Opposition — Berg v. United States

Supreme Co.!t, 4. S. |

FILED

No. 80-132 sp 25 1900

MICHAEL RODAK, JR., CLERK

In the Supreme Court of the Wnit

OCTOBER TERM, 1979

GERALD W. BERG, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

WADE H. McCreg, JR.

Solicitor General

PHILIP B. HEYMANN

Assistant Attorney General

Louis M. FISCHER

Attorney

Department of Justice

Washington, D.C. 20530

(202) 633-2217

In the Supreme Court of the United States

OCTOBER TERM, 1979

No. 80-132

GERALD W. BERG, PETITIONER

V.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

QUESTIONS PRESENTED

1. Whether application of the forfeiture provision of

the Organized Crime Control Act of 1970 (18 U.S.C.

1963) results in an impermissible forfeiture of estate.

2. Whether petitioner’s sentence is invalid under the

Double Jeopardy Clause.

3. Whether the Organized Crime Control Act of 1970,

18 U.S.C. 1961 et seqg., applies only to persons commonly

regarded as “racketeers.”

4. Whether petitioner’s conviction should be reversed

because the government’s chief witness at trial was

represented by the United States Attorney’s former law

firm.

II

TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Cases:

Calero-Toledo v. Pearson Yacht Leasing Co.,

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Goldsmith-Grant v. United States, 254 U.S.

TOD sscindiatinisiiiasisihaiiintedbtleisidertaaat aia isa 4

Mandel v. United States, No. 79-1029, cert.

denied, (Apr. 14, 1980) ou... eeeeeeseeeeseseeeesseeees 3

One Plymouth Sedan v. Pennsylvania, 380

BS Fp, GW -inkincntbsundictbinedhescbiincsciccdaieiatestinbatbaibiias 4

Shaffer v. Heitner, 433 U.S. 186 o....ccccececcccceseeeeeees 4

United States v. Aleman, 609 F. 2d 298 ..........c0008 5

United States v. Campanale, 518 F. 2d

352, cert. denied, 423 U.S. 1050 ................0000 5, 6

United States v. Chovanec, 467 F. Supp.

Ge ssapissiciadevianiscindiaiidiadéritiainhiciielninkoleiameiainties 5

United States v. Culbert, 435 U.S.

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United States v. Forsythe, 560 F. 2d

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III

Page

Cases—Continued:

United States v. Huber, 603 F. 2d 387, cert.

denied, No. 79-896 (Mar. 17, 1980) ........ccseceseees 4

United States v. L’Hoste, 609 F. 2d 796,

petition for cert. pending, No. 79-1898 ..........00 4

United States v. Mandel, 415 F. Supp.

CT cadcaccdasenasenpmaccabuievundshekcdabanebaitanadebonebetiia 3, 5, 7

United States v. Rubin, 559 F. 2d 975 .........seceeees 3

United States v. Swiderski, 593 F. 2d 1246,

cert. demied, 441 U.S. 933 oo... eceececeseceeeeeeees 5

United States v. Vignola, 464 F. Supp.

PUTT. icsvcisnusbabebcadladsncidasdabisinwsesusenacemcetapasaeanlas 5

Whalen v. United States, No. 78-5471

CR Bi BR Beets vcsihsnstsnnenepapcitiniseccesateanesactiias 5

Constitution and statutes:

United States Constitution:

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Fifth Amendment (Double Jeopardy

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Eighth Amendment .................:csssssssssssseeseeeeeeees 3

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IV

Constitution and statutes—Continued:

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Miscellaneous:

Congressional Statement of Findings and

Purpose, P.L. 91-452, Section 1;

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116 Cong. Rec. (1970):

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S. Rep. No. 91-617, 91st Cong.,

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OPINION BELOW

The opinion of the court of appeals (Pet. App. la-28a)

is reported at 620 F. 2d 1026.

JURISDICTION

The judgme..t of the court of appeals was entered on

April 21, 1980 (Pet. App. 29a). A petition for rehearing

was denied on May 29, 1980 (Pet. App. 30a). On June 24,

1980, the Chief Justice extended the time for filing a

petition for a writ of certiorari to and including July 28,

1980, and the petition was filed on that date.

STATEMENT

Following a jury trial in the United States District

Court for the District of Maryland, petitioner was

convicted on one count of engaging in a pattern of

racketeering activity (18 U.S.C. 1962(c)), 12 counts of

mai! fraud (18 U.S.C. 1341), and one count of obstructing

a criminal investigation (18 U.S.C. 1510). He received a

concurrent sentence on all counts of four years’ imprison-

ment and a $15,000 fine. In addition, his interest in Buzz

Berg Wrecking Company, Inc., was ordered forfeited

pursuant to 18 U.S.C. 1963(a). The court of appeals

reversed the conviction for obstructing a criminal

investigation, but otherwise affirmed (Pet. App. la-28a).

The evidence at trial showed that from January 1968 to

July 1976, petitioner participated in a scheme by which he

and certain other demolition contractors in Baltimore

insured that they received the City’s demolition business

at fixed and artificially inflated prices. Petitioner and the

other contractors enlisted the aid of co-defendant Ottavio

Grande, who was director of the city department

2

responsible for awarding demolition contracts.’ Grande

also had authority to award contracts for the removal of

fire hazards on an informal bidding basis (Pet. App. 2a-

3a). By collusion and use of confidential information

provided by Grande, the contractors succeeded in

obtaining contract awards at prices higher than the prices

that would have resulted from true competitive bidding.

The evidence showed that Grande provided the group

with the City’s appraisal of the cost per cubic foot for

each demolition project (Pet. App. 4a; Tr. 439, 442).

From this information, petitioner and the other contrac-

tors were able to determine the maximum “low” bid that

could be made without causing the City to reject the bids

and readvertise the project (Pet. App. 4a). The group

members then agreed to alternate as the “low” bidder,

with the others either bidding larger amounts or

refraining from bidding at all (ibid.). Grande was paid

approximately five percent of each contract that was

awarded pursuant to this scheme (ibid.). Petitioner and his

co-defendants also took steps to maintain the effectiveness

of their bid-rigging activities by coopting outsiders. Thus,

when Andrew and Edgar Hawthorne, who owned a

Philadelphia demolition company, began making legitimate

bids for contracts, they were approached by the group (Tr.

1052) and were soon persuaded to join it (Pet. App. |2a-13a;

Tr. 1064, 1066).

'The other contracters were Joseph Tuller, Andrew and Edgar

Hawthorne, Pietro Castagna, Charles Collison, Roland Larkin,

Julius Hoffman, Harry Milzman, and C. Gordon Spielman. Co-

defendants Tuller, Andrew and Edgar Hawthorne, Castagna, and

Grande were convicted at trial on various charges resulting from their

participation in the scheme. Tuller did not appeal. The convictions of

Grande and Castagna were affirmed along with petitioner’s

conviction on appeal, while those of Andrew and Edgar Hawthorne

were reversed. The remaining contractors testified as government

witnesses at trial.

3

ARGUMENT

Petitioner’s first three arguments concern the scope and

application of the RICO statute, 18 U.S.C. 1961 et seq.

No federal court has accepted any of these contentions,

many have rejected them, and this Court denied review of

three virtually identical claims in Mandel v. United States,

No. 79-1029, cert. denied, April 14, 1980. There is no

reason for a different result here.

1. Petitioner first contends (Pet. 12-18) that forfeiture

of his interest in the business firm used in the bid rigging

scheme constitutes a “forfeiture of estate” in contraven-

tion of Art. III, § 3, Clause 2, and the EighthAmendment

to the Constitution.

The common law doctrine of forfeiture of estate

required surrender of the defendant’s estate and chattels

upon conviction of treason and certain other felonies.

Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S.

663, 682 (1974). By contrast, as the Senate Committee on

the Judiciary noted in explaining Section 1963, “the

concept of forfeiture as a criminal penalty [is] limited in

Section 1963(a) to one’s interest in the enterprise which is

the subject of the specific offense involved here, and

[does] not extend[] to any other property of the convicted

offender * * *.” S. Rep. No. 91-617, 91st Cong., Ist Sess.

80 (1969). The Committee emphasized that the purpose of

the forfeiture statute was to divest persons engaged in

criminal activities of their interests in organizations

acquired or operated through racketeering methods. /d. at

79-80; see United States v. Rubin, 559 F. 2d 975, 991-992

(Sth Cir. 1977).

There is nothing novel about forfeiture statutes that

operate in this fashion. Following adoption of the

Constitution, Congress enacted statutes providing for

forfeiture of many types of property that have been used

4

in the conduct of a criminal enterprise. See, e.g., 15

U.S.C, 6; 21 U.S.C. 824(f); 26 U.S.C. 7301; 49 U.S.C. 781-

783. Because the object of these forfeiture statutes is to

penalize the commission of an offense against the law,

they are deemed quasi-criminal in nature. One Plymouth

Sedan v. Pennsylvania, 380 U.S. 693, 700 (1965). This

Court repeatedly has affirmed application of such

forfeiture statutes even when—in contrast to the present

case—they visit.a forfeiture on a property owner who has

not himself used the property for criminal purposes. See,

e.g., Calero-Toledo vy. Pearson Yacht Leasing Co., supra,

416 U.S. at 683; Goldsmith-Grant v. United States, 254

U.S. 505, 510-513 (1921).

Petitioner’s claim (Pet. 14-17) that Section 1963 gives

rise to a constitutionally impermissible in personam

forfeiture is also without merit. It is, of course, true that

the statute imposes a forfeiture directly upon a defendant

following his conviction, rather than after a formally

separate proceeding in rem against the offending

property. But because both procedures are designed to

penalize the commission of an offense and result in an

identical forfeiture of the property involved in the

criminal enterprise, there is “no substantial difference

between an in rem proceeding and a forfeiture proceeding

brought directly against the owner.” United States v.

Huber, 603 F. 2d 387, 397 (2d Cir. 1979), cert. denied, No.

79-896 (Mar. 17, 1980); see also United States v. L’ Hoste,

609 F. 2d 796, 813 n.15 (Sth Cir. 1980), petition for cert.

pending, No. 79-1898; see also Shaffer v. Heitner, 433

U.S. 186, 207 n.22 (1977).

2. Petitioner next argues (Pet. 18-21) that his separate

convictions under the RICO statute (18 U.S.C. 1961) and

under the mail fraud statute (18 U.S.C. 1341) resulted in

impermissible “multiple punishment” in violation of the

5

Double Jeopardy Clause as construed by this Court in

Whalen v. United States, No. 78-5471 (Apr. 16, 1980).

While we wholly disagree with petitioner’s discussion of

this issue, there is no occassion to consider it here, since

the issue is simply not presented by the sentence imposed

on petitioner. He was sentenced, under the RICO count,

to four years’ imprisonment, a $15,000 fine, and forfeiture

of his interest in the wrecking company. This sentence was

well within the limits provided by the RICO statute. All

of the sentences on the other counts on which petitioner

was convicted were concurrent with the RICO sentence.

Accordingly, petitioner was not cumulatively punished,

regardless of whether the RICO and mail fraud counts are

the “same” for constitutional or statutory purposes.

3. Petitioner also claims (Pet. 22-24) that the RICO

statute, 18 U.S.C. 1961 et seqg., was intended to reach only

“professional racketeers” or persons engaged in organized

crime. That contention has been correctly rejected by

every court that has considered it.?

While the stated purpose of the Organized Crime Act,

of which RICO is a part, is to eradicate organized crime,

the statute does not require proof that a defendant is

connected with organized crime. United States v. Aleman,

supra, 609 F. 2d at 304. The defendant’s behavior, not his

status, determines the applicability of the statute. See,

e.g.. United States v. Swiderski, 593 F. 2d 1246, 1249

(D.C. Cir. 1978), cert. denied, 441 U.S. 933 (1979); United

2See United States v. Aleman, 609 F. 2d 298, 302-305 (7th Cir.

1979), certiorari denied, No. 79-1009 (Mar. 24, 1980); United States v.

Campanale, 518 F. 2d 352, 363-364 (9th Cir. 1975), cert. denied, 423

U.S. 1050 (1976); United States v. Chovanec, 467 F. Supp. 41, 44-45

(S.D. N.Y. 1979); United States v. Vignola, 464 F. Supp. 1091, 1096

(E.D. Pa. 1979); United States v. Mandel; 415 F. Supp. 997, 1018 (D.

Md. 1976). See also United States v. Forsythe, 560 F. 2d 1127, 1135-

1136 (3d Cir. 1977).

6

States v. Campanale, supra, 518 F. 2d at 364. Thus, on its

face, Section 1962(b) punishes anyone who, through a

“pattern of racketeering activity,” maintains an interest in

or controls an enterprise engaged in interstate commerce.

Section 1962(c) similarly prohibits conducting the affairs

of an enterprise engaged in interstate commerce through a

“pattern of racketeering activity.” ‘Racketeering activity”

is, in turn, defined to include violations of a number of

federal criminal statutes, including the federal mail fraud

statute. See 18 U.S.C. 1961(1). And “pattern of racketeer-

ing activity” is defined as “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 *** after the commission of a prior act of

racketeering activity.” 18 U.S.C. 1961(5). In short,

Congress has enacted a comprehensive statutory scheme

designed to punish “any person” who engages in a pattern

of explicitly defined acts of racketeeiing. Nothing on the

face of the statute suggests that, in addition to these

requirements, its application is limited to persons engaged

in “organized crime.” See United States vy. Campanale,

supra, 518 F. 2d at 364; see also United States v. Culbert,

435 U.S. 371 (1978).3

3The Act’s legislative history confirms that it should be given the

broad interpretation its terms command. While Congress’s primary

concern in enacting the statute was to cure the corruption of business

enterprises and democratic processes by organized crime (see

Congressional Statement of Findings and Purpose, P.L. 91-452, Section

1; 18 U.S.C. 1961 note), Congress also made it clear that the statute

“shall be liberally construed to effectuate its remedial purposes.” Pub. L.

91-452, Section 904; 18 U.S.C. 1961 note. In keeping with its desire to

assure liberal construction, Congress rejected suggestions that a

definition of organized crime be added to the statute (see 116 Cong. Rec.

35343-35344 (1970)), preferring to provide the Attorney General

maximum flexibility in effectuating its broad remedial objectives (116

Cong. Rec. 35302 (1970) (Remarks of Rep. Celler)). Congress’s actions

offer convincing evidence that it Jid not intend that some connection

7

4. Petitioner also contends (Pet. 24-25) that his

conviction should be reversed because the United States

Attorney’s former law firm represented the chief govern-

ment witness at petitioner’s trial. This claim is without

merit for the reasons explained by the court of appeals

(Pet. App. 7a-8a). The U.S. Attorney submitted an

affidavit to the district court confirming that he had

recused himself from any decisions involving the witness.

The two prosecutors in charge of the case also filed

affidavits stating that the U.S. Attorney made no

decisions concerning the witness and that the U;S.

Attorney knew nothing of their own arrangements with

the witness (see Pet. App. 7a-8a). Under these cir-

cumstances, the court below was correct in concluding (id.

at 8a) that there was no “evidence of an appearance of

impropriety.” Further review of that factual issue is not

warranted.

with organized crime be demonstrated as a prerequisite to conviction.

United States v. Mandel, supra, 415 F. Supp. at 1019. Had Congress

intended that membership in organized crime be an element under the

racketeering statute, it certainly would have defined the expression

“organized crime,” since “the highly subjective and prejudicial

connotations of that term [] would simply render the statute

unenforceable, a result plainly not in the contemplation of Congress.”

United States v. Mandel, supra, 415 F. Supp. at 1018-1019; see also

United States v. Culbert, supra, 435 U.S. at 373-374.

8

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

WADE H. McCreg, JR.

Solicitor General

PHILIP B. HEYMANN

Assistant Attorney General

Louis M. FISCHER

Attorney

SEPTEMBER 1980

DOJ-1980-09