U.S. v. Santoni

Decision Date19 October 1978
Docket Number77-2007,Nos. 77-2006,s. 77-2006
Citation585 F.2d 667
PartiesUNITED STATES of America, Appellee, v. George Joseph SANTONI, Appellant. UNITED STATES of America, Appellee, v. John Jake Konstantine JAKUBIK, Appellant.
CourtU.S. Court of Appeals — Fourth Circuit

Harold I. Glaser, Baltimore, Md., for appellant in No. 77-2006.

M. Albert Figinski, Baltimore, Md., for appellant in No. 77-2007.

David Dart Queen, Asst. U. S. Atty., Baltimore, Md. (Russell T. Baker, Jr., U. S. Atty., Baltimore, Md., on brief), for appellee.

Before BOREMAN and FIELD, Senior Circuit Judges, and HALL, Circuit Judge.

FIELD, Senior Circuit Judge:

George Santoni and John Jakubik appeal from their convictions under 18 U.S.C. § 1951 (Hobbs Act), 1 following a joint jury trial. The appellants were joined under Rule 8(b) of the Federal Rules of Criminal Procedure and charged in a multicount indictment. Santoni was charged with violating 18 U.S.C. § 1951 (extortion) and § 2 (aiding and abetting) in Counts One through Four and with violating 26 U.S.C. § 7206(1) (tax evasion) in Count Five; he was convicted on Counts One through Four and acquitted on Count Five. Jakubik was charged with violating 18 U.S.C. §§ 1951 and 2 in Counts Two and Three; he was convicted on Count Two and acquitted on Count Three. Both Santoni and Jakubik appeal, contending that there was an insufficient nexus with interstate commerce to support a conviction under the Hobbs Act. In addition, Jakubik argues that (1) "property" was not extorted within the meaning of the Hobbs Act, (2) it was reversible error for the trial court to deny his pre-trial motion for severance based on improper joinder under Rule 8(b), and (3) it was reversible error for the trial court to deny his Rule 14 motion for severance when only one day before the end of their joint trial Santoni stated that he would not take the witness stand.

This case centers around the federal government's attempt to uncover in the city of Baltimore a practice under which contractors were required to kick back a percentage of their contract fees to various officials in exchange for assurances of future contracts and the evasion of inspections during the performance of their contracts. As a part of this investigation, Municipal Chemical Corp. was organized in February, 1975, with the financial support of the F.B.I., for the specific purpose of obtaining evidence relative to political kickbacks and extortion incident to local government contracts in Baltimore. Although the realization of profit was not a primary goal of Municipal Chemical, the corporation was designed to acquire and perform contracts in the field of chemical cleaning and building demolition while pursuing its undercover activity. Salvatore Spinnato was hired to work in cooperation with the F.B.I. as a paid consultant to Municipal Chemical, and was the only person in the corporation familiar with chemical cleaning. F.B.I. agents Dudley Hodgson and Ronald Miller acted as officers of Municipal Chemical. During the period covered by the indictment, appellant Santoni was a member of the Maryland House of Delegates and had been assisted in his election effort by appellant Jakubik who was a building maintenance foreman for the city of Baltimore.

In May of 1975, Olympos Painting Co. acquired a contract to clean two public schools in the Baltimore area. Later in that spring Spinnato informed Santoni, whom he had known previously, that he was involved with Municipal Chemical and that it had bid unsuccessfully on the cleaning contract awarded to Olympos Painting. Santoni informed Spinnato that he could help Municipal Chemical but that it would cost ten percent of all contract fees plus an initiation fee of $3,000. Spinnato paid Santoni the $3,000, and Santoni advised him that he could obtain a subcontract for Municipal Chemical from Olympos Painting. Jakubik arranged for a meeting between Santoni and Konstantinos Nicolaidis, president of Olympos Painting, at which meeting Santoni was introduced by Jakubik, according to Nicolaidis' testimony, as "a state delegate (who) can help you if you ever have a problem * * *. And it is good to have a friend like this * * * on account of (Santoni's) being a politician and state delegate." At this meeting Santoni requested that Olympos Painting give Municipal Chemical a subcontract to clean one of the two Baltimore schools, but Nicolaidis was reluctant to enter into such an arrangement.

At a subsequent meeting Santoni, Jakubik, Spinnato, Hodgson, Miller and Nicolaidis discussed the possibility of a subcontract for Municipal. After Nicolaidis refused Municipal Chemical's offer to perform the work for $32,000, according to Nicolaidis' testimony, Jakubik reminded Nicolaidis "about he knowing people, that they can help contractors, that it's good to have these people as friends, and sometimes you couldn't afford to have them against you." During this same meeting, Santoni informed Nicolaidis that there would be no trouble with inspectors. Nicolaidis subsequently agreed to award the subcontract to Municipal Chemical at the price of $16,000 because, according to his testimony, "I thought I was getting into or associating with people that would be helping me in future contracts." On July 21, 1975, after signing and delivering the subcontract to Nicolaidis, the principals of Municipal Chemical paid Santoni $1,600 to cover the ten percent kickback fee.

In the performance of its subcontract, Municipal Chemical used Hydron 300, a chemical manufactured in Pennsylvania, as expressly required by the original contract. In addition Municipal Chemical rented power scaffolding and accessories from Sky-Climber, Inc., of California. After completing its work under the subcontract, Municipal Chemical sold 55 gallons of Hydron 300 to Nicolaidis for use by Olympos Painting in completion of the contract.

About the time the school subcontract was being completed, Santoni informed Spinnato that it would cost Municipal Chemical $10,000 for his assistance in the

acquisition of demolition contracts, and agent Hodgson paid Santoni the amount requested by him. In February of 1976, approximately one year after its formation, Municipal Chemical Corp. was forced to terminate its operations because Spinnato's undercover activity had been revealed.

INTERSTATE COMMERCE

Counts One through Three were based upon the chemical cleaning contract and subcontract while Count Four involved the attempt to acquire demolition contracts. With respect to the chemical cleaning contract and subcontracts, appellants argue that (1) the government created the only connection with interstate commerce and thus manufactured the jurisdictional requirement, and (2) Municipal Chemical was only a "one shot deal" and thus there was no real effect on interstate commerce as a result of appellants' activities. We do not agree and conclude that the requisite nexus with interstate commerce under the Hobbs Act was established in Counts One through Three.

Appellants contend that Municipal Chemical, the government created corporation, provided the only connection with interstate commerce by making purchases of Hydron 300 and renting scaffolding, both of which were manufactured out-of-state. They argue that the logical extension of holding that the interstate commerce jurisdictional element was met in such fashion would permit the government to assume federal jurisdiction over purely state criminal cases by manufacturing a nexus with interstate commerce. In making this argument the appellants rely strongly on United States v. Archer, 486 F.2d 670 (2 Cir. 1973), which involved 18 U.S.C. § 1952 (Travel Act), making it a federal crime to use any facility in interstate commerce to carry on an illegal activity. In Archer the only connection with interstate commerce consisted of interstate phone calls initiated by a government agent for the express purpose of creating jurisdiction, with the exception of one transcontinental call which the court discarded as " 'a casual and incidental occurrence.' " Id. at 682. The Second Circuit expressed its disapproval of the government's methods of uncovering the illegal activity and its attempts to create jurisdiction. While the conviction was reversed, upon rehearing the court narrowed its holding to those cases where the interstate commerce element "is furnished solely by undercover agents." Id. at 685-86. The Second Circuit's subsequent decision in United States v. Gambino, 566 F.2d 414 (1977), appears to further restrict Archer. In Gambino the F.B.I. had organized a sanitation collection company in an effort to uncover extortionate pressure being placed on similar companies by the defendants. The only connection with interstate commerce was the government's out-of-state purchases of equipment, and dumping of garbage in New Jersey because of cheaper rates. The court distinguished Archer by noting that it involved the contrived use of interstate facilities whereas in Gambino "the activities of (the government corporation) were Necessarily wedded to interstate commerce." 566 F.2d at 419 (emphasis added). In our opinion the present case is distinguishable from Archer and falls within the rationale of Gambino since the contract with the city Required the use of Hydron 300. Regardless of who performed the work on the two Baltimore schools, interstate commerce would have been involved in the cleaning process by this required use of Hydron 300. In addition the rented scaffolding, manufactured out-of-state, was a Necessary part of the cleaning process. Appellants' reliance on Archer is further undercut by our decision in United States v. LeFaivre, 507 F.2d 1288 (4 Cir. 1974), Cert. denied, 420 U.S. 1004, 95 S.Ct. 1446, 43 L.Ed.2d 762 (1975), where we concluded that the interstate requisite of the Travel Act is satisfied if there is "some utilization of a facility in interstate commerce and it is not requisite that such use...

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