U.S. v. Phillips

• Decision Date: 11 May 1978
• Docket Number: Nos. 77-1283,77-1428,s. 77-1283
• Citation: 577 F.2d 495
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Morris PHILLIPS and James Beasley, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 495

577 F.2d 495

UNITED STATES of America, Plaintiff-Appellee, v. Morris PHILLIPS and James Beasley, Defendants-Appellants.

Nos. 77-1283, 77-1428.

United States Court of Appeals, Ninth Circuit.

May 11, 1978.

Rehearing Denied June 8, 1978.

Jerrold M. Ladar, of San Francisco, Cal., for defendants-appellants.

Edmund D. Lyons, Sp. Atty., Dept. of Justice, San Francisco, Cal., for plaintiff-appellee.

Appeal from the United States District Court, Northern District of California.

Before CARTER and TRASK, Circuit Judges, and BURNS, ^* District Judge.

JAMES M. CARTER, Circuit Judge:

This is a joint appeal by Morris Phillips and James Beasley, who were convicted of conspiracy to commit extortion, in violation of the Hobbs Act (18 U.S.C. § 1951) (Count I), and of attempting to commit extortion, also in violation of the Hobbs Act (Count II). Phillips was sentenced to concurrent three-year terms and fined $10,000.00. Beasley was sentenced to concurrent five-year terms.

ISSUES

Appellants raise on appeal the following issues:

(1) Both appellants question whether their conduct falls within the ambit of the Hobbs Act;

Phillips contends:

(2) That the indictment improperly alleged the same offense in each count;

(3) That the district court abused its discretion in not requiring the tapes to be played in full;

(4) That the transcripts of the tapes were inaccurate and were not admissible;

(5) That the district court erred in permitting the introduction of a co-conspirator's statements before proof of Phillips' participation in the conspiracy (6) That there was a fatal variance between his indictment and the proof adduced at trial;

Beasley contends:

(7) That the district court erred in failing to order production under the Jencks Act of certain tax returns;

(8) Both appellants contend that the jury instructions were improper.

FACTS

In 1970, Chester Smith, owner of Chet Smith Trucking, subcontracted with a private contractor, CEME Development Corporation, to perform various earthmoving services in the San Francisco Hunter's Point area. CEME was principal contractor for the San Francisco Redevelopment Agency ("RDA"), a governmental body responsible for urban redevelopment in the City and County of San Francisco. Smith completed his work in 1972 but could not obtain payment in full from CEME. Attempts to obtain payment were unsuccessful and in February 1973, Smith filed a claim with the RDA for $434,000.00, the amount owed to him. The claim stagnated and in October 1973, Smith filed suit against the RDA and CEME for $1.1 million in damages.

The events which followed unfold the extortion conspiracy. ¹ Smith had several meetings with Beasley, who served as Chairman of the Citizens Committee of the Model Cities Program and was known as an influential member of the Hunter's Point community. Smith also met with Phillips, who, as Area Director of the RDA for Hunter's Point, was responsible for the operation of the project. Phillips had direct access to and influence with the five-person RDA Board, the approval of which was required for payment of Smith's claim. These meetings and communications will be summarized in chronological order for clarity.

August 5, 1975

Smith met with Phillips at a San Francisco restaurant. Smith sought to influence Phillips to urge a quick settlement of his claim. Phillips told Smith he thought it was "criminal" that the RDA had refused to settle the claim. Smith informed Phillips that an RDA Board member, Joe Mosley, had attempted to solicit a $30,000.00 kickback from Smith in return for settlement of his claim. Phillips said that was a matter between Mosley and Smith.

October 1975

Another meeting took place between Smith and Phillips in which Phillips described a meeting he had with another RDA Board member, Jim Silva. Phillips assured Smith "he could handle it" and promised to talk to Silva again.

January 1976

Smith met with Phillips for lunch at a San Francisco restaurant. This meeting (and most subsequent meetings) was taped by Smith with a miniature body recorder furnished to him by the FBI. These tapes were admitted into evidence. During the meeting, Phillips told Smith that his claim would probably be settled soon and again showed his disinterest in the alleged kickback attempt of Mosley.

January 26, 1976

Beasley came unannounced to Smith's place of business in San Francisco. Beasley said he had been sent by others to see how much it would be worth to Smith to have his claim settled. Smith said it would be worth a great deal, and Beasley said he would be in touch.

March 17, 1976

Beasley again came to Smith's offices. In a taped conversation, Beasley told Smith he was acting on behalf of Mosley, Silva, and Phillips as go-between explaining that because of his criminal record he could not be embarrassed by disclosure. He said settlement would cost $67,000.00, but encouraged a counter-offer from Smith.

April 19, 1976

During a taped conversation at Smith's office, Beasley told Smith he was going to meet Phillips to discuss the deal. Smith offered $5,000.00 down and $30,000.00 upon payment of his claim, and Beasley said he would check with Phillips about whether this offer was acceptable.

April 26, 1976

Beasley met Smith at his office and for some still unexplained reason, offered to put up the initial $5,000.00 expected from Smith as a downpayment. Smith agreed.

April-June 1976

Smith met with Beasley several times. Beasley suggested asking CEME to pay the kickback, but Smith rejected the idea as unrealistic. Beasley instructed Smith to pay $395.00 to a third party. This amount was to be deducted from the ultimate payoff.

June 21, 1976

Smith taped a telephone conversation with Phillips. Phillips stated that Smith's claim would be settled in the near future because three of the five RDA Board members were leaving office soon and "they don't have nothing to concern themselves about." Phillips alluded to the fact that Smith should just follow directions. He told Smith he preferred not to talk to him over the telephone but within a week he could give Smith "an omen" or "a message."

June 29, 1976

Beasley called Smith and demanded on behalf of Phillips and Commissioners Mosley, Silva and Jensen $5,000.00 in addition to that which Beasley allegedly already had paid on Smith's behalf. Later that day Phillips called Smith (indicating he wished he were calling from a pay telephone when talking to Smith) and said he understood Smith's "dilemma" and that "you're getting valid information; just do what you can about (it) and at least know where its coming from. . . ." Phillips further explained that "We got to use whatever conduit we can, irrespective of what you might think about the quality of 'em . . . ."

July 2, 1976

Beasley called Smith and again demanded the $5,000.00. He said he was serving as bagman because he had no direct connection with the RDA. He told Smith that it was worth paying the money in lieu of longer delay or possibly never receiving payment on his claim.

July 7, 1976

Beasley visited Smith and repeated his demand for the money. Beasley called Phillips' office while with Smith and asked Phillips' secretary to ask Phillips to "reassure Mr. Smith for me please." Later Smith called Phillips, who told him:

(a) "The thing you're dealing with on the 13th or the 20th looks like the magic day . . . ."

(b) "Well, I'm pretty much aware of everything that's being said to you on this. . . . I understand exactly how that's going. It doesn't present me with any problem. . . ."

(c) "I just said nobody will leave you hanging out."

Phillips agreed to meet Smith for lunch the following day.

July 8, 1976

Beasley called Smith in the morning and told him to tell Phillips at lunch where the payoff was to take place. Smith did not tell Beasley where he was meeting Phillips for lunch. Despite this fact, Beasley was at the restaurant when Smith arrived and said "the man" would arrive shortly. Beasley left Smith and took a seat at the bar.

Phillips arrived and assured Smith that he was "guaranteeing the whole thing." Beasley, Phillips said, was acting only as a "messenger and a conduit." Smith offered the $5,000.00 directly to Phillips, but Phillips insisted it be given to Beasley for safety's sake. After that, Phillips said, he was going to "spend a couple of bucks for the conduit and pass it on." Smith then suggested a location for the payoff and Phillips agreed.

Smith met Beasley at the appointed time and place that afternoon. (Smith had not told Beasley about the meeting.) Smith gave the $5,000.00 to Beasley, who was immediately arrested. Phillips was arrested shortly thereafter.

Appellants were indicted by a special federal grand jury on two counts of violating the Hobbs Act, 18 U.S.C. § 1951. The indictment charged the two with participation in a scheme to extort $40,000.00 from Smith "by fear of economic loss and under color of official right." Appellants were tried separately and found guilty on both counts.

(1) THE HOBBS ACT

The appellants' contention that their conduct is not within the scope of the Hobbs Act is without merit.

These cases were argued on August 8, 1977. At that time United States v. Culbert, 548 F.2d 1355 (9 Cir. 1977) had recently been decided, holding that " 'although an activity may be within the literal language of the Hobbs Act, it must constitute "racketeering" to be within the perimeters of the Act,' " p. 1357, quoting United States v. Yokley, 542 F.2d 300, 304 (6 Cir. 1976). Following argument the present cases were submitted for decision. In October 1977 the Supreme Court granted certiorari in Culbert and on November 2, 1977, the panel vacated the submission of the present cases until the Supreme Court decided Culbert, at which time the cases would be automatically resubmitted.

On March 28, 1978, the Supreme Court reversed in United States v. Culbert, --- U.S. ----, 98 S.Ct. 1112, 55 L.Ed.2d 349 (1978), concluding that ". . . Congress...