U.S. v. Norton

Decision Date16 March 1989
Docket NumberNos. 87-5425,87-5648,s. 87-5425
Citation867 F.2d 1354
Parties27 Fed. R. Evid. Serv. 1339 UNITED STATES of America, Plaintiff-Appellee, v. James NORTON, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Paul FOSCO, James Pinckard, Paul A. Di Franco, James Norton, Defendants- Appellants.
CourtU.S. Court of Appeals — Eleventh Circuit

Thomas D. Decker, Decker & Associates, Ltd., Thomas A. Foran, Foran, Wiss & Schultz, Chicago, Ill., for defendants-appellants.

Dexter W. Lehtinen, U.S. Atty., John M. Owens, Sp. Atty., U.S. Dept. of Justice, Miami Strike Force, Bill Healy, Miami, Fla., Frank J. Marine, U.S. Dept. of Justice, Washington, D.C., for plaintiff-appellee.

Samuel J. Betar, Altheimer & Gray, Phillip J. Zisook, Chicago, Ill, for Paul Fosco.

Arnold Kanter, Altheimer & Gray, Dennis P. Birke, Chicago, Ill., for James Pinkard.

Thomas A. Foran, Foran, Wise & Schultz, Jack J. Carriglio, Chicago, Ill., for Paul DiFranco.

Thomas D. Decker, Chicago, Ill., for James Norton.

Appeals from the United States District Court for the Southern District of Florida.

Before RONEY, Chief Judge, HATCHETT, Circuit Judge, and HENDERSON, Senior Circuit Judge.

HENDERSON, Senior Circuit Judge:

Paul Fosco, Paul Di Franco, James Norton and James Pinckard were convicted in the United States District Court for the Southern District of Florida of conspiring to participate in racketeering activity involving the unlawful payment and receipt of money from employee welfare benefit plans in violation of 18 U.S.C. Secs. 1954 and 1962(d). The charged enterprise consisted of a building and construction workers' union ("the Laborers' Union"), its affiliated local unions in Miami and Chicago, and various employee benefit plans including the "Chicago Trust Fund" and the "Southeast Florida Trust Fund."

The kickback scheme originated in 1970 when the Chicago Trust Fund announced its intention to institute a dental care plan for union members. A corporation, Consultants & Administrators, Inc. ("C & A"), was formed to provide these services. Codefendants Angelo Fosco, who was the father of Paul Fosco, and James Caporale exerted their influence as union representatives to insure that C & A obtained the contract in exchange for payments made to them through the corporation. James Norton was president of C & A, while Paul Di Franco, a dentist, and Paul Fosco, who purportedly handled sales and public relations, were named the corporation's vice presidents. The kickbacks were generated by inflating the appellants' salaries. The excess cash would then be returned to Daniel Milano, Sr., another C & A owner, who in turn paid the money to Angelo Fosco and Caporale.

In 1972 the operation expanded into Florida when C & A submitted its bid for a similar dental services contract for the benefit of Florida Laborers' Union members through a corporation called Dental Vision Care Centers ("DVCC"). Again, it was awarded the contract in exchange for agreeing to pay the Florida union and Trust Fund representatives a percentage of the premiums paid by the benefit fund under the contract. Pursuant to its agreement, DVCC made regular payoffs from 1973 to 1977 to a number of conspirator-controlled companies.

James Pinckard entered the picture in 1974 when the Chicago dental services contract was amended to include vision services and dental services for union members' dependents. Codefendant Alfred Pilotto, a Chicago Trust Fund representative, ensured that C & A would receive this lucrative "family contract" in return for a kickback consisting of 10% of C & A's increased premiums. Payments were to be funneled through a corporate arrangement similar to that employed in the Florida operation. Pilotto's son-in-law, Pinckard, acted as a conduit for the illegal payments through a corporation, Pinckard & Associates ("P & A"), ostensibly created to verify patients' eligibility for coverage under the contract.

Following a federal investigation of suspected labor racketeering activities involving these corporations, federal agents obtained search warrants authorizing the search of both C & A's and P & A's administrative offices. Shortly after their indictment, the appellants filed a motion to suppress all materials seized during the search. The district court ordered the corporate records suppressed because it found that the warrants were "unconstitutionally general." The government then filed an interlocutory appeal. This court vacated and remanded to the district court to determine whether the facts supported the application of the "good faith" exception to the exclusionary rule. See United States v. Accardo, 749 F.2d 1477 (11th Cir.), cert. denied sub nom. Pinckard v. United States, 474 U.S. 949, 106 S.Ct. 314, 88 L.Ed.2d 295 (1985). After an evidentiary hearing, the district court denied the appellants' motion to suppress on the grounds that the law enforcement agents reasonably relied in good faith on the warrants. The appellants eventually were convicted by a jury on April 27, 1987. 1

Norton urges reversal of his conviction and dismissal of the indictment on the grounds that the government failed to present sufficient evidence before the grand jury to support the indictment. This argument is foreclosed, however, by the decision in Costello v. United States, 350 U.S. 359, 76 S.Ct. 406, 100 L.Ed. 397 (1956), in which the United States Supreme Court held that inadequate or incompetent evidence before a grand jury could not be a basis for challenging an indictment where the indictment resulted in an otherwise valid conviction. 350 U.S. at 363-64, 76 S.Ct. at 409, 100 L.Ed. at 402-03. This court consistently has followed the Costello rule to preclude appellate review of sufficiency of the evidence before the grand jury. See, e.g., United States v. DiBernardo, 775 F.2d 1470, 1478 (11th Cir.1985), cert. denied, 476 U.S. 1105, 106 S.Ct. 1948, 90 L.Ed.2d 357 (1986); United States v. Cruz, 478 F.2d 408, 412 (5th Cir.), cert. denied sub nom. Aleman v. United States, 414 U.S. 910, 94 S.Ct. 259, 38 L.Ed.2d 148 (1973); Cohen v. United States, 436 F.2d 586, 587 (5th Cir.), cert. denied, 403 U.S. 908, 91 S.Ct. 2215, 29 L.Ed.2d 684 (1971). We therefore decline to review it here.

The appellants also challenge the sufficiency of the evidence on two other grounds. First, Pinckard contends that the government's case against him failed because he was not a member of any of the four classes of persons subject to the statute. 2 Contrary to this assertion, Pinckard's involvement fell within the fourth classification contained in the statute, which includes any "person who, or an officer, counsel, agent or employee of an organization which provides benefit plan services" to an employee pension benefit plan. 18 U.S.C. Sec. 1954(4). The statute does not require direct employment by the benefit plan. See United States v. Russo, 442 F.2d 498, 502 (2d Cir.1971), cert. denied, 404 U.S. 1023, 92 S.Ct. 669, 30 L.Ed.2d 673 (1972). Pinckard provided such services to the plan through C & A, which contracted directly with the Chicago Trust Fund. Since P & A was created primarily to serve as a channel for kickbacks to Alfred Pilotto, who had obtained the contract for C & A, we find his connection to C & A sufficient to sustain his guilt for an offense under Section 1954. That Pinckard "knowingly joined the group which agreed to make " payments to Pilotto, a benefit fund trustee, is more than sufficient to uphold his conviction. See United States v. Provenzano, 615 F.2d 37, 44 (2d Cir.) (emphasis in original), cert. denied, 446 U.S. 953, 100 S.Ct. 2921, 64 L.Ed.2d 810 (1980).

Moreover, 18 U.S.C. Sec. 1954 also includes "any person who directly or indirectly gives or offers, or promises to give or offer, any fee, kickback, commission, gift, loan, money or thing of value prohibited by this section." (emphasis supplied). Given the ample evidence that Pinckard was not only aware of the others' participation in the scheme, but also that he agreed to forward the payments to Pilotto, his conviction under Section 1954 is supported on either of these grounds.

Pinckard was not charged with a Section 1954 violation but with conspiracy to conduct the affairs of an enterprise through a pattern of "racketeering activity" in violation of 18 U.S.C. Sec. 1962(d). Even if he could not be found guilty as a principal under Section 1954, "[t]he government need only prove that [the] defendant conspired to commit the substantive RICO offense and was aware that others had done likewise" in order to support a RICO conspiracy charge. United States v. Pepe, 747 F.2d 632, 660 (11th Cir.1984). Thus, Pinckard's related argument that the indictment must fail because it did not allege that he was a member of the class of persons amenable to section 1954 is without merit.

18 U.S.C. Secs. 1962(c) and (d) make it a crime to conspire to participate in the affairs of "any enterprise engaged in, or the activities of which affect, interstate or foreign commerce ... through a pattern of racketeering activity." The appellants' second attack on the sufficiency of the evidence centers around the government's alleged failure to establish the requisite nexus between the enterprise and interstate commerce.

The charged enterprise was the Laborers' Union, its subordinate local unions, and its affiliated employee benefit plans. It is well established that the enterprise, and not the individual charged with violating the statute, must engage in or affect interstate commerce. See, e.g., United States v. Qaoud, 777 F.2d 1105, 1116 (6th Cir.1985), cert. denied sub nom. Callanan v. United States, 475 U.S. 1098, 106 S.Ct. 1499, 89 L.Ed.2d 899 (1986); United States v. Conn, 769 F.2d 420, 423-24 (7th Cir.1985); United States v. Dickens, 695 F.2d 765, 781 (3d Cir.1982), cert. denied, 460 U.S. 1092, 103 S.Ct. 1792, 76 L.Ed.2d 359 (1983); United States v. Groff, 643 F.2d 396, 400 (6th Cir.), cert. denied sub nom. Turbyfill v....

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