U.S. v. Stephens

• Decision Date: 25 January 1995
• Docket Number: No. 94-1257,94-1257
• Citation: 46 F.3d 587
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Cleo D. STEPHENS, Sr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 587

46 F.3d 587

UNITED STATES of America, Plaintiff-Appellee, v. Cleo D. STEPHENS, Sr., Defendant-Appellant.

No. 94-1257.

United States Court of Appeals,

Seventh Circuit.

Argued Nov. 3, 1994.

Decided Jan. 25, 1995 ^*.

Rehearing Denied March 20, 1995. ^**

Michael A. Thill, Asst. U.S. Atty., Andrew B. Baker, Jr., Asst. U.S. Atty. (argued), Dyer, IN, for plaintiff-appellee.

J. Michael Katz, Katz, Brenman & Angel, Merrillville, IN (argued), for defendant-appellant.

Before COFFEY, PRATT, ^*** and FLAUM, Circuit Judges.

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. Secs. 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. Secs. 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 Sec. 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. Secs. 841(a)(1) and 846. Count III charged Stephens with violating 18 U.S.C. Sec. 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. Sec. 1962(d). On November 2, 1993, Stephens renewed his motion for

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 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.

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.

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...