U.S. v. Stodola

• Decision Date: 06 January 1992
• Docket Number: No. 88-3000,88-3000
• Citation: 953 F.2d 266
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Frank A.J. STODOLA, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 266

953 F.2d 266

UNITED STATES of America, Plaintiff-Appellee, v. Frank A.J. STODOLA, Defendant-Appellant.

No. 88-3000.

United States Court of Appeals Seventh Circuit.

Argued Sept. 5, 1991.

Decided Jan. 6, 1992.

Michael A. Thill, Asst. U.S. Atty. (argued), Office of the U.S. Atty., Dyer, Ind., for plaintiff-appellee.

Robert C. Perry (argued), Indianapolis, Ind., for defendant-appellant.

Before WOOD, Jr. and MANION, Circuit Judges, and ROSZKOWSKI, District Judge. ^*

MANION, Circuit Judge.

Defendant-appellant Frank A.J. Stodola, a life-long resident of Lake County, Indiana, has had a full career as attorney, judge and politician. Stodola was a practicing attorney in Hammond, Indiana for approximately thirty-seven years. He served as Hammond City Court Judge from 1955 to 1966. He served as Lake County Superior Court Judge from 1967 to 1970. In 1977, Stodola was an unsuccessful candidate for the United States Congress. In 1980, Stodola was elected to the Board of Commissioners for Lake County, Indiana; he remained on the Board until 1984. During his tenure as a commissioner, Stodola became embroiled in illegal schemes to take kickbacks in exchange for contracts with Lake County. ¹

On December 2, 1987, a grand jury returned a five-count indictment against Stodola. Count 1 charged Stodola with conducting an enterprise's affairs through a pattern of racketeering activity in violation of RICO, 18 U.S.C. § 1962(c). The predicate acts alleged in Count 1 were twenty violations of the Indiana bribery statute--three bribes received from Professional Building Maintenance Company (PBM) and seventeen bribes received from General Maintenance Services Company (GMS) in exchange for the contract to clean the county offices. Count 2, which related to the payments obtained from PBM, and Count 3, which related to the payments obtained from GMS, charged Stodola with conspiracy to affect commerce by extortion in violation of the Hobbs Act, 18 U.S.C § 1951. Counts 4 and 5 charged Stodola with making false income tax returns, 26 U.S.C. § 7206(1). A jury found Stodola guilty of all counts except Count 2, the PBM extortion count. The district court sentenced Stodola to a total of 12 years imprisonment.

Stodola appeals his convictions on Counts 1 and 3, contending there was insufficient evidence to prove a pattern of racketeering activity under RICO and insufficient evidence to prove a conspiracy to commit extortion under the Hobbs Act. Stodola also challenges the jury instructions on RICO and extortion. For the reasons set forth below, we affirm the convictions.

I.

An elected, three-member Board of Commissioners has exclusive authority to transact the business of Lake County, Indiana, including entering contracts on behalf of the County. Ind.Code § 36-2-2-2. By law, contracts with Lake County are awarded through sealed bidding to the lowest responsible and responsive bidder. Ind.Code §§ 36-1-9-3, 36-1-9.1-4. The historical practice of some Lake County Commissioners, however, was to award contracts to their "friends"--companies who gave the Commissioners kickback money. See, e.g., United States v. Forszt, 655 F.2d 101 (7th Cir.1981) (Lake County Commissioner Joseph J. Forszt, who received payments from vendors in exchange for Lake County contracts from 1949 to 1975, was convicted of engaging in a pattern of racketeering activity in violation of 18 U.S.C. § 1962(c)). As ex-Commissioner Rudy Bartolomei stated at trial, all contracts had to be approved by the Commissioners, and they routinely awarded contracts to their "friends"--companies who paid them kickback money.

Prior to his election to the Lake County Board of Commissioners, Stodola had heard rumors about payments being made to the Commissioners in exchange for contracts. During his election campaign, Stodola approached Commissioner Rudy Bartolomei on several occasions and asked Bartolomei where the Commissioners made their money.

Among the contracts that the Commissioners controlled was the contract to clean the Lake County Government Complex in Crown Point, Indiana. The cleaning contract was for about $220,000 annually. Professional Building Maintenance Company was first awarded this contract by bid in 1973 or 1974 and retained the contract through April 1983. Before Stodola was elected, sometime in 1975 or 1976, John Garmon, an officer and part-owner of PBM, had a meeting with the three Lake County Commissioners--at that time, Noah Atterson Spann, Rudy Bartolomei, and Nick Angel. The purpose of the meeting was to inform PBM that it would have to pay the Commissioners kickback money in order to keep the cleaning contract. Subsequently, Bartolomei called Garmon to set up another meeting and told Garmon that "it's time that your company began to make those contributions." At the meeting, Bartolomei suggested that PBM bill the County for paper towels, toilet tissue and hand soap that they would not deliver. Garmon rejected this scheme, and Bartolomei told Garmon, "Devise a way to do it. It's up to you. We have to have it."

After consulting with the other owner of PBM, Harold Mitchell, Garmon did devise a way to pay the kickbacks. PBM would submit invoices to the County for additional work--for example, carpet cleaning, wall washing and other services not included in the general cleaning contract--and inflate the price for the work. The Commissioners would approve the invoices for the extra work, and PBM would receive a check from the County for the inflated amount. After receiving the check from the County, PBM would give the Commissioners the difference between the actual price of the extra work and the amount paid by the County. At another meeting with Bartolomei, Garmon explained this scheme, and Bartolomei approved it. Bartolomei also told Garmon to deliver the kickback money divided equally in three envelopes.

From this time until PBM lost the contract in 1983, Bartolomei would call Garmon two to four times a year and ask him, "Isn't it time for you to come and visit us?" PBM would then submit an inflated invoice for extra work to the Commissioners for approval. After the Commissioners approved the invoice and the County paid PBM, Mitchell would cash a check for the inflated amount and give the cash to Garmon. Garmon would meet with Bartolomei and give him three envelopes, each containing $1,000 to $2,000 cash. ² Bartolomei would keep one envelope and give the other envelopes to the other Commissioners. He always told the other Commissioners who the money was from.

PBM was still making payments when Stodola was elected as Lake County Commissioner. Although Stodola never met or talked to Garmon or Mitchell, he did accept and sign PBM's contract proposals for 1981, 1982, and 1983. He also approved and signed inflated invoices for extra work submitted by PBM in October 1981 and February 1982. The inflated invoices led to two bribes, one in November 1981 and another in March 1982. Stodola accepted both bribes. Each time, Bartolomei gave Stodola the envelopes containing the kickback money and told Stodola the money was from PBM.

At trial, both Garmon and Mitchell testified that they believed PBM would lose the cleaning contract if they did not give kickbacks to the Commissioners.

In 1983, PBM did lose the cleaning contract. The Commissioners awarded the contract to General Maintenance Services Company. GMS was formed in 1981 by Larry Crowel and Randy Norris. Crowel had known Stodola for approximately twenty years and had worked on Stodola's campaign for Lake County Commissioner. In late 1981, Crowel had several conversations with Stodola about getting the cleaning contract. Stodola told Crowel that he would have to see Bartolomei. In the beginning of 1982, Stodola suggested to Bartolomei that they give the cleaning contract to GMS; he told Bartolomei that Crowel "knows how to play the game" and "could do a better job" for them.

In 1982, Crowel met with Bartolomei and told him that GMS wanted the cleaning contract. Bartolomei told Crowel that he was not unhappy with PBM. Crowel asked Bartolomei how much PBM was paying him each month, and Bartolomei wrote down $600 or $700 on a piece of paper. Crowel offered Bartolomei $900 to $1000. In a similar meeting with Commissioner Spann, Crowel offered Spann $1000 to $1100 a month. Shortly thereafter, Stodola, Spann and Bartolomei had a secret meeting and decided to award the cleaning contract to GMS.

For the next two years, GMS made monthly payments to the Commissioners. GMS financed the bribes by inflating the annual contract price. Then, after GMS received its monthly check from the County, Crowel would cash the check for the inflated amount and meet with each commissioner in his office to give him the kickback money. Between May 1983 and December 1984, Crowel made seventeen payments of between $400 and $800 to Stodola.

Crowel and his partner, Randy Norris, testified at trial that they paid the Commissioners so GMS could keep the cleaning contract. They both believed that, if they did not pay the kickbacks, GMS would not get the contract.

II. RICO

Stodola was found guilty of violating 18 U.S.C. § 1962(c). Section 1962(c) makes it "unlawful for any person employed by or associated with any enterprise ... to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity...." The enterprise in this case was the Lake County Commissioner's Office. Stodola contends that there was insufficient evidence to prove a "pattern of racketeering activity" under RICO because the jury found him not guilty of conspiracy to commit extortion in regard to the payments from PBM. His acquittal on this count of the indictment, Stodola argues, necessarily implies that the jury found that he did not take bribes from PBM. Thus, the RICO conviction rests only on the seventeen bribes over twenty months that Stodola took from GMS, and these bribes do not establish a...