United States v. Elliott

SIMPSON, J.

In this case we deal with the question of whether and, if so, how a free society can protect itself when groups of people, through division of labor, specialization, diversification, complexity of organization, and the accumulation of capital, turn crime into an ongoing business.

Today we review the convictions of six persons accused of conspiring to violate the RICO statute, two of whom were also accused and convicted of substantive RICO violations. The government admits that in this prosecution it has attempted to achieve a broader application of RICO than has heretofore been sanctioned. Predictably, the government and the defendants differ as to what this case is about. According to the defendants, what we are dealing with is a leg, a tail, a trunk, an ear -- separate entities unaffected by RICO proscriptions. The government, on the other hand, asserts that we have come eyeball to eyeball with a single creature of behemoth proportions, securely within RICO's grasp. After a careful, if laborious study of the facts and the law, we accept, with minor exceptions, the government's view. Because of the complicated nature of this case, both factually and doctrinally, a detailed explication of the facts and of the reasoning underlying our conclusions must be undertaken.

Simply stated, this is a case involving a group of persons informally associated with the purpose of profiting from criminal activity. The facts giving rise to this generalization, however, are considerably more complex. Evidence presented during the 12 day trial implicated the six defendants and 37 unindicted co-conspirators in more than 20 different criminal endeavors. Because the jury found the defendants guilty as charged, with two exceptions, we proceed on the assumption that all relevant credibility choices were made in favor of the government.

The evidence in this case demonstrated the existence of an enterprise -- a myriopod criminal network, loosely connected but connected nonetheless. By committing arson, actively assisting a car theft ring, fencing thousands of dollars worth of goods stolen from interstate commerce, murdering a key witness, and dealing in narcotics, J. C. and Recea Hawkins directly and indirectly participated in the enterprise's affairs through a pattern, indeed a plethora, of racketeering activity. We affirm their convictions on Count Two.

IV. THE RICO CONSPIRACY COUNT

All six defendants were convicted under 18 U.S.C. § 1962(d) of having conspired to violate a substantive RICO provision, § 1962(c). In this appeal, all defendants, with the exception of Foster, argue that while the indictment alleged but one conspiracy, the government's evidence at trial proved the existence of several conspiracies, resulting in a variance which substantially prejudiced their rights and requires reversal. Prior to the enactment of the RICO statute, this argument would have been more persuasive. However, as we explain below, RICO has displaced many of the legal precepts traditionally applied to concerted criminal activity. Its effect in this case is to free the government from the strictures of the multiple conspiracy doctrine and to allow the joint trial of many persons accused of diversified crimes.

A. Prior Law: Wheels and Chains

1. Kotteakos and the Wheel Conspiracy Rationale: The Court in Kotteakos held that proof of multiple conspiracies under an indictment alleging a single conspiracy constituted a material variance requiring reversal where a defendant's substantial rights had been affected. At issue was "the right not to be tried en masse for the conglomeration of distinct and separate offenses committed by others." Kotteakos thus protects against the "spill-over effect", the transference of guilt from members of one conspiracy to members of another.

2. Blumenthal and the Chain Conspiracy Rationale: The impact of Kotteakos was soon limited by the Court in Blumenthal v. United States, where the indictment charged a single conspiracy to sell whiskey at prices above the ceiling set by the Office of Price Administration. The owner of the whiskey, through a series of middlemen, had devised an intricate scheme to conceal the true amount he was charging for the whiskey. Although some of the middlemen had no contact with each other and did not know the identity of the owner, they had to have realized that they were indispensible cogs in the machinery through which this illegal scheme was effectuated. The Court concluded that "in every practical sense the unique facts of this case reveal a single conspiracy of which the several agreements were essential and integral steps.” Thus the "chain conspiracy" rationale evolved.

3. Limits of the Chain Conspiracy Rationale: The rationale of Blumenthal applies only insofar as the alleged agreement has "a common end or single unified purpose." Generally, where the government has shown that a number of otherwise diverse activities were performed to achieve a single goal, courts have been willing to find a single conspiracy. This "common objective" test has most often been used to connect the many facets of drug importation and distribution schemes. The rationale falls apart, however, where the remote members of the alleged conspiracy are not truly interdependent or where the various activities sought to be tied together cannot reasonably be said to constitute a unified scheme. In United States v. Miley, for example, the Second Circuit held that the value and quantity of drugs sold by the defendant-suppliers was insufficient to justify the inference that each knew his supplies were only a small part of the drugs handled by a larger operation. Similarly, in United States v. Bertolotti, the same Court focused on an alleged narcotics conspiracy that bore little resemblance to "the orthodox business operation" found to exist in other drug cases; many of the "narcotics transactions" involved amounted to "little more than simple cash thefts" in which no drugs changed hands. The only factor that tied several isolated transactions together, the Court noted, was the presence of two of the defendants, Rossi and Coralluzzo, in each. In effect, "the scope of the operation was defined only by Rossi's resourcefulness in devising new methods to make money". Under these circumstances, the Court held that the government had failed to prove the existence of a single conspiracy.

Applying pre-RICO conspiracy concepts to the facts of this case, we doubt that a single conspiracy could be demonstrated. Foster had no contact with Delph and Taylor during the life of the alleged conspiracy. Delph and Taylor, so far as the evidence revealed, had no contact with Recea Hawkins. The activities allegedly embraced by the illegal agreement in this case are simply too diverse to be tied together on the theory that participation in one activity necessarily implied awareness of others. Even viewing the "common objective" of the conspiracy as the raising of revenue through criminal activity, we could not say, for example, that Foster, when he helped to conceal stolen meat, had to know that J.C. was selling drugs to persons unknown to Foster, or that Delph and Taylor, when they furnished counterfeit titles to a car theft ring, had to know that the man supplying the titles was also stealing goods out of interstate commerce. The enterprise involved in this case probably could not have been successfully prosecuted as a single conspiracy under the general federal conspiracy statute, 18 U.S.C. § 371.

B. RICO to the Rescue: The Enterprise Conspiracy

In enacting RICO, Congress found that "organized crime continues to grow" in part "because the sanctions and remedies available to the Government are unnecessarily limited in scope and impact". Thus, one of the express purposes of the Act was "to seek the eradication of organized crime . . . by establishing new penal prohibitions, and by providing enhanced sanctions and new remedies to deal with the unlawful activities of those engaged in organized crime." Against this background, we are convinced that, through RICO, Congress intended to authorize the single prosecution of a multi-faceted, diversified conspiracy by replacing the inadequate "wheel" and "chain" rationales with a new statutory concept: the enterprise.

To achieve this result, Congress acted against the backdrop of hornbook conspiracy law. Under the general federal conspiracy statute, the precise nature and extent of the conspiracy must be determined by reference to the agreement which embraces and defines its objects. Whether the object of a single agreement is to commit one or many crimes, it is in either case that agreement which constitutes the conspiracy which the statute punishes. In the context of organized crime, this principle inhibited mass prosecutions because a single agreement or "common objective" cannot be inferred from the commission of highly diverse crimes by apparently unrelated individuals. RICO helps to eliminate this problem by creating a substantive offense which ties together these diverse parties and crimes. Thus, the object of a RICO conspiracy is to violate a substantive RICO provision -- here, to conduct or participate in the affairs of an enterprise through a pattern of racketeering activity -- and not merely to commit each of the predicate crimes necessary to demonstrate a pattern of racketeering activity. The gravamen of the conspiracy charge in this case is not that each defendant agreed to commit arson, to steal goods from interstate commerce, to obstruct justice, and to sell narcotics; rather, it is that each agreed to participate, directly and indirectly, in the affairs of the enterprise by committing two or more predicate crimes. Under the statute, it is irrelevant that each defendant participated in the enterprise's affairs through different, even unrelated crimes, so long as we may reasonably infer that each crime was intended to further the enterprise's affairs. To find a single conspiracy, we still must look for agreement on an overall objective. What Congress did was to define that objective through the substantive provisions of the Act.

C. Constitutional Considerations

The "enterprise conspiracy" is a legislative innovation in the realm of individual liability for group crime. We need to consider whether this innovation comports with the fundamental demand of due process that guilt remain "individual and personal".

The substantive proscriptions of the RICO statute apply to insiders and outsiders -- those merely "associated with" an enterprise -- who participate directly and indirectly in the enterprise's affairs through a pattern of racketeering activity. Thus, the RICO net is woven tightly to trap even the smallest fish, those peripherally involved with the enterprise. This effect is enhanced by principles of conspiracy law also developed to facilitate prosecution of conspirators at all levels. Direct evidence of agreement is unnecessary: "proof of such an agreement may rest upon inferences drawn from relevant and competent circumstantial evidence -- ordinarily the acts and conduct of the alleged conspirators themselves".

Undeniably, then, under the RICO conspiracy provision, remote associates of an enterprise may be convicted as conspirators on the basis of purely circumstantial evidence. We cannot say, however, that this section of the statute demands inferences that cannot reasonably be drawn from circumstantial evidence or that it otherwise offends the rule that guilt be individual and personal. The Act does not authorize that individuals "be tried en masse for the conglomeration of distinct and separate offenses committed by others". Nor does it punish mere association with conspirators or knowledge of illegal activity; its proscriptions are directed against conduct, not status. To be convicted as a member of an enterprise conspiracy, an individual, by his words or actions, must have objectively manifested an agreement to participate, directly or indirectly, in the affairs of an enterprise through the commission of two or more predicate crimes. One whose agreement with the members of an enterprise did not include this vital element cannot be convicted under the Act. Where, as here, the evidence establishes that each defendant, over a period of years, committed several acts of racketeering activity in furtherance of the enterprise's affairs, the inference of an agreement to do so is unmistakable.

In the instant case, it is clear that "the essential nature of the plan" was to associate for the purpose of making money from repeated criminal activity. Defendant Foster, for example, hired J. C. Hawkins to commit arson, helped him to conceal large quantities of meat and shirts stolen from interstate commerce, and bought a stolen forklift from him. It would be "a perversion of natural thought and of natural language" to deny that these facts give rise to the inference that Foster knew he was directly involved in an enterprise whose purpose was to profit from crime. As we noted in United States v. Gonzalez, "persons so associating and forming organizations for furthering such illicit purposes do not normally conceive of the association as engaging in one unlawful transaction and then disbanding. Rather the nature of such organizations seems to be an ongoing operation . . ." Foster also had to know that the enterprise was bigger than his role in it, and that others unknown to him were participating in its affairs. He may have been unaware that others who had agreed to participate in the enterprise's affairs did so by selling drugs and murdering a key witness. That, however, is irrelevant to his own liability, for he is charged with agreeing to participate in the enterprise through his own crimes, not with agreeing to commit each of the crimes through which the overall affairs of the enterprise were conducted. n30 We perceive in this no significant extension of a co-conspirator's liability. When a person "embarks upon a criminal venture of indefinite outline, he takes his chances as to its content and membership, so be it that they fall within the common purposes as he understands them".

Our society disdains mass prosecutions because we abhor the totalitarian doctrine of mass guilt. We nevertheless punish conspiracy as a distinct offense because we recognize that collective action toward an illegal end involves a greater risk to society than individual action toward the same end. That risk is greatly compounded when the conspirators contemplate not a single crime but a career of crime. " There are times when of necessity, because of the nature and scope of the particular federation, large numbers of persons taking part must be tried together or perhaps not at all . . . . When many conspire, they invite mass trial by their conduct".

We do not lightly dismiss the fact that under this statute four defendants who did not commit murder have been forced to stand trial jointly with, and as confederates of, two others who did. Prejudice inheres in such a trial; great Neptune's ocean could not purge its taint. But the Constitution does not guarantee a trial free from the prejudice that inevitably accompanies any charge of heinous group crime; it demands only that the potential for transference of guilt be minimized to the extent possible under the circumstances in order "to individualize each defendant in his relation to the mass". The RICO statute does not offend this principle. Congress, in a proper exercise of its legislative power, has decided that murder, like thefts from interstate commerce and the counterfeiting of securities, qualifies as racketeering activity. This, of course, ups the ante for RICO violators who personally would not contemplate taking a human life. Whether there is a moral imbalance in the equation of thieves and counterfeiters with murderers is a question whose answer lies in the halls of Congress, not in the judicial conscience.

Viewed in a light most favorable to the government, the evidence against Elliott proved the following:

(1) Early in the spring of 1971, Joe Fuchs gave Elliott a bottle of 500 amphetamine capsules without a prescription.

(2) Shortly thereafter, Elliott negotiated a deal with Fuchs for Joe Breland to build an enclosed porch and for Fuchs to repay Elliot and Breland with amphetamine pills. During the next year, Fuchs delivered the pills in installments of 400.

(3) In April, 1972, Elliott, apparently as a favor for J.C., either sold or gave to Fuchs a 50 pound piece of stolen Hormel meat.

(4) In May, 1973, Elliott, serving as a juror in the trial of Rudolph Flanders for possession of meat from the same stolen shipment, held out for acquittal, causing a mistrial. No evidence was presented that Elliott had been contacted in advance about how he would vote in the Flanders case, although J.C. had told others that he felt Elliott would cooperate.

(5) In January, 1976, Elliott encouraged Fuchs to lie to a federal grand jury about how he acquired the stolen meat given to him by Elliott in 1972.

This evidence could not be taken to support, to the exclusion of all other reasonable hypotheses, a conclusion by the jury that Elliott agreed to participate, directly or indirectly, in the affairs of an enterprise through a pattern of racketeering activity. At best, this evidence discloses that Elliott used a close friend, Joe Fuchs, as a personal source of amphetamines and that he became peripherally involved in a stolen meat deal, an involvement he later attempted to conceal. The government failed to prove that Elliott's amphetamine transactions with Fuchs were in any way connected with the affairs of the enterprise. The Hormel meat, on the other hand, undeniably was acquired as a result of enterprise activity, but Elliott's cooperation with J. C. Hawkins in disposing of a small portion of the meat is insufficient to prove beyond a reasonable doubt that Elliott knowingly and intentionally joined the broad conspiracy to violate RICO. Elliott's acts are equally consistent with the hypothesis that he conspired with J.C. and Fuchs for the limited purpose of aiding in the distribution of stolen meat, an offense with which he was not charged in this case. Under this hypothesis, Elliott agreed to participate in the affairs of the enterprise, but not through a pattern of racketeering activity, hence, not in violation of the Act. Similarly, Elliott's two subsequent attempts to cover up the facts in the Hormel meat case are subject to two interpretations: (1) as possible overt acts in furtherance of an agreement to participate in the enterprise's affairs through a pattern of racketeering activity, or (2) as efforts at concealment undertaken after the object of his more limited conspiracy with J.C. and Fuchs had been accomplished, on the theory that "every conspiracy will inevitably be followed by actions taken to cover the conspirators' traces". To allow these predictable acts of concealment to be construed as independent evidence that Elliott agreed to conduct a pattern of racketeering activity would unjustifiably broaden the already pervasive scope of the RICO statute. We hold, then, that the more reasonable conclusion dictated by these facts is that, while Elliott may have conspired to distribute stolen meat, the jury could not reasonably conclude that he conspired to violate RICO.