U.S. v. Kramer
| Decision Date | 15 August 2007 |
| Docket Number | No. 1:06-cr-200-ENV-CLP.,1:06-cr-200-ENV-CLP. |
| Citation | 499 F.Supp.2d 300 |
| Parties | UNITED STATES of America, v. Neil KRAMER, Isadore A. Userowitz a/k/a "Arthur Userowitz," Harold Weisberg, Hamad Ali a/k/a "Ahmed Jeran," Hamood Zokari, Nageeb Aldaylam, Mohammed Algahim a/k/a "Mohamed Kaid," Abdullah Alhababi, Salem Al-Merdai, Abdo Alwasia, Mohsen Hudyih and Fateh Nagi Saleh, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
Brendan G. King, Lawrence Philip Ferazani, Jr., United States Attorneys Office, Eastern District of New York, Brooklyn, NY, for Plaintiff.
Gerald J. McMahon, Law Office of Gerald J. McMahon, Frederick H. Cohn, Gould, Reimer, Walsh, Goffin & Cohn, LLP, James M. Branden, Law Offices of James M. Branden, Donna R. Newman, Donna R. Newman, Esq., Stephen Turano, Roger B. Adler, Robert J. Feldman, Raymond J. Aab, Richard Elliot Kwasnik, New York, NY, Stacey Richman, Murray Richman, Law Offices of Murray Richman, Samuel Gregory, Samuel Gregory P.C., Joyce Balaban David, John Michael Burke, Brooklyn, NY, Kevin James Keating, Law Office of Kevin J. Keating, Garden City, NY, for Defendants.
Defendant Abdullah Alhababi moves to dismiss criminal charges, brought on March 27, 2006, that he collected extensions of credit by extortionate means, 18 U.S.C. § 894(a), and conspired to do so, 18 U.S.C. § 371. The only specific act relating to Alhababi charged in the now-pending superseding indictment is that The United States asserts that the withholding of immigration and travel documents by a lender as collateral on a loan may support a conviction under 18 U.S.C. § 894(a)(1) — a criminal statute that carries up to a 20-year term of imprisonment, and which provides that "[w]hoever knowingly participates in any way, or conspires to do so, in the use of any extortionate means to collect or attempt to collect any extension of credit ... shall be fined under this title or imprisoned not more than 20 years, or both." The United States's position is baseless.
First, § 894(a)(1) makes clear that "a defendant may only be convicted ... if he knowingly plays some role in the extortion itself, but not if he merely performs acts that he knows will facilitate a debtor's repayment of a debt being collected by extortionate means." United States v. Scotti, 47 F.3d 1237, 1246 (2d Cir.1995). Here, the indictment does not allude to or even remotely suggest any conduct that could conceivably support a colorable allegation that Alhababi knowingly participated in an extortionate act to collect a debt or that he conspired to do so.
Second, § 894(a)(1) applies to the extortionate collection of debt, as opposed to the extortionate extension of credit, which is an offense proscribed by a separate statute, 18 U.S.C. § 892(a). The legislative history of the two sections shows that the Congress intended to create two separate and distinct offenses:
EXTORTIONATE COLLECTION: Not everyone who falls into the clutches of a loan shark is necessarily aware at the outset of the nature of the transaction into which he has entered. Moreover, cases will arise where the use of extortionate means of collection can be demonstrated even though it cannot be shown that a bilateral understanding that such would be the case existed at the outset. Section 894(a) covers these situations by making it a criminal offense to collect an indebtedness by extortionate means, regardless of how the indebtedness arose....
H.R. Conf. Rep. No. 1397, at 2028 (1968), reprinted in 1968 U.S.C.C.A.N. 2021, 2028. "[W]here defendants used extortionate means in the extension of a loan but did not use any extortionate means, explicit or implicit, in the collection of the loan-convictions under § 894 cannot stand." United States v. Lore, 4 F.Supp.2d 352, 358 (D.N.J.1998). The Lore court went on to observe that
neither DiSalvo [n]or Smith, nor any other case known to this Court, has taken an act that formed a violation of § 892 and used the same act as the sole basis for a § 894 violation. The very fact that Congress has enacted two separate statutes — one criminalizing extortionate extension of a loan and one criminalizing extortionate collection of a loan — is meaningful. Under the government's broad interpretation of § 894, virtually any time a defendant violates § 892 by extending a loan using extortionate means he or she would also violate § 894 without any additional conduct other than receiving repayments. Indeed, the government claims it has met its burden under both § 892 and § 894 at the moment of repayment because Britt's threat carried over from each offense. This interpretation, however, is unrealistic because every loan agreement contemplates repayment by definition, and the only circumstances under which convictions under both § 892 and § 894 would not be present are those where an extortionate loan is extended but where the creditor chooses not to collect.
Third, § 894(a)(1) applies to "extortionate means," statutorily defined as "any means which involves the use, or an express or implicit threat of use, of violence or other criminal means to cause harm to the person, reputation, or property of any person." 18 U.S.C. § 891(7) (emphasis added). Second Circuit caselaw makes clear, however, that despite the statutory inclusion of "other criminal means," not all criminal means constitute the type of coercion that could support a conviction under section 894(a)(1). See United States v. Pacione, 738 F.2d 567, 569 (2d Cir.1984).
In Pacione, an attorney was accused of making two usurious loans on which he took a mortgage and then a trust deed as security. Id. at 568. Both the mortgage and trust deed fraudulently misstated the loans' terms to disguise their usurious nature. Id. The debtors understood that nonpayment would result in the trust deed being recorded, and that is precisely what happened when they failed to repay their debt. Id. The District Court dismissed the indictment, concluding that "[f]iling a usurious mortgage may be illegal, but it is not `criminal' in the sense that the word is used in [the extortionate credit transactions] statute." Id. at 569. The Second Circuit agreed. Id. In reviewing the statute's legislative history, Judge Pratt quoted the only recorded legislative statement of a Member of Congress specifically referencing the "other criminal means" language:
I want to make it clear that the term "other criminal means" as used in this statute is intended by its authors to have a liberal construction in order that we can take care of the situations which involve forcing other people to do criminal activity under threat of collection of debt. The use of force, express or implied, is not the sole test of an extortionate extension of credit. This is an important part of the statute.
Id. at 571 (quoting See 114 Cong. Rec. at 14391 (1968)) (emphasis added). The Second Circuit elaborated:
Our review of the legislative history convinces us that congress was concerned primarily with the use of actual and threatened violence by members of organized crime engaged in loan sharking and that it did not intend to authorize a federal 20 year punishment for every creditor who violated some other state or federal criminal statute in the process of making or collecting a usurious loan. In our view, the term "other criminal means" was meant to supplement the context of "violence" so as to punish those who forced their non-paying victims into committing crimes. We do not now attempt to ascertain the precise limits of the statute, for it is sufficient to conclude that Pacione's activities in preparing and threatening to record a deed and mortgage that recited false considerations, and in actually recording the deed, are beyond those limits and therefore not included within the activities congress meant to proscribe. Cf. Perez v. United States, 402 U.S. 146, 152-53, 91 S.Ct. 1357, 1360-61, 28 L.Ed.2d 686 (1971).
Our narrow interpretation is consistent with that previously given the statute in this and other courts. Certainly, the emphasis of the vast majority of prosecutions instituted under the statute is on the use of, or explicit or implicit threat to use, violence to instill fear in the victim.
Pacione, 738 F.2d at 571-72; see also Robert Swris Gen. Contractor Corp. v. New Metro. Fed. Say. & Loan Assoc., 873 F.2d 1401, 1405 (11th Cir.1989) (); Oak Rubber Co. v. Bank One, N.A., 214 F.Supp.2d 820, 829 (N.D.Ohio 2002) (). In United States v. Natale, 526 F.2d 1160 (2d Cir.1975), the Second Circuit similarly stated that
[a]cts or statements constitute a threat under 18 U.S.C. § 891(7) "if they instill fear in the person to whom they are directed or are reasonably calculated to do so in light of the surrounding circumstances...." It is this "calculated" use of threatening gestures or words to collect credit extensions which Congress has made criminal.
Id. at 1168 (internal citation omitted).
The act of taking an individual's immigration and travel documents as security on a loan is not the type of extortionate act to which § 894(a)(1) was intended to apply. Individuals commonly provide their licenses, passports, and other similar documents as security in transactions. For instance, movie theaters accept licenses and other forms of identification...
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