U.S. v. Jannotti

• Decision Date: 20 March 1984
• Docket Number: 83-1094,No. 83-1093,Nos. 83-1093,No. 83-1094,83-1093,s. 83-1093
• Citation: 729 F.2d 213
• Parties: 15 Fed. R. Evid. Serv. 145 UNITED STATES of America v. JANNOTTI, Harry P. Schwartz, George X. Appeal of Harry P. JANNOTTI, inAppeal of George X. SCHWARTZ, in
• Court: U.S. Court of Appeals — Third Circuit

Page 213

729 F.2d 213

15 Fed. R. Evid. Serv. 145

UNITED STATES of America v. JANNOTTI, Harry P. Schwartz, George X Appeal of Harry P. JANNOTTI, in No. 83-1093 Appeal of George X. SCHWARTZ, in No. 83-1094.

Nos. 83-1093, 83-1094.

United States Court of Appeals Third Circuit.

Argued Sept. 12, 1983.

Decided Feb. 21, 1984.

Rehearing and Rehearing In Banc Denied March 20, 1984.

J. Clayton Undercofler, III (argued), Dilworth, Paxson, Kalish & Kauffman, Philadelphia, Pa., for appellant Jannotti.

Edward H. Rubenstone (argued), Richard A. Sprague, Sprague & Rubenstone, Philadelphia, Pa., for appellant Schwartz.

James J. Rohn (argued), Asst. U.S. Atty., Philadelphia, Pa., for appellee.

Before SEITZ, Chief Judge, GIBBONS and ROSENN, Circuit Judges.

OPINION OF THE COURT

SEITZ, Chief Judge:

Harry P. Jannotti and George X. Schwartz appeal sentences imposed after their convictions for conspiring to violate the Hobbs Act, 18 U.S.C. Sec. 1951(a) (1976), and, in the case of defendant Schwartz, the Racketeer Influenced and Corrupt Organizations Act ("RICO Act"), 18 U.S.C. Sec. 1962(d) (1976). This court has jurisdiction under 28 U.S.C. Sec. 1291.

I. PROCEDURAL HISTORY

Defendants are former members of the Philadelphia City Council. They were tried together on charges of conspiring to interfere with interstate commerce, in violation of the Hobbs Act, 18 U.S.C. Sec. 1951(a), and conspiring to conduct an enterprise through racketeering activities, in violation of the RICO Act, 18 U.S.C. Sec. 1962(d). The indictment charged that the conspiracies existed for approximately three weeks, from about January 11, 1980, to about February 2, 1980. The jury found that Schwartz was guilty on both counts, and that Jannotti was guilty on the Hobbs Act count and innocent on the RICO count.

The district court, however, granted defendants' motions to set aside the guilty verdicts in their entirety, dismissed the Hobbs Act counts for lack of jurisdiction, and entered judgments of acquittal. 501 F.Supp. 1182. The government appealed these orders and judgments, and this court, sitting in banc, reversed and ordered reinstatement of the jury's verdicts. 673 F.2d 578 (3rd Cir.) cert. denied, 457 U.S. 1106, 102 S.Ct. 2906, 73 L.Ed.2d 1315 (1982). The district court reinstated the verdicts and imposed sentences.

II. FACTUAL BACKGROUND

A brief statement of the facts of this case will assist in understanding the issues presented in this appeal. A more complete statement of the facts is found in this court's in banc decision. See 673 F.2d 578, cert. denied, 457 U.S. 1106, 102 S.Ct. 2906, 73 L.Ed.2d 1315 (1982). Schwartz's and Jannotti's indictments resulted from the FBI's so-called "ABSCAM" investigation of political corruption. The central device in this "sting" investigation was the creation of an elaborate scheme in which FBI undercover agents pretended to represent the interests of a fictitious Arab sheik seeking to immigrate to this country and to construct a large hotel in Philadelphia.

Undercover FBI agents, posing as representatives of the sheik, came to Philadelphia in January 1980 to seek out city officials who would promise political favors in exchange for cash. Specifically, the agents sought help from some members of the Philadelphia City Council on such matters as zoning and building permits. The agents had previously met with Howard Criden, a Philadelphia lawyer, and through Criden they met in January with Schwartz, Jannotti, and Louis Johanson, all members of the City Council. ¹ At these meetings the defendants and Johanson accepted cash payments and made promises of political assistance to the sheik on matters before the city council. All of these meetings took place at the Barclay Hotel in Philadelphia, where the agents had set up audio and video tape equipment to record the conversations surreptitiously. Telephone conversations were also recorded. These audio and video tapes played a crucial role in the prosecutions of Schwartz and Jannotti.

III. JURISDICTION UNDER THE HOBBS ACT

Defendants raise numerous objections to their convictions. They first argue that this court, in its earlier decision in banc, announced the standard for jurisdiction under the Hobbs Act but ignored a secondary contention, that the evidence failed to meet that standard. Defendants therefore renew in this appeal their argument that the evidence was insufficient. We disagree that the issue of the sufficiency of the evidence was not considered in the earlier opinion. After a thorough examination of the record, this court held as follows:

In this case the jury found that the defendants conspired to violate the Hobbs Act by their acceptance of payments in return for their promises to expedite completion of an elaborate hotel project which, had it been constructed, would have entailed at least a $30 million expenditure. Had the project actually been planned as represented, defendants' actions would have violated the Hobbs Act even if unforeseen difficulties, such as the overthrow of the "sheik", prevented any further action on the project. The federal interest in protecting interstate commerce is no less under the factual situation presented in this case. The threat posed by defendants' actions is just as great. Since Congress has exercised the full scope of its commerce power in the Hobbs Act, we conclude that there was Hobbs Act jurisdiction.

673 F.2d at 594. It is clear from this passage that the court in its earlier opinion not only articulated a standard for jurisdiction under the Hobbs Act but also held that jurisdiction existed on the basis of evidence presented by the government.

IV. HEARSAY EVIDENCE

Both defendants argue that the district court improperly admitted various pieces of important hearsay evidence. Unless otherwise noted, defendants entered timely objections to the admission of this evidence at trial.

All of the evidence at issue was admitted under the "coconspirator exception" to the rule against hearsay, Fed.R.Evid. 801(d)(2)(E). Under that exception, the out-of-court statements of the defendants' coconspirators will not be excluded as hearsay. The rule is a source of considerable confusion, but its requirements, as construed in this circuit, may be summarized as follows. There must be "independent evidence" of the conspiracy, i.e., evidence independent of the proffered hearsay itself. This evidence must establish by a "clear preponderance" that the conspiracy existed and that both the defendants and the declarant were members of the conspiracy. The "preponderance" test "simply requires the prosecution to present sufficient proof leading the trial judge to find 'that the existence of the contested fact is more probable than its nonexistence.' " United States v. Ammar, 714 F.2d 238, 250 (3d Cir.), cert. denied, --- U.S. ----, 104 S.Ct. 344, 78 L.Ed.2d 311 (1983). Finally, the out-of-court statement must have been made during the course of, and in furtherance of, the conspiracy. Id. at 245. Where the district court has admitted such statements under Rule 801(d)(2)(E), our review is limited to the question whether, viewing the evidence in a light most favorable to the proponent (in this case the government), the district court had "reasonable grounds" to support its ruling. Id. at 249.

A. Proof of the Schwartz-Jannotti Conspiracy

In order to assess the defendants' objections to the admission of certain out-of-court statements, it is necessary to review first their challenge to the district court's finding that there was a preponderance of independent evidence establishing a conspiracy to which the defendants belonged. If we conclude that the district court had reasonable grounds for its finding, we must then inquire whether the out-of-court statements challenged by the defendants satisfied the other requirements of Rule 801(d)(2)(E).

We have no doubt whatsoever that the district court had reasonable grounds for finding that a preponderance of the independent evidence established a conspiracy in which Schwartz, Jannotti, and Criden were members. The goal of this conspiracy was illegally to assist the fictitious sheik in matters before the Philadelphia City Council relating to the hotel project, in exchange for cash. In the videotape of a meeting between Schwartz, Criden, and the undercover agents on January 23, 1980, Schwartz told the agents that "we got uh five or six now [new?] members [of the City Council] that came in. Uh, you tell me your birth date. I'll give them to you for your birthday. (Laughter)." (App. 696a) This statement was independently admissible as an admission under Rule 801(d)(2)(A). Schwartz also made statements that evidenced Criden's complicity in the conspiracy. For example, Schwartz told the agents that "[t]here are certain protocol that should be worked out in advance and that's where the law firm, Howard [Criden], will become involved. To put it together so that it doesn't boomerang." (App. 756a) At the conclusion of the meeting, Schwartz examined and accepted an envelope containing $30,000 in cash.

In the videotape of the meeting between Criden, Jannotti and the agents, also admissible under Rule 801(d)(2)(A), Jannotti stated the following:

JANNOTTI: We'll go in there [the City Council] and battle, we'll go in and battle.

AGENT: You're with us?

JANNOTTI: Certainly, we'll go in and battle.

(App. 867a) Jannotti also explained to the agents that Schwartz had told him about the proposed scheme:

AGENT: Okay, ah, are you aware of my position and ah, ah.

JANNOTTI: George [Schwartz] has told me.

(App. 848a) At the conclusion of this meeting, the agents gave Jannotti an envelope containing $10,000 in cash.

Because we are convinced that the district court had reasonable grounds for finding that a conspiracy was established by a preponderance of the evidence, we must now consider the defendants' challenges to the admission of particular out-of-court statements under the coconspirator rule.

B. The...