U.S. v. Sutton

Decision Date04 September 1979
Docket NumberNos. 78-5134,s. 78-5134
CourtU.S. Court of Appeals — Sixth Circuit
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Carl SUTTON, Jr., Joseph Spinoza Elkins, Dyeatra Ann Carter, Edwin Arthur Adams, Otis Hensley, Prince Albert Rankin, Samuel Lee Harris, Charles Edward Craven, Viola Holmes, Defendants-Appellants. to 78-5139, 78-5141 to 78-5143.

Engel, Circuit Judge, filed a dissenting opinion.

Eugene D. Smith, Cincinnati, Ohio (Court-appointed), for defendants-appellants in 78-5134.

James C. Cissell, U. S. Atty., Terry Lehman, Asst. U. S. Atty., Dayton, Ohio, Paul J. Brysh, c/o T. George Gilinsky, Washington, D. C., for U. S. in all cases.

James R. Willis, Cleveland, Ohio, for defendants-appellants in 78-5135 and 78-5136.

Willis, Whitehead, Character, Adrine, Childs, Blackwell & Davison, Cleveland, Ohio, for defendants-appellants in 78-5135.

John Carson, Cleveland, Ohio, for defendants-appellants in 78-5136.

Philip L. Pleska, Lebanon, Ohio (Court-appointed), for defendants-appellants in 78-5137.

James D. Ruppert, Franklin, Ohio (Court-appointed), for defendants-appellants in 78-5138.

Calvin W. Prem, Cincinnati, Ohio (Court-appointed), for defendants-appellants in 78-5139.

Andrew B. Dennison, Cincinnati, Ohio (Court-appointed), for defendants-appellants in 78-5141.

Henry E. Sheldon, Cincinnati, Ohio (Court-appointed), for defendants-appellants in 78-5142.

Ronald A. Lipez, Cincinnati, Ohio (Court-appointed), for defendants-appellants in 78-5143.

Before ENGEL, KEITH and MERRITT, Circuit Judges.

MERRITT, Circuit Judge.

This case raises issues of first impression in our court concerning the scope of the federal enterprise racketeering statute, 18 U.S.C. §§ 1961-68 (1976). The law was enacted as Title IX of the Organized Crime Control Act of 1970 and is popularly known as RICO, an acronym for "Racketeer Influenced and Corrupt Organizations," the heading under which it appears in the criminal code. RICO's central aim is to prevent and punish the financial infiltration and corrupt operation, through patterns of racketeering activity, of "legitimate business operations affecting interstate commerce." Iannelli v. United States, 420 U.S. 770, 787 n. 19, 95 S.Ct. 1284, 1294, 43 L.Ed.2d 616 (1975). The question in this case is whether the statute may also be applied to persons engaged in racketeering activity unrelated to any legitimate organization but in furtherance of something the government terms "a criminal enterprise." We hold that it may not.

I.

After a jury trial in the United States District Court for the Southern District of Ohio, on an indictment containing 329 counts, the nine appellants Carl Sutton, Jr., Joseph Elkins, Dyeatra Carter, Edwin Adams, Otis Hensley, Prince Albert Rankin, Samuel Harris, Charles Cravens, and Viola Holmes were each convicted of conducting the affairs of an "enterprise" affecting interstate commerce through a pattern of racketeering activity, 18 U.S.C. § 1962(c), and of conspiracy to commit that offense, 18 U.S.C. § 1962(d). Each was also convicted of one or more counts of using the telephone to facilitate drug offenses, 21 U.S.C. § 843(b), and of various substantive drug offenses, primarily possession and distribution of heroin, 21 U.S.C. § 842(a)(1). In addition, Adams was convicted of seven counts of mail fraud, 18 U.S.C. § 1341, and of transporting and receiving stolen property in interstate commerce, 18 U.S.C. §§ 2314-15; and, Hensley was convicted of eight counts of mail fraud, thirteen counts of receipt by a convicted felon of firearms shipped in interstate commerce, 18 U.S.C. § 922(h), and of unlicensed dealing in firearms, 18 U.S.C. § 922(a).

The government's evidence showed both a significant heroin distribution business and a large-volume stolen property fencing operation. They were centered in the Cincinnati, Ohio area, and involved many of the same participants.

The central figures in the narcotics distribution business were appellant Sutton and Herschel Weintrub, who was not tried in the instant prosecution. Sutton, with the aid of appellant Holmes, purchased heroin from Elkins and Carter in Cleveland with money supplied by Weintrub. The drugs were redistributed by appellants Rankin, Craven, Adams, Hensley and Harris.

Weintrub, Hensley and Adams comprised the fencing operation. Weintrub's role again was apparently that of financier. Adams and Hensley actually marketed the stolen property, principally household goods. There was evidence that the goods were supplied by several burglary rings over which Hensley and Adams once claimed control to an undercover government agent.

It was the government's theory of the case that these were not discrete criminal ventures but were merely separate departments of a unitary "criminal enterprise" under the management and control of Weintrub and Sutton. For example, there was evidence that Adams often sold both heroin and stolen property to a single customer in the same transaction. Adams told one such buyer, a government informant, that the stolen goods he had on hand stoves in that instance had been provided by Hensley and that the heroin he was selling was supplied by "Carl" (Sutton) and "Herschel" (Weintrub). Weintrub, Hensley, Harris, and Sutton were often observed by government surveillance agents visiting Adams' place of business, a jewelry store, from which the heroin and stolen property were usually sold. During court-authorized electronic surveillance Adams and Hensley, and Adams and Weintrub, frequently were overheard discussing both the narcotics and the fencing operations in a single telephone conversation.

The telephone interceptions also revealed that Adams and Weintrub assisted Hensley in obtaining false receipts for jewelry, appliances, and other items of personal property which Hensley had reported stolen from his home in a burglary. Hensley used the receipts to collect insurance money on the items, and the mailings made in connection with the insurance claims formed the basis of the mail fraud counts. The proceeds of the fraud apparently were applied to a debt Hensley owed Weintrub for narcotics.

A warrant-authorized search of Hensley's residence during the closing days of the investigation uncovered several ledger books documenting transactions in firearms and stolen property. Entries in one of the ledger books formed the basis for Hensley's convictions of receipt by a convicted felon of firearms that had been shipped in interstate commerce.

II.

Appellants' main contention is that RICO was intended to proscribe only the infiltration and operation of legitimate enterprises through patterns of racketeering activity, something the government concedes was not involved in this case. 1 Appellants argue that the statute does not reach a group of individuals like themselves, who "merely" have committed a series of racketeering offenses. To say the least, the argument lacks surface appeal, for it asks us to embrace the rather ironic proposition that racketeers should be immune from criminal liability under the statute so long as they keep their activities wholly Illegitimate. We suspect that largely explains the hostile treatment the argument has received in the other courts of appeals that have considered it. United States v. Rone, 598 F.2d 564 (9th Cir. 1979); United States v. Elliott, 571 F.2d 880 (5th Cir.), Cert. denied sub nom. Delph v. United States, 439 U.S. 953, 99 S.Ct. 349, 58 L.Ed.2d 344 (1978); United States v. Altese, 542 F.2d 104 (2d Cir. 1976), Cert. denied, 429 U.S. 1039, 97 S.Ct. 736, 50 L.Ed.2d 750 (1977); United States v. Morris, 532 F.2d 436 (5th Cir. 1976); United States v. Hawes, 529 F.2d 472 (5th Cir. 1976); United States v. Cappetto, 502 F.2d 1351 (7th Cir. 1974), Cert. denied, 420 U.S. 925, 95 S.Ct. 1121, 43 L.Ed.2d 395 (1975). Upon analysis, however, we do not find appellants' proposed construction of RICO quite as unusual as it might seem at first blush. Indeed, we think there are compelling reasons to adopt it.

A.

Our analysis begins with the language of the statute. Section 1962(c), under which appellants were convicted, provides in pertinent part:

It shall be 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. . . . (emphasis added)

"Racketeering activity" is defined in section 1961(1) as including numerous federal offenses and, in addition, any offense involving murder, kidnapping, gambling, arson, robbery, extortion or drugs punishable under state law by imprisonment for more than one year. A "pattern of racketeering activity" is defined by section 1961(5) as requiring at least two acts of racketeering committed within ten years of each other.

The government's argument is straightforward and relies entirely upon the text. The government first notes that the statute on its face does not distinguish between "legitimate" and "illegitimate" enterprises but instead, by its express terms, applies to "Any enterprise." "Enterprise," the government then points out, is defined broadly in section 1961(4) to include "Any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." These provisions dispose of appellants' claim, according to the government, since the evidence demonstrates that appellants were a "group of individuals associated in fact" and that each committed the required number of racketeering offenses while in that association. To summarize the government's theory of the case, the evidence showed the existence of a "single enterprise operated for the purpose of making money from repeated criminal activity." 2

Of course, it is beyond dispute that the statute must be read to cover "any enterprise." But what does that mean? The flaw we see...

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