Petition for Writ of Certiorari — Posner v. United States

Fy | Suavenre Court, U.d-

88-1307 *) FILED |

PERG (189

No. JOSEPH F. SPANIOL, JR.

CLERK

In THE

Supreme Court of the Anited States

Octoser Term, 1988

eee ee ee Nee enc ner ne ne cane te Nn canara me tenn RAP eM 5 aI ears wn

ne aR rR eR RR ACT A 8 RRR A A —

MICHAEL POSNER and SIDNEY MUSKOVSKEY,

Petitioners,

UNITED STATES OF AMERICA,

Respondent.

--

a

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

ALLAN A. ACKERMAN

2000 N. Clifton Avenue

Chicago, Illinois 60614

(312) 332-2891

Counsel for Petitioners

Michael Posner

and Sidney Muskovsky

Midwest Law Printing Co., Chicago 60611, (312) 321-0220

at

i

QUESTIONS PRESENTED

I.

Whether Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479

(1985) in part, stands for the proposition that in a RICO

conspiracy case, the “PATTERN” of racketeering activity

comprises an essential element of the federal criminal of-

fense? (The circuits are divided on this question.)

II.

Whether the failure by the trial judge to instruct on

the elements essential to the statute (18 U.S.C. § 1962(d))

comprise plain error? (Notwithstanding Pope v. Illinois,

___ US. __, 107 S.Ct. 1918, 95 L.Ed.2d 439 (1987) the

circuits remain divided on this question also.)

ia

il

TABLE OF CONTENTS

PAGE

QUESTIONS PRESENTED ................4.. i

TADSLE OF AUTHORITIES 220. cecccceccsnes ill

fog ii 1 4 ot, SnD Prr raga mre 1

Pe RWI evden sess db aneeeneaneeeceeus 2

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED .............204.. 2

STATEMENT OF THE CASE ............-- 4

REASONS FOR GRANTING THE WRIT .... 8 :

PO 5... eee ee 17 |

APPENDIX

Opinion of the United States Court of Appeals for

the Seventh Circuit, decided December 8, 1988 . la

Judgment of the United States Court of Appeals for

the Seventh Circuit, dated December 8, 1988... 23a

ill

TABLE OF AUTHORITIES

CASES:

Cabana v. Bullock, 474 U.S. 376, 106 S.Ct. 689

twa cceeueeseeess

Liquid Air Corp. v. Rogers, 834 F.2d 1297 (CA 7,

EE

McKinzie v. Risley, 842 F.2d 1525 (CA 9, 1988) ..

Pope v. Illinois, __. U.S. ___, 107 S.Ct. 1918

ESET EO eee ee ee ee 13, 15,

Rose v. Clark, 478 U.S. 570, 106 S.Ct. 3101 (1986) .

EPO UG CESS C4G Sue bess eccedccceseces 13,

Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985) .

ES a re 8, 9,

U.S. v. Bordallo, 857 F.2d 519 (CA 9, 1988) ..

U.S. v. Clemons, 848 F.2d 741 (CA 3, 1988) ..

U.S. v. Coonan, 839 F.2d 886 (CA 2, 1988) ...

UENCE EGGS deka kha sn aescescces 8, 10, 11,

U.S. v. Frasch, 818 F.2d 631 (CA 7, 1987) ....

U.S. v. Golomb, 811 F.2d 787 (CA 2, 1987) ...

U.S. v. Grayson, 795 F.2d 278 (CA 3, 1986) ..

U.S. v. Horak, 833 F.2d 1235 (CA 7, 1987) .... 8,

U.S. v. lanniello, 8308 F.2d 184 (CA 2, 1986), cert.

denied, 107 S.Ct. 3229 (1987) ..............

U.S. v. Kerley, 838 F.2d 932 (CA 7, 1988) .. 9,

U.S. v. Kozminski, ___. US. , 108 S.Ct. 2751

tana odes keassscccssccecce 12,

PAGE

10

16

16, 18

15, 16

11, 18

15

16, 17

12, 17

6

9

11

12, 18

11

15, 16

13, 16

iv

U.S. v. Mentz, 840 F.2d 315 (CA 6, 1988) ..... 13, 15

U.S. v. Ortega, 859 F.2d 327 (CA 5, 1988) .... 15

U.S. v. Peel, 837 F.2d 975 (CA 11, 1988) .. 13, 14, 15

U.S. v. Slay, 858 F.2d 1310 (CA 8, 1988) ..... 16

U.S. v. Stern, 858 F.2d 1241 (CA 7, 1988) .... 6

U.S. v. Williams, 809 F.2d 1072 (CA 5, 1987)... 12

OTHER AUTHORITIES:

United States Constitution, Fifth Amendment ... 2

United States Constitution, Sixth Amendment ... 2

SSS ee ca eel ae oa eae ee aeeee 3,4

Ty THE

Supreme Court of the Vnited States

Ocroser Term, 1988

foo ent

ae

MICHAEL POSNER and SIDNEY MUSKOVSKY,

Petitioners,

UNITED STATES OF AMERICA,

Respondent.

One (a aenernseT nt I AARC Te RR EAL A A RS Noo Aer aN ——~

——— A AAA RR: A RR A, ee ne

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Petitioners pray that a writ of certiorari issue to review

the judgment of the United States Court of Appeals for

the Seventh Circuit entered on December 8, 1988.

OPINIONS BELOW

The final judgment of the trial court was not printed

in an official reporter.

The decision of the United States Court of Appeals for

the Seventh Circuit is reported as United States v. Mus-

kovsky and Posner, ___ F.2d ____ (CA _ 7, 1988). The

aides

Court of Appeals’ decision was rendered on December 8,

1988. The opinion below is reprinted in the Appendix to

this petition, infra, at la-22a.

JURISDICTION

The decision of the United States Court of Appeals for

the Seventh Circuit, from which review is sought, was

entered on December 8, 1988. The petitioners did not seek

any petition for rehearing in the Court of Appeals.

This Court has jurisdiction to review the judgments of

the Court of Appeals under 28 U.S.C. § 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

This petition involves the Fifth and Sixth Amendments

of the United States Constitution and the federal RICO

statute, 18 U.S.C. §§ 1961-1964.

The portions pertinent to the issues raised herein are

set forth below:

United States Constitution, Amendment V

. . nor be deprived of life, liberty or property, with-

out due process of law... .

United States Constitution, Amendment VI

In all criminal prosecutions, the accused shall enjoy

the right to a speedy and public trial, by an impar-

tial jury of the State and district wherein the crime

shall have been committed, ... .

A ate

=

In pertinent part the RICO (conspiracy) statute, 18

U.S.C. § 1962 (1970) states:

§ 1962. Prohibited activities

(a) It shall be unlawful for any person who has re-

ceived any income derived, directly or indirectly, from

a pattern of racketeering activity or through collec-

tion of an unlawful debt in which such person has

participated as a principal within the meaning of sec-

tion 2, title 18, United States Code, to use or invest,

directly or indirectly, any part of such income, or the

proceeds of such income, in acquisition of any interest

in, or the establishment or operation of, any enter-

prise which is engaged in, or the activities of which

affect, interstate or foreign commerce. A purchase of

securities on the open market for purposes of invest-

ment, and without the intention of controlling or par-

ticipating in the control of the issuer, or of assisting

another to do so, shall not be unlawful under this sub-

section if the securities of the issuer held by the pur-

chaser, the members of his immediate family, and his

or their accomplices in any pattern or racketeering

activity or the collection of an unlawful debt after

such purchase do not amount in the aggregate to one

percent of the outstanding securities of any one class,

and do not confer, either in law or in fact, the power

to elect one or more directors of the issuer.

(b) It shall be unlawful for any person through a

pattern of racketeering activity or through collection

of an unlawful debt to acquire or maintain, directly

or indirectly, any interest in or control of any enter-

prise which is engaged in, or the activities of which

affect, interstate or foreign commerce.

(c) It shall be unlawful for any person employed

by or associated with any enterprise engaged in, or

the activities of which affect, interstate or foreign

commerce, to conduct or participate, directly or in-

directly, in the conduct of such enterprise’s affairs

through a pattern of racketeering activity or collec-

tion of unlawful debt.

a ie

(d) It shall be unlawful for any person to conspire

to violate any of the provisions of subsections (a), (b),

or (c) of this section.

(Added Pub.L. 91-452, Title IX, §901(a), Oct. 15,

1970, 84 Stat. 942.)

STATEMENT OF THE CASE

On January 28, 1987 a federal grand jury in Chicago

returned a fifteen (15) count indictment charging Posner

and Muskovsky with a RICO conspiracy in violation of

18 U.S.C. § 1962(d) (Count 1). The same indictment, in

Counts 2-15, charged the petitioners with Travel Act vio-

lations.}

The substance of the case below revolved around the

Roman House. The Roman House was a nightclub featur-

ing nude female dancers located on North Milwaukee

Avenue in Prairie View, Illinois; it had a sign in front

saying ‘“Nude, Nude, Nude” (Tr. 2-3, 75, 121-122, 203-204,

276-277, 786). Roman House did not have a liquor license,

and therefore sold non-alcoholic beverages (Tr. 432, 685-

686, 992; GX. 39, Tr. pp. 5-6). The non-alcoholic beverages

were nothing more than either grape juice or sparkling

water. Female employees called “mixers” encouraged cus-

tomers to purchase “bottles of bubbly.” The bottles cost

the customer approximately $100.00 per bottle (Tr. 166-

167, 328-329, 994-995). Upon the purchase of a “bottle of

bubbly” the ‘‘mixer’”’ and her male customer/companion

would adjourn to a secluded area of the nightclub where

1 Per 18 U.S.C. §§2 and 1952.

ee SE

the male companion would be entertained for approximate-

ly fifteen or twenty minutes. The female “mixer’’ (after

fifteen/twenty minutes) would ask her companion whether

he wanted to purchase another “bubbly bottle.” If he did,

she stayed; if not, she bid him adieu.

The mixers were not supposed to solicit or take money

from the customers.” Rather, the customers paid for the

bottles of “bubbly” usually with their credit cards. Roman

House’s management, would make telephone calls in inter-

state commerce, to representatives of the various credit

cards to obtain approval for the customers’ charges (Tr. 4-12,

21-22, 46-49, 54-63, 91-100, 124-132, 166-173, 208-218, 219-

252, 277-284, 364-371, 379-388, 410-422, 450-454, 477-483).

The federal offenses here came about by virtue of Roman

House’s use of credit cards. The Roman House engaged

in business intercourse—from approximately 1982 through

1984—with a company named National Credit Service

(NCS). NCS was a credit card processing service. In May

1981 the FBI took over the operation of NCS pursuant

to an undercover operation, and NCS was run by FBI

Agents Larry Damron and Norman Transeth using under-

cover aliases (Tr. 534-535, 785-786). NCS provided credit

card processing services to Roman House for Master Card

and Visa charges from October 1982, and for American

Express charges from October 1983, through August, 19%4

2 The evidence below demonstrated that any number of the female

employees offered their services/for cash/in violation of Roman

House rules (Tr. 424, 468, 469). The evidence showed that at least

three (3) of the female employees had their own ‘“‘private deals’’

. were on frolics of their own (Tr. 424, 468, 469).

3 NCS provided similar credit card processing services to approxi-

mately 20 other similar clubs during the undercover operation (Tr.

581-582).

tlle

(Tr. 541, 550-552). Once a week NCS would visit the

Roman House, total up the gross credit slips and remit

a check to the Roman House less 15 percent (Tr. 535-537,

544, 550). The 15 percent represented the NCS service

charge.4

The prosecution evidence included the testimony of the

undercover FBI agents who were running NCS, former

Roman House employees and approximately seven (7)

Roman House customers. The Travel Act counts were

supported by the testimony of the customers.®

THE DEFENSE CASE. Petitioner Muskovsky testified

(Tr. 1196-1282). Muskovsky worked at the Roman House

from 1977 until it closed in 1986 (Tr. 1197-1205). He

started as a doorman, then became a bartender and in

1979 became the manager of the Roman House. In that

capacity he hired and fired employees, approved customer

4 In other words, NCS, as an FBI enterprise, contributed to the

ability of the Roman House to “service” male customer credit card

accounts. The government charged the Roman House 15 percent.

The NCS company generated enough business to have its own

local name. . . “operation safe bet” . . . see U.S. v. Frasch, 818

F.2d 631 (CA 7, 1987), U.S. v. Stern, 858 F.2d 1241, 1243, n.2 (CA

7, 1988).

Counts 2-15 alleged federal Travel Act violations. Thirteen (13)

of the fifteen (15) Travel Act counts involved Roman House and

NCS during the period of time NCS was operated by the FBI.

5 E.g., Counts 2 and 3 involved a customer, Strandford M. Dick.

In March, 1982, that customer testified that he used his credit

card at the Roman House (Tr. 650, 652). He testified that one of

the female employees engaged in some sexual conduct (Tr. 659).

Hence, the use of the credit card provided the ostensible federal

jurisdiction; the single sexual act constituted an Illinois misde-

meanor violation (Ill.Rev.Stats., Ch. 38, § 11-14 (1981)).

Each subsequent Travel Act violation (Counts 4-15) had similar

supportive trial evidence (albeit different dates and customers).

om

credit card charges and supervised the day-to-day manage-

ment of the Roman House. Credit card charges accounted

for approximately 85 percent of the Roman House’s busi-

ness (Tr. 1204-1215). Muskovsky repeatedly told employees

that prostitution was prohibited (Tr. 1222-1231, 1268-1269).

Six (6) former customers (Tr. 1075-1122, 1186-1195, 1283-

1292, 1306-1314) and four (4) former employees (Tr. 986-

1052, 1123-1173, 1314-1872) of the Roman House testified

that prostitution did not take place at the Roman House

during the period 1976 to 1985.

i Prior to closing arguments the trial court charged the

ya as regarding the essential elements of Count 1 (Tr.

0 -1457). The trial court charged the jury:

To prove the charge alleged in Count 1 of the in-

dictment the government must prove the following

| propositions:

First, that a defendant was employed by or associ-

ated with the enterprise alleged in Paragraph 1 of

Count 1 of the indictment;

Second, that the defendant knowingly conspired with

another person to conduct and participate in the con-

| duct of the affairs of that enterprise, directly or in-

| directly, through a pattern of racketeering activity,

| namely acts in violation of the laws of the State of

Illinois against prostitution as alleged in Counts 2

| through 15 of the indictment; and

\ Third, the enterprise engaged in interstate commerce

or the activities of the enterprise affected interstate

commerce (Tr. 1455).

The Court further charged the jury that:

The government must prove that each defendant con-

spired to commit the offense of conducting the affairs

of an enterprise through a pattern of racketeering

activity and was aware that others had done likewise.

= =

The finding of the conspiracy charged in Count 1 does

not require that two predicate acts of racketeering

activity actually occurred. There need only exist an

agreement to perform these acts (Tr. 1457).

The trial court did not charge the jury that the PAT-

TERN requirement compelled the jury to find, inter alia,

that the racketeering activity could not involve a series

of disconnected acts . . . nor did the trial court instruct

the jury that there had to be a continuity and relation-

ship as between the pattern-conduct in order to qualify

as a pattern of racketeering activity. The omission of

these essential elements had overwhelming import in this

case in that the evidence showed that during the period

of time covered by the indictment (approximately 10

years) the Roman House entertained at least 160,000 cus-

tomers (Tr. 1059) and during the same period of time the

government’s trial evidence showed sexual activity involv-

ing only 14 customers and some 33 separate acts involv-

ing those 14 customers over the entire length of the in-

dictment.

REASONS FOR GRANTING THE WRIT

The lower courts are divided as to the meaning of Sedi-

ma.® Is “pattern” of racketeering activity a question of

law for the court or a fact-specific question for the jury?”

Assuming (as most courts have done) that it is a fact-spe-

6 Sedima, S.P.R.L. v. Imrex Co., 473 U.S 479 (1985).

7 Cf., U.S. v. Horak, 833 F.2d 1235, 1240 (CA 7, 1987) vs. U.S.

». Coonan, 839 F.2d 886, 888-890 (CA 2, 1988).

a OR

cific jury question then must the “pattern” of racketeer-

ing activity be defined in that it comprises essential ele-

ments of the offense?

Likewise, the lower courts are divided as to whether

the failure to charge the jury on ‘essential elements’’ is

plain error?®

This case provides an appropriate vehicle for the resolu-

tion of these troublesome, re-occurring and difficult ques-

tions.

In Sedima, S.P.R.L. v. Imrex Co., 473 U.S 479 (1985)

the Court vacated the dismissal of a civil RICO, complaint

while, in part, discussing ‘“‘pattern of racketeering activ-

ity.” In part, Sedima held:

As many commentators have pointed out, the defini-

tion of a “pattern of racketeering activity” differs

from the other provisions in § 1961 in that it states

that a pattern “requires at least two acts of racke-

teering activity,” § 1961(5) (emphasis added), not that

it “means” two such acts. The implication is that

while two acts are necessary, they may not be suffi-

cient. Indeed, in common parlance two of anything

do not generally form a “pattern.” The legislative his-

tory supports the view that two isolated acts of rack-

eteering activity do not constitute a pattern (105 S.Ct.

at 3285, n. 4, emphasis ours).

Since Sedima, courts have wrestled with defining the

concept of a pattern under RICO. Clearly more is re-

quired than just two (2) acts committed within a ten year

8 In U.S. v. Kerley, 858 F.2d 932, 939 (CA 7, 1988) the Court,

while granting a new trial, noted that the Second Circuit state-

ment ... “in general, failure to instruct the jury on an essential

element of the offense constitutes plain error” .. . citing, inter

alia, Golomb, 811 F.2d 787, 793 (CA 2, 1987).

=_ =

period; the acts must have “continuity plus relationship

which combines to produce a pattern.’

In Liquid Air Corp. v. Rogers, 834 F.2d 1297 (CA 7,

1987) the court affirmed a civil RICO jury verdict. The

court approved the following jury instruction:

[t]wo or more acts of racketeering activity which

were related by a common scheme, plan or motive.

It may not simply be a series of disconnected acts.

Therefore, proof of two acts of racketeering activity,

without more does not establish a pattern.

* * *

The instruction comports with the general require-

ments of the statute as interpreted since Sedima. (834

F.2d at 1308).

The utterly unsettled state-of-law gathers support from

U.S. v. Cocnan, 839 F.2d 886 (CA 2, 1988). In Coonan

a divided court declined the government’s emergency peti-

tion for a writ of mandamus where the trial judge at the

close of the Coonan trial evidence alerted all counsel that

there would be no instruction on what constitutes a pat-

tern of racketeering (Jd. at 888). The government’s posi-

tion in Coonan was simply that the failure to instruct on

the “pattern” of racketeering conduct or activity deprived

the jury of the essential elements of the offense (/d. at

889, 890).1°

Circuit Judge Altimara dissented. In his dissent, Cir-

cuit Judge Altimara noted, inter alia, that the pattern

of racketeering elements were essential elements of the

offense and that the jury must deliberate on the facts only

9 Liquid Air Corp. v. Rogers, 834 F.2d 1297, 1304 (CA 7, 1987).

10 Thus the government’s argument in Coonan is identical to our

argument both below and as presented in this petition.

after being informed of all the essential elements of an

offense (Jd. at 889). Circuit Judge Altimara clearly found

that the “pattern-elements” were within the essential ele-

ments of the RICO offense (/d. at 898-890).1!

In U.S. v. Grayson, 795 F.2d 278 (CA 3, 1986) the Court

affirmed a drug related RICO conspiracy. While affirm-

ing the Court, citing Sedima, noted that the various

Courts of Appeals had differing views of ‘“‘pattern’’ (795

F.2d at 288, 289). The Grayson Court stated:

We may assume, without deciding, that the predicate

acts under RICO “must have the same or similar

purposes, results, participants, victims or methods of

commission or [must be] otherwise . . . interrelated

by distinguishing characteristics,” so as not to be

“isolated” acts (795 F.2d at 290).12

In U.S. v. Ianniello, 808 F.2d 184 (CA 2, 1986), cert.

denied, 107 S.Ct. 3229 (1987) the Court affirmed a criminal

RICO conspiracy finding, inter alia, that post-Sedima cer-

tain Circuits have modified the “‘pattern’”’ requirements

while other Circuits have treated Sedima as not mark-

ing a sharp departure in the law, 808 F.2d at 191, n. 13.

However, the Janniello panel found itself bound by prior

11 To compound the disarray the government alternatively argued

below that the pattern requirement may be deemed a matter of

law for the trial court (Gov.Brf. below at pp. 42, 44).

It is clear that the government has taken different positions as

between the instant case and the Coonan case. These inconsis-

tent positions, aliwnde, may satisfy the need for resolution of this

troublesome issue by the Court.

12 Cert. denied, _.___—-U.S. ___, 107 S.Ct. 899 (1987).

The Grayson facts are utterly distinguishable from those at bar.

As the Grayson panel noted the drug related evidence was over-

whelming and the jury could not have come to any conclusion

other than the conclusion of guilty even assuming a proper jury

charge. (Jd. at 290).

=,

Circuit precedent and thus found no need to probe the

question of essential elements/pattern requirement instruc-

tions (808 F.2d at 190, 191). However, the government’s

position in Coonan, ante, certainly underscores the cur-

rent need for review and resolution.'%

It is our position that the pattern requirement is a fact-

specific question.!4 If this proposition is correct then the

fact... of a “pattern of racketeering activity” comprises

an essential element of criminal RICO conspiracy cases.!*

The court below, while affirming these convictions found

no plain error (indeed, no error whatsoever) in the trial

court’s failure to instruct the jury on what we perceive

to be “essential elements” (App. 16a-19a).

Once again, on the premise that the pattern require-

ments comprise essential elements (per the government’s

position in Coonan, ante) the lower courts are divided as

to whether the failure to instruct a trial jury comprises

plain error.!6 In U.S. v. Kozminski, ___ U.S. ___.,, 108

13 The Fifth Circuit seemingly finds no need to offer jury instruc-

tions on “pattern of racketeering activity”, U.S. v. Williams, 809

F.2d 1072, 1093-1094 (CA 5, 1987). Hence, it is unclear whether

Sedima had any impact in that Circuit.

4 Cf., U.S. v. Horak, 833 F.2d 1235, 1240 (CA 7, 1987).

15 We lack current viable statistics as to the number of criminal

RICO indictments returned from 1986-1988. It appears a reason-

able estimate that some 20 percent of the criminal indictments

from 1986 to date involve criminal RICO prosecutions.

16 The court below alternatively rejected the petitioners’ essen-

tial elements argument on the erroneous premise that the peti-

tioners invited the trial court to charge the jury without the essen-

tial elements (App. 17a-18a).

The sole support for this finding is found in the government’s

brief below at pg. 39. However, most of the Rule 30 conference

was off the record. Hence, the inability of the government or the

court below to locate transcriptual reference can hardly be con-

sidered dispositive of the “invited error’ concept.

—13—

S.Ct. 2751 (1988) the Court affirmed the granting of a new

trial where, inter alia, jury instructions comprised a part

of the issue. While affirming the granting of a new trial

the Court stated:

The District Court’s instruction on involuntary ser-

vitude, which encompassed other means of coercion,

may have caused the Kozminskis to be convicted for

conduct that does not violate either statute. Accord-

ingly, we agree with the Court of Appeals that the

convictions must be reversed and the case remanded

for a new trial (108 S.Ct. at 2765).

Surely the government cannot offer evidence that the

requisite “‘pattern” of racketeering occurred and if the

jury was not instructed on the essential elements... .

then, of course, the petitioners at bar may have been con-

victed for conduct that is not violative of the RICO stat-

ute. Accordingly we urge that this Court consider the

Kozminski language as appropriate to this petition.

Plain error vel non divides the lower courts. In U.S.

v. Mentz, 840 F.2d 315, 324 (CA 6, 1988) the Court

vacated a series of bank robbery convictions finding that

the absence of an essential element barred conviction.17

Similarly in U.S. v. Peel, 837 F.2d 975 (CA 11, 1988) the

Court reversed a federal narcotics conviction finding that

the jury instructions in that case permitted the convic-

tion of Peel on separate alternative theories . . . only one

of which was prohibited (837 F.2d at 977). While revers-

ing the Peel Court noted that the government’s position

(citing both Rose and Pope) that a harmless error analysis

was permissible was wrong (/d. at 978). The Court of Ap-

peals held that the erroneous instruction altered the in-

17 Even after both Pope v. Illinois, __.. U.S. ___, 107 S.Ct.

1918 (1987) and Rose v. Clark, 478 U.S. 570 (1986).

i ie

dictment by telling the jury that they could convict Peel

on the charged offense based on a finding that did not

constitute an element of the charged crime. The court

viewed the situation as a Fifth Amendment violation in

that the defendant had the fundamental right to be tried

and convicted only on the charges presented in the in-

dictment returned by the grand jury (/d. at 980). The

court further noted:

The government’s reliance on the decisions of the

U.S. Supreme Court in Rose v. Clark, 478 U.S. 570,

106 S.Ct. 3101, 92 L.Ed.2d 460 (1986) and Pope v.

Illinois, ___. U.S. ___, 107 S.Ct. 1918, 95 L.Ed.2d

439 (1987) is misplaced. Although both of those cases

involved erroneous jury instructions on an essential

element of a charged crime that affected a defen-

dant’s constitutional rights, neither of the errors at

issue in those cases constituted a constructive amend-

ment of a grand jury indictment (838 F.2d at 980,

fn. 3).

In Cabana v. Bullock, 474 U.S. 376, 106 S.Ct. 689

(1986), the court modified and remanded the granting of

habeas relief while vacating the death sentence there im-

posed. Within the text of the decision the court noted:

A defendant charged with a serious crime has the

right to have a jury determine his guilt or innocence,

Duncan v. Louisiana, 391 U.S. 145, 88 S.Ct. 1444,

20 L.Ed.2d 491 (1968), and a jury’s verdict cannot

stand if the instructions provided the jury do not re-

quire it to find such element of the crime under the

proper standard of proof, Sandstrom v. Montana, 442

U.S. 510, 99 S.Ct. 2450, 61 L.Ed.2d 39 (1979). Find-

ings made by a judge cannot cure deficiencies in the

jury’s finding as to the guilt or innocence of a defen-

dant resulting from the court’s failure to instruct it

to find an element of the crime (474 U.S. at ___,

106 S.Ct. at 696; emphasis supplied).

_

In Pope v. Illinois, __. U.S. ___, 107 S.Ct. 1918 (1987)

the Court remanded a series of obscenity convictions back

to the Illinois courts for resolution of a harmless error

inquiry where jury instructions, as they peculiarly related

to obscenity, were incorrect. Jnter alia, the Pope major-

ity wrote:

To the extent that cases prior to Rose may indicate

that a conviction can never stand if the instructions

provided the jury do not require it to find each ele-

ment of the crime under the proper standard of

proof, see, e.g., Cabana v. Bullock, 474 U.S. 376, 384,

106 S.Ct. 689, ___, 88 L.Ed.2d 704 (1986), after

Rose, they are no longer good authority (107 S.Ct.

at 1922, n.7).18

Since both Cabana and Rose, ante, were from the same

term of Court it is difficult to ascertain the viability of

Cabana post-Rose. However, since Pope mandates that

Cabana is no longer good authority . . . the subsequent

inability of lower courts to deal with whether the lack

of essential elements is even cognizable remains under-

standable. Notwithstanding the language in Pope (Cabana

is no longer good authority) the Sixth, Seventh, Ninth and

Eleventh Circuits, while citing both Pope and Rose, have

nonetheless found that Pope is not controlling.’

18 Post-Pope the Court of Appeals for the Fifth Circuit cited

Cabana v. Bullock, ante, with approval in U.S. v. Ortega, 859 F.2d

327, 333 (CA 5, 1988) (while emphasizing that Fifth Circuit prece-

dent stands for the proposition ... . “it is plain error for a judge to

fail to instruct the jury on all essential elements of a crime, EVEN

THOUGH SUCH AN INSTRUCTION IS NOT REQUESTED”

. 859 F.2d at 333, emphasis ours, citations omitted).

19 E.g., U.S. v. Mentz, 840 F.2d 315 (CA 6, 1988); U.S. v. Kerley,

838 FF: 2d 932, 938 (CA 7, 1988); U.S. v. Bordallo, 857 F.2d 519,

527, 528 (CA 9, 1988); U.S. v. Peel, 837 F.2d 975, 980 (CA 11,

1988).

~~"

In U.S. v. Kerley, 858 F.2d 932 (CA 7, 1988) the Court

granted a new trial, on rehearing. In Kerley the Court

initially found that the failure to instruct, on an essen-

tial element in the refusal to register in the Army con-

viction, was not plain error (Jd. at 939). However, on

rehearing, it turned out that the trial transcript did note

an appropriate objection to the omitting instruction and

hence the plain error analysis was for naught; a new trial

was ordered. The Kerley decision did note that there

was a split-in-Circuits on whether the failure to instruct

on an essential element is always plain error (Jd. at 939).

The Court noted that the Sixth Circuit takes the posi-

tion that the failure to instruct is always plain error while

the Eighth Circuit does not and the Second and Seventh

Circuits will . . . generally find that failure to instruct

the jury on an essential element of the offense constitutes

plain error (/d. at 939).?°

In U.S. v. Clemons, 843 F.2d 741 (CA 3, 1988), the court

affirmed a witness tampering conviction while once again

reviewing Pope and Rose (Jd. at 753). The court, affirm-

ing the conviction, found that in combination, Pope and

Rose required the court of appeals to find. . . that the

facts found by the jury were such that it is clear beyond

20 Citing decisions from the Second, Third and Fourth Circuits.

In McKinzie v. Risley, 842 F.2d 1525 (CA 9, 1988) (en banc) the

eleven (11) active Circuit Court Judges reviewed both Rose and

Pope. Six (6) members voted to affirm the dismissal of the §2254

petition, five (5) members of the Court dissented.

In U.S. v. Slay, 858 F.2d 1310 (CA 8, 1988) the Court affirmed

an order below granting a new trial. The government urged that

both Rose and Pope compelled a harmless error analysis (/d. at

1315). The Court of Appeals, while affirming the granting of a new

trial, found that the trial court’s analysis of the problem (jury in-

structions, post-McNally) was supported by the record. This, not-

withstanding both Rose and Pope.

= =

a reasonable doubt that if the jury had never heard the

impermissible instruction its verdict would have been the

same .. . (/d. at 753). The Clemons court did note that

the case was not the same as where an instruction pre-

vented the jury from considering the issue of Clemons

content .. . the proof against Clemons was overwhelm-

ing (/d. at 754).

If the Clemons analysis is accurate then the court below

in this case was incorrect.

The trial record in the instant case shows that fourteen

(14) customers of the Roman House enjoyed sexual favors

over a ten (10) year period. The same trial evidence showed

that the Roman House entertained over 160,000 customers

during the same period of time. Petitioners calculate that

the sexually favored customers comprise .001 percent (we

think).

CONCLUSION

In U.S. v. Coonan, 839 F.2d 886 (CA 2, 1988) a divided

court denied the government’s mandamus petition. Within

that petition the government’s position was that the trial

court was about to commit prejudicial error in that the

trial court was not going to give the trial jury a com-

plete series of instructions on “pattern of racketeering.”

The dissent (agreeing with the government) agreed that

the complete jury charge must include a recitation of the

essential elements of a RICO conspiracy.

This petition squarely presents the question of whether

it was Plain Error for the trial court not to instruct on

the essential elements of a RICO conspiracy assuming,

arguendo, that the question of “‘pattern”’ vel non are for

the jury as a fact-specific question. That position, post-

Sedima, was embraced by the Seventh Circuit in U.S. v.

Horak, 833 F.2d 1235 (CA 7, 1987). The lack of Circuit

conformity is a compelling reason to grant this petition.

In addition, the several Circuits are in disarray as to

whether Pope v. Illinois, USS. , 107 S.Ct. 1918

(1987) can be interpreted as meaning there can be no plain

error where there is a failure to instruct the jury on the

essential statutory elements of a federal criminal offense.

The petitioners submit that the failure to instruct the

trial jury as to essential elements comprise, in this case,

both Fifth and Sixth Amendment violations.

Accordingly, and for the above reasons, it is respect-

fully submitted that this Court grant this petition for writ

of certiorari and thereafter vacate the convictions at bar

and remand this case for a new trial.

Respectfully submitted,

ALLAN A. ACKERMAN

2000 N. Clifton Avenue

Chicago, Illinois 60614

(312) 332-2891

Counsel for Petitioners

Michael Posner

and Sidney Muskovsky

APPENDIX

— {

IN THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Nos. 87-3103 & 87-3104

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

Vv.

SIDNEY MUSKOvSKY and MICHAEL POSNER,

Defendants-Appellants.

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 87 CR 59—William T. Hart, Judge.

ARGUED SEPTEMBER 15, 1988—DECIDED DECEMBER 8, 1988

Before CoFFEY, FLAUM, and EASTERBROOK, Circuit |

Judges. |

FLAuM, Circuit Judge. Defendants Michael Posner and

Sidney Muskovsky were convicted by a jury of fourteen |

violations of the Travel Act and of conspiracy to violate |

the Racketeer Influenced and Corrupt Organizations Act

(RICO). The Travel Act violations were premised on the

use of an interstate facility, the telephone, to promote,

manage, facilitate and carry on acts of prostitution in

violation of Illinois law, and the RICO violation was based

on the predicate Travel Act violations. On appeal, the De-

fendants assert numerous errors. First, they claim that

there was insufficient evidence to convict them of either

—~2a—

the Travel Act or RICO conspiracy violations. Second,

they claim that the government’s conduct in gathering

evidence against them was so outrageous that, as a mat-

ter of due process, their convictions must be reversed.

Third, they claim that the trial court committed plain er-

ror in failing to instruct the jury on the definition of “pat-

tern” for purposes of a RICO violation. Finally, the Defen-

dants assert that, because Illinois law precludes conviction

for both a substantive crime and a conspiracy to commit

that substantive crime, their RICO conspiracy sentences

must be vacated since they cannot be sentenced for both

the Travel Act violations and the RICO conspiracy viola-

tion. Because we find no merit in these contentions, we

affirm.

bi

Defendant Michael Posner was the owner of the Roman

House, a club located in Prairie View, Illinois. Defendant

Sidney Muskovsky was the manager of that club from ap-

proximately 1979 to 1985. The Roman House was billed

as a nude dancing establishment and featured a sign in

front of the club which read ‘‘Nude, Nude, Nude.” The

defendants admitted that they intended to run the club

as a ‘“bust-out’”’ joint—an establishment where the object

is to take all of the customer’s money. The government

contended at trial, and apparently convinced the jury, that

the Roman House succeeded in its objective by enticing

the customer to buy very expensive drinks, using their

credit cards, in exchange for sexual favors.

The Defendants were convicted of fourteen counts of

using a facility in interstate commerce to promote, facili-

tate, manage and carry on an unlawful activity in viola-

tion of 18 U.S.C. Section 1952 (the Travel Act). The De-

fendants were also convicted of one count of conspiring

to participate in the affairs of an enterprise through a

pattern of racketeering activity in violation of 18 U.S.C.

Section 1962(d) (RICO). Defendant Posner was sentenced

to ten years’ imprisonment on the RICO conspiracy con-

viction and five years’ probation on the Travel Act counts,

—3a—

and was also fined a combined total of $95,000. Defendant

Muskovsky was sentenced to four years’ imprisonment on

the RICO conspiracy count and five years’ probation on

the Travel Act violations. This appeal followed.

Il.

The Defendants attack their convictions in various ways

under the rubric of insufficient evidence. First, they claim

that some of the testimony against them was so unreliable

that it should not have been taken into account by the

jury. Without that testimony, they say, there is insuffi-

cient evidence to prove that they violated either the Travel

Act or RICO. Second, the Defendants claim there is in-

sufficient evidence to show that they entered into a con-

Spiracy to operate the Roman House through a pattern

of racketeering activities. Third, the Defendants assert

that there was insufficient evidence of the interstate nexus

required to support a RICO violation. Finally, the Defen-

dants offer a grab bag of claims alleging insufficient evi-

dence to support their Travel Act convictions.

When presented with a claim of insufficient evidence we

will “affirm the verdict if the evidence, when viewed in

the light most favorable to the government, establishes

that any rational trier of fact could have found the ele-

ments of the crime beyond a reasonable doubt.”’ United

States v. Leibowitz, No. 87-2838, slip op. at 13 (7th Cir.

Sept. 7, 1988); United States v. D’Antonio, 801 F.2d 979,

981 (7th Cir. 1986). This is a very heavy burden for a de-

fendant to meet. United States v. Bruun, 809 F.2d 397,

408 (7th Cir. 1987). The burden becomes even heavier,

however, where there is a claim of insufficient evidence

because of the unreliability of one or more witnesses. Mat-

ters of witness credibility, absent ‘‘extraordinary circum-

stances,” are solely for the jury to evaluate. United States

v. D’Antonio, 801 F.2d at 982. With these standards in

mind we now turn to the specific allegations of insuffi-

cient evidence made by the Defendants.

—

A.

The Defendants claim that the testimony of three of the

Government’s witnesses, Ann Stefka, Kim Hileman and

Nada Lauts, was “somewhere between . . . inherently in-

credible and inherently improbable.” They claim that such

flawed testimony provides the extraordinary circumstances

which allow a reviewing court to independently evaluate

witness credibility. Moreover, with the testimony of these

witnesses excluded, they believe there is insufficient evi-

dence to support their convictions.!

Ann Stefka was a waitress at the Roman House from

late 1979 to early 1981. She testified at trial that she “fre-

quently” saw acts of oral sex and sexual intercourse take

place at the Roman House between customers and the

dancers and mixers.? She also testified that she saw both

Posner and Muskovsky send girls to the back of the club

to be with customers.®? As a waitress, one of Ms. Stefka’s

duties was to clean up after the club had closed for the

1 The Defendants’ theory is that with this testimony excluded,

all that is left is the testimony of various customers who did not

know whether the sexual acts they engaged in were encouraged

by the Roman House or were actually just a side business of a

few of the girls working at the club. To this end, the Defendants

go to great lengths to try to show that only a handful of girls

were actually implicated in the predicate Travel Act counts. Since

we do not think that the testimony of Ms. Stefka, Ms. Hileman,

and Ms. Lauts can be disregarded, we do not need to address the

Defendants’ contention that all of the acts of prostitution at the

Roman House were the work of “independent contractors.”

2 Mixers were women who did not dance but whose responsibility

it was to induce customers to buy drinks. Some, but not all of

these mixers, engaged in sexual acts with the customers.

3 The Roman House consisted of a foyer and one large rectangu-

lar room. At one end of the room was a dance floor with tables

surrounding it. At the other end of the room was an area that

was kept completely dark and contained approximately six “love

seats” or “love couches.”’ We will refer to this section of the

Roman House as the “back area.”’

a

night. Ms. Stefka testified that in the course of this clean-

up she occasionally found used sexual paraphernalia such

as condoms in the back of the club.

On cross-examination, defense counsel extensively ques-

tioned Ms. Stefka on whether she had ever heard Posner

tell his employees not to engage in sex. Ms. Stefka tes-

tified that she had not heard Posner say this, whereupon

defense counsel attempted to impeach her with her grand

jury testimony asserting that she had heard Posner make

such a statement. Defense counsel also attempted to bring

out that Ms. Stefka had a drug problem at the time she

worked at the Roman House, a charge which Ms. Stefka

denied.

Kim Hileman worked as a dancer and a mixer at the

Roman House in 1980. She testified that she and other

girls engaged in oral sex and sexual intercourse with cus-

tomers in the back area of the Roman House. According to

Ms. Hileman, when a customer entered the Roman House

he would be seated at a table near the dance floor where

a mixer would eventually join him. If the customer agreed

to buy drinks for the mixer, the mixer would ask the cus-

tomer if he would like to go to the back area where they

could be “more comfortable.”’ Once in the back, she would

attempt to induce the customer to buy bottles of “‘bubbly,”’

a non-alcoholic mixture of juice and soda. Only after the

customer had purchased three or four bottles of bubbly,

at approximately $96 a bottle, would she engage in sexual

intercourse or oral sex with the customer. Ms. Hileman

further testified that Muskovsky sent her to the back area

with the knowledge that she would engage in oral sex

or sexual intercourse and never told her not to engage

in such acts.

On cross-examination the defense established that Ms.

Hileman had a serious drinking problem during part of

the time she worked at the Roman House. The defense

also introduced evidence that Ms. Hileman told the FBI,

prior to the grand jury proceedings in this case, that she

did not engage in sexual conduct of any kind at the Roman

—

House. Ms. Hileman admitted that she was fired from the

Roman House because of her failure to show up for work

and because of her drinking problems.

Nada Lauts, from May to October, 1976, was also a

dancer and mixer at the Roman House. Ms. Lauts, like

Ms. Hileman, testified that she attempted to get cus-

tomers to buy bottles of “champagne” and then go to the

back area where they could “party and have a good time.”

Ms. Lauts further testified that she saw other mixers en-

gage in oral sex and sexual intercourse with customers

in the back area and that she saw Defendant Posner send

girls to the back area. During both direct and cross-

examination, Ms. Lauts admitted that in exchange for her

testimony she was given immunity from prosecution, was

given aid in trying to settle problems she had with the

IRS, and that, because of her testimony, a case against

her husband involving drug possession may have been

dropped.

Defendants claim that the testimony of these three wit-

nesses should be disregarded because the testimony was

“Somewhere between inherently incredible and inherently

improbable.” Initially, we note that the Defendants have

waived this claim by failing to raise it before the district

court. See United States v. Carter, 720 F.2d 941, 945 (7th

Cir. 1983) (failure to present issue to district court results

in a waiver of that issue on appeal). Even if we were to

reach the Defendants’ claim on the merits, however, we

would find that the testimony was properly before the

jury. Defendants cite United States v. Rosenberg, 416 F.2d

680, 683 (7th Cir. 1969), for the proposition that we may

disregard testimony which is “inherently improbable.”” In

Rosenberg, evidence gathered by government agents was

excluded at trial because the agents lacked a search war-

rant at the time they obtained the evidence. On appeal,

the government claimed that its agents were lawfully on

the premises of the corporation without a search warrant

since the agents were simply returning a bill of sale. We

found that explanation inherently improbable, in the sense

—~7a—

that it confounded logic, in light of the facts surrounding

the visit to the corporation’s offices.

In contrast to Rosenberg, it would not confound logic

for us to believe the testimony of Stefka, Hileman and

Lauts. To the contrary, their testimony was remarkably

consistent with each other’s and consistent with much of

the testimony from other sources. True, there was some

reason to doubt the testimony of Stefka and Hileman based

on their prior sworn testimony and the testimony of Lauts

based on her possible bias, but the Defendants had the

opportunity to inform the jury of these problems. ‘These

matters [of credibility and bias] affect only the witnesses’

credibility and, as such, are ‘solely for the jury to

evaluate.’ ”’ United States v. D’Antonio, 801 F.2d at 982.

Because there is nothing extraordinary about the circum-

stances of this case, we cannot say that the testimony

of the three witnesses was so inherently improbable or

incredible that it should be disregarded.

B.

Defendants’ next contention is that there was insuffi-

cient evidence upon which the jury could find that they

entered into a conspiracy to operate the Roman House

through a pattern of racketeering. Posner claims that

there was no evidence that he was involved in the affairs

of the Roman House when the alleged predicate acts oc-

curred between 1982 and 1984. Posner argues that, at

most, he was in the position of one who is associated with

a conspiracy or knows about a conspiracy but does not

actually become involved in the conspiracy. Similarly,

Muskovsky claims that there was insufficient evidence to

find that he entered into an agreement to operate the

Roman House through a pattern of racketeering activity.

To find a defendant guilty of conspiracy to violate RICO,

the government must show that the defendant “was aware

of the essential nature and scope of the enterprise and

intended to participate in it.”” United States v. Bruun, 809

F.2d at 410. While there is no need to prove that the

oo

defendant intended personally to perform the two predi-

cate acts required for RICO liability, United States v.

Neapolitan, 791 F.2d 489, 498 (7th Cir.), cert. denied, 479

U.S. 940 (1986), the government does have to show more

than “mere association with conspirators, knowledge of

a conspiracy, and presence during conspiratorial discus-

sions... .’’ United States v. Percival, 756 F.2d 600, 610

(7th Cir. 1985); see also United States v. Williams, 798

F.2d 1024, 1028 (7th Cir. 1986). The government has to

show that there was an agreement between the members

of the conspiracy. Of course, direct evidence of that agree-

ment need not be shown, “fan agreement can be inferred

from the circumstances.” United States v. Neapolitan, 791

F.2d at 501.

In this case, there was an abundance of evidence from

which the jury could find that the Defendants knew the

nature and scope of the enterprise and intended to par-

ticipate in it. For example, an undercover FBI agent tes-

tified that Posner admitted to him that he ran the Roman

House as a “bust-out” joint where the “girls push the

customer as far as they could push them to get all of his

money before he had any kind of sexual gratification.”

Posner made additional statements to the FBI indicating

that he knew charge cards were being used to pay for

the sexual acts occurring at the Roman House. Muskov-

sky also admitted, in tape recorded conversations with

undercover FBI agents, that, under his supervision, acts

of prostitution occurred at the Roman House. Muskovsky

told the agent that his customers “would charge between

a thousand and fifteen hundred dollars on each visit for

his favorite girl” but that when two men came in together

they “usually [did] not spend enough money to get...

laid.” These admissions show that the Defendants knew

about the activities at the Roman House and allowed the

jury to infer that they agreed to participate in them.

The Defendants claim that these admissions are insuf-

ficient to support their conspiracy convictions because a

person cannot be found guilty of conspiracy based solely

on his own admissions. Defendants misstate the law. The

—~9a—

correct rule is that a defendant cannot be convicted of

conspiracy, or for that matter any crime, based solely on

his own uncorroborated admissions made after the conspir-

acy has ended. United States v. Fearn, 589 F.2d 1316,

1321 (7th Cir. 1978) (“It is a settled principle . . . that

a conviction must rest upon firmer ground than the un-

corroborated admission or confession of the accused) (em-

phasis added); United States v. Soteras, 770 F.2d 641, 644

n.4 (7th Cir. 1985) (the corroboration rule “does not apply

to statements made prior to or during the commission of

the crime’’).

In this case there is no doubt that each of the Defen-

dants’ admissions was made during the pendency of the

conspiracy. Moreover, there was sufficient evidence to cor-

roborate their admissions. First, Nada Lauts testified that

Posner asked her to show him how she handled customers

and then “proceeded to open up his pants” and told her

to “show me what you do.” Similarly, there was testi-

mony from Kim Hileman that Muskovsky told her that

“he wanted to get some of what the customers were get-

ting,’’ whereupon they “had oral sex and [sexual] inter-

course.”’ Second, there was ample evidence that both Posner

and Muskovsky sent women to the back area to be with

men, called in the credit card charges with which custom-

ers paid for the illegal activities, and kept files on the

preferred sexual conduct and partners of various custom-

ers. Thus, it was proper for the jury to consider the ad-

missions in deciding that Posner and Muskovsky conspired

to conduct the activities of the Roman House through a

pattern of racketeering activities.4

4 Had this evidence been presented as independent circumstan-

tial evidence, rather than corroborative evidence, it would have

been enough to allow the jury to infer that the Defendants know-

ingly agreed to conduct illegal prostitution activities at the Roman

House through use of interstate facilities.

—10a—

C.

Defendants next claim that there was insufficient evi-

dence of an interstate nexus to support their RICO con-

spiracy convictions. In order to have federal jurisdiction

under RICO, the government must show either that the

enterprise is engaged in interstate commerce or that the

activities of the enterprise affect interstate commerce. 18

U.S.C. Section 1962(c); see United States v. Conn, 769

F.2d 420, 423-424 (7th Cir. 1985). In this case the Gov-

ernment contended that the activities of the enterprise,

the Roman House, affected interstate commerce through

its use of the interstate phone system to get approval for

credit card transactions.

Defendants claim their use of an interstate facility, the

telephone, is insufficient to meet the RICO nexus require-

ment for two reasons. First, they assert that because their

use of the telephone was infrequent, the effect on inter-

state commerce from the use was so small that it is in-

sufficient to meet the nexus requirement. Second, they

claim that because the government encouraged the use

of the telephone by the Roman House, that use cannot

serve as the requisite interstate nexus.

The required nexus between the activities of the enter-

prise and interstate commerce need not be great; ‘“‘even

a minimal effect on interstate commerce satisfies this

jurisdictional element.” United States v. Bagnariol, 665

F.2d 877, 892 (9th Cir. 1981), cert. denied, 456 U.S. 962

(1982). Thus, this court has held that the activities of the

Cook County Circuit Court affect interstate commerce

simply because it purchases supplies and office equipment

from companies located outside of Illinois. United States

v. Murphy, 768 F.2d 1518, 1531 (7th Cir. 1985), cert. de-

nied, 475 U.S. 1012 (1986). Given the minimal effect on

commerce needed to satisfy the “jurisdictional” element,

the telephone use by the Roman House sufficiently affects

interstate commerce to satisfy the RICO nexus require-

ment. Moreover, even leaving out the telephone use, the

Roman House, like the Cook County Circuit Court, af-

—lla—

fected interstate commerce through its purchase of sup-

plies from out-of-state companies.5

Defendants contend that the telephone use should not

be counted toward the nexus requirement because that

use was encouraged by the government.® As will be dis-

cussed more fully below, the company to which the Roman

House placed the phone calls in order to get approval for

credit card transactions, the National Credit Card Ser-

vice, was in fact operated by the FBI. According to the

Defendants, the FBI’s operation involved “promoting the

use of the credit cards . . [sic] and thus the interstate

telephone calls.” Defendants argue that because the FBI

promoted the use of the telephone system, that use can-

not now be used as the basis for finding an effect on in-

terstate commerce.

In United States v. Archer, 486 F.2d 670, 681 (2d Cir.

1973), the Second Circuit held that telephone calls which

were made at the behest of federal agents and made sole-

ly for the purpose of achieving federal jurisdiction did not

meet an interstate commerce requirement. The court stated

that Congress did not mean to reach cases “where the

federal officers themselves supplied the interstate element

and acted to ensure that an interstate element would be

present.” Jd. at 682. Although we have never been pre-

sented with a case where federal jurisdiction was inappro-

priate because it was “manufactured,” see United States v.

Podolsky, 798 F.2d 177 (7th Cir. 1986) (questioning whether

5 The Defendants stipulated at trial that they used plastic cups

supplied from a company in Ohio, cocktail napkins supplied by a

company from Wisconsin, and natural gas produced in six states

other than Illinois.

§ This is not technically an insufficiency of the evidence argument.

Even if there was indisputable evidence that the telephone calls

actually took place, the Defendants could still assert that the calls

were insufficient to form the basis of the interstate nexus. We

note that there was ample evidence that the telephone calls were

made so that a true insufficient evidence argument on this point

would be meritless.

—12a—

there is any vitality to the idea of “‘manufactured”’ juris-

diction outside of circumstances constituting entrapment

or cancelling an element of the crime), we have not com-

pletely foreclosed the possibility of such a decision. See

United States v. Anderson, 809 F.2d 1281, 1287 (7th Cir.

1987).

Even if there is a viable doctrine of manufactured juris-

diction, however, we do not believe that it can be applied

to this case. The Defendants made telephone calls in inter-

state commerce in order to get credit card approvals even

before the government took over the credit card operation.

Unlike Archer, this is not a case where the government

supplied the nexus to interstate commerce and acted to

ensure that it would be present. In sum, the Defendants’

telephone activities were not “manufactured,” and the ac-

tivities had a sufficient effect on interstate commerce to

meet the RICO nexus requirement.

D.

Defendants also claim that, in three areas, there was

insufficient evidence to support their Travel Act convic-

tions. First, they contend that their indictments failed to

specify what acts constituted the “thereafter” acts re-

quired by the Travel Act. Second, Defendants assert that

the impermissible acts of prostitution were too sporadic

to be the basis of Travel Act violations. Finally, the De-

fendants argue that the Government failed to prove the

requisite effect on interstate commerce because the use

of the telephone was not “significantly related” to the ac-

tivity constituting the violation. Each of these contentions

can be disposed of in relatively short order.

A Travel Act violation occurs when a person uses any

facility in interstate commerce with intent to promote or

facilitate an unlawful activity and thereafter promotes or

a ne |

—13a—

facilitates the illegal activity. 18 U.S.C. Section 1952(a).7

The Defendants assert that their Travel Act indictments

failed to specify what illegal acts they performed or facili-

tated following their use of interstate facilities. However,

there is no requirement that the indictment specifically

identify the “thereafter” acts. As the Eighth Circuit re-

cently noted, “an indictment is sufficient if it sets forth

the offense in the statutory language, provided that the

statute sets out the neccessary elements of the offense.”

United States v. Cerone, 830 F.2d 938, 951 (8th Cir. 1987),

7 Section 1952(a) states, in its entirety:

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.

8 Each of the Travel Act counts were set out in substantially

similar form in the indictment and read:

That on or about [some date in 1982-1984], in the Northern

District of Illinois, Eastern Division, and elsewhere, MICHAEL

POSNER, and SIDNEY MUSKOVSKY, defendants herein, did

use and cause the use of a facility in interstate commerce, the

interstate telephone communications system, . . . with the in-

tent to promote, manage, establish and carry on and facilitate

the promotion, management, establishment and carrying on of

an unlawful activity, that is a business enterprise involving

prostituuon in violation of the laws of the State of Illinois,

. and thereafter said defendants did perform and cause to

be performed acts to promote, manage, establish and carry on,

and facilitate the promotion, management, establishment and

carrying on of that unlawful activity.

—l4a—

cert. denied, 108 S. Ct. 1730 (1988). The indictments here

did set forth the Travel Act offense in the statutory lan-

guage. Thus, the failure to specify the “thereafter’’ acts

was not error.

The Defendants’ next claim in regard to the Travel Act

is that even if there were any illegal activities at the

Roman House, those activities were too sporadic to form

the basis of the “business enterprise” required by the Act.

The Travel Act defines ‘unlawful activity” as “any busi-

ness enterprise involving . . . prostitution offenses in viola-

tion of the laws of the state in which they are committed.”

18 U.S.C. Section 1952(b). The term ‘business enterprise”’

has been construed to require more than isolated, casual,

or sporadic activity. United States v. Corbin, 662 F.2d

1066, 1073 n.16 (4th Cir. 1981). Rather, to be a business

enterprise, the activities must be part of a “continuous

course of conduct.” Jd. at 1072; United States v. Krev-

sky, 741 F.2d 1090, 1094 (8th Cir. 1984).

In this case the evidence showed that acts of prostitu-

tion took place at the Roman House over a span of at

least nine years. While it may be true that, as the Defen-

dants claim, the number of customers who were involved

in acts of prostitution was very small when compared with

the total number of customers, proof that a large percent-

age of customers were involved in the illegal activity is

not required. So long as the illegal activity was not an

isolated or sporadic event, which the prostitution here was

not, a business enterprise has been shown for purposes

of the Travel Act.

Finally, the Defendants assert that their Travel Act con-

victions cannot stand because their use of interstate facil-

ities was not “significantly related” to the charged illegal

activities. Again, the Defendants have correctly stated a

principle of law and then misapplied that principle to the

facts of their case. They are quite correct that in “a Travel

Act prosecution the interstate travel or use must relate

significantly, rather than incidentally or minimally, to the

illegal activity.”’ United States v. Raineri, 670 F.2d 702,

—1l5a—

717 (7th Cir.), cert. denied, 459 U.S. 1035 (1982); see also

United States v. Peskin, 527 F.2d 71, 77 (7th Cir. 1975).

This does not mean, however, that the interstate use must

be indispensable to the illegal activity; it is enough that

the use facilitates the illegal activity. United States v.

Raineri, 670 F.2d at 717; United States v. Stern, slip op.

at 11, No. 87-2418 (7th Cir. Sept. 28, 1988). In this case,

the use of the interstate telephone system to attain credit

card approvals was significantly related to the prostitu-

tion activities. It is clear that the ability of the Defen-

dants to get prior approval of credit card transactions fa-

cilitated the prostitution activities by ensuring that pay-

ment for those activities would be forthcoming. Thus, the

evidence was sufficient in all respects to sustain the De-

fendants’ convictions for violation of the Travel Act.

Il.

Defendants assert that the Government’s conduct in gath-

ering evidence against them was so outrageous that their

convictions should be vacated. The doctrine of outrageous

government conduct, first articulated in United States v.

Russell, 411 U.S. 428, 431-32, 93 S. Ct. 1637, 1643 (1973),

has had a checkered history. In Russell, the Supreme

Court said that even in a case not rising to the level of

entrapment, there “may some day be presented... a

situation in which the conduct of law enforcement agents

is so outrageous that due process principles would abso-

lutely bar the government from invoking judicial processes

to obtain a conviction.” Id. Nevertheless, neither the Su-

preme Court nor this circuit have ever held that the gov-

ernment’s conduct in a particular case was so outrageous

that due process required a dismissal. See United States

v. Shoffner, 826 F.2d 619, 626 (7th Cir.), cert. denied, 108

S. Ct. 356 (1987). Still, we have left open the possibility

that we might some day be presented with a case of gov-

ernment conduct which was so “truly outrageous” that

due process would bar conviction even where no indepen-

dent constitutional right was violated. Jd.

—l6a—

The Defendants’ claim of outrageous government con-

duct stems from the FBI’s operation of a credit card ap-

proval company, the National Credit Card Service (NCS),

as an undercover operation to gather information on pros-

titution activities in the Chicago area. According to FBI

agent Larry Damron, NCS set up and operated credit

card accounts for the Roman House, and operations like

it, ostensibly to hide the true source of the credit card

charges from the banks. In reality, the goal of NCS was

to gain as much information as possible about operations

such as the Roman House. The Defendants say they are

“troubled by the skullduggery of such [government] be-

havior, surprised by its crudeness, stunned by its lack of

social consciousness and, [sic] extremely doubtful of its

legality.” We are not troubled by the FBI’s operation and

we have no doubt of its legality.

The government’s use of a credit card service to “sting”’

enterprises such as the Roman House is not outrageous.

The government has broken no laws nor violated the con-

stitutional rights of any citizen. This is not a case where

the Roman House’s conduct can be attributed to govern-

ment suasion; the Roman House used credit card approval

services well before the government took over NCS. Un-

der those circumstances, the Defendants have fallen far

short of showing that the government’s conduct was so

“truly outrageous” that due process bars conviction.

IV.

Defendants next claim that the trial court committed

plain error by failing to instruct the jury on the defini-

tion of “pattern” for purposes of RICO. The court charged

the jury that the government must prove that

the defendant knowingly conspired with another per-

son to conduct and participate in the conduct of the

affairs of that enterprise, directly or indirectly,

through a pattern of racketeering activity, namely

acts in violation of the laws of the State of Illinois

against prostitution as alleged in Counts 2 through

15 of the indictment... .

—17a—

The judge further instructed the jury that “ ‘pattern of

racketeering activity’ means two acts of racketeering ac-

tivity, the last of which occurred within 10 years after

the commission of a prior act of racketeering.” The Defen-

dants claim these instructions were deficient because they

failed to define what is meant by a “pattern” of racketeer-

ing activity. According to the Defendants, these instruc-

tions would allow the jury to convict based on a series

of disconnected acts, a result foreclosed by the Supreme

Court’s definition of the pattern element. Because the

Defendants failed to raise this claim before the District

Court, we will review their contention under the plain

error standard. United States v. Conn, 769 F.2d 420, 425

(7th Cir. 1985); United States v. Kerley, 838 F.2d 932, 937

(7th Cir. 1988) (“A plain error is not just one that is con-

spicuous but one whose correction is necessary to prevent

a ‘miscarriage of justice.’ ’’).

The Supreme Court has stated, in dicta, that to find

a “pattern” of racketeering activities there must be both

continuity and relationship between (or among) the predi-

cate acts. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479,

496 n.14, 105 S. Ct. 3275, 3285 n.14 (1985). This circuit

has followed the Supreme Court’s admonition and has re-

quired that the government prove “continuity plus rela-

tionship” in order to show a pattern for purposes of RICO.

See, e.g., United States v. Horak, 833 F.2d 1235, 1240 (7th

Cir. 1987); Liquid Air Corp. v. Rogers, 834 F.2d 1297,

1304 (7th Cir. 1987). The Defendants claim that the district

court committed plain error by failing to instruct the jury

that “continuity plus relationship” must be shown. We

disagree.

Initially, we note that if the district court’s instruction

was error, it was error that was invited by the Defen-

dants. The Defendants submitted an instruction, parts of

which were eventually incorporated into the instructions

actually given, substantially similar to the instruction

given by the district court. Where error is invited, not

even plain error permits reversal. See United States v.

Wiggins, 530 F.2d 1018, 1020 (D.C. Cir. 1976) (“invited

—18a—

error generally does not require reversal, 7.e., appellant

cannot now complain that the court gave an instruction

which he requested.”); United States v. Young, 745 F.2d

733, 752 (2d Cir. 1984), cert. denied, 470 U.S. 1084 (1985)

(“not even the plain error doctrine permits reversal on

the ground that the trial court granted a defendant’s re-

quest to charge.”’).

Moreover, even if the trial court’s instruction amounted

to error in this case, it was not plain error. The trial court

instructed the jury that they had to find a “pattern of

racketeering activity” before they could find guilt. This

is not a case where the jury was not instructed at all on

an essential element of the crime, United States v. Pope,

561 F.2d 663, 670 (6th Cir. 1977), nor is this a case where

the trial court’s instruction amounted to a directed verdict

against the defendant on an element of the crime. United

States v. Kerley, 838 F.2d at 938. Instead, this was simply

a case where the trial court failed to fully define an ele-

ment of the crime. Such an omission is not the kind of

“miscarriage of justice” which the plain error doctrine is

designed to correct. See United States v. Sherwood, 770

F.2d 650, 654 (7th Cir. 1985) (no plain error where trial

court failed to define the term “willful” in a case where

an element of the crime was willful activity on the part

of the defendant).

In United States v. Grayson, 795 F.2d 278, 288 (3d Cir.

1986), cert. denied, 479 U.S. 1054 (1987), the Third Circuit

was presented with an allegation of error nearly identical

to the one made in this case. In Grayson, the defendant

claimed that the trial court erred in failing to instruct the

jury that a “connection” was required between the predi-

eate acts in order to convict on a RICO charge. Id. In-

stead, the jury was instructed only that “a pattern of

racketeering activity is defined to be two or more acts

of racketeering which occurred within ten years of each

other.”’ Jd. The Grayson court held that even if the in-

struction was incomplete, it did not amount to reversible

error since even a “glance at the predicate acts for the

RICO offense charged” showed that, to find guilt, the jury

—19a—

would necessarily have had to conclude that there was

continuity and relationship. Jd. at 290.

Just as in Grayson, the jury’s finding of guilt on all of

the predicate Travel Act counts in this case necessarily

established the requisite continuity and relationship. All

of the predicate acts involved acts of prostitution within

a two-year span. The acts were alleged to have occurred

at the same location and to have resulted from coordi-

nated action on the part of the Defendants. Given their

finding of guilt on all of the charged Travel Act counts,

the jury necessarily found the continuity and relationship

among the predicate acts necessary to support a RICO

conviction.

V.

Finally, the Defendants contend that their RICO sen-

tences must be vacated because Illinois law would not

allow conviction and sentencing for both the RICO con-

spiracy and Travel Act convictions. They correctly point

out that, under Illinois law, one may not be convicted and

sentenced for both a substantive crime and a conspiracy

to commit that substantive crime. See People v. Walker,

84 Ill. 2d 512, 419 N.E.2d 1167, 1176 (1981) (‘Under IIli-

nois law, a defendant cannot be convicted of both the in-

choate and the principal offense.”). According to the De-

fendants, this principle has been violated by their convic-

tions and sentencing on both the RICO charge (conspiracy)

and the Travel Act charge (substantive charge).

The Defendants’ argument goes as follows. Both RICO

and the Travel Act incorporate elements of state law. The

Travel Act explicitly incorporates state law prostitution

in its definition of ‘unlawful activity.” RICO implicitly

incorporates state law by making a violation of the Travel

Act eligible for inclusion as one of the two necessary pred-

icate acts. Defendants claim that since state offenses are

incorporated into federal law, state defenses must also be

incorporated. Thus, they claim that if there would be a

defense under state law to the state offense incorporated

—20a—

in the federal charge, then the federal charge cannot stand.

Defendants claim that this principle is implicated in this

case since state law would afford a defense to conviction

and sentencing for both the substantive Travel Act viola-

tions and inchoate RICO violations (which they claim im-

plicates state conspiracy law). This argument is flawed in

several respects.

First, the Defendants’ argument requires that they

show that their RICO conspiracy convictions somehow im-

plicate state conspiracy law. They claim that state con-

spiracy law is implicated not directly but as the overall

“theory of the prosecution.” But, the Defendants are in-

correct in asserting that state conspiracy law is implicated

in this case. Their Travel Act convictions were based on

violations of the Illinois prostitution laws, not Illinois con-

spiracy laws. Their RICO convictions were based on the

predicate Travel Act convictions and federal conspiracy

law. RICO conspiracy is a federal crime and its conspiracy

element is defined solely by federal law.

A claim similar to that of the Defendants’ was made

in United States v. Johnson, 426 F.2d 1112 (7th Cir. 1970).

In Johnson, the defendant was charged with both con-

spiracy to commit burglary and the substantive offense

of burglary in connection with the theft of a safe from

a federal institution. The substantive burglary count was

made an offense by the Assimilative Crimes Act which

incorporated state definitions of crimes into federal law

where no similar federal criminal statute existed. Jd. at

1116. The conspiracy count was based on a federal statute

that made conspiracy to commit any federal crime, in-

cluding crimes made federal by the Assim?” tive Crimes

Act, a federal violation. The defendant 1... that case

claimed that he was improperly sentenced for committing

two crimes since Illinois law precluded conviction for both

the substantive offense (burglary) and the inchoate offense

(conspiracy to commit burlary). The court rejected that

contention holding that Illinois conspiracy law did not con-

trol. Thus, the defendant was properly convicted under

two separate federal provisions.

—2la—

The Defendants in this case were also properly con-

victed under two separate federal provisions. Nowhere in

the RICO indictment was state conspiracy law implicated.

RICO conspiracy is a federal offense, just as the conspir-

acy in Johnson was a federal offense. Thus, state law de-

fenses to state law conspiracy charges are inapplicable to

a federal RICO conspiracy charge.

Second, even if state conspiracy law was implicated in

some way, the Defendant’s claim would fail since only

state substantive defenses are incorporated into federal

law for purposes of RICO, not state procedural defenses.

Thus, in United States v. Cissell, 700 F.2d 338, 339-40

(6th Cir. 1983), the court dismissed a RICO indictment

where the government failed to prove that the defendants

had actually violated state law as defined by the state

bribery statute. See also United States v. Tonry, 837 F.2d

1281 (5th Cir. 1988) (Travel Act indictment for acts of

bribery in violation of Louisiana law dismissed where per-

son bribed was a non-Louisiana official and Louisiana law

did not make it a crime to bribe a non-Louisiana official).

By comparison, in United States v. Friedman, 854 F.2d

535, 565 (2d Cir. 1988), no dismissal was required where

the state used as the two RICO predicate acts two crimes

which could not engender separate convictions under state

law. In Friedman, the defendant claimed that the two

bribes he was charged with making could not constitute

separate predicate acts since under state law the bribes

at issue could only constitute a single offense. Jd. The

court assumed that the defendant had correctly stated the

state law but nevertheless held that the two bribes could

constitute separate RICO predicate acts. The court char-

acterized the state rule as procedural and held that “state

procedural rules .. . are irrelevant to RICO.” Id.; See

also United States v. Licavoli, 725 F.2d 1040, 1047 (6th

Cir. 1984) (RICO was “not meant to incorporate state pro-

cedural law.”’). The Ninth Circuit has reached the same

conclusion for purposes of the Travel Act. See United

States v. Bertman, 686 F.2d 772, 774 n.2 (9th Cir. 1982)

(“we seriously doubt that non-substantive state law de-

—22a—

fenses, such as the running of the statute of limitations,

are cognizable in a Travel Act prosecution.’’).

The state law at issue here is procedural in nature. The

rule does not define what is a crime in Illinois but sim-

ply says that although there may be two possible crimes,

there can only be one conviction and sentence. The fact

that there could only be one state sentence should have

no effect on Congress’ determination that where a RICO

violation can be found based on Travel Act violations,

more than one sentence is appropriate. Therefore, we hold

that there was no error in convicting and sentencing the

Defendants for violation of both RICO and the Travel Act.

VI.

The Defendants have failed to show any reversible error

in the district court. We therefore AFFIRM.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Seventh Circuit

—23a—

JUDGMENT — ORAL ARGUMENT

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

Chicago, Illinois 60604

December 8, 1988.

Before

Hon. JOHN L. Correy, Circuit Judge

Hon. JOEL M. FLaum, Circuit Judge

Hon. FRANK H. EASTERBROOK, Circuit Judge

Nos. 87-3103 and 87-3104

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

vs.

SIDNEY MUSKOVSKY and MICHAEL POSNER,

Defendants-Appellants.

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 87 CR 59—William T. Hart, Judge.

This cause was heard on the record from the United

States District Court for the Northern District of Illinois,

Eastern Division, and was argued by counsel.

On consideration whereof, IT IS ORDERED AND AD.-

JUDGED by this Court that the judgment of the said

District Court in this cause appealed from be, and the

same is hereby, AFFIRMED, in accordance with the opin-

ion of this Court filed this date.