United States v. DePalma

Citation461 F. Supp. 778
Decision Date25 August 1978
Docket NumberNo. 78 Cr. 401.,78 Cr. 401.
PartiesUNITED STATES of America, Plaintiff, v. Gregory J. DePALMA, Eliot H. Weisman, Richard Fusco, a/k/a "Nerves", Murad Nersesian, a/k/a "Mike Fusco" and "Mickey Coco", Leonard Horwitz, a/k/a "The Fox", Laurence I. Goodman, Salvatore J. Cannatella, Louis Pacella, a/k/a "Louie Dome", Anthony Gaggi, a/k/a "Nino", and Thomas Marson, Defendants.
CourtU.S. District Court — Southern District of New York

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Robert B. Fiske, Jr., U. S. Atty., S. D. N. Y. by Nathaniel H. Akerman, Scott G. Campbell, Asst. U. S. Attys., New York City, for plaintiff.

Robert L. Ellis, New York City, for defendant DePalma.

Grand & Ostrow by Norman S. Ostrow and Frank H. Wright, New York City, for defendant Weisman.

Martin B. Adelman, New York City, for defendant Fusco.

Murray Richman, New York City, for defendant Nersesian.

Jonathan W. Lubell, New York City, for defendant Horwitz.

Litman, Friedman, Kaufman & Asche, New York City, for defendant Goodman by Herman Kaufman and Richard M. Asche, New York City, of counsel.

Segal & Hundley, New York City, for defendant Cannatella by Marvin B. Segal, New York City, of counsel.

Barry I. Slotnick, New York City, for defendant Pacella.

James M. LaRossa by John Mitchell, New York City, for defendant Gaggi.

Gregory J. Perrin, New York City, for defendant Marson.

SWEET, District Judge.*

The Indictment in this action was filed on June 2, 1978 and alleges a pattern of racketeering activity by the defendants centering on the corporate enterprise known as the Westchester Premier Theatre ("the Theatre") (Count One), a securities fraud (Counts Two through Twelve), a bankruptcy fraud (Counts Thirteen through Twenty-three) and an obstruction of justice (Count Twenty-four). The events giving rise to the charges occurred over a period from 1971 through 1978. The Indictment resulted from extensive electronic interceptions, data obtained from informants, and the admissions of certain of the defendants. There are ten defendants named. Not surprisingly defendants have filed extensive pretrial motions challenging the adequacy of the various counts of the Indictment, the propriety of joinder of the counts in the Indictment, seeking severance, dismissal of certain counts as a consequence of prosecutorial misconduct, striking certain material from the Indictment, requesting a bill of particulars, production of documents for inspection, and seeking a continuance.1 This court has previously ordered evidentiary hearings relating to (1) the Government's compliance with the sealing and minimization requirements of Title III of the Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. §§ 2510-2520, (2) the suppression of certain statements by defendant Weisman, and (3) the use of the Government of allegedly immunized testimony of defendant Weisman. The matters requiring evidentiary hearing will be dealt with in a subsequent opinion.

For the reasons set forth below, the motions to dismiss the Indictment, for misjoinder and severance are denied. The motion to strike certain matters from the Indictment, for a bill of particulars, document inspecting and for a continuance are granted to the extent set forth below.

I. COUNT ONE CHARGES AN OFFENSE.

Count One charges defendants Weisman, DePalma and Fusco with violating 18 U.S.C. § 1962 (c);2 ("RICO"), in that they are alleged to have participated in a pattern of racketeering activity3 in the conduct of the affairs of the Theatre through the commission of acts of securities fraud and bankruptcy fraud. Section 1962(c) is part of Title IX of the Organized Crime Control Act of 1970 (Public Law No. 91-452).

Title IX, entitled Racketeer Influenced and Corrupt Organizations, proscribes, inter alia, "the operation of any enterprise engaged in interstate commerce through a `pattern' of `racketeering activity.'" H. R. Rep. No. 1549, 91st Cong., 2nd Sess. reprinted in 2 U.S.Code Cong. & Ad.News, pp. 4007, 4010 (1970). Section 1961(1) of Title IX defines racketeering activity to include bankruptcy and securities fraud. A review of the legislative history relating to this statute evinces the concern of Congress in eliminating the influence of organized crime activities in our society. The Senate Report on the Organized Crime Control Act states as follows:

Obviously, the time has come for a frontal attack on the subversion of our economic system by organized criminal activities. That attack must begin, however, with the frank recognition that our present laws are inadequate to remove criminal influences from legitimate endeavor organizations.
* * * * * *
Title IX recognizes that present efforts to dislodge the forces of organized crime from legitimate fields of endeavor have proven unsuccessful. To remedy this failure, the proposed statute adopts the most direct route open to accomplish the desired objective. Where an organization is acquired or run by defined racketeering methods, then the persons involved can be legally separated from the organization, either by the criminal law approach of fine, imprisonment and forfeiture, or through a civil law approach of equitable relief broad enough to do all that is necessary to free the channels of commerce from all illicit activity.

S. Rep. No. 617, 91st Cong., 1st Sess. 78-79 (1969). This attitude was consistently endorsed in both the House and the Senate during hearings on this bill. It is in this context that the defendants' motions must be viewed.

A. The Indictment Properly Alleges a Pattern of Racketeering.

Defendant Weisman asserts that in order to establish a violation of 18 U.S.C. § 1962(c) the two acts of racketeering activity necessary to establish a "pattern" must be related. Claiming that the activities with respect to the alleged securities fraud are not related to the activities of the alleged bankruptcy fraud, Weisman seeks dismissal of Count One. The motion is denied.

The statutory definition of pattern of racketeering activity is unambiguous and contains no reference to any requirement of "relatedness." A review of the legislative history establishes that Congress was concerned with proscribing illegal activities of legitimate business, and that the only relation it deemed necessary for the two predicate acts is that they both be in the conduct of the affairs of the same enterprise. 18 U.S.C. § 1962(c) (1970).4

Two significant amendments to the definition of pattern of racketeering, prior to the enactment of the statute, lend further support to this view. Prior to these amendments the definition was as follows: "The term pattern of racketeering activity includes at least one act occurring after the effective date of this chapter." S. Rep. No. 617, supra at 122. Since "the term `pattern' indicates that what is intended to be proscribed is not a single isolated act of `racketeering activity,' but at least two such acts" (id.) the statute was amended to read as follows: "The term `pattern of racketeering activity' means at least two acts, one of which occurred after the effective date of this chapter." Id. There was no requirement that the two acts be related to each other. In fact, at that point there was no requirement that the two acts even be related in time. This was the cause of some concern to those who commented on the proposed bill. See e. g. 116 Cong. Rec. S855 (daily ed. Jan. 22, 1970) (analysis of American Civil Liberties Union). Such concerns led to the enactment of the ten year limitation in the statute. It was this ten year limitation that provided any requirement of nexus between the two predicate acts. In its final form the statute simply required that the person commit at least two acts of racketeering activity within a ten year period.

Considering the time and effort spent by Congress on this definition, had it wanted to provide for any "relatedness", it had ample opportunity to do so. Instead Congress must have realized that the definition of "pattern of racketeering activity" would necessarily be interpreted in the context of the statute to which it applies (18 U.S.C. § 1962). Thus, the term "pattern", when used in this context, applies to the relationship of the acts to the enterprise, and no more. The definition of "racketeering activity" in the section and the additional definition of "pattern of racketeering activity", taken together, results in the conclusion that the "pattern" definition states a minimum but not necessarily an exclusive definition. A main focus of Title IX was the enterprise,5 not only the persons committing the acts, and Congress felt that the "pattern" would be supplied by this common factor.6

This interpretation was accepted by the court in United States v. Elliott, 571 F.2d 880 (5th Cir. 1978). The Fifth Circuit there noted that the Organized Crime Control Act

does not criminalize either associating with an enterprise or engaging in a pattern of racketeering activity standing alone. The gravamen of the offense described in 18 U.S.C. § 1962(c) is the conduct of an enterprise's affairs through a pattern of racketeering activity. Thus, the Act does require a type of relatedness: the two or more predicate crimes must be related to the affairs of the enterprise but need not otherwise be related to each other.

Id. at 899 n.23. This analysis is consistent with the legislative history. United States v. Parness, 503 F.2d 430, 438 and 442 (2d Cir. 1974), cert. denied, 419 U.S. 1105, 95 S.Ct. 775, 42 L.Ed.2d 801 (1975) is also apposite in this regard. There, predicate acts of the RICO charge were three separate violations of 18 U.S.C. § 2314, all steps in a scheme to take over a hotel. Although these violations arguably had a greater nexus than merely steps in the common scheme, "there is no indication in Parness that the Court of Appeals requires anything more for the establishment of a `pattern' within the meaning of § 1961(5) than two acts of racketeering . . ." United States v. Moeller, 402 F.Supp. 49,...

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