U.S. v. Hedman

Decision Date30 October 1980
Docket Number78-2619 and 78-2654,Nos. 78-2617,78-2618,s. 78-2617
Citation630 F.2d 1184
Parties6 Fed. R. Evid. Serv. 1105 UNITED STATES of America, Plaintiff-Appellee, v. John HEDMAN, Michael Jercich, Thomas Karnick and Henry Larsen, Defendants- Appellants.
CourtU.S. Court of Appeals — Seventh Circuit

Julius Lucius Echeles, Anna R. Lavin, Chicago, Ill., for defendants-appellants.

Thomas P. Sullivan, U. S. Atty., Thomas P. Johnson, Asst. U. S. Atty., Chicago, Ill., for plaintiff-appellee.

Before SWYGERT, PELL and BAUER, Circuit Judges.

BAUER, Circuit Judge.

Defendants-appellants in these consolidated cases appeal from the judgments of conviction entered upon the jury verdicts finding them guilty of conspiracy to commit extortion and extortion under color of official right in violation of the Hobbs Act. Appellants also appeal from their convictions for filing fraudulent tax returns in violation of the federal income tax laws. We affirm.

I. FACTS

On June 13, 1978, the federal grand jury returned a nineteen count indictment charging the defendants, John Hedman, Michael Jercich, Thomas Karnick and Henry Larsen, with various violations of federal statutes arising from the acceptance of monies allegedly extorted by them in their capacities as Building Inspection Supervisors assigned to the Construction and Technical Inspection Bureau of the City of Chicago. Count One of the indictment charged all four defendants with conspiracy to commit extortion through the wrongful use of their official positions, in violation of 18 U.S.C. § 1951. 1 Counts Two through Thirteen of the indictment charged the defendants individually with substantive violations of Section 1951 by the extortion of money from various building contractors under color of official right. Counts Fourteen through Nineteen charged defendants Hedman, Jercich and Larsen with the failure to report the income received from these extortionate activities on their federal income tax returns for the years 1973 and 1974, in violation of 26 U.S.C. § 7206(1).

All four defendants were tried jointly before a jury with the Honorable Nicholas J. Bua presiding. On November 15, 1978, at the conclusion of a two week trial, the jury returned guilty verdicts against each defendant on all counts of the indictment, with the exception that Michael Jercich was found not guilty in Count Twelve. On December 19, 1978, Judge Bua sentenced defendants Hedman, Jercich and Larsen each to one year in the custody of the Attorney General, three years' probation, and imposed a $5,000 fine. Thomas Karnick was sentenced to one year of custody on a work-release program, three years' probation, and received a $1,000 fine.

In view of the numerous claims of error asserted on appeal, and because many of the contentions raised concern the quality and sufficiency of the evidence, a summary recitation of the evidence adduced at trial is warranted. Other pertinent factual material necessary to an understanding of our resolution of these claims is appropriately set forth in the discussion that follows.

The evidence at trial showed that the defendants commenced their employment with the City of Chicago during the 1950's as inspectors for the Department of Buildings. In 1969 and 1970, they were promoted to the positions of Supervisor. In those positions, the defendants were responsible for supervising the inspection, by six district inspectors, of all new construction and remodeling in the geographical areas of the City of Chicago to which they had been assigned. The Chicago Building Code requires that anyone who undertakes any construction work, structural repairs, additions or remodeling in the city, secure a building permit from the Department of Buildings. The fee for such permits varies with the type of construction undertaken. For example, the permit fee for a frame garage was $24 in 1971 and $47.50 in 1976. Once the permit is obtained, the construction may proceed. At various stages of the construction a building inspector from the City of Chicago inspects the project to insure compliance with the building code. Upon completion of the construction, the inspector validates the permit.

A. Counts One through Five

These counts alleged the receipt of extortionate payments by the defendants from the Danley Lumber Company, an Illinois corporation whose principal business is the construction of residential garages. In the course of its business, Danley annually purchases approximately $1,000,000 in building materials from manufacturers outside the State of Illinois.

Since its inception in 1959, Danley has constructed a substantial number of garages in Chicago that violated the Building Code, usually because the garages were too large or too close to the lot line. On such occasions, Danley would either fail to obtain a building permit or obtain one through the submission of a false application. For these jobs, Danley would make illegal payoffs to the defendants.

Between 1959 and the mid-1960's Bentley Weitzman, the President of Danley, would pay $25 to the building inspector for the district in which the non-conforming garage was being erected. The money for these payoffs was obtained from the receipts for construction work that was performed but not recorded on Danley's books. Weitzman testified that these receipts were also not reported on Danley's tax returns. From the mid-1960's until 1976, the task of making payoffs on construction that violated the Chicago Building Code was handled by Bentley Weitzman's father, Harry Weitzman. When a job did not violate the building code, Harry Weitzman would file a permit application and pay the required fee to the City of Chicago.

A routine procedure was established at Danley for processing non-conforming garages. When a job violated the Building Code, the employee at Danley who processed that job order would give Harry Weitzman a slip of paper indicating the address of the job and a notation that a violation existed. Weitzman would then write the name of the area supervisor for that job on the slip, and return the slip to the job file. At the same time, Weitzman would make an entry on a list he maintained of all non-conforming jobs. When the garage was being built, the slip would be returned to Weitzman. He accumulated slips for several days and then gave them to Irving Lazarus, Vice President of Danley. Lazarus would obtain cash from a walk-in safe located in Danley's offices, place $25 per slip in an envelope with the slips, and give the money and slips to Weitzman. Bentley Weitzman testified that, on occasion, he also provided the cash to his father.

When Harry Weitzman received the cash and slips from Lazarus, he would delete the job addresses from his list. He would then write the name of the supervisors on separate envelopes, place the appropriate amount of money in each envelope, and personally deliver them to all four defendants at either their offices in City Hall or their homes. On occasion, Weitzman would give to one supervisor an envelope to be delivered to another supervisor.

From 1968 or 1969 until 1976, Harry Weitzman kept a diary of these payoffs. At the top of each page of the notebook, Weitzman wrote the first name of a supervisor, e. g., "Mike," "Tom," "Hank," and "John." Also listed on these pages were the addresses of the non-conforming job sites, as well as the amounts, the dates, and the places of the payments made to each supervisor for those jobs. The diary detailed payments that were made to all four defendants individually, as well as payments that were made to one supervisor for delivery to another.

B. Counts Six through Eight

These counts related to the extortionate payments allegedly received by Hedman, Jercich and Larsen from the All State Lumber Company. All State is an Illinois corporation engaged in the construction of garages and obtains building materials from manufacturers and suppliers located outside of Illinois.

Like the Danley Lumber Company, All State built garages that violated the Chicago Building Code. On such occasions, All State would not obtain a building permit, but would instead make a payoff to the Building Inspection Supervisor assigned to the district in which the garage was constructed.

When All State commenced a job that violated the Building Code, either the garage superintendent or the remodeling superintendent would telephone the appropriate supervisor and give him the address of the non-conforming job site. The All State employee would then give a slip of paper to the assistant bookkeeper, indicating the job name, the address, the supervisor and the amount of money to be paid to the supervisor. The bookkeeper would then write the name and address of the job on a separate piece of paper and place it, along with $25, into an envelope bearing the supervisor's name. The envelope often contained several job slips and amounts of money ranging from $25 to $100. The supervisors would then stop by the All State office and pick up the envelopes bearing their names. Three of the defendants, John Hedman, Michael Jercich, and Henry Larsen, received payoffs in this fashion from All State. On occasion, one supervisor would pick up the envelopes addressed to another supervisor.

The money used for the payoffs was obtained from the All State petty cash fund and was recorded on All State's books as a "permit fee." Thus, each entry in the All State accounts of $25 for a "permit" reflected a payoff. By comparing the assignment maps of the Department of Buildings to the address of each payoff, it was possible to approximate the amount of money paid to each of the three supervisors. Between 1971 and 1974, approximately $11,575 was paid collectively to the supervisors by the All State Lumber Company.

C. Counts Nine and Ten

These counts related to payoffs allegedly made to defendants Hedman and Jercich by the Ashland Building...

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