U.S. v. Genova

• Decision Date: 20 June 2003
• Docket Number: No. 02-1602.,No. 02-1914.,No. 02-2053.,No. 02-1650.,02-1602.,02-1650.,02-1914.,02-2053.
• Citation: 333 F.3d 750
• Parties: UNITED STATES of America, Plaintiff-Appellee, Cross-Appellant, v. Jerome GENOVA, Lawrence Gulotta, and Jerome Stack, Defendants-Appellants, Cross-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 750

333 F.3d 750

UNITED STATES of America, Plaintiff-Appellee, Cross-Appellant, v. Jerome GENOVA, Lawrence Gulotta, and Jerome Stack, Defendants-Appellants, Cross-Appellees.

No. 02-1602.

No. 02-1650.

No. 02-1914.

No. 02-2053.

United States Court of Appeals, Seventh Circuit.

Argued April 11, 2003.

Decided June 20, 2003.

Rehearing Denied August 18, 2003.

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David E. Bindi (argued), Office of the U.S. Attorney, Chicago, IL, for plaintiff-appellee.

Charles B. Sklarsky (argued), Jenner & Block, Chicago, IL, for Jerome P. Genova.

Stanley L. Hill (argued), Hill & Associates, Chicago, IL, for Lawrence P. Gulotta.

Edward M. Genson, Marc W. Martin (argued), Chicago, IL, for Jerome J. Stack.

Before EASTERBROOK, MANION, and DIANE P. WOOD, Circuit Judges.

EASTERBROOK, Circuit Judge.

After his election in 1993 as Mayor of Calumet City, Illinois, Jerome Genova appointed Lawrence Gulotta as City Prosecutor and arranged for his law firm, Gulotta & Kawanna, to get the lion's share of the City's legal business. Both a jury (with respect to Genova) and the judge (with respect to Gulotta, who elected a bench trial) concluded that Genova had a financial reason for this decision: Gulotta kicked back to Genova about 30% of all payments his firm received from the City. United States v. Genova, 167 F.Supp.2d 1021 (N.D.Ill.2001). Genova diverted public resources to private ends in at least one other way: He induced Jerome Stack, the Public Works Commissioner, to make employees available for political duties. Stack gave employees leave (to provide the cover story that they were doing politics on their own) while providing each with a day of "comp time" for every day of political work. For some tasks, such as attending fundraisers, Stack gave the employees overtime credit, which immediately padded their paychecks — and always in an amount enough to cover the cost of tickets that the employees had purchased for themselves and their families.

For these machinations, Genova, Gulotta, and Stack have been convicted of violating the Racketeer Influenced and Corrupt Organizations Act (RICO); they operated the City (an "enterprise") through a pattern of racketeering (the predicate offenses are bribery and mail fraud). Gulotta was convicted of bribing Genova, Genova and Gulotta were convicted of mail fraud, and all three defendants were convicted of stealing more than $5,000 from a program (the City) that receives more than $10,000 annually in federal funds. The district court set aside Stack's theft convictions and several predicate acts underlying Genova's RICO conviction but rejected other challenges. United States v. Genova, 187 F.Supp.2d 1015 (N.D.Ill.2002). Genova has been sentenced to 60 months' imprisonment plus a fine of $12,500 and forfeiture of $386,276; Gulotta to 48 months plus a fine of $15,000 and forfeiture of $270,944; and Stack to 37 months plus a fine of $3,000. Gulotta has been disbarred and Genova suspended by Illinois pending disbarment. But Ronald Kawanna, Jr., Gulotta's former partner, remains in good standing at the Illinois bar even though the district court, after finding that Kawanna committed extensive perjury in the federal trial, strongly recommended that Illinois terminate his right to practice law. See 167 F.Supp.2d at 1043-45.

Genova and Gulotta challenge their convictions under 18 U.S.C. § 666 for theft, and the United States has filed a cross-appeal seeking to have Stack's theft convictions reinstated.

Comp time is equivalent to money because it works like vacation leave: the employee can use it to receive pay for days on which no work is performed, and unused comp time (like unused vacation leave) may be converted directly to cash on resignation. Defendants contend that comp time represents a loss to the City only when drawn down (or cashed out) by an employee, and that the evidence does not show that more than $5,000 worth of comp time was used (as opposed to credited) in any given year. But this is like arguing that money placed in an employee's bank account does not count for purposes of § 666 until the employee makes a withdrawal. To the contrary, money deposited in a bank, or comp time in an employment account, is value transferred to the employee when deposited, not when used, and the evidence was more than sufficient to show that Calumet City deposited more than $5,000 of comp time in employees' accounts, because of their political services, in each of 1996 and 1997. Genova's § 666 convictions based on the use of public money for political activities is unexceptionable. And even if some leave remained unused and was canceled when the scheme came to light, the recovery of stolen funds does not make the original deed less a theft.

Some of Genova's (and all of Gulotta's) § 666 convictions stem from funds paid to Gulotta & Kawanna and then kicked back to Genova. With respect to these, defendants contend, Genova did not receive more than $5,000 that was "owned by" or "under the care, custody, or control of" Calumet City, as § 666 requires — because the money belonged to Gulotta & Kawanna. This argument supposes that a thief gets good title to the boodle. Genova and Gulotta corruptly arranged for Gulotta & Kawanna to receive some of Calumet City's money, so that the law firm could pass a portion of it back to Genova. The roundabout does not disguise the fact that Gulotta & Kawanna never earned the amount that was destined to be handed over to Genova as a kickback; Genova just arranged to pilfer that money through an intermediary, and both participants were properly convicted. (We take up later the question whether Gulotta must disgorge the portion of the money that compensated his firm for legal services actually rendered.)

The jury convicted Stack of two counts under § 666, one for funds misapplied in 1996 and the other for funds diverted in 1997. The district judge granted Stack's post-verdict motion for acquittal under Fed.R.Crim.P. 29(c), observing that the verdicts with respect to § 666 conflict with the verdict on the RICO charge. In order to convict Stack of violating RICO, the jury had to determine that he carried out a pattern of racketeering activity, and the jury was asked to report by special verdicts which potential predicate offenses it had found. The judge wrote:

[T]he jury found that Stack committed only four racketeering acts involving Paul Kowalchyk, Nick Yovkovich, Tom Maszinski and Anthony Perry. Our examination of the record indicates that, even when viewing the evidence in the light most favorable to the Government, Stack's award of comp days to these four Public Works employees in violation of racketeering acts 9, 10, 12 and 13 did not exceed $5,000 in 1996 and 1997. As such, we reject the Government's claim that "[T]he fact that the jury acquitted defendant Stack of all but four predicate acts in the RICO count is irrelevant," ... because we do not believe that a reasonable jury could have found the requisite jurisdictional amount of § 666 for either year beyond a reasonable doubt. Consequently, this Court enters a judgment of acquittal as to Stack on Counts Five and Six.

187 F.Supp.2d at 1032-33. The United States has appealed under the Criminal Appeals Act, 18 U.S.C. § 3731, which authorizes appellate review whenever the Double Jeopardy Clause would not forbid the relief that the prosecutor seeks. See United States v. Wilson, 420 U.S. 332, 336-39, 95 S.Ct. 1013, 43 L.Ed.2d 232 (1975).

Wilson holds that, if a remand would not require a second trial, it does not matter whether the judge's post-trial decision should be labeled an "acquittal." Id. at 339-53, 95 S.Ct. 1013. See also, e.g., United States v. Morrison, 429 U.S. 1, 97 S.Ct. 24, 50 L.Ed.2d 1 (1976). The prosecutor asks us to reinstate the jury's verdict and remand for the imposition of the sentence authorized by law; as in Wilson and Morrison, that step is permissible under both the statute and the Constitution. United States v. Martin Linen Supply Co., 430 U.S. 564, 97 S.Ct. 1349, 51 L.Ed.2d 642 (1977), is not to the contrary. Martin Linen holds that the double jeopardy clause forbids a second trial following a Rule 29(c) acquittal but reiterates the holding of Wilson that there is no problem when "restoration of the guilty verdict, and not a new trial, would necessarily result if the Government prevailed." 430 U.S. at 570, 97 S.Ct. 1349. And United States v. DiFrancesco, 449 U.S. 117, 130, 101 S.Ct. 426, 66 L.Ed.2d 328 (1980), which post-dates Martin Linen, recites as one of double jeopardy's fixed stars the principle that "the Double Jeopardy Clause does not bar a Government appeal from a ruling in favor of the defendant after a guilty verdict has been entered by the trier of fact." See also Peter Westen & Richard Drubel, Toward a General Theory of Double Jeopardy, 1978 S.Ct. Rev. 81, 137-55. It has long been this court's view that the United States may appeal from a judge's order acquitting the defendant after the jury has returned a verdict of guilty, for reversal does not require a new trial. See, e.g., United States v. Klein, 910 F.2d 1533, 1535 (7th Cir.1990); United States v. Blasco, 581 F.2d 681, 683-84 (7th Cir.1978); United States v. Allison, 555 F.2d 1385, 1386-87 (7th Cir.1977). We adhere to that position today.^†

Whether the jury's special verdicts on the RICO charge imply Stack's innocence of the § 666 charges is open to doubt. Maybe the jury stopped after identifying Kowalchyk, Yovkovich, Maszinski, and Perry because it deemed four predicate acts enough to establish the prohibited pattern of racketeering; the verdict thus need not establish that this is all Stack did. But even if the RICO and § 666 verdicts are irreconcilable, this does not vitiate the jury's disposition of the § 666 counts. Inconsistency does not spoil a conviction. See United States v. Powell, 469 U.S. 57, 105 S.Ct. 471, 83 L.Ed.2d 461 (...