U.S. v. Smalley, 83-7518

• Decision Date: 08 March 1985
• Docket Number: No. 83-7518,83-7518
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Rex Elmo SMALLEY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 944

754 F.2d 944

UNITED STATES of America, Plaintiff-Appellee, v. Rex Elmo SMALLEY, Defendant-Appellant.

No. 83-7518.

United States Court of Appeals Eleventh Circuit.

March 8, 1985.

Rehearing and Rehearing En Banc Denied April 24, 1985.

William J. Baxley, Charles A. Dauphin, Birmingham, Ala., for defendant-appellant.

Frank W. Donaldson, U.S. Atty., Michael V. Rasmussen, Asst. U.S. Atty., Birmingham, Ala., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Alabama.

Before RONEY and ANDERSON, Circuit Judges, and MORGAN, Senior Circuit Judge.

LEWIS R. MORGAN, Senior Circuit Judge:

Rex Elmo Smalley has been sheriff of Marshall County, Alabama, since 1974. The sale of alcoholic beverages is illegal in Marshall County, ¹ but various bootlegging operations have flourished there under the patronage and protection of Sheriff Smalley. During his tenure he has extorted pay-offs from bootleggers ² in the county and failed to report this income to the Internal Revenue Service.

A jury in the United States District Court for the Northern District of Alabama convicted him of four counts of extortion, ³ one count of conspiracy to commit extortion, and three counts of willfully filing false income tax returns. ⁴ The court sentenced him to serve concurrent sentences of three years on each count, to pay $1,000.00 on each tax count, and to pay costs of $1,239.22.

Smalley does not challenge on appeal the sufficiency of the evidence to support the convictions. He does, however, allege defects in the indictment and the trial.

I. THE INDICTMENT

A. Misjoinder of the Extortion and Tax Counts

Smalley first asserts that the joinder of the tax and extortion counts in the same indictment violated Rule 8(a) of the Federal Rules of Criminal Procedure. ⁵ Improper joinder under Rule 8(a) is a matter of law subject to plenary review by this court. United States v. Montes-Cardenas, 746 F.2d 771, 776 (11th Cir.1984). We must construe Rule 8(a) broadly in favor of initial joinder. Id. "Offenses may be joined if they are based on 'two or more acts or transactions connected together or constituting part of a common scheme or plan.' Fed.R.Crim.P. 8(a). Two crimes are 'connected' together if the proof of one crime constitutes a substantial portion of the proof of the other." Id. Smalley contends that the government's proof failed to satisfy this requirement because it failed to show that the income he failed to report on his tax returns came from extortion. Compare United States v. Diaz-Munoz, 632 F.2d 1330, 1335-36 (5th Cir.1980) (joinder of tax and non-tax counts violated Rule 8(a) because government failed to prove that unreported income flowed from the non-tax crime) with United States v. Kopituk, 690 F.2d 1289, 1312-14 (11th Cir.1982) (joinder proper because tax offenses arose out of the other offenses charged), cert. denied, 461 U.S. 928, 103 S.Ct. 2089, 77 L.Ed.2d 300 (1983).

The government's proof at trial consisted of the testimony of bootleggers who had paid large sums to Smalley for protection, Smalley's financial statements, ⁶ and a bank deposits-cash expenditures analysis. ⁷ Smalley bases his misjoinder argument upon the deposits-expenditures analysis, which he contends establishes that very little of the unreported income stemmed from extortion. ⁸ We agree with the government, however, that this analysis sets only the lower limit of Smalley's unreported income. The bootleggers testified that they normally made the pay-offs in cash, but few cash deposits were made into Smalley's bank accounts. Thus, the extortion proceeds probably circumvented the receipts-expenditures analysis. The other direct evidence established that Smalley received considerable amounts by extortion. He does not claim to have reported any of it, and the government established that he did not. Thus, because the proof of extortion constituted a substantial portion of the proof of tax evasion, see Montes-Cardenas, 746 F.2d at 776, the government proved that logical relationship between the tax and extortion counts required for joinder under Rule 8(a). See United States v. Park, 531 F.2d 754, 761 (5th Cir.1976); see also Bonner v. City of Prichard, Alabama, 661 F.2d 1206, 1207 (11th Cir.1981) (en banc) (decisions of the former Fifth Circuit Court of Appeals handed down prior to October 1, 1981 binding precedent in the eleventh circuit).

B. Multiplicity of the Extortion Counts

Count three of the indictment charged Smalley with extorting money and alcoholic beverages from Jerry Wayne Lang from late 1974 to July 1980. During this time, Lang either personally operated his bootlegging business or hired employees to operate it for him. Count four charged Smalley with extorting money from Lang and Larry Abercrombie from July 1980 to February 1982. Abercrombie leased the business from Lang at a flat rate of $500.00 per week and gave Lang the pay-off money for Smalley. Count 20 alleged that Smalley extorted money from Lang, Harry Kearley, and Richard Sams from February 1982 to June 1982. Kearley and Sams, government undercover agents, took over the business from Abercrombie and continued to pay the rent and extortion money to Lang. Each count alleged extortion "by a course of conduct." Smalley insists that these counts allege a single course of conduct against a single victim, Lang, and should therefore have been consolidated.

The government could indeed have proceeded upon a one-count theory. United States v. Provenzano, 334 F.2d 678, 684-85 (3d Cir.), cert. denied, 379 U.S. 947, 85 S.Ct. 440, 13 L.Ed.2d 544 (1964). The law does not require such a tactic, however. United States v. Addonizio, 451 F.2d 49, 59 (3d Cir.1971), cert. denied, 405 U.S. 1048, 92 S.Ct. 1309, 31 L.Ed.2d 591 (1972). An extortion conviction under the Hobbs Act requires proof that (1) the defendant induced his victim to part consensually with property (2) either through the wrongful use of actual or threatened force, violence or fear or under color of official right (3) in such a way as to adversely affect interstate commerce. United States v. Nakaladski, 481 F.2d 289, 298 (5th Cir.), cert. denied, 414 U.S. 1064, 94 S.Ct. 570, 38 L.Ed.2d 469 (1973); 18 U.S.C. Sec. 1951. Each relinquishment of property manifesting all these elements is a separate offense that may be the subject of a separate count. Addonizio, 451 F.2d at 59 (defendant's conviction on sixty-three counts of extortion upheld because all counts, each of which based upon individual payment, showed that each subject payment manifested all the elements of extortion); Fed.R.Crim.P. 8(a). If each individual payment could be the subject of a separate count, then the grouping of payments as in the indictment against Smalley is also permissible.

II. THE TRIAL

A. "Stipulation" by the Trial Judge

The prisoner stipend received by Smalley, see supra note 7, was the subject of considerable testimony at trial. The government called a witness from the State of Alabama Department of Public Accounts, who explained the payment of these funds. The following colloquy occurred on cross-examination of this witness:

Q: Now, what does the law provide--whose money, under the law, legally, is that $1.75 a day, plus the sliding scale of food allowance? Who does that belong to?

A: That is the sheriff's.

Q: Sheriff's, personally?

A: If they have a local law providing such, yes, sir.

Q: All right, sir. Are you familiar with the law in Marshall County, Alabama?

A: Yes, sir.

Q: Well, do you have it with you by chance?

A: Yes, sir, somewhere.

Q: Now, Marshall County, Alabama--

GOVERNMENT ATTORNEY: We will stipulate it is personal income to the sheriff.

DEFENSE ATTORNEY: You will stipulate that all that money belongs to the sheriff?

GOVERNMENT ATTORNEY: Absolutely.

DEFENSE ATTORNEY: All right. Just all the money paid by the state for prisoner meals was personal property of the sheriff.

GOVERNMENT ATTORNEY: And by the county.

DEFENSE ATTORNEY: And paid by the county.

GOVERNMENT ATTORNEY: And by the county.

DEFENSE ATTORNEY: Okay.

Smalley later called as a witness Ralph Dowdy, a Certified Public Accountant, to challenge the income tax calculations of the Internal Revenue Service and to analyze the income reported by Smalley for the tax years in question. Dowdy testified that Smalley's unreported income was less than that claimed by the government, but his figures were based upon the assumption that the profit from the prisoner stipend was not taxable income. During the government's cross-examination of Dowdy, Smalley denied that he had made any stipulation on the issue:

Q: Aren't you assuming in your computation--well, let me ask you this: If he had, if he received checks from the state and from the county and what he got was in excess of his expenses for feeding prisoners, that would be income to him wouldn't it?

A: Not necessarily.

Q: Why not necessarily?

A: Well, if it was income, why didn't the State of Alabama send him a 1099? He gets a W-2 at the end of the year for the salary.

Q: For the record, we stipulated that was income. But let me ask you this--

DEFENSE ATTORNEY: We did not so stipulate. We stipulated that--

THE COURT: Well, I stipulate that it is income because it is the law. That is income. So I am in respectful disagreement with the witness on that. Now, let's go on to the next question.

Smalley argues that the court committed reversible error by (1) stipulating the excess prisoner stipend to be income, thereby invading the purview of the jury, and (2) discrediting the witness before the jury by openly disagreeing with him. "[W]e will not reverse a conviction unless the comments of the Trial Judge are so prejudicial as to amount to a denial of a fair trial." United States v. Preston, 608 F.2d 626, 636 (5th Cir.1979), cert. denied, 446 U.S. 940, 100 S.Ct. 2162, 64 L.Ed.2d 794 (1980). "A clear effect on the jury is required to reverse for comment by the trial judge." United States v....