U.S. v. Kravitz, 83-1484

• Decision Date: 24 January 1984
• Docket Number: No. 83-1484,83-1484
• Parties: UNITED STATES of America, Appellee, v. Charles S. KRAVITZ, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 102

738 F.2d 102

UNITED STATES of America, Appellee, v. Charles S. KRAVITZ, Appellant.

No. 83-1484.

United States Court of Appeals Third Circuit.

Argued Jan. 24, 1984.

Resubmitted Pursuant to Rule 12(6) on Sept. 26, 1984.

Decided Oct. 3, 1984.

Rehearing and Rehearing En Banc Denied Oct. 29, 1984.

Edward S.G. Dennis, Jr., U.S. Atty., Walter S. Batty, Jr., Gary S. Glazer (argued), Asst. U.S. Attys., Philadelphia, Pa., for appellee.

Alan J. Hoffman (argued), Edward S. Wardell, Carl W. Hittinger, Edmunds J. Brokans, Dilworth, Paxson, Kalish & Kauffman, Philadelphia, Pa., Stanford Shmukler (argued), Philadelphia, Pa., for appellant.

Before GIBBONS, Circuit Judge, and ATKINS, District Judge. ^*

OPINION OF THE COURT

GIBBONS, Circuit Judge:

Charles Kravitz appeals from a judgment of sentence imposed following his conviction for violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sec. 1961 et seq. (1982) ("RICO") and the Travel Act, 18 U.S.C. Sec. 1952 (1982). He contends that his conviction should be set aside, and that in any event the court erred in ordering forfeiture of his interest as a stockholder in American Health Programs, Inc. (AHP). We hold that his objections to the RICO and Travel Act convictions are without merit, ¹ and that the forfeiture order was proper. Thus we affirm.

I.

Kravitz, a dentist, was the sole stockholder of AHP, a corporation engaged in the health care delivery business. In order to obtain a renewal of a contract for dental and other services with the Philadelphia Fraternal Order of Police (FOP), Dr. Kravitz made three cash payments totalling $7,000 between May 14, 1982 and June 4, 1982 to Robert Hurst, President of the FOP. He also made one payment of $1,000 to Michael Lutz, Secretary of the FOP. Both Hurst and Lutz were at the same time working undercover with the F.B.I. Kravitz was indicted for violation of RICO and the Travel Act, 18 U.S.C. Secs. 1952, 1961-1963 (1982). The predicate offenses for the RICO violation were the briberies of Hurst and Lutz. Kravitz was tried before a jury and convicted on one RICO count and one Travel Act count. On the RICO count, Kravitz was sentenced to four years incarceration and a $25,000 fine.

After the jury returned a guilty verdict on the RICO count, several questions were prepared for submission to the jury. Under Rule 31(e) of the Federal Rules of Criminal Procedure, if an "indictment ... alleges an interest or property is subject to criminal forfeiture, a special verdict shall be returned as to the extent of the interest or property subject to forfeiture, if any." The government proposed the following questions:

(1) Did the defendant own any shares of stock in American Health Programs?

(2) Did he maintain this interest in violation of the racketeering laws?

(3) Shall such shares of stock be forfeited to the United States?

(4) Did the defendant hold a position in American Health Programs which gave him a source of influence over the company?

(5) Did he use the position to conduct the affairs of American Health Programs through a pattern of racketeering activity?

(6) Shall the defendant be required to forfeit his position to the United States? ²

The jury answered questions 1, 2, 4, and 5 affirmatively, and thereby found that Kravitz had used his ownership position in AHP to engage in a pattern of racketeering activity. Despite the conclusion such responses would seem to compel, the jury answered questions 3 and 6 in the negative. Although it was the government that originally prepared the questions, prior to their submission, it attempted to withdraw questions 3 and 6. Although the court submitted the questions over the government's objections, it specifically reserved for argument whether those questions, if answered negatively, were binding on the court. The district court subsequently decided that they were not. The court refused to follow the jury's recommendation and ordered forfeiture of Kravitz's stock and position in AHP.

II.

Appellant raises three arguments on appeal on the forfeiture issue: (1) even if the forfeiture of property held in violation of RICO is mandatory, it was for the jury to decide the extent of the property used to conduct racketeering; (2) having had questions 3 & 6 submitted to the jury, appellant acquired a sixth amendment right to trial by jury on those issues; and (3) forfeiture was in violation of the eighth amendment's ban against disproportionate sentencing.

A.

A primary question presented by this appeal is whether forfeiture under section 1963 is mandatory upon a finding that the appellant's property was used to promote racketeering. We conclude, as have all other courts to decide the question, that forfeiture is mandatory. See United States v. Hess, 691 F.2d 188, 190 (4th Cir.1982); United States v. Godoy, 678 F.2d 84, 88 (9th Cir.1982), cert. denied, --- U.S. ----, 104 S.Ct. 390, 78 L.Ed.2d 334 (1983); United States v. L'Hoste, 609 F.2d 796, 809-11 (5th Cir.), cert. denied, 449 U.S. 833, 101 S.Ct. 104, 66 L.Ed.2d 39 (1980).

Several factors compel that conclusion. The first is the plain meaning of the language employed in section 1963(a), stating that "[w]hoever violates any provision of section 1962 ... shall forfeit to the United States" the illegally used interests. As the Fifth Circuit pointed out in L'Hoste, although there are occasions where "shall" has been interpreted to vest discretionary, rather than mandatory, authority to act, the wording of the statute is the most persuasive evidence of Congressional intent. L'Hoste, supra, 609 F.2d at 810. Nor does the legislative history ever discuss forfeiture in discretionary terms, see, e.g., H.R.Rep. No. 91-1549, 91st Cong., 2d Sess. 57, reprinted in 1970 U.S.Code Cong. & Ad.News 4007, 4033; S.Rep. No. 91-617, 91st Cong., 1st Sess. 160 (1969). The wording of the remaining penalties established under section 1963(a) also supports a mandatory interpretation of forfeiture: section 1963(a) states that a defendant "shall be fined not more than $25,000 or imprisoned not more than twenty years, or both " (emphasis added). Thus, where Congress intended for the penalty to be optional, as in the choice between fine or imprisonment, they specified that there was such a choice. The section's wording provides no choice regarding the imposition of forfeiture.

Moreover, a literal reading of section 1963(a) is consistent with RICO purposes. The criminal forfeiture provision was viewed as an innovative means of addressing the spread of organized crime that has infiltrated so many aspects of American society. Of foremost concern during Congressional hearings on RICO was the weakness of current efforts at curtailing the spread of organized crime to legitimate business endeavors. For instance, the Senate Judiciary Committee's report quoted the Attorney General's testimony that:

While the prosecutions of organized crime leaders can seriously curtail the operations of the Cosa Nostra, as long as the flow of money continues, such prosecutions will only result in a compulsory retirement and promotion system as new people step forward to take the place of those convicted.

S.Rep. No. 91-617, 91st Cong. 1st Sess. 78 (1969). The report stated that forfeiture as a penalty for the criminal offense--although disfavored throughout American history, id. at 79--was an innovative approach which could provide the linchpin in the renewed effort against organized crime:

Title IX recognizes that present efforts to dislodge the forces of organized crime from legitimate fields of endeavor have proven unsuccessful. To remedy this failure, the proposed statute adopts the most direct route open to accomplish the desired objective. Where an organization is acquired or run by defined racketeering methods, then the persons involved can be legally separated from the organization, either by the criminal law approach of fine, imprisonment and forfeiture, or through a civil law approach of equitable relief broad enough to do all that is necessary to free the channels of commerce from all illicit activity.

Id.

In light of RICO's central goal of inhibiting organized crime's infiltration of legitimate business, it is certainly not likely that forfeiture was viewed by its drafters as an optional penalty. At the least, a mandatory interpretation of section 1963(a)'s forfeiture would promote, rather than discourage, RICO's intended purpose. Indeed, it is consistent with RICO's own construction clause, Pub.L. No. 91-452, Sec. 904(a), 84 Stat. 922, 947 (1970), which states that the statute "shall be liberally construed to effectuate its remedial purposes."

When Congress has opted to provide for discretionary forfeiture, it has done so expressly. Thus, under the Internal Revenue Laws there is district court discretion to remit or mitigate the forfeiture. 18 U.S.C. Sec. 3617 (1982). The Organized Crime Control Act itself elsewhere contains a permissive, rather than mandatory, forfeiture provision. In establishing penalties for illegal gambling, Congress provided that "[a]ny property ... used in violation of the provisions of this section may be seized and forfeited to the United States." 18 U.S.C. Sec. 1955(d) (1982).

Finally, we note that where Congress did provide for the remission or mitigation of the forfeiture order, it vested that decision-making authority with the Attorney General, not the federal courts. Section 1963(c) explicitly incorporates "[a]ll provisions of law relating to the ... remission or mitigation of forfeitures for violation of the customs laws ..."; it also imposes upon the Attorney General "[s]uch duties as are imposed upon the collector of customs ... with respect to the disposition of property ...." Under the customs laws, it is the Attorney General who has the authority to grant remission or mitigation. See, e.g., United States v. One 1970 Buick Riviera, Ser. 494870H910774, 463 F.2d 1168, 1170 (5th Cir.), cert. denied, 409...