpreted the term involving broadly to include conspiracies or attempts to commit subdivision A 20 [enumerated state law criminal predicate offenses] and D21 ["(D) any offense involving fraud
connected with a case under title 11 (except a case under section 157 of this title)] crimes as proper RICO predicates

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20 See, e.g., United States v. Fernandez, 388 F.3d 1199, 1259 (9th Cir. 2004) (conspiracy to murder); United States v. Pimentel, 346 F.3d 285, 303-04 (2d Cir. 2003), cert. denied, 543 U.S. 955 (2004) (attempted murder); United States v. Warneke, 310 F.3d 542, 546-47 (7th Cir. 2002) (conspiracies to commit various state offenses listed under subdivision A); United States v. Marino, 277 F.3d 11, 28-31 (1st Cir.), cert. denied, 536 U.S. 948 (2002) (conspiracy to murder); United States v. Carrillo, 229 F.3d 177, 181-82 (2d Cir.) (conspiracy to murder), cert. denied, 531 U.S. 1026 (2000); United States v. Darden, 70 F.3d 1507, 1524-25 (8th Cir. 1995) (conspiracy to distribute, and possess with intent to distribute controlled substances constitutes a RICO predicate, but simple possession of cocaine is not a RICO predicate), cert. denied, 517 U.S. 1149 (1996); United States v. Pungitore, 910 F.2d 1084, 1135 (3d Cir. 1990) (conspiracy to murder and attempted murder in (continued...)

20

because these crimes involve the specified types of conduct, and hence are not limited to a specified statutory provision.22 Similarly, solicitation may be considered an act involving specified offenses under subdivisions A and D.23 **A conspiracy, however, or attempt to commit an offense
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20(...continued) violation of state law proper RICO predicates), cert. denied, 500 U.S. 915 (1991); United States v. Angiulo, 847 F.2d 956, 963 n.18 (1st Cir. 1988) (conspiracy to murder); United States v. Manzella, 782 F.2d 533 (5th Cir.) (conspiracy to commit state law arson proper RICO predicate), cert. denied, 476 U.S. 1123 (1986); United States v. Ruggiero, 726 F.2d 913, 919 (2d Cir.) (conspiracy to murder in violation of state law is an act or threat involving murder under 18 U.S.C. 1961(1)(A)), cert. denied, 469 U.S. 831 (1984); United States v. Licavoli, 725 F.2d 1040, 1045 (6th Cir.) (same), cert. denied, 467 U.S. 1252 (1984); United States v. Welch, 656 F.2d 1039, 1063 n.32 (5th Cir. 1981) (same) (dictum), cert. denied, 456 U.S. 915 (1982); United States v. Dellacroce, 625 F. Supp. 1387, 1392 (E.D.N.Y. 1986) (conspiracy to murder); United States v. Gambale, 610 F. Supp. 1515 (D. Mass. 1985) (same). 21 See, e.g., United States v. Darden, 70 F.3d 1507, 1524-25 (8th Cir. 1995) (conspiracy to distribute, and possess with intent to distribute controlled substances constitutes a RICO predicate, but simple possession of cocaine is not a RICO predicate), cert. denied, 517 U.S. 1149 (1996); United States v. Casamento, 887 F.2d 1141, 1165-66 (2d Cir. 1989) (conspiracy to import and distribute narcotics), cert. denied, 493 U.S. 1081 (1990); United States v. Echeverri, 854 F.2d 638, 648-49 (3d Cir. 1988) (conspiracy to possess and distribute narcotics); United States v. Benevento, 836 F.2d 60, 72 (2d Cir. 1987) (conspiracies to import, manufacture and distribute narcotics); United States v. Brooklier, 685 F.2d 1208, 1216 (9th Cir. 1982) (conspiracy to extort money under 18 U.S.C. 1951), cert. denied, 459 U.S. 1206 (1983); United States v. Phillips, 664 F.2d 971, 1015 (5th Cir. 1981) (conspiracy to import marijuana), cert. denied, 457 U.S. 1136 (1982); United States v. Weisman, 624 F.2d 1118, 1124 (2d Cir.) (conspiracies to commit securities fraud and bankruptcy fraud), cert. denied, 449 U.S. 871 (1980); United States v. Santiago, 207 F. Supp. 2d 129, 144 n.10

(S.D.N.Y. 2002) (narcotics trafficking conspiracy). 22 However, as a general rule, state offenses for accessory after the fact to the commission of a state offense referenced in Section 1961(1)(A) does not constitute an act involving such a referenced offense because, typically, an accessory after the fact offense does not require the same mens rea as required to prove the referenced state offense. 23 See, e.g., United States v. Welch, 656 F.2d 1039, 1048 (5th Cir. 1981) (solicitation of and conspiracy to commit murder), cert. denied, 456 U.S. 915 (1982); United States v. Yin Poy Louie, 625 F. Supp. 1327, 1332 (S.D.N.Y. 1985) (conspiracy, solicitation, or attempt to murder), appeal dismissed sub nom. United States v. Tom, 787 F.2d 65 (2d Cir. 1986); Pohlot v. Pohlot, 664 F. Supp. 112, 116-17 (S.D.N.Y. 1987) (criminal solicitation of murder in violation of state law (continued...)

21

listed within subdivisions B, C, E, F or G could not be a RICO predicate unless attempt or conspiracy is expressly included within the terms of the listed statutory offense.24 1. State Offenses Section 1961(1)(A) defines racketeering activity as follows: any act or threat involving murder, kidnaping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or dealing in a controlled substance or listed chemical (as defined in section 102 of the Controlled Substances Act) [i.e., 21 U.S.C. 802], which is chargeable under State law and punishable by imprisonment for more than one year. This definition does not identify specific state statutes that may provide the basis for a RICO predicate act of racketeering. Rather, Congress intended the state offenses referenced in Section 1961(1)(A) to identify generically the kind of conduct proscribed by RICO, and therefore it is immaterial whether a state statute uses the same labels or classifications as specified in Section 1961(1)(A). Thus, a state statutory offense may constitute a proper RICO predicate racketeering act under Section 1961(1)(A) provided it substantially conforms to the generic definition of the state
______________________________________________
23(...continued)

constitutes proper RICO predicate). See also United States v. Miller, 116 F.3d 641, 674-75 (2d Cir. 1997) (act involving murder need not be actual murder as long as the act directly concerned murder, and facilitation of murder was a proper RICO predicate because accessorial offenses described in the New York State statutory provisions involved murder within the meaning of RICO where defendant provided information he knew would enable inquirer to commit murder), cert. denied, 524 U.S. 905 (1998). 24 See, e.g., United States v. Ruggiero, 726 F.2d 913, 919-20 (2d Cir.) (conspiracy to violate 18 U.S.C. 1955 is not a proper RICO predicate because conspiracy is not indictable under that provision), cert. denied, 469 U.S. 831 (1984); United States v. Brooklier, 685 F.2d 1208, 1216 (9th Cir. 1982) (conspiracy to violate 18 U.S.C. 1951 is a proper predicate because conspiracy is indictable under that provision), cert. denied, 459 U.S. 1206 (1983); R.E. Davis Chem. Corp. v. Nalco Chem. Co., 757 F. Supp. 1499, 1510 (N.D. Ill. 1990) (conspiracy to commit mail and wire fraud and transportation of stolen property, in violation of 18 U.S.C. 2314 and 2315 are not RICO predicates); Allington v. Carpenter, 619 F. Supp. 474 (C.D. Cal. 1985) (conspiracy to violate 18 U.S.C. 1343 is not a RICO predicate). 22
American Jurisprudence, Second Edition Database updated November 2010

Extortion, Blackmail, and Threats Laura Hunter Dietz, J.D. V. Federal Anti-Racketeering Act (Hobbs Act) B. Elements 1. In General 72. Generally West's Key Number Digest West's Key Number Digest, Extortion and Threats A.L.R. Library Elements of offense proscribed by the Hobbs Act (18 U.S.C.A. 1951) against racketeering in interstate or foreign commerce, 4 A.L.R. Fed. 881 4 et seq. The offense proscribed by the Federal Anti-Racketeering Act consists of (1) robbery[1] or extortion,[2] or an attempt or conspiracy to rob or extort,[3] and (2) causing the obstruction or delay of, or an effect upon, commerce. [4] The Hobbs Act proscribes two types of extortion: the first requires proof that the defendant induced payment by the use of threats or fear,[5] while the second involves obtaining property from another under color of official right. [6] Racketeering is not an element of a violation of the Hobbs Act. Thus, the government does not have to prove that the defendant's conduct constituted racketeering.[7] 4, 25.1

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[FN2] 76 et seq. [FN3] 77. [FN4] 94 et seq. [FN5] U.S. v. Hairston, 46 F.3d 361 (4th Cir. 1995). As to the use of threats or fear, see 82 to 85. [FN6] U.S. v. Hairston, 46 F.3d 361 (4th Cir. 1995). As to extortion under color of official right, see 86 to 93. [FN7] U. S. v. Culbert, 435 U.S. 371, 98 S. Ct. 1112, 55 L. Ed. 2d 349 (1978); U. S. v. Graham, 581 F.2d 789 (9th Cir. 1978) 73. Intent West's Key Number Digest

West's Key Number Digest, Extortion and Threats A.L.R. Library

Elements of offense proscribed by the Hobbs Act (18 U.S.C.A. 1951) against racketeering in interstate or foreign commerce, 4 A.L.R. Fed. 881 7 Intent is an essential element of a Hobbs Act violation which must be proved beyond a reasonable doubt.[1] The rule that a person is held to intend the natural consequences of his or her acts is applicable.[2] A finding that the defendant intended to extort money from the victim does not require proof that the defendant created, or intended to create, the fear that he subsequently exploited.[3]

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[FN1] U.S. v. Dabish, 708 F.2d 240, 12 Fed. R. Evid. Serv. 1888 (6th Cir. 1983); U. S. v. Price, 617 F.2d 455, 5 Fed. R. Evid. Serv. 1168 (7th Cir. 1979); U. S. v. Trotta, 525 F.2d 1096 (2d Cir. 1975); U.S. v. Sweeney, 262 F.2d 272 (3d Cir. 1959). [FN2] U.S. v. Green, 350 U.S. 415, 76 S. Ct. 522, 100 L. Ed. 494 (1956); U. S. v. Mitchell, 463 F.2d 187 (8th Cir. 1972); Bianchi v. U.S., 219 F.2d 182 (8th Cir. 1955). [FN3] U.S. v. Granados, 142 F.3d 1016 (7th Cir. 1998). 74. IntentGeneral or specific intent West's Key Number Digest West's Key Number Digest, Extortion and Threats A.L.R. Library Elements of offense proscribed by the Hobbs Act (18 U.S.C.A. 1951) against racketeering in interstate or foreign commerce, 4 A.L.R. Fed. 881 7 Some cases hold that the intent required under 18 U.S.C.A. 1952 is general intent,[1] while other cases hold that specific intent is required.[2] At least one court has affirmed a trial court's departure from the use of the terms "general intent" and "specific intent" in its instructions to the jury, apparently on the ground that these terms have been an abiding source of ambiguity and confusion in the penal law.[3] In proving the crime of extortion, intent must often be inferred from ambiguous statements and situations. The avoidance of explicit demands for personal payoffs and threats of adverse consequences if payment is not made cannot in themselves save a defendant from a jury determination that he or she intended to extort.[4] The intent to extort may be inferred from the victim's state of mind, and therefore, proof of explicit threats is not required.[5] 5

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[FN1] U.S. v. Schweihs, 971 F.2d 1302, 36 Fed. R. Evid. Serv. 369 (7th Cir. 1992); U. S. v. Warledo, 557 F.2d 721 (10th Cir. 1977); U.S. v. Green, 246 F.2d 155 (7th Cir. 1957); U.S. v. Agnes, 581 F. Supp. 462, 16 Fed. R. Evid. Serv. 1202 (E.D. Pa. 1984); U. S. v. Furey, 491 F. Supp. 1048 (E.D. Pa. 1980), aff'd, 636 F.2d 1211 (3d Cir. 1980). [FN2] U.S. v. Boylan, 898 F.2d 230, 29 Fed. R. Evid. Serv. 1223 (1st Cir. 1990); U.S. v. Dabish, 708 F.2d

240, 12 Fed. R. Evid. Serv. 1888 (6th Cir. 1983); U. S. v. Kovic, 684 F.2d 512, 11 Fed. R. Evid. Serv. 854 (7th Cir. 1982); U. S. v. Hamilton, 684 F.2d 380, 11 Fed. R. Evid. Serv. 433 (6th Cir. 1982). [FN3] U. S. v. Arambasich, 597 F.2d 609 (7th Cir. 1979). [FN4] U. S. v. Duhon, 565 F.2d 345 (5th Cir. 1978). [FN5] U. S. v. Scacchetti, 668 F.2d 643 (2d Cir. 1982); U. S. v. Duhon, 565 F.2d 345 (5th Cir. 1978). 75. IntentTo affect interstate commerce A.L.R. Library Elements of offense proscribed by the Hobbs Act (18 U.S.C.A. 1951) against racketeering in interstate or foreign commerce, 4 A.L.R. Fed. 881 7 It is not incumbent upon the prosecution to prove that it was the purpose of the defendants' conduct to affect interstate commerce; the prosecution must prove only that the natural consequences of the alleged acts or attempted acts would be to affect interstate commerce.[1] Nor is it even necessary to show that the perpetrator of the extortionate scheme knew that interstate commerce was involved or that he or she could have reasonably foreseen an effect upon interstate commerce.[2] CUMULATIVE SUPPLEMENT Cases: Interstate commerce nexus required for Hobbs Act conviction was established where victim of city councilman's extortion conspiracy was gas station owner seeking city approval of beer and wine permit for gas station, victim was customarily engaged in interstate commerce, and crime had potential to deplete assets of victim and his business. 18 U.S.C.A. 1951(a). U.S. v. Moreno, 44 Fed. Appx. 836 (9th Cir. 2002). [END OF SUPPLEMENT]

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[FN1] U.S. v. Shareef, 190 F.3d 71 (2d Cir. 1999); U.S. v. Arena, 180 F.3d 380, 52 Fed. R. Evid. Serv. 908 (2d Cir. 1999), cert. denied, 531 U.S. 811, 121 S. Ct. 33, 148 L. Ed. 2d 13 (2000); U.S. v. Boston, 718 F.2d 1511 (10th Cir. 1983); U.S. v. Whitt, 718 F.2d 1494, 14 Fed. R. Evid. Serv. 944 (10th Cir. 1983); U. S. v. Warledo, 557 F.2d 721 (10th Cir. 1977); U. S. v. Gupton, 495 F.2d 550 (5th Cir. 1974). As to the effect upon interstate commerce as an element of a Hobbs Act violation, see 94 et seq. [FN2] U.S. v. Nelson, 137 F.3d 1094, 48 Fed. R. Evid. Serv. 1184 (9th Cir. 1998); U. S. v. Mazzei, 390 F. Supp. 1098 (W.D. Pa. 1975), judgment modified on other grounds, 521 F.2d 639 (3d Cir. 1975). 76. Statutory definition of "extortion" West's Key Number Digest West's Key Number Digest, Extortion and Threats 2

As used in the Hobbs Act, the term "extortion" means the obtaining of property from another, with his or her consent, induced by the wrongful use of actual or threatened force, violence, or fear, or under color of official right.

[1] Practice Guide: Since the definition of extortion is written in the disjunctive, extortion may be proved under the Hobbs Act in either of two ways: either by showing that property was unlawfully obtained (1) under color of official right, or (2) through the wrongful use of actual or threatened force, violence, or fear.[2]

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[FN1] 18 U.S.C.A. 1951(b)(2). [FN2] U. S. v. Burkhart, 682 F.2d 589 (6th Cir. 1982). As to the phrase "under color of official right," see 86 et seq.; as to the phrase "wrongful use of force, violence, or fear," see 82 et seq. 77. Attempts and conspiracies The Hobbs Act covers not only extortion, but also attempts and conspiracies to extort which would, if completed, have the effect of obstructing commerce.[1] Physical violence designed to culminate in extortion, even if the scheme aborts prior to the extortion, comes within the prohibition of 18 U.S.C.A. 1951,[2] though physical violence is not necessary to sustain a conviction. An attempt to arouse fear is sufficient proof of attempted extortion, [3] for the offense is complete when the defendant has attempted to induce the victim to part with property.[4] Since the Act covers attempts, it is not necessary, in order to sustain a conviction, that money or property that the defendant attempted to extort was actually received by the defendant.[5] For the same reason, the extortion victim's assets need not necessarily be depleted in order to sustain a conviction.[6]

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[FN1] 18 U.S.C.A. 1951(a). [FN2] U. S. v. Franks, 511 F.2d 25 (6th Cir. 1975).

**[FN3] U. S. v. Frazier, 560 F.2d 884 (8th Cir. 1977); U.S. v. Quinn, 514 F.2d 1250 (5th Cir. 1975).
[FN4] U. S. v. Frazier, 560 F.2d 884 (8th Cir. 1977). [FN5] U.S. v. Sweeney, 262 F.2d 272 (3d Cir. 1959); U.S. v. Green, 246 F.2d 155 (7th Cir. 1957); U. S. v. Furey, 491 F. Supp. 1048 (E.D. Pa. 1980), aff'd, 636 F.2d 1211 (3d Cir. 1980). [FN6] U. S. v. Rindone, 631 F.2d 491 (7th Cir. 1980) (sustaining the defendant's conviction where the Federal Bureau of Investigation supplied the money used in the extortionate transaction). 78. "Obtaining property from another" West's Key Number Digest West's Key Number Digest, Extortion and Threats 8

The term extortion is defined in the Hobbs Act as the obtaining of property from another, with his or her consent, induced by the wrongful use of actual or threatened force, violence, or fear, or under color of official right. [1] The requirement that property be "obtained" is given a broad constructionthe perpetrator of a physical attack or threat need neither seek nor receive an economic benefit, and the lack of an economic motive does not constitute

a defense.[2] For purposes of the "obtaining of property" requirement of the statute, **the offense of attempted extortion is complete when the defendant has attempted to induce his or her victim to part with property.[3] Where the property in question is the victim's right to conduct a business free from threats of violence and physical harm, a person who has committed or threatened violence or physical harm in order to induce the abandonment of that right has "obtained," or attempted to obtain, property.[4] The fact that the defendant makes no effort to take personal possession of an extortion payment after it has been relinquished by the victim is irrelevant,[5] though there is authority to the contrary, holding that under the statute there must be an "obtaining" in that someone, either the extortioner or a third person, must receive the property of which the victim is deprived.[6] The concept of property in the Hobbs Act is not limited to tangible rights, but extends also to intangible rights. [7] CUMULATIVE SUPPLEMENT Cases: For purposes of Hobbs Act requirement that property must be obtained for extortion to occur, word "obtain" means to gain possession of. Scheidler v. National Organization for Women, Inc., 537 U.S. 393, 123 S. Ct. 1057, 154 L. Ed. 2d 991, 188 A.L.R. Fed. 741 (2003). While the Hobbs Act expanded the scope of common-law extortion to include private individuals, the statutory language retained the requirement that property must be "obtained." 18 U.S.C.A. 1951(b)(2). Scheidler v. National Organization for Women, Inc., 537 U.S. 393, 123 S. Ct. 1057, 154 L. Ed. 2d 991, 188 A.L.R. Fed. 741 (2003). Robbery of contraband could support Hobbs Act conviction. U.S. v. Martinez, 83 Fed. Appx. 384 (2d Cir. 2003), cert. denied, 124 S. Ct. 2057, 158 L. Ed. 2d 521 (U.S. 2004) and cert. denied, 125 S. Ct. 293 (U.S. 2004) and cert. granted, judgment vacated, 125 S. Ct. 135 (U.S. 2004). [END OF SUPPLEMENT]

____________________________
[FN1] 18 U.S.C.A. 1951(b)(2). [FN2] U.S. v. Arena, 180 F.3d 380, 52 Fed. R. Evid. Serv. 908 (2d Cir. 1999), cert. denied, 531 U.S. 811, 121 S. Ct. 33, 148 L. Ed. 2d 13 (2000).

**[FN3] U. S. v. Frazier, 560 F.2d 884 (8th Cir. 1977).

For a discussion of attempts to commit extortion, see 77. [FN4] U.S. v. Arena, 180 F.3d 380, 52 Fed. R. Evid. Serv. 908 (2d Cir. 1999), cert. denied, 531 U.S. 811, 121 S. Ct. 33, 148 L. Ed. 2d 13 (2000). [FN5] U.S. v. Arena, 180 F.3d 380, 52 Fed. R. Evid. Serv. 908 (2d Cir. 1999), cert. denied, 531 U.S. 811, 121 S. Ct. 33, 148 L. Ed. 2d 13 (2000); U. S. v. Moss, 631 F.2d 105 (8th Cir. 1980). [FN6] U.S. v. Panaro, 266 F.3d 939, 57 Fed. R. Evid. Serv. 415 (9th Cir. 2001). [FN7] U.S. v. Arena, 180 F.3d 380, 52 Fed. R. Evid. Serv. 908 (2d Cir. 1999), cert. denied, 531 U.S. 811, 121 S. Ct. 33, 148 L. Ed. 2d 13 (2000); U.S. v. Debs, 949 F.2d 199 (6th Cir. 1991); U.S. v. Local 560 of Intern. Broth. of Teamsters, Chauffeurs, Warehousemen, and Helpers of America, 780 F.2d 267, 19 Fed. R. Evid. Serv. 944 (3d Cir. 1985) 79. Benefit to extortionist

A.L.R. Library Elements of offense proscribed by the Hobbs Act (18 U.S.C.A. 1951) against racketeering in interstate or foreign commerce, 4 A.L.R. Fed. 881 6(d) Extortion under the Hobbs Act does not require personal benefit to the extortionist, whether direct or indirect, since the gravamen of the offense is loss to the victim.[1] CUMULATIVE SUPPLEMENT Cases: Extortion provision of the Hobbs Act requires not only the deprivation, but also the acquisition, of property. 18 U.S.C.A. 1951(b)(2). Scheidler v. National Organization for Women, Inc., 537 U.S. 393, 123 S. Ct. 1057, 154 L. Ed. 2d 991, 188 A.L.R. Fed. 741 (2003). [END OF SUPPLEMENT]

____________________________
[FN1] U.S. v. Green, 350 U.S. 415, 76 S. Ct. 522, 100 L. Ed. 494 (1956); U.S. v. Panaro, 266 F.3d 939, 57 Fed. R. Evid. Serv. 415 (9th Cir. 2001); U.S. v. Hairston, 46 F.3d 361 (4th Cir. 1995); U.S. v. Clemente, 640 F.2d 1069, 7 Fed. R. Evid. Serv. 1318 (2d Cir. 1981); U. S. v. Cerilli, 603 F.2d 415 (3d Cir. 1979); U. S. v. Frazier, 560 F.2d 884 (8th Cir. 1977); U. S. v. Trotta, 525 F.2d 1096 (2d Cir. 1975). 80. Victim's state of mind The victim's state of mind is an essential element in a prosecution for extortion in violation of the Hobbs Act.[1] The government must establish that the defendant induced the victim to part with his or her money or property and that the defendant did so by extortion.[2] Extortion may be proved under the Hobbs Act in either of two ways: either by showing that property was unlawfully obtained (1) under color of official right, or (2) through use of actual or threatened force, violence, or fear.[3] When extortion is accomplished by force or fear, there is no dispute that the victim's state of mind is an essential element of a violation of 18 U.S.C.A. 1951.[4] To prove extortion the government need not prove that the defendant actually possessed the power to carry out his or her threats; it is only necessary to prove that the victim reasonably believed that the defendant had such power.[5] Proof of an explicit promise by a public official to perform certain acts is not necessary to establish a violation of the Hobbs Act if enough evidence is presented for the jury to infer that the official accepted payments related to his using his influence on behalf of the payor.[6]

_______________________
[FN1] U.S. v. Montoya, 945 F.2d 1068 (9th Cir. 1991); U. S. v. Price, 617 F.2d 455, 5 Fed. R. Evid. Serv. 1168 (7th Cir. 1979); U. S. v. Adcock, 558 F.2d 397, 2 Fed. R. Evid. Serv. 1113, 43 A.L.R. Fed. 851 (8th Cir. 1977). [FN2] U. S. v. Adcock, 558 F.2d 397, 2 Fed. R. Evid. Serv. 1113, 43 A.L.R. Fed. 851 (8th Cir. 1977). [FN3] 76. [FN4] U.S. v. Middlemiss, 217 F.3d 112 (2d Cir. 2000); U. S. v. Price, 617 F.2d 455, 5 Fed. R. Evid. Serv.

1168 (7th Cir. 1979); U. S. v. Adcock, 558 F.2d 397, 2 Fed. R. Evid. Serv. 1113, 43 A.L.R. Fed. 851 (8th Cir. 1977); U. S. v. Biondo, 483 F.2d 635 (8th Cir. 1973); U. S. v. Nelson, 486 F. Supp. 464 (W.D. Mich. 1980). [FN5] U.S. v. Middlemiss, 217 F.3d 112 (2d Cir. 2000); U. S. v. Salvitti, 464 F. Supp. 611 (E.D. Pa. 1979). [FN6] U.S. v. Coyne, 4 F.3d 100 (2d Cir. 1993). 81. Threat to commit legal act West's Key Number Digest West's Key Number Digest, Extortion and Threats 25.1

A defendant who threatens to do an act which he or she is legally empowered to do, where the threat is made for the specific purpose of obtaining money or property, is guilty of extortion under 18 U.S.C.A. 1951, where the money was paid as a result of the threat even though the defendant could have legally acted against the threatened party without penalty.[1] CUMULATIVE SUPPLEMENT Cases: Threatening or committing physical violence unrelated to robbery or extortion falls outside the scope of the Hobbs Act which makes it a federal crime to obstruct, delay, or affect commerce by robbery or extortion or by threatening or committing "physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section," as phrase "plan or purpose" refers to plans or purposes that affect interstate commerce through robbery or extortion, and not simply plans and purposes that affect interstate commerce. Scheidler v. National Organization for Women, Inc., 126 S. Ct. 1264, 164 L. Ed. 2d 10 (U.S. 2006). Congress did not intend to create a freestanding physical violence offense in the Hobbs Act which makes it a federal crime to obstruct, delay, or affect commerce by robbery or extortion or by threatening or committing "physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section"; rather, Congress intended to forbid acts or threats of physical violence in furtherance of a plan or purpose to engage in what the statute refers to as robbery or extortion and related attempts or conspiracies. Scheidler v. National Organization for Women, Inc., 126 S. Ct. 1264, 164 L. Ed. 2d 10 (U.S. 2006). [END OF SUPPLEMENT]

__________________________
[FN1] U. S. v. Hyde, 448 F.2d 815 (5th Cir. 1971). 82. Generally West's Key Number Digest West's Key Number Digest, Extortion and Threats 4

One of the ways in which extortion may be proved under the Hobbs Act is by acts of the defendant to obtain the property of another, with his or her consent, induced by the wrongful use of actual or threatened force, violence, or fear.[1] However, the threat of bodily harm is neither an inherent characteristic nor a necessary concomitant of the crime of extortion under the Hobbs Act.[2] The definition of extortion is not limited to those circumstances in which property is obtained through the wrongful use of fear created by implicit or explicit threats, but instead leaves open the cause of the fear, and the wrongful use of fear need not be a consequence of an implicit or explicit threat .[3] The

Act prohibits unlawful conduct in the disjunctive and conduct within the scope of the Act may include either actual force, or actual violence, or the threat of violence, or the engendering of fear of force or violence, and thus, when actual violence has been used to frighten the victim into giving up a property right, it is irrelevant that that violence was not preceded by a threat.[4] CUMULATIVE SUPPLEMENT Cases: Defendants' use of a police badge in course of alleged conspiracy to take drugs from participants in drug deal did not constitute use of actual or threatened force, or violence, or fear of injury, as required as element of conviction for conspiracy to commit robbery in violation of Hobbs Act; once a police badge was displayed, a reasonable person would have perceived the badge to indicate that "the jig was up," rather than to immediately indicate an imminent threat of force. U.S. v. Santos, 425 F.3d 86 (2d Cir. 2005), for additional opinion, see, 152 Fed. Appx. 24 (2d Cir. 2005). Evidence was sufficient to sustain defendant's conviction for violating the Hobbs act by robbing and murdering drug dealer and dealer's girlfriend; evidence demonstrated that defendant and victim had recently quarreled about drug proceeds and that defendant had vowed to kill victim and to take his money, the day before the killings, defendant communicated his murderous intent to a confederates in a discussion during which handcuffs and flex cuffs were displayed, which was significant in light of evidence that victim's hands had been restrained when he was killed, and stab wounds were consistent with those that could have been inflicted by two knives subsequently discovered missing from defendant's girlfriend's apartment. U.S. v. Stewart, 101 Fed. Appx. 845 (2d Cir. 2004). Defendant's convictions on Hobbs Acts extortion charges was supported by evidence that defendant instituted and perpetuated a system in which his juvenile prostitutes turned over their earnings because of his threats and physical violence. U.S. v. Pipkins, 378 F.3d 1281 (11th Cir. 2004), cert. granted, judgment vacated, 125 S. Ct. 1617, 161 L. Ed. 2d 275 (U.S. 2005) and opinion reinstated, 2005 WL 1421449 (11th Cir. 2005). [END OF SUPPLEMENT]

___________________________
[FN1] 18 U.S.C.A. 1951(b)(2). For a discussion of the other way extortion may be provedby showing acts of the defendant to obtain the property of another "under color of official right"see 86 et seq. [FN2] U.S. v. Jones, 997 F.2d 967 (1st Cir. 1993).

**[FN3] U.S. v. Abelis, 146 F.3d 73 (2d Cir. 1998).

[FN4] U.S. v. Arena, 180 F.3d 380, 52 Fed. R. Evid. Serv. 908 (2d Cir. 1999), cert. denied, 531 U.S. 811, 121 S. Ct. 33, 148 L. Ed. 2d 13 (2000). 83. "Wrongful" A.L.R. Library Elements of offense proscribed by the Hobbs Act (18 U.S.C.A. 1951) against racketeering in interstate or foreign commerce, 4 A.L.R. Fed. 881 6(c) The word "wrongful," as used in the statutory definition of the term "extortion" in the Hobbs Act, has reference to an illegal actthat is, an act which violates the criminal laws of the United States or any state or territory.[1] **The obtaining of property may be "wrongful" because the alleged extortionist has no lawful claim to that property.[2]

_________________________
[FN1] Callanan v. U.S., 223 F.2d 171 (8th Cir. 1955).

**[FN2] U. S. v. Enmons, 410 U.S. 396, 93 S. Ct. 1007, 35 L. Ed. 2d 379 (1973); U. S. v. Arambasich,
597 F.2d 609 (7th Cir. 1979); U. S. v. Nell, 570 F.2d 1251 (5th Cir. 1978); U.S. v. Quinn, 514 F.2d 1250 (5th Cir. 1975). 84. "Fear" A.L.R. Library Elements of offense proscribed by the Hobbs Act (18 U.S.C.A. 1951) against racketeering in interstate or foreign commerce, 4 A.L.R. Fed. 881 6(a) Violence occurring before and after the time a defendant makes unlawful demands are relevant to the establishment of extortion by the defendant, as bearing on whether consent was induced by fear.[1] Actual violence need not occur, as threats of violence are sufficient to constitute a violation of the Act.[2] A violation of the Hobbs Act may be committed even in the absence of threats of physical violence, since the term "fear" includes the fear of economic loss.[3] Exploitation of the victim's reasonable fears constitutes extortion despite the absence of any threats whatsoever; the victim's fear need not be a consequence of direct or implicit threats by the defendant.[4] The extortionist need not be responsible for the state of fear in which the victim finds himself; it is enough if the extortionist exploits that fear and thereby wrongfully obtains money or property.[5] The existence of fear is considered from the perspective of the victim.[6] No overt act of coercion need be proven in order to establish a violation of the Hobbs Act.[7] CUMULATIVE SUPPLEMENT Cases: Even assuming victim's reasonable fear did not continue after he drove away from an encounter in which defendant threatened to kill victim and his son, the minute during which victim heard the threat and saw defendant's weapon qualified as "sustained," in determining whether victim suffered "sustained fear," as required for offense of criminal threat. West's Ann.Cal.Penal Code 422. People v. Fierro, 180 Cal. App. 4th 1342, 2010 WL 60221 (2d Dist. 2010). [END OF SUPPLEMENT]

___________________________________
[FN1] U.S. v. Sweeney, 262 F.2d 272 (3d Cir. 1959). [FN2] U.S. v. Green, 350 U.S. 415, 76 S. Ct. 522, 100 L. Ed. 494 (1956); U.S. v. Gibson, 726 F.2d 869 (1st Cir. 1984); U.S. v. Sweeney, 262 F.2d 272 (3d Cir. 1959).

**[FN3] 85. **[FN4] U.S. v. Middlemiss, 217 F.3d 112 (2d Cir. 2000); U.S. v. Billups, 692 F.2d 320, 11 Fed. R. Evid.
Serv. 1198 (4th Cir. 1982); U. S. v. Sander, 615 F.2d 215 (5th Cir. 1980); U. S. v. Crowley, 504 F.2d 992 (7th Cir. 1974); U. S. v. DeMet, 486 F.2d 816 (7th Cir. 1973); U. S. v. Tolub, 309 F.2d 286 (2d Cir. 1962).

**[FN5] U.S. v. Frey, 5 Fed. Appx. 514 (7th Cir. 2001), cert. denied, 122 S. Ct. 50, 151 L. Ed. 2d 20 (U.S.
2001); U.S. v. Williams, 952 F.2d 1504, 34 Fed. R. Evid. Serv. 998 (6th Cir. 1991).

**[FN6] U.S. v. Tomblin, 46 F.3d 1369, 41 Fed. R. Evid. Serv. 964 (5th Cir. 1995).

**[FN7] U. S. v. Mazzei, 521 F.2d 639 (3d Cir. 1975); U.S. v. Swiatek, 632 F. Supp. 985 (N.D. Ill. 1986).
85. "Fear"Fear of economic loss A.L.R. Library Elements of offense proscribed by the Hobbs Act (18 U.S.C.A. 1951) against racketeering in interstate or foreign commerce, 4 A.L.R. Fed. 881 6(b) The term "fear," as used in the statutory definition of the term "extortion" in the Hobbs Act, includes fear of economic loss, and is not limited to fear of physical violence.[1] The fear of economic loss is viewed from victim's perspective.[2] The fear must be of a loss, and the fear of losing a potential benefit does not suffice.[3] To prove extortion by fear of economic harm in violation of the Hobbs Act, the government must establish that the threat of such harm generated fear in the victim, but the threat need not be express and the victim's state of mind is relevant, and the government may show not only what the defendant said but also what the victim believed about the situation.[4] The possibility of lost business opportunities[5] and the fear which may result from intentional interference with a valuable contract right[6] are the types of economic fear whose extortionate exploitation is within the reach of the Hobbs Act. CUMULATIVE SUPPLEMENT Cases: Sufficient evidence existed to show three construction subcontractors reasonably feared economic harm if they failed to pay money demanded of them by defendant's coconspirator to purchase assistance of influential people in Puerto Rico government to secure subcontractors a major project, as required to show Hobbs Act extortion; first subcontractor testified that he agreed to pay the money because if he did not the government would make life very difficult for his construction firm by delaying the project payments and not awarding the firm government contracts in the future, second subcontractor felt that if he failed to pay he would stuff adverse consequences, and third subcontractor testified that he feared detriment to his business if he did not pay, and they all testified further that they knew the recipients of the money were people with influence. U.S. v. Vazquez-Botet, 532 F.3d 37 (1st Cir. 2008). [END OF SUPPLEMENT]

________________________ **[FN1] De Falco v. Bernas, 244 F.3d 286 (2d Cir. 2001), cert. denied, 122 S. Ct. 207, 151 L. Ed. 2d 147
(U.S. 2001); U.S. v. Middlemiss, 217 F.3d 112 (2d Cir. 2000); Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494 (3d Cir. 1998); U.S. v. Valenzeno, 123 F.3d 365, 1997 FED App. 240P (6th Cir. 1997); U.S. v. Collins, 78 F.3d 1021, 44 Fed. R. Evid. Serv. 144 (6th Cir. 1996); U.S. v. Sturman, 49 F.3d 1275 (7th Cir. 1995); U.S. v. Tomblin, 46 F.3d 1369, 41 Fed. R. Evid. Serv. 964 (5th Cir. 1995); U.S. v. Hairston, 46 F.3d 361 (4th Cir. 1995); U.S. v. DeLuca, 17 F.3d 6 (1st Cir. 1994); U.S. v. Flynt, 15 F.3d 1002 (11th Cir. 1994). [FN2] U.S. v. Valenzeno, 123 F.3d 365, 1997 FED App. 240P (6th Cir. 1997).

**[FN3] U.S. v. Tomblin, 46 F.3d 1369, 41 Fed. R. Evid. Serv. 964 (5th Cir. 1995). **[FN4] U.S. v. Hairston, 46 F.3d 361 (4th Cir. 1995); U.S. v. Williams, 952 F.2d 1504, 34 Fed. R. Evid.

Serv. 998 (6th Cir. 1991). [FN5] U.S. v. Collins, 78 F.3d 1021, 44 Fed. R. Evid. Serv. 144 (6th Cir. 1996); U.S. v. Hairston, 46 F.3d 361 (4th Cir. 1995); U. S. v. Hathaway, 534 F.2d 386 (1st Cir. 1976). [FN6] De Falco v. Bernas, 244 F.3d 286 (2d Cir. 2001), cert. denied, 122 S. Ct. 207, 151 L. Ed. 2d 147 (U.S. 2001); U.S. v. Stirone, 168 F. Supp. 490 (W.D. Pa. 1957), aff'd, 262 F.2d 571 (3d Cir. 1958), cert. granted, 359 U.S. 978, 79 S. Ct. 897, 3 L. Ed. 2d 928 (1959) and judgment rev'd on other grounds, 361 U.S. 212, 80 S. Ct. 270, 4 L. Ed. 2d 252 (1960). U.S. v. Snell, 627 F.2d 186 (9th Cir.(Cal.),Sep 08, 1980) Defendant was convicted in the United States District Court for the Northern District of California, William W Schwarzer, J., of attempted robbery of a federally insured bank, and he appealed. The Court of Appeals held that: (1) evidence was sufficient to support the conviction; (2) retrial for attempted robbery after Government had obtained a conviction for another offense arising out of same transaction did not violate defendant's right against double jeopardy; and (3) new indictment was not defective in form. Affirmed. See also, 9 Cir., 550 F.2d 515, 9 Cir., 592 F.2d 1083. [1] Criminal Law 110 44

110 Criminal Law 110III Attempts 110k44 k. In General. Most Cited Cases A conviction for attempt requires proof of culpable intent and conduct constituting substantial step toward commission of the crime that strongly corroborates that intent. [2] Robbery 342 24.30

342 Robbery 342k24 Weight and Sufficiency of Evidence 342k24.30 k. Attempts. Most Cited Cases (Formerly 342k24.1(6)) Evidence, which indicated that defendant and his coconspirators had assembled materials necessary to commit the crime reconnoitered the location of the crime and the habits of a kidnap victim who was an integral part of plan to rob bank, and that effectuation of plan was frustrated on one occasion by presence of a police car and on another by presence of a Great Dane at intended victim's house, was sufficient to establish offense of attempted robbery of federally insured bank. Appeal from the United States District Court for the Northern District of California. Before ANDERSON and TANG, Circuit Judges, and MURRAY,[FN*] District Judge. FN* Honorable William D. Murray, Senior United States District Judge for the District of Montana, sitting by designation. PER CURIAM:

This is the third appeal involving the prosecution of Edward Snell for his participation in an aborted kidnap and robbery scheme. In the first appeal, United States v. Snell, 550 F.2d 515 (9th Cir. 1977), the court affirmed Snell's conviction for conspiracy to rob a federally insured bank, but reversed his conviction for attempted obstruction of commerce in violation of the Hobbs Act, 18 U.S.C. s 1951, on the ground that the conduct charged was within the exclusive coverage of 18 U.S.C. s 2113.[FN1] A new indictment was returned charging him with attempted robbery of a federally insured bank. Snell's pretrial appeal of his motion to dismiss the new indictment on double jeopardy grounds was rejected in United States v. Snell, 592 F.2d 1083 (9th Cir.), cert. denied, 442 U.S. 944, 99 S.Ct. 2889, 61 L.Ed.2d 315 (1979). After a bench trial on the record of the former jury trial, Snell was found guilty of the new charge and appeals. FN1. In United States v. La Binia, 614 F.2d 1207 (9th Cir. 1980), this court relying on the Supreme Court's intervening decision in United States v. Culbert, 435 U.S. 371, 98 S.Ct. 1112, 55 L.Ed.2d 349 (1978), overruled the holding in Snell that led to the reversal of Snell's Hobbs Act conviction. The facts of this case are recounted in the first Snell opinion, 550 F.2d at 517. They show that Snell and two coconspirators planned to kidnap a bank manager and his wife, hold the wife hostage while accompanying the manager to the bank to obtain $150,000, and then kill the manager. Pursuant to that plan the three went to the manager's home and then to the bank where, from the parking lot, they observed the manager and identified his car. The other two co-conspirators also waited near the manager's house in the evening to observe him returning home. After observing the manager's routine at his home and office, the three assembled false identifications, rubber gloves, hand guns, mace, ropes, and adhesive tape and went to the bank manager's house to carry out their plan. Spotting a Highway Patrol vehicle near the house, they postponed execution of the plan. The following day they returned to the house, again armed. Snell and one co-conspirator carried false police identification. They knocked on the door and identified themselves as policemen, but their plan to force an entry and kidnap the wife was frustrated by a Great Dane that accompanied her to the door. When one of the co-conspirators was picked up on unrelated charges and revealed the plan to the police, Snell and the third co-conspirator were arrested. On appeal, Snell contends that (1) the evidence shows that he was engaged in preparation rather than an attempt; (2) his retrial for attempted robbery after the Government had obtained a conviction for another offense arising out of the same transaction violated his fifth amendment right against double jeopardy; and (3) that the new indictment was defective in form. We find no error and affirm. I. (1)(2) A conviction for attempt requires proof of culpable intent and conduct constituting a substantial step toward commission of the crime that strongly corroborates that intent. United States v. Mandujano, 499 F.2d 370, 373-79 (5th Cir. 1974), cert. denied, *188419 U.S. 1114, 95 S.Ct. 792, 42 L.Ed.2d 812 (1975); see United States v. Bussey, 507 F.2d 1096 (9th Cir. 1974). The evidence here established the existence of both elements. **Snell's intent was demonstrated by the plan that he devised with his co-conspirators. **His intent was corroborated in a number of ways: assemblage and possession of the materials necessary to commit the crime, reconnoitering the location of the crime and the habits of the victim, and the actions taken to effectuate the plan that were frustrated only by the fortuity of a police car on one occasion and the presence of a Great Dane at the intended victim's house on another. Despite Snell's contrary assertion, this case is not meaningfully distinguishable from the factual circumstances in Bussey. U.S. v. Bussey, 507 F.2d 1096 (9th Cir.(Or.),Nov 26, 1974) Defendant was convicted in the United States District Court for the District of Oregon, Robert C. Belloni, Chief Judge, for attempted bank robbery and for carrying a firearm during an attempted bank robbery and he appealed. The Court of Appeals, Trask, Circuit Judge, held that although consent of woman who was a participant in bank robbery attempt to a search of motel room where the group was staying was valid as to the common areas, it was not valid as to defendant's personal luggage, but error in denying suppression of evidence taken from defendant's luggage was harmless in view of the overwhelming case against defendant. The Court also held that defendant's actions pursuant to plan to force bank manager to go from manager's home to the bank to open vault, which plan

progressed to the point where defendant and companions left manager's house after being convinced that vault door could not be opened until a much later time, constituted an attempted bank robbery and defendant's abandonment of the attempt would not bar conviction for the attempt. Affirmed. [3] Robbery 342 12

342 Robbery 342k12 k. Attempt. Most Cited Cases Actions of defendant pursuant to plan to force bank manager to go to bank and open vault door, which plan progressed to point where manager convinced defendant that vault door could not be opened until a much later time and defendant and companions left manager's house, constituted an attempted bank robbery and defendant's abandonment of the attempt would not bar conviction for the attempt. 18 U.S.C.A. 924(c), 2113(a). [4] Criminal Law 110 44

110 Criminal Law 110III Attempts 110k44 k. In General. Most Cited Cases It is not sufficient as a defense to proceed well into the execution of an offense and then turn away because the plans are found to have been frustrated. Before BROWNING and TRASK, Circuit Judges, and JAMESON,FN1 District judge. FN1. Honorable William J. Jameson, Senior United States District Judge, District of Montana, sitting by designation. OPINION TRASK, Circuit Judge: Leroy Bussey appeals his conviction at a trial to the court for attempted bank robbery, 18 U.S.C. 2113(a), and for carrying a firearm during an attempted bank robbery, 18 U.S.C. 924(c) (Supp.1974). His plan was a rather elaborate one to force the bank manager to accompany him and his confederates from his home to the bank where the manager would open the vault door for them. The plan progressed with the aid of pistols and a shotgun to the point where the manager explained that the vault door had a time lock which would not permit anyone to open it until a much later designated time. They were convinced and left the house. A woman who was a participant told the whole story to the FBI and gave written permission for a search of the motel room where the group was staying. A search was made and incriminating evidence was obtained. [1] At a hearing the court denied suppression upon the ground that a valid consent had been given. The court was correct as to the common areas, United States v. Matlock, 415 U.S. 164, 94 S.Ct. 988, 39 L.Ed.2d 225 (1974), but in error as to the appellant's personal luggage from which much of the evidence was taken. [2] The error was harmless in view of the overwhelming case against appellant which the Government produced. For instance, (1) the wife of the bank manager identified appellant at trial; (2) Bussey's woman companion testified in detail about his participation in the planning and execution of the attempted robbery; (3) she also disclosed how certain guns stolen from the bank manager's house were disposed of in a lake; they were recovered and identified at trial; and (4) another independent witness, Nick Duarte, testified to an admission of the attempted robbery by appellant. The trial court did not rely upon the suppressed evidence in its findings of fact and conclusions of law which supported the judgment. The admission into evidence of the items which should have been suppressed was harmless error. Brown v. United States, 411 U.S. 223, 231, 93 S.Ct. 1577, 36 L.Ed.2d 251

(1973); Harrington v. California, 395 U.S. 250, 254, 89 S.Ct. 1726, 23 L.Ed.2d 284 (1969). [3] Appellant next contends that his acts did not constitute an attempted bank robbery. His argument based upon his reading of the statute is frivolous. Next, he argues that his acts did not progress to the point of the commission of the attempt. In Giles v. United States, 157 F.2d 588 (9th Cir.), cert denied, 331 U.S. 813, 67 S.Ct. 1197, 91 L.Ed. 1832 (1946), we approved a jury instruction defining attempt as an act tending toward the accomplishment, and done in part execution of the design to commit a crime, exceeding an intent but falling short of an execution of it. 157 F.2d at 590. In the present case the activities of the appellant clearly meet this test. See Lemke v. United States, 211 F.2d 73, 75 (9th Cir.), cert. denied, *1098 347 U.S. 1013, 74 S.Ct. 866, 98 L.Ed. 1136 (1954).

U.S. v. Arambasich, 597 F.2d 609, 101 L.R.R.M. (BNA) 2311, 86 Lab.Cas. P 11,343 (7th Cir.(Ill.) May 03, 1979)

Applying the definiton of the essential element specific intent in the crime of 18 U.S.C. 1951 extortion by fear of economic harm, established by the Supreme Court in U.S. v. Enmons, (410 U.S. 396, 93
S.Ct.1007,(U.S.La.,Feb 22, 1973). Clear definition. Defendant was convicted before the United States District Court for the Northern District of Illinois, Eastern Division, John F. Grady, J., of extortion and conspiracy to extort in violation of Hobbs Act, and he appealed. The Court of Appeals, Tone, Circuit Judge, held that: (1) defendant's requested stock instruction on specific intent was properly refused, and (2) it is unnecessary to use the term specific intent or to give any particular form of instruction; the important aspect is that the total term of specific intent be defined and its applicability to the case be made clear. Affirmed. [1] Criminal Law 110

822(7)

110 Criminal Law 110XX Trial 110XX(G) Instructions: Necessity, Requisites, and Sufficiency 110k822 Construction and Effect of Charge as a Whole 110k822(7) k. Intent, Malice, and Motive. Most Cited Cases Extortion and Threats 165 33

165 Extortion and Threats 165II Threats 165k33 k. Trial, Sentence, and Punishment. Most Cited Cases In prosecution for extortion affecting commerce in violation of Hobbs Act on charge of obtaining money from contractors with knowledge that it was paid because they feared economic harm and that defendant was not entitled to receive it, defendant's requested stock instruction on specific intent was properly refused, and instructions as a whole adequately advised that defendant was not to be convicted without the requisite intent to obtain that which he was not entitled to receive or without knowledge that payments were product of fear of economic harm. 18 U.S.C.A. 1951(a). [2] Extortion and Threats 165 33

165 Extortion and Threats 165II Threats 165k33 k. Trial, Sentence, and Punishment. Most Cited Cases

In a prosecution for extortion and conspiracy to extort affecting commerce in violation of statute, it is unnecessary to use the term specific intent or to give any particular form of instruction; the important aspect is that the total term of specific intent be defined and its applicability to the case be made clear. 18 U.S.C.A. 1951(a). [3] Criminal Law 110 1173.2(5)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1173 Failure or Refusal to Give Instructions 110k1173.2 Instructions on Particular Points 110k1173.2(5) k. Evidence in General. Most Cited Cases It was not reversible error for court to fail to give a two-conclusion instruction defining reasonable doubt, in prosecution for extortion and conspiracy to extort affecting commerce in violation of statute. 18 U.S.C.A. 1951(a). *610 Before TONE and BAUER, Circuit Judges, and MORGAN, District Judge. [FN*] FN* The Honorable Robert D. Morgan, Chief Judge of the United States District Court for the Southern District of Illinois, is sitting by designation. TONE, Circuit Judge. John Arambasich appeals from convictions under the Hobbs Act for extortion and conspiracy to extort, raising only two issues, both concerning the district court's jury instructions: (1) whether the court erred in refusing to give a stock instruction on specific intent, and (2) whether the court erred in refusing to give the two-conclusion instruction defining reasonable doubt. We find no error and affirm the judgment. The facts can be stated briefly for purposes of this appeal. The defendant's brother, Edward Arambasich, was the business agent of Local 444 of the International Association of Bridge, Structural, and Ornamental Ironworking Union between May, 1971 and March, 1975. The business agent had significant De jure and De facto powers: It appears from the record that he had power to determine which members of the local would work on a particular job. See also United States v. Kramer, 355 F.2d 891, 894-895 (7th Cir.), Vacated in part and cert. denied, 384 U.S. 100, 86 S.Ct. 1366, 16 L.Ed.2d 396 (1966). Any firm awarded a contract within the local's jurisdiction was required either to hire the local members assigned to the job by the business agent or to secure his permission to use its own men. If contractors were to avoid labor problems, they found it necessary to obtain the business agent's approval before doing any work within the local's jurisdiction. It appears from the evidence that the victims of the extortion scheme understood that the business agent had these powers. On at least seven occasions between 1971 and 1975, defendant's brother Edward used his powers to exact payments for himself as well as to require contractors to hire the defendant. The evidence showed that the defendant seldom, if ever, did any work whatsoever. Generally, he appeared at the job site only to pick up his check, which was equal in amount to that of the highest paid ironworker for the pay period. On one occasion, after his brother had made arrangements for him to be hired, John Arambasich appeared at the job site on the day work was scheduled to begin dressed in a suit and tie, introduced himself to the owner of the construction company, and asked how long the job was expected to last. The owner estimated about six to ten weeks. Arambasich replied, Well, why don't you pay me four weeks' salary, and I won't bother you anymore. And you will not have any labor problems. The owner agreed and later made out a check for $1,187.20, less state and federal taxes and social security withholdings. I. Arambasich does not contest the sufficiency of the evidence to support the jury's verdicts. Rather, relying primarily on United States v. Barclay, 560 F.2d 812 (7th Cir. 1977), he contends that the district court's failure to give his requested instructions on **specific intent or **some similarly worded alternative requires reversal.[FN1]

FN1. Arambasich tendered two different stock instructions on specific intent. The first is as follows: The crime charged in this case requires proof of specific intent before the defendant can be convicted. Specific intent, as the term implies, means more than the general intent to commit the act. To establish specific intent the government must prove that the defendant knowingly did an act which the law forbids, purposely intending to violate the law. Such intent may be determined from all the facts and circumstances surrounding the case. LaBuy, Jury Instructions in Federal Criminal Cases, s 4.04 at 20. The alternative instruction is as follows: The crime charged in this case is a serious crime which requires proof of specific intent before the defendant can be convicted. Specific intent, as the term implies, means more than the general intent to commit the act. To establish specific intent the government must prove that the defendant knowingly did an act which the law forbids, purposely intending to violate the law. Such intent may be determined from all the facts and circumstances surrounding the case. An act or a failure to act is knowingly done, if done voluntarily and intentionally, and not because of mistake or accident or other innocent reason. Devitt and Blackmar, Federal Jury Practice and Instructions, s 14.03 at 377 (1977). *611 The statute under which Arambasich was convicted of extortion and conspiracy to extort, 18 U.S.C. s 1951(a), provides as follows: Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by . . . extortion . . . or conspires so to do, . . . shall be fined . . . or imprisoned . . ., or both. As used in s 1951, (t)he term extortion means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. 18 U.S.C. s 1951(b)(2). In this definition, (t)he term wrongful, . . . modifies the use of each of the enumerated means of obtaining property actual or threatened force, violence, or fear . . ., United States v. Enmons, 410 U.S. 396, 399, 93 S.Ct. 1007, 1009, 35 L.Ed.2d 379 (1973) (footnote omitted), and limits the statute's coverage to those instances where the obtaining of the property would itself be wrongful because the alleged extortionist has no lawful claim to that property. Id. at 400, 93 S.Ct. at 1009-1010. The statute reaches the wrongful use of fear of financial harm to obtain property. See, e. g., 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); United States v. Duhon, 565 F.2d 345, 351 (5th Cir. 1978). We are inclined to agree with the district judge in the case at bar that the labels specific intent and general intent, [FN2] which are emphasized in the stock instructions he refused to give, and the distinction the instructions attempt to make between those categories of intent, are not enlightening to juries.[FN3] More specific and therefore more comprehensible information is conveyed by stating the precise mental state required for the particular crime. FN2. See ALI, Model Penal Code s 2.02, Comment (Tent. Draft No. 5, 1955): (W)e can see no virtue in preserving the concept of general intent, which has been an abiding source of ambiguity and of confusion in the penal law. The Model Penal Code, the Supreme Court recently observed, has been one source of guidance upon which the Court has relied to illuminate questions such as the appropriate standard of intent. United States v. United States Gypsum Co., 438 U.S. 422, 444, 98 S.Ct. 2864, 2877, 57 L.Ed.2d 854 (1978). Compare with the statement quoted above from the Comment to s 2.02 of the Code the following statement in the Gypsum opinion:

The element of intent in the criminal law has traditionally been viewed as a bifurcated concept embracing either **the specific requirement of purpose or **the more general one of knowledge or awareness. 438 U.S. at 445, 98 S.Ct. at 2877. FN3. For a discussion of the various ways in which the terms general intent and specific intent are used see LaFave and Scott, Handbook on Criminal Law 201-202 (1972); See generally United States v. United States Gypsum Co., 438 U.S. 422, 434 - 446, 98 S.Ct. 2864, 2872-2878, 57 L.Ed.2d 854 (1978); Morissette v. United States, 342 U.S. 246, 72 S.Ct. 240, 96 L.Ed. 288 (1952). It has been said that the intent required under s 1951 is general intent. See United States v. Green, 246 F.2d 155, 159-160 (7th Cir.), Cert. denied, 355 U.S. 871, 78 S.Ct. 122, 2 L.Ed.2d 76 (1957); United States v. Warledo, 557 F.2d 721, 729 n. 3 (10th Cir. 1977). We do not rest our decision on this, however. In the case at bar that mental state consisted of an intent to obtain money from contractors with the knowledge that it was paid because they feared economic harm and that the defendant was not entitled to receive it. United States v. Enmons, supra, 410 U.S. at 400, 406 n. 16, 93 S.Ct. 1007. **The cases are unanimous in holding that the government need not prove that the defendant acted for the purpose of affecting interstate commerce or with knowledge that it would be affected. See, e. g., United States v. Spagnolo, 546 F.2d 1117, 1119 n. 5 (4th Cir. 1976); United States v. Green, 246 F.2d 155, 159-160 (7th Cir.), Cert. denied, 355 U.S. 871, 78 S.Ct. 122, 2 L.Ed.2d 76 (1957); United States v. Bryson, 418 F.Supp. 818, 826-827 (W.D.Okl.1975). In this case, the district court correctly instructed the jury as follows: *612 To sustain the charges of extortion contained in . . . the indictment, the Government must prove each of the following propositions beyond a reasonable doubt . . .: First, that the company named in the count made the payments of money alleged . . . . Second, that the reason the company made the payments was because its officers or employees feared economic harm to the company if the payments were not made. Third, that the defendant John Arambasich received the payments from the company **knowing that he was not legally entitled to receive them and **knowing that they were made because the company feared economic harm. Fourth, that interstate commerce was affected in the manner I have explained . . . . Further, the court explained that, The word knowingly, as used in the crime charged means that the act was done voluntarily and purposely, and not because of mistake or accident. Knowledge may be proven by a defendant's conduct and by all of the facts and circumstances surrounding the case. The court also elaborated on the meaning of fear as the term was used with respect to the victim's state of mind.[FN4] FN4. The court said: The term fear has a commonly accepted meaning. It includes fear of economic harm. It may consist of a state of anxious concern, alarm or apprehension of anticipated harm to a business or of a threatened economic loss. Fear may be present even if the confrontations between the alleged victim and the alleged extorter appear friendly. The indictment charges Arambasich and his brother as principals in the crimes alleged. For purposes of the federal criminal law, (w)hoever commits an offense against the United States or aids, abets, counsels, commands,

induces or procures its commission is punishable as a principal. 18 U.S.C. s 2(a). The court explained to the jury that, In order to aid or abet the commission of a crime, a person must associate himself with the criminal venture, participate in it knowingly participate in it knowing what it is about, and try to make it succeed. This instruction is also in accord with the law. See, e. g., United States v. Bryant, 461 F.2d 912, 919 (6th Cir. 1972); United States v. Peoni, 100 F.2d 401, 402-403 (2d Cir. 1938) (L. Hand, J.). [1] These instructions adequately advised the jury that Arambasich was not to be convicted for voluntarily but innocently accepting the money, without the requisite intent to obtain that which . . . (he was) not entitled to receive, or without knowledge that the payments were the product of fear of economic harm. Taken as a whole, they adequately apprised the jury of the mental element that the government was required to prove beyond a reasonable doubt and specified the criteria by which the jury was to evaluate the evidence. [2] Although he argues that the failure to give the requested instructions constitutes reversible error, Arambasich never explains how he could have been prejudiced by the failure to give these instructions. As we pointed out in Barclay, there is no particular magic or salvation in using the word specific per se. The important aspect is that the total term of specific intent be defined and its applicability to the case be made clear. United States v. Barclay, supra, 560 F.2d 817 n. 7. It is unnecessary to use the term specific intent or to give any particular form of instruction. The stock specific intent instructions tendered by Arambasich are based on decided cases and have been approved in countless others. Yet they illustrate, if not the variety or disparity, the confusion of (judicial) definitions of the requisite but elusive mental element. Morissette v. United States, supra, 342 U.S. at 252, 72 S.Ct. at 244. See also United States v. United States Gypsum Co., supra, 438 U.S. at 444, 98 S.Ct. at 2877. It is not very *613 helpful to speak of a defendant's purpose to violate the law, as do these stock instructions . **Use of the phrase purposely intending to violate the law may be erroneously interpreted by jurors, for example, to require that the defendant know his act violates a criminal statute, which is ordinarily unnecessary, See LaFave and Scott, Supra note 3 at 356-357, 365. Giving one of the stock instructions may therefore not only confuse but mislead the jury to the prejudice of the prosecution. A trial judge is accordingly justified in refusing to give it, if he adequately instructs on the requisite mental state by other means. Arambasich's heavy reliance on United States v. Barclay, supra, is misplaced. There the defendant was convicted of aiding and abetting the making of a false entry on bank records in violation of 18 U.S.C. ss 2, 1005. [FN5] The prosecution was required to prove that Barclay acted with the specific intent to defraud or injure the bank or aid (the principal) in doing so. Id. at 816. **The aiding and abetting statute does not expressly require any particular intent. **But, as the government conceded in Barclay, because there can be no violation of 18 U.S.C. s 2 alone, the intent required is defined by the substantive offense and is to aid and abet its commission. Id. at 816. FN5. In relevant part, the statute provides: Whoever makes any false entry in any book, report or statement of such (national or insured) bank with intent to injure or defraud such bank or any other company, body politic or corporate, or any individual person, or to deceive any officer of such bank, or the Comptroller of the Currency, or the Federal Deposit Insurance Corporation, or any agent or examiner appointed to examine the assets of such bank, or the Board of Governors of the Federal Reserve System Shall be fined not more than $5,000 or imprisoned not more than five years, or both. 18 U.S.C. s 1005. The judge instructed the jury that the government was required to prove that (1) Johnson, the alleged principal,

caused a false entry to be made on the bank's records, (2) Johnson had the intent to injure or defraud the bank, and (3) Barclay did knowingly aid and abet . . . (Johnson) in causing the false entry to be made. Id. at 815 n. 5. But the judge refused to give either the LaBuy instruction on specific intent, See note 1, Supra, tendered by Barclay and the government, United States v. Barclay, supra, 506 F.2d at 814, or an instruction defining intent to defraud, which incorporated LaBuy's s 4.07, Id. at 815 n. 4. Nor did he otherwise advise the jury that the government had to prove that Barclay intended that the false entry injure or defraud the bank. This court held the instructions inadequate, because Nowhere in the jury charge . . . (was there) any language specifying the criteria by which . . . (the intent to injure or defraud) must be measured. Id. at 818. Furthermore, although the instruction defining the elements of the offense, summarized above, did state as an essential element that Barclay must have knowingly aided and abetted Johnson, there . . . (was) no explanation that Barclay must have acted with the required specific intent to defraud or injure the bank or aid Johnson in doing so. Id. at 816.[FN6] Thus, the trial court's instructions in Barclay failed to provide adequate criteria by which the jury could determine whether or not both Johnson and Barclay had the requisite specific intent to injure or defraud the bank. Ibid. FN6. In Barclay there was a substantial possibility that the jury understood the court's instructions as requiring conviction if they found that the defendant did no more than obtain the loan. See also United States v. Bryant, supra. For, in instructing the jury on aiding and abetting, the court simply read the statute, 18 U.S.C. s 2, quoted Supra. Compare the aiding and abetting instruction given in this case, quoted Supra. The importance of this omission was underscored by evidence of the jury's actual confusion concerning the requirement of intent. After deliberating for about eleven hours, the jury in Barclay sent out four *614 written questions, one of which was, Please give us a definition of intent. The court's response was as follows: The word intent refers to the purpose one has in performing an act. The instructions previously given you describe the intent required under each count of the indictment and I do not believe I can add anything to what I have already said. United States v. Barclay, supra, 560 F.2d at 816. This supplemental instruction only reinforced the basic misconception that Barclay could be found guilty of aiding and abetting a s 1005 violation by merely knowingly securing a loan from Johnson **without also knowing that Johnson was going to make a false entry with the specific intent to injure or defraud the bank and without Barclay himself having the specific intent to injure or defraud the bank, commit a crime, or aid Johnson in committing a crime. Id. at 816-817. Since the jury had not been properly advised regarding the intent which Barclay must have entertained in order to violate 18 U.S.C. ss 2 and 1005, we held that under United States v. Bryant, supra, 461 F.2d at 919-920, reversal of the conviction was required. As we have pointed out, the instructions here required the jury to find that Arambasich knew of the extortion scheme and voluntarily and purposefully participated in it and tried to make it succeed. Arambasich was not convicted of being a knowing spectator or an unwitting assistant; rather, he was convicted for being a knowing participant.[FN7] In light of the instructions given, the failure to give the specific intent instruction was not reversible error. FN7. The court's instructions concerning the conspiracy count are not challenged; in any event they were adequate. II. [3] Arambasich's second contention, namely, that it was reversible error for the court not to give a two-

conclusion instruction, defining reasonable doubt, is wholly without merit. United States v. Larson, 581 F.2d 664, 669 (7th Cir. 1978); United States v. Cooper, 577 F.2d 1079, 1085 (6th Cir.), Cert. denied, -- U.S. --, 99 S.Ct. 196, 58 L.Ed.2d 179 (1978). The judgment is affirmed. AFFIRMED.

Bankruptcy fraud extortion of unwarranted protection payments