Petition — Philpot v. United States

Ofi.cs me Court, U.S.

a | kFiLt wv

32-1958 jun 1983

STEVASy

CLERK

Speman aeons

NO.

IN THE

SUPREME COURT OF THE UNITED STATES

ee ae a mee

DONALD PHILPOT,

Petitioner,

VS.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF

APPEALS FOR THE FIFTH CIRCUIT

DAN C. GUTHRIE, JR.

BURLESON, PATE & GIBSON

2929 Turtle Creek Place

P., O. Box 190623

Dallas, Texas 75219

(214)559-0910

QUESTION PRESENTED

1. Whether the interstate commerce

requirement of a Hobbs Act prosecution can

be satisfied by the activities of a cor-

poration which is conducting activities

which are criminal and wholly illegal

under the relevant state laws regulating

credit unions and their promotion.

p i |

TABLE OF CONTENTS

QUESTIONS PRESENTED ..- « « -«

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TABLE OF AUTHORITIES -. «© © @ «

CITATION TO OPINION BELOW...

BEE REO og gf Oe ee ee ee

STATUTES INVOLVED «© «© © «© © © «

STATGmem: OF THE CASE « «+ «© « 2

REASONS FOR GRANTING CERTIORARI

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CERTIFICATE OF SERVICE .-« «ee.

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423

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TABLE OF AUTHORITIES

CASES

STIRONE V. UNITED STATES,

SG) UG. 212 CLSGO) « 2 2

UNITED STATES V. BLAKEY,

67 ©.24 779 (7th Cir. 1979).

STATUTES

Title 18, United States Code

§1951 o e + - * a 7 a a * .

§1952 o . 2 . * — = * - . -

Title 28, United States Code

§1254(1) ea ee See

Oklahoma Statutes, Section 2005

Texas Revised Civil Statutes,

Article 2461-2.07 . =. . . * *

10

NO.

IN THE

SUPREME COURT OF THE UNITED STATES

DONALD PHILPOT,

Petitioner,

VS.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF

APPEALS FOR THE FIFTH CIRCUIT

The Petitioner, DONALD PHILPOT,

respectfully prays that a Writ of

Certiorari issue to review the judgment

and opinion of the United States Court of

Appeals for the Fifth Circuit entered in

tis proceeding on April 13, 1983.

2

CITATION TO OPINION BELOW

The opinion in the United States Court

Of Appeals for the Fifth Circuit in this

case is cited as United States vs.

Philpot. The opinion is not reported but

appears herein as Appendix A.

3

JURISDICTION

The judgment of the Court of Appeals

for the Fifth Circuit was entered on April

13, 19863. This Petition for Certiorari

was filed within sixty days of that date

in accordance with Rule 20.1 of the Rules

of the Supreme Court of the United States.

The Court's jurisdiction is invoked under

28 U.S.C. §1254(1).

4

STATUTES INVOLVED

As provided by Supreme Court Rule

21.1(£), the verbatim quotation of the

following Statutes are sec forth in

Appendix B hereto:

Article 2461-2.07 of the Texas Revised

Civil Statutes ang Title 6, Oklahoma

Statutes, Section 2005.

_

STATEMENT OF THE CASE

The Petitioner was indicted on two

counts charging violations of 18 U.S.C.

§§1951 and 1952. By pre-trial motion,

counsel for Petitioner moved to dismiss

the indictment. The Government agreed to

strike the last sentence of paragraph one

of the count charging the $1951 violation.

Following a jury trial on that count only,

Petitioner, business agent for Local lll

of the Baker's Confectionary and Tobacco

Union, was convicted of attempting to

extort $15,000 from a company called

Credit Union Promotions, Inc., thereby

affecting interstate commerce. On

August 30, 1982, Petitioner was sentenced

to five years in the custody of the

Attorney General and Count Two was

dismissed. Notice of Appeal was filed by

Petitioner on the third day of September,

6

1982. The Judgment of the Fifth Circuit

of Appeals was entered on the thirteenth

day of April, 1983, in an opinion authored

by Judge Tate affirming the conviction.

This Court's jurisdiction is invoked under

28 U.S.C. $1254(1).

The Petitioner, on appeal, contended

that the interstate commerce requirement

of the Hobbs Act was not satisfied by the

proof at trial since the only effect on

interstate commerce would come from the

activities of a business which was con-

ducting itself in violation of various

states' laws regulating credit unions,

their registration and promotion. Thus,

the activities of the victim were wholly

illegal and criminal. The Court of Appeals

for the Fifth Circuit rejected the

Petitioner's position and ruled that under

Texas law a corporation which has not

obtained a license to do business in Texas

7

nevertheless retains some legal effect

and that reason alone is sufficient to

Support the interstate commerce require-

ment of the Hobbs Act prosecution. The

panel opinion did not address the Texas

law which made the activities of the

alleged victim of the extortion, Credit

Union Promotions, Inc. (hereinafter

referred to as “C.U.P."), illegal. C.U.P.

was headquartered in Tulsa, Oklahoma. The

firm had only one client, Bakem Credit

Union (hereinafter referred to as

“Bakem"), which was headquartered in North

Little Rock, Arkansas. C.U.P.‘'s activi-

ties were directed at promoting enrollment

in Bakem.

Prior to trial, Petitioner's counsel

filed a Motion to Dismiss the Indictment

on the interstate commerce defect noted

above. An affidavit filed in support of

that motion contained a copy of a record

from the Texas Secretary of State which

showed that C.U.P. was not authorized to

transact business in Texas and a letter

from the Arkansas Securities Department

which showed that Bakem could not have

members in Texas. After trial Petitioner

filed a Motion in Arrest of Judgment in

which this argument was again raised. In

support of this position, he submitted the

above documents again, as well as an offi-

cial record of the Oklahoma State Banking

Department which showed that Bakem was

never authorized to do_- business in

Oklahoma as well as a letter from the

Deputy Commissioner of the Oklahoma State

Banking Department stating that Bakem had

never been given a Certificate of

Authority as required by the Oklahoma law

regulating credit unions. There was no

evidence that Bakem or C.U.P. had complied

with the Texas law regulating the conduct

of any organization which was a credit

union or was promoting the same. Relevant

laws of Oklahoma and Texas make the non-

compliance a criminal act. By Order dated

July 26, 1982, the trial court overruled

the Petitioner's Motion in Arrest of

Judgment.

This court has never considered whether

Or not the Hobbs Act applies to the acti-

vities of a wholly illegal business such

as the victim in this case. No Court of

Appeals prior to the decision of this case

had considered this issue. As the Seventh

Circuit has observed, "[t]Jhe Defendant and

the Government agree that no authority

indicates whether the Hobbs Act applies to

wholly illegal business." United States

Vs BiGney, GO? F.2d 779, 783 (7th Cir.

1979).

10

REASONS FOR GRANTING CERTIORARI

Fhe decision of the Fifth Circuit of

Appeals in holding that the activities of

a wholly illegal business satisfied the

interstate commerce requirement of a Hobbs

Act prosecution constitutes an important

interpretation of the Hobbs Act never

before considered by the Supreme Court.

As this Court has recognized,

"[tJhere are two essential elements

of the Hobbs Act crime: interference

with commerce and extortion. Both

elements have to be charged.

Neither a surplusage and neither can

be treated as a surplusage. The

charge that interstate commerce is

affected is critical since the

Federal Government's jurisdiction of

the crime rests only on that

interference."

Stirone v. United States, 361 U.S. 212,

218 (1960). Clearly then, failure on the

part of the Government to be able to prove

the interstate commerce element mandates

reversal of the conviction.

a

Persuasive policy considerations dic-

tate that a business engaged in the

carrying on or promotion of a credit union

like the victim in Petitoner's case be

held strictly accountable to compliance

with applicable state law regulating this

type of business. fThe nature of a credit

union's function is much like a bank. It

is a depository and safekeeper of money.

The various states should be left free to

demand compliance with the laws whih they

have enacted regarding these activities.

A business who chooses to disregard these

regulatory laws and conduct its business

illegally and in a criminal way cannot as

a matter of law have activities which

Satisfy the interstate commerce require-

ment of the Hobbs Act.

As noted, the Court of Appeals for the

Fifth Circuit completely ignored the Texas

regulatory scheme governing credit unions

12

and their promotion in that state. it

alse did net address the fact that under

the relevant state laws failure to comply

with the statutes constitutes a criminal

act. Thus, Petitioner submits that the

commerce requirement of the Hobbs Act was

not satisfied at trial and prosecution of

Petitioner, if any, should be left to

applicable Texas state law.

2

CONCLUSION

For these reasons, a Writ of Certiorari

should issue to review the judgment and

opinion of the Fifth Circuit.

Respectfully submitted,

DAN C. GUTHRIE, JR.

BURLESON, PATE & GIBSON

2929 Turtle Creek Place

P. 0. Box 190623

Dallas, Texas 75219

(214) 559-0910

ATTORNEY FOR PETITIONER

14

CERTIFICATE OF SERVICE

THis 18 tO certify that a true and

correct copy of the foregoing Petition for

Mrit of Certiorari was mailed to Mr.

Richard Stephens, Assistant United Stateds

Attorney, 1100 Commerce Street, Dallas,

Texas 75242 and to Mr. Wade Hampton

McCree, Jr., Solicitor-General, Department

of Justice, Suite 5143, Ninth and

Constitution Avenue, N.W., Washington,

D.C. 20530, on this the 3/37 day of May,

1983.

APPENDIX A

A-1l

UNITED STATES of America

Plaintiff-Appelle,

Ve

Donald PHILPOT

No.

United States Court of Appeals

Fifth Circuit

April 13, 1983

Before RUBIN and TATE, Circuit Judges, and

DAVIS*, District Judge.

TATE, Circuit Judge:

The Defendant, Philpot, appeals from

his conviction, under 18 U.S.C. $1951 (the

Hobbs Act), of attempted extortion. The

indictment alleged that he = requested

$15,000 from the victim company for his

approval and assistance in a _ business

solicitation enterpise, and threatened both

physical and economic harm if the money

was not paid. Philpot raises four con-

tenions on appeal that, for the following

rasons, are rejected as unpersuasive:

*District Judge of the Western District

of Louisiana, sitting by designation.

APPENDIX A

A-2

Philpot initially contends that rever-

sible error occurred when evidence was

admitted of prior wrongful or violent acts

done by him, without any limiting instruc-

tion. Various witnesses-- officers and

employees of the victim company-- testified

to statements made to them by Philpot of

his past violent and illegal conduct. No

objection was made to this testiony, and

no cautionary instruction to the jury was

requested.

Thus, the alleged error in 6 6[the

admission of this evidence was waived by

the failure to raise timely objection at

the time, Fed. R. Evid. 103(a)(1), unless

the admission of the statements constituted

"plain errors affecting substantial

rights” id. 103(d). We doubt that, in

the context of the entire record, the

admission of the statements, even if

tenuously inadmissible, had any effect on

the verdict or could otherwise meet even

threshold tests of "plain error".

However, even if objection had _ been

raised before the trial court, it would

properly have been overruled.

In contending inadmissibility, Philpot

relies on Rule 404(b), which prohibits

evidence of extraneous crimes, wrongs, or

acts to prove the characteer of the

accused in order to show that he committed

the present offense for which he is on

trial Here, however, the allegedly objec-

tionable evidence were non-hearsay out-of-

court admissions of a party (the defendant

Philpot) offered by his opponent (the

prosecution), Fed. R. Evid. 801(d)(2), for

a relevant purpose, Id., Rules 401, 402.

APPENDIX A

A-3

Statements by a defendant to _ his

intended extortion victims have been held

admissible by this court, not only as non-

hearsay, but also as tending to prove the

defendant's inducement of a fearful state

of mind on the part of his victims (an

essential element of a Hobbs Act

conviction). United States v. Lynn, 608

38 13), 9S (Sth Cir. ITS): United

States v. Nakaladski, 481 F.2d 289, 301

(Sth Cir.) cert. denied, 414 U.S. 1064, 94

S.Ct. S370 (1973).~ Statements by Philpot

in this case to witnesses tht he enjoyed

“strong-arming" and “ripping people off",

that he had rigged an election, and that

he had been in prison were not admitted to

show his bad character or to show that he

had in fact done these acts. They were

introducted, rather, to show his attempts

to instill a fearful state of mind in his

victims, or to induce them to cooperate in

accordance with his threats, when he made

these statements to them.

Philpot next contends that = another

prerequisite of a Hobbs Act conviction was

not met in this case-- that the actions of

the defendant affect interstate commerce.

Stirone v. United States, 361 U.S. 212,

218. BD G.Ct. 270, 274 (1960). Philpot

argues that because the Oklahoma~based

victim company was not authorized to do

business under Texas law, any extortionate

attempts on its "illegal" businss opera-

tions in Texas would not affect Interstate

Commerce.

We doubt that the circumstance relied

upon affects the "interstate" aspect of

the business against which the extortion

was directed. Nevertheless, Texas law

APPENDIX A

A-4

provides that the acts of a corporation

that has not obtained a license to do

business nonetheless retain legal effect,

Tex. Bus. Corp. Act Art. 8.18 (1955), and

for this reason alone, this legitimate

aspect of the company's business is suf-

ficient to support the commerce requirement

of a Hobbs Acts conviction, see United

States v. Blakey, 607 F.2d 775, 782-83

(7th Cir. 1979). Philpot's contention on

this issue is therefore rejected.

Philpot argues, thirdly, that a fatal

variance exists between the indictment in

this case and the proof adduced at trial

so as to require reversal of his convic-

tion. He contends that while the indict-

ment alleged an extortionate attempt

against one company, Credit Union

Promotions, Inc., the evidence shows, if

anything, an extortionate attempt against

another, Bakem Credit Union. The evidence

Clearly indicates, however, that the indi-

viduals who were threatened in this case

were working on behalf of both companies.

In fact, the individuals to whom the

threats were primarily directed were the

president and a part owner of Credit Union

Promotions, Inc., the company name in the

indictment.

The requirement that the proof adduced

at trial correspond to the allegations of

an indictment insures that (1) the defen-

dant will be adequately informed of the

charges to prepare his defense without

Surprise at trial; and (2) the defendant

will not be subject to another prosecution

for the same offense. Berger v. United

States, 295 U.S. 78, 82, 55 S.Ct. 629, 630

(1934). Philpot, in this case, suffered

no surprise, and there is no showing of

APPENDIX A

A-5

any reasonable danger of a second prosecu-

tion. His claim of variance, therefore,

if indeed there was variance, is rejected.

See United States v. Duhon, 565 F.2d 345,

355 (5th Cir.) cert. denied, 435 U.S. 952,

98 S.Ct. 1580 (1978). Cf. United States

v. Stirone, supra, 361 U.S. at 215-19, 80

S.Ct. at 272-74.

Finally, Philpot challenges the suf-

ficiency of the evidence to support his con-

viction. This contention also is without

merit. Looking at the evidence in the

light most favorable to the government,

Glasser v. United States, 315 U.S. 60, 80,

62 S.Ct. 457, 469 (1942), there is ample

evience upon which the jury could have

concluded that Philpot requested $15,000

from Credit Union Promotions, Inc., while

simultaneously instilling fear through

threats of both physical and economic

harm, if such payment was not made. In

addition, there is ample evidence to th

effect that the extortion, had it suc-

ceeded, would have affected interstate

commerce.

Conclusion

Accordingly, we AFFIRM the judment of

the district court convicting Philpot and

sentencing him to five years in prison for

the attempted extortion.

AFFIRMED.

APPENDIX B

B-1

Article 2461-2.07 of the Texas Revised

Civil Statutes and provides as follows:

"No person, corporation, partnership, or

association of credit unions organized

under this Act or the Federal Credit Union

Act, may use a name or title containing

the words ‘credit union' or any derivation

thereof, represent itself as a credit

union, or conduct business as a credit

union. Violation of this section consti-

tutes a misdemeanor punishable by a fine

of not more than $5,000, or confinement in

jail for not more than two years, or

both.*

Title 6, Oklahoma Statutes, Section 2005

provides as follows:

"It shall be unlawful for any individual,

firm, association, or corporation to tran-

sact a Credit Union business except as

authorized by the laws of the State of

Oklahoma or the United States, or to use

or advertise in connection with any busi-

ness, other than the Credit Union business

conducted under the laws of this State or

of the United States, the term 'Credit

Union', or any other term or terms calcu-

lated to ddeceive the public into

believing that such person, firm, asso-

ciation, or corporation is engaged in the

Credit Union business. Any person, firm,

association, or corporation violating any

of the provisions of this section, either

individually or as an interested party, in

any firm, association, or corporation

shall be guilty of a misdemeanor, and upon

APPENDIX B

B=-2

conviction thereof, shall be fined in a sum

of not less than one hundred (100)

dollars, nor more than five hundred (500)

dollars, or by imprisonment in the County

jail for not less than thirty (30) days,

nor more than six (6) months, or by both

such fine and imprisonment, and it is

hereby made the duty of the Attorney

General to enforce the provisions of this

Section; and in order to prevent the

violation of this Section, the District

Court in the County wherein said Credit

Union is located is hereby authorized and

empowered to grant an injunction and to

appoint a receiver to take charge of the

business and assets of any person, firm,

association, or corporation found guilty

of violating the provisions of this

Section, and to make all necessary and

proper orders to wind up such business and

prevent a violation of this Section. Laws

£961, pb. i2, $5.