U.S. v. Marubeni America Corp., No. 79-1327

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Writing for the CourtBefore WRIGHT and WALLACE, Circuit Judges, and HOFFMAN; EUGENE A. WRIGHT
Citation611 F.2d 763
PartiesUNITED STATES of America, Plaintiff-Appellant, v. MARUBENI AMERICA CORPORATION and Hitachi Cable, Ltd., Defendants-Appellees.
Docket NumberNo. 79-1327
Decision Date10 January 1980

Page 763

611 F.2d 763
61 A.L.R.Fed. 867
UNITED STATES of America, Plaintiff-Appellant,
v.
MARUBENI AMERICA CORPORATION and Hitachi Cable, Ltd.,
Defendants-Appellees.
No. 79-1327.
United States Court of Appeals,
Ninth Circuit.
Jan. 10, 1980.

Dean B. Allison, Asst. U. S. Atty., Los Angeles, Cal., for plaintiff-appellant.

Edward M. Medvene, Los Angeles, Cal., for defendants-appellees.

Appeal from the United States District Court for the Central District of California.

Before WRIGHT and WALLACE, Circuit Judges, and HOFFMAN, Senior District Judge. *

EUGENE A. WRIGHT, Circuit Judge.

The substantive issue is whether the criminal forfeiture provided by the Racketeering and Corrupt Organizations Act (RICO) is limited to interests "in an enterprise." The district court held that it is. We affirm.

FACTS

Marubeni America Corporation (Marubeni) and Hitachi Cable, Ltd., (Hitachi) are engaged in the production and sales of electrical cable. Marubeni is incorporated in the United States. Hitachi is a Japanese corporation.

Anchorage Telephone Utility (ATU) is an instrumentality of the Municipality of Anchorage, Alaska. Between the spring of

Page 764

1970 and September 1978, it invited bids on four contracts to supply it with telephone cable.

The government contends that Forrest Ellis, Marubeni's local representative in Alaska, paid bribes to Richard McBride, an ATU official, for confidential bidding information on the four supply contracts. Marubeni and Hitachi allegedly used this information to underbid their competitors. The government asserts that the defendants lowered their bids by offering some types of cable at depressed prices, thereby making their package bids artificially low.

Based on their bids, Marubeni and Hitachi were awarded large parts of three supply contracts. The aggregate price of these awards was over $8.8 million. After each award, Ellis received cash payments, supposedly commissions, which the government contends he shared as bribe money with McBride.

The government finally alleges that McBride used his position to insure that ATU would not order the types of cable Marubeni and Hitachi bid at depressed prices.

The grand jury charged 63 counts of mail fraud, wire fraud, interstate travel to commit bribery, conspiracy to commit these offenses and racketeering.

This appeal concerns count 63, which charges Marubeni, Hitachi and a corporate officer of each with conducting the affairs of an enterprise through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(c). Count 63 demands that Marubeni and Hitachi forfeit to the United States, pursuant to 18 U.S.C. § 1963(a)(1), "any and all sums or amounts paid or payable" to either or both for their performance of the supply contracts.

The trial court read the § 1963(a)(1) forfeiture provision to apply only to interests "in an enterprise" conducted illegally and not to income derived from illegal operation of the enterprise. It consequently dismissed the portion of count 63 demanding forfeiture of contract income.

The proceedings below are suspended at the pre-trial stage while the government takes this appeal. Two questions are presented:

(1) Does this court have jurisdiction to review a trial court's order partially dismissing one count of a criminal indictment; and

(2) Are amounts paid or payable for performance of a contract procured through a pattern of racketeering activity forfeitable interests under RICO.

I.

APPELLATE JURISDICTION

Appellate jurisdiction is founded on 18 U.S.C. § 3731 which provides:

In a criminal case an appeal by the United States shall lie to a court of appeals from a decision, judgment, or order of a district court dismissing an indictment or information as to any one or more counts, except that no appeal shall lie where the double jeopardy clause of the United States Constitution prohibits further prosecution.

Appellees argue the statute does not confer jurisdiction on this court to review an order dismissing part of one count. We disagree.

After reviewing the history of appellate jurisdiction in criminal cases and carefully examining § 3731, the Supreme Court concluded:

(w)hile the language of (§ 3731) is not dispositive, the legislative history makes it clear that Congress intended to remove all statutory barriers to Government appeals and to allow appeals whenever the Constitution would permit.

United States v. Wilson, 420 U.S. 332, 337, 95 S.Ct. 1013, 1019, 43 L.Ed.2d 232 (1975). We find no constitutional impediment to our review.

The Second Circuit, the only other court to face this issue, found jurisdiction. United States v. Alberti, 568 F.2d 617 (2d Cir. 1977). The Alberti court noted that § 3731 refers to dismissal of an indictment "as to one or more counts," not to dismissal "of one or more counts of an indictment." Id.

Page 765

at 621. The court also pointed out that the practical effect of dismissing a "substantial part" of one count could be the same as dismissing the whole count. 1 It concluded that the Congressional directive to construe the statute liberally required resolving any doubt in favor of finding appellate jurisdiction.

We believe Alberti was correctly decided and that § 3731 gives us appellate jurisdiction to review a partial dismissal of one count of an indictment.

II.

RICO FORFEITURE

RICO contains a prohibitory section, § 1962, and a penal section, § 1963(a).

Section 1962 prohibits three types of activities: (1) acquiring an interest in an "enterprise" with income derived from a "pattern of racketeering activity;" 2 acquiring an interest in or control of an "enterprise" directly through a "pattern of racketeering activity;" 3 and conducting or participating in the conduct of an "enterprise" through a "pattern of racketeering activity." 4 Marubeni and Hitachi are charged with the third type of activity.

Section 1963(a) provides as penalties for violations of § 1962 a fine, imprisonment, 5 and forfeiture. Dual forfeiture provisions require the criminal to forfeit to the United States

(1) any interest he has acquired or maintained in violation of section 1962, and (2) any interest in, security of, claim against,

Page 766

or property or contractual right of any kind affording a source of influence over, any enterprise which he has established, operated, controlled, conducted, or participated in the conduct of, in violation of section 1962.

18 U.S.C. § 1963(a).

The government seeks forfeiture of amounts paid or payable to Marubeni and Hitachi under the first provision, § 1963(a)(1). 6 It insists the term "interest" means any form of income or proceeds from a "pattern of racketeering activity." We cannot agree.

THE RULING BELOW

The district court began with the observation that § 1963(a)(1) calls for forfeiture of interests "acquired or maintained in violation of section 1962 . . . ." The court naturally examined § 1962 to discover what sorts of interest were forfeitable:

The term "interest" is used in § 1962 in subsections (a) and (b). In both subsections, the statute refers to an interest In an enterprise: subsection (a) speaks of the "acquisition of any interest in . . . any enterprise . . .;" subsection (b) speaks of the acquisition or maintenance of "any interest in . . . any enterprise . . . ." It follows, therefore, that when the forfeiture provision found in § 1963(a)(1) speaks of "any interest . . . acquired or maintained in violation of section 1962 . . . ," the provision refers to interests in an enterprise.

Order Dismissing in Part, Count 63 of the Indictment, pp. 2-3.

The court found its construction supported by a distinction, implicit in the language of RICO, between "income" and "interest." Section 1962(a) makes certain investments of racketeering "income" illegal. When Congress meant "income," the district court noted, it used that term. 7 The implication was compelling that

the term "interest," as it is used in § 1963(a)(1)'s forfeiture provision, means something other than income derived from a pattern of racketeering activity.

Id. at 3.

The district court concluded:

The forfeiture claim in the Indictment thus fails since it demands the forfeiture of income Marubeni and Hitachi allegedly received through a pattern of racketeering activity and does not demand the forfeiture of any interests possessed by these corporations in any enterprise.

Id. We agree. We believe the district court's position is supported by the statutory language and its legislative history.

SUBSTANTIVE PROVISIONS OF RICO

The government argues that Congress was not so short-sighted as to attempt to stop criminal infiltration into legitimate institutions by attacking only the actual infiltration. It contends Congress must have sought to attack the potential for infiltration by depriving criminals of the ill-gotten gains they use to acquire interests in legitimate enterprises. The government's position is attractive, but does not square with the statute Congress wrote.

THE 1% INVESTMENT EXCEPTION

The government contends that racketeering income is forfeitable because it is an "interest acquired" by conducting an enterprise through a pattern of racketeering activity in violation of § 1962(c). Congress dealt expressly with racketeering income in § 1962(a) and we, like the district court, turn to that section for guidance.

Section 1962(a), after stating the general prohibition against investing "income derived, directly or indirectly, from a pattern of racketeering activity," provides an exception to the rule:

Page 767

A purchase of securities on the open market for purposes of investment, and without the intention of controlling or participating in the control of the issuer, or of assisting another to do so, shall not be unlawful under this subsection if the securities of the issuer held by the purchaser, the members of his immediate family, and his or their accomplices in any pattern of racketeering activity or the collection of an unlawful debt after such...

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47 practice notes
  • U.S. v. Pharis, No. 00-2855.
    • United States
    • U.S. Court of Appeals — Third Circuit
    • July 26, 2002
    ...was appealing his conviction, and thus there was no question of jurisdiction under § 3731; in United States v. Marubeni America Corp., 611 F.2d 763, 764-65 (9th Cir.1980), the court (following a similar decision by the Second Circuit) held that dismissal of a substantial part of a count of ......
  • U.S. v. Levasseur, Nos. 88-1198
    • United States
    • U.S. Court of Appeals — First Circuit
    • May 9, 1988
    ...158 (1985); United States v. Margiotta, 662 F.2d 131, 139-41 (2d Cir.1981) (Margiotta II ); cf. United States v. Marubeni America Corp., 611 F.2d 763, 765 (9th Cir.1980) (appellate jurisdiction exists to review dismissal of portion of RICO count demanding forfeiture of income from RICO ente......
  • U.S. v. Horak, Nos. 86-1473
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • November 5, 1987
    ...dismissal of a portion of a count demanding forfeiture of contract income pursuant to section 1963(a)(1). United States v. Marubeni, 611 F.2d 763, 764-65 (9th Cir.1980). The trial court ruling that was affirmed there, however, was made before trial purely on grounds of legal insufficiency. ......
  • U.S. v. Dior, No. 80-1497
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • March 15, 1982
    ...section 3731 be liberally construed, see United States v. Hetrick, 644 F.2d 752 (9th Cir. 1981); United States v. Marubeni America Corp., 611 F.2d 763 (9th Cir. 1980), we cannot overlook the fact that section 3731 does not enlarge our power to accept an appeal under section 1291. In liberal......
  • Request a trial to view additional results
47 cases
  • U.S. v. Pharis, No. 00-2855.
    • United States
    • U.S. Court of Appeals — Third Circuit
    • July 26, 2002
    ...was appealing his conviction, and thus there was no question of jurisdiction under § 3731; in United States v. Marubeni America Corp., 611 F.2d 763, 764-65 (9th Cir.1980), the court (following a similar decision by the Second Circuit) held that dismissal of a substantial part of a count of ......
  • U.S. v. Levasseur, Nos. 88-1198
    • United States
    • U.S. Court of Appeals — First Circuit
    • May 9, 1988
    ...158 (1985); United States v. Margiotta, 662 F.2d 131, 139-41 (2d Cir.1981) (Margiotta II ); cf. United States v. Marubeni America Corp., 611 F.2d 763, 765 (9th Cir.1980) (appellate jurisdiction exists to review dismissal of portion of RICO count demanding forfeiture of income from RICO ente......
  • U.S. v. Horak, Nos. 86-1473
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • November 5, 1987
    ...dismissal of a portion of a count demanding forfeiture of contract income pursuant to section 1963(a)(1). United States v. Marubeni, 611 F.2d 763, 764-65 (9th Cir.1980). The trial court ruling that was affirmed there, however, was made before trial purely on grounds of legal insufficiency. ......
  • U.S. v. Dior, No. 80-1497
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • March 15, 1982
    ...section 3731 be liberally construed, see United States v. Hetrick, 644 F.2d 752 (9th Cir. 1981); United States v. Marubeni America Corp., 611 F.2d 763 (9th Cir. 1980), we cannot overlook the fact that section 3731 does not enlarge our power to accept an appeal under section 1291. In liberal......
  • Request a trial to view additional results

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