U.S. v. Nace

• Decision Date: 21 September 1977
• Docket Number: Nos. 76-1794,75-3183 and 75-3509,s. 76-1794
• Citation: 561 F.2d 763
• Parties: 2 Fed. R. Evid. Serv. 733 UNITED STATES of America, Appellee, v. Gale NACE and Nathan J. Warren, Sr., Appellants. UNITED STATES of America, Appellee, v. Ned WARREN, Sr., and Gale Nace, Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 763

561 F.2d 763

2 Fed. R. Evid. Serv. 733

UNITED STATES of America, Appellee, v. Gale NACE and Nathan J. Warren, Sr., Appellants.

UNITED STATES of America, Appellee, v. Ned WARREN, Sr., and Gale Nace, Appellants.

Nos. 76-1794, 75-3183 and 75-3509.

United States Court of Appeals Ninth Circuit.

Sept. 21, 1977.

Rehearing and Rehearing En Banc Denied Nov. 8, 1977.

Jordan L. Green, of Debus, Busby & Green Ltd., Phoenix, Ariz., John J. Flynn, of Flynn, Kimerer, Thinnes, Derrick & Lindholm, Phoenix, Ariz., argued for appellants.

Michael B. Scott, Asst. U. S. Atty., Phoenix, Ariz., Kevin F. O'Malley, Sp. Atty., Los Angeles, Cal., argued for appellee.

Appeals from the United States District Court for the District of Arizona.

Before ELY, GOODWIN and ANDERSON, Circuit Judges.

OPINION

GOODWIN, Circuit Judge:

Gale Nace and Nathan Warren, Sr., appeal their convictions under 18 U.S.C. § 894 for using extortionate means to collect an extension of credit. The separate appeals have been consolidated because of the similarity of many of the issues.

This prosecution grew out of alleged threats made by Warren and Nace in their attempt to collect a loan from Edward Dennis Kelly. The record shows that Kelly and Warren were associated in several business ventures. They agreed to acquire and jointly manage several bars through corporate entities. After the bars were acquired, Kelly informed Warren that the operations needed an $8,000 loan. Warren arranged for Kelly to borrow $8,000 from Nace. On August 29, 1973, Nace advanced the funds to Kelly in exchange for a promissory note and a security interest in certain liquor licenses.

Kelly and Warren sold two of the bars. While awaiting the receipts from the sales, Kelly suspended payment on the $8,000 loan. Nace demanded his money and told Kelly that he was not concerned with Kelly's arrangements with Warren. During the second week in October, 1973, Nace approached Kelly and told him that if he did not pay Nace could have an arm broken for $50, two arms broken for $100, two arms and a leg broken for $150, and for $200 he could get the whole package done. Nace also stated that "People who don't pay, don't last long."

Kelly informed Warren of these threats but Warren stated that Kelly should take up the matter with Nace. A few days later, Kelly, accompanied by his bodyguard, met with Warren. As he was leaving Warren's office, Kelly was confronted by Nace, who told him that this was a syndicate now, it wasn't the little league, and Kelly would pay.

A month later, Warren called Kelly and demanded payment on the balance of the $8,000 note. When Kelly did not comply, Warren again called him and said: "If you don't, I would hate to pay the consequences." The following day Kelly received several phone calls from both Warren and Nace.

Kelly then contacted the police and allowed them to record a subsequent meeting he had with Warren and Nace. During that conversation Warren said: "I happen to like you or I would've broken your neck because I've been cheated on the whole deal." When Nace entered, Warren stated: "He just walked in here saying he's not paying you Gale." Nace replied, "I don't care, I have a bad deal, and its bad; I'll guarantee you I'll put you in the hospital for 8 grand, it will cost you that."

In October of 1974, Kelly, accompanied by two friends, again went to Warren's office. Warren confronted them with a tape recorder and Kelly stated on the tape that Warren had never threatened him.

The investigation continued for another year. On November 13, 1974, a three-count indictment was returned against Nace. On June 11, 1975, a superseding indictment was filed against Nace and Warren. After a jury trial, Warren and Nace were convicted on all counts charged.

Appellants argue first for a new trial, claiming that the prosecution violated Fed.R.Evid. 103(c) by introducing prejudicial, nonadmissible evidence in front of the jury. Specifically, appellants accuse the prosecution of improperly asking a question that would plant in the jury's mind the suggestion of a syndicate murder "contract".

References to "syndicate" operations surfaced several times during the trial. The issue first arose at pretrial when appellants made a motion to dismiss the indictment because, they argued, the Extortionate Credit Transactions Act, 18 U.S.C. § 891 et seq., applied only to organized crime and to those seeking to enforce debts which had their origins in illegal activity. Warren and Nace argued that the government's evidence showed only threats between two legitimate businessmen.

While the government always contended that Warren and Nace were involved in organized crime, it had little proof. The prosecution argued at pretrial that 18 U.S.C. § 894 covered any attempt to collect a debt by extortionate means. The trial court reserved its ruling on this motion.

Reference to the "syndicate" next surfaced when Kelly, the victim of the alleged extortion, testified that appellant Nace had told him that "this was a syndicate now and it wasn't little league and I would pay."

During the defense case-in-chief, appellant Warren testified that he had no connections with the so-called syndicate, the Costra Nostra, or Mafia.

His cross examination produced the following:

"Q: Mr. Warren, Mr. Flynn asked you, I believe during your direct examination, if you had any association with the Mafia or the Cosa Nostra or the syndicate and you answered no ?

A: That's correct.

Q: Did you ever tell Dennis Kelly that you had any such connections?

A: No, never.

Q: Have you ever told any one that you placed a contract with any such organization?

A: What do you mean?

Q: Did you ever tell any one that you had placed a $5,000 contract with the people in Detroit or Chicago?

A: I don't know people in Detroit or Chicago.

Q: Did you ever make that statement?

A: No.

Q: Do you know Mr. Richard Frost?

A: Yes, sir.

Q: Did you ever tell Mr. Frost that you lost $5,000 to people in Chicago because

A: No, I don't even know anybody in Chicago, to the best of my knowledge.

Q: The question, sir, is did you ever tell Mr. Frost that you lost $5,000 because you placed a contract with people in Chicago to kill Mr. Frost?

(Defense Counsel): I'm going to object, if the Court please, because it is entirely immaterial and highly prejudicial.

(Prosecutor): Well, if your Honor please,

(Defense counsel): Just a moment, please, if I may have the Court's ruling on that.

THE COURT: Well, the Court is inclined to sustain your objection unless you will avow that you have evidence to that effect.

(Prosecutor): I will go forward, if your Honor please.

THE COURT: You will have someone to testify to that?

(Prosecutor): Yes, your Honor.

(Defense counsel): At this moment, I would request a hearing in the absence of the Jury on this particular matter.

(Prosecutor): Your Honor, I will avow to the Court that I have evidence that will impeach this witness's testimony as to placing the contract and I see no reason to go into any thing out of the presence of the Jury.

THE COURT: Well, I'd better hear your offer of proof. Members of the Jury, you will now take a short recess and bear in mind the Court's admonition given to you before and with respect to matters such as these, you are not to give any weight to any testimony until it may be repeated. In other words, just disregard any question until the Court makes its decision and otherwise advises you. You may now be excused."

The court then heard argument and determined to hear an offer of proof at a later time that day. The jury returned and was again admonished to disregard the question and the avowal unless it received further instructions from the court.

Later that day the court heard the testimony of Richard Frost. Frost stated that Warren had told him that he (Warren) had put out a syndicate contract on Frost. The court excluded this testimony, saying that it would unduly prejudice Nace. (The court did not express its view on the admissibility of the testimony as to Warren.)

At this juncture, counsel for Warren requested that the jury be further admonished; counsel for Nace requested a mistrial. The court did not further admonish the jury that day and the mistrial motion was denied. The next morning, counsel for Warren moved for a mistrial on the grounds that a curative instruction at that time could not erase the error. The court denied the motion for a mistrial but it further cautioned the jury. Once again, in its general instructions to the jury at the close of the trial, the court told the jury to disregard any evidence which had been disallowed by the court.

The case was tried shortly after the effective date of the Federal Rules of Evidence. While the Frost transaction was arguably admissible under Rule 404(b) as to Warren, it was arguably inadmissible under Rule 403 as to Nace. The government can argue that the cautionary instructions, running as they did in favor of both defendants, gave Warren more than he was entitled to, and Nace can argue that the cautionary instructions gave him less, as they merely attempted to "unring a bell" to his real or imaginary prejudice. In the context in which the matter was presented to the court, however, the cautionary instructions were, if not perfect, adequate.

The defense opened this line of questioning on direct examination. Warren's testimony that he had no Mafia connections was an invitation to vigorous cross-examination. Although the prosecutor should have broached the impeachment material outside of the jury's presence as it did other dangerous evidentiary matters, we cannot say that its failure to do so constituted that kind of misconduct which requires reversal.

Unlike many of the cases cited by appellants, the government in this case had evidence to support its allegations. Compare United States v. Rudolph, 403 F.2d 805 (6th Cir. 1968); Thurman v. United States, 316 F.2d 205 (9th Cir. 1963). Furthermore, the defendants made the...