U.S. v. Elders, 77-1181

• Decision Date: 01 February 1978
• Docket Number: No. 77-1181,77-1181
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Thelbert C. ELDERS, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1020

569 F.2d 1020

UNITED STATES of America, Plaintiff-Appellee, v. Thelbert C. ELDERS, Defendant-Appellant.

No. 77-1181.

United States Court of Appeals Seventh Circuit.

Argued Sept. 27, 1977.

Decided Feb. 1, 1978.

Sherman C. Magidson, Francis E. Andrew, Carl P. Clavelli, Georgette Pantusos, Chicago, Ill., for defendant-appellant.

Thomas P. Sullivan, U. S. Atty., John E. Burns, Leida B. Schoggen, Asst. U. S. Attys., Chicago, Ill., for plaintiff-appellee.

Before FAIRCHILD, Chief Judge, SWYGERT and BAUER, Circuit Judges.

SWYGERT, Circuit Judge.

In this appeal our principal concern is the nature of the effect on interstate commerce needed to establish jurisdiction under the Hobbs Act.

An eleven-count indictment, filed October 30, 1975, charged Thelbert C. Elders with violating the federal tax laws and the Hobbs Act. Subsequently, the grand jury returned a superseding indictment, changing the dates of the periods in the two extortion counts. Before trial the Government dismissed the first two counts and the indictment was renumbered accordingly. The charges on which the defendant went to trial can be summarized as follows:

Counts One, Three, Five, and Seven: violation of 26 U.S.C. § 7206(1) by filing a false income tax return for 1970, 1971, 1972, and 1973 respectively.

Counts Two, Four, and Six: violation of 26 U.S.C. § 7201 by evasion of income tax for 1970, 1971, and 1972 respectively.

Count Eight: violation of the Hobbs Act, 18 U.S.C. § 1951 by obtaining $11,830 from William Hall during the period from October 1969 to March 1971.

Count Nine: violation of the Hobbs Act by obtaining $16,408 from Russell Fierge and Richard Blake during the period from May 1970 to July 1973.

Following a jury trial, the defendant was convicted of filing a false income tax return (Count Seven) and of extortion (Count Nine). After the jury failed to reach a verdict on the remaining counts and the trial court declared a mistrial as to those charges, the Government dismissed Counts One through Six and Count Eight. On Count Nine, Elders was sentenced to the custody of the Attorney General for a period of eighteen months. Sentence was suspended on Count Seven, and the defendant was given three years probation to start following his prison sentence. The defendant has appealed his conviction under Count Nine, challenging the jurisdictional basis for the Hobbs Act charge. He also alleges that two trial errors require a reversal on both counts.

I

In 1967 defendant Elders became Street Department Foreman for the Village of Maywood, a Chicago suburb. In August 1970 he was appointed acting Public Works Director for the village, and on October 1, was made Director. Elders held that position through June 1973.

In July 1970 Russell Fierge and Richard Blake merged their separate tree service enterprises into the Illinois Shade Tree Company (IST) to provide tree service in the western suburbs of Chicago. Blake ran the company's office while Fierge handled the public relations and supervised the work. IST began receiving contracts through Elders for tree removal work in Maywood. Fierge, having previously worked for the village, told Blake that because the village was "wired," kickbacks of ten percent of the gross billings would have to be paid to one or more of its officials. After submitting billings and receiving payments therefor, Blake gave money to Fierge who in turn delivered the cash to Elders.

In 1970 Fierge made three or four payments to Elders, the largest being $400 and the smallest $100. During part of 1971, Fierge continued to pay Elders ten percent of the payments received from Maywood after that Blake made the payments. This arrangement continued throughout 1972 and part of 1973. In 1973 Blake gave cash to Elders on three occasions: first, in mid-May IST received a $503.50 check from Maywood for work previously done, and Blake gave Elders a ten percent kickback; second, on June 6 Blake submitted one bill for $650 and another for $2000 for clearing a vacant lot in Maywood, and upon payment gave Elders and the president of the Maywood Park District $1000 in cash; and third, on June 15 Blake paid Elders $500 for the sale to Maywood of a stump removing machine which IST owned. After admitting evidence of the June 6, 1973 transaction, the trial court ruled that the jury should not consider the evidence as substantive proof inasmuch as Elders received the money in his capacity as an official of the Maywood Park District rather than as Public Works Director; therefore the transaction fell outside the scope of Count Nine.

II

The defendant's major contention for reversal is that the Government failed to show IST's involvement with interstate commerce at the critical times charged in Count Nine. After noting that Count Nine charged a continuing extortion of Blake and Fierge from May 1970 through June 1973, the defendant argues that because IST did not purchase any equipment through interstate commerce after mid-1971, extortion of IST subsequent to that time could not fall within the perimeters of the Hobbs Act. The defendant further argues that the trial court should have excluded evidence of any extortionate payment made subsequent to Blake and Fierge's early 1973 decision to terminate their business. The record shows that Fierge left IST in February 1973 and thereafter Blake ran the company alone until its dissolution. The two had agreed that Blake would sell all unmortgaged company property and the proceeds would be divided. In early June Blake sold a quantity of equipment at auction, and the company was substantially liquidated by August 1973.

In response, the Government contends that the Elders extortions during the 1970 through 1973 period charged in Count Nine had at least a de minimis effect on commerce and were sufficient to meet the jurisdictional requirement of the Hobbs Act. The Government makes three arguments: (1) that the use of equipment purchased or manufactured out-of-state was sufficient to establish jurisdiction; (2) that IST engaged in out-of-state work during the period in question; and (3) that either the extortionate payments depleted the assets of IST and/or the inflated prices paid by Maywood depleted its treasury, thereby impairing the ability of either or both to do business interstate. The Government also contends that the planned termination of IST did not alter the fact that commerce was affected.

The Hobbs Act, enacted to cope with the problem of racketeering, "the levy of blackmail upon industry," ¹ was intended to eliminate interference with the flow of interstate commerce. The broad language of the Act manifests " a purpose to use all the constitutional power Congress has to punish interference with interstate commerce by extortion, robbery or physical violence. . . . (and) outlaws such interference 'in any way or degree.' " Stirone v. United States, 361 U.S. 212, 215, 80 S.Ct. 270, 272, 4 L.Ed.2d 252 (1960).

Courts have consistently held that the Act should be given an expansive interpretation to cover a wide range of extortionate activity. ² In each case, however, a nexus has been required between the extortionate conduct and interstate commerce in order to establish federal jurisdiction. That nexus may be de minimis, United States v. DeMet, 486 F.2d 816, 822 (7th Cir. 1973), cert. denied, 416 U.S. 969, 94 S.Ct. 1991, 40 L.Ed.2d 558 (1974), but it must nonetheless exist. Additionally, the connection with or effect on interstate commerce must have been at least a "realistic probability" at the time of the extortionate act. United States v. Staszcuk, 517 F.2d 53, 59-60 (7th Cir.) (en banc ), cert. denied, 423 U.S. 837, 96 S.Ct. 65, 46 L.Ed.2d 56 (1975).

A. Out-of-State Purchases of Equipment

To establish a nexus with interstate commerce, the Government focuses on IST's use of equipment which was either manufactured or purchased outside of Illinois. In June 1970 Dixie Tree (IST's predecessor) purchased a Chevy Hi-Ranger manufactured in Indiana. In October 1970 IST bought two trailers manufactured in Michigan. IST purchased a Bobcat and a trailer in Missouri, a truck chassis in Wisconsin, and an aerial tower in Michigan. A stump remover was manufactured in Iowa. The record shows that IST made its final interstate purchase of equipment in mid-1971.

The Government argues that the extortions demanded by Elders were necessary for IST to obtain business in Maywood. "Thus, Elders' demands, if not met, would have tended to prevent the equipment from being used after it had 'come to rest' in Illinois, thereby damming up the stream of commerce. . . . " We fail to see the logic of the Government's argument, particularly in light of the fact that IST was being dissolved at the time of the 1973 extortions. There was not even a "realistic probability" that any equipment would be replaced or any additional equipment purchased. IST's cessation of interstate purchases of equipment in mid-1971, combined with the decision in early 1973 to terminate its business, distinguish this case from those cited by the Government to support its position. ³

B. IST's Out-of-State Work

The Government next contends that the commerce requirement is satisfied by IST's work outside of Illinois. Testimony at trial showed that IST performed work in Florissant, Missouri in 1971 or 1972, in the St. Louis, Missouri area in early 1973, and in Gary, Indiana during 1972. The Government contends that this out-of-state work required use of IST equipment in other states, and that there was a "reasonable probability" that IST would have performed other out-of-state jobs. We do not agree.

The testimony relating to IST's out-of-state jobs was far from conclusive and, at any rate, failed to establish any plans for such employment after the decision to terminate the business. When that decision is considered along with the fact that IST out-of-state employment was sporadic and incidental to its work in Illinois, it becomes clear...