Petition — Manchester v. United States

‘FILED

IN THE

SUPREME COURT OF THE UNITED SPARES

October Term, 1979

MICHAEL J. MANCHESTER, Petitioner

v.

UNITED STATES OF AMERICA, Respondent

PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

-FOR THE THIRD CIRCUIT

Joseph M. Smith, Esquire

Counsel for Petitioner

2040 Philadelphia Savings Fund

- Society Building

12 South Twelfth Street

Philadelphia, Pennsylvania 19107

(215) WA 3-0123

THE LEGAL INTELLIGENCER, 66 NORTH JUNIPER STREET, PHILA, PA. 19107 (215) 561-4050

TABLE OF CONTENTS

Page

REESE IEG A a 1

a ie i wk vs hin bd a vk c ceo ss 2

rs 2

Statutory Provisions Involved ................... 3

a 3

Reasons for Granting the Writ ................... 9

1. The Decision below conflicts with a Deci-

sion of the United States Court of Appeals

for the Sixth Circuit as to the proper in-

terpretation of 28 U.S.C. 1961 and 1962 ... 9

2. The Statute involved is not invoked on in-

frequent and isolated occasions but rather

is used regularly by United States Attor-

neys across the country and hence the

proper interpretation of this Statute is a

matter of vital import to a great number of

MEG ae Ae ay bigs pies 8 dow 6 see cc 10

3. The Decision below incorrectly interprets

Section 1961 and 1962 in defining “Enter-

prise” and so extends the scope of the Stat-

ute well beyond that intended by the Con-

EMERG SUN ES sa eG Aw be ao ose cas cece 11

4. The Decision below is arguably in conflict

with a Decision of this Court ............. 11

5. This Court should not permit a conviction

to stand which convicts an individual who

is one of the entities which together com-

prise an “Enterprise” to be in violation of

both Sections 1962(c) and 1962(d) ....... 12

TABLE OF CONTENTS Continued

Page

6. This Court should grant Certiorari for the

reasons stated above. But, having granted

Certiorari, it should review the evidence to

determine if it was sufficient to sustain

each of the verdicts in order to do justice to

this particular Petitioner as well as settle

the law for other persons in his position

EE idee er a Caen hia RED cade aera 13

INE ie ee Oo aeeia . we on vee Ged a 14

Appendix:

Judgment Order of Court of Appeals ............ 17

Order Denying Rehearing .............ccccccees. 20

a eT aS oe nee 22

Text of Title 18 United States Code, Section 1961 28

Text of Title 18 United States Code, Section 1962 31

Text of Title 18 United States Code, Section 1341 33

Text of Title 26 United States Code, 7206(1) .... 34

TABLE OF CITATIONS

Direct Sales v. United States, 391 U.S. 703, 63 S.

Sc SIRES Shs veh PR eeu Oe ere 8 12

United States v. Fineman, 434 F. Sup. 189 (E.D.

ct pI Ps saa Ee no 11

United States v. Sutton, Fed. 2d. (Sixth

Circuit 1979) (Slip Opinion of 9/4/79 at 78-

RE 6 pu eas Bere es Pee noe ash hs 9, 10, 11

ii

1

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1979

Pe

MICHAEL J. MANCHESTER, Petitioner

v.

UNITED STATES OF AMERICA, Respondent

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

The petitioner, Michael J. Manchester respectfully

prays that a writ of certiorari issue to review the judg-

ment order of the United States Court of Appeals for

the Third Circuit entered in this proceeding on Sep-

tember 4, 1979.

OPINION BELOW

There was no opinion as such issued by the Court

of Appeals. Its judgment order, not yet reported, ap-

pears in the Appendix hereto. In addition, the

2

memorandum opinion rendered by the District Court

for the Eastern District of Pennsylvania is also in-

cluded in the Appendix hereto. This memorandum

opinion has not been reported.

JURISDICTION

The judgment of the Court of Appeals for the Third

Circuit was entered on September 4, 1979. A timely

petition for rehearing was denied on September 28,

1979 and this petition for certiorari was filed within 30

days of that date. This Court’s jurisdiction is invoked

under 28 U.S.C. §1254(1).

QUESTIONS PRESENTED

The central aim of Title 1X of the Organized Crime

Control Act of 1970 is to prevent and punish the finan-

cial infiltration and corrupt operation of legitimate

businesses affecting interstate commerce. Section

1962 of Title 18 prohibits certain conduct and Section

1961 defines the terms used to describe the conduct so

prohibited. The questions presented are:

I. May Section 1962(c) be applied to a person

who joins with other entities to form an “en-

terprise” as defined in Section 1961 which has

no legitimate object but rather is devoted ex-

clusively to criminal activities?

II. May an individual who is one of the entities

which together comprise an “enterprise” also

be a person “associated” with that “‘enter-

prise” and simultaneously be a conspirator

with the “enterprise’’?

III. Was the evidence sufficient to sustain the ver-

dict on each and every count?

3

STATUTORY PROVISIONS INVOLVED

United States Code, Title 18:

Sections 1961, 1962 — text in the Appendix

United States Code, Title 18:

Section 1341 — text in the Appendix

United States Code, Title 26:

Section 7206(1) — text in the Appendix

STATEMENT OF THE CASE

Petitioner was convicted by a jury at a trial pre-

sided over by the Honorable Charles R. Weiner of the

United States District Court for the Eastern District of

Pennsylvania of racketeering [18 U.S.C. 1962(c)],

racketeering conspiracy [18 U.S.C 1962(d)], mail fraud

[18 U.S.C. 1341] and filing a false corporate income tax

return [26 U.S.C. 7206(1)]. In essence, the jury found

petitioner guilty of joining with a group of others to

bribe a Pennsylvania Department of Transportation

(hereinafter PENNDOT) employee to foster the sale of

the various kinds of traffic control equipment which

petitioner and the others sold. In addition, petitioner

was convicted of filing a false income tax return for

Rad-O-Lite of Philadelphia, Inc. (hereinafter Rad-O-

Lite), a corporation for which he was the chief operat-

ing officer as well as a part owner.

Originally, petitioner and Rad-O-Lite had been in-

dicted together with six other defendants on the racke-

teering indictment, 78-281. Prior to trial, all of these

six defendants plea bargained with the Government

and so disposed of their cases.

Petitioner and Rad-O-Lite were brought to trial on

78-281, and a three-count tax charge indictment,

78-284 in which petitioner alone was named as a de-

fendant, was consolidated with it for trial. Petitioner

was named as a defendant in four of the counts in

4

78-281 and all three of the counts of 78-284. The jury

convicted him of three of the four counts on 78-281 and

all three of the counts on 78-284. A post-trial motion for

judgment of acquittal was granted by the District Court |

on two of the three counts of 78-284 — otherwise, the

post-trial motions were denied.

Factually, this was a very complex and confusing

case.

As to. the racketeering indictment, 78-281:

This indictment essentially charged that one

Joseph Barszowski, a career PENNDOT employee,

who was an assistant traffic engineer in the

PENNDOT office for Southeastern Pennsylvania re-

ferred to as District Six, was the ringleader of a scheme

in which certain distributors, producers, subcontrac-

tors and sales representatives obtained his aid in hav-

ing items of traffic safety equipment specified or re-

quired in PENNDOT traffic safety improvement proj-

ects in return for which Barszowski was given money

and other things of value by them. For all practical

purposes, Barszowski ran District Six — no project

could be completed without his approval and no one

was paid for traffic signal work unless Barszowski ap-

proved such payment.

Petitioner was the Vice-President and chief execu-

tive officer of Rad-O-Lite. Among Rad-O-Lite’s prod-

ucts was a form of traffic safety equipment known as

the Rad-O-Lite pre-emption device and a component of

that device which was known as the Rad-O-Lite pre-

emption chassis. Rad-O-Lite’s pre-emption equipment

is a traffic control system whereby the operator of an

emergency vehicle can, when approaching an inter-

section controlled by a traffic light, cause that traffic

signal to turn green for him and red for all other traffic

by simply activating a device in the emergency vehicle.

The Rad-O-Lite pre-emption chassis is a metal con-

tainer with wiring which is mounted inside traffic sig-

nal controller boxes and is intended for the purpose of

iit te i i i i i gy

i ii tt tl it i tet i lt i Be ee i a an ew re"

5

holding or mounting the Rad-O-Lite pre-emption de-

vice itself.

Sometime in 1971 or 1972, one Harry Weigand ap-—

proached petitioner and asked if he could be the sales

representative for Rad-O-Lite’s pre-emption equip-

ment. Weigand was then in the business of selling traf-

fic signs, street signs and paint and in so doing dealt

almost exclusively with municipalities, townships and

boroughs, precisely the kind of entities which would be

the purchasers of pre-emption equipment. Petitioner

gave Weigand an exclusive distributorship of the

Rad-O-Lite pre-emption equipment over an area which

included PENNDOI’s District Six. Apparently, im-

mediately after Weigand acquired the Rad-O-Lite dis-

tributorship he went to Barszowski and offered to split

his comissions with Barszowski if Barszowski would

help him to secure sales. Barszowski readily agreed

and in fact sales were made and commissions were

split.

Weigand also contacted one Homer Pireoff, a

salesman for W. F. Keegan, Inc., another co-defendant,

which company was itself in the traffic signal business

although it did not sell pre-emption equipment, and

made the same offer to Pireoff. Pireoff also agreed.

At Barszowski’s direction, Weigand paid

Barszowski’s commissions not directly to Barszowski,

but rather by check to another co-defendant, John F.

Dallas. Further, Weigand testified that at one point a

portion of the commissions for a particular sale were

paid to co-defendants J. Vincent Egan, Jr. and Joseph

V. Egan, III.

The crucial alleged criminal conduct occurred in

connection with a Federal Government project known

as the TOPICS Program which funded in large part the

cost of upgrading traffic intersections within

PENNDOT District Six. Because of the existence of

this program, Barszowski caused to be inserted a speci-

fication for traffic control projects within his district

6

which required a pre-emption chassis and he caused

the preparation of a PENNDOT specification for pre-

emption chassis equipment that could only be met by

Rad-O-Lite’s product, although it did not specifically

mention that product by name. This resulted in the sale

of the Rad-O-Lite pre-emption chassis to contractors

working on PENNDOT TOPICS projects in District

Six. Most of these sales were made through W. F.

Keegan, Inc., the distributor for producers of the con-

trollers used on the TOPICS projects which included

the Rad-O-Lite pre-emption chassis as part of the con-

troller package which it offered to PENNDOT contrac-

tors.

As a result, approximately four hundred traffic in-

tersections were upgraded and Rad-O-Lite sold approx-

imately four hundred pre-emption chassis in connec-

tion with this program. The evidence indicated that the

Government actually paid $1,600.00 per pre-emption

chassis but that Rad-O-Lite only received $850.00 per

chassis.

It was the Government’s contention at trial that

although petitioner did not directly participate in the

bribes of Barszowski, he was aware of them and ap-

proved of them by permitting Barszowski to more or

less direct the activities of Rad-O-Lite. In support of

this proposition the Government produced evidence

tending to show that Barszowski was a frequent visitor

to the Rad-O-Lite facility; that petitioner attended

meetings with Barszowski, Weigand and key em-

ployees of W. F. Keegan, Inc. where Rad-O-Lite busi-

ness was discussed; that petitioner sent copies of some

of Rad-O-Lite’s business correspondence to Barszowski

at his home address; that Barszowski helped petitioner

to obtain a loan from one of the co-defendants, Joseph

V. Egan, III, and that Barszowski acted as a mes-

senger to repay the loans petitioner had made from

Egan and from John F. Dallas; that Barszowski was

present when petitioner relieved Weigand of his dis-

7

tributorship and that this took place approxin.ately a

week to ten days after Weigand had seni a Federal form

1099 to John F. Dallas reflecting the commissions

which Weigand had paid to Dallas for Barszowski’s

benefit.

The Government also called several former em-

ployees of Rad-O-Lite. Two of them testified that peti-

tioner told them that Barszowski was a silent partner

in Rad-O-Lite; two of them testified that petitioner had

made angry remarks to the effect that Barszowski was

bleeding him dry and not doing very much in return;

and two of them testified that each was told that they

were not to recognize Barszowski should he appear at

the Rad-O-Lite facility with his own PENNDOT

superior.

On the other hand, Barszowski’s immediate

superior at PENNDOT testified and told the jury that

he knew full well that Barszowski was a regular visitor

to the Rad-O-Lite facility and the facilities of other

companies in the traffic control business and that he

would not have been the least bit surprised had

Barszowski been recognized by the Rad-O-Lite em-

ployees.

Petitioner himself testified and flatly contradicted

the testimony of the former Rad-O-Lite employees.

Otherwise, in large part, he corroborated the factual

testimony of the other Government witnesses although

he testified contrary to the inferences the Government

sought to be drawn from their testimony.

He freely admitted that he kept in close touch with

Barszowski and kept him fully advised of Rad-O-Lite’s

activities concerning the TOPICS projects. He ex-

plained that he did this because Rad-O-Lite from its

inception was in dire financial straits and it was very

important that Rad-O-Lite’s bills be paid as promptly as

possible and only Barszowski had the power to cause

the payment of any particular bill.

Finally, it is quite clear from the evidence that a

number of persons knew that Barszowski was receiv-

8

ing bribe money — among them were Weigand, Pireoff,

J. Vincent Egan, Jr., George McFadden the controller

and treasurer of W. F. Keegan, Inc. and, of course,

Barszowski himself. Each of these persons testified

either under grant of immunity or after a plea bargain

had been arranged with the Government and not one of

them testified that petitioner knew of the bribe pay-

ments.

As to the tax charges, indictment 78-284:

The one count now remaining charged petitioner

with having knowingly and willfully filed a corporate

income tax return for Rad-O-Lite which was false in

that it understated income and over-stated interest de-

ductions.

The evidence here indicated that there was some

$38,000.00, represented by four checks, which was not

included within the total amount of money reported.

There was evidence from petitioner’s accountant that

the reason why these four checks were not included

was because he had mistakenly assumed that they had

been included in the corporation’s prior fiscal year re-

turn. The total income reported on the return involved

in this count was $359,067.00. Petitioner’s accountant

further testified that the omission of the $38,000.00

would have had absolutely no effect on the tax liability

of anyone due to losses in prior years which could be

carried forward. On the other hand, an I.R.S. agent

testified for the Government that the omission of the

$38,000.00 would have had an effect on the tax liabil-

ity. It should be noted that there was no testimony

whatsoever about the alleged over-stated interest de-

duction.

9

REASONS FOR GRANTING THE WRIT

1. The Decision below conflicts with a Decision of the

United States Court of Appeals for the Sixth Circuit

as to the proper interpretation of 28 U.S.C. 1961 and

1962.

;

It is clear that if pe:itioner violated the federal

racketeering statute at all, it is because he became one

of the entities that comprised an “enterprise” which

conducted its affairs through “a pattern of racketeer-

ing activity.” It is equally clear that the enterprise here

involved was convened, in the language of the indict-

ment, “for the purpose of corruptly influencing and

seeking to influence the administration of traffic safety

improvement projects in PENNDOT District Six by

means of bribery and fraud and the concealment

thereof.” Thus, the question arises, as phrased by the

United States Court of Appeals for the Sixth Circuit in

United States v. Sutton, ___ F.2d ____ (Slip Opinion of

September 4, 1979 at number 78-5134), “The question

in this case is whether the statute may also be applied

to persons engaged in racketeering activity unrelated

to any legitimate organization but in furtherance of

something the government terms ‘a criminal enter-

prise’.”

The Sixth Circuit answered the question in the

negative holding that the word “enterprise” as used in

the statute necessarily means an enterprise created for

a lawful purpose. Their specific language at page 16 of

th~ Slip Opinion is

“We therefore hold that an ‘enterprise’ within

the meaning of the statute is ‘any individual,

partnership, corporation, association . . . and any

union or group of individuals associated in fact,’

that is organized and acting for some ostensively

lawful purpose, either formally declared or infor-

mally recognized. Section 1962 (c) is violated

10

whenever any person associated with such an en-

terprise conducts its ‘affairs’, i.e., undertakes any

activity on behalf of or relating to the purposes of

the enterprise, by committing at least two criminal

acts constituting a ‘pattern of racketeering’ as de-

fined in Section 1962(5).”

In the case at bar, the Third Circuit, since it af-

firmed the judgment of the District Court, has held that

an “enterprise” organized for an unlawful purpose is

also prohibited by this statute. Thus, there is a clear

conflict between the Sixth Circuit and the Third Cir-

cuit. Further, it would appear that the Third Circuit’s

view is shared by the Second, Fifth, Sixth and Ninth

Circuits as well. Sutton, supra at page 4.

2. The Statute involved is not invoked on infrequent and

isolated occasions but rather is used regularly by

United States Attorneys across the country and

hence the proper interpretation of this Statute is a

matter of vital import to a great number of persons.

We believe and so respectfully submit that

whenever a regularly invoked federal criminal statute

is interpreted in a non-uniform basis so that a person

who lives in one part of the country might go to jail for

conduct which in another part of the country is not

considered criminal at all, this Court should resolve the

differences in interpretation to achieve uniformity. It

simply should not be that someone who lives in Phila-

delphia, Pennsylvania might go to jail for conduct

which would not even support a prosecution if that per-

son had lived in Cincinnatti, Ohio. We submit that jus-

tice is not justice unless applied evenhandedly and

such is not presently the case with reference to this

statute.

11

3. The Decision below incorrectly interprets Section

1961 and 1962 in defining “Enterprise” and so ex-

tends the scope of the Statute well beyond that in-

tended by the Congress.

It has been said that the primary thrust of Section

1962 is directed towards the protection of existing

businesses engaged in interstate commerce from infil-

tration of elements of organized crime, from being used

as vehicles for laundering the proceeds of organized

crime activities, and from being perverted to methods

of operation commonly associated with organized

crime. See United States v. Fineman, 434 F. Sup. 189

(E.D. Pa. 1977).

We submit this case certainly does not present a

situation involving organized crime in any generally

accepted use of that term. Petitioner and his company

were engaged in legitimate business — exactly the

kind of persons the racketeering act was designed to

protect, not prosecute. |

For purposes of this petition, we submit the deci-

sion of the Sixth Circuit in United States v. Sutton,

supra, and the reasoning therein contained to support

the proposition that the Court below has erroneously

construed “enterprise” in Sections 1961 and 1962 to

include a grouping together of persons whose sole ob-

ject is an unlawful purpose.

This Court should grant certiorari to correct this

error.

4. The Decision below is arguably in conflict with a deci-

sion of this Court.

While we do not concede that the evidence adduced

at trial was sufficient for the purpose, we suggest that

the absolute outer limits of the jury’s finding would

have been that petitioner at some point during the

12

period covered by the indictment learned of the scheme

to bribe Barszowski. But we submit that even if it be

granted that petitioner had knowledge, the evidence is

totally devoid of any activities of petitioner which indi-

cated an intent to further that unlawful scheme. To the

contrary, petitioner’s entire activities as reflected in

the record are totally consistent with a reasonable

businessman’s attempts to further his business. We in-

vite your attention to your decision in Direct Sales v.

United States, 391 U.S. 703, 63 S. Ct. 1265 (1943). We

submit that this decision supports the proposition that

even if it be found that at some point petitioner became

aw.re that Barszowski was getting a cut on commis-

sions on the sale of Rad-O-Lite products, no criminal

liability could attach to petitioner unless he thereafter

performed acts intended to benefit Barszowski as op-

posed to acts intended to benefit Rad-O-Lite and him-

self with the incidental effect of benefiting Barszowski

— we submit that on this record there is no such evi-

ence.

5. This Court should not permit a conviction to stand

which convicts an individual who is one of the en-

tities which together comprise an “Enterprise” to

be in violation of both Sections 1962(c) and 1962(d).

We submit that the evidence in the case at bar, if it

shows any criminal conduct on petitioner’s part at all,

shows that petitioner did whatever it is he did, not as

an independent operator but as a part of a group of

persons — as a member of an “enterprise.” And so we

submit that if petitioner was associating with an en-

terprise engaged in activities which affected interstate

commerce through a pattern of racketeering activity,

the crime created and prohibited by 1962(c), then he

certainly could not be a conspirator with those persons

with whom he was associated for that unlawful pur-

pose, the crime created and prohibited by 1962(d).

13

In the Court below, the Government asserted that

this argument fails because the statutory definition of

1962(c) does not contain an element of agreement or

concerted activity and that it makes it unlawful for

“any person” to conduct an enterprise affecting inter-

state or foreign commerce through a “pattern of racke-

teering.’”’ We concede that such is the language of Sec-

tion 1962(c) — but while under the statutory definition

it may well be possible for a single person to commit

the offense, the evidence in the case at bar, shows, if

any criminal conduct at all, conduct as a part of the

enterprise.

In essence then, the Government seeks to give two

different labels to what can only properly be considered

as a single course of action by petitioner. We submit

that it is therefore improper to convict him of two dif-

ferent crimes and subject him to the possibility of sepa-

rate and consecutive prison terms for the two different

offenses. |

6. This Court should grant Certiorari for the reasons

stated above. But, having granted Certiorari, it

should review the evidence to determine if it was

sufficient to sustain each of the verdicts in order to

do justice to this particular petitioner as well as set-

tle the law for other persons in his position gener-

ally.

We believe that there was woefully insufficient

evidence to sustain a conviction on any of the counts

involved in the two indictments in this case. In particu-

lar, we believe that there is absolutely no evidence to

show criminal conduct in connection with the remain-

ing count of the tax indictment, count 2 of 78-284. We

confess that this aspect of the case does not involve, to

the best of our knowledge, any novel principal of law.

But petitioner is completely convinced that with par-

rs

14

ticular reference to the tax charge, the verdict of the

jury below was woefully erroneous. We respectfully

submit that if this Court believes that certiorari should

be granted in order to determine the proper construc-

tion of the racketeering statute and thus accomplish a

benefit for an untold number of persons, it is only fit-

ting that the one person who brought the matter to the

attention of this Honorable Court should be afforded a

complete review of his own case.

CONCLUSION

For these reasons, a Writ of Certiorari should issue

to review the judgment of the Third Circuit.

Respectfully submitted,

JOSEPH M. SMITH

Counsel for Petitioner

2040 Philadelphia Savings Fund Society Building

12 South Twelfth Street

Philadelphia, Pennsylvania 19107

Dated: October 19, 1979

Appendix

JUDGMENT ORDER OF

COURT OF APPEALS

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 79-1334 and 79-1335

UNITED STATES OF AMERICA

\

Vv.

MANCHESTER, MICHAEL J.,

Appellant in No. 79-1334

(D.C. Crim. No. 78-00281-06)

UNITED STATES OF AMERICA

Vv.

MANCHESTER, MICHAEL J.,

Appellant in No. 79-1335

(D.C. Crim. No. 78-00284)

Appeal from the United States District Court

for the Eastern District of Pennsylvania

Submitted Under Third Circuit Rule 12(6)

September 4, 1979

Before: ALDISERT, ROSENN and GarTH, Circuit Judges.

17

19

JUDGMENT ORDER

After considering the contentions raised by appel-

lant, to-wit, that (1) the federal racketeering statute

was not intended to apply to the instant situation, (2)

the charge of racketeering and the charge of racketeer-

ing conspiracy are mutually exclusive on the facts of

this case, (3) the racketeering charge fails because

there was not alleged nor proved at least two acts of

racketeering activity, (4) the mail fraud charge fails

because there was no proof of an intent to devise or

intend to devise a scheme to defraud, (5) the govern-

ment committed prejudicial error by introducing

against appellant other crimes both by cross-

examination of appellant himself and by direct exami-

nation of other witnesses, (6) the trial court committed

reversible error in refusing to strike certain testimony,

(7) the evidence was not sufficient to sustain the ver-

dict on any count, and (8) the trial court did not apply

the proper standard of review in considering appel-

lant’s post-trial motions, it is

ADJUDGED AND ORDERED that the judgment of

the district court be and is hereby affirmed.

BY THE COURT

/s/ R. J. ALDISERT

Circuit Judge

Attest:

/s/ Thomas F. Quinn, Clerk

Dated: September 4, 1979

ORDER DENYING REHEARING

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 79-1334 and 79-1335

UNITED STATES OF AMERICA

VU.

MANCHESTER, MICHAEL, J.

Appellant in No. 79-1334

UNITED STATES OF AMERICA

Vv.

MANCHESTER, MICHAEL, J.

Appellant in No. 79-1335

SUR PETITION FOR REHEARING

Present: SEITz, Chief Judge, ALDISERT, ADAMS, GIBBONS,

ROSENN, HUNTER, WEIS, GARTH, HIGGINBOTHAM and

SLOVITER, Circuit Judges.

The petition for rehearing filed by

APPELLANT

in the above entitled case having been submitted to

the judges who participated in the decision of this

court and to all the other available ‘circuit judges of

20

21

the circuit in regular active service, and no judge

who concurred in the decision having asked for re-

hearing, and a majority of the circuit judges of the

circuit in regular active service not having voted for

rehearing by the court in banc, the petition for re-

hearing is denied. |

BY THE COURT

/s/ R. J. ALDISERT

Circuit Judge

Dated: September 28, 1979

22

Opinion of the District Court

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF

PENNSYLVANIA

UNITED STATES OF AMERICA

Vv. : Crim. No. 78-281

MICHAEL J. MANCHESTER ands: 78-284

RaAD-O-LITE OF PHILADELPHIA,

INC., a/k/a PRE-EMPTION

DEVICES, INC.

MEMORANDUM OPINION AND ORDER

WEINER, J. February 21, 1979

Presented to the court are the post-trial motions of

the defendants, Michael Manchester and Rad-O-Lite of

Philadelphia, Inc., a/k/a Pre-Emption Devices, Inc., for

judgment of acquittal or in the alternative for new

trial. The defendant Manchester was convicted by a

jury in Criminal Number 78-281 of one count of racke-

teering, one count of conspiring to racketeer, and one

of two counts of mail fraud, and in Criminal Number

78-284 of two counts of subscribing to false tax returns

and one count of aiding and assisting in the prepara-

tion of a false tax return. The defendant Rad-O-Lite of

Philadelphia, Inc. was convicted in Criminal Number

78-281 of conspiring to racketeer. The defendants have

assigned various grounds in support of their motions.

Defendants have made a general argument con-

cerning the sufficiency of the evidence, and technical

arguments regarding the applicability of the “RICO”

Statutes, 18 U.S.C. §1961 et seqg., the mutual exclu-

siveness of 18 U.S.C. §§1962(c) and 1962(d), the gov-

ernment’s failure to allege and prove at least two acts

23

of racketeering activity, and the government’s failure

to prove intent to devise a scheme to defraud within the

meaning of the mail fraud statute. For the reasons to

follow we deny the defendants’ motions.

The defendants were indicted with seven other

named defendants. Prior to trial, all of the co-

defendants except defendants Manchester and Rad-

O-Lite of Philadelphia, Inc. pleaded guilty to one or

more of the counts charged in the indictment.

At the trial of Manchester and Rad-O-Lite, the gov-

ernment called nineteen witnesses in its case in chief,

and called one of those again in rebuttal. After the de-

nial of defendants’ motion for judgment of acquittal,

the defendants presented their defense.

The case involved a complex scheme resulting in

the knowing and intentional payment of money and

other things of value to co-defendant Joseph

Barszowski, an assistant district traffic engineer em-

ployed by the Pennsylvania Department of Transporta-

tion (“Penndot’’), to bribe Barszowski so as to induce

him to use his influence and the power of his position to

assist in the sale of defendants’ pre-emption device.

The defendants filed motions for a new trial and/or

for judgment of acquittal. Rule 33 of the Federal Rules

of Criminal Procedure allow a new trial “if required in

the interest of justice.’”’ The federal courts are in

agreement that a motion for a new trial is directed to

the sound discretion of the trial court after it has

weighed the evidence and considered the credibility of

the witness. United States v. Dabney, 393 F.Supp. 529

(1975).

In considering a motion for judgment of acquittal:

‘‘... The verdict of a jury must be sustained if

there is substantial evidence, taking the view most

favorable to the Government. . .”’ Gilasser v.

United States, 315 U.S. 60, 80 (1942)

In reviewing the evidence introduced at trial, we are

24

precluded from assessing the credibility of witnesses

and must instead determine whether all the evidence

against the defendants, taken as a whole, is sufficient

to permit reasonable jurymen to find defendants guilty

beyond a reasonable doubt. If we can reach that con-

clusion, the defendants’ motion must be denied.

The defendants raise many arguments in support

of their motions, which we shall address individually.

Initially, the defendants argue that the thrust of the

Federal Racketeering statute is directed toward the

protection of existing businesses engaged in interstate

commerce from activities of persons involved in “or-

ganized crime.”’ The defendants, however, have not

cited any authority for this proposition. Instead, the de-

fendants argue that those situations which were held

to be covered by the “RICO” statutes, but which did not

involve organized crime, were incorrectly decided. The

defendants also assert that the intent of Congress was

to limit the applicability of the “RICO” statutes to or-

ganized crime situations. While we agree that Con-

gress intended to deter the influence of “organized

crime” by 18 U.S.C. §1961 et seq., that does not pre-

clude it’s application to this case which does not con-

cern “organized crime.” The decision in United States

v. Fineman, 434 F.Supp. 189, 197 (E.D. Pa. 1977) re-

solved the defendants’ claim wherein it said:

That these considerations formed the principal

motive for the actions taken by Congress is appar-

ent from the Congressional statement of purpose,

as well as from the legislative history. But criminal

statutes are necessarily directed at actions, not at

individuals. The Congressional response was to

make certain patterns of activity punishable as

federal crimes, whoever may commit them. If the

defendant’s conduct can be shown to fall within

the range of activities forbidden by the express

language of the statute, it is not within the pro-

vince of the Court to create an exception, merely

25

because a strong argument can be made that the

Congressional purpose might have been ac-

complished by a more narrowly drawn statute.

Secondly, the defendants argue that counts one

and two of the indictment are mutually exclusive and

therefore that it is legally impossible for Manchester to

have been found guilty on both charges. We do not

agree, as we find the defendant Manchester was con-

victed of two separate sections of 18 U.S.C. §1962

which delineate distinctly different unlawful actions.

Section 1962(c) is directed at the defendant Manches-

ter being a member of and being associated with an

“enterprise” that was conducted in such a manner that

it affected interstate or foreign commerce through a

“pattern of racketeering activity.’’ The defendant

Manchester could have been found to have been a

member of such an “enterprise” without any evidence

showing that he agreed or contracted to take part in the

illegal activity. Section 1962(d) makes it a crime to

conspire to carry out the substantive crime established

in §1962(c). Conspiracy to commit a crime is an offense

different and apart from the offense which may be the

purpose of the conspiracy, and even if the substantive

offense was committed in the course of carrying out the

objectives of the conspiracy, there is no merger of of-

fenses. Pinkerton v. United States, 328 U.S. 640, 643

(1946). Sections 1962(c) and (d) contain separate and

distinct crimes. Consequently, a defendant can be con-

victed of violating each section.

The defendants further argue that the government

failed to prove Manchester’s involvement in at least

two acts of racketeering as is required for a racketeer-

ing conviction under 18 U.S.C. §1961(5). The govern-

ment proved one act of mail fraud and Manchester’s

violation of the Pennsylvania Bribery Statute — a sec-

ond act of racketeering. Hence, this claim is without

merit.

26

The defendants contend that there was insufficient

evidence for the jury to convict Manchester of mail

frauc under 18 U.S.C. §1341 because the letter he sent,

and upon which the government’s case rests was not

shown to have been in furtherance of a scheme to de-

fraud. In view of the fact that the recipient of the letter,

who was an employee of the defendants at the time of

receipt, testified that the contents of the letter referred

to the underlying conspiracy with and bribery of

Barszowski, we find no merit in the defendants’ con-

tention. On the basis of the testimony and the letter

itself, the jury had ample evidence to find that the ob-

ject of the letter was to further the scheme to defraud

Penndot and the public, and to return a conviction

therefor.

Finally, the defendants argue in support of their

motions that the evidence presented by the govern-

ment was insufficient to support the verdict. We dis-

agree. The well established standard employed in con-

sidering allegations of insufficient evidence for the

jury verdict is one of viewing all the evidence in a light

most favorable to the government, Hamling v. United

States, 418 U.S. 87, 124 (1974); United States v.

Goichman, 407 F.Supp. 980 (1976), while leaving the

question of credibility of the witnesses to the jury.

United States v. Brown, 583 F.2d 659 (3d Cir. 1978);

United States v. Greenlee, 517 F.2d 899 (3d Cir.), cert.

denied, 423 U.S. 985 (1975).

Under these standards, the government proved the

violations sufficiently for the jury to find that the de-

fendants committed the crimes they were convicted of.

The government’s evidence presented at trial included

direct testimony of the defendants’ knowledge of co-

defendant Barszowski’s acceptance of bribes in ex-

change for favors, and of Barszowski’s financial inter-

est in Rad-O-Lite. Direct evidence also brought out the

existence of a ‘silent partnership’? between

Barszowski and the defendant Manchester, and re-

ee

27

peated statements of Manchester to the effect that

Barszowski was getting more out of the defendants

than he was producing, which was to the extreme de-

triment of the defendants. Further evidence of the de-

fendants’ knowing involvement in the racketeering

scheme came from the letter the defendants sent to an

employee which spoke of Barszowski as a colleague

involved in the scheme to require the inclusion of pre-

emption chassis in Penndot traffic safety contracts and

to bribe Barszowski.

From this and additional evidence, we conclude

that the government produced sufficient evidence to

warrant the jury’s finding that the defendants are

guilty. The government joined with the defendant

Manchester for judgment of acquittal on counts 1 and

3 of Criminal Case 78-284. Therefore we deny the de-

fendants’ motions for a new trial and their motion for

judgment of acquittal, except as to counts 1 and 3 of

Criminal Case 78-284 of which judgment of acquittal

is granted.

28

TEXT OF TITLE 18

UNITED STATES CODE, SECTION 1961

Title 18 U.S.C., Section 1961.

As used in this chapter—

(1) “Racketeering activity’ means (A) any act or

threat involving murder, kidnaping, gambling, arson,

robbery, bribery, extortion, or dealing in narcotic or

other dangerous drugs, which is chargeable under

State law and punishable by imprisonment for more

than one year; (B) any act which is indictable under

any of the following provisions of title 18, United States

Code: Section 201 (relating to bribery), section 224 (re-

lating to sports bribery), sections 471, 472, and 473 (re-

lating to counterfeiting), section 659 (relating to theft

from interstate shipment) if the act indictable under

section 659 is felonious, section 664 (relating to em-

bezzlement from pension and welfare funds), sections

891-894 (relating to extortionate credit transactions),

section 1084 (relating to the transmission of gambling

information), section 1341 (relating to mail fraud), sec-

tion 1343 (relating to wire fraud), section 1503 (relat-

ing to obstruction of justice), section 1510 (relating to

obstruction of criminal investigations), section 1511

(relating to the obstruction of State or local law en-

forcement), section 1951 (relating to interference with

commerce, robbery, or extortion), section 1952 (relat-

ing to racketeering), section 1953 (relating to interstate

transportation of wagering paraphernalia), section

1954 (relating to unlawful welfare fund payments),

section 1955 (relating to prohibition of illegal gambling

businesses), sections 2314 and 2315 (relating to inter-

state transportation of stolen property), sections 2341-

2346 (relating to trafficking in contraband cigarettes),

sections 2421-24 (relating to white slave traffic), (C)

any act which is indictable under title 29, United

States Code, section 186 (dealing with restrictions on

payments and loans to labor organizations) or section

29

901(c) (relating to embezzlement from union funds), or

(D) any offense involving bankruptcy fraud, fraud in

the sale of securities, or the felonious manufacture,

importation, receiving, concealment, buying, selling,

or otherwise dealing in narcotic or other dangerous

drugs, punishable under any law of the United States:

(2) “State” means any State of the United States,

the District of Columbia, the Commonwealth of Puerto

Rico, any territory or possession of the United States,

any political subdivision, or any department, agency,

or instrumentality thereof;

(3) “person” includes any individual or entity cap-

able of holding a legal or beneficial interest in property;

(4) “enterprise” includes any individual, partner-

ship, corporation, association, or other legal entity, and

any union or group of individuals associated in fact

although not a legal entity;

(5) “pattern of racketeering activity” requires at

least two acts of racketeering activity, one of which

occurred after the effective date of this chapter and the

last of which occurred within ten years (excluding any

period of imprisonment) after the commission of a prior

act of racketeering activity;

(6) “unlawful debt” means a debt (A) incurred or

contracted in gambling activity which was in violation

of the law of the United States, a State or political sub-

division thereof, or which is unenforceable under State

or Federal law in whole or in part as to principal or

interest because of the laws relating to usury, and (B)

which was incurred in connection with the usiness of

gambling in violation of the law of the United States, a

State or political subdivision thereof, or the business of

lending money or a thing of value at a rate usurious

under State or Federal law, where the usurious rate is

at least twice the enforceable rate;

(7) “racketeering investigator’ means any attor-

ney or investigator so designated by the Attorney Gen-

eral and charged with the duty of enforcing or carrying

into effect this chapter;

30

(8) “racketeering investigation” means any in-

quiry conducted by any racketeering investigator for

the purpose of ascertaining whether any person has

been involved in any violation of this chapter or of any

final order, judgment, or decree of any court of the

United States, duly entered in any case or proceeding

arising under this chapter;

(9) “documentary material” includes any book,

paper, document, record, recording, or other material;

and

(10) ‘‘Attorney General” includes the Attorney

General of the United States, the Deputy Attorney Gen-

eral of the United States, any Assistant Attorney

General of the United States, or any employee of the

Department of Justice or any employee of any depart-

ment or agency of the United States so designated by

the Attorney General to carry out the powers conferred

on the Attorney General by this chapter. Any department

or agency so designated may use in investigations au-

thorized by this chapter either the investigative provi-

sious of this chapter or the investigative power of such

department or agency otherwise conferred by law.

Added Pub.L. 91-452, Title IX, §901(a), Oct. 15, 1970,

84 Stat. 941, and amended Pub.L. 95-575, §3(c), Nov.

2, 1978, 92 Stat. 2465.

31

TEXT OF TITLE 18

UNITED STATES CODE, SECTION 1962

Title 18 U.S.C., Section 1962.

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

received any income derived, directly or indirectly,

from a pattern of racketeering activity or through col-

lection 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 enterprise

which is engaged in, or the activities of which affect,

interstate or foreign commerce. A purchase of securi-

ties on the open market for purposes of investment, and

without the intention of controlling or participating in

the control of the issuer, or of assisting another to do so,

shall not: be unlawful under this subsection if the secu-

rities of the issuer held by the purchaser, the members

of his immediate family, and his or their accomplices

in any pattern or racketeering activity of the collection

of an unlawful debt after such purchase do not amount

in the aggregate to one percent of the outstanding se-

curities 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 control of any enterprise

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 com-

merce, to conduct or participate, directly or indirectly,

in the conduct of such enterprise’s affairs through a

32

pattern of racketeering activity or collection of unlaw-

ful debt.

(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.

33

TEXT OF TITLE 18

UNITED STATES CODE, SECTION 1341

Title 18 United States Code, Section 1341.

Whoever, having devised or intending to devise

any scheme or artifice to defraud, or for obtaining

money or property by means of false or fraudulent pre-

tenses, representations, or promises, or to sell, dispose

of, loan, exchange, alter, give away, distribute, supply,

or furnish or procure for unlawful use any counterfeit

or spurious coin, obligation, security, or other article,

or anything represented to be or intimated or held out

to be such counterfeit or spurious article, for the pur-

pose of executing such scheme or artifice or attempting

so to do, places in any post office or authorized deposi-

tory for mail matter, any matter or thing whatever to be

sent or delivered by the Postal Service, or takes or re-

ceives therefrom, any such matter or thing, or know-

ingly causes to be delivered by mail according to the

direction thereon, or at the place at which it is directed

to be delivered by the person to whom it is addressed,

any such matter or thing, shall be fined not more than

$1,000 or imprisoned not more than five years, or both.

As amended May 24, 1949, c. 139, § 34, 63 Stat. 94:

Aug. 12, 1970, Pub.L. 91-375, § 6() (11), 84 Stat. 778.

34

TEXT OF TITLE 26

UNITED STATES CODE, SECTION 7206(1)

Title 26 United States Code, Section 7206(1)

Any person who—

(1) Declaration under penalties of perjury.—

Willfully makes and subscribes any return, statement,

or other document, which contains or is verified bya

written declaration that it is made under the penalties

of perjury, and which he does not believe to be true and

correct as to every material matter; . .

shall be guilty of a felony and, upon conviction thereof,

shall be fined not more than $5,000, or imprisoned not

more than 3 years, or both, together with the costs of

prosecution. Aug. 16, 1954, c. 736, 68A. Stat. 852.