U.S. v. DiCarlantonio, s. 88-3151

• Decision Date: 01 June 1989
• Docket Number: 88-3152,Nos. 88-3151,88-3248 and 88-3249,s. 88-3151
• Citation: 870 F.2d 1058
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Anthony DiCARLANTONIO (88-3151/3248), and John Prayso (88-3152/3249), Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1058

870 F.2d 1058

57 USLW 2594

UNITED STATES of America, Plaintiff-Appellee, v. Anthony DiCARLANTONIO (88-3151/3248), and John Prayso (88-3152/3249), Defendants-Appellants.

Nos. 88-3151, 88-3152, 88-3248 and 88-3249.

United States Court of Appeals Sixth Circuit.

Argued Jan. 30, 1989.

Decided March 17, 1989.

Rehearing and Rehearing En Banc Denied June 1, 1989.

David L. Shroyer (argued), Columbus, Ohio, for U.S.

Max Kravitz (argued), Columbus, Ohio, for John Prayso.

Before KENNEDY and MILBURN, Circuit Judges, and PECK, Senior Circuit Judge.

KENNEDY, Circuit Judge.

Anthony DiCarlantonio and John Prayso appeal their convictions for conspiracy to violate and actual violation of the Hobbs Act, 18 U.S.C. Sec. 1951. We affirm the conspiracy convictions; but we reverse appellants' convictions for substantive Hobbs Act violations, because the government failed to prove appellants' actions had an effect on interstate commerce.

DiCarlantonio was city attorney of Steubenville, Ohio; Prayso the fire chief. In May 1986, attorney Otto Jack sought DiCarlantonio's interpretation of a local fire ordinance which apparently prevented Jack's client--Jody Glaub--from placing propane tanks within the city limits. Prayso had previously ordered the removal of tanks owned by Glaub's company, Atlas Gas. DiCarlantonio told Jack he would discuss the situation with Prayso.

On May 12, 1986, Jack telephoned DiCarlantonio to check on his progress. DiCarlantonio suggested that Jack give money to the fire chief. Jack balked at the suggestion, protesting that a payoff would be illegal. During this telephone conversation, it was agreed that DiCarlantonio, Prayso, and Jack would meet the following day. At the May 13 meeting, Prayso observed that Glaub could "make a fortune" in the propane business, and said "We should all be on a percentage." Jack reiterated his objection that a kickback would be illegal. The three ultimately decided to reconvene the next day with Glaub in attendance.

Following the May 13 meeting, Glaub and Jack arranged to cooperate with the FBI. On May 14, DiCarlantonio and Prayso promised Glaub a "very reasonable" deal. It was agreed that Glaub would calculate his anticipated profit if the ordinance were changed, and DiCarlantonio and Prayso would receive a cut. On May 20, 1986, DiCarlantonio and Prayso agreed to a $30,000 "fee" for working to change the ordinance. They immediately began lobbying local officials in favor of altering the ordinance, but these efforts did not result in a change in the law.

On May 28, 1986, Glaub delivered $30,000 to DiCarlantonio and Prayso. The bribe money was provided from FBI funds not the assets of Jody Glaub or Atlas Gas. Prayso was apprehended the same day with $15,000 stuffed in his socks. DiCarlantonio had a briefcase in his possession when arrested. When questioned by the FBI, DiCarlantonio claimed he did not have the key to the case. Confronted with the fact that the case had a combination lock, he replied that the combination was 1-3-3 and warned that the lock "sticks." Subsequent examination revealed that the combination was 2-2-4 and that the mechanism worked smoothly. The FBI obtained a search warrant, and the case was opened in the presence of DiCarlantonio and his attorney, revealing $15,000 in cash. DiCarlantonio exclaimed, "Oh, how did that get there?"

Prayso and DiCarlantonio claimed that they had been privately investigating Glaub. Unimpressed by this explanation, the jury convicted both defendants. The convictions were reversed on appeal, but after a second trial both were again convicted.

I.

The principal issue raised by this appeal is whether appellants' conduct constituted a substantive Hobbs Act violation. The Act punishes extortion that "in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce." 18 U.S.C. Sec. 1951. Appellants contend the government failed to prove that their scheme had any actual impact on interstate commerce. They point out that the flow of natural gas into Steubenville was stemmed not by their illegal acts, but by a preexisting valid ordinance. As for the payment of the bribe, appellants argue this had no effect on interstate commerce because the money came from the FBI, not Atlas Gas.

In order to be punishable as a substantive violation of the Hobbs Act, an extortionate scheme must have at least a de minimis effect on interstate commerce. United States v. Harding, 563 F.2d 299 (6th Cir.1977), cert. denied, 434 U.S. 1062, 98 S.Ct. 1235, 55 L.Ed.2d 762 (1978). This is not a heavy burden, but we conclude that this is one of the rare cases where a de minimis effect on commerce cannot be found.

The de minimis test clearly would have been satisfied if Glaub had paid the bribe with the assets of Atlas Gas--a business in interstate commerce. However, Glaub used neither his own funds nor those of the company; instead, the bribe money was provided by the FBI. The government now argues that the payment of $30,000 in FBI funds affected interstate commerce by temporarily depleting the funds available to the agency. But while courts have found actual violations of the Hobbs Act where the defendant dealt with an FBI-created business, ¹ the mere receipt of government funds has never been enough to establish an actual effect on interstate commerce. In United States v. Rindone, the Seventh Circuit held that although receipt of FBI funds was sufficient to establish Hobbs Act jurisdiction for purposes of an attempt charge, "the extortion could not at the moment of the payoff have actually affected commerce." 631 F.2d 491, 494 (7th Cir.1980). This reasoning assumed that the receipt of FBI funds as a bribe had no impact on interstate commerce, and "the corollary of the Rindone analysis is that no actual commission of Hobbs Act extortion could be charged for the receipt of what were in fact FBI funds." United States v. Freedman, 562 F.Supp. 1378, 1383 (N.D.Ill.1983) (emphasis in original). Freedman observed:

[T]here could be no actual effect on interstate commerce when Rindone obtained FBI dollars, not dollars belonging to interstate enterpriser Harper. Thus only the possibility of convicting Rindone for an extortion attempt under the Hobbs Act obviated the government's need to show an actual effect on interstate commerce....

Id. at 1383 (emphasis in original). See also Brantley, 777 F.2d at 163 ("[W]e do not think the convictions of the substantive offenses [under the Hobbs Act] may be sustained on the basis of the defendants' mistaken assumption that commerce would be affected.").

The government protests that adopting the Rindone analysis would hamper law enforcement by requiring victims to use their own money even when cooperating with the authorities. However, we note that Rindone erects no barrier to attempt charges where FBI funds are used, and an attempted violation of the Hobbs Act carries the same potential penalties as a completed one. ²

Alternatively, the government suggests that the scheme affected interstate commerce by restricting the flow of propane gas. But, in fact, appellants' actions had no effect on the amount of gas permitted in Steubenville. Commerce in propane was limited not by appellants' actions, but by a valid municipal ordinance, which had been enacted before Prayso became fire chief and DiCarlantonio law director. Nor did appellants succeed in increasing the flow of gas. Of course, the success of an extortionate scheme is not ordinarily a prerequisite to a substantive Hobbs Act violation. But in this case, appellants' failure to carry out the objects of the scheme meant that interstate commerce was in no way affected by the scheme. It did not take any funds out of the stream of commerce, nor did it increase or decrease the flow of propane.

II.

Appellants argue that their convictions for conspiracy to violate the Hobbs Act also must be reversed, because it became impossible to complete the violation once the FBI became involved. This argument misapprehends the law of conspiracy. While a substantive Hobbs Act violation requires an actual effect on interstate commerce, a conspiracy charge requires the government to prove only that the defendants' scheme would have affected commerce. "As with other conspiracies, a conviction of conspiring to obstruct commerce in violation of the Hobbs Act may be founded upon proof of an agreement to engage in conduct which would violate the statute." United States v. Brantley, 777 F.2d 159, 163 (4th Cir.1985), cert. denied, 479 U.S. 822, 107 S.Ct. 90, 93 L.Ed.2d 42 (1986). Thus, the courts have concluded that "factual impossibility is no defense to an inchoate offense" under the Hobbs Act. United States v. Brooklier, 685 F.2d 1208, 1217 (9th Cir.1982), cert. denied, 459 U.S. 1206, 103 S.Ct. 1194, 75 L.Ed.2d 439 (1983). In Brooklier, for example, the defendants challenged their Hobbs Act conspiracy convictions on the ground that the business involved had no nexus with interstate commerce because it was an FBI sham. The court rejected this defense, holding that no actual impact on interstate commerce need be shown to sustain a conspiracy conviction. Similarly, the Third Circuit, sitting en banc, upheld the Hobbs Act conspiracy convictions of government officials who accepted substantial payments from a fictitious "Arab Sheik," even though the transaction had no actual effect on interstate commerce. United States v. Jannotti, 673 F.2d 578 (3d Cir.) (en banc ), cert. denied, 457 U.S. 1106, 102 S.Ct. 2906, 73 L.Ed.2d 1315 (1982). The court observed:

The Hobbs Act, by its own terms, encompasses the inchoate offenses of attempt and conspiracy to extort. Convictions for these offenses have been sustained notwithstanding the absence of any evidence of an actual effect on interstate commerce.

Id. at 592.

In the present case, a reasonable jury clearly could have found that appellants had conspired to extort money from Glaub and...