U.S. v. Grande, s. 78-5056

• Decision Date: 29 May 1980
• Docket Number: Nos. 78-5056,s. 78-5056
• Citation: 620 F.2d 1026
• Parties: 27 Cont.Cas.Fed. (CCH) 80,367, 6 Fed. R. Evid. Serv. 696 UNITED STATES of America, Appellee, v. Ottavio F. GRANDE, Appellant. UNITED STATES of America, Appellee, v. Gerald W. BERG, a/k/a Buzz Berg, Appellant. UNITED STATES of America, Appellee, v. Andrew HAWTHORNE, Appellant. UNITED STATES of America, Appellee, v. Edgar HAWTHORNE, Appellant. UNITED STATES of America, Appellee, v. Pietro CASTAGNA, a/k/a Peter Castagna, Appellant. to 78-5059 and 78-5061.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1026

620 F.2d 1026

27 Cont.Cas.Fed. (CCH) 80,367, 6 Fed. R.

Evid. Serv. 696

UNITED STATES of America, Appellee, v. Ottavio F. GRANDE, Appellant.

UNITED STATES of America, Appellee, v. Gerald W. BERG, a/k/a Buzz Berg, Appellant.

UNITED STATES of America, Appellee, v. Andrew HAWTHORNE, Appellant.

UNITED STATES of America, Appellee, v. Edgar HAWTHORNE, Appellant.

UNITED STATES of America, Appellee, v. Pietro CASTAGNA, a/k/a Peter Castagna, Appellant.

Nos. 78-5056 to 78-5059 and 78-5061.

United States Court of Appeals Fourth Circuit.

Argued Oct. 4, 1979.

Decided April 21, 1980.

As Modified on Denial of Rehearing and Rehearing En Banc May 29, 1980.

Eugene Gressman, School of Law, University of North Carolina, Chapel Hill, N. C., for appellants.

Ransome J. Davis, Baltimore, Md. (H. Russell Smouse, Baltimore, Md., on brief), for appellant Andrew Hawthorne.

Wilbur Greenberg, Philadelphia, Pa., for appellant Edgar Hawthorne.

Henry Belsky, Baltimore, Md. (Jana R. Barnett, Baltimore, Md., on brief), for appellant Pietro Castagna.

Michael E. Marr, Baltimore, Md., on brief, for appellant Ottavio F. Grande.

David D. Queen, Asst. U. S. Atty., Baltimore, Md. (Russell T. Baker, Jr., U. S. Atty., Baltimore, Md., on brief), for appellee.

Before WINTER and RUSSELL, Circuit Judges, and FIELD, Senior Circuit Judge.

WINTER, Circuit Judge:

The appealing defendants, four demolition contractors and a former director of the Baltimore City department who was responsible for preparing, advertising, evaluating and supervising the city's demolition contracts, were all convicted on forty-five counts of a forty-eight count indictment charging them with various criminal offenses arising out of a scheme of collusive bidding on demolition contracts in Baltimore City. ¹ The demolition contracts which were the object of collusive bidding were principally those let by the Department of Housing and Community Development between 1971 and 1975. The appellants raise twelve principal contentions applicable to some or all of them.

We affirm in part and reverse in part and remand for further proceedings.

I.

Viewed in the light most favorable to the government, the evidence showed that within the period January 1968 to July 1976, there was intense redevelopment in Baltimore City, and demolition of outmoded and unusable buildings was a frequent occurrence. Virtually all demolition was done by private contractors at municipal expense through contracts let by the Department of Housing and Community Development, Division of Construction and Building Maintenance, of which defendant Ottavio F. Grande, was director. Grande's division prepared demolition contracts, fixed the specifications contained therein, evaluated bids, made recommendations for awards and supervised performance of the contracts once an award was made. Under city law, awards were made by the city's Board of Estimates to the lowest responsible bidder as a result of competitive bidding, after public advertisement for bids. With respect to some "emergency" demolition contracts, e. g., demolition to eliminate dangerous conditions resulting from fires, competitive informal bidding was used, with the award made by Grande to the lower bidder.

Dissatisfied with their margin of profit on contracts obtained by competitive bidding, the contractors who historically had done the city's demolition and wrecking work devised a scheme to ensure them a greater profit. Initially the group consisted of defendant Gerald W. "Buzz" Berg (Buzz Berg Wrecking Company), defendant Joseph Tuller (State Wrecking Company of Maryland), Charles E. Collison (Harford Contracting Company), Roland Larkin (Roland Larkin, Inc.), Julius Hoffman and Harry Milzman (Harry Hoffman & Sons, Inc.), C. Gordon Spielman (Charles J. Spielman, Inc.), and defendant Pietro Castagna (Castle Construction Company). ² The conspiracy was later joined by defendants Andrew Hawthorne and Edgar Hawthorne (Robert L. Hawthorne, Inc.), who were Philadelphia contractors who desired to get Baltimore business.

The scheme was a simple one. Through information supplied by Grande as to the city's cost estimate on a contemplated project, the group could determine the maximum bid that could be made without causing all bids to be rejected and the project readvertised. With that knowledge, the members of the group would assign themselves turns to submit the "low" bid, with the other bidders either not bidding or bidding a higher amount. Grande was paid approximately five percent of each contract for which an award was obtained pursuant to the scheme.

Counts one through twenty-eight charged violations of mail fraud against Grande, Berg, Tuller and the Hawthornes. Counts twenty-nine through thirty-one charged Berg, Tuller and Andrew Hawthorne with being engaged in a pattern of racketeering activity and called for the forfeiture of their interests in their respective companies upon conviction of the charges against them. Counts thirty-two, thirty-three, thirty-five and thirty-six charged Grande with affecting interstate commerce by means of extortion from Larkin and Harford Contracting Company, Inc., and similar offenses were charged against Grande and Castagna jointly in counts thirty-four, thirty-seven and thirty-eight. Grande was charged with obstruction of justice by bribery in count thirty-nine and Berg with obstruction of justice by intimidation and threats of force in count forty. Finally, counts forty-one through forty-eight charged Grande with various income tax violations with respect to the sums paid him under the scheme to obtain contracts.

Other facts necessary to an understanding of the various contentions advanced by the defendants will be stated in the discussion of the contention to which they relate.

II.

Collectively, defendants advance a myriad of arguments why the convictions of all or some of them should be reversed, with or without a new trial. We see no need to discuss each contention at length, and we will begin by commenting on those which we do not think warrant extended treatment.

A. We reject defendants' argument that, although their prosecution falls within the scope of federal jurisdiction, it improperly injects federal criminal power into areas of peculiarly local or state concern. This issue was decided implicitly in United States v. Caldwell, 544 F.2d 691 (4 Cir. 1976). See also the authorities cited and discussed in the panel opinion in United States v. Mandel, 591 F.2d 1347, 1357-58 (4 Cir. 1979), later withdrawn. Indeed, this is a stronger case in which to apply the mail fraud statute (18 U.S.C. § 1341), because in this case it can readily be inferred that, by reason of collusive bidding, Baltimore City and its citizens suffered actual financial injury. Not only were they deprived of good government, they were required to pay more for demolition when the "low" bid was artificially inflated than they would have been required to pay for demolition under contracts fairly entered into as the result of honest competitive bidding. Certainly we think that in general the evidence to support the existence of a scheme to defraud is compelling.

The thrust of § 1341 is upon misuse of the mails to defraud, not the regulation of state and municipal affairs. United States v. States, 488 F.2d 761, 767 (8 Cir. 1973), cert. denied, 417 U.S. 909, 94 S.Ct. 2605, 41 L.Ed.2d 212, cert. denied, 417 U.S. 950, 94 S.Ct. 3078, 41 L.Ed.2d 671 (1974). Defendants' use of the mails, principally to give notice to proceed on contracts for demolition to send checks in full or partial payment under fraudulently obtained demolition contracts and to mail a bill from one of the contractors for work performed under one such contract are, in our view, sufficiently related to the scheme to defraud to bring defendants within the reach of § 1341. Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 362, 98 L.Ed. 435 (1954); United States v. Mandel, supra, at 1360 n.9; United States v. Brewer, 528 F.2d 492, 494 (4 Cir. 1975).

B. We reject also the argument of Berg and Andrew Harthorne that their convictions under counts twenty-nine and thirty-one must be reversed because legally they cannot be convicted both of mail fraud under § 1341 (charged in other counts) and conducting interstate business through a pattern of racketeering under 18 U.S.C. § 1962(c) as charged in counts twenty-nine and thirty-one. A premise of the argument appears to be the rejected notion that the Racketeer Influenced and Corrupt Organizations Chapter (RICO) of the Organized Crime Control Act of 1970, 18 U.S.C. §§ 1961 et seq. applies only to organized crime in the classic "mobster" sense. See United States v. Campanale, 518 F.2d 352, 363 (8 Cir. 1975), cert. denied, 423 U.S. 1050, 96 S.Ct. 777, 46 L.Ed.2d 638 (1976). To the contrary, § 1961(1) defines "racketeering activity" merely to mean, inter alia, an act indictable under the mail fraud statute, § 1341, and defines "pattern of racketeering activity" as at least two acts of racketeering activity occurring within a stated time period.

Without detailing all of the elements of each crime, we think it clear that a conviction under § 1962(c) requires proof of elements not required to be proved to obtain a conviction under § 1341. See Iannelli v. United States, 420 U.S. 770, 95 S.Ct. 1284, 43 L.Ed.2d 616 (1975); Blockburger v. United States, 284 U.S. 299, 52 S.Ct. 180, 76 L.Ed. 306 (1932). The fact that the § 1341 counts in the instant indictment alleged more than was strictly required to be proved to obtain a conviction under that section, and the fact that these incidental facts were proved at the trial, cannot bar a prosecution and punishment under § 1962(c), which depended on proof of the additional facts to establish its additional elements. The Blockburger test looks to what elements of proof a statute requires to establish its violation, not what may be incidentally alleged and proved, 284 U.S. at 304, 52 S.Ct. at...