U.S. v. Viola

• Decision Date: 13 September 1994
• Docket Number: 913 and 1344,D,Nos. 1257,1343,s. 1257
• Citation: 35 F.3d 37
• Parties: UNITED STATES of America, Appellee, v. Anthony VIOLA, Louis Gazzoli, Michael Formisano, Gaetano Izzo, also known as Guy Izzo, also known as Guy, Defendants-Appellants, Fred Rosen, also known as Rosie; Gerard Petrozelli, also known as Rosie Petrozelli, also known as Rosie, also known as Tony; Barry Imhoff, also known as Rosie Imhoff, also known as Rosie, also known as Number 15 Jr.; Vincent Sorrentino; Pasquale Moschetta, also known as Patty Moschetta, also knownas Patty; Max Emmanuel Herman, also known as Old Man Herman; Thomas Antonelli, Sr.; Carlos Barona; Hernan Zapata; Jimmy Barona; Paulo Zuluaga, also known as Paulo Lnu; Carlos Pazmino and Frank Pinto, Defendants. ocket 93-1272(L), 93-1291, 93-1405, and 93-1583.
• Court: U.S. Court of Appeals — Second Circuit

Page 37

35 F.3d 37

63 USLW 2256

UNITED STATES of America, Appellee, v. Anthony VIOLA, Louis Gazzoli, Michael Formisano, Gaetano Izzo, also known as Guy Izzo, also known as Guy Defendants-Appellants Fred Rosen, also known as Rosie; Gerard Petrozelli, also known as Rosie Petrozelli, also known as Rosie, also known as Tony; Barry Imhoff, also known as Rosie Imhoff, also known as Rosie, also known as Number 15 Jr.; Vincent Sorrentino; Pasquale Moschetta, also known as Patty Moschetta, also knownas Patty; Max Emmanuel Herman, also known as Old Man Herman; Thomas Antonelli, Sr.; Carlos Barona; Hernan Zapata; Jimmy Barona; Paulo Zuluaga, also known as Paulo Lnu; Carlos Pazmino and Frank Pinto, Defendants.

Nos. 1257, 1343, 913 and 1344, Docket 93-1272(L), 93-1291,

93-1405, and 93-1583.

United States Court of Appeals Second Circuit.

Argued July 20, 1994.

Decided July 28, 1994.

Opinion Filed Sept. 13, 1994.

Frank A. Lopez, New York City, for defendant-appellant Louis Gazzoli.

Joyce C. London, New York City, for defendant-appellant Gaetano Izzo.

Mark B. Gombiner, New York City (Henriette D. Hoffman, The Legal Aid Soc., Federal Defender Services Unit, of counsel), for defendant-appellant Michael Formisano.

Christine E. Yaris, New York City, for defendant-appellant Anthony Viola.

Jason Brown, Asst. U.S. Atty., Brooklyn, NY (Zachary W. Carter, U.S. Atty., Susan Corkery, Eric Friedberg, Asst. U.S. Attys., E.D. of NY, of counsel), for appellee.

Before: WALKER, McLAUGHLIN, and JACOBS, Circuit Judges.

WALKER, Circuit Judge:

Defendants-appellants appeal from judgments of conviction and sentence entered by the United States District Court for the Eastern District of New York (Sterling Johnson, Jr., Judge ), after a jury trial. They were convicted of substantive and conspiracy violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. Sec. 1962(c) and (d), as well as substantive and conspiracy violations arising from their involvement in a drug and stolen property importation and distribution ring. The indictment arose out of an investigation of criminal activity on the Brooklyn, New York waterfront that uncovered a scheme by defendant Anthony Viola to use his influence to facilitate the importation of cocaine and marijuana into the country, and to steal goods from the pier and adjacent warehouses and then sell them. Viola was the proprietor of Blue Chip Coffee, a wholesale coffee company in Brooklyn, and the other appellants were associated with him in different ways. Louis Gazzoli was a warehouseman who conducted business with Viola. Gaetano Izzo was a forklift operator at the Cargo Transport warehousing company, but sometimes worked evenings for Viola. Michael Formisano performed odd jobs for Viola, mostly consisting of light clean-up and maintenance work.

As a result of the investigation, a grand jury indicted seventeen individuals, five of whom were joint defendants in the trial in the district court, in a multi-count indictment charging offenses committed from 1984 until July 23, 1991. The government presented extensive evidence at trial in support of the charges, most of which is not relevant to the issues addressed in this opinion. In summary, the indictment charged that Viola and the other defendants assisted narcotics dealers in their efforts to import drugs into the United States through the Brooklyn waterfront.

The drug owners would contact Viola who, in turn, would use his influence and access to information to locate the drugs and remove them from the pier in circumvention of United States Customs regulations governing inspection of imported goods. The indictment also alleged that the defendants purloined cargo from the waterfront and then sold the goods on the black market. The government's case consisted of approximately forty witnesses, including three cooperating witnesses, and extensive recorded conversations obtained through over one year's electronic surveillance of Viola's office.

All appellants were convicted of violating and conspiring to violate RICO, 18 U.S.C. Sec. 1962(c) and (d). In addition to the RICO counts, the jury convicted Formisano of receiving and possessing property stolen from interstate commerce in violation of 18 U.S.C. Sec. 659, and Izzo of attempting to possess and conspiring to possess marijuana and cocaine, of importing and conspiring to import marijuana, and of being an accessory after the fact to other defendants' crimes.

Of the five defendants who stood trial below, one was acquitted and the remaining four--Viola, Izzo, Formisano, and Gazzoli--appealed. We announced our decision in an unpublished order affirming the convictions and sentences of all appellants except Izzo and Formisano, see United States v. Viola, 33 F.3d 50 (2d Cir.1994) (table case), and write to detail our reasoning on two points raised in that order. First, we consider Formisano's claims that he did not participate in the operation or management of the RICO enterprise as is required to support a conviction under 18 U.S.C. Sec. 1962(c), see Reves v. Ernst & Young, --- U.S. ----, ---- - ----, 113 S.Ct. 1163, 1172-73, 122 L.Ed.2d 525 (1993), and that the government did not prove knowledge of the RICO conspiracy sufficient to convict him under Sec. 1962(d). Second, we address Izzo's claim that the district court improperly assessed a two-point offense level enhancement based on his alleged abuse of a position of trust. See U.S.S.G. Sec. 3B1.3 (1992). Consistent with our earlier order, we reverse Formisano's convictions on the two RICO counts and Izzo's sentence enhancement for abuse of a position of trust, and affirm in all other respects.

DISCUSSION

I. Formisano's RICO Convictions

Formisano challenges his conviction under both the substantive and conspiracy provisions of RICO. With respect to the substantive count under Sec. 1962(c), he claims the district court erroneously instructed the jury that he could be convicted of conducting or participating in the conduct of a RICO enterprise even if he played "no part" in the operation or management of the enterprise. With respect to the conspiracy count under Sec. 1962(d), he challenges the sufficiency of the evidence regarding his knowledge of the existence of the RICO conspiracy.

A. The "Conduct" or "Participate" Instruction

1. Application of the Reves standard

Section 1962(c) makes it "unlawful for any person employed by or associated with" a RICO enterprise "to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity." Under the previously settled law of this circuit, a defendant did not have to operate or manage a RICO enterprise in order to conduct or participate in the conduct of the enterprise's affairs. See United States v. Scotto, 641 F.2d 47, 52-53 (2d Cir.1980), cert. denied, 452 U.S. 961, 101 S.Ct. 3109, 69 L.Ed.2d 971 (1981). However, we have recently recognized that the Supreme Court's holding in Reves--that at a minimum the defendant must "have some part in directing [the enterprise's] affairs," --- U.S. at ----, 113 S.Ct. at 1170--is irreconcilable with the relevant portion of our decision in Scotto. See Napoli v. United States, 32 F.3d 31, 34-35 (2d Cir. Aug. 4, 1994).

In Reves, the Court adopted an "operation or management" test to gauge whether a defendant had a sufficient connection to the enterprise to warrant imposing liability under Sec. 1962(c). Under the Court's interpretation, simply aiding and abetting a violation is not sufficient to trigger liability even though We agree with Formisano that the district court's charge did not comport with the requirements of the statute as interpreted in Reves. The district court instructed the jury as follows:

                Sec. 1962(c) punishes those who participate "directly or indirectly" in the enterprise's affairs.  This is so because "aiding and abetting liability extends beyond persons who engage, even indirectly, in a proscribed activity;  aiding and abetting liability reaches persons who do not engage in the proscribed activity at all, but who give a degree of aid to those who do."  Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., --- U.S. ----, ----, 114 S.Ct. 1439, 1447, 128 L.Ed.2d 119 (1994).  The Court did not determine "how far Sec. 1962 extends down the ladder of operation," though it indicated 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."  Reves, --- U.S. at ---- & n. 9, 113 S.Ct. at 1173 & n. 9.   Some insight into the scope of the operation or management test can be discerned from the Court's intimation that while the operation or management test is more restrictive than aiding and abetting liability, it requires less than "significant" control over the enterprise.  See Reves, --- U.S. at ---- & n. 4, 113 S.Ct. at 1170 & n. 4;  Stone v. Kirk, 8 F.3d 1079, 1091-92 (6th Cir.1993)
                

The third element that the government must prove is that a defendant conducted or participated in the affairs of the enterprise. The terms conduct and participate in the conduct of an enterprise include the performance of acts, functions or duties that are necessary or helpful to the operation of the enterprise.

A person may participate in the conduct of an enterprise even though he had no part in the management or control of the enterprise and no share in any profits. But the participation must be willful and knowing. (emphasis added).

Since Reves, it is plain that the simple taking of directions and performance of tasks that are "necessary or helpful" to the enterprise, without more, is insufficient to bring a defendant within the scope of Sec. 1962(c). So also, the district court's instruction that Formisano could be convicted "even though he had no part in the management or control of the enterprise," cannot be reconciled with the Reves...