US v. Waters, No. CR 93-AR-295-S.

CourtU.S. District Court — Northern District of Alabama
Writing for the CourtACKER
Citation850 F. Supp. 1550
PartiesUNITED STATES of America v. Forrest E. WATERS, Jr.; Marlon Ford Waters; Diane M. Burlingame.
Docket NumberNo. CR 93-AR-295-S.
Decision Date22 April 1994

850 F. Supp. 1550

Forrest E. WATERS, Jr.; Marlon Ford Waters; Diane M. Burlingame.

No. CR 93-AR-295-S.

United States District Court, N.D. Alabama, Southern Division.

April 22, 1994.

850 F. Supp. 1551
850 F. Supp. 1552
Albert C. Bowen, Jr., Clyde E. Riley, Beddow Erben & Bowen, Birmingham, AL, for defendants Forrest E. Waters, Jr. and Marlon Ford Waters

J. Mark White, White Dunn & Booker, Birmingham, AL, for defendant Diane M. Burlingame.

Claude Harris, Bill L. Barnett, U.S. Atty's. Office, Birmingham, AL, for plaintiff U.S.


ACKER, District Judge.

The court has for consideration motions for judgment of acquittal filed pursuant to Rule 29, F.R.Cr.P., by defendants, Forrest E. Waters, Jr. (Forrest), Marlon Ford Waters (Ford) (father and son) and Diane M. Burlingame (Diane) (their secretary), at the conclusion of the evidence in the above-entitled criminal case. Defendants' said motions were taken under advisement and not ruled on. The jury thereupon rendered a verdict of guilty as charged in both counts of the indictment. Count One charged Forrest and Ford with a Hobbs Act violation in the form of a wrongful threat of economic harm allegedly leveled at LAP Construction, Inc. (LAP), a subcontractor on a multifamily residential complex called Wildforest being developed by Forrest and Ford. Count Two charged Forrest, Ford and Diane with the illegal laundering of $8,000 allegedly obtained

850 F. Supp. 1553
from LAP by virtue of the Count I extortionate threat


This court seriously considered granting defendants' Rule 29 motions when made, and not submitting the case to the jury. The court now wishes it had done so. If the court had taken the time after the evidence was concluded to think the matter through and to do a little research, it would have granted the motions for acquittal, particularly the motion of Diane, the alleged laundress. In the opinion which follows, the court will explain why it should have taken the case away from the jury.

Everything which will hereinafter be said must be underlined by the general and well-accepted rule that penal statutes are strictly construed in favor of the accused. To this date no court has wandered very far from this rule of statutory construction. There is no exception to this rule for interpreting or understanding the particular criminal statutes here involved. This court finds no reason to change this rule of construction or to lighten the Government's burden of proof, even assuming that these defendants are, as the Government describes them in the last paragraph of its post-trial brief, "leeches". The entire case presented to the grand jury on December 3, 1993, consists of 19 pages of hearsay, double hearsay, and triple hearsay from one FBI agent. This court fully comprehends that the burden of proving "probable cause" for the purpose of obtaining an indictment is much easier to meet than the burden of "proof beyond a reasonable doubt" necessary to obtain a conviction. For instance, although there was no evidence whatsoever presented to this particular grand jury to suggest that the alleged extortionate threat adversely affected commerce (one of the essential elements of a Hobbs Act violation), a court does not look behind the indictment to see if the Government met the burden of proving to the grand jury that probable cause actually existed. As the Supreme Court said in United States v. Calandra, 414 U.S. 338, 94 S.Ct. 613, 38 L.Ed.2d 561 (1974):

The validity of an indictment is not affected by the character of the evidence presented. Thus, an indictment valid on its face is not subject to challenge on the ground that the grand jury acted on the basis of inadequate or incompetent evidence.

414 U.S. at 344, 94 S.Ct. at 618. The Assistant United States Attorney's last remark to this grand jury was: "It took a little longer than five minutes, but it was interesting." The court agrees that the presentation to this grand jury was interesting and is worth a careful perusal.1 For instance, on page 9

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850 F. Supp. 1556
850 F. Supp. 1557
of the transcript the Assistant United States Attorney asked his only witness about "various conversations after the payment of the first $8,000 by Mr. Pfeiffer Phifer." (emphasis supplied). This question implied that there were subsequent payments made by Phifer to the Waters. However, from the evidence at trial Phifer made only one payment of $8,000, and that was all that the Government charged in the indictment. The only reason the grand jury transcript is in the record is that it was furnished as Jencks material. As stated, this court is fully aware that grand jury presentations are usually routine. Grand juries rarely, if ever, say, "You'll have to give us more than that, or we won't indict!" This grand jury was tractable. Whether or not it found this particular presentation "interesting", this court finds it academically interesting


The first non-academic question to be addressed is not whether there was enough evidence upon which Forrest and Ford could be indicted but whether there was enough evidence upon which they could be convicted of the charges contained in Count One. In trying to provide an answer to this question, the Waters make several telling arguments. The court will discuss only those which it finds worthy of examination.

Wrongful Use of Fear of Economic Harm

Paragraph 7 of Count One describes the Waters' alleged extortionate conduct as the "wrongful use of fear of economic harm, in that the defendants did convey to Lap Construction threats to interfere with said company's ability to obtain further work." (emphasis supplied).

Some courts of appeals would hold that a body-wired confidential FBI informant like Phifer, who, in fact, did not actually fear any economic harm and who could not have been an actual subject of intimidation, cannot provide the essential element of fear. However, the Eleventh Circuit has held to the contrary. Compare United States v. Brecht, 540 F.2d 45 (2d Cir.1976), and United States v. Capo, 817 F.2d 947 (2d Cir.1987), which require an actual apprehension of anticipated harm by the victim, with U.S. v. Quinn, 514 F.2d 1250 (5th Cir.1975), and United States v. Haimowitz, 725 F.2d 1561 (11th Cir.1984), which hold that the issue is looked at not through the eyes of the victim but through the eyes of the defendant, and if the threat was reasonably calculated to instill fear of economic harm, the burden of proving this element is met. Therefore, the mere fact that Phifer was working for the FBI at the time Forrest and Ford threatened him with the loss of future jobs does not provide an escape route, unless the Eleventh Circuit can be persuaded to agree with this court's tentative belief that a serious distinction should be recognized between a threat received by a person who has no actual fear of economic harm and a threat received by someone, like Phifer, who had actually expected to benefit from the body-recorded threat. Here, by cooperating with the FBI, Phifer planned to extricate himself from what he felt was an unprofitable deal, and his plan has succeeded. Phifer's motivation arguably makes a difference, and in this court's opinion, it provides a reason for finding this factual situation more amenable to an application of the rationale of the Second Circuit than to that of the Eleventh Circuit. However, as it now stands this court feels bound to disagree with the Waters' contention that the Government failed to prove a threat of economic harm. While sorely tempted by the marked factual difference between this case and the cases which created the binding Eleventh Circuit precedent, this court will not stray from stare decisis, especially when it is unnecessary in this case to do so.

850 F. Supp. 1558

A troublesome, but dispositive, question is whether the threat alleged in Count One was "wrongful," the statutory term necessarily used. Of the varying stories told by the witnesses as to the substance of the evolving agreement between the Waters and Phifer, the version most damaging to the Waters must be the one assumed to exist for the purposes of Rule 29 analysis. Although the various versions are similar, there are enough interpretations and nuances that this court respectfully declines to attempt to outline all possible variants. The following colloquy, which occurred during the Rule 29 argument, basically reveals the Government's position on this subject:

THE COURT: Mr. Barnett, do you want to talk on that subject a little bit?
MR. BARNETT: I'd be happy to, Your Honor.
It looks to me like the only thing that we haven't covered is Rule 29 as to the evidence must be construed in a light most favorable to the government. And what have you got? And we can take it back. There are any number of ways of approaching it, but let's just do it from the bar of the word "get-go."
It's the state of the mind of the victim that makes the early agreement significant, because that sets the pace in his mind, here's a window of opportunity to get hundreds of thousands of dollars in contracts if I will agree to the kickback. If I will agree to the kickback on the front end of it, I ain't getting none.
THE COURT: And that's not charged.
MR. BARNETT: Of course, it's not charged, except to the degree that it sets the state of mind of the victim. And it sets up the unlawful conduct, and he knows in his mind they've got the capacity, whatever the connection is that they say they have at HUD, to get HUD work.
He's doing piecework with the railroad company, paid to go up and down the line. He's done some contracts, but he hasn't done anything like a hundred thousand dollars or these multiple hundred thousand dollar contracts. And they say you kick it back to us, and the percentages that we

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1 practice notes
  • U.S. v. Kaplan, No. 95-4908
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • January 22, 1998
    ...effect on commerce be adverse. See United States v. De Parias, 805 F.2d 1447, 1450 (11th Cir.1986); see also United States v. Waters, 850 F.Supp. 1550, 1562 (N.D.Ala.1994) (applying the rule). Although a few of our sister circuits have criticized our choice of words in De Parias, 12 the req......
1 cases
  • U.S. v. Kaplan, No. 95-4908
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • January 22, 1998
    ...effect on commerce be adverse. See United States v. De Parias, 805 F.2d 1447, 1450 (11th Cir.1986); see also United States v. Waters, 850 F.Supp. 1550, 1562 (N.D.Ala.1994) (applying the rule). Although a few of our sister circuits have criticized our choice of words in De Parias, 12 the req......

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