United States v. Renzi
| Citation | 861 F.Supp.2d 1014 |
| Decision Date | 21 March 2012 |
| Docket Number | No. CR 08–212 TUC DCB (BPV).,CR 08–212 TUC DCB (BPV). |
| Parties | UNITED STATES of America, Plaintiff, v. Richard G. RENZI, James W. Sandlin, and Dwayne Lequire, Defendants. |
| Court | U.S. District Court — District of Arizona |
OPINION TEXT STARTS HERE
Gary Michael Restaino, U.S. Attorneys Office, Phoenix, AZ, Peter Michael Koski, Edward T. Kang, Emily Rae Woods, Michael Joseph Ferrara, U.S. Dept. of Justice, Washington, DC, for Plaintiff.
Brian Matthew Heberlig, David Matthew Fragale, Reid Henry Weingarten, Linda C. Bailey, Steptoe & Johnson LLP, Kelly B. Kramer, Mayer Brown LLP, Emily Crandall Harlan, Nixon Peabody LLP, Washington, DC, Stacey Faith Gottlieb, Greenberg Traurig LLP, Phoenix, AZ, for Defendants.
Andrew Beardall, pro se.
The Court accepts and adopts the Magistrate Judge's Report and Recommendation (R & R) as the findings of fact and conclusions of law of this Court and denies Defendant Renzi's Motion to Dismiss Hobbs Act Charges (Counts 1, 26 & 27). (Doc. 107.)
On October 19, 2010, Magistrate Judge Bernardo P. Velasco issued a Report and Recommendation (R & R). (Doc. 841.) The Magistrate Judge found the Government's Second Superseding Indictment (SSI) adequately states a violation of the Hobbs Act, including identifying who was deprived of what property which was wrongfully obtained by Defendants Renzi and Sandlin. The Magistrate Judge rejected Defendant Renzi's argument that the Hobbs Act charges fail as a matter of law because it does not reach a federal employee's effort to acquire land for the benefit of the federal government.
The only Objection to Judge Velasco's R & R was filed by Defendant Renzi. He reurges the arguments made before the Magistrate Judge and argues that the Magistrate Judge wrongly decided the issues. The Government has filed a Response to Defendant Renzi's Objection. The matters are fully briefed and ready for disposition by the Court.
The duties of the district court in connection with a R & R are set forth in Rule 59 of the Federal Rules of Criminal Procedure and 28 U.S.C. § 636(b)(1). The district court may “accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” Fed.R.Crim.P. 59(b)(3); 28 U.S.C. § 636(b)(1). “The judge may also receive further evidence or recommit the matter to the magistrate judge with instructions.” 28 U.S.C. § 636(b); see alsoFed.R.Crim.P. 59(b)(3).
Where the parties object to a R & R, “[a] judge of the [district] court shall make a de novo determination of those portions of the [R & R] to which objection is made.” Thomas v. Arn, 474 U.S. 140, 149–50, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985) (quoting 28 U.S.C. § 636(b)(1)(C)). When no objection is filed, the district court need not review the R & R de novo.Wang v. Masaitis, 416 F.3d 992, 1000 n. 13 (9th Cir.2005); United States v. Reyna–Tapia, 328 F.3d 1114, 1121–22 (9th Cir.2003) (en banc). Therefore, to the extent that no objection has been made, arguments to the contrary have been waived. McCall v. Andrus, 628 F.2d 1185, 1187 (9th Cir.1980) (); see also, Advisory Committee Notes to Fed.R.Civ.P. 72 ().
The Court has considered the Objection filed by the Defendant, the Government's Response, and the parties' briefs considered by the Magistrate Judge on the Motion to Dismiss the Hobbs Act counts.
The Defendant urges the Court to find that the Hobbs Act charges are invalid as a matter of law under Wilkie v. Robbins, 551 U.S. 537, 127 S.Ct. 2588, 168 L.Ed.2d 389 (2007), because the Hobbs Act does not reach a federal employee's efforts to acquire land for the benefit of the government. Alternatively, Defendant argues if the Hobbs Act applies, there can be no violation of the Act where the Government does not allege anyone was wrongfully deprived of property, and in fact Renzi was owed the money he received from Sandlin. Finally, Renzi challenges the sufficiency of the SSI for failing to differentiate between the property-sale proceeds received by Sandlin from those received by Renzi, thereby, making it impossible to establish which payments the Grand Jury relied on in respect to its finding the Defendants received money not due them.
The Court will not repeat, but adopts in full, the detailed recounting of the SSI Hobbs Act charges, which were provided by the Magistrate Judge in the R & R at pages 1020 through 1022.
The Hobbs Act criminalizes interference with interstate commerce by extortion, 18 U.S.C. § 1951(a), defined as “obtaining the property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right, 18 U.S.C. § 1951(b).
Defendant Renzi argues the government was the beneficiary of the sale of the Sandlin property and, therefore, as a matter of law the Hobbs Act case fails. In Wilkie, the Supreme Court considered a scenario where federal officials coerced a private property owner into giving up valuable property rights, even though the officials' motivations were with malice or bad intent. “The Court reasoned that federal employees are entitled to capitalize on their discretionary enforcement authority—to coerce property owners into granting the government rights to which it is otherwise not entitled.” (Objection at 3 (citing Wilkie, 551 U.S. at 558 & n. 10, 127 S.Ct. 2588)). “The Court concluded that the Hobbs Act did not apply as a matter of law when federal employees sought to acquire land for the benefit of the federal government.” Id. (citing Wilkie, 551 U.S. at 563, 127 S.Ct. 2588). Defendant Renzi argues he sought the Sandlin property for the benefit of the government, therefore, “the Hobbs Act does not apply as a matter of law.” (Objection at 4.)
Defendant Renzi complains that the Magistrate Judge improperly made an “intent-based” assessment by considering Defendant's motivation in promoting the Sandlin land swap was for himself and not the government. The Magistrate Judge noted this “intent-based” distinction was rejected by the Supreme Court, and rejected it as well. (R & R at 1023–24.) The Magistrate Judge applied the relevant consideration, which is that he [Renzi] is alleged to have obtained, or attempted to obtain, a personal benefit not due him in the form of property.” Id. at 1024 (emphasis added).
“Renzi asserts that he was entitled to the money due to him from Sandlin under the terms of the note executed in connection with Sandlin's purchase of Fountain Realty.” Id. The Magistrate Judge correctly noted that Renzi is not charged with extorting money from Sandlin, and therefore,the existence of a prior debt between himself and Sandlin is immaterial to allegations that Renzi and Sandlin together obtained property they were not entitled to from the land exchange proponents. (SSI, Counts 26 and 27, ¶¶ 15(A), 48, 50). The facts in the SSI essentially allege that there was no bona fide sale of the Sandlin property.
Extortion under the Hobbs Act is a “larceny-type” offense, completed when a victim is forced to part with property and someone, either the extortioner or a third person receives the property of which the victim was deprived. (R & R at 1024–25.) The public official must have obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts. Id. at 1024–25 (citing Evans v. United States, 504 U.S. 255, 268, 112 S.Ct. 1881, 119 L.Ed.2d 57 (1992)).
The Court agrees with the Magistrate Judge's conclusion that the SSI alleges larceny-like conduct: Defendant Renzi allegedly acted in his official capacity to wrongfully deprive the Aries Group of money paid for Sandlin's property from which Renzi obtained repayment of a personal loan from Sandlin to himself. The Aries Group did pay the money to Sandlin and Renzi did obtain the money from Sandlin. Renzi was not due any money from the Aries Group or the land exchange, and any other land exchange arrangement would not have benefitted Renzi.
Renzi argues the Hobbs Act counts fail because the Government does not allege: a property sale at an inflated price. Additionally, the right to control its business affairs was not a protected right held by the Aries Group, and in respect to the land exchange, the Aries Group did not have a right to be free from outside interference.
While a net loss may suggest a sham transaction, there are other factors such as the timing of the transaction or the victim's desire to not buy a property that may also evidence a sham transaction. United States v. Millet, 123 F.3d 268, 275–276 (5th Cir.1997). The SSI does not fail because it does not allege a net loss as to Aries Group due to the purchase of the Sandlin property. The SSI essentially alleges a sham transaction. (Counts 26 and 27, ¶¶ 1–14, 15(A), 16–25).
As to Renzi's reliance on Scheidler v. NOW, Inc., 537 U.S. 393, 397, 123 S.Ct. 1057, 154 L.Ed.2d 991 (2003), this is not a case where the alleged property obtained by the extortioner is an intangible property right. Here, the property allegedly obtained by Defendant Renzi was hard cash, “i.e., an asset or right that a person could transfer or sell—from the supposed victim.” (Objection at 8.)
Defendant Renzi cannot rely on Viacom Int'l Inc. v. Icahn, 747 F.Supp. 205, 211 (S.D.N.Y.1990), where the court applied the Enmons–Clemente construction of the Hobbs Act. “A Hobbs Act violation arises under the Enmons–Clemente framework when a defendant exploits a plaintiff's fear of economic loss and receives...
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