State v. Judd

• Decision Date: 02 November 1988
• Docket Number: No. 88-0430-CR,88-0430-CR
• Citation: 433 N.W.2d 260,147 Wis.2d 398
• Parties: , RICO Bus.Disp.Guide 7101 STATE of Wisconsin, Plaintiff-Respondent, d v. Winston D. JUDD, Defendant-Appellant.
• Court: Wisconsin Court of Appeals

Page 260

433 N.W.2d 260

147 Wis.2d 398, RICO Bus.Disp.Guide 7101

STATE of Wisconsin, Plaintiff-Respondent, ^d v. Winston D. JUDD, Defendant-Appellant.

No. 88-0430-CR.

Court of Appeals of Wisconsin.

Argued Oct. 6, 1988.

Opinion Released Nov. 2, 1988.

Opinion Filed Nov. 2, 1988.

[147 Wis.2d 399] Mark Lukoff, First Asst. State Public Defender, on briefs, for defendant-appellant.

Donald J. Hanaway, Atty. Gen. and Rustam A. Barbee, Asst. Atty. Gen., on briefs, Rustam A. Barbee, argued, for plaintiff-respondent.

Before SCOTT, C.J., BROWN, P.J., and NETTESHEIM, J.

SCOTT, Chief Judge.

This appeal involves interpretation of the Wisconsin Organized Crime Control Act (WOCCA), secs. 946.80 through 946.87, Stats. Winston Judd seeks a reversal of his conviction on the basis that sec. 946.83(3), Stats., requires the "enterprise" to be separate from the "person" who is charged with conducting a pattern of racketeering activity through the enterprise. He alleges that the evidence is insufficient on this point. While we agree that the enterprise must be separate from the person, we conclude that sufficient evidence supports such a finding in this case. We therefore affirm Judd's conviction.

FACTS

Judd was charged with participating directly in Cropmaster, Inc., through a pattern of racketeering activity involving theft by fraud from five individuals and the issuance of a worthless check to the sixth.

Each of the five theft victims contracted with Cropmaster, through Judd, for the purchase and erection of used silos. The silos were never delivered, and the five individuals never got their money back.

The worthless check victim had sold Judd a fire-damaged silo for $2400. Judd paid $100 down but the check for the balance bounced.

Judd was the president and sole owner of Cropmaster. Work crews performed necessary labor in erecting silos purchased through Cropmaster.

WOCCA AND RICO

Section 946.83(3), Stats., under which Judd was charged, reads as follows:

No person employed by, or associated with, any enterprise may conduct or participate, directly or indirectly, in the enterprise through a pattern of racketeering activity.

"Racketeering activity" is defined in sec. 946.82(4), Stats., as the attempt, conspiracy to commit, or commission of any of a number of different felonies, including theft under sec. 943.20, Stats., and the issuance of a worthless check under sec. 943.24(2), Stats. A "pattern of racketeering activity" is defined in sec. 946.82(3) as at least three incidents of racketeering activity that are interrelated as specified by statute and that occurred within a certain time frame.

"Person" is not defined in WOCCA, but "enterprise" is defined in sec. 946.82(2), Stats., as follows:

"Enterprise" means any sole proprietorship, partnership, corporation, business trust, union organized under the laws of this state or other legal entity or any union not organized under the laws of this state, association or group of individuals associated in fact although not a legal entity. "Enterprise" includes illicit and licit enterprises and governmental and other entities.

WOCCA was created by ch. 280, Laws of 1981. No state court decisions have previously interpreted the act. WOCCA was patterned, however, after the federal Racketeer Influenced and Corrupt Organizations Act (RICO). See Legislative Reference Bureau Analysis, 1981 S.B. 561. Thus, the voluminous federal law concerning RICO may be persuasive authority as to the interpretation of WOCCA. See Gygi v. Guest, 117 Wis.2d 464, 467, 344 N.W.2d 214, 216 (Ct.App.1984).

The federal counterpart to sec. 946.83(3), Stats., is 18 U.S.C. sec. 1962(c), which reads:

It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.

The federal definition of enterprise is in 18 U.S.C. sec. 1961(4):

"[E]nterprise" 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.

"PERSON" AND "ENTERPRISE"

Judd argues that sec. 946.83(3), Stats., must be interpreted as is its federal equivalent, which requires the person to be separate from the enterprise. See, e.g., Haroco, Inc. v. American Nat'l Bank & Trust Co., 747 F.2d 384, 400 (7th Cir.1984), aff'd, 473 U.S. 606, 105 S.Ct. 3291, 87 L.Ed.2d 437 (1985). ¹ We agree.

Both sec. 946.83(3), Stats., and 18 U.S.C. sec. 1962(c) require the person to be "employed by" or "associated with" the enterprise. "Thus, if we construed [this subsection] to permit the same entity to be both the person and the enterprise, we would reach the anomalous result that the entity was employed by or associated with itself." United States v. DiCaro, 772 F.2d 1314, 1319 (7th Cir.1985), cert. denied, 475 U.S. 1081, 106 S.Ct. 1458, 89 L.Ed.2d 716 (1986). In our view, sec. 946.83(3) can only be interpreted to require the person to be separate from the enterprise.

We therefore must turn to the question of whether Judd and Cropmaster were proven to be separate entities. The evidence is sufficient to support the verdict if we can conclude that the jury, acting reasonably, could be convinced to the required degree of certainty by evidence which it had a right to believe and accept as true. State v. Teynor, 141 Wis.2d 187, 204, 414 N.W.2d 76, 82 (Ct.App.1987).

Judd argues that he and Cropmaster are one and the same, and that the whole operation was a "one-man band." See McCullough v. Suter, 757 F.2d 142, 144 (7th Cir.1985). As factual support, Judd points to the absence of testimony that Cropmaster had any employees. One member of the work crew merely testified that he worked for Judd.

The state's response is three-fold: (1) a corporation is a separate entity under ch. 180, Stats.; (2) the "one-man band" analysis of McCullough does not apply to a corporation; and (3) even if it does apply, Judd fails the "one-man band" test because of the other workers. At oral argument, the state categorized its argument somewhat differently, suggesting that a separate entity can be created either formally (by incorporating) or practically (by employing others). See McCullough, 757 F.2d at 144.

We adopt the state's position that a separate entity is formed by the act of incorporation, which entity constitutes an "enterprise" within the meaning of WOCCA. We base our conclusion on Wisconsin's statutory scheme and on existing federal law interpreting similar RICO provisions.

The state legislature has declared that one of the problems sought to be remedied by WOCCA is the "increasing extent to which criminal activities and funds acquired as a result of criminal activity are being directed to and against the legitimate economy of the state." Sec. 946.81, Stats. The federal congressional intent included the protection of legitimate business against infiltration by racketeers. See United States v. Aleman, 609 F.2d 298, 304 (7th Cir.1979), cert. denied, 445 U.S. 946, 100 S.Ct. 1345, 63 L.Ed.2d 780 (1980).

The facts of this case represent precisely the evil addressed by the legislature. Cropmaster was incorporated and, as such, acquired a legal status separate from its owners. Stebane Nash Co. v. Campbellsport Mut. Ins. Co., 27 Wis.2d 112, 121, 133 N.W.2d 737, 743 (1965). Judd is now asking us to ignore the separate legal status of Cropmaster and declare him to be its "alter ego." This we cannot do:

[T]hose who created the corporation in order to enjoy advantages flowing from its existence as a separate entity are asking that such existence be disregarded where it works a disadvantage to them. We do not consider it good policy to do so.

Id. at 122, 133 N.W.2d at 744 (emphasis added) (citation omitted).

Nothing in federal law persuades us to the contrary. Judd cites to us such axioms as this: "[A]n organization cannot join with its own members to do that which it normally does and thereby form an enterprise separate and apart from itself.... '[T]he whole is no different than the sum of its parts in this context.' " Yellow Bus Lines, Inc. v. Local Union 639, 839 F.2d 782, 791 (D.C.Cir.), cert. denied, 488 U.S. 926, 109 S.Ct. 309, 102 L.Ed.2d 328 (1988). However, this case, like others cited to us, involves a corporate defendant, not an individual def...