U.S. v. Segal, 02 CR 0112.

• Decision Date: 28 February 2003
• Docket Number: No. 02 CR 0112.,02 CR 0112.
• Citation: 248 F.Supp.2d 786
• Parties: UNITED STATES of America, Plaintiff, v. Michael SEGAL, Defendant.
• Court: U.S. District Court — Northern District of Illinois

248 F.Supp.2d 786

UNITED STATES of America, Plaintiff, v. Michael SEGAL, Defendant.

No. 02 CR 0112.

United States District Court, N.D. Illinois, Eastern Division.

February 28, 2003.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Harvey M. Silets, Gil M. Soffer, Jonathan S. Feld, Katten Muchin Zavis Rosenman, Chicago, IL, Daniel E. Reidy, Thomas P. McNulty, Jones Day, Chicago, IL, for Defendant.

Virginia M. Kendall, U.S. Atty's Office, Chicago, IL, for U.S.

MEMORANDUM OPINION AND ORDER

CASTILLO, District Judge.

The Government's superseding indictment charges Michael Segal with seven counts of mail fraud (Counts One through Seven), one count of wire fraud (Count Eight), a Racketeer Influenced and Corrupt Organizations Act ("RICO") count (Count Nine) as well as seven false statement counts (Counts Ten through Sixteen). Segal presently seeks dismissal of Counts Nine through Sixteen on the grounds that: (1) the RICO count fails to adequately allege a pattern of racketeering activity and an enterprise associated-in-fact; and (2) the false statement counts improperly mix the mens rea of 18 U.S.C. § 1033(a)(1) with actus reus of 18 U.S.C. § 2. For the reasons set forth herein, we deny Segal's motion to dismiss Counts Nine through Sixteen of the superseding indictment. (R. 58-1.)

RELEVANT FACTS

The superseding indictment sets forth the allegations against Segal and is briefly summarized here. The Government alleges that Segal, President and Chief Operating Officer of Near North Insurance Brokerage, Inc. ("NNIB"), an insurance agency and brokerage firm, devised and participated in a scheme to defraud monies (allegedly over $20,000,000) from NNIB's trust account for a variety of improper uses. Segal allegedly carried out the scheme through an enterprise including NNIB, its parent Near North National Group, Inc., as well as related affiliates and subsidiaries. Segal allegedly concealed the illegal activity by filing with the Illinois Department of Insurance a series of yearly applications that included false statements. Presently before the Court is Segal's motion to dismiss Counts Nine through Sixteen of the superseding indictment.

LEGAL STANDARDS

To withstand a motion to dismiss brought pursuant to Federal Rule of Criminal Procedure 12, an indictment must include the essential elements of the crimes alleged therein. United States v. Torres, 191 F.3d 799, 804 (7^th Cir.1999) (noting that an indictment is generally sufficient "when it sets forth the offense in the words of the statute itself, as long as those words expressly set forth all the elements necessary to constitute the offense intended to be punished.") (quotations and citations omitted); United States v. Palumbo Bros., Inc., 145 F.3d 850, 860 (7^th Cir.1998). The indictment must also inform the defendant of the nature of the charges to enable him both to prepare a defense and to guard against double jeopardy. Torres, 191 F.3d at 804 (citations omitted). In construing the indictment, the Court infers facts necessarily implied and employs "common sense." Palumbo Bros., 145 F.3d at 860 (internal quotations and citations omitted). Furthermore, we review the indictment as a whole and refrain from reading it in a "hypertechnical manner." Torres, 191 F.3d at 804 (internal quotations and citation omitted).

ANALYSIS

I. Count Nine (RICO)

Segal is charged under 18 U.S.C. § 1962(c), which requires that the Government allege that Segal engaged in "(1) conduct (2) of an enterprise (3) through a pattern of racketeering activity." Torres, 191 F.3d at 805 (quoting Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985)). At issue in the instant motion is whether the Government failed to adequately allege an enterprise and a pattern of racketeering activity.

A. Enterprise associated-in-fact

The Government alleges an enterprise associated-in-fact, defined by RICO as "any union or group of individuals associated in fact although not a legal entity." 18 U.S.C. § 1961(4). The Supreme Court describes an enterprise as "a group of persons associated together for a common purpose of engaging in a course of conduct." United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981). Furthermore, an enterprise is "an ongoing structure of persons associated through time, joined in purpose, and organized in a manner amenable to hierarchical or consensual decision-making." Torres, 191 F.3d at 805-06 (internal quotations and citations omitted). In addition, the enterprise must have a structure and goals separate from the predicate acts themselves; it must be "more than a group of people who get together to commit a pattern of racketeering activity." See Stachon v. United Consumers Club, Inc., 229 F.3d 673, 675 (7^th Cir.2000) (internal quotations and citations omitted) (dismissing the complaint for failure to plead an enterprise because it did not "offer the slightest sign of a command structure separate and distinct" from the defendant corporation). The structure requirement, however, is not so onerous; "[t]here must be some structure, to distinguish an enterprise from a mere conspiracy, but there need not be much." United States v. Korando, 29 F.3d 1114, 1117 (7^th Cir. 1994) (internal quotations and citations omitted). See also Fitzgerald v. Chrysler Corp., 116 F.3d 225, 228 (7^th Cir.1997) (concluding that an "enterprise" connotes more than a conspiracy but acknowledging "[j]ust how much more is uncertain.").

Guided by this Seventh Circuit case law, we conclude that the Government adequately pleads an enterprise associated-infact with the amount of specificity required under Federal Rule of Criminal Procedure 7. Fed.R.Crim.P. 7. See Torres, 191 F.3d at 804. The Government clearly identifies the entities included in the alleged enterprise: NNNG, NNIB and their related affiliates and subsidiaries (identified in Count One, paragraph 1(c) of the indictment), all of whom conducted insurance and insurance-related business throughout the United States and Europe. (R. 51, Superseding Indictment, Count Nine ¶ 1; Count One ¶ 1.) Tracking the language of a leading United States Supreme Court case, see Turkette, 452 U.S. at 583, 101 S.Ct. 2524, the Government further alleges that the enterprise "constituted an ongoing organization whose members, associates, partners, employees and agents functioned as a continuing unit for a common purpose of achieving the objectives of the enterprise." (R. 51, Superseding Indictment, Count Nine ¶ 1.)

Count Nine, however, goes beyond simply tracking the relevant language and provides sufficient detail, at this stage of the criminal proceedings, regarding: the purposes of the enterprise apart from the predicate acts themselves (¶ 2 ¹), see Stachon, 229 F.3d at 675; the role of Segal as the principal leader, organizer and manager of the enterprise (¶ 3), see Torres, 191 F.3d at 805-06; and the means and methods of the enterprise (114), id. (R. 51, Superseding Indictment, Count Nine ¶¶ 2-4.) We acknowledge that the description of the specific roles of some entities alleged in the enterprise lacks detail, but as noted in one of the cases cited by Segal, this lack of specificity might be addressed in a bill of particulars and does not necessitate dismissal of the indictment. See United States v. Bailey, 689 F.Supp. 1463, 1473 (N.D.Ill.1987). Furthermore, Segal's reliance on Richmond is misplaced because the plaintiffs in that civil RICO case named a string of entities and did not provide any detail regarding the structure, continuity or common course of conduct of the alleged enterprise. Richmond v. Nationwide Cassel, L.P., 52 F.3d 640, 645-46 (7^th Cir.1995).² Altogether, the Court concludes the enterprise is plead with sufficient detail for Segal to understand the charges against him and prepare a defense; we will refrain from reading the indictment in a "hypertechnical manner." Torres, 191 F.3d at 804.

B. Pattern of racketeering activity

RICO defines a "pattern of racketeering activity" as requiring at least two acts of racketeering committed in a ten-year period. 18 U.S.C. § 1961(1). The Supreme Court expanded upon this limited definition in the RICO statute with the continuity plus relationship test; the Government must show that the "racketeering predicates are related, and that they amount to or pose a threat of continuing criminal activity." See H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239, 109 S.Ct. 2893,106 L.Ed.2d 195 (1989); see also Sedima, 473 U.S. at 496 n. 14, 105 S.Ct. 3275. (initially articulating the continuity plus relationship test).

The predicate acts satisfy the relationship test if they have the "same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events." Corley v. Rosewood Care Ctr., Inc. of Peoria, 142 F.3d 1041, 1047 (7^th Cir.1998) (quoting H.J., Inc., 492 U.S. at 240, 109 S.Ct. 2893). The continuity test is met if the acts demonstrate either closedended or open-ended continuity. Id. Closed-ended continuity may be shown by "a series of related predicates extending over a substantial period of time." Id. (quotations and citation omitted). The Court looks to five factors when determining whether closed-ended continuity exists: "the number and variety of predicate acts and the length of time over which they were committed, the number of victims, the presence of separate schemes and the occurrence of distinct injuries." Id. at 1049 (quotations and citation omitted). We examine these factors with an "eye toward achieving a natural and commonsense result." Vicom, Inc. v. Harbridge Merck Servs., Inc., 20 F.3d 771, 780 (7^th Cir.1994) (internal quotations and citations omitted). Furthermore, "[n]either the presence or absence of any of these factors is dispositive." Uniroyal Goodrich Tire Co. v. Mwt. Trading Corp., 63 F.3d 516, 524 (7^th Cir.1995)....