United States v. Console

• Citation: 13 F.3d 641
• Decision Date: 22 December 1993
• Docket Number: Nos. 92–5507,92–5511 and 92–5555.,s. 92–5507
• Parties: UNITED STATES of America v. Richard P. CONSOLE, Appellant. UNITED STATES of America v. Morton MARKOFF, D.O., Appellant. UNITED STATES of America v. Edward C. CURCIO, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

13 F.3d 641

UNITED STATES of America

v.Richard P. CONSOLE, Appellant.

UNITED STATES of America

v.Morton MARKOFF, D.O., Appellant.

UNITED STATES of America

v.Edward C. CURCIO, Appellant.

Nos. 92–5507, 92–5511 and 92–5555.

United States Court of Appeals, Third Circuit.

Argued Nov. 12, 1993

Decided Dec. 22, 1993

Partners in law firm and doctor in medical practice were convicted in the United States District Court for the District of New Jersey, Nicholas H. Politan, J., of Racketeer Influenced and Corrupt Organizations Act (RICO) and federal mail fraud violations in connection with scheme to defraud insurance companies by submitting inflated medical bills on behalf of accident victims represented by firm. Partners and doctor appealed. The Court of Appeals, Greenberg, Circuit Judge, held that: (1) association in fact between law firm and medical practice constituted RICO enterprise; (2) evidence supported partner's RICO convictions; and (3) partner was not entitled to have his trial severed from that of other law partner.

Affirmed. Nathan Z. Dershowitz and Amy Adelson, Alan M. Dershowitz (argued), Dershowitz & Eiger, P.C., Cambridge, MA, for appellant Richard P. Console.

Benjamin Goldstein (argued), Maressa, Goldstein, Birsner, Patterson, Drinkwater & Oddo, P.C., Berlin, NJ, for appellant Morton Markoff, D.O. Dennis A. Durkin (argued), Suzanne Harris, Durkin & Durkin, Newark, NJ, for appellant Edward C. Curcio.

Edna Ball Axelrod (argued), Chief, Appeals Div., Michael Chertoff, U.S. Atty., Newark, NJ, for appellee.

Before: GREENBERG, COWEN, and SEITZ, Circuit Judges.

OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. FACTUAL AND PROCEDURAL HISTORY

A. FACTUAL HISTORY

Richard P. Console, Edward C. Curcio, and Morton Markoff appeal from judgments of conviction and sentences entered in the district court on September 28, 1992. We have jurisdiction under 28 U.S.C. § 1291.

The background of the case is as follows. Console and Curcio were partners in a law firm (the “firm”) located in Berlin, New Jersey, and Markoff was an osteopathic physician who practiced in nearby Clementon, New Jersey. Console started the firm in 1973, and soon began hiring other associates, some of whom later became partners. Curcio joined the firm in 1978 and became a partner in 1982. Philip LiVolsi was another partner.

The firm developed a relationship with Markoff in the 1970's, which continued into the 1980's. Markoff referred accident victims to the firm for legal services, and the firm referred clients to Markoff for medical services. When treating a client of the firm, Markoff sent the client's medical bills to the firm, which in turn sent them to the client's insurance company for the payment of the client's personal injury protection (“PIP”) benefits pursuant to New Jersey's No–Fault law governing claims for injuries from automobile accidents. ¹ When making a claim on behalf of a client seeking “special damages,” the firm also sent the medical bills either to the client's or the defendant's insurance company to support claims for pain and suffering or other “special damages” sustained by the client. Markoff received the PIP payments corresponding to the medical bills he sent to the firm, and the firm retained a share of any recovery made for a claim.

B. PROCEDURAL HISTORY

In 1985, federal agents searched the firm, and in April 1989, a grand jury indicted Curcio and Markoff along with four codefendants: LiVolsi, the firm's legal administrator (Peter Hulmes), and two of Markoff's employees (Virginia Knowlton and Carmella Lombardi).² The indictment charged the defendants with violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq., and the federal mail fraud statute, 18 U.S.C. §§ 1341– 42, perpetrated in connection with a scheme to defraud insurance companies by submitting inflated medical bills on behalf of accident victims represented by the firm.

On April 24, 1990, LiVolsi agreed to plead guilty to one count of RICO and two predicate acts of mail fraud and to testify before a new grand jury. This grand jury returned a superseding indictment on August 23, 1990, charging two additional defendants, Console and Kathy Baldwin–Sabath, an employee of the firm, with the commission of offenses. Subsequently there were two jury trials in the United States District Court in this case.

Count 1 of the final superseding indictment charged the appellants and the codefendants with conducting and participating in the conduct of an enterprise consisting of the firm and Markoff's medical practice (the “Law Firm–Markoff Enterprise”) through a pattern of racketeering activity involving multiple acts of mail fraud. 18 U.S.C. §§ 1962(c) and 2. Similarly, Count 2 charged the appellants and the codefendants with conspiring to conduct the affairs of the Law Firm–Markoff Enterprise through a pattern of racketeering activity. 18 U.S.C. § 1962(d). The indictment also charged each of the appellants with multiple counts of mail fraud. 18 U.S.C. §§ 1341 and 2.

Prior to the first trial, the appellants moved to dismiss the indictment by reason of alleged prosecutorial misconduct. The district court heard argument on the motions and decided to review all grand jury transcripts in camera. But the government provided 14 of the more than 100 transcripts it produced without colloquy. The government informed the district court that these 14 transcripts had been irreparably water damaged and lost while in the court reporter's possession. In response to motions regarding this incident, the district court held hearings in December 1989 and January 1990. In an opinion filed on April 11, 1990, the district court held that any prosecutorial misconduct before the grand jury was harmless.

The first trial began on February 26, 1991. During this trial, Knowlton agreed to plead guilty to one count of mail fraud. The jury returned its verdict in June 1991. Markoff was convicted of the RICO counts and 24 counts of mail fraud but he was acquitted of 11 mail fraud counts. Console and Curcio also were acquitted of certain mail fraud counts. The jury, however, did not reach a verdict on the RICO counts and certain mail fraud counts against Console, Curcio, and Hulmes, and consequently the court declared a mistrial as to these counts. The jury acquitted Sabath and Lombardi on all counts.

Following his conviction, Markoff learned that during jury deliberations a juror had obtained information regarding the case from her sister-in-law who was an attorney and had shared that information with other jurors. In September 1991, the district court held hearings to determine the nature of this communication, whether it was prejudicial, and whether Markoff's convictions should be set aside. During in camera proceedings, the district court questioned each juror individually. Based on the jurors' in camera testimony, the district court determined that one of the jurors made a remark during deliberations indicating that she had discussed the case with her sister-in-law who was an attorney. Nonetheless, the court held that the juror's comment had not prejudiced Markoff, and thus it denied his motion to set aside his convictions. Although the juror who mentioned her sister-in-law's comments during deliberations testified in camera that other jurors had read newspapers during the trial, the court also denied Markoff's request for a second jury inquiry to investigate these allegations.

Following his convictions, Markoff entered into a cooperation agreement with the government and agreed to testify against Console, Curcio, and Hulmes at a second trial. Console moved to dismiss the charges against him on double jeopardy grounds prior to the second trial, but the district court denied his motion. The district court also denied Curcio's severance motion. The second trial began on February 25, 1992, and the jury returned its verdict on May 21, 1992, convicting Console and Curcio on both RICO counts. The jury also convicted Console and Curcio of eight counts of mail fraud and four counts of mail fraud, respectively. The jury, however, acquitted Hulmes of all charges except for one which the court then dismissed.

The court sentenced the three appellants to lengthy prison terms on September 25, 1992, and required Console and Markoff to pay restitution to the victims of their RICO and mail fraud violations. The judgments of conviction were entered on the docket on September 28, 1992, and the appellants timely appealed.³

II. DISCUSSION

A. FAILURE TO ESTABLISH A RICO ENTERPRISE

The appellants argue that the evidence was insufficient to support their convictions for violations of 18 U.S.C. § 1962(c) and (d), because the government failed to establish the existence of a RICO “enterprise.” ⁴ Section 1962(c) prohibits “any person employed by or associated with any enterprise” affecting interstate or foreign commerce from conducting or participating “in the conduct of such enterprise's affairs through a pattern of racketeering activity.” Section 1962(d) makes it unlawful to conspire to violate Section 1962(c) or the other substantive provisions of RICO.

RICO defines an “enterprise” as “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” 18 U.S.C. § 1961(4). In United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 2528–29, 69 L.Ed.2d 246 (1981), the Supreme Court stated that an enterprise “is an entity separate and apart from the pattern of activity in which it engages,” and that it is “proved by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit.” In United States v. Riccobene, 709 F.2d 214, 222 (3d Cir.), cert. denied, 464 U.S. 849, 104 S.Ct. 157, 78 L.Ed.2d 145 (1983), “we construed Turkette to require proof of each of the three sub-elements referred to by...