United States v. Marcello, Crim. A. No. 80-274.

• Decision Date: 20 April 1982
• Docket Number: Crim. A. No. 80-274.
• Citation: 537 F. Supp. 1364
• Parties: UNITED STATES of America v. Carlos MARCELLO et al.
• Court: U.S. District Court — Eastern District of Louisiana

537 F. Supp. 1364

UNITED STATES of America v. Carlos MARCELLO et al.

Crim. A. No. 80-274.

United States District Court, E. D. Louisiana.

April 20, 1982.

COPYRIGHT MATERIAL OMITTED

John Volz, U. S. Atty., L. Eades Hogue, U. S. Justice Dept., Albert Winters, Richard T. Simmons, Asst. U. S. Attys., John Voorhees, U. S. Justice Dept., New Orleans, La., for Government.

Arthur A. Lemann, III, Provino Mosca, Russell Schonekas, New Orleans, La., Henry Gonzalez, Tampa, Fla., for defendant Carlos Marcello.

John R. Martzell, John Wilson Reed, Michael Fawer, Mathew Greenbaum, New Orleans, La., for defendant Charles E. Roemer, II.

SEAR, District Judge

Introduction

Following their convictions in this federal criminal prosecution, defendants Carlos Marcello and Charles E. Roemer, II, moved for judgments of acquittal or, in the alternative, for a new trial on a number of grounds. After considering the extensive memoranda submitted by counsel and the oral argument presented at the hearing of December 14, 1981, in light of the substantial record of the case and the voluminous evidence adduced at trial, I denied the defendants' motions, ruling orally from the bench. At the same time, I also denied four motions which had been argued by the defendants prior to trial, but whose determination had been deferred until trial. See United States v. Marcello, 508 F.Supp. 586, 590-98 (E.D.La.1981).

Background of the Case

In the summer of 1980, Marcello and Roemer were charged with three co-defendants in a lengthy twelve-count indictment resulting from a year-long Justice Department undercover "sting" operation commonly known as Brilab.¹ The Brilab investigation was nationwide and broad in scope, centering upon suspected illegal activities involving public officials, labor unions and reputed organized crime figures. The investigation was carried out by agents of the Federal Bureau of Investigation working with a convicted felon and career con man named Joseph Hauser. Hauser had recently pleaded guilty to federal criminal charges arising from a scheme to swindle health, welfare and pension funds from labor unions, United States v. Hauser, No. CR-78-313 (D.Ariz. Feb. 5, 1979). He willingly agreed to cooperate with federal officials when approached at about the time of his guilty plea by FBI agents who proposed that he participate in the undercover operation.² Hauser's agreement to cooperate in the investigation was not entirely motivated by the spirit of penitence or by a sense of civic obligation. In exchange for his participation in the Brilab investigation, Hauser received the assistance of Justice Department attorneys who appeared on his behalf in his Arizona sentencing, substantial compensation payments in addition to reimbursement for expenses and other fringe benefits during his participation in the Brilab investigation, and a place in the federal witness protection program when his term of imprisonment resulting from his criminal conviction ended.

The Louisiana arm of the Brilab operation in which Hauser became involved lasted about one year, from February 1979 to February 1980, a period during which the 1979 gubernatorial campaign and election were conducted. As part of the undercover investigation, Hauser and two FBI agents, Michael Wachs and Larry Montague, posed as representatives of a fictitious Beverly Hills, California firm called Fidelity Financial Consultants. Wachs, who assumed the alias Michael Sachs, and Montague, who took the name Larry Golden, working together with Hauser, set up their dummy business on the West Coast. Personalized business cards and stationery showing that they represented Prudential Insurance Company of America, one of the largest insurance firms in the world, were printed by the FBI.³ Posing as insurance representatives with a connection to Prudential, Hauser and the two agents contacted individuals with whom Hauser said he had dealt in the past, including Carlos Marcello, in an effort to gain a foothold for obtaining insurance contracts with state and local governmental agencies and private businesses in Louisiana. The agents' activities included face-to-face meetings with Marcello, several candidates for public office, and Roemer, who was then Commissioner of Administration of the state of Louisiana and chief of the gubernatorial campaign of then-State Senator Edgar G. "Sonny" Mouton of Lafayette. Scores of tape recordings of conversations concerning the election campaign, insurance, and the activities of the agents and the defendants were made with Hauser's consent⁴ or pursuant to wiretap orders previously issued by United States district judges.⁵ More than 130 of the surreptitiously made recordings were eventually used as evidence at the Brilab trial. The agents made cash payments of thousands of dollars to several candidates or their representatives. Roemer himself received two payments totalling $25,000, which he contended were campaign contributions for Mouton. In the indictment that formed the basis for this criminal prosecution, however, the payments were characterized as bribes given in return for Roemer's promise to use his influence to shift the state employees insurance contract from its existing carrier to the agents.

Count One of the superseding indictment⁶ that resulted from the Brilab investigation charged Marcello, Roemer, I. Irving Davidson, Vincent Marinello, and Aubrey Young with a conspiracy in violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. § 1962(d). Specifically, the defendants were charged with conspiring to associate together in fact as an enterprise for the purpose of obtaining the state employees insurance contract through the commission of various criminal acts, including public bribery in violation of Louisiana law, La.Rev.Stat.Ann. § 14:118 (West Supp.1980); interstate travel with intent to conduct unlawful activity in violation of 18 U.S.C. § 1952; wire fraud in violation of 18 U.S.C. § 1343; and mail fraud in violation of 18 U.S.C. § 1341. Count Two charged all five defendants with a substantive violation of RICO. Counts Three through Twelve alleged various acts of mail fraud, wire fraud, and interstate travel in aid of unlawful activity against some or all of the defendants.

After eighteen weeks of trial, the jury found Marcello and Roemer guilty of Count One, the RICO conspiracy. Marcello was acquitted on the eleven other counts against him, and Roemer was acquitted of the five other charges against him.⁷ Their co-defendants were acquitted on all charges against them.⁸

Prior to the trial, I had deferred ruling on three motions brought by the defendants to dismiss the indictment on grounds of governmental overreaching or misconduct, selective prosecution, and artificially created federal jurisdiction,⁹ an issue raised with renewed fervor in defendant Roemer's post-trial motion for judgment of acquittal. The rulings were deferred primarily so that my determination would be based on a complete evidentiary record and a complete understanding of the facts of this complex case without the necessity of conducting extensive and redundant pre-trial hearings that would have duplicated much of the evidence to be presented at the anticipated lengthy trial. United States v. Marcello, supra, 508 F.Supp. at 594. Although the defendants were provided an opportunity at the post-trial hearing conducted on December 14, 1981 to present any further evidence relevant to their pre-trial motions,¹⁰ no additional evidence was presented at that time and the defendants rested their motions on the substantial record developed at trial. After the trial, the convicted defendants filed lengthy post-trial motions¹¹ which were scheduled for hearing and argument on December 14, 1981 along with the deferred motions. In addition to the previously raised issue of artificially created federal jurisdiction, the post-trial motions included the following three general arguments: (1) The evidence presented during the trial was insufficient to support the RICO conspiracy conviction because no actual agreement to commit the requisite second predicate offense was proved; (2) The jury instructions concerning certain elements of the RICO conspiracy conviction were insufficient; and (3) The government failed to prove either the existence of an "enterprise" separate from the alleged predicate offenses or a "pattern of racketeering activity" as that term is defined by the RICO statute.

Governmental Overreaching and Artificially Created Federal Jurisdiction

The defendants' allegations of governmental misconduct or overreaching and artificially created federal jurisdiction share common legal and factual bases and require substantially similar proof. Both claims touch upon the conduct of government agents in the instigation, operation and maintenance of alleged criminal offenses during the Brilab investigation. Both require examination of the specific activities of these government agents in an undercover operation, which, by its nature, required a degree of government participation, and both seek to define the boundary between permissible and impermissible governmental involvement.

In their motions to dismiss on grounds of governmental misconduct and overreaching, the defendants contend that the government's involvement in the Brilab scheme was so pervasive and outrageous that due process principles or the court's supervisory power over the criminal justice system require that the indictment against them, and their resulting convictions based on that indictment, be dismissed. Although the Supreme Court has never applied the defense of outrageous governmental misconduct in a specific case to dismiss an indictment or vacate a conviction, it has recognized that a situation may arise "in which the conduct of law enforcement agents is so outrageous that due process principles would absolutely bar the government from invoking judicial processes to obtain a...