United States v. Niedelman, 72 Cr. 1127.

• Decision Date: 06 April 1973
• Docket Number: No. 72 Cr. 1127.,72 Cr. 1127.
• Citation: 356 F. Supp. 979
• Parties: UNITED STATES of America, v. Hilda F. NIEDELMAN, Defendant.
• Court: U.S. District Court — Southern District of New York

356 F. Supp. 979

UNITED STATES of America, v. Hilda F. NIEDELMAN, Defendant.

No. 72 Cr. 1127.

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

April 6, 1973.

Whitney North Seymour, Jr., U. S. Atty., New York City, for plaintiff; John J. Tigue, Jr., Asst. U. S. Atty., of counsel.

Richard Kuh, Kuh, Goldman, Cooperman & Levitt, New York City, for defendant.

MEMORANDUM AND ORDER

WHITMAN KNAPP, District Judge.

Defendant Hilda Niedelman moves to dismiss an indictment charging her with one count of conspiracy, twenty-three "Travel Act" counts, and twenty-three mail fraud counts. She contends that:

1. The Travel Act, 18 U.S.C. § 1952, does not cover the alleged offenses commercial bribery.

2. The mail fraud counts are defective in that they fail to identify a victim of the alleged scheme to defraud.

3. The grand jury did not act as a body independent of the United States Attorney in that it did not scrutinize the actual terms of the indictment.

4. There is a possibility that defendant Niedelman's testimony before the grand jury was not heard by every juror that voted to indict her.

5. The prosecutor abused his discretion by seeking to indict defendant Niedelman at all, by treating her so severely in comparison both to her co-defendants and to those charged in companion indictments, and by failing to seek an indictment against either Aviquipo, the corporation of which defendant was Treasurer, or Lockheed, which later acquired it.

I am persuaded that § 1952 was not intended to cover commercial bribery, but reject defendant's other arguments.

I.

Section 1952 provides:

(a) Whoever travels in interstate or foreign commerce or uses any facility in interstate or foreign commerce including the mail, with intent to —

(1) distribute the proceeds of any unlawful activity;

or

(2) commit any crime of violence to further any unlawful activity; or

(3) otherwise promote, manage, establish, carry on, or facilitate the promotion, management, establishment, or carrying on, of any unlawful activity,

and thereafter performs or attempts to perform any of the acts specified in subparagraphs (1),

(2), and (3), shall be fined not more than $10,000 or imprisoned for not more than five years, or both.

(b) As used in this section "unlawful activity" means

(1) any business enterprise involving gambling, liquor on which the Federal excise tax has not been paid, narcotics, or controlled substances (as defined in Section 102(6) of the Controlled Substances Act), or prostitution offenses in violation of the laws of the State in which they are committed or of the United States, or

(2) extortion, bribery, or arson in violation of the laws of the State in which committed or of the United States.

The instant prosecution is based on a combination of (a)(1) and (3) and (b)(2), the government's theory being that defendant Niedelman used the mails with intent to carry on "bribery" in violation of New York Penal Law § 180.00, McKinney's Consol.Laws, c. 40. That statute, entitled Commercial Bribing, provides:

"A person is guilty of commercial bribing when he confers, or offers or agrees to confer any benefit upon any employee, agent or fiduciary without the consent of the latter's employer or principal, with intent to influence his conduct in relation to his employer's or principal's affairs. Commercial bribing is a class B misdemeanor."

The offense charged in the indictment is that defendant Niedelman participated in a scheme whereby payments were mailed from Aviquipo, Inc. to the purchasing agent for Fiat, for the purpose of inducing such agent to place purchase orders for Fiat with Aviquipo.

Defendant contends that the alleged offense is not punishable by § 1952 because the Congress did not intend to cover the offense known in New York as "commercial" bribery when it used the generic term "bribery."

Similar contentions have heretofore been raised and rejected in this District. See United States v. Maiolo (72 Cr. 1123), United States v. Endresen (73 Cr. 85), United States v. Hohn (72 Cr. 1124), and United States v. Callahan (72 Cr. 1126). I feel constrained to disagree with these determinations.

The Supreme Court's decision in United States v. Nardello (1969) 393 U.S. 286, 89 S.Ct. 534, 21 L.Ed.2d 487 is here controlling. In that case, an indictment under the Travel Act charged the defendants with "shakedown" operations (luring victims into sexual situations of a compromising nature and then extorting money on threat of exposure) committed in Pennsylvania with the aid of instrumentalities of interstate commerce. The District Court dismissed the indictment on the ground that Pennsylvania statutes defined the defendants' unlawful conduct as "blackmail" rather than "extortion" and that the offense was therefore not picked up by the Travel Act. The Supreme Court reversed, ruling that the Travel Act, in providing for Federal punishment of such "extortion" as was prohibited by State law, was intended to reach conduct deemed by the Congress to be extortionate, regardless of the nomenclature employed by State legislatures in punishing the conduct in question. Turning, therefore, to the case at bar, the question is whether or not the Congress had in mind unauthorized payments to purchasing agents when it used the generic term "bribery" in the Travel Act.

As I read the Nardello decision, the court laid down some rather clear guidelines for resolving such a question. Interpretation of the Travel Act, Nardello declared, should have the effect of carrying forward two basic Congressional objectives: (1) to assist the states in fighting the depredations of the organized underworld (393 U.S. at 290-292, 89 S.Ct. 534); and (2) insofar as possible, to achieve an interpretation having a uniform effect throughout the nation (at 293-294, 89 S.Ct. 534). The interpretation urged by the government in the case at bar would further neither of these objectives, and would utterly thwart the second.

As to the first objective, the extensive Congressional hearings cited by the Court in Nardello and by respective counsel in the case at bar contain not so much as a hint that so-called "commercial" bribery (as opposed to conventional bribery, arson and extortion) was ever considered to be a typical tool of the underworld. On the contrary, as the case at bar—like the companion cases of Maiolo, Endresen, Hohn and Callahan— illustrates, commercial bribery is typically an establishment transgression. Furthermore (as the next paragraph establishes), at the time the Travel Act was under consideration, no legislature had ever treated "commercial" bribery as severely as the various crimes ultimately specified in that statute.¹

As to the second objective, achieving national uniformity, we find that, in 1960—the year before the Travel Act was enacted—one half the states imposed no criminal sanctions upon commercial bribery, twelve had limited statutes, and only thirteen had general states punishing such an offense. Among the states which punished the particular conduct here involved (payments to a purchasing agent) potential prison terms varied from 6 months (Nebraska, Washington), to a year (Connecticut, Louisiana, Massachusetts, Michigan, New York, Pennsylvania, Rhode Island, South Carolina, Virginia, Wisconsin). See Note, 108 U.Pa.L.Rev. 848 (1960), Chart pp. 864, 866. Since the Travel Act was enacted, New York has reduced the possibility of imprisonment to a maximum of three months N.Y.Penal Law §§ 180.00, 70.15(2). In other words, the interpretation of the Travel Act which the government here urges would in some states have the drastic effect of converting a minor state offense into a major federal felony, while in other states it would have no effect whatever. In neither event would it assist the states by making available federal punishment comparable to that which they, in their legislative judgment, had already fixed for the offense involved. I need not—and for present purposes do not—question the Congress' power to create such a situation. However, I find absolutely no evidence that the Congress harbored any such intent. Cf. United States v. Bass (1972) 404 U.S. 336, 349, 92 S.Ct. 515, 30 L.Ed.2d 488, United States v. Enmons (1973) 410 U.S. 396, 93 S.Ct. 1007, 35 L.Ed.2d 379.

Counts 26 through 48 are accordingly dismissed. Since Count 1 charges only a conspiracy to violate the Travel Act, it too is dismissed.

II.

Defendant's second objection to the indictment is that the mail fraud counts fail to allege the necessary elements of that offense and, in addition, that eight of those counts charge mailings predating the existence of the alleged scheme to defraud.

The mail fraud counts track the language of 18 U.S.C. § 1341, and then in their second paragraph state that in furtherance of the alleged fraudulent scheme defendant Niedelman and others caused payments to be made indirectly by Aviquipo, Inc. to Curtis Baldwin, a Fiat purchasing agent, to induce Baldwin to cause Fiat to make purchases from Aviquipo.

Although, as defendant observes, the indictment does not explicitly name the victim of the fraud or describe the injury claimed to have resulted, I find that the allegation that the payments were made to induce an employee of Fiat to take action favorable to Aviquipo (the payor) adequately identifies Fiat as victim of the fraud and adequately defines the resulting injury as the subversion of Fiat's employee. This is sufficient to enable defendant to prepare her defense and protect her from the possibility of double jeopardy. Cf. United States v. De Sapio (S.D.N.Y.1969) 299 F.Supp. 436, 445-446.

Defendant's argument that eight of the mailing counts must be dismissed because they precede the date the...