US v. Sturm, Crim. A. No. 86-421-WD.

• Decision Date: 08 September 1987
• Docket Number: Crim. A. No. 86-421-WD.
• Citation: 671 F. Supp. 79
• Parties: UNITED STATES of America, Plaintiff, v. John Andrew STURM, Defendant.
• Court: U.S. District Court — District of Massachusetts

671 F. Supp. 79

UNITED STATES of America, Plaintiff, v. John Andrew STURM, Defendant.

Crim. A. No. 86-421-WD.

United States District Court, D. Massachusetts.

September 8, 1987.

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Charles McGinty, Federal Defender's Office, Boston, Mass., for defendant.

Paul F. Healy, Asst. U.S. Atty., for plaintiff.

MEMORANDUM UPON ENTRY OF JUDGMENT

WOODLOCK, District Judge.

This is a repossession dispute which ripened into a criminal proceeding.

I denied the defendant's "Motion for Judgment of Acquittal," after a jury verdict finding him guilty on Count One of attempted extortion under the Hobbs Act, 18 U.S.C. § 1951, and guilty on Count Two of violation of the bank felony statute, 18 U.S.C. § 2113(a). The principal question raised by that motion was whether the jury could properly conclude that the defendant's lender, the Worcester County Institute for Savings ("WCIS" or "Bank"), was put in fear of economic harm during its negotiations with the defendant over the return of certain collateral related to his purchase of an airplane.

I am directing judgment on this conviction which includes a term of incarceration and a fine as punishment for that activity but does not include an order of restitution. The principal question presented by the sentencing decision was how to calibrate and sanction the blameworthiness of the defendant's conduct in his negotiations with WCIS.

This memorandum is intended to set forth the interrelated reasons for the answers I have given to these questions.

I

The facts taken — as they must be on this Motion for Judgment of Acquittal — in the light most favorable to the Government, United States v. McNatt, 813 F.2d 499, 502 (1st Cir.1987), showed the following at trial.

The defendant John Andrew Sturm obtained a loan from WCIS by signing a promissory note for $110,000 in May 1985 and giving a purchase money mortgage in connection with his acquisition of an Aero Commander aircraft for $214,000. The loan was secured by the aircraft and certain related materials including the plane's logbooks.

Logbooks, which in essence provide a history of the aircraft, are necessary if the aircraft is to be used for commercial purposes and are inherently valuable to potential purchasers as evidence of the past performance of the aircraft.

In May 1986, Sturm was late on his payments to WCIS. Upon inquiry from the Bank, Sturm promised to bring the note up to date, which he did shortly thereafter. The following month WCIS learned from People's Bank in Connecticut that People's Bank had experienced problems with Sturm in connection with their own loan on another aircraft purchased by him. People's Bank indicated that it was considering filing a mechanic's lien against the Aero Commander — which was then kept in an airport in Connecticut. On the basis of this information, WCIS repossessed the Aero Commander. WCIS's act of repossession, however, did not encompass the logbooks.

The aircraft was flown from Connecticut to Hyannis, Massachusetts, on August 20, 1986. On September 26, 1986, an auction was held to sell the Aero Commander. Sturm appeared at the auction with an associate, who bid $50,000 for the aircraft. The Bank took ownership of the plane because the auction did not produce what WCIS considered the fair market value for the aircraft. Bank officials learned that the low valuation was a result of the unavailability of the logbooks.

After the auction Sturm told WCIS officials that he might be able to obtain the logbooks for a fee. In a series of telephone conversations Sturm inquired about the Bank's success in selling the airplane and indicated that he might sell the logbooks either to WCIS or to the ultimate purchaser of the aircraft.

Following one such telephone call WCIS contacted the FBI and the subsequent conversations were recorded. During a telephone conversation on December 2, 1986, Sturm professed to be unable to find the logbooks and offered to broker the aircraft for WCIS. Exhibit 5A at 3.¹ After discussing the two potential buyers with whom WCIS was then purportedly in negotiations, Sturm noted that with the logbooks the aircraft would be worth "more than forty five thousand dollars more" than was being offered. He then pressed his proposition. "That should make the books worth about twenty thousand dollars," Sturm said. Id. WCIS's representative interjected, "for the Bank to give to you?" "Yeah," Sturm replied. He continued, "for twenty thousand dollars I know I could find the books. I can find anything." Id. at 9.

Sturm explained that he was not concerned about any residual indebtedness to the Bank on the loan. "It doesn't matter to me whether they, whether the Bank wants to chase me or whether, cause I've already named them in my bankruptcy filing anyways ...," he explained. Id. at 10. Sturm said he would, however, be able to deliver the books if the Bank could assure him that he would receive $20,000. "You get a commitment for me and then I can give you a commitment, then there'd be no problem." Id. at 15-16. In a conversation later that day, Sturm reiterated his offer. "If they want to pay twenty thousand, I can have the books by the end of the week for em." Exhibit 6A at 9.

During that conversation, Sturm told the Bank that he expected to have his loan balance liquidated and to receive $20,000 additional cash.

I wanna be able to walk out of this thing and also I would want it in cash, cash, too. So that I won't have any problems with someone saying well yeah we'll give you twenty thousand and apply it against your loan. I don't want any of that crap.

Id. Sturm explained that he wanted the cash to avoid creditors.

I don't want to have money that's attachable, and you know, like if I accepted a check from you people, you could put a stop payment on it.... And cash I can spend you know and I can say hey, I spent it the next and there's no problem with it. I just don't want any ah ah people saying, well you know, what happened to that money. I can say, well I grabbed it and I spent it.

Id. at 11. After further negotiations, WCIS agreed to pay $20,000 to get the books. Id. at 15. Two days later, Sturm called to confirm that he had the logbooks and that the books would be transferred the following day, December 5. Exhibit 7A at 1-2.

On December 5, Sturm met in the Bank with two FBI agents working in an undercover capacity as officers of WCIS. Sturm told them he retrieved the logbooks from the Cayman Islands and brought them to Worcester from his home in Connecticut. Exhibit 9A at 3, 13. He said the logbooks, to which he had had access for some time, were in the parking lot ready for transfer. Id. at 9, 15. Sturm reiterated his demand for cash and expressed concern about preparation of a Currency Transaction Report because he did not want to attract the IRS's attention to his receipt of cash. "I don't want to raise any flags. I want to keep this thing as private and confidential as possible," he said. Id. at 8. When one of the Agents observed, "this kinda reminds me of a kidnapping or whatever. You know, we, we take twenty thousand dollars out and see our property," id. at 14-16, Sturm replied, "I know." Id. at 15.

Sturm then left the Bank with the two agents and was arrested as he showed them the logbooks in the trunk of his car.

II

The Hobbs Act, 18 U.S.C. § 1951(b)(2), recognizes three species of inducement which can lead to extortionate interference with interstate commerce: wrongful use of actual or threatened force or violence; the color of official right; and fear, which in practice — when unassociated with force, violence or misuse of public office — has come generally to mean fear of economic harm.

In its last major treatment of the Hobbs Act the Supreme Court attempted to place a limiting construction on the scope of the statute. The Court held that the word "`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 `wrongful' because the alleged extortionist has no lawful claim to that property." United States v. Enmons, 410 U.S. 396, 400, 93 S.Ct. 1007, 1009-10, 35 L.Ed.2d 379 (1973).

Since Enmons, however, the lower courts, no doubt concerned that acts of force and violence seeking an extortionate extraction "deserve to be dignified as federal crimes," id. at 412, 93 S.Ct. at 1016 (Blackmun, J., concurring), have systematically chosen to limit Enmons. Indeed, its holding has been characterized as "merely carving out a labor exception to the traditional law of extortion codified in the Hobbs Act." United States v. Zappola, 677 F.2d 264, 269 (2d Cir.), cert. denied, 459 U.S. 866, 103 S.Ct. 145, 74 L.Ed.2d 122 (1982).

Putting to one side whether the development of Hobbs Act case law in the inferior courts after Enmons has faithfully read and applied what the implications of that decision were for violence or misuse of office cases, cf. United States v. Russo, 708 F.2d 209, 216-26 (6th Cir.) (Holschuh, J. concurring), cert. denied, 464 U.S. 993, 104 S.Ct. 487, 78 L.Ed.2d 682 (1983) the post-Enmons case law rejecting the claim of right defense has not yet spoken directly in the context of fear of economic harm.² And this is a context in which reasoned differential analysis is quite important.

The desire to recognize wrongfulness in cases involving violence or misuse of position is intuitively apparent. The use or threatened use of force and violence and the misuse of office are not difficult to recognize as inherently wrongful means to any end. But the same presumptive wrongfulness does not arise where the activity is not inherently wrong but is designed to instill anxiety that some economic benefit or interest may be lost. That anxiety is after all the animating force of our economic system.

Consequently, the concept of wrongful inducement of fear of economic harm requires a careful effort at definition lest the push and...