United States v. Chovanec

• Decision Date: 08 March 1979
• Docket Number: No. 78 Cr. 749.,78 Cr. 749.
• Citation: 467 F. Supp. 41
• Parties: UNITED STATES v. Paul CHOVANEC et al. (David Friend), Defendants.
• Court: U.S. District Court — Southern District of New York

467 F. Supp. 41

UNITED STATES v. Paul CHOVANEC et al. (David Friend), Defendants.

No. 78 Cr. 749.

United States District Court, S. D. New York.

February 23, 1979.

As Modified March 8, 1979.

COPYRIGHT MATERIAL OMITTED

Robert B. Fiske, Jr., U. S. Atty., S.D.N.Y. by Dwight L. Greene, Jacob Laufer, Asst. U. S. Attys., New York City, for the United States.

Lawrence S. Bader, Segal & Hundley, New York City, for defendant David Friend.

PIERCE, District Judge.

OPINION AND ORDER

Defendant David Friend moves for an order dismissing the wire fraud and racketeering counts, severing him from the trial of his co-defendants, striking certain phrases as surplusage from the indictment and directing the government to provide a bill of particulars of certain items.

WIRE FRAUD COUNTS

Defendant Friend moves to dismiss his wire fraud counts which charge violations of 18 U.S.C. § 1343 — counts 22 through 27 of the indictment — on the grounds that the grand jury received insufficient evidence to support their action against him. Friend contends that the government failed to call before the grand jury the sole victim named in those counts and that the victim Ben Whitehouse would have testified that he was not defrauded by the defendant. Only an affidavit from Friend's attorney is submitted in support of this contention. Even assuming, arguendo, that the victim would testify as stated, the motion to dismiss is denied.

It is well settled that an indictment which is facially valid and returned by a properly constituted grand jury is not subject to review for sufficiency of evidence. United States v. Calandra, 414 U.S. 338, 345, 94 S.Ct. 613, 38 L.Ed.2d 561 (1974); Costello v. United States, 350 U.S. 359, 363, 76 S.Ct. 406, 100 L.Ed. 397 (1956). Here, defendant does not contend that the grand jury was improperly constituted or that the indictment is otherwise deficient.

Rather, defendant objects to the government's choice of witnesses. But the government need not rely on testimony of a victim to establish its case for the grand jury. It need not call all available witnesses or present exculpatory evidence. United States v. Eucker, 532 F.2d 249, 255-56 (2d Cir. 1976), cert. denied, 429 U.S. 822, 97 S.Ct. 73, 50 L.Ed.2d 84 (1977). The government must establish that there is reasonable belief that a crime has been committed and that a criminal proceeding against the individual is warranted. United States v. Calandra, 414 U.S. 338, 344, 94 S.Ct. 613, 38 L.Ed.2d 561 (1974). Wide prosecutorial discretion, subject only to review upon a showing of flagrant abuse, is the standard governing the presentation of evidence to a grand jury. United States v. Chanen, 549 F.2d 1306 (9th Cir.), cert. denied, 434 U.S. 825, 98 S.Ct. 72, 54 L.Ed.2d 83 (1977). "An indictment valid on its face is not subject to challenge on the ground that the grand jury acted on the basis of inadequate or incompetent evidence . . . ." United States v. Calandra, 414 U.S. 338, 345, 94 S.Ct. 613, 618, 38 L.Ed.2d 561 (1974). Accordingly, defendant's motion for an order dismissing counts 22 through 27 of the indictment or in the alternative for judicial inspection of the grand jury minutes is hereby denied.

ANTI-RACKETEERING

Defendant Friend moves to dismiss Count 49 which alleges a violation of 18 U.S.C. § 1962(c) on four grounds. Section 1962(c) provides:

"It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt."

1. Defendant contends that the statute is limited to those who manage or operate an enterprise, and that a broker, as he is characterized in the indictment, is not a person who conducts or participates in the conduct of an enterprise's affairs. The Court notes, however, that the statute also prohibits indirect participation. Further, a strong argument may be made that the allegations in the indictment, if true, render the defendant a direct participant in the conduct of the enterprise's affairs. See United States v. Forsythe, 560 F.2d 1127, 1136 (3d Cir. 1977).

2. Defendant contends that since he is charged with defrauding only one victim, he cannot be charged with engaging in a pattern of racketeering activity. 18 U.S.C. § 1961(5) defines a pattern of racketeering activity as "at least two acts of racketeering activity . . . within ten years." Racketeering activity means, inter alia, any act indictable under section 18 U.S.C. § 1343 (relating to wire fraud). 18 U.S.C. § 1961(1) (1976); see United States v. Parness, 503 F.2d 430 (2d Cir. 1974), cert. denied, 419 U.S. 1105, 95 S.Ct. 775, 42 L.Ed.2d 801 (1975). The indictment charges Friend with six incidents of wire fraud over a four week period. Even though only one victim is alleged to have been defrauded, the Court finds that each count of the indictment constitutes a separate predicate act. In construing the term "pattern" in United States v. Stofsky, 409 F.Supp. 609 (S.D.N.Y.1973), this Court noted that in a section of the Organized Crime Control Act of 1970 enacted simultaneously with § 1961, the term "pattern of criminal conduct" "embraces criminal acts that have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events." 18 U.S.C. § 3575 (1976) (emphasis supplied). In concurrence with that opinion, the Court finds that it is precisely the fact that the same victim is alleged that may serve as the connecting link in predicate acts to establish a "pattern." It appears that defendant "would require a showing of separate and unrelated schemes, as a precondition for finding two indictable `acts' . . . that would constitute a `pattern of racketeering activity' under 18 U.S.C. §§ 1961(1)(B), (5), 1962(c)." United States v. Weatherspoon, 581 F.2d 595, 601 n. 2 (7th Cir. 1978). The Court declines to adopt an interpretation of the statute as urged by defendant which is not only contrary to the plain language of the statute, but which might render it unconstitutional.

3. Defendant's contention that 18 U.S.C. § 1962(c) is unconstitutionally vague is hereby denied. United States v. Stofsky, 409 F.Supp. 609, 614 (S.D.N.Y.1973). See also 2, infra.

4. Defendant argues that § 1962 was intended primarily to be used in connection with organized crime prosecutions, and, therefore, the indictment should be dismissed since it is not alleged that he is affiliated with organized crime in any way.

It is clear that § 1962 was aimed at organized crime and the legislative history of the section and even the title of the chapter, the Organized Crime Control Act of 1970, are replete with such references. See, e. g., Cong. Statement of Finding and Purpose, Pub.L. 91-452, § 1, 84 Stat. 922, 923 (1970); 116 Cong.Rec. S 607 (daily ed. Jan. 21, 1970). It is reasonable to conclude that "organized crime" should be defined broadly. As stated by the Ninth Circuit:

"It would usually be difficult, if not impossible, to prove that an individual or business was associated with or controlled by a clandestine criminal organization. It might also be difficult to prove that a particular offense was of the kind commonly engaged in by organized criminals in the year the statute was enacted; and, in any event, such a restriction upon the statute's coverage would provide an easy avenue for evasion through adoption of new forms and techniques of illicit trafficking." United States v. Roselli, 432 F.2d 879, 885 (9th Cir. 1970), cert. denied, 401 U.S. 924, 91 S.Ct. 883, 27 L.Ed.2d 828 (1971).

Consequently, Congress enacted a broad statute which proscribes specific acts as enumerated in 18 U.S.C. § 1961 with no restrictions limiting it to persons with particular affiliations. See United States v. Campanale, 518 F.2d 352, 364 (9th Cir.), cert. denied, 423 U.S. 1050, 96 S.Ct. 777, 46 L.Ed.2d 638 (1975).

This Circuit has held that the statute should be construed liberally. See United States v. Altese, 542 F.2d 104, 106 (2d Cir. 1976), cert. denied, 429 U.S. 1039, 97 S.Ct. 736, 50 L.Ed.2d 750 (1977). The plain language of the statute does not require affiliation with organized crime. To accept the proposed narrow interpretation would virtually preclude prosecutions under § 1962. Further, "when a statute on its face clearly covers certain activity . . . a court should accept the statute as written and avoid plunging into the murky waters of legislative history in an attempt to fathom whether Congress really intended to reach what the language of its statute does reach." United States v. Le Faivre, 507 F.2d 1288, 1295 (4th Cir.), cert. denied, 420 U.S. 1004, 95 S.Ct. 1446, 43 L.Ed.2d 762 (1974). Cf. United States v. Archer, 486 F.2d 670, 680 (2d Cir. 1973) ("It would go beyond the proper exercise of judicial power for courts to confine the Travel Act to its title . . . or even to the precise purpose stated to Congress by the Attorney General.")

Defendant relies on the language of Judge Carter in the trial transcript of United States v. Medical Therapy Sciences, Inc., 77 Cr. 677 (S.D.N.Y.) (Friend's Exh. D) to support his motion for dismissal. Without agreeing or disagreeing with the result therein, this Court notes that this case is distinguishable. In Medical Therapy Sciences, Judge Carter declined to apply § 1962 to a single defendant in a single operation, stating that "if . . . the conspiracy was Medical Therapy and several others I would have a different view. This is one man. I have no indication that he is connected with any other . . . venture." Id. at pp. 1758-59. In the present case, there are seventeen alleged co-schemers named in the indictment. The Court finds the statute to be applicable under these circumstances.

For the foregoing reasons, the ...