U.S. v. Busher, No. 85-1122

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: Before WRIGHT, SNEED and KOZINSKI; KOZINSKI; Busher levels three challenges against his conviction and forfeiture. First, he claims that the prosecutor's failure to inform him of all of the charges for which an indictment was sought prior to his test
• Citation: 817 F.2d 1409
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. James E. BUSHER, Defendant-Appellant.
• Docket Number: No. 85-1122
• Decision Date: 26 May 1987

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817 F.2d 1409 55 USLW 2683 UNITED STATES of America, Plaintiff-Appellee,
v.
James E. BUSHER, Defendant-Appellant. No. 85-1122. United States Court of Appeals,
Ninth Circuit. Argued and Submitted Nov. 10, 1986.
Decided May 26, 1987.

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George J. Mendelson, Rockville, Md., for defendant-appellant.

Mervyn Hamburg, Washington, D.C., for plaintiff-appellee.

Appeal from the United States District Court for the District of Hawaii.

Before WRIGHT, SNEED and KOZINSKI, Circuit Judges.

KOZINSKI, Circuit Judge:

We review the conviction and order of forfeiture entered against appellant, James E. Busher, for violating the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Secs. 1961 et seq. (1982) (RICO).

Facts

Busher owns 92 percent of ATL, Inc., a Hawaii corporation engaged in the construction business. ATL's principal client was the U.S. Department of Defense. Busher used a Nevada corporation, J.W. Contracting Co., as a fictitious subcontractor, receiving purported subcontracting payments from ATL. This and similar practices got Busher into trouble. In January 1984, Busher was advised that he was under investigation for submitting false claims to the government, conspiracy to defraud the government and mail fraud, all in connection with ATL's contracts with the Department of Defense. In February and March, Busher testified on these matters before the grand jury, which later expanded its investigation to include income tax evasion and submission of false tax returns.

Busher was indicted in September 1984 and, after a jury trial, was convicted of

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violating RICO; submitting false statements to the government, 18 U.S.C. Sec. 1001 (1982); presenting false claims to the government, 18 U.S.C. Sec. 287 (1982); mail fraud, 18 U.S.C. Sec. 1341 (1982); tax evasion; 26 U.S.C. Sec. 7201 (1982), and submitting false income tax returns, 26 U.S.C. Sec. 7206(1) (1982). As a result of his RICO conviction, Busher forfeited to the United States his entire interest in ATL, J.W. Contracting and certain Nevada real estate purchased through J.W. Contracting. In addition, Busher was sentenced to four years imprisonment on the RICO counts, to run concurrently with two years on the tax charges and two years on the false statements, false claims and mail fraud charges.

Issues

Busher levels three challenges against his conviction and forfeiture. First, he claims that the prosecutor's failure to inform him of all of the charges for which an indictment was sought prior to his testimony before the grand jury amounted to prosecutorial misconduct. Second, he contends that RICO may not be used to convert simple Internal Revenue Code violations into racketeering charges. Finally, he argues that forfeiture of his entire interest in ATL, J.W. Contracting and the Nevada real estate is so disproportionate to the criminal conduct for which he was convicted as to violate the eighth amendment.

Discussion

1. Prosecutorial Misconduct

Busher asserts that the district court should have dismissed the indictment because the prosecutor failed to advise him of all of the charges for which indictment was sought, and failed to follow Justice Department guidelines for bringing RICO cases. Although courts have the power to dismiss an indictment both on due process grounds and as a part of their inherent supervisory power over the administration of justice, the power is exercised sparingly. United States v. De Rosa, 783 F.2d 1401, 1404 (9th Cir.), cert. denied, --- U.S. ----, 106 S.Ct. 3282, 91 L.Ed.2d 571 (1986); United States v. Al Mudarris, 695 F.2d 1182, 1185 (9th Cir.), cert. denied, 461 U.S. 932, 103 S.Ct. 2097, 77 L.Ed.2d 305 (1983). A defendant challenging an indictment carries a heavy burden: He must demonstrate that the prosecutor engaged in flagrant misconduct that deceived the grand jury or that significantly impaired its ability to exercise independent judgment. De Rosa, 783 F.2d at 1405; Al Mudarris, 695 F.2d at 1185. Busher has not carried this burden.

The prosecutor was not required to tell Busher which crimes the grand jury was investigating at the time he was called to testify. See United States v. Washington, 431 U.S. 181, 188-89, 97 S.Ct. 1814, 1819, 52 L.Ed.2d 238 (1977); United States v. Swacker, 628 F.2d 1250, 1253 (9th Cir.1980). Busher's claim that the prosecutor misled him, causing him to withhold exculpatory evidence, is unavailing because "[a]n appellate court may not attack an indictment on the ground of incompetent or inadequate evidence," Al Mudarris, 695 F.2d at 1185, and the prosecutor had no duty to present exculpatory evidence to the grand jury. Id. His allegations that the prosecutor's tactics biased the grand jury are completely unsubstantiated.

Busher's separate argument that the prosecutor disregarded Justice Department guidelines for bringing RICO prosecutions is similarly unpersuasive. Even if the Justice Department does not normally recommend RICO prosecutions under these circumstances, the decision to prosecute an apparent violation of the law can hardly be deemed flagrant misconduct. The U.S. Attorneys' manual, on which Busher relies, states that it "is not intended to, does not, and may not be relied upon to create any rights, substantive or procedural, enforceable at law by any party in any matter, civil or criminal. Nor are any limitations hereby placed on otherwise lawful litigative prerogatives of the Department of Justice." U.S. Department of Justice, United States Attorneys' Manual Sec. 1-1.100 (1984). Busher therefore is not entitled to

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rely on it. See Schweiker v. Hansen, 450 U.S. 785, 789, 101 S.Ct. 1468, 1471, 67 L.Ed.2d 685 (1981). ¹

2. Propriety of RICO Charges

Busher argues that RICO charges based on the mailing of two fraudulent federal income tax returns were improper because Congress deliberately omitted tax fraud from the list of predicate acts that may give rise to RICO violations. 18 U.S.C. Sec. 1961 (1982). However, "any act which is indictable under" 18 U.S.C. Sec. 1341 may serve as a predicate act for purposes of RICO. 18 U.S.C. Sec. 1961 (1982). We have previously held that mailing fraudulent tax returns is indictable as mail fraud under section 1341. United States v. Miller, 545 F.2d 1204, 1216 n. 17 (9th Cir.1976), cert. denied, 430 U.S. 930, 97 S.Ct. 1549, 51 L.Ed.2d 774 (1977); see United States v. Condo, 741 F.2d 238, 239 (9th Cir.1984), cert. denied, 469 U.S. 1164, 105 S.Ct. 924, 83 L.Ed.2d 936 (1985). It follows that such violations can serve as predicate acts of racketeering under RICO.

3. Forfeiture

The jury found that Busher's interests in ATL, J.W. Contracting and the Nevada real estate were subject to forfeiture. Busher does not challenge the jury's finding that these interests were forfeitable under RICO. 18 U.S.C. Sec. 1963 (1982). Rather, he contends that forfeiture of his entire interest in these properties is so grossly disproportionate to the crimes for which he was convicted that it violates the eighth amendment's prohibition against "excessive fines ... [and] cruel and unusual punishments." U.S. Const., amend. VIII.

In United States v. Marubeni America Corp., 611 F.2d 763, 769 n. 12 (9th Cir.1980), we noted that section 1963 could "be read to produce penalties shockingly disproportionate to the offense" committed. ² In Marubeni, we left to another day consideration of the statutory and constitutional issues raised by a potentially disproportionate forfeiture under RICO. Id. That day is here. ³

A. Section 1963

Section 1963 is purposely broad. ⁴ At the time Busher committed the acts for

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which he was convicted, section 1963(a) provided that a person convicted under section 1962--the substantive provision of RICO--"shall forfeit to the United States (1) any interest he has acquired or maintained in violation of section 1962, and (2) any interest in ... any enterprise which he has established, operated, controlled, conducted, or participated in the conduct of, in violation of section 1962." 18 U.S.C. Sec. 1963(a) (1982). ⁵ Section 1963 was designed to totally separate a racketeer from the enterprise he operates. See Russello, 464 U.S. at 28, 104 S.Ct. at 303. Thus, forfeiture is not limited to those assets of a RICO enterprise that are tainted by use in connection with racketeering activity, but rather extends to the convicted person's entire interest in the enterprise. United States v. Washington, 797 F.2d 1461, 1477 (9th Cir.1986); United States v. Anderson, 782 F.2d 908, 917-18 (11th Cir.1986); United States v. Ginsburg, 773 F.2d 798, 801 (7th Cir.1985), cert. denied, --- U.S. ----, 106 S.Ct. 1186, 89 L.Ed.2d 302 (1986); United States v. Cauble, 706 F.2d 1322, 1349-50 (5th Cir.1983), cert. denied, 465 U.S. 1005, 104 S.Ct. 996, 79 L.Ed.2d 229 (1984).

Moreover, the substantive provisions of RICO, to which section 1963 is keyed, cover an extraordinarily broad range of activities. Forfeiture under RICO can thus result from very serious, as well as from more trivial, violations of the law. ⁶ At one end of the spectrum is the paradigmatic racketeering enterprise: an organization deriving almost all its income from serious criminal conduct. At the other end of the spectrum is conduct by an otherwise legitimate business, consisting of as few as two isolated predicate acts of relatively minor consequence, but which nevertheless amount to a RICO violation. Forfeiture of the enterprise where the conduct in question falls close to this end of the spectrum may well take more than the constitution allows. ⁷

B. The Eighth Amendment

Forfeiture under section 1963(a) is clearly "punishment" as that term is used in the eighth amendment. See S.Rep. No. 617, 91st Cong., 1st Sess. 124 (1969) (a forfeiture proceeding under section 1963 is "in personam" against the defendant who is the party to be punished ) (emphasis added); Marubeni, 611 F.2d at 765; Ginsburg,

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773 F.2d at 800; cf. Ingraham v. Wright, 430 U.S....