U.S. v. Cauble

• Decision Date: 31 May 1983
• Docket Number: No. 82-2087,82-2087
• Citation: 706 F.2d 1322
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Rex C. CAUBLE, Individually and doing business as Cauble Enterprises, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1322

706 F.2d 1322

UNITED STATES of America, Plaintiff-Appellee, v. Rex C. CAUBLE, Individually and doing business as Cauble

Enterprises, Defendant-Appellant.

No. 82-2087.

United States Court of Appeals,

Fifth Circuit.

May 31, 1983.

Rehearing and Rehearing En Banc Denied Aug. 11, 1983.

Bruder & Cooper, Melvyn Carson Bruder, Dallas, Tex., Michael Tigar, Washington, D.C., for defendant-appellant.

Robert J. Wortham, U.S. Atty., Tyler, Tex., David B. Smith, Dept. of Justice, Appellate Section, Crim. Div., Washington, D.C., for plaintiff-appellee.

Appeal from the United States District Court for the Eastern District of Texas.

Before WISDOM, RUBIN and TATE, Circuit Judges.

ALVIN B. RUBIN, Circuit Judge:

Rex C. Cauble appeals his conviction on a ten-count indictment charging him with violating the Racketeer Influenced and Corrupt Organizations statute (RICO) and the Travel Act and with misapplication of bank funds. Cauble, a wealthy Texas businessman, was in effect accused of being the range boss of the highly publicized "Cowboy Mafia," a loosely-knit group responsible for importing and distributing over 147,000 pounds of marijuana from 1976 through 1978. ¹ The indictment charged Cauble with substantive violations of RICO ² based on conduct of an enterprise through a pattern of racketeering activity and investment of income from racketeering activity in an interstate enterprise; conspiracy to violate RICO; three violations of the Travel Act, ³ and four counts of misapplication of bank funds. ⁴ The jury convicted him on all counts and found that Cauble's share of Cauble Enterprises should be forfeited. The trial judge imposed a five-year sentence on Count One and concurrent five-year sentences on the other counts and ordered the forfeiture. Cauble's appeal raises myriad challenges to the indictment, the sufficiency of the evidence adduced at trial, and the legality of the forfeiture. Having reviewed the sixteen-volume record, we conclude that the trial was fair, the evidence was sufficient, and the assertions of error are without merit. We, therefore, affirm the judgment of conviction and forfeiture.

I. The RICO Claims

A. Background

Congress adopted the Racketeer Influenced and Corrupt Organizations provisions ⁵ "to provide a blueprint for federal action against organized crime...." ⁶ Although it suffered initially from limited use, RICO is now a frequently-employed arrow in the federal prosecutor's crime-fighting quiver. RICO's application and effectiveness have been enhanced by the judicial consensus that it may be used even though no organized crime activity is charged ⁷ and by the Supreme Court's decision that it applies not only to legitimate enterprises conducted through a pattern of racketeering activity, but to wholly illegitimate enterprises as well. ⁸

1. What RICO Prohibits

RICO's purpose is "the imposition of enhanced criminal penalties and new civil sanctions to provide new legal remedies for all types of organized criminal behavior, that is, enterprise criminality--from simple political corruption to sophisticated white-collar crime schemes to traditional Mafia-type endeavors." ⁹ RICO does not, however, criminalize conduct that was legal before its enactment. Its application depends on the existence of racketeering activity violating some other criminal statute, state or federal. ¹⁰

Section 1962(a) of the statute prohibits the use of illegally-derived funds to acquire or maintain an interest in an enterprise by legal means. ¹¹ Section 1962(c) proscribes the illegal use of an enterprise. Section 1962(d) makes illegal a conspiracy to violate RICO's substantive provisions, requiring the government to prove that the defendant agreed to participate in the enterprise's affairs through a pattern of racketeering. Each section requires that the enterprise affect interstate commerce.

The government establishes a Sec. 1962(a) violation by proving the existence of an enterprise, the defendant's derivation of income from a pattern of racketeering activity, and the use of any part of that income in acquiring an interest in or operating the enterprise. The government establishes a Sec. 1962(c) violation by proving the existence of an enterprise, the defendant's employment by or association with that enterprise, and the defendant's conduct of or participation in the conduct of the enterprise's affairs through a pattern of racketeering activity. ¹² Because this case requires us to examine the proof necessary to demonstrate both the existence of an enterprise and the connection of a defendant to it, we discuss each element briefly.

2. Enterprise

The statute states: " '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." ¹³ The Supreme Court has held that this language encompasses both wholly legal entities and completely illegal associations-in-fact. ¹⁴ But "[t]he 'enterprise' is not the 'pattern of racketeering activity'; it is an entity separate and apart from the pattern of activity in which it engages." ¹⁵ Therefore, in every case the government must prove not only that there was a pattern of racketeering activity but that it was conducted through an enterprise as thus defined.

In this case the indictment charged that Cauble Enterprises, a legal partnership consisting of Cauble, his wife, and his son, was the enterprise used in violation of both Secs. 1962(a) and (c). ¹⁶

3. Pattern of Racketeering Activity

The statute defines a "pattern of racketeering activity" as "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." ¹⁷ "Racketeering activity" includes an array of crimes that violate either state or federal law. ¹⁸

4. Nexus Between the Enterprise and the Racketeering Activity

RICO criminalizes the conduct of an enterprise through a pattern of racketeering activity and not merely the defendant's engaging in racketeering activity. ¹⁹ Therefore, there must be a nexus between the enterprise, the defendant, and the pattern of racketeering activity. The mere fact that a defendant works for a legitimate enterprise and commits racketeering acts while on the business premises does not establish that the affairs of the enterprise have been conducted "through" a pattern of racketeering activity. ²⁰ Similarly, a defendant's mere association with a lawful enterprise whose affairs are conducted through a pattern of racketeering activity in which he is not personally engaged does not establish his guilt under RICO. ²¹

In several opinions we have discussed the requirement that there be a nexus between the enterprise and the racketeering activity. We have not, however, formulated a test to determine whether the requisite nexus has been established by the government's proof. ²² Even in our most recent discussion of legal enterprises, United States v. Dozier, 672 F.2d 531 (5th Cir.), cert. denied, --- U.S. ----, 103 S.Ct. 256, 74 L.Ed.2d 200 (1982), we did not define the nexus required but concluded that "the nexus is clear" because "[o]nly [the defendant's] position in the [enterprise] and his control over its affairs enabled him to hawk its services for personal gain." 672 F.2d at 544.

Two courts have held that the test for determining whether the government has met the nexus requirement is whether it has proved that "(1) [the defendant] is enabled to commit the predicate offenses solely by virtue of his position in or control over the affairs of the enterprise, or (2) the predicate offenses are related to the activities of that enterprise." ²³ This test appears to us essentially to combine the two required connections under part (1) of the inquiry. Because the enterprise-racketeering nexus should be distinct from the defendant-racketeering connection, we find it necessary to modify this formulation. A defendant does not "conduct" or "participate in the conduct" of a lawful enterprise's affairs, unless (1) the defendant has in fact committed the racketeering acts as alleged; (2) the defendant's position in the enterprise facilitated his commission of the racketeering acts, and (3) the predicate acts had some effect on the lawful enterprise. ²⁴

B. Challenges to the Indictment

Cauble challenges each RICO count on the ground that it fails to state an offense against the United States. ²⁵ Count One of Cauble's indictment, the conspiracy charge, details the predicate offenses and overt acts with great specificity. It alleges that as part of the conspiracy Cauble Enterprises' "lands, buildings, automobiles, aircrafts [sic], employees and assets" would be used. It then lists thirty-seven overt acts, alleging that Cauble and Cauble Enterprises loaned money to, financed travel by, and provided ranches and an airplane for use by the conspirators. Cauble nonetheless contends that this count is defective because its charging portion does not include references to the particular means by which Cauble Enterprises' affairs were conducted through a pattern of racketeering activity. He also contends that the allegation that he acted "individually and doing business as Cauble Enterprises" "leaves a question whether some agency theory more arcane than contemplated by 18 U.S.C. Sec. 2 is being invoked." ²⁶ Finally, he charges that the count is too vague to permit a clear answer.

The indictment's purpose is to inform the accused of the charges; it must be read in the light of that purpose. An indictment is sufficient if it contains the elements of the offense charged, fairly informs the defendant what charge he must be prepared to meet, and enables the accused to plead acquittal or conviction in bar of future prosecutions for the same offense. Stratton, 649 F.2d at 1073.

In Stratton, the defendant argued that the indictment was defective because it alleged too broad an enterprise. W...