U.S. v. Urban

Decision Date20 April 2005
Docket NumberNo. 03-1370.,No. 03-1325.,No. 03-2315.,No. 03-1356.,No. 03-1326.,No. 03-2751.,No. 03-1371.,No. 03-2737.,03-1325.,03-1326.,03-1356.,03-1370.,03-1371.,03-2315.,03-2737.,03-2751.
Citation404 F.3d 754
PartiesUNITED STATES of America v. Thomas URBAN, Appellant No. 03-1325 United States of America v. Joseph J. O'Malley, Appellant No. 03-1326 United States of America v. Joseph R. Leone, Appellant No. 03-1356 United States of America v. Gerald S. Mulderig, Appellant No. 03-1370 United States of America v. Fred Tursi, Appellant No. 03-1371 United States of America v. James F. Smith, Appellant No. 03-2315 United States of America v. William C. Jackson, Appellant No. 03-2737 United States of America v. Stephen M. Rachuba, Appellant No. 03-2751.
CourtU.S. Court of Appeals — Third Circuit

Peter A. Levin, Philadelphia, PA, for Appellant, Thomas Urban.

F. Emmett Fitzpatrick, Jr. (Argued), F. Emmett Fitzpatrick Law Offices, Philadelphia, PA, for Appellants, Joseph J. O'Malley and William C. Jackson.

Alan L. Yatvin, Popper & Yatvin, Philadelphia, PA, for Appellant, Joseph R. Leone.

S. Daniel Hutchison, Woodbury, NJ, for Appellant, Gerald S. Mulderig.

NiaLena Caravasos, F. Emmett Fitzpatrick Law Offices, Philadelphia, PA, for Appellant, Fred Tursi.

David L. McColgin (Argued), Defender Association of Philadelphia, Federal Court Division, Philadelphia, PA, for Appellant, James F. Smith.

Ari S. Moldovsky (Argued), Moldovsky & Moldovsky, Philadelphia, PA, for Appellant, Stephen M. Rachuba.

Amy L. Kurland (Argued), Office of United States Attorney, Philadelphia, PA, for Appellee.

Before: SCIRICA, Chief Judge, FISHER, and GREENBERG, Circuit Judges.

OPINION OF THE COURT

FISHER, Circuit Judge.

Appellants, plumbing inspectors employed by the City of Philadelphia, were convicted of improperly accepting payments from plumbers whose work they inspected in violation of the Hobbs Act and the Racketeer Influenced and Corrupt Organizations Act ("RICO"). They raise a host of contentions on appeal, including primarily a challenge to the District Court's jury instruction regarding the Hobbs Act's requirement that the covered misconduct have affected commerce. We find none of Appellants' contentions sufficient to support overturning their convictions. We will, however, vacate their sentences in light of the United States Supreme Court's recent decision in United States v. Booker, ___ U.S. ___, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), and remand to the District Court for resentencing in accordance with that decision.

I.

Appellants Thomas Urban, Joseph J. O'Malley, Joseph R. Leone, Gerald S. Mulderig, Fred Tursi, James F. Smith, William C. Jackson and Stephen M. Rachuba were plumbing inspectors employed by the Construction Services Department ("CSD"), a division of the Department of Licenses and Inspections ("L & I Department") of the City of Philadelphia. The L & I Department is a regulatory agency charged with construction inspections and business regulatory affairs. The CSD is responsible for issuing all construction permits and performing construction inspections. Appellants were tasked with performing the plumbing component of these inspections, and were expected to enforce the city plumbing code in order, among other things, to ensure the safety of the city drinking water. Appellants were assigned to districts. Plumbers were required to call the offices of the district in which their job was located to set up an appointment with an inspector. Appellants had discretion to decide when to perform the inspection. In performing inspections and enforcing the plumbing code, Appellants had the power to cite violations of the code, issue stop work orders on projects, and revoke the license of any plumber who failed to comply with the code.

In the late 1990s, law enforcement became aware that plumbing inspectors were accepting monetary payments from plumbers whose work they inspected, or claimed to have inspected. In the course of its investigation into this practice, the FBI interviewed several confidential sources — designated as CS1, CS2 and CS3, respectively — who had worked as plumbing inspectors alongside Appellants, or as plumbers whose work Appellants had inspected. An affidavit executed by an FBI agent, filed by the government in support of a request to install hidden cameras in city vehicles which would be used by suspected plumbing inspectors, detailed statements given by these confidential sources. CS1, a former plumbing inspector from 1992 to 1997, stated that 70%-80% of the plumbing contractors whose work he inspected during that time period "provided him with a cash `tip' of $5 to $20 in return for his inspection and for allowing the contractor to work without interference." CS1 stated that he made an additional $3,000 to $6,000 per year from these "tips," and that acceptance of "tips" was commonplace among the L & I Department's plumbing inspectors. CS1 believed that plumbing inspectors, including specifically many of the Appellants, "regularly accept[ed] `tips' while working in their official capacity as City inspectors[.]"

CS2, a small plumbing contractor who had allegedly interacted with plumbing inspectors through a third party, stated that he provided money used to pay a plumbing inspector named "Tursi" in 1999 and on at least ten prior occasions. CS3, a large general plumbing contractor who worked with several plumbing subcontractors, stated that he was told by his subcontractors that payments were made to an inspector named "O'Donnell" and his replacement named "Smith." The affidavit also stated that the affiant had interviewed a "cooperating witness" who had "made consensual recordings of L & I plumbing inspector Fred Tursi allegedly extorting money from him." This cooperating witness advised that he had given $50 to his plumbers to give to Tursi to "keep him off their backs."

On the strength of this information, the government sought and obtained from the United States District Court for the Eastern District of Pennsylvania an order authorizing the installation of hidden video cameras in two city vehicles which would be used by certain of the Appellants while on official city business. Video captured by these cameras apparently showed Appellants Jackson, Leone, O'Malley, Rachuba and Smith accepting cash on numerous occasions from plumbers during the course of conducting inspections; in many instances, Appellants apparently accepted cash payments without performing any inspection at all.

On March 19, 2002, a grand jury in the Eastern District of Pennsylvania returned an indictment of 13 plumbing inspectors, including Appellants, charging them with a violation of RICO, 18 U.S.C. § 1962, and multiple counts of Hobbs Act extortion, in violation of 18 U.S.C. § 1951. A five-week trial ensued in early September 2002. At trial, the government presented evidence showing that multiple plumbers made numerous monetary payments of varying sizes to each of the Appellants. Plumbers testified that they paid inspectors anywhere from $5 to $200 per inspection. There was ample evidence at trial that plumbers paid inspectors in order to ensure timely and favorable inspections,1 and to prevent unfavorable treatment or harassment by inspectors. One plumber testified that "We felt like if you didn't do what was, what had been going on for years, you certainly would not see, you may not see an inspector showing up when you want him[,]" while another testified that he paid inspectors because "[y]ou didn't want to get on the bad side of the inspector." Other plumbers testified that they paid inspectors because they could not afford to find out if they would be treated differently by the inspectors if they did not pay. Plumber Richard Clements testified that failing to tip could result in an inspector who would "give me a hard time, or I wouldn't get the prompt service." Yet another plumber testified that when Appellant Tursi asked him for a larger tip than offered, he complied because "I felt as though there would be some kind of problem if I didn't do it."

The government presented substantial evidence demonstrating that Appellants knew that it was improper to accept monetary payments from plumbers whose work they were inspecting, thus undermining Appellants' view that they were voluntarily (and therefore properly) accepting "tips." Each Appellant was required, at the time of hiring, to sign an ethics statement acknowledging knowledging that he was not permitted to accept "any offer, any gift, favor or service that might tend to influence" him in the discharge of his duties. Every inspector hired between 1980 and 2000 — including all of the Appellants — was told that it was against city policy for employees to take any cash in any amount at any time. An ethics directive from the Mayor of Philadelphia permitted City employees to accept up to $100 in gifts per year from any one source, but expressly disallowed their acceptance of cash in any amount.

Evidence of how Appellants accepted the plumbers' payments reinforced the government's contention that Appellants knew the payments were improper. Plumbers concealed the payments to Appellants in the pages of their work permit or by folding it up and transferring the money in what was commonly referred to as a "green handshake." In a conversation taped by a cooperating witness and played for the jury, Appellant Mulderig explained that "every time they hand me a permit I, I used to fold it over like that and then put it in my pocket, you know what I mean .... when I would go to like Boston Market or something for lunch I would go in the men's room and take it out and put it in my, you know, take the money out of there and put it in my pocket." Moreover, video taken by the hidden cameras in the city vehicles apparently revealed numerous instances of Appellants surreptitiously receiving the payments and endeavoring to keep the payments hidden....

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