U.S. v. Glick, 1024

• Decision Date: 14 April 1998
• Docket Number: D,No. 1024,1024
• Citation: 142 F.3d 520
• Parties: 21 Employee Benefits Cas. 2927 UNITED STATES of America, Appellee, v. Harvey I. GLICK, Defendant-Appellant. ocket 97-1118.
• Court: U.S. Court of Appeals — Second Circuit

Page 520

142 F.3d 520

21 Employee Benefits Cas. 2927

UNITED STATES of America, Appellee, v. Harvey I. GLICK, Defendant-Appellant.

No. 1024, Docket 97-1118.

United States Court of Appeals Second Circuit.

Argued Feb. 13, 1998.

Decided April 14, 1998.

Marc Fernich, Burstein & Fass, LLP, New York City for Defendant-Appellant.

Paul Radvany, Special Assistant United States Attorney, Brooklyn, NY (Zachary W. Carter, United States Attorney for the Eastern District of New York, Susan Corkery, Assistant United States Attorney, Brian D. Coad, Special Assistant United States Attorney, Brooklyn, NY, on the brief), for Plaintiff-Appellee.

Before: JACOBS, LEVAL, and LAY, ^* Circuit Judges.

LAY, Circuit Judge.

In July 1988, William Loeb established an entity called Consolidated Local Union 867 (the "Union") in order to offer Blue Cross health insurance (the "Health Plan") to the general public. Shortly thereafter, Loeb also established the Consolidated Welfare Fund (the "Welfare Fund"), which qualified as an employee welfare benefit plan under ERISA. To obtain the Welfare Fund's health insurance coverage, an individual had to pay union dues and fees in addition to paying Welfare Fund contributions. The record reflects no other function of the Union or Union membership other than as a vehicle for enrolling in the Health Plan. As president of the Union and trustee of the Welfare Fund, Loeb exercised management control over the Welfare Fund's monies, bank accounts and assets and determined who would be admitted to the Union.

To expand the Union's membership, Loeb engaged insurance brokers and subbrokers to sell the Welfare Fund's health insurance program nationwide. As part of that effort, Loeb entered into an agency agreement with Harvey I. Glick and his insurance brokerage firm, HIG Associates, Inc. ("HIG"). Under the agreement, Loeb gave HIG the exclusive right to market the Health Plan in eight states, and non-exclusive marketing rights in the remaining states. ¹ Loeb required HIG to remit a certain amount of money to the Union and to the Welfare Fund for each Health Plan participant. HIG would keep any additional amounts it collected from the participants as its commission. HIG's responsibilities consisted of enrolling new employer groups into the Health Plan and handling the administrative aspects of the paperwork and billing. HIG also coordinated the sending of payments to the Union and to the Welfare Fund on a monthly basis and tracked any additions or deletions of memberships in the Union.

In the fall of 1989, HIG engaged Diversified Health Concepts, Inc. ("DHC") to market the Health Plan nationwide. Under the subbrokerage arrangement, DHC collected monthly premiums from the Health Plan participants, deducted a percentage from the premiums for its commission, and then forwarded the balance to HIG. HIG would then deduct its own commission from the premium payments and forward the balance to the Union and the Welfare Fund. Glick had the discretion to determine the amount of HIG's commission.

By 1990, the marketing efforts of HIG and DHC produced rapidly increasing enrollment in the Health Plan. In late 1989, it appears that Loeb asked Glick to pay him $5.00 for each participant enrolled in the Health Plan through DHC's marketing effort and, in return, Loeb would allow Glick to continue using DHC as a subbroker. Glick agreed to this proposal and accordingly made monthly payments, totaling approximately $150,000, to Loeb and his wife.

Testimony produced at trial showed that in June 1990, Glick complained to Robert Schneider, a principal of DHC, that he considered the payments to Loeb as "an expense of his business." Glick also told Schneider that paying Loeb by check allowed Glick to "control" Loeb and that Glick "felt that he had been very smart in making the payments by check because that way he could prove--that way Mr. Loeb could not deny the payments had been made." (A at 265). ²

As a result of these illegal payments, Glick earned approximately $1.011 million in commissions from the sales of health policies by DHC between October 1989 and July 1990. The Welfare Fund eventually became insolvent and approximately $10 million in medical claims were left unpaid. Shortly thereafter, the government charged Glick with bribing a trustee of a welfare benefits plan, in violation of 18 U.S.C. § 1954 and with conspiracy to violate § 1954, in violation of 18 U.S.C. § 371.

After a three-day trial, a jury returned a verdict of guilty on all counts. The district court sentenced Glick to 46-months' imprisonment and a fine of $100,000 to be paid in monthly installments of $1,000. On this appeal, Glick raises several challenges to his conviction, sentence and fine.

Discussion

I. Merit of Conviction

Glick argues that the indictment against him failed to charge him with a crime because his conduct fell beyond the scope of 18 U.S.C. § 1954. We note that Glick failed to preserve this issue for appeal. However, we review this issue under the plain-error doctrine because it asserts a jurisdictional defect. ³

Section 1954 punishes "any person who directly or indirectly gives or offers, or promises to give or offer, any fee, kickback, commission, gift, loan, money, or thing of value" to a trustee of an employee welfare benefit plan "because of or with intent to ... influence[d] ... any of [the trustee's] actions, decisions, or other duties relating to any question or matter concerning such plan...." 18 U.S.C. § 1954 (1994). Glick concedes that his conduct falls within the literal sweep of the statute's language. He argues, however, that the statute should be interpreted to apply only when the illegal payments have a demonstrable connection with or effect upon plan assets. ⁴ In effect, Glick urges this Court to look beyond the plain language of the statute and impose an additional element to the crime of bribing a trustee. For the following reasons, we decline to do so.

We read the statute according to its plain meaning. "No rule of construction ... requires that a penal statute be strained and distorted in order to exclude conduct clearly intended to be within its scope...." United States v. Raynor, 302 U.S. 540, 552, 58 S.Ct. 353, 359, 82 L.Ed. 413 (1938). "A statute can be unambiguous without addressing every interpretative theory offered by a party. It need only be 'plain to anyone reading the Act' that the statute encompasses the conduct at issue." Salinas, --- U.S. at ----, 118 S.Ct. at 475 (1997) (quoting Gregory v. Ashcroft, 501 U.S. 452, 467, 111 S.Ct. 2395, 2404, 115 L.Ed.2d 410 (1991)).

In this case, Glick's conduct falls squarely within the literal scope of § 1954. Glick made illegal payments to the trustee of the Welfare Fund, in return for the exclusive right to market the Welfare Fund's health insurance program and to retain DHC as its subbroker. The statute criminalizes any payment made to a trustee of a welfare benefits plan intended to influence any of the trustee's decisions relating to any matter concerning the plan. In this context, the word "any" has an expansive meaning, see United States v. Gonzales, 520 U.S. 1, ----, 117 S.Ct. 1032, 1035, 137 L.Ed.2d 132 (1997), and encompasses Loeb's decision regarding who to retain as the Welfare Fund's insurance broker. We find there is no express language in § 1954 that requires the illegal payments to be connected with or to have an effect upon plan assets specifically.

Glick asserts the legislative history of § 1954 indicates Congress intended § 1954 to apply only when fund assets are affected by a bribe or kickback. We disagree. "Courts in applying criminal laws generally must follow the plain and unambiguous meaning of the statutory language. '[O]nly the most extraordinary showing of contrary intentions' in the legislative history will justify a departure from that language." United States v. Albertini, 472 U.S. 675, 680, 105 S.Ct. 2897, 2902, 86 L.Ed.2d 536 (1985) (citations omitted) (quoting Garcia v. United States, 469 U.S. 70, 75, 105 S.Ct. 479, 482-83, 83 L.Ed.2d 472 (1984)). By enacting § 1954, Congress intended to protect welfare funds from all conflict-of-interest payments, as well as to prevent kickbacks and bribes. See United States v. Romano, 684 F.2d 1057, 1063-64 (2d Cir.1982) (citing H.R.Rep. No. 998, 87th Cong. 1st Sess. 7, reprinted in 1962 U.S.Code Cong. & Ad. News 1532). We conclude there is no "extraordinary showing of contrary intentions" in the legislative history of § 1954 that warrants our adoption of Glick's proposed statutory interpretation.

II. Sentencing

Glick raises three challenges to the district court's calculation of his sentence. Glick contends the district court erroneously found that: (1) Glick had paid a "bribe," with a base offense level of ten, rather than a "gratuity," with a base offense level of six; (2) the value of the "improper benefit" to Glick was the amount of HIG's commissions, rather than the total amount of the bribes Glick paid to Loeb; and (3) Glick was a "fiduciary of a benefit plan" warranting a two-level enhancement. We review de novo the district court's interpretation of the Sentencing Guidelines, and review the district court's factual findings for clear error. United States v. Lopreato, 83 F.3d 571, 574 (2d Cir.1996) (citing United States v. Reese, 33 F.3d 166, 174 (2d Cir.1994)).

A. Measurement of "Improper Benefit"

The district court found that Glick had collected $1.011 million in commissions from DHC's sales of the Health Plans. The district court used this figure to impose an eleven-level increase to Glick's base offense level sentence pursuant to U.S.S.G. §§ 2E5.1(b)(2) and 2F1.1's loss table for receipt of an "improper benefit." ⁵ Glick contends the district court used the wrong measure of "improper benefit" under § 2E5.1(b)(2) and that, as a matter of law, Glick could not have received any "improper benefit." We note that Glick failed to preserve these arguments for appellate review,...