U.S. v. Freeman
| Decision Date | 22 September 1993 |
| Docket Number | 92-10102,Nos. 92-10094,s. 92-10094 |
| Citation | 6 F.3d 586 |
| Parties | , RICO Bus.Disp.Guide 8414 UNITED STATES of America, Plaintiff-Appellee, v. Darryl FREEMAN, Tyrone Netters, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Arthur W. Ruthenbeck, Federal Public Defender, Ann C. McClintock and Daniel J. Broderick, Asst. Federal Public Defenders, Sacramento, California; Robert M. Wilson, Segal & Kirby, Sacramento, CA, for defendants-appellants.
Bradford C. Lewis, Asst. U.S. Atty., Sacramento, CA, for plaintiff-appellee.
Appeal from the United States District Court for the Eastern District of California.
Before: LAY, * HUG, and SCHROEDER, Circuit Judges.
Appellants Netters and Freeman were indicted as a result of an FBI sting operation aimed at identifying corruption in the California state legislature. Netters was convicted of one count of violating RICO, three counts of extortion in violation of the Hobbs Act, four counts of money laundering, and one count of subscribing to a false tax return. He challenges all of his convictions, except subscribing to a false tax return. Freeman was convicted of conspiring to and aiding and abetting extortion in violation of the Hobbs Act. He appeals both of his convictions.
The district court had jurisdiction pursuant to 18 U.S.C. Sec. 3231. We exercise jurisdiction over these timely appeals pursuant to 28 U.S.C. Sec. 1291. We affirm.
In 1986, the FBI initiated an undercover investigation into suspected corruption in the California legislature. The investigation arose as the result of conversations in 1982 between Marvin Levin, who was working as a citizen informant for the FBI, and Freeman, who was then employed as a legislative staff member for the California Assembly. During these conversations, Freeman made statements indicating that special interest legislation could be purchased in the California legislature and that he expected to be paid for his efforts as a staff member.
In January 1986, Levin introduced FBI Special Agent John Brennan to Freeman. Freeman was then president of the Superior Valley Rural Small Business Development Corporation ("Superior Valley"), which administered a state-subsidized loan guarantee program. Levin introduced Brennan as an officer of Gulf Shrimp Fisheries, Inc. of Mobile, Alabama, and Gulf Shrimp West, Inc. of California ("Gulf Shrimp"). The FBI created these fictitious entities for purposes of the undercover operation. Brennan told Freeman that Gulf Shrimp was interested in expanding its operations in Northern California and that it needed two things to facilitate the expansion: (1) a guarantee from Superior Valley for a loan to finance part of the expansion and (2) special interest legislation to allow more extensive financing of its expansion through industrial development bonds.
The loan guarantee was a device to enable the FBI to explore Freeman's prior statements about purchasing legislation without actually becoming involved in the legislative process. Brennan gave Freeman two $1,000 payments for his assistance, as president of Superior Valley, with the loan guarantee.
The proposed legislation was intended to allow Gulf Shrimp to market an industrial development bond to a California savings and loan association. The proposed bill was to be drafted to apply only to Gulf Shrimp to make it obvious that the bill was special interest legislation. Without the legislation, an industrial development bond issued by Gulf Shrimp would not have been a permissible investment for a California savings and loan. Freeman agreed to help Brennan obtain this legislation.
During the first five months of 1986, Freeman took steps to find a legislator who would sponsor the special interest bill in return for payments. On June 16, Freeman introduced Brennan to Netters, a legislative aide to Assemblyperson Gwen Moore of the 49th Assembly District. The three men discussed the bill's status and the need to locate an author to carry it. According to Netters, he agreed to approach Moore about the bill because it supported a small business and had the potential for generating jobs for minorities and women.
Later the same day, Freeman called Netters and negotiated the payment required for Moore's authorship and Netters' assistance. After concluding the call, Freeman told Brennan that Moore would author the bill, but that Netters required a contribution of $5,000 to Moore's campaign committee. According to Freeman, the first $2,500 payment was to be made when the bill cleared the Assembly's Finance and Insurance Committee, and the second $2,500 payment was to be made when the bill passed the Assembly. Freeman also told Brennan that Netters wanted to be a "consultant" and that Freeman would arrange to pay Netters directly. Freeman accepted a payment of $2,500 from Gulf Shrimp for helping to find a sponsor for the bill. The next day, Freeman told Brennan that Netters required a $500 cash payment in return for his assistance in moving the bill, but Freeman never paid Netters this money.
As the deadline for introducing new legislation had passed, Freeman identified an existing bill which could be gutted and used as a vehicle for Gulf Shrimp's interests. Netters was assigned the responsibility of moving the bill, AB 3773, through the legislative process. Shortly after Freeman and Netters negotiated the amount of the payments required for Netters' assistance, Netters contacted the legislative aide for the assemblyperson carrying the original version of AB 3773 to coordinate the highjacking of the bill. Netters secured a rule waiver from an Assembly Rules Committee staff member so that the highjacked bill could be reassigned to the Assembly Finance and Insurance Committee. Netters also submitted the new special interest language for the bill to Legislative Counsel for drafting.
On June 20, Brennan called Netters at work and asked him when the "backside" payment of $2,500 was due. Apparently, Netters was concerned about the call because Freeman later chided Brennan about it, telling Brennan that "[Netters] insinuated that I'm getting him involved in some ab-scam, ab-scam thing or something like and I'm going no, no, no...." In response to Brennan's apology for being too explicit on the telephone, Netters said that "[s]ome things are best never said."
On June 23, the amended version of AB 3773 was sent from Legislative Counsel to the Finance and Insurance Committee. On the following day, Brennan gave Netters the "front-end" money in the form of a check for $2,500 payable to the Friends of Gwen Moore.
In June, Freeman began renting office space from Northern California Research Associates ("NCRA"), a Sacramento consulting firm. On June 23, Freeman told Brennan that Netters would prefer to receive his "consultant fee ... straight cash under the table ... through me" or "through ... NCRA."
On July 10, AB 3773 passed the Assembly and was sent to the Senate for hearing in August. Thereafter, Netters appeared before the Senate Rules Committee to obtain a file notice waiver so that the Senate Banking and Commerce Committee could hear the bill on an expedited basis. The bill would have been dead for the 1986 legislative session without this file notice waiver. Netters, Freeman, and Brennan then met with the Senate Banking and Commerce Committee's consultant to allay the consultant's concerns about the special interest nature of the bill. The bill passed the Senate committee only after Assemblyperson Moore agreed to a demand by the committee chairperson, Senator Rose Ann Vuich, to delete the special interest language from the bill. On August 13, Netters sent the bill to the Senate Floor without amending it because Brennan told Netters that he wanted to retain the controversial language.
Later that day, Brennan gave Netters the "back-end" payment in the form of a check for $2,500 payable to the Friends of Gwen Moore. At Netters' request, Brennan did not date the check. Netters also asked Brennan to write him a second undated check for $2,500 to replace the check for the "front-end" payment, which Netters had held in a file to conceal the timing of the contribution and to avoid the appearance of bribery.
When Senator Vuich realized that the bill had not been amended as agreed, Netters had the bill sent to the inactive file in the Senate. On August 15, after Netters told Brennan that the special interest language would have to come out, Brennan instructed Netters to kill the bill. The two undated checks Brennan had given Netters on August 13 were dated August 15 and deposited into Moore's campaign account.
On August 23, Brennan told Netters that he wanted to revive the bill in order to improve his bargaining position in the sale of Gulf Shrimp. Without Moore's knowledge, Netters had the bill removed from the inactive file. When Netters later became upset with Brennan, he had the bill returned to the inactive file. On August 27, Netters complained about the numerous obstacles that the bill had encountered and indicated that Brennan would have to make additional payments to Freeman to secure Netters' continued assistance.
Subsequently, Freeman explained to Brennan that it would be difficult to revive AB 3773 because Netters had already cashed the two checks payable to Moore's campaign committee. Freeman stated that Netters would revive the legislation but that the revival would cost considerably more money. Freeman told Brennan that he would have to provide a check for $8,000 payable to NCRA as a "down payment" and to replace the $5,000 that Moore would return with a note explaining that the checks had been cashed by mistake. Further, Freeman told Brennan that he would have to make an additional payment of $27,000 to secure Netters' assistance with the bill. On August 27, Brennan gave Freeman an $8,000 check payable to NCRA.
On August 28, Freeman told...
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