U.S. v. Shifman

• Decision Date: 02 June 1997
• Docket Number: No. 96-2286,96-2286
• Citation: 124 F.3d 31
• Parties: UNITED STATES, Appellee, v. Stanton D. SHIFMAN, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 31

124 F.3d 31

UNITED STATES, Appellee, v. Stanton D. SHIFMAN, Defendant, Appellant.

No. 96-2286.

United States Court of Appeals First Circuit.

Heard June 2, 1997.

Decided Aug. 19, 1997.

Paul G. Holian, Boston, MA, for appellant.

Donald C. Lockhart, Trial Attorney, Boston, MA, with whom Donald K. Stern, United States Attorney, were on brief for appellee.

Before TORRUELLA, Chief Judge, CAMPBELL, Senior Circuit Judge, and BOUDIN, Circuit Judge.

LEVIN H. CAMPBELL, Senior Circuit Judge.

Stanton Shifman challenges his convictions on charges arising out of an illegal loan-sharking operation run by Joseph A Yerardi, Jr. He argues, inter alia, that there was insufficient evidence to support the convictions.

I.

Stanton Shifman and nine others were indicted on October 14, 1993 for multiple offenses based on their involvement in an illegal gambling and loan-sharking operation. Shifman, whose activities pertained only to the loan-sharking side of the operation, was charged with violation of, and conspiracy to violate, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1962(c) & (d). He was also charged with four counts of aiding and abetting the making of extortionate extensions of credit, 18 U.S.C § 892(a), and a single count of aiding and abetting the collection of an extension of credit by extortionate means, 18 U.S.C § 894(a).

Shifman was tried separately from the others. The government's evidence consisted primarily of the testimony of the alleged victims of the loan-sharking activities, seized records of loans, and admissions made by Shifman to law enforcement officials. We recite the facts in the light most favorable to the verdicts being appealed. United States v. Valerio, 48 F.3d 58, 63 (1st Cir.1995).

Joseph Yerardi operated a large-scale gambling and loan-sharking enterprise that made loans to borrowers at weekly interest rates of from 3 percent to 5 percent. These rates translate into annual interest rates of from 153 percent to 260 percent. The maximum legal annual rate allowed in Massachusetts is 20 percent. Mass. Gen. Laws. ch. 271, § 49.

Shifman first came into contact with Yerardi when he needed the loan shark's services because of his own mounting debts. Shifman subsequently borrowed from Yerardi numerous times and on each occasion made interest payments of 3 percent or 4 percent a week. At times, Shifman fell behind in his weekly payments and was threatened with physical injury by a Yerardi employee, Jack Murphy, also known as Jack Kelley. At some point, Yerardi encouraged Shifman to refer anyone he knew in need of money to Yerardi. In return for these referrals, which totaled approximately ten over a twelve to sixteen month period, Shifman received either fees from the borrowers or "points"--a reduction in the interest rate on his loan--from Yerardi. Lieutenant-Detective William McDermott testified that Shifman admitted to him that Yerardi would reduce his debt after he referred a customer who proceeded to take out a loan from Yerardi.

Much of the testimony came from the borrowers, Mark LaChance, Gerald Moore, Craig Inge, Randall Gasbarro, and Paul Mahoney, whose loans were all documented by entries in the records seized from Yerardi.

LaChance testified that he approached Shifman, who he knew to be in the mortgage business, for legitimate financing on his construction equipment. Shifman told him the financing would come through without a problem. After weeks of waiting, LaChance, desperately in need of money, approached Shifman for help in obtaining a short-term loan. Shifman referred LaChance to Yerardi, clearly conveying that Yerardi was a loan shark. The legitimate financing Shifman was allegedly procuring for LaChance never materialized.

Gerald Moore testified that he too was introduced to Yerardi by Shifman. He also testified that he was paying 4 percent interest a week on the money he borrowed from Yerardi, and that he knew that he could be physically hurt if he didn't repay the money. Moore gave a portion of the proceeds of his loan from Yerardi to Shifman. At one point, when Moore was behind in his payments, Jack Murphy and two other men visited Moore on Yerardi's behalf and attempted to break Moore's hand.

Craig Inge testified that he went to Shifman with the hope of obtaining legitimate financing for his video business. When the financing failed to materialize, Shifman referred Inge to Yerardi. Shifman represented that the loan with Yerardi would serve only to meet Inge's needs until the legitimate financing came through. Again, the legitimate financing never materialized. Inge paid Shifman $1,000 from the money he borrowed from Yerardi for what Shifman described as a fee for his services.

Randall Gasbarro and Paul Mahoney both testified that Shifman referred them to Yerardi. They both understood, from Shifman's description, that Yerardi was a loan shark. Both men testified that they were paying 3 percent interest a week on the money they borrowed from Yerardi. Mahoney testified that he gave a portion of the money he borrowed from Yerardi to Shifman.

Another witness, Paul Terranova, testified that he approached Shifman for a second mortgage on his home. When the mortgage didn't come through, Shifman referred Terranova to Yerardi suggesting that the loan would be a short-term loan to tide him over until the mortgage came through. He also testified that he paid Shifman approximately $2,500, and that the mortgage never came through, causing him to remain indebted to Yerardi.

Shifman himself testified that he gave numerous people Yerardi's telephone number, and that these people would not have known about Yerardi, nor would they have taken out extortionate loans from Yerardi, had he not referred them. Shifman testified to knowing Yerardi to be a loan shark, and that people could be physically injured if they did not repay the loans from Yerardi.

The jury found Shifman guilty of both violating RICO and conspiring to violate RICO. The jury also found Shifman guilty on all four counts of aiding and abetting the making of extortionate extensions of credit. The jury acquitted Shifman on the charge that he had aided and abetted the collection of an extension of credit by extortionate means. Shifman was sentenced to 51 months imprisonment. This appeal followed.

II.

A. Sufficiency of the Evidence

Shifman contends that the evidence was insufficient as a matter of law to support his convictions. "In reviewing sufficiency claims, we consider the evidence 'in the light most favorable to the prosecution' and then ask whether the evidence 'would allow a rational jury to determine beyond a reasonable doubt that the defendant[ ] w[as] guilty as charged.' " United States v. Hurley, 63 F.3d 1, 11 (1st Cir.1995)(quoting United States v. Mena-Robles, 4 F.3d 1026, 1031 (1st Cir.1993)), cert. denied, --- U.S. ----, 116 S.Ct. 1322, 134 L.Ed.2d 474 (1996).

1. The RICO Counts

For a defendant to be found guilty of a substantive RICO violation, the government must prove beyond a reasonable doubt that (1) the "enterprise affect[ed] interstate or foreign commerce, (2) that the defendant under consideration associated with the enterprise, (3) that [the] defendant participated in the conduct of the enterprise's affairs, and (4) that [the] defendant's participation was through a pattern of racketeering activity." Aetna Cas. Sur. Co. v. P & B Autobody, 43 F.3d 1546, 1558 (1st Cir.1994). ¹

For a defendant to be found guilty of conspiring to violate RICO, the government must prove "(1) the existence of an enterprise affecting interstate commerce, (2) that the defendant knowingly joined the conspiracy to participate in the conduct of the affairs of the enterprise, (3) that the defendant participated in the conduct of the affairs of the enterprise, and (4) that the defendant did so through a pattern of racketeering activity by agreeing to commit, or in fact committing, two or more predicate offenses." Id. at 1561.

Hence liability for a substantive RICO violation under § 1962(c) and liability for a RICO conspiracy violation under § 1062(d) rest on very similar elements. There are, however, two notable differences. As stated in Aetna:

The major difference between a violation of § 1962(c) itself ... and a violation of § 1962(d) based on § 1962(c) ... is the additional required element that the defendant knowingly joined a conspiracy to violate § 1962(c). Another difference is that, to prove that a defendant violated § 1962(c), it is necessary for the plaintiff to prove two predicate offenses; under § 1962(d), in contrast, this is not an element required to be proved. To prove a violation of § 1962(d), it is enough to prove that a defendant agreed with one or more others that two predicate offenses be committed.

Id. at 1562.

a. The Substantive RICO Violation

i. Affecting Interstate Commerce

Shifman does not challenge the adequacy of the proof that Yerardi's loan-sharking enterprise affected interstate commerce.

ii. Association with the Enterprise

The second element of the substantive RICO violation is "that the defendant under consideration associated with the enterprise." Id. at 1558. The jury could reasonably have found from the evidence presented that Shifman deliberately associated himself with Yerardi's enterprise. Not only did Shifman himself borrow from Yerardi, he referred borrowers to Yerardi with the goal of obtaining either a reduction in the interest rate on his own debt to Yerardi, or a cash fee from the borrower. Infra.

iii. Participation in the Conduct

The third element of the substantive RICO violation under § 1962(c) requires that the defendant have participated in the conduct of the enterprise's affairs. The Supreme Court has interpreted the phrase "to participate in the conduct of the enterprise's affairs" to mean participation in the operation or management of the criminal enterprise. See Reves v. Ernst & Young, 507 U.S. 170, 185, 113 S.Ct. 1163,...