Appendix — Sikes v. Boone

Sd-1loyl

Supreme Court, U.S.

Q8-1892° | FireD

IN THE

MAY 18 1984

Supreme Court of the United Statearoce STEVAS

October Term. 1983

HARRY P. JANNOTTI.

u'

Petitioner

UNITED STATES OF AMERICA.

Respondent

GEORGE X. SCHWARTZ.

|

Petitioner

UNITED STATES OF AMERICA.

Respondent

APPENDIX OF PETITIONERS

JANNOTTI AND SCHWARTZ

On Petitions for Writ of Certiorari

In No. and No.

Respectively

Of Counsel:

DILWORTH. PAXSON. KALISII

& KAUFFMAN

2600 The Fidelity Building

Philadelphia. Pennsylvania 19109

Of Counsel:

SPRAGUE. LEVINSON & THALL

Suite 400, Wellington Building

135 S. 19th Street

Philadelphia. Pennsylvania 19103

J. CLAYTON UNDERCOFLER. III

ROBERT N. DELUCA

CARL W. HITTINGER

2600 The Fidelity Building

Philadelphia. Pennsylvania 19109

(215) 8735-7500

Attorneys for Petitioner

Harry P. Jannotti

RICHARD A. SPRAGUE

STEVE ALEXANDER

Suite 400. Wellington Bui!ding

135 S. 19th Street

Philadelphia. Pennsylvania 19103

(215) 561-7681

Attorneys for Petitioner

George X. Schwartz

PACKARD PRESS / LEGAL DIVISION, 10th & SPRING GARDEN STREETS, PHILA., PA. 19123 (215) 236-2000

TABLE OF CONTENTS OF JOINT APPENDIX

TO PETITIONS FOR WRIT OF CERTIORARI

2 eee

Opinion of the United States Court of Appeals

for the Third Circuit Entered 21 February

SE hee errr ha ote NW cane hes

Judgment of the United States Court of Appeals

for the Third Circuit Entered 21 February

1984

Orders of the United States Court of Appeals for

the Third Circuit: denying rehearing and

rehearing en banc entered 20 March 1984;

and staying issuance of the mandate en-

Og ea eee

Judgment of Conviction and Imposition of Sen-

tence of the United States District Court for

the Eastern District of Pennsylvania En-

Bo re

Opinion of the United States Court of Appeals

for the Third Circuit Entered 11 February

a os eae See a ee elas

Memorandum and Order of the United States

District Court for the Eastern District of

we a ee ee ee ee et ie ee ee or a oe ee ee ee on oe ee i ee

Page

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Pennsylvania Entered 18 August 1980 ...PA-153

Memorandum and Order of the United States

District Court for the Eastern District of

Pennsylvania Entered 26 November 1980 PA-175

Order of the United States Court of Appeals for

the Third Circuit Entered 26 August 1981 PA-225

Judgment of the United States Court of Appeals

for the Third Circuit Entered 11 February

1982

TABLE OF CONTENTS OF JOINT

APPENDIX — (Continued )

Page

Charge to the Jury of the United States District

Court for the Eastern District of Pennsylva-

nia Delivered 16 September 1980 ....... PA-229

Constitutional and Statutory Provisions Involved PA-273

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UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 83-1093

No. 83-1094

UNITED STATES OF AMERICA

DS.

JANNOTTI, HARRY P.

SCHWARTZ, GEORGE X.

Harry P. Jannotti,

appellant in No. 83-1093

George X. Schwartz,

appellant in No. 83-1094

(D.C. Crim. No. 80-00166-02)

(D.C. Crim. No. 80-00166-04)

Argued: September 12, 1983

Before: SEITZ, Chief Judge; Gibbons

and Rosenn, Circuit Judges.

(Opinion Filed: February, 21, 1984)

J. CLAYTON UNDERCOFLER, III

(argued)

DILWORTH, PAXSON, KALISH &

KAUFFMAN

2600 The Fidelity Building

Philadelphia, PA 19109

Attorney for Appellant Jannotti

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EDWARD H. RUBENSTONE (argued)

RICHARD A. SPRAGUE

SPRAGUE & RUBENSTONE

Suite 400, Wellington Building

135 S. 19th Street

Philadelphia, PA 91903

Attorneys for Appellant Schwartz

JAMES J. ROHN (argued)

United States Attorney's Office

Rm. 3310, U.S. Courthouse

601 Market Street

Philadelphia, PA 19106

Attorney for Appellee

OPINION OF THE COURT

SEITZ. Chief Judge:

Harry P. Jannotti and George X. Schwartz appeal

sentences imposed after their convictions for

conspiring to violate the Hobbs Act, 18 U.S.C.

§ 1951(a) (1976), and, in the case of defendant

Schwartz, the Racketeer Influenced and Corrupt

Organization Act (“RICO Act”). 18 U.S.C. § 1962(d)

(1976). This court has jurisdiction under 28 U.S.C.

§ 1291.

I. PROCEDURAL HISTORY

Defendants are former members of the

Philadelphia City Council. They were tried together on

charges of conspiring to interfere with interstate

commerce, in violation of the Hobbs Act, 18 U.S.C. §

1951(a), and conspiring to conduct an enterprise

through racketeering activities, in violation of the

RICO Act, 18 U.S.C. 1962(d). The indictment charged

eT os pees

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that the conspiracies existed for approximately three

weeks, from about January 11, 1980, to about

February 2, 1980. The jury found that Schwartz was

guilty on both counts, and that Jannotti was guilty on

the Hobbs Act count and innocent on the RICO countt.

The district court, however, granted defendants’

motions to set aside the guilty verdicts in their entirety,

dismissed the Hobbs Act counts for lack of jurisdiction,

and entered judgments of acquittal. 501 F. Supp.

1182. The government appealed these orders and

judgments, and this court, sitting in banc, reversed

and ordered reinstatement of the jury's verdicts. 673

F.2d 578, cert. denied, 457 U.S. 1106 (1982). The

district court reinstated the verdicts and imposed

sentences.

Il. FACTUAL BACKGROUND

A brief statement of the facts of this case will assist

in understanding the issues presented in this appeal. A

more complete statement of the facts is found in this

court's in banc decision. See 673 F.2d 578, cert.

denied, 457 U.S. 1106 (1982). Schwartz's and

Jannotti’s indictments resulted from the FBI's

so-called “ABSCAM" investigation of political

corruption. The central device in this “sting”

investigation was the creation of an elaborate scheme

in which FBI undercover agents pretended to represent

the interests of a fictitious Arab sheik seeking to

immigrate to this country and to construct a large hotel

in Philadelphia.

Undercover FBI agents, posing as representatives

of the sheik, came to Philadelphia in January 1980 to

seek out city officials who would promise political

favors in exchange for cash. Specifically, the agents

sought help from some members of the Philadelphia

City Council on such matters as zoning and building

permits. The agents had previously met with Howard

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Criden, a Philadelphia lawyer, and through Criden they

met in January with Schwartz, Jannotti, and Louis

Johanson, all members of the City Council.‘ At these

meetings the defendants and Johanson accepted cash

payments and made promises of political assistance to

the sheik on matters before the city council. All of these

meetings took place at the Barclay Hotel in

Philadelphia, where the agents had set up audio and

video tape equipment to record the conversations

surreptitiously. Telephone conversations were also

recorded. These audio and video tapes played a crucial

role in the prosecutions of Schwartz and Jannotti.

Ill. JURISDICTION UNDER THE HOBBS ACT

Defendants raise numerous objections to their

convictions. They first argue that this court, in its

earlier decision in banc, announced the standard for

jurisdiction under the Hobbs Act but ignored a

secondary contention, that the evidence failed to meet

that standard. Defendants therefore renew in this

appeal their argument that the evidence was

insufficient. We disagree that the issue of the

sufficiency of the evidence was not considered in the

earlier opinion. After a thorough examination of the

record, this court held as follows:

In this case the jury found that the defendants

conspired to violate the Hobbs Act by their

acceptance of payments in return for their

promises to expedite completion of an elaborate

hotel project which, had it been constructed,

1 Criden and Johanson were convicted in the Eastern District

of New York on charges of conspiracy and bribery. Their

convictions were upheld on appeal. United States v. Myers,

692 F.d 823 (2d Cir. 1982), cert. denied, 103 S. Ct. 2437,

2438 (1983).

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would have entailed at least a %30 million

expenditure. Had the project actually been planned

as represented, defendants’ actions would have

violated the Hobbs Act even if unforeseen

difficulties, such as the overthrow of the “sheik”,

prevented any further action on the project. The

federal interest in protecting interstate commerce

is no less under the factual situation presented in

this case. The threat posed by defendants’ actions

is just as great. Since Congress has exercised the

full scope of its commerce power in the Hobbs Act,

we conclude that there was Hobbs Act jurisdiction.

673 F.2d at 594. It is clear from this passage that the

court in its earlier opinion not only articulated a

standard for jurisdiction under the Hobbs Act but also

held that jurisdiction existed on the basis of evidence

presented by the government.

IV. HEARSAY EVIDENCE

Both defendants argue that the district court

improperly admitted various pieces of important

hearsay evidence. Unless otherwise noted, defendants

entered -timely objections to the admission of this

evidence at trial.

All of the evidence at issue was admitted under the

“coconspirator exception” to the rule against hearsay,

Fed. R. Evid. 801(d)(2)(E). Under that exception, the

out-of-court statements of the defendants’

coconspirators will not be excluded as hearsay. The

rule is a source of considerable confusion, but its

requirements, as construed in this circuit, may be

summarized as follows. There must be “independent

evidence” of the conspiracy, i.e., evidence independent

of the proffered hearsay itself. This evidence must

establish by a “clear preponderance” that the

conspiracy existed and that both the defendants and

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the declarant were members of the conspiracy. The

“preponderance” test “simply requires the prosecution

to present sufficient proof leading the trial] judge to find

‘that the existence of the contested fact is more

probable than its nonexistence." United States v.

Ammar, 714 F.2d 238, 250 (3d Cir.), cert. denied, 104

S. Ct. 344 (1983). Finally, the out-of-court statement

must have been made during the course of, and in

furtherance of, the conspiracy. Id. at 245. Where the

district court has admitted such statements under

Rule 801(d)(2)(E), our review is limited to the question

whether, viewing the evidence in a light most favorable

to the proponent (in this case the government), the

district court had “reasonable grounds” to support its

ruling. Id. at 249.

A. Proof of the Schwartz-Jannotti Conspiracy

In order to assess the defendants’ objections to the

admission of certain out-of-court statements, it is

necessary to review first their challenge to the district

court's finding that there was a preponderance of

independent evidence establishing a conspiracy to

which the defendants belonged. If we conclude that the

district court had reasonable grounds for its finding,

we must then inquire whether the out-of-court

statements challenged by the defendants satisfied the

other requirements of Rule 801(d)(2)(E).

We have no doubt whatsoever that the district

court had reasonable grounds for finding that a

preponderance of the independent evidence

established a conspiracy in which Schwartz, Jannotti,

and Criden were members. The goal of this conspiracy

was illegally to assist the fictitious sheik in matters

before the Philadelphia City Council relating to the

hotel project, in exchange for cash. In the videotape of a

meeting between Schwartz, Criden, and the

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undercover agents on January 23, 1980, Schwartz told

the agents that “we got uh five or six now [new?]

members (of the City Cowrieil) that came in. UR, you tell

me your birth date. I'll give them to you for your

birthday. (Laughter).” (App. 696a) This statement was

independently admissible as an admission under Rule

801(d)(2)(A). Schwartz also made statements that

evidenced Criden’s complicity in the conspiracy. For

example, Schwartz told the agents that “[t]here are

certain protocol that should be worked out in advance

and that’s where the law firm, Howard [Criden], will

become involved. To put it together so that it doesn't

boomerang.” (App. 756a) At the conclusion of the

meeting, Schwartz examined and accepted an envelope

containing %30,000 in cash.

In the videotape of the meeting between Criden,

Jannotti, and the agents, also admissible under Rule

801(d)(2)(A), Jannotti stated the following:

JANNOTTI: We'll go in there [the City

Council] and battle, we'll go

in and battle.

AGENT: You're with us?

JANNOTTI: Certainly, we'll go in and

battle.

(App. 867a) Jannotti also explained to the agents that

Schwartz had told him about the proposed scheme:

AGENT: Okay, ah, are you aware of

my position and ah, ah.

JANNOTTI: George [Schwartz] has told

me.

(App. 848a) At the conclusion of this meeting, the

agents gave Jannotti an envelope containing *10,000

in cash.

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Because we are convinced that the district court

had reasonable grounds for finding that a conspiracy

was established by a preponderance of the evidence, we

must now consider the defendants’ challenges to the

admission of particular out-of-court statements under

the coconspirator rule.

B. The Telephone Calls

The defendants first challenge the admission of

audio tapes of three phone conversations on January

11 and January 18, 1980, between Howard Criden and

an undercover FBI informant. Defendants argue that

the conspiracy discussed above had not yet begun at

the time of these conversations, and that the tapes

therefore should not have been admitted under Rule

801(d)(2)(E). The indictment charged both defendants

with belonging to a conspiracy starting January 11,

the date of the earliest of the conversations at issue.

The government, however, does not challenge in its

brief the defendants’ assertion that no conspiracy

existed at the time of these conversations. Instead, the

government seems to argue that the tapes were

admissible because they were merely “background”

and nonprejudicial. The government, however, has

cited no authority for a “background” exception to the

hearsay rule, and we will therefore assume that these

tapes should have been excluded from evidence at trial.

We reject defendants’ contention, however, that

admission of the evidence constitutes reversible error.

Neither Schwartz nor Jannotti is mentioned in the

conversations. The January 18 conversations simply

concern the arrangements for the meeting between

Criden and the undercover agents and do not hint at

illegality. We agree that certain remarks during the

January 11 conversation suggest a general atmosphere

of corruption. Criden refers to a law partner who is a

a Ss eee Ne ee EN 8 ee et

EA nei at NN snl we Pla mE Ne hl Ne Tia

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city councilman, suggesting a deal in the making that

might involve political favors. This reference, however,

is harmless in view of admissible evidence, considered

later, that the partner, Johanson, was indeed a

member of the defendants’ conspiracy. There are also

remarks in the conversation about arrangements being

made with Philadelphia-area congressmen who were

later indicted and convicted for involvement in

ABSCAM. The possibility that the defendants were

prejudiced by this indirect association with the

congressmen its insignificant in view of other proof of

the defendants’ guilt, including the statements of

Schwartz and Jannotti quoted above. We therefore

conclude that it is “highly probable” that these tapes

“did not contribute to the jury's judgment of

conviction.” Government of Virgin Islands v. Toto, 529

F.2d 278, 284 (3d Cir. 1976).?

Defendants also challenge the admission of these

particular tapes on the ground that the admission

violated their rights under the sixth amendment to

confront witnesses. This issue is raised for the first

time on appeal, no objection having been entered in the

district court. We will assume without deciding that

questions of alleged constitutional error under the

2 The “high probability” standard is different from the

“reasonable doubt” or “reasonable possibility” standard of

appellate review used to determine the harmlessness of

constitutional error. See Chapman v. California, 386 U.S.

18, 24 (1967). “High probability” requires that we have a

sure conviction that the error did not prejudice the

defendants. Cf. Kotteakos v. United States. 328 U.S. 750,

764-65, 776 (1946). We may not simply conclude that it is

more likely than not that the error was harmless. On the

other hand, we may be firmly convinced that the error was

harmless without disproving every “reasonable possibility”

of prejudice. See R. Traynor, The Riddle of Harmless Error

33-37, 44-45 (1970).

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sixth amendment are generally cognizable under the

doctrine of “plain error”, Fed. R. Crim. P. 52(b), and

that the admission of this hearsay evidence failed to

satisfy the requirements of the confrontation clause.

We conclude, however, that the admission of these

tapes, if erroneous, was harmless beyond a reasonable

doubt. Brown v. United States, 411 U.S. 223 (1973):

Chapman v. California, 386 U.S. 18, 24 (1967).

C. The Meetings on January 18, 1980

The defendants next challenge the admissibility of

videotapes of meetings between Criden and the FBI

undercover agents, and between Criden, the agents,

and Louis Johanson, a partner in Criden’s law firm

and a member of the Philadelphia City Council.

Defendants challenge this evidence on various

grounds. The first meeting, they assert, took place

before the conspiracy began. As explained above, we

are willing to assume that this is true and that the

evidence should have been excluded at trial. We believe,

however, that this evidence was merely cumulative. At

the meeting, the agents explained the fictitious hotel

project in greater detail to Criden. The agents told

Criden they needed help with the many problems that

would arise during such a project, and the discussion

turned to Johanson and Schwartz. Criden agreed to

help enlist them, and the agents promised him

$10,000 in return. In view of the very persuasive and

damning evidence noted elsewhere in this opinion, it is

highly probable that the supposedly erroneous

admission of this evidence did not influence the jury in

any substantial way, despite the fact that defendant

Schwartz was mentioned by name on the tape as a

potential coconspirator.

Defendants challenge the admission of the tape of

the second meeting, between the agents, Criden, and

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Johanson, on the grounds that there was no

independent evidence establishing that Johanson had

joined the conspiracy between Schwartz, Jannotti, and

Criden. In addition, they argue that even if there were

such independent evidence, the tape of the January 18

meeting was inadmissible because the meeting

occurred before Schwartz and Jannotti joined the

conspiracy, and because. by the time they did join.

Johanson had withdrawn. The defendants challenge

the admission of the tape of the third meeting, after

Johanson had left. on the ground that Criden’s

remarks to the undercover agents were not in

furtherance of any conspiracy, even the one between

Criden and Johanson.

We first consider whether Johanson was a member

of the Schwartz-Jannotti conspiracy described above.

The independent evidence of Johanson’s involvement

is not as strong as the evidence against Schwartz,

Jannotti, and Criden, but we nonetheless conclude,

without hesitation, that the district court had

reasonable grounds for holding that the evidence

satisfied the preponderance requirement.

There was independent evidence that undercover

FBI agents established a scheme to solicit political help

from Philadelphia City Council members on matters

affecting a hotel project (App. 552a), and that Schwartz

and Jannotti agreed to sell political favors to these

agents. There was also independent evidence that

Johanson was a council member serving on the council

committee dealing with zoning matters (App. 177a),

that Johanson met with these same agents and Criden

less than a week before the agents’ meetings with

Schwartz and Jannotti, described above, and that

Johanson accepted 25,000 in cash from them (App.

471a). Finally, independent evidence established that

Criden was paid %5,000 for “producing” Johanson

(App. 524a, 572a, 577a). and that Criden was

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depositing the money he was receiving from the agents

in a safe deposit box which was accessible only to

Criden, Johanson, and another member of their law

firm (App. 596a-97a). We have no doubt that the

district court had reasonable grounds for including

Johanson in the conspiracy on the basis of this

evidence.

The question remains whether Johanson’'s

particular statements at the meeting on January 18

were admissible. Defendants argue that even if

Johanson were a member of the conspiracy, this

particular meeting took place before Schwartz and

Jannotti joined. Moreover, Johanson had withdrawn

from the conspiracy by the time they became members.

The fact that the Johanson meeting occurred before

Schwartz and Jannotti joined the conspiracy is

without legal significance. The Supreme Court has

held that “the declarations and acts of the various

members, even though made or done prior to the

adherence of some to the conspiracy, become

admissible against all as declarations or acts of

co-conspirators in aid of the conspiracy."’ United

States v. United States Gypsum Co., 333 U.S. 364.

393 (1948). See also United States v. Lester, 282 F.2d

750, 753 (3d Cir. 1960); Lefco v. United States, 74

F.2d 66, 68 (3d Cir. 1934).

We find the defendants’ withdrawal argument

unsupported by the evidence. The record indicates that

Johanson refused to help Criden enlist Schwartz (App.

607a), and it also suggests that Johanson was unaware

that Criden was able to contact Schwartz despite this

refusal. There is no evidence at all, however, that

Johanson had withdrawn from the conspiracy. Indeed,

he had accepted $25,000 from the undercover agents

only a few days before his decision not to enlist

Schwartz, and there is no reason to believe he did not

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still intend to provide political favors as promised. As

this court has explained, “[t]he defendant must present

evidence of some affirmative act of withdrawal on his

part, typically either a full confession to the authorities

or communication to his co-conspirators that he has

abandoned the enterprise and its goals." United States

v. Steele. 685 F.2d 793, 803 (3d Cir.), cert. denied, 103

S. Ct. 213 (1982). Once the defendant has made a

prima facie showing of withdrawal, the burden shifts

to the government either to impeach the defendant's

proof or to show some act by the defendant in

furtherance of the conspiracy and subsequent to the

alleged withdrawal. Id. The defendants have not made

a prima facie showing of withdrawal. The mere

possibility that Johanson may not have known that

Criden enlisted Schwartz on his own does not require

us to conclude that Johanson had withdrawn or had

somehow become a member of a different conspiracy,

since “[i]t is well-established that one conspirator need

not ... be aware of all the details of the conspiracy in

order to be found to have agreed to participate in it.”

United States v. Riccobene, 709 F.2d 214, 225 (3d

Cir.), cert. denied. 104 S. Ct. 157 (1983).

We also reject defendants’ assertion that Criden’s

statements to the agents at the meeting immediately

after Johanson’'s departure were not in furtherance of

the conspiracy. At that meeting, Criden met alone with

the undercover agents, discussed the enlistment of

Schwartz and Jannotti, and received %5,000 for

enlisting Johanson. (App. 499a-500a) It is difficult to

imagine statements more in furtherance of a

conspiracy to sell political favors.

Finally, the defendants challenge the admission of

videotapes of two meetings between Criden and the

undercover agents. The first of these meetings

occurred on January 23, 1980, immediately after the

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meeting between Criden, the agents, and Schwartz.

The second occurred on J iuary 24, 1980,

immediately after the meeting between Criden, the

agents, and Jannotti.

The defendants challenge the admission of these

videotapes on the ground that the statements at the

meetings were not in furtherance of the conspiracy to

buy influence among members of the city council. The

improper admission of these videotapes. they argue,

was prejudicial and constitutes reversible error.

We find that, with the exceptions discussed below,

the statements at the two meetings between Criden

and the undercover agents were in furtherance of the

conspiracy to buy influence. At the first meeting,

Criden collected $5,000 for introducing Schwartz to

the agents. Criden assured the agents that Schwartz

was corrupt and would fulfill his end of the illegal

bargain. (App. 760a) The conversation then turned to

the proposed meeting with Jannotti. The agents asked

Criden whether the meeting had been arranged, and

Criden responded that he had had some difficulties

(App. 762a-64a) and was not sure Jannotti could or

should be included (App. 771a). Eventually Criden

agreed to try to arrange the meeting, and there was a

discussion of the price required to purchase Jannotti's

assistance. Criden and the agents decided to begin

with an offer of $10,000.

At the second meeting, the agents asked Criden

whether Jannotti understood the arrangement and

could be relied on to perform. Criden responded that

Jannotti understood the offer and was reliable. (App.

895a, 897a. 905a)

In each of these two meetings, the agents and

Criden discussed the probable success of the scheme

and the amounts required to buy the influence of the

coconspirators. Although not as central to the

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conspiracy as the agents’ meetings with Jannotti,

Schwartz, and Johanson, these meetings nonetheless

clearly and materially advanced the conspiracy toward

its goal of using illegally acquired political influence to

eliminate obstacles to the construction of the hotel. We

therefore hold that these portions of the videotapes

were properly admitted under Rule 801(d)(2)(E).

We agree with defendants, however, that certain

portions of these videotapes in which the parties

discussed certain United States Congressmen were

inadmissible because the discussions were not in

furtherance of the conspiracies charged. Defendants

challenge the admission of tapes of both the January

23 and the January 24 meetings on this ground. The

government responds that the defendants at trial

withdrew their objection to the January 23 meeting.

(App. 195a-96a, 792a-94a, 798a) Although the trial

transcript is not very clear, we believe that the

withdrawn objection was a relevancy objection entered

after the jury had viewed the videotape, not the Rule

801(d\(2\(E) objection entered prior to the viewing.

(App. 684a) We will therefore review both the January

23 and the January 24 meetings.

In the meeting on the 23rd, the agents and Criden

discussed two Pennsylvania congressmen and referred

to deals with them that were apparently different from

the hotel project. (App. 766a-67a, 774-77a, 781a-82a)

In the meeting on the 24th, the agents and Criden

discussed an upcoming meeting with a member of

Congress from the Philadelphia area. Later during the

meeting, the congressman called and talked to one of

the agents. (App. 894a, 906a-07a)

The presence of these discussions on the tapes is

not surprising, of course, since ABSCAM was a large

and diverse undertaking, with many overlapping

instances of graft and corruption. The government,

however, has not argued before this court that these

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other schemes were part of the conspiracy with which

we are concerned, and apparently the government

made no such argument at trial. This court is aware

that in some instances it may be very difficult to delete

inadmissible portions of a videotape without rendering

the evidence unintelligible. Such is not the case here,

however. We have no doubt that the objectionable

portions of these videotapes could have been deleted

without seriously affecting the impact of the tapes as a

whole, and we therefore conclude that these portions of

the tapes should not have been admitted.

Despite this conclusion. however, we find such

error was not prejudicial to the defendants in any

significant way. Any blemishes to the defendants’

characters resulting from the admission of this

evidence were utterly insignificant in view of the

admissible evidence against the defendants.

E. Conclusion

We conclude that,. with the exception of the

statement made about the congressman, discussed

above, and the earlier tapes of Criden’s meetings with

the agents, which we assume to be inadmissible but

harmless, all of the hearsay evidence offered by the

government under Rule 801(d)(2)(E) was properly

admitted.

V. THE ENTRAPMENT CHARGE

Defendants next argue that the district court

improperly charged the jury on the issue of entrapment

by bifurcating the burden of proof and requiring the

defendants to satisfy a threshold burden before they

could be entitled to jury consideration of the defense.

Our review of this issue is plenary.

The district court's charge to the jury on the issue

of entrapment was a long one, and what follows are

only the passages most relevant to the defendants’

argument.

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Before an issue of entrapment arises and

before you have to consider entrapment the

evidence must lead you to believe that the

Government induced the defendant to commit the

crime charged.... The issue really is: Is this a crime

which would have been committed without the

Government's participation or is this something

where the idea for committing this particular

crime originated with the Government and that it

was the Government's idea that this particular

: crime be committed? (App. 1351a)

If the government is responsible for

inducement -- that is, if the idea for committing

the crime originated with the Government, if this

specific crime would not have been committed but

for the Government's idea and action -- then in

order to obtain a conviction the Government must

go further and must prove beyond a reasonable

doubt that the defendant was predisposed to

commit crimes of that type. - (App. 1352a)

If there was inducement, then the Government

cannot obtain a verdict of guilty unless the

evidence as a whole proves beyond a reasonable

doubt that the particular defendant was

predisposed to commit that type of offense. (App.

1362a)

[Ylou are, first of all, on the one had, not here

to decide generally whether you like what the

Government did or not but, rather, the specific

question as to whether what they did amounted to

inducement and, if so, whether they have shown

predisposition. (App. 1366a)

After the charge had been given, a side-bar conference

was held to consider objections. Defendants’ lawyers

argued that the court had instructed the jury on a

PA-18

bifurcated burden of proof on the issue of entrapment,

which was improper in view of certain prior decisions

in this circuit. The court apparently rejected this

argument but agreed for other reasons to supplement

the charge on entrapment. In this supplemental

charge, the court stated the following:

If you find from the evidence that there was

inducement, that the crime was induced by the

Government agents -- that is, if you accept as

correct the inferences urged upon you by defense

counsel to the effect that Criden was being paid

money to bring them in and that they were being

offered this hotel project only on condition that

they accept and so forth, if there was inducement --

if you find those facts to be correct, then that

would amount to inducement and you would

therefore acquit the defendants unless the

evidence as a whole satisfies you beyond a

reasonable doubt that they were predisposed.

In short, the burden is upon the Government

in a case of this kind to prove beyond a reasonable

doubt that there was no entrapment. If the

defendants were induced to commit the crime,

then they were entrapped and should be acquitted

unless the Government satisfies you beyond a

reasonable doubt that they were predisposed to

commit the crime. (App. 1378a-79a)

To analyze the defendants’ objection to this charge,

we turn to an earlier decision of this court, United

States v. Watson, 489 F.2d 504 (3d Cir. 1973), where

we considered how to charge a jury on entrapment. To

be entitled to such a charge, the defendant must first

show “(1) evidence that the Government initiated the

crime, regardless of the amount of pressure applied to

the defendant, and (2) any evidence negating the

defendant's propensity to commit the crime.” Id. at

PA-19

509. The question of whether the defendant is entitled

to the entrapment charge is for the court. Id. at 511.

See also United States v. Wolffs, 594 F.2d 77, 81 (5th

Cir. 1979). If the court decides to give the charge, it

must follow the “unitary” approach, in which the

burden to disprove the entrapment defense as a whole,

beyond a reasonable doubt, is placed exclusively on the

government. Failure to place this burden exclusively on

the government will not be cured by the presence of a

general charge that the government has the burden of

proving the defendant's guilt beyond a reasonable

doubt. Watson, 489 F.2d at 51 n.10: Government of

Virgin Islands v. Cruz, 478 F.2d 712, 717 (3d Cir.

1973) (dictum).

The focus of the entrapment defense is on the

defendant's predisposition, as required by the

Supreme Court in United States v. Russell, 411 U.S.

423 (1973). Inducement, however, is not irrelevant. As

this court explained in Watson,

the stronger the inducement, the more likely that

any resulting criminal conduct of the defendant

was due to the inducement rather than to the

defendant's own predisposition. Under the unitary

approach we require, inducement therefore enters

as an element of predisposition which the

Government must disprove, rather than as an

independent element which the defendant must

prove.

489 F.2d at 511.

This approach is to be distinguished from the

“bifurcated” approach, in which the burden of proof is

divided between the defendant and the government.

Under the bifurcated approach, the jury must first

consider whether the defendant has met his burden on

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the issue of inducement. If so, then the jury must.

consider whether the government has proved

predisposition. See United States v. Sherman, 200

F.2d 880, 882-83 (2d Cir. 1952). This court rejected the

bifurcated approach in Watson. 489 F.2d at 510, 511.

Our preference for the unitary approach is

grounded in several concerns. First, the Supreme

Court has clearly held that entrapment is, at bottom, a

question of the defendant's predisposition and not the

government's inducement, although the latter is a

relevant consideration. Russell, supra, 411 U.S. at

433-36. To divide the burden of proof between the

defendant and prosecution on the issues of

inducement and predisposition encourages the jury to

ignore the Supreme Court's holding. Second, the

unitary approach avoids the possibility of jury

confusion inherent in a shifting burden of proof.

Finally, the unitary approach is more consistent with

the government's ultimate burden of proving the

defendant's guilt beyond a reasonable doubt. Under

our approach, the defendant need not offer evidence

sufficient to support a finding of inducement, as the

bifurcated approach would seem to require. Instead,

the defendant need only raise a reasonable doubi about

predisposition. Notaro v. United States, 363 F.2d 169,

176 (9th Cir. 1966).

Turning to the district court’s charge in the

present case, we note that the court clearly stated that

“the burden is upon the Government in a case of this

kind to prove beyond a reasonable doubt that there was

no entrapment.” (App. 1379a) Repeatedly, however, the

court indicated that the defendants had a threshold

burden of showing inducement. Not only did this

incorrectly divide the burdem ULetween the defendants

and the government, but it also required an

independent consideration of the issue of inducement,

PA-21

apart from the central issue of predisposition. We must

therefore conclude that the district court's instruction

on entrapment was erroneous.

We are not confronted here with an error affecting

the defendants’ constitutional rights. The entrapment

defense “is noi of a constitutional dimension,” United

States v. Russell, 411 U.S. 423, 433 (1973), and the

erroneous instruction affected no other possible

constitutional right. We are therefore not required in

this appeal to find beyond a reasonable doubt that the

error was harmless, Chapman v. California, 386 U.S.

18 (1967). Instead, we must use the “highly probable”

standard of appellate review discussed above.

Government of Virgin Islands v. Toto, 529 F.2d 278,

284 (3d Cir. 1976). Applying this standard to the

circumstances of this case, we hold that the erroneous

instruction is not reversible. Fed. R. Crim. P. 52(a). As

noted above, the district court charged the jury that it

was obligated to acquit the defendants if the

government failed to disprove entrapment beyond a

reasonable doubt. This part of the charge was correct.

The charge was erroneous insofar as the district court

improperly required the defendants to show some

evidence of inducement, either by introducing their

own proof or by reference to the government's evidence.

This evidence, however, was patent: the government

had created an elaborate fiction to convince the

defendants that an Arab sheik was prepared to pay

bribes to local officials in exchange for favors.

The district court correctly placed on the

government the burden of proving predisposition

beyond a reasonable doubt. We find that the

government's evidence established overwhelmingly

that the defendants enthusiastically accepted bribes.

There simply is no credible evidence that the

defendants were reluctant to take the money. To the

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contrary, the evidence shows the defendants, each of

them an elected public official, boasting of their power

and their corruption. In view of this overwhelming

proof, we conclude without hesitation that the

defendants were not prejudiced by the district court's

error.

Defendants also argue that the district court's

instruction on entrapment was so confusing as to

warrant reversal. We agree that the charge was

interspersed with digressions on legal and factual

issues unrelated to the question of entrapment. We

conclude, however, that the district court's instruction

was not prejudicially confusing.

VI. ENTRAPMENT AND AGENCY

Related to the defendants’ challenge to the

entrapment instructions is the argument that they

were entitled, as a matter of law, to an instruction that

Criden should be considered a government agent in

determining whether there was entrapment. This

argument, even if meritorious, is unavailing, since

there is no evidence that Criden attempted to induce

the defendants beyond informing them of the

availability of the sheik’s offer. The defendants did not

call Criden as a witness, nor did they seek to establish

in any other way that Criden was instrumental in

persuading the defendants to accept the bribes. We will

not guess about such matters. Moreover, we note that

the district court instructed the jury on the defendants’

claim that Criden was an agent, and we can only

assume that the jury gave the theory whatever weight it

was due. We will give it no more.

VIl. THE RICO CHARGE

Finally, defendant Schwartz attacks his conviction

under the RICO Act. Schwartz was convicted under

wy

PA-23

RICO section 1962(d), 18 U.S.C. § 1962(d), for

conspiring to violate section 1962(c). Section 1962(c)

states that no person “associated with” an enterprise

affecting interstate commerce may “conduct or

participate, directly or indirectly, in the conduct of

such enterprise's affairs through a pattern of

racketeering activity ..... The “enterprise” in the

present case was the law firm of Criden, Johanson,

Dolan, Morissey & Cook, in which both Criden and

Johanson were partners. Schwartz raises two issues:

first, that his conviction was not supported by evidence

of a conspiracy to conduct an enterprise through a

pattern of racketeering, and second, assuming such a

conspiracy did exist, that there was insufficient

evidence of Schwartz’s membership in it. We will

consider these two contentions together. We examine

the evidence in a light most favorable to the

government to determine whether a jury could have

resolved these issues against Schwartz beyond a

reasonable doubt.

We begin by noting the obvious. There is no

question that a conspiracy existed to sell political

favors to a fictitious Arab sheik, and that Schwartz was

a member of that conspiracy. The evidence discussed

above amply supports these conclusions. The question

now under consideration is whether there was a RICO

conspiracy, and whether Schwartz knowingly joined

that RICO conspiracy.

The Fifth Circuit has stated, and we agree, that

“[t]he mere fact that a defendant works for a legitimate

enterprise and commits racketeering acts while on the

business premises does not establish that the affairs of

the enterprise have been conducted ‘through’ a pattern

of racketeering activity.” United States v. Cauble, 706

F.2d 1322, 1332 (5th Cir. 1983). Instead, the

government must show that a person “‘is enabled to

commit the predicate offenses solely by virtue of his

PA-24

position in the enterprise or involvement in or control

over the affairs of the enterprise; or ... the predicate

offenses are related to the activities of that enterprise.’”

United States v. Provenzano, 688 F.2d 194, 200 (3d

Cir.), cert. denied, 103 S.Ct. 492 (1982) (quoting

United States v. Scotto, 641 F.2d 47, 54 (2d Cir. 1980),

cert. denied, 452 U.S. 961 (1981)). In order to establish

a conspiracy to violate section 1962(c), “the

government must prove beyond a reasonable doubt

that ... the individuals knowingly agreed to participate

in the ‘enterprise’ through a paticrn of racketeering.”

United States v. Riccobene, 709 F.2c 214, 220-21 (3d

Cir.), cert. denied, 104 S. Ct. 157 (1983).

With these principles in mind, we turn to the

record. Evidence presented to the jury would have

allowed it to conclude beyond a reasonable doubt (1)

that the ABSCAM “front” involved a fictitious Arab

sheik who wished to contact a politically influential

Philadelphia law firm as part of an effort to build the

hotel; (2) that Schwartz knew this; and (3) that

Schwartz agreed not only to perform political favors but

also to set up contacts with the Philadelphia firm of

Blank, Rome, Comisky & McCauley.* The jury could

also reasonably have concluded that Criden regerded

the illegal deal he had struck with the sheik as a

3. At the meeting on January 23, 1980, between Schwartz,

Criden, and the undercover agents. one of the agents asked

if Schwartz knew of a “local, politically savvy” law firm that

the sheik could use. (App. 725a) Criden responded that

Schwartz's old law firm, Blank, Rome, was the best

candidate because of its expertise in building and zoning

matters. (App. 726a-27a) Criden explained that he and

Schwartz had “already discussed” the matter of the law

firm. (726a-27a, 752a) Finally, Schwartz explained that

Criden would work with the firm to take care of “certain

protocol that should be worked out tn advance ....” (App.

755a-56a) This was to insure that the deal did not

“boomerang.” (App. 756a)

PA-25

business matter for his own firm of Criden, Johanson,

Dolan, Morissey & Cook, and that Criden regarded the

sheik and the undercover agents as the firm's

“clients”.* Finally, the evidence would have allowed the

jury reasonably to conclude that although the Blank,

Rome firm was expected to get most of the sheik’s

business, Criden expected his firm to continue to

benefit, and that Schwartz knew this.*

4. At the same meeting described in the preceding footnote.

Schwartz told the agent that Criden could “help” in the

search for a firm. The agent responded that it might be

difficult to use Criden’s firm because one of the partners

(Johanson) was a member of the City Council, and it might

create the appearance of a conflict of interest. The agent

emphasized, however that he did not want to cut Criden

out of the action. Criden reassured the agent that he and

Schwartz had discussed these matters, and that there was

no reason to worry. (App. 725a-26a)

Ellis Cook, one of Criden’s law partners. testified at the

trial] that on January 21, 1980, Criden gave him two sums

of money, *3,000 and %5,000. both in cash. Criden

described the first payment to Cook as his “fee” for the

meeting between Criden, Johanson, and the undercover

agents three days earlier. Criden told Cook that the second

amount was part of Johanson’s payment, and that Cook

was to put it in a safe deposit box accessible only to Criden,

Johanson, and Cook. (App. 596a-97a) Cook had leased the

safety deposit box, on Criden’s instructions, long before

this meeting. As Cook explained, “it was to hold certain

valuable papers for clients.” (App. 620a) At Criden’'s

request, Cook later withdrew this money in the form of

bank money orders. The money orders were payable to the

Criden, Johanson law firm. (App. 598a-600a) When asked

why Criden was giving money to him, Cook explained that

Criden “had always been good to me, plus I had to do the

legal work that was coming out of this.” (App. 624a. See

also App. 626a-27a, 640a, 643a.)

5. Ellis Cook testified that Criden told him the hotel project

would be handled by the Blank, Rome law firm, but that

“[t}hey would be working with us on the project.” (App.

PA-26

In view of this evidence, we conclude that a jury

could have decided, beyond a reasonable doubt, that

legal work was an important part of the proposed

transaction, that Criden’s firm was expecting to do

some of this legal work, and that Schwartz knew this.

The jury could therefore have concluded beyond a

reasonable doubt that Criden and Schwartz knowingly

agreed to conduct or participate, directly or indirectly,

in the conduct of the law firm's affairs through a

pattern of racketeering activity, as proscribed by the

RICO Act.

Vill. CONCLUSION

For the above stated reasons, the sentences of

defendant Schwartz under the Hobbs Act and the RICO

Act, and the conviction of defendant Jannotti under

the Hobbs Act, will be affirmed.®

606a-07a) Criden indicated that he might be talking to

someone about the possibility that Cook, Criden, and

another partner would join the Blank, Rome firm. (App.

607a) This would bring to four the number of partners at

the firm who had profited or could expect to profit from the

hotel project and the legal business it would generate.

Three of these were “name” partners. At the meeting on

January 23, 1980, between Criden and the undercover

agents after Schwartz had left the room, Criden explained

the legal arrangements. He stated that there would be

“substantial legal fees involved” and that these fees would

be shared:

For obvious reasons, okay, there will be substantial

legal fees involved. Now I made a deal with him today.

Okay, which was one of the reasons that everything

worked so smooth because what was given to him was

minor in comparison to what will be made in legitimate

legal fees in a project of this nature. (App. 759a)

6. Defendants also raised certain issues in order to preserve

them for future appeal. These issues, according to the defendants’

briefs, are the following: the nature of the proof necessary to show

PA-27

ROSENN, Concurring and Dissenting.

I concur and join in the majority opinion except

insofar as it sustains the RICO conviction. I

respectfully dissent from part VII (the RICO charge) and

part VIII because the Government has not proved that

Schwartz committed the offense charged in the RICO

indictment.

I.

As the majority opinion notes, both appellants,

members of the Philadelphia City Council, were

convicted of having conspired to obstruct interstate

commerce -in violation of the Hobbs Act by accepting

payments in return for promises to expedite the

construction of a major hotel complex in the city. The

construction plan, however, was only part of a “sting”

operation. On the same operative facts, the jury also

found the defendant Schwartz guilty of conspiracy to

violate the Racketeer Influenced and Corrupt

Organizations Act (RICO), 18 U.S.C. § 1962(d) (1976).

The RICO indictment (count two) charged

Schwartz and Jannotti, together with Criden,

Johanson, and an unindicted coconspirator, Ellis

Cook, with conspiracy to conduct and participate in

the conduct of the affairs of a law firm, Criden,

Johanson, Dolan, Morrissey & Cook (the firm),

through a pattern of racketeering activity in violation

of 18 U.S.C. 8 1962(d) (1976). The first paragraph of the

indictment defined the firm as a business and legal

entity engaged in the practice of law in Philadelphia,

the requisite jurisdictional effect on interstate commerce under the

Hobbs Act: the sufficiency of the government's proof of extortion

under the Hobbs Act: whether the defendants were entrapped as a

matter of law: and whether the government violated the defendants’

due process rights during the course of its ABSCAM investigation.

These issues were decided by this court in its previous in banc

decision. 673 F.2d 578. cert. dented. 457 U.S. 1106 (1982).

PA-28

Pennsylvania, and as constituting an “enterprise

engaged in, and the activities of which affected,

interstate commerce.” Criden and Johanson were

partners in that firm; Schwartz and Jannotti were not.

The object of a RICO conspiracy is to violate a

substantive provision of the RICO statute. The

substantive provision of RICO that the indictment

charged Schwartz with having conspired to violate is

section 1962(c). It provides in pertinent part:

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

indirectly, in the conduct of such enterprise's

affairs through a pattern of racketeering activity

II.

Criden implicated Schwartz in this fictitious

project before Schwartz had any knowledge of it or its

principals. On Friday, January 18, 1980, Criden met

with undercover agents Wald and Haridopolos at

Philadelphia's Barclay Hotel. Waid told Criden that an

Arab sheik was interested in co.istructing a large hotel

complex in Philadelphia and desired advance

assurances that there -would be no zoning or labor

problems. Criden hastily assured the agents there

would be no such problems and suggested the

possibility of dealing with Johanson, a member of the

City Council, and Schwartz. its president. They

discussed “the tariff’ for each of the men and agreed to

arrange a meeting with Councilman Johanson. The

agents promised Criden a fee of %10,000 for

introductions to Johanson and Schwartz.

With visions of the $10,000 in hand, Criden lost no

time in returning that same evening with Johanson.

PA-29

Johanson gave the agents the assurances they sought.

The agents, in turn, presented him with $25,000. Wald

than asked Johanson whether Schwartz could help the

sheik and Johanson replied that Schwartz and

Councilman Jannotti controlled the City Council.

Johanson indicated that he would explore the

possibility of arranging a meeting with Schwartz and

Jannotti. He then departed. Criden remained and

discussed with the agents how they might enlist the

services of Schwartz and Jannotti and how much they

might have to spend. At the end of the meeting, Wald

gave Criden %5,000 for his personal services and

promised him “five [more] for the next delivery.”

Johanson never introduced Schwartz or Jannotti

to the agents. Over the weekend he had second

thoughts about his conversation with the agents and

Criden. When Criden called Monday morning to

arrange for a meeting with Schwartz, Johanson

refused to make the introduction or to set up a meeting

with Jannotti. There is no indication that Johanson

had any subsequent involvement in the matter.

Criden had never met Schwartz, and he contrived

to obtain an introduction through two intermediaries.

He informed them that one of his clients wished to use

Schwartz as a consultant. He then paid the

intermediaries ®3,000 for arranging the introduction.

On January 23, 1980, Schwartz made his first and

only appearance on this stage. He met with Criden and

agent Wald at the hotel. Criden informed Wald that he

had discussed the project with Schwartz. Schwartz

spoke enthusiastically of the positive business

environment in Philadelphia. When the conversation

turned to the question of obtaining zoning variances in

advance of construction, Schwartz indicated that he

controlled the City Council, as well as the Zoning Board

of Adjustment and the Board of Building Standards.

PA-30

Wald mentioned that his client had other

investments in mind besides the hotel construction

and asked whether Schwartz could “suggest” a local,

politically savvy law firm. When Criden suggested

Schwartz's former law firm, Blank, Rome, Comiskey &

McCauley (Blank, Rome), Wald inquired whether that

would create a conflict of interest. Schwartz replied

that he had completely severed his relationship with

the firm. He commented that the firm had expertise in

all types of construction and financing and would be a

proper firm to use for this kind of work. Criden offered

to set up an appointment with the firm and to make the

referral. Schwartz also suggested another major

Philadelphia law firm, Wolf, Block, Schorr and

Solis-Cohen. With respect to using his old law firm,

Schwartz commented that “[t]here are certain protocol

that should be worked out in advance and that’s where

the law firm Howard [Criden] will become involved. To

put it together so that it doesn't boomerang.”

Wald asked Schwartz if the “dollars we're talking

are in the right ballpark.” Schwartz replied that money

was not his prime concern, and that his interest was in

Philadelphia's economic and tax development. He

confirmed Waid’s statement that they had made a

business deal and that the sheik had a friend in

Philadelphia. Wald then handed Schwartz an envelope

containing $30,000 and asked him if the sum was

“appropriate.” Schwartz took the envelope and

departed, but not before advising Wald that he was

“very much available” if the sheik required his future

services. Following Schwartzs departure, Wald gave

Criden the $5,000 he had previously promised him for

Schwartz's “delivery.”

Schwartz made his debut in this alleged

conspiracy on January 23, 1980, and the record shows

no further meetings between him and the agents. The

PA-31

day after the agents met with Schwartz, Criden

arranged to have Jannotti meet with thern. They met

that evening and the agents again described the

project. Jannotti promised to help. Wald then handed

Jannotti an envelope with %10,000 and Jannotti left.

III.

Although the entire hotel project was imaginary,

the law of this case is, as the majority has noted, -that

there is Hobbs Act jurisdiction. See United States v.

Jannotti, 673 F.2d 578 (3d Cir.) (in banc), cert.

denied, 457 U.S. ll06 (1982). On the record we have

here, the conduct of Schwartz and Jannotti provides

sufficient evidence to convict each of them of a Hobbs

Act conspiracy. But whether the Government proved

that Schwartz is also guilty of the RICO charge is an

entirely different question. I believe the answer is that

it did not.

The thrust of the statute, as is indicated by its title

“Racketeer Influenced and Corrupt Organizations Act”

and the lar guage of sections 1962(a), (b), and (c), is the

perversion of a business, organization, or enterprise

through a pattern of racketeering activity. The

principal purpose of Congress in enacting RICO was to

protect legitimate businesses from the infiltration by

organized crime by eradicating “the criminal means of

acquiring, maintaining and conducting any enterprise

affecting commerce.” United States v. Stofsky, 409

F.Supp. 609, 613 (S.D.N.Y. 1973).'

1. “Title IX is aimed at removing organized crime from our

legitimate organizations . . . . Unless an individual not only

commits such a crime but engages in a pattern of such violations,

and uses that pattern to obtain or operate an interest in an

interstate business, he is not subject to the proceedings under Title

IX.” 116 Cong. Rec. 585 (1970) (emphasis added), quoted in

Note.Organized Crime and the Infiltration of Legitimate Business:

Civil Remedies for “Criminal Activity.” 124 U. Pa. L. Rev. 192, 205

n.74 (1975).

PA-32

This purpose is demonstrated by the very structure

of the statute's operative provisions. As to enterprises

engaged in interstate commerce, section 1962(a)

prevents the use or investment of racketeering income

in the acquisition of any interest in such an enterprise.

Section 1962(b) makes it unlawful through a pattern of

racketeering activity to acquire a direct interest in or

control of such an enterprise. Section 1962(c) reaches

employees and persons already associated with the

enterprise and prohibits them from conducting its

affairs through a pattern of racketeering activity. The

statute also provides severe mandatory forfeiture

penalties for a section i962 violation. 18 U.S.C.

§ 1963(a).?

The gravamen of a section 1962(d) RICO offense is

not a conspiracy to commit bribery or some other

predicate offense, but a conspiracy to operate or

participate in the conduct of the affairs of an enterprise

through a pattern of racketeering activity. The

enterprise concept, a distinct element, is the focus of

the RICO crime. “Although the provisions create a

cluster of substantive offenses, a RICO violation,

broadly speaking, arises from the use of power,

acquired by crime, to gain or maintain a foothold in an

enterprise that operates in interstate commerce.”

Bridges, Private RICO Litigation Based Upon “Fraud

in the Sale of Securities,” 18 Ga. L. Rev. 43, 48 (1983)

(hereinafter cited as ‘Private RICO Litigation”)

2. “A close reading of § 1962... reveals that subsections (a),

(b), and (c) are designed to work together to deal with the three

different ways in which organized crime infiltrates and corrupts

legitimate organizations... . All three sections considered together

represent a unified plan to deal with the infiltration of legitimate

organizations.” Note, Elliott v. United States: Conspiracy Law and

the Judicial Pursuit of Organized Crime through RICO. 65 Va. L.

Rev. 109, 17 (1979); see H.R. Rep. No. 91-1549, 9lst Cong.. 2d Sess.

. reprinted in 1970 U.S. Code Cong. & Ad. News, 4007,

4033.

PA-33

(footnote omitted). Thus, the court of appeals in United

States v. Mandel, 591 F.2d 1347 (4th Cir.), vacated on

other grounds, 602 F.2d 653 (1979) (in banc) (district

court's order granting judgment N.O.V. on the RICO

charge undisturbed), cert. denied, 445 U.S. 961 (1980),

approved the district court's holding “that the ‘conduct

or participate’ language in section 1962(c) required

some involvement in the operation or management of

the business... .” 59] F.2d at 1376 (emphasis added).

Section 1962(c) “requires more than merely some

connection or even a ‘substantial nexus’ between a

lawful enterprise and the prohibited pattern of

racketeering.” United States v. Webster, 639 F.2d 174,

185 (4th Cir.}, cert. denied, 454 U.S. 857 (1981),

modified 669 F.2d 185 (1982).

In discussing what constitutes a conspiracy under

RICO, this court in United States v. Riccobene, 709

F.2d 214 (3d Cir.), cert. denied, 104 S.Ct. 157 (1983),

reasoned that:

An agreement merely to commit the predicate

offenses would not be sufficient to support a RICO

conspiracy. Nor is it sufficient if the defendants

merely participate in the same enterprise. . . . This

is so because, under RICO, it is an agreement “to

conduct or participate... in the conduct of [an]

enterprise's activities” through the commission of

predicate offenses that is prohibited, not an

agreement to commit a pattern of racketeering

activity alone.

Id. at 224. This statement in Riccobene reflects the fear

that Congress had that organized crime could obtain a

foothold in the commerce and industry of the country

and from there “intimidate all competition out of the

market. The results of this activity would be the typical

antitrust vices of monopolization, price fixing and so

forth.” Private RICO Litigation, supra, at 70. These

PA-34

concerns were expressed during the Senate and House

hearings. Jd. at 70, n.136. In United States v. Turkette,

452 U.S. 576 (1981), the Supreme Court recognized that

a great concern of Congress in enacting RICO was “the

infiltration of legitimate businesses,” id. at 592-93,

and resolved a much disputed question by holding that

the statute also reached the operation and

management of criminal enterprises.

IV.

In this case, the indictment charges that Schwartz

conspired to conduct and participate in the conduct of

the affairs of an enterprise -- the Criden, Johanson,

Dolan, Morrissey & Cook law firm -- through a pattern

of racketeering activity. Proof of an agreement only to

participate in a conspiracy to commit two or more

predicate crimes of bribery is insufficient to establish a

RICO violation. “More specifically, to convict for

conspiracy to violate RICO the government must prove

that the person objectively manifested through words

or actions, an agreement to participate in the conduct

of the affairs of the enterprise through the commission

of two or more predicate crimes.” United States v.

Martino, 648 F.2d 367, 394 (5th Cir.), cert. denied,

456 U.S. 949 (1982). Accord United States v. Winter,

663 F.2d I120, 136 (Ist Cir. 1981), cert. denied, 103 S.Ct.

1249 (1983). And under United States v. Mandel,

supra, the required proof must demonstrate “some

involvement in the operation or management of the

business.” 591 F.2d at 1375.

Applying these principles of RICO construction,

this court held in United States v. Provenzano, 688

F.2d 194, 200 (3d Cir.), cert. denied, 103 S.Ct. 492

(1982), that a union officer who accepted bribes in

exchange for the union's countenancing of the

violations by empioyers of collective bargaining

agreements was conducting union affairs through a

’

*

PA-35

pattern of racketeering activity. It was the conduct of

the union office that provided the requisite element for

the RICO offense. The court observed, however, that

“when the predicate acts are unrelated to the

enterprise or the actor's association with it [then] the

nexus element is missing, and consequently there is no

RICO violation.” Id. at 200. I read this language to

mean that the predicate acts must be related to

managing or participating in the operation of the

affairs of the enterprise. The evidence does not support

such a conspiracy here.

The Government might have proven that

Schwartz, as president of the City Council, had

conspired to conduct the affairs of the Council through

a pattern of racketeering activity. United States v.

Frumento, 563 F.2d 1083 (3d Cir. 1977), cert. denied,

434 U.S. 1072 (1978), could have been an analogue for

such an indictment and prosecution. The Government,

however, chose to indict Schwartz and Jannotti for

conspiracy to conduct and participate in the conduct of

the Criden, Johanson, Dolan, Morrissey & Cook law

firm. There is nothing to show that Schwartz was even

in the firm's office, or that he used its telephones,

library, or facilities. The pertinent evidence does not

prove that Schwartz had any intention or objective of

conspiring to conduct or participate in the conduct of

the affairs of that firm.

') Further, although Criden, a partner in the firm,

“played a key role in inducing Schwartz to accept the

3. Evidence in support of such a conspiracy might have been

found in a meeting between Criden, Schwartz, and Jannottt prior

to Jannotti'’s meeting with Wald. Schwartz advised Jannotti that

these “people . . . want to be assured that they are not going to have

any problems, they want your support, want you to go up with

\Criden} tonight and meet these people tonight and get your 10

thou, okay.” In addition, Cook testifled that Criden gave Schwartz

some money for introducing Criden to Jannotti.

PA-36

bribe, the evidence demonstrates that Criden was

acting in his personal capacity -- not as a member of

the law firm -- to pick up some fast money by merely

introducing the agents to Schwartz, Jannotti, and

Johanson. None of these meetings was concerned with

the conduct of the affairs of the law firm. Not one bit of

evidence was introduced to show any firm record of any

transaction pertaining to the conspiracy to bribe. The

firm never opened a record, or made 2 note in

connection with the transactions, despite its usual

practice of opening a file whenever a matter became

firm business. True, Criden and Johanson shared

some of the money with Cook, a partner, but they

shared the money among themselves and not with the

firm. They placed the funds in a special safe deposit

box. Neither the monies they received, nor the safe

deposit box in which they stored the cash, were

registered with the firm. The safe deposit box, opened

the year before, had been registered in the individual

names of Criden and Cook and only they had access to

it. They later added Johanson’s name. The record

demonstrates that the box did not belong to the firm.

4. Cook testified on cross examination:

Q: And when that safe deposit box was opened, it was not

opened in the name of the law firm of Criden, Johanson,

Dolan, Morrissey & Cook, is that correct?

A: Yes sir.

Q: And, specifically, what was the name under which that

safety deposit box was opened when it was initially

opened?

A: I don't know. It was Criden and Cook, or through Criden &

Ellis Cook, but was the two of us.

Q Whichever one it was specifically not in the name of the

firm, but in the name of you and Mr. Criden?

A. Yes sir.

PA-37

The record discloses that at all times Criden acted

on his own -- not in his capacity as a member of the law

firm -- in dealing with Wald and his mythical sheik.

Criden engaged in a pattern of racketeering activity for

Criden personally, not in behalf of the law firm or in the

name of the law firm. He involved Johanson in his

capacity as a member of City Council, not in his role as

a member of the law firm. He sought nothing from

Johanson that involved the firm. Although he directed

Cook to withdraw %3000 from the safe deposit box,

Criden instructed Cook that this money was to be

advanced to pay bills of the firm.’ This “advance” by

Criden to meet a cash shortage in the firm is hardly

evidence that Schwartz conspired to conduct the firm's

affairs “through a pattern of racketeering activity.”

Even if Criden were engaged in RICO racketeering

activity, Schwartz's and Jannotti’s limited association

with him does not ipso facto make them guilty of a

RICO conspiracy unless they conspired with him to

violate the substantive provisions of section 1962(c).

Although Schwartz's betrayal of the public trust is

indefensible, his recommendation of a law firm to

represent the sheik does not expand a conspiracy to

violate the Hobbs Act into a RICO conspiracy. Wald

asked Schwartz to “suggest” a law firm to handle legal

work for his principal and Schwartz gave him the

names of the firm of Blank, Rome and the firm of Wolf,

Q. And at no time was that box in the name of -- 1 don't want

to repeat that whole long name of the law firm --

A. No, it was not sir.

(621A)

5. These funds were not transmitted to the law firm as fees or

income, as the majority seems to suggest, typescript op. at 28, n.4.,

but were merely a unilateral “advance” by Criden personally.

PA-38

Block, Schorr & Solis-Cohen. Wald made no selection

but Criden intended to push the legal business to

Blank, Rome, perhaps in the hope that he might obtain

a “referral fee.” During a luncheon a week later with a

Blank, Rome partner, Schwartz mentioned the

recommendation that he had made in connection with

the projected hotel complex and suggested that Criden

might want to participate in fees. The evidence shows

that Criden’s expectation of a financial benefit from the

legal work presumably to be accomplished by Blank,

Rome was not for any legal services to be performed by

Criden or his law firm, but was merely a form of

“referral fee” to accrue to him personally. Furthermore,

as Schwartz pointed in his luncheon conversation,

“Mr. Criden’s firm could not participate in the legal

representation of this enterprise, nor could Mr.

Criden.” The suggestion of the Blank, Rome or Wolf,

Block law firms is not evidence of any intention by

Schwartz to conduct the affairs of the Criden,

Johanson firm.

There is not the slightest evidence that Schwartz

conspired to conduct the affairs of the firm when he

accepted a payoff from Wald. The purpose of the

January 23 meeting with Schwartz was solely to have

him accept a personal bribe. The separate meetings

with Johanson and Jannotti had a similar purpose.

The undercover agents enlisted Criden’s services only

because they knew from their prior Abscam dealings

with him that he would be a willing tool in setting up

Philadelphia councilmen for the bribery “sting.” Even

though Criden did not know Schwartz or Jannotti, he

contrived to meet them and separately introduce them

to the agents to advance the bribery plans. In each

instance, the councilmen were on venal journeys of

their own; none of the journeys entailed conducting the

affairs of the firm of Criden, Johanson, Dolan,

Morrissey & Cook. Rather than revealing a conspiracy

PA-39

to conduct the affairs of the firm through a pattern of

racketeering activity, the record shows that the essence

of the conspiracy was to bribe Schwartz and Jannotti

in return for illegal favors from City Council.

V.

In conciusion, I would affirm the conviction of the

appellants under the Hobbs Act. I would reverse

Schwartz's conviction under the RICO Act and remand

to the district court with directions to dismiss count II

(the RICO count) of the indictment.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circutt

PA-40

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PA-41

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 83-1093 & 83-1094

No. 83-1093

UNITED STATES OF AMERICA

v.

JANNOTTI, HARRY P..,

Appellant

No. 83-1094

UNITED STATES OF AMERICA

v.

SCHWARTZ, GEORGE X.,

Appellant

(D.C. Crim. 80-00166-02 & 80-00166-04)

on Appeal from the United States District Court

for the Eastern District of Pennsylvania

Present: SEITZ, Chief Judge, GIBBONS and ROSENN,

Circuit Judges

JUDGMENT

This cause came to be heard on the record from the

United States District Court for the Eastern District of

Pennsylvania and was argued by counsel September 12,

1983.

On consideration whereof, it is now here ordered

and adjudged by this Court that the judgments of the

said District Court entered February 1, 1983, be, and the

same are hereby affirmed.

Attest:

Clerk

February 21, 1984

PA-42

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 83-1094

UNITED STATES OF AMERICA

v.

GEORGE X. SCHWARTZ.

Appellant

(Criminal No. 80-166-04 — E.D. Pa. )

SUR PETITION FOR REHEARING

Present: SEITZ, Chief Judge, ALDISERT, ADAMS,

GIBBONS, HUNTER, WEIS, GARTH.

HIGGINBOTHAM, SLOVITER, BECKER. and

ROSENN Circuit Judges.

The petition for rehearing filed by appellant in the

above entitiled case having been submitted tto the judges

who participated in the decision of this court and to all

the other available circuit judges of the circuit in regular

active service, and no judge who concurred in the deci-

sion having asked for rehearing, 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 peti-

tion for rehearing is denied.

By the Court,

Collins J. Seitz

Chief Judge

DATED: March 20, 1984

PA-43

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 83-1094

UNITED STATES OF AMERICA

v.

SCHWARTZ, GEORGE X..

Appellant

Pursuant to rule 41(b) of the Federal Rules of Ap-

pellate Procedure, it is ORDERED that issuance of the

certified judgment in lieu of formal mandate in the

above cause be, and it is hereby stayed until May 19,

1984.

Chief Judge

Dated: March 28, 1984

PA-44

(THIS PAGE LEFT BLANK FOR

SCHWARTZ JUDGMENT]

EDITOR'S NOTE

PAGES PW and Aso WERE POOR

HARD C TIME OF FILMLNG.

IF AND WHEN A BETTER COPY CAN BE

OBTAINED, A NEW FICHE WILL BE

ISSUED.

In the presence of the attorney for the government

the defendant appeared m person on this date .

J. Rohe, Esq. MONTH DAY YEAR

01 31 83

—<_!

However the court advised defendant of right to counsel and asked whether defencani Jesired tai

have counsel appointed by the court and the

XZ ) WITH COUNSEL L_ Richard A. Sprague,Esq.

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INOING & . ene Gare

JOGMENT

Comspiring to obstruct iate

Hobbs act. Ct.3

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Organization Act Ct.2

The court asked whether defendant had any thing to say why pitiaaal should not be pronounced. Because no sufficient cause to the contrary

was shown, or appeared to the court, the court adjudged the defendant guilty as charged and convicted and ordered that: The defendant bs

hereby committed to the custody of the Attorney General or his authorized representative for imprisonment for a period of ome year :

restate commerce im violation ef the

cketeer Influenced and Corrupt

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end one day af to count muuber;¢wo, as to count sumbder thrae the defend

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any time during the probation period of within a maximum probation period of five years permitted by law, may issue a warrant and revoke

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PA-45

(THIS PAGE LEFT BLANK FOR

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PA-46

[THIS PAGE INTENTIONALLY LEFT BLANK]

PA-47

UNITED STATES COURT OF APPEALS

FOF. THE THIRD CIRCUIT

Nos. 81-1020 and 81-1021

UNITED STATES OF AMERICA

Appellant in No. 81-1020

v.

JANNOTTI, HARRY P.

(D.C. Crim. No. 80-00166-02)

UNITED STATES OF AMERICA,

Appellant in No. 81-1021

v.

SCHWARTZ, GEORGE X.

(D.C. Crim. No. 80-00166-04)

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

Argued June 10, 1981

Before: ALDISERT, WEIS, and SLOVITER, Circuit Judges

Reargued In Banc November 23, 1981

Before: SEITZ, Chief Judge,

ALDISERT, ADAMS, GIBBONS, HUNTER, WEIS,

GARTH, HIGGINBOTHAM and SLOVITER, Circuit Judges

(Opinion filed February 11. 1982)

PA-48

Peter F. Vaira

United States Attorney

Walter S. Batty, Jr.

Assistant United States Attorney

Chief, Appellate Division

Joseph M. Fioravanti (Argued)

Assistant United States Attorney

James J. Rohn

Assistant United States Attorney

Room 3310 U. S. Courthouse

601 Market Street

Philadelphia, Pa. 19106

Paul Shechtman

Criminal Division

Department of Justice

Washington, D.C. 20530

COUNSEL FOR APPELLANT

J. Clayton Undercofler, III, Esq.

Robert N. deLuca, Esq. (Argued)

Carol A. Meehan, Esq.

2600 The Fidelity Building

Philadelphia, Pa.

Of Counsel:

Dilworth, Paxson, Kalish & Levy

COUNSEL FOR APPELLEE

HARRY P. JANNOTTI

Richard A. Sprague, Esq. (Argued)

Edward H. Rubenstone, Esq.

Sprague, Goldberg & Rubenstone

135 South 19th Street

Philadelphia, Pa. 19103

COUNSEL FOR APPELLEE

GEORGE X. SCHWARTZ

PA-49

OPINION OF THE COURT

SLOVITER, Circuit Judge.

On September 16, 1980, after a six-day trial, a jury

found defendants Harry P. Jannotti and George X.

Schwartz guilty of conspiring to obstruct interstate com-

merce, in violation of the Hobbs Act, 18 U.S.C.

§1951(a), and found Schwartz guilty of conspiracy in

violation of the Racketeer Influenced and Corrupt Or-

ganizations Act, 18 U.S.C. §1962(d). At the time of the

events charged in the indictment, Schwartz was presi-

dent of the Philadelphia City Council and Jannotti was

the Council's majority leader. Following the entry of the

guilty verdicts, defendants renewed their requests for

judgments of acquittal and dismissal of the indictment,

on which the trial court had previously reserved deci-

sion. On November 26, 1980, the district court entered

an order setting aside the verdict of the jury in its entire-

tv, dismissing Count III of the indictment (the Hobbs

Act count) for lack of jurisdiction, and granting the mo-

tions of defendants for judgment of acquittal. The Gov-

ernment appeals.’

In his opinion accompanying the order, the trial

judge gave four reasons for entry of the judgment of ac-

quittal and dismissal of Count III of the indictment.

United States v. Jannotti, 501 F. Supp. 1182 (E.D. Pa.

1980). He concluded:

1. The government suggests that we have jurisdiction under

28 U.S.C. §1291. That section does not create appellate jurisdiction

over appeals vy the United States in criminal cases. DiBella v. Unit-

ed States, 369 U.S. 121. 130 (1962); Government of the Virgin Is-

lands v. Hamilton. 475 F.2d 529 (3d Cir. 1973). However. we have

jurisdiction over these appeals pursuant to the Criminal Appeals

Act. 18 U S.C. §3731. See United States v. Wilson. 420 U.S. 332

1975): United States v. Schoenhut, 576 F.2d 1010. 1018 & n 713d

Cir). cert. denied. 439 U.S. 964 (1978)

PA-50

1. The evidence at trial did not establish the actual

or potential impact upon interstate commerce necessary

to sustain federal jurisdiction under the Hobbs Act;

2. The evidence at trial established entrapment as a

matter of law:

3. Governmental overreaching amounted to a viola-

tion of due process of law;

4. The circumstances relied upon to establish fed-

eral jurisdiction were artificially created. Id. at 1205.

Our review of the record and applicable law con-

vinces us that in reaching these conclusions the district

court erred in its legal analysis and usurped the function

of the jury to decide contested issues of fact. We reverse

the district court's order and direct reinstatement of the

jurv’s verdict.

I.

SUMMARY OF EVIDENCE

An understanding and appreciation of the evidence

presented to the jurv is essential to consideration of the

issues facing us on this appeal. We have therefore un-

dertaken an exposition of some of the highlights of that

evidence. The government operation, which has come to

be known as ABSCAM, began some time in 1978. The

basic nature of the plan was that F.B.I. agents posed as

emplovees of Abdul Enterprises, a fictional multi-

national corporation whose principal, a fictional Arab

Sheik. Yassir Habib of the Arab nation of Abu Dhabi,

was represented as interested in investing large

amounts of money in this country and in emigrating

here. According to the government, the plan was “con-

ceived to create opportunities for illicit conduct by public

officiais predisposed to political corruption.” Brief for Ap-

pellant at 6. From the very beginning the government

utilized the services of Melvin Weinberg, accurately

characterized bv the district court as a “career swindler,”

PA-51

501 F. Supp. at 1193,* who, with F.B.J. agents. “spread

the word” that the Sheik was interested in meeting pub-

lic officials who could facilitate his planned investments.

This basic plan evolved into various subparts. each

with its own cast of participants, which were ultimately

the subject of a series of indictments returned by grand

juries sitting in various federal districts of the country.

Thereafter, a number of local and federal public officials

were tried on offenses arising out of their participation.

We focus on the facts material to the prosecution of

Jannotti and Schwartz in the Eastern District of

Pennsylvania.”

The Philadelphia phase began on January 11. 1980

when Weinberg called Howard Criden, a Philadelphia

attorney, and told him that the Sheik was “looking to

build a hotel” in Philadelphia. Criden. who had previous-

ly received money from the F.B.1. agents for arranging

introductions to congressmen in connection with an-

other phase of the ABSCAM operation.’ was told that

2. Weinberg was convicted of mail fraud and wire fraud in

1977. At the intercession of the government. he was sentenced to

three years probation in return for his agreement to help in the

ABSCAM investigation. He was paid $3,000 a month bv the FB!

as of the time of the trial, had received a total of approximately

$140,000 up to that time, and had also received other tnnge

benefits.

3. The trials of two other defendants. Louis C. Johanson. a

member of Philadelphia City Council, and Howard L. Criden. a

Philadelphia attorney, who were indicted along with Schwartz and

Jannotti were severed from that of Schwartz and Jannotti. Both

Johanson and Criden were convicted on similar charges in the Unit-

ed States District Court for the Eastern District of New York. and

the government moved for their dismissal as defendants here.

4. Criden, Johanson, and Mayor Ermnchetti of Camden, New

Jersey, were instrumental in arranging for four congressmen. in-

cluding Philadelphia Congressmen Myers and Lederer. to meet the

F.B.I. agents. At the meetings the congressmen agreed to introduce

immigration bills in return for money, leading to their ultimate in-

dictment and conviction.

PA-52

two representatives of the Sheik would be coming to

Philadelphia to begin discussions. Weinberg suggested

that they be introduced to Congressman Myers or

Lederer, and asked Criden which one would be better.

CRIDEN: Well, I got to hear what you want to

do first, and. . . you know.

WEINBERG: I think they’re looking to build a

hotel there. I’m not sure. That’s only what I heard.

CRIDEN: Okay. Why don’t you tell him to find

out more particulars because I don’t know that ei-

ther one would help you in that department. “Ve

may be able to give you more help to them.

WEINBERG: Who do you know there?

CRIDEN: Everybody!

WEINBERG: Everybody?

CRIDEN: Everybody!

WEINBERG: All right. PU. . . VU.

CRIDEN: Remember. | got a partner who’s a

city councilman.

A211-12.

A week later, on January 18, 1980, Criden met with

F.B.I. agents Michael Wald and Ernest Haridopolos at

the Barclay Hotel in Philadelphia. Wald and Haridopolos

used the names Michael Cohen and Ernie Polos in their

dealings with defendants throughout these events. That

meeting was among the group of meetings at the Bar-

clay recorded on videotape by the F.B.I. Wald told

Criden that the Sheik was interested in building a hotel

in South Philadelphia, that Wald’s role was to address

himself to possible problems such as zoning, condemna-

tions, and variances. A351. Criden stated, “You don’t

have any problem. You got you two of the strongest

guys” [referring to Myers and Lederer]. Wald responded,

“He [Sheik] wants to be assured that municipal govern-

ment and he can coexist.” Criden asked, “How do you

want me to satisfy you,” to which Wald responded, “I’m

sure the easiest way for me to deal with someone in mu-

PA-53

nicipal government and I can go back... . Titles im-

press the man, as you know, from past experience. . . .

If he receives those assurances from someone with a ti-

tle sounds 2ppropriate, eh, I buy it, he buys it.” A351-53.

Wald asked Criden about the municipal setup, in-

cluding city council. Criden explained that Philadelphia

City Council is composed of 12 district councilmen and

five at-Jarge councilmen, that his “partner [Johanson is]

a district councilman”, and that the president of city

council, Schwartz, “is a powerful guy” who had been

“president of city council for maybe now ten, twelve

years, already now. Has got power.” Wald responded,

“He’s the man.” A354-55. Wald later asked:

WALD: Can we deal with Mr. Schwartz.

CRIDEN: Oh, sure.

WALD: He seems like the type of person we

CRIDEN: Oh, sure.

WALD: Can I deal with him while I'm here in

town?

CRIDEN: I don’t know. | gotta get hold of my

partner.

WALD: Can I deal with your partner?

CRIDEN: Oh, sure.

A357. After some discussion of timing and the proper

“tariff,” Wald asked if he could talk candidly with

Johanson. Criden responded that “As far as Johanson is

concerned, you can talk as candidly as you want.” With

regard to Schwartz, he stated, “He may want to handle it

indirectly.” A367. Wald expressed some concern, stating

that under no circumstances would he want to disap-

point his employer.

CRIDEN: Listen, Mike, I, I read you loud and

clear and if I was sitting in that chair, I would feel

exactly the same way ok. You have no problems

with me.

PA-54

WALD: Ok. How do you want to work this?

Eh, do you wantta call me back here concerning

CRIDEN: Oh sure.

WALD: Mr. Johanson.

CRIDEN: I'll get back to you in the next cou-

ple hours.

WALD: Alright.

CRIDEN: If I can serve him up.

A368-69. Wald then asked what the “tariff” would be for

Johanson and Schwartz, and Criden replied

“{t]}wenty-five” for Johanson, A375, and “{a|nother fifty”

for Schwartz. A376. Wald demurred at the latter figure,

and Criden asked, “You wanta go thirty on this guy?”

Wald asked, “will he bite at thirty?. . . 1 mean does that

take care of him?” and Criden replied, “Let me try it

.... PU run it up the flagpole.” A376-77. Finally

Criden raised the subject of his fee and asked for and

was promised “ten for both of them.” A377.

Several hours later, Criden returned with Johanson

to the Barclay suite where Wald and Haridopolos waited.

Wald again discussed the proposed hotel construction,

explained that he wanted to avoid delays due to the need

for a variance or a building permit, and received

Johanson’s assurances that the inspectors from Licenses

and Inspections, the building inspectors, the plumbing

inspectors, and the electrical inspectors are “not gonna

monkey with you, for a minute because they're gonna be

told not to. . . because the words gonna come down,

that this is a vital project.” A421. In discussing the politi-

cal situation in Philadelphia, and City Council in par-

ticular, Johanson boasted that of the 17 councilmen, he

and Schwartz was each a “very bright fella”, and “after

that there ain’t a brain in the closet.” A415. He spoke of

his and Schwartz’ importance, and stated that Schwartz,

Jannotti and he “run the Citv Council.” A450. Wald then

asked about Jannotti:

PA-55

WALD: Would he be interested in doing busi-

ness with us.

JOHANSON: I don't know that it’s necessar\

but if you want to we can.

WALD: I don’t know — if it is —- vou're the

best judge of that.

JOHANSON: I think George is ah —

CRIDEN: Well, it might not be a bad idea to

bring Harry up.

JOHANSON: We can bring Harry up. Harrv’s

the Majority Leader. He’s the — va know. second in

command.

WALD: Yea.

JOHANSON: He's got seniority.

A453-54. After some additional discussion, the following

exchange took place:

HARiDOPOLOS: Are you acquainted with

hov’' much ah, ya know, ah for the favor and for all

these assur — assurances, right.

CRIDEN: Right.

HARIDOPOLOS: You know how much it is?

JOHANSON: Sure.

HARIDOPOLOS: How much is it?

JOHANSON: Twenty-five.

HARIDOPOLOS: Okay, ah but, of course, ah.

we have to have these proper assurances. You do us

a favor, we're doin you a favor.

CRIDEN: Obviously.

JOHANSON: Sure.

A471. Johanson gave his assurances and received

$25,000. A480. The following exchange took place:

WALD: And for 25 we've got a friend.

JOHANSON: Right.

A477. The conversation turned to Schwartz:

WALD: Can I talk to Mr. Schwartz as I have

spoken —

PA-56

JOHANSON: Next week —-

WALD: — to you gentlemen —

WALD: [F]rankly. . .

CRIDEN: If you can’t have the same discus-

sion with George,. . . you won't have the meeting.

A485. Wald asked the same question about Jannotti.

Criden promised to let him know whether he could have

the same kind of conversation with Jannotti. A490. After

Johanson left, Haridopolos gave Criden $5,000 and

promised another “five for the next delivery.” A501.

Criden, who did not know Schwartz personally, ar-

ranged for Schwartz to meet the F.B.I. agents through

an intermediary, Judge Thomas Shiomos of the Court of

Common Pleas of Philadelphia County, who lived in the

same apartment hotel as Schwartz. Shiomos testified at

trial that at a meeting on January 21, 1980 between him,

Criden and their mutual friend, Mr. Kattheman, Criden

told him of the proposed hotel construction, asked him if

Schwartz would be interested in talking to “these people

. . . for the purpose of giving them his advice with re-

gard to building this complex in Philadelphia,” and indi-

cated that the investors were willing to “pay for

|[Schwartz’] advice.” A639-40. Shiomos thereafter met

with Schwartz, advised him that Criden had wealthy

Arab clients who wanted to invest $150 million to build a

hotel in Philadelphia, and indicated to Schwartz that

Criden had said there “would he a fee for Mr. Schwartz

for his advice” and “that Mr. Criden expected part of that

fee.” A643. Schwartz stated that he “would be interested

in anyone who is willing to invest $150 million.”

Shiomos stated when he left that he didn’t think there

was anything “improper” but that if Schwartz “thought

there was anything improper or fishy [Shiomos was]

sure if [Schwartz] met with Mr. Criden that {Schwartz}

—-~—_ = es

PA-57

could determine that.” A644.° Thereafter Criden spoke

with Schwartz. That discussion was not taped or record-

ed, and there was no trial evidence as to the contents of

the conversation.®

On January 23, 1980, Criden and Schwartz visited

Wald at the Barclay suite. This conversation was

videotaped. Criden stated that he and Schwartz had

“spoken at length” and that Schwartz knew that those

persons whom Wald represented were “interested in

building a hotel facility in Philadelphia that may amount

to some 30 or 40 million dollars.” A689. Wald explained

his purpose:

WALD: Well, what I have been instructed to

do and the purpose for ah my visits to to Philadel-

5. Some time after Schwartz attended the January 23, 1980

meeting at the Barclay, Shiomos and Kattleman went to

Kattleman’s apartment where Criden lay $6,000 on the table as the

fee to be paid to Shiomos and Kattleman. Shiomos assumed this was

a portion of Criden's share of the fee that was paid to Schwartz

A654. Shiomos testified he gave his $3,000 share to Kattleman

A655

6. In his post-trial testimony, Criden testified

Q. All right, now, when you went and saw Mr. Schwartz

after Judge Shiomos had arranged for the interview, did vou tell

Mr. Schwartz that the purpose for Mr. Schwartz going there is

to be a consultant for these Arabs or the Arab representatives?

A. To some degree, yes.

Q. You say to some degree —

A. I told Mr. Schwartz there would be a consulting fee in-

volved and I explained the project to him and | also told Mr

Schwartz that I had represented these people and had done

business with them for some period of time and that he would

receive a consulting fee

Q. Did you tell Mr. Schwartz at any time pnor to his going

to that meeting that the purpose of the meeting was in a sense

to fix him anc to arrange for him to taxe: care of matters in front

of City Council’

A. No, sir

A3317

PA-58

phia is to firm up uh, what we consider to be a major

investment here and uh the gentleman cares to

make a major investment here because he seems to

like Philadelphia, and he has been told that it would

uh be in his best interest to have an investment, uh,

in an area where he, uh, would like to take up rather

permanent residence and Philadelphia is it.

SCHWARTZ: Philadelphia is a nice city.

Philadelphia has been on the move since 1952. And,

uh, business climate in Philadelphia is good.

A690. Wald continued:

WALD: Uh, and we want to put one up. Now

we know that there are problems inherent in any

major construction, uh, in this city and any other

city. What I am trying to do is take care of any po-

tential problems long before they exist. We’re not

breaking ground tomorrow morning. We can forsee

certain problems such as, uh, uh, zoning and

variances and this type of thing. . . municipal gov-

ernment, how it effects those various things, but we

don’t want to be faced with problems down the road.

A691-92. Schwartz responded to this overture with a so-

liloguy on his own political power and importance. After

explaining how close he was to the mayor’ and that he

was “sort of a protege” of the mayor’s deceased father,

who had been Chairman of the [Democratic] party,

Schwartz stated:

SCHWARTZ: . . . Unfortunately then he died

in 63. And I have been close to every chairman

since. I am a member of the Democratic National

Committee. I am a member of the State Committee.

7. There is no evidence that William Green, Philadelphia’s

then newly elected mayor, was ever involved in or knew of the

transactions at issue. In fact, Criden described Green as “an All

American boy”, A343, and advised Wald that it would be “‘a critical

mistake” to approach him. A372.

pr a +

PA-59

! am a member of the City Committee. A Ward

Leader. I, uh, I have a ward — if you know what

that means in politics.

A693. A few minutes later, Wald asked:

WALD): Is it fair to say that by doing business

with you, uh. . . my zoning problems become. . .

SCHWARTZ: Right.

CRIDEN: You, you don’t have any.

WALD: Okay. Now. There are what, 17 mem-

bers, aS, as vou say... . and also what uh I read

here...

SCHWARTZ: Right.

WALD: Uh, do we have a uh controlling vote

‘SCHWARTZ: Yes.

WALD: .. . problem here?

SCHWARTZ: No. .

WALD: Uh.

SCHWARTZ: No.

WALD: Can you control. . .

WALD: . . . those types of factions?

SCHWARTZ: Yes.

WALD: You can control them?

SCHWARTZ: The proof was today. The proof

was the election of myself as president again.

WALD: Uh hmm.

SCHWARTZ: In other words, we got uh five or

six now [sic] members that came in. Uh, you tell me

your birth date. I'll give them to you for your

birthday.

AG95-6. The essence of Schwartz’ representations of

control was repeated shortly thereafter:

WALD: All right. Yeu’re controlling the coun-

cil at this point.

PA-60

SCHWARTZ: Right.

WALD: As far as I’m concerned.

SCHWARTZ: Right.

CRIDEN: Right. And has been for. . .

SCHWARTZ: Right. Right.

WALD: Should we have anything that comes

up to a vote, that has to be done on a vote basis, the

council is with you.

SCHWARTZ: Yes.

WALD: You control them at this point.

SCHWARTZ: Yes. Yes. Yes.

CRIDEN: 100 percent.

SCHWARTZ: Yes.

A709. Schwartz stated that although he could not prom-

ise that the hotel project would not have problems, those

problems would not be “insurmountable” as long as the

project “is a proper project.” A698. Wald stated, “I am

not putting up a cathouse”, Criden interjected, “It’s go-

ing to be legitimate”, and Schwartz responded, “That I

take for granted, or I wouldn’t be here.” A710. Wald then

asked Schwartz for assurances of his support if the

project “violates some minor. . . type statute or ordi-

nance or. . . something”, and Schwartz replied:

SCHWARTZ: There is a Board of Building

Stanaards. There, there is built-in relief every stage

of the way. There’s a Zoning Board of Adjustment

for variances.

WALD: Okay. Can you control that?

SCHWARTZ: Yes... .

A711. Inmediately thereafter he explained, “if it isn’t

something that is outlandish, if it is something that

should and can be handled, and I can, I can’t think of

anything that couldn’t be handled. . . [t]hrough a vari-

ance procedure of some kind.” A712. Wald stated:

WALD: Okay. Meaning that, if City Council

has to vote on it, we don’t have a problem at this

point?

PA-61

SCHWARTZ: Well, I'm going further. There

are other boards and agencies, uh, depending upon

what your client, how idiosyncrant he wants to be

and how eccentric he wants to be.

WALD: (Laughter) . .. They can become

rather eccentric.

SCHWARTZ: All right. All right. It may be

necessary to go to these various boards and commis-

sions. Now, they are part of the organization. They

are part and parcel and...

WALD: Appointed, appointed officials?

SCHWARTZ: Yes, they are appointed officials.

Uh, but uh, as I say, uh, I always do my homework.

And, uh, the mayor is a very strong mayor. We have

a strong mayor form of government. And all these

people are his appointees. Mv understanding with

him is that I go to him — period. I don’t even have to

go to one of the flunkies, one of the functionaries. |

gotohim... .

A712-13. After additional discussion which concerned

local law firms that could be employed by the hotel

project, the economic climate in Philadelphia, and the

encouragement received by business from the city, Wald

referred to Schwartz’ compensation:

WALD: Cur time frame is growing short, but

we don’t have those type of problems. We don’t have

that built-in resentment. Ah. . . We've talked to

Howard, you know, the figures, the dollars we're

talking are in the right ballpark. We're. . .

SCHWARTZ: That’s not my prime concern.

I’m interested in the City of Philadelphia. I’m inter-

ested in a good project. I’m interested in tax

rateables. I want to see Center City develop. Espe-

cially Center City. There are a few parcels left. Well

anything else that’s going to add to the tax rateables

of the city that’s going to create jobs.

PA-62

WALD: I am again quick to say that Im not

really interested in the City of Philadelphia to be

candid.

SCiIWARTZ: Well I have to be. I have to be.

WALD: Perhaps, oh sure. . . (inaudible)

CRIDEN: Your primary concern is to see that

if your emplover decides to move, you have a mini-

mum amount of problems.

WALD: Exactly. . . . Problems are to be han-

dled before they arise. Right. Should any minor

problems come up. Should any problems that are

councilmatic in scope. . .

SCHWARTZ: No problem.

WALD: You could take care of them. Those

are the tvpe of things. . .

SCHWARTZ: Right.

WALD: That he asks I make an unequivocal.

ves, it's been handle« its been taken care of and uh

CRIDEN: You make that an unequivocable

yes.

SCHWARTZ: It's. . . I would savy to you that

it's much easier now than it is than it was four vears

ago.

A746-47. The conversation returned to the nature of the

understanding:

SCHWARTZ: There are administrative escape

hatches for everything in the City of Philadelphia

under our various codes. There's a way of doing it —

administrative wav of doing it.

WALD: Okay, and that is the type of thing vou

can handle for us.

SCHWARTZ: Oh yeah, right.

WALD: I can go back and sav | met a gentle-

man. We had a business deal uh. I've made a triend

in Philadelphia.

PA-63

SCHWARTZ: Yes.

WALD: And things are taken care of. . .

SCHWARTZ: Right... .

WALD: Okay, and the sums appropriate and

we're in good shape. Okay.

A753-54.

Shortly thereafter as seen on the videotape, Wald

opened his briefcase and, without discussion of the

amount, handed Schwartz an envelope [containing

$30,000 cash], which Schwartz placed in his jacket

without counting. The nature of the commitment

Schwartz made was reiterated:

WALD: The legislative problems we've taken

care of?

CRIDEN: No problem.

WALD: Okay, that I can, that I, that I got as-

surance on.

SCHWARTZ: Right.

CRIDEN: You have, you have no problem.

WALD: Okay, the other things can be done

through attorneys, but the legislative problems

don’t exist anymore?

CRIDEN: That’s right.

SCHWARTZ: No. Do not.

WALD: Okay.

A756.

Criden remained behind and received his $5,000

fee for arranging the meeting. A758. He admitted to

Wald that he had to give “something” to someone to

make the approach to Schwartz. A763. Wald indicated

an interest in talking to Jannotti if he was “amenable”

because both Criden and Johanson had referred to

Jannotti “as a power.” A770. Criden undertook to ascer-

tain to “try to do something” with Jannotti and “if the an-

swer is no, I’m going to tell you right off the bat, forget

it.” A778. They discussed the amount of the payment to

PA-64

Jannotti, Wald asking “Will he run with five” and Criden

replying “Maybe ten. . . {L]et me run it up the flag pole

with him.” A779-80. Wald asked whether he should deal

with anybody else on the executive side and was told

that there was no one else he could or should do busi-

ness with. Criden promised to communicate with Wald

the next day and departed.

The next evening, January 24, 1980, following tele-

phone arrangements, Jannotti and Criden arrived at the

Barclay suite to meet with Wald and Haridopolos.

Jannotti had been briefed by Criden and Schwartz earli-

er that day who had “explained the whole situation.”

A848. With Jannotti, as with Schwartz, Wald explained

“I’m only here for one reason, to bring back some assur-

ances.” A849. He continued:

WALD: [We are prepared to make a major in-

vestment in this city, alright, and. ah. we have in-

credible funding but it’s still a major investment

even for the people that | represent at this time. Ah,

it’s not a drop in the bucket even for them. It’s a fair

amount of money and ah, the way these people do

business, is somewhat different than the wavy we do

business in this country, they don't think. They just

can't tolerate nor can they put up with psvchologi-

cally anv problems that arise. Now these tvpe of

problems do arise but they can be handled. but the

tvpe of problems that would get back to mv emplov-

er. Ahe, he can’t deal with them. and he turns to me

and says I thought we had all this settled in Phila-

delphia. So, that’s why I’m here. simplv to take care

of any problems now.

JANNOTTI: Far in advance.

WALD: Ah. it’s reallv not that tar | don't think.

CRIDEN: Well. . .

WALD: But at least enough in advance that ah

when the time comes it's over and done with everv-

thing is nice. Ah. those problems are simply the

PA-65

ones that I can forsee and you haven't come up with

anymore than you and I had been worried about nor

has the other gentleman I dealt with, and that

would be ah, ah, the zoning, any variances that we

have to obtain any, ah, committee type things we’d

would have to, ah, deal with, with City Council ah,

inspections, licensing the whole gamut, ya know

the whole thing, well you were in that type of busi-

ness in, in an allied situation and I’m sure you can

appreciate the petty things that arise, ah, that have

to be handled.

JANNOTTI: First of all you, you’re going to in-

vest a substantial amount of money and, ah, what

you'll be doing is bringing into the City of Philadel-

phia a substantial amount of money, and this will

create jobs, will create a tax base and ah from what I

gather everything that you want to do with be strict-

ly, ah, on board. I mean there’s nothing phony about

it.

WALD: It’s a legitimate operation.

JANNOTTI: As long as it’s, long as it’s a legiti-

mate, legitimate operation. Ya know, any legitimate

operation we will fight for because, ah, ya know why

shouldn’t we fight for a legitimate operation? If the

operation is legitimate, it’s going to bring a tax base

into the City of Philadelphia, it’s going to bring em-

ployment into the City of Philadelphia, ah, this is,

this is basically our job, ah George George’s job and

my job, ah, to try to get as much money into the City

of Philadelphia and as many jobs into the City of

Philadelphia as we possibly can.

A849-51. Wald asked:

WALD: [Bly dealing with you here this eve-

ning and, and the gentleman I, I spoke with last

evening, can I go back with those assurances?

JANNOTTI: I don’t see why not, as you say, ya

know it’s a legitimate project and you have your fi-

is

PA-66

nancing, there’s nothing ah, there's nothing that

vou're doing illegal. . .

CRIDEN: Michael wants to be sure that he

has a friend if he has a problem.

JANNOTTI: Oh certainly.

WALD: If something arises. if something

arises that needs a City Council vote to be very spe-

cific, a City Council vote is needed on the thing, can

I count on vour vote?

JANNOTTI: Whysure. . .. first of all we'll go

over it again, you have a legitimate project, ah,

you're going to invest 36 million dollars in the City

of Philadelphia, which is going to create a tax base

and going to create emplovment.

WALD: Right, but.

JANNOTTI: But ya, but.

HARIDOPOLIS: A lot of legitimate, ah, things

get bogged down. we don't want to be bogged down.

JANNOTTI: No. I can’t see this being bogged

down.

A853-54. Wald explained his position:

WALD: Let me give vou a short insight into

the Arab mind, that its ah, it’s at times difficult to

understand now, ah, I can appreciate it because I’ve

had both worlds and I can relate, ah, you know, you

folks are here, right, they, they think differently,

they deal differently, their psychological process are

alien to the way I understand exactly what you’re

saving. Ok. I’m coming up with something that’s

going to help the City of Philadelphia. Ah, it would

help, as it would help any city. Ah, he does not look

on it that way. They do business, differently. They

pay the freight up front. They make friends, right,

and then when there, there is a potential problem

then I don’t mean, I don’t mean a problem that

would necessarily close down construction and

throw the project out of Philadelphia.

PA-67

A855-56.

Wald and Jannotti discussed City Council politics.

and Jannotti affirmed Criden’s statement that Council

“never had a vote on an issue that George and Harrv

wanted passed that they'd lost in the last two vears.”

A859. They then discussed the payment to Jannotti:

WALD: But, you were here at the time. You

convinced me right off the bat that we were in the

right city and we would have no problems.

CRIDEN: You will have no problems.

WALD: And I would just as soon save the

money, but I can’t go back.

CRIDEN: I understand. we _ had _ that

discussion.

WALD: (Pointing to Criden) Did he. was he

very graphic with ya?

JANNOTTI: Yes.

WALD: On exactly how... .

JANNOTTI: (Nodding ves) He was always up

front, up front.

WALD: Ok and... .

CRIDEN: To the bottom line. vou know me

Michael, I, I don’t we. we both do evervthing right

up front.

WALD: Ok and, alright, then I'm going to be.

then I’m going to be up front with va. I'm.

CRIDEN: Exactly.

WALD: Ah, vou’ve been in business all vour

life. you’ve as you said, you got an education 20

years behind the bar, I was sent to Philadelphia to

pay for certain things because that is the psvchology

and that is the method of business that these people

are use to, and that is how they conduct business.

they conduct with everybody they do. That’s why

I’m here. I understand their psychology, I’ve been

involved with them long enough, ah to make it a

major part of my life, a majority of my life.

PA-68

JANNOTTI: Well, you know ah, just just on

the basics, of what you said and what they want to

do, it’s enough for me to get on the floor and argue. |

don’t have to, even care what else they want to come

up with. My basic point is, the fact that, ah what's

coming in here, and this has been our job, to bring

as much business and and, and ah tax base and em-

ployment to the City of Philadelphia. If that’s the

way they want to do business, that’s all right too.

A859-61. Wald asked again for “assurances”:

WALD: Can I go back, ah ah, to my employer,

the Sheik and tell him that I dealt with a man, on

Wednesday night tell him who he is, dealt with you,

Thursday night, explain who you were, what your

position is and say he and I conducted a cash busi-

ness transaction and he guaranteed me, we don’t

have a problem in Philadelphia. We ah, ah City

Councils on our side the man has the influence with

the Finance Committee, he has influence. . .

JANNOTTI: You weuldn’t, you wouldn't be

able to say we don’t have a problem. Problems might

arise, but problems ah, you might say problems can

be solved.

WALD: Ok, you can handle those problems we

presume.

JANNOTTI: I don’t see why not if it’s a legiti-

mate, if it’s a if it’s a legitimate if it’s a, if it’s a legiti-

mate enterprise, it’s a legitimate piece of business.

WALD: By making friends with you this eve-

ning, if we have to go to City Council and say look,

ya know, give us a break, right, got us some legisla-

tion that this is ok. That it’s in the right neighbor-

hood, that the time.

CRIDEN: If you want a street for example let’s

say changed from a two way to a one way ok, maybe

that will help you.

PA-69

WALD: Ok.

CRIDEN: Handle your traffic pattern.

JANNOTTI: We handle that everyday.

WALD: But I go back and I'll say we have this.

and I'll use that as an example that if we have a one

way street situation and it’s just hurting the front,

of, of the place we cannot move people in and out of

the hotel limousines to private vehicles and what

have you, ah the men I dealt with said they will

help. I’m not saying that you could walk in there

and change this thing tomorrow, but.

CRIDEN: Yet.

JANNOTTI: We'll go in there and battle, we'll

go in and battle.

WALD: You're with us?

JANNOTTI: Certainly. we'll go in and battle.

A863-67. Wald then took an envelope from his briefcase

[containing $10,000 cash], handed it to Jannotti, and

asked if “that amount is sufficient.” Jannotti took the en-

velope, answering, “We've discussed it.”

HARIDOPOLIS: You know how much it is?

CRIDEN: Tell him, you can tell him.

HARIDOPOLIS: How much is it?

CRIDEN: Tell him?

JANNOTTI: We won't even discuss it.

WALD: Ok, but you did discuss it with

Howard?

JANNOTTI: We won't even discuss it.

HARIDOPOLIS: Is this arrangement please,

pleasing to you?

JANNOTTI: As I say, we won't even discuss it.

WALD: Ok, well, we've done our business.

A884-85. Jannotti departed, and Criden promised to see

him downstairs.

PA-70

II.

HOBBS ACT CONSPIRACY

In its opinion granting the motions for acquittal the

district court noted that the “evidence permitted, al-

though it did not compel, the inference that the pav-

ments represented bribes paid in exchange for the de-

fendants’ assurances of using their official positions to

pave the way for expeditious completion of the project.”

501 F. Supp. at 1184. The court, however, dismissed

Count III of the indictment, the Hobbs Act conspiracy

count, for two reasons. The first dealt with the fictitious

nature of the scheme. Although the court was willing to

assume that the “evidence permitted the jury to con-

clude that, if the project had in fact been a genuine

project, it would have required the movement of articles

in interstate commerce, and that the payment of these

bribes would have affected such commerce by depleting

the funds available for carrving out the project.’® the

court focused on the fact that “there never was any such

planned project. The Arabs. their plans, and their monev

were all entirely fictitious.” Id. The court concluded:

While the jurisdictional reach of the Hobbs Act is

undoubtedly extensive, touching conduct having

only minimal or potential impact upon commerce

(broadly defined), it does not operate to confer fed-

eral jurisdiction over purely hvpothetical potential

impacts on commerce which could never occur.

Id. at 1185. The district court thus fashioned a require-

ment that conviction for conspiracy to violate the Hobbs

8. In charging the jurv on the Hobbs Act count. the court in-

structed that it must find that “a natural and probable consequence

of the extortion, the receiving the money. would have been to affect

interstate commerce” and that the Government position was that

the receipt of the payments of $30.000 and $10.000 would have had

an effect on interstate commerce. A1344-45.

PA-7]

Act requires an actual potential effect on interstate

commerce.

The second jurisdictional defect, according to the

district court, stemmed from its view that the Hobbs Act

does not cover the “passive acceptance of gratuities by

public officials.” Jd. The district court, after noting that

defendants did not request payment and “made it very

clear that the payments would not be necessarv”, found

that the convictions would represent “a substantial

stretching of the definition of extortion.” /d

A.

Effect on Interstate Commerce

The broad language of the Hobbs Act. covering any-

one who “in any way or degree . _ affects commerce

. by. . . extortion or attempts or conspires so to do

18 U.S.C. §1951,° demonstrates Congress’ intent

to free interstate commerce trom burdens of any kind

caused by extortion. The Supreme Court has expressly

recognized that the statute manifests a congressional

purpose “to use all the constitutional power Congress

9. The Hobbs Act reads in pertinent part as tollows

Whoever in any wav or degree obstructs. delavs. or affects

commerce or the movement of anv article or commodity in

commerce, by robbery or extortion or attempts or conspires so

to do shall be fined not more than $10,000 or imprisoned

not more than twenty vears, or both

18 U.S.C. §1951(a). The statute defines “commerce” as

commerce within the District of Columbia, or any Territory or

Possession of the United States; all commerce between any

point in a State, Territory, Possession, or the District ot Colum-

bia and any point outside thereof; all commerce between points

within the same State through any place outside such State:

and all other commerce over which the United States has

junsdicticn.

18 U.S.C. §1951(b3)

PA-72

has to punish interference with interstate commerce

. .” Stirone v. United States, 361 U.S. 212, 215

(1960). Accord, e.g.. United States v. Cerilli, 603 F.2d

415, 423 (3d Cir. 1979), cert. denied, 444 U. S. 1043

(1980). See also United States v. Culbert, 435 U.S. 371

(1978): United States v. Green, 350 U.S. 415, 420-21

(1956). In United States v. Staszcuk, 517 F.2d 53, 58

(7th Cir.) (en banc), cert. denied, 423 U.S. 837 (1975),

the court concluded that “the purpose of the Hobbs Act

parallels the central purpose of the Commerce Clause

itself.” Thus, the decision of the district court in this

case has application beyond the Hobbs Act because the

extent of Congress’ power under the commerce clause is

implicated, and, if its analysis is accepted, will have

ramifications for all federal criminal statutes enacted un-

der Congress’ commerce clause power.

We begin the analysis of Congress’ power to regu-

late interstate commerce with the now-accepted princi-

ple that the commerce clause reaches, inter alia, activi-

ties affecting interstate commerce. Perez v. United

States, 402 U.S. 146, 150 (1971); United States v. Dar-

by, 312 U.S. 100 (1941). However, application of a fed-

eral criminal statute is not limited to those cases in

which an actual interstate effect is shown. Instead, as

the Court recognized in Perez v. United States, 402 U.S.

at 152-53, it is enough that the conduct falls within the

“class of activities” within the reach of federal power.

Schwartz and Jannotti were convicted of a conspir-

acy to violate the Hobbs Act, rather than of a substantive

violation of the Hobbs Act. A substantive violation of the

Hobbs Act generally is supported by proof of an actual

effect on commerce. See. e.g., United States v. Mazzei,

521 F.2d 639, 642 (3d Cir.) (en banc), cert. denied, 423

U.S. 1014 (1975). But see United States v. Staszcuk.

517 F.2d 53, 59-60 (7th Cir.) (en banc), cert. denied.

423 U.S. 837 (1975) (actual effect need not be shown:

“realistic probability” of effect is sufficient). Defendants

PA-73

argue that it follows that a prosecution for conspiracy to

violate the Hobbs Act also requires proof “that com-

merce must have been affected.” Brief for Appellee

Jannotti at 22. In so arguing, defendants overlook the

significant distinction between a conviction for a sub-

stantive offense and a conviction for a conspiracy to

commit the substantive offense. This distinction was

recognized bv the district court at an early stage of the

litigation when it dismissed the substantive Hobbs Act

counts of the indictment on the ground that there was

no possibility that the bribe payments could actually

have affected commerce, but left standing the conspir-

acy count on the possibility that federal jurisdiction

could be grounded on proof that the conspiracy, if com-

pleted, would affect commerce. See 501 F. Supp. at

1184. The subsequent dismissal of Count III of the in-

dictment was apparently grounded on the district court’s

changed view of the law that an actual potential effect

was required, even for a conspiracy conviction. We be-

lieve the district court’s earlier view was the correct one

Because an agreement between two or more pc:

sons to commit criminal acts poses, in and of itself. a

rious danger to social order, it is proscribed by the law o}

conspiracy. See Callanan v. United States, 364 U.S. 587.

593 (1961). The ultimate failure of the conspiracy may

diminish, but does not eliminate, the threat it poses to

social order; therefore, the illegality of the agreement

does not depend on the achievement of its ends. See gen-

erally United States v. Shoup, 608 F.2d 950, 957 n.13

(3d Cir. 1979); United States v. Bobo, 586 F.2d 355, 371

(5th Cir. 1978), cert. denied, 440 U.S. 976 (1979). It is

similarly irrelevant that the ends of the conspiracy were

from the very inception of the agreement objectively

unattainable. United States v. Waldron, 590 F.2d 33

(Ist Cir.), cert. denied, 441 U.S. 934 (1979) (conviction

for conspiracy to transport stolen goods in excess of

$5,000 affirmed, even though, unknown to defendants,

PA-74

property transported was worth less than $5,000); Unit-

ed States v. Thompson, 493 F.2d 305 (9th Cir. ), cert. de-

nied, 419 U.S. 834 (1974) (defendant can be convicted

of conspiracy to smuggle marijuana even though sub-

stance was not shown to be marijuana). In this case the

defendants agreed to do acts which, had they been at-

tainable, would have affected commerce. At that point,

regardless of whether an actual effect on commerce was

“reasonably probable,” a sufficient federal interest was

implicated to support federal jurisdiction over that

agreement.

The Hobbs Act, by its own terms, encompasses the

inchoate offenses of attempt and conspiracy to extort.

Convictions for these offenses have been sustained not-

withstanding the absence of any evidence of an actual

effect on interstate commerce. In United States v. Rosa,

560 F.2d 149, 153 (3d Cir.) (en banc), cert. denied, 434

U.S. 862 (1977), a case in which there was no effect on

commerce because the “victim” refused to pay the extor-

tion demand, we stated that a defendant may be convict-

ed under the Hobbs Act for an “attempted extortion

which would, if the act were completed, have the effect

of obstructing commerce.” See also United States v.

Bellomini, 454 F. Supp 44, 47 (W.D. Pa. 1978) (“The

fact that the business enterprise was frustrated at a later

date through failure of finances does not constitute a de-

fense to a charge of attempt to extort money in violation

of the Hobbs Act.”’). Similarly, in United States v. Caci,

401 F.2d 664 (2d Cir. 1968), vacated on other grounds,

394 U.S. 310 (1969), the Second Circuit sustained the

conviction of defendants for conspiracy to rob an

armored car messenger in violation of the Hobbs Act al-

though the plan was aborted.

Counsel for defendants conceded at oral argument

that they could point to no precedent to support their

contention that a conviction for conspiracy to violate the

Hobbs Act must be predicated on « showing of an actual

PA-75

or probable future effect on interstate commerce. One of

the few cases to focus on the interstate commerce aspect

of the Hobbs Act, United States v. Staszcuk. 517 F.2d 53

(7th Cir.) (en banc). cert. denied, 423 U.S. 837 (1975),

arose when a local alderman was convicted of a substan-

tive Hobbs Act violation. The government had proven

that he received $3,000 and that he did not oppose a

zoning change which authorized the construction of an

animal hospital. Because no such hospital was ever

built, the court noted that “there is no evidence that ei-

ther the zoning change or the payment had anv effect

whatsoever, either favorable or unfavorable, on inter-

state commerce.” Id. at 55. Judge. now Justice. Stevens.

writing for a majority of the en banc court. considered

whether the federal statute reached extortion under

those circumstances. and concluded: “We are. . . per-

suaded that the cases which uniformly hold that a

threatened effect on interstate commerce is sufficient to

bring the statute into play notwithstanding the absence

of any actual effect, correctly interpret the congressional

purpose.” Id. at 59 (emphasis added).

We believe Justice Stevens’ approach is dispositive

of the jurisdictional issue before us. Congress can con-

Stitutionally reach inchoate offenses because these

offenses pose a potential threat to interstate commerce:

the existence of such a threat ties “the proscribed con-

duct to the area of federal concern delineated by the stat-

ute.” United States v. Feola, 420 U.S. 671. 695 (1975).

The appropriate inquiry then is not whether the defen-

dants’ perceptions can invest the courts with federal ju-

risdiction, as the district court viewed the issue. but

whether the defendants’ conduct constituted a sufficient

threat to interstate commerce so as to implicate an “area

of federal concern” sufficient to give rise to federal

jurisdiction.

In essence the defendants are arguing that we

should accept an impossibility defense when federal ju-

PA-76

risdiction is predicated on interstate commerce. We be-

lieve such a defense must be rejected here. In substan-

tive Hobbs Act convictions, the requisite nexus to

interstate commerce has been found in the depletion of

assets theory, because the payment of an extortion de-

mand may reduce the assets available for the purchase

of goods originating in other states. See, e.g., United

States v. Cerilli, 603 F.2d 415, 424 (3d Cir. 1979), cert.

denied, 444 U.S. 1043 (1980); L’nited States.. v.

Addonizio, 451 F.2d 49, 77 (3d Cir. 1971). cert denied..,

405 U.S. 936 (1972). In United States v. Rindone, 631

F.2d 491 (7th Cir. 1980), the Hobbs Act conviction of a

municipal inspector who had extorted money in ex-

change for work permits was challenged on the ground

that there was no nexus with interstate commerce under

the depletion of assets theory because the Federal Bu-

reau of Investigation had supplied the money used in the

extortionate transaction. In rejecting this claim, the

court reviewed Hobbs Act cases which upheid jurisdic-

tion although no depletion of assets affecting interstate

commerce had or could take place and affirmed the “fed-

eral interest in deterring even futile threats to interstate

commerce”, 631 F.2d at 493, referring to United States

v. Staszcuk, 517 F.2d at 57. The Rindone court

concluded:

As the court noted in [United States v. Breoklier,

459 F. Supp. 476 (C.D.Cal. 1978)], “[t]his extortion

completed a plan that would have actually affected

commerce but for a fact unknown to defendants,

i.e., that [the victim] was a company not actually en-

gaged in commerce.” Id. at 478. The presence here

of a fact not known to Rindone, i.e., that the FBI

provided the payoff money, is likewise irrelevant to

the jurisdictional inquiry.

631 F.2d at 494. In the Brooklier case, relied upon by

the Seventh Circuit, the victim corporation was an

F.B.I.-created shell that in fact had no interstate deal-

PA-77

ings. Jurisdiction under the Hobbs Act was nonetheless

upheld.

In construing other federal statutes, the courts also

have expressed an unwillingness to accept impossibility

as precluding jurisdiction. In United States v. Rose, 590

F.2d 232 (7th Cir. 1978), cert. denied, 442 U.S. 929

(1979), two defendants who had agreed to burglarize a

home in Arizona and to transport the stolen goods to IIli-

nois, unwittingly engaged F.B.I. agents to perform the

theft and to transport the goods. The agents never in-

tended to commit the thefts and no goods were ever sto-

len; instead the defendants were arrested and convicted

of conspiracy to transport goods interstate knowing the

goods to be stolen. Although the issue of federal jurisdic-

tion was not expressly raised, the court, in affirming the

convictions under 18 U.S.C. §§371, 2314, commented:

Here [defendants] intended to cause the goods to be

stolen and then transported in interstate commerce

with knowledge that they had been stolen. All that

was necessary, in addition to an overt act, was that

the intended future conduct they had agreed upon

include all the elements of the substantive crime.

590 F.2d at 235. This statement reflects the court’s view

that the defendants’ plan to transport the goods inter-

state, even though unattainable from the outset, suffi-

ciently impinged on an area of federal concern to justify

federal regulation and prohibition. See also Craven v.

United States, 22 F.2d 605, 609 (1st Cir. 1927), cert. de-

nied, 276 U.S. 627 (i928) (conviction for conspiracy to

import foreign liquor without payment of tariff can be

sustained based on defendants’ erroneous beliefs that

liquor was of foreign origin).

Defendants have argued that the holding in United

States v. Feola, 420 U.S. at 695-96, supports their view

that an essential jurisdictional element cannot be estab-

PA-78

lished by reference solely to the state of mind of the de-

fendant. Feola provides no support for the defendants’

theory. [In Feola, even though the defendants did not in-

tend to assault a federal officer, the Court held that they

could be still convicted for conspiring to violate the fed-

eral statute, 18 U.S.C. §111, which prohibits an assault

on a federal officer. In holding that there was a “suffi-

cient threat” to an ‘area of federal concern” to meet the

federal jurisdictional requirement as long as a federal of-

ficer was in fact the target of the planned attack, 420

U.S. at 695, the Court did not preclude the existence of

federal jurisdiction where the intended victim is be-

lieved to be a federal officer, but in fact is not.

In fact, the language in the Feola opinion and the

approach taken by the Court there support our final rea-

son for rejecting the district court's holding that an actu-

al potential effect on interstate commerce is a jurisdic-

tional prerequisite for a conviction for conspiracy to

violate the Hobbs Act. Defendants have been able to of-

fer this court no policy reason for us to accept their re-

Strictive view of Congress’ constitutional power to legis-

late as to conspiracies which pose a threat to interstate

commerce. Defendants agree that had the government

moved frorn the verbal ruse that its agents were in the

hotel construction business to the more concrete action

of embarking on that venture, see United States v.

Gambino, 566 F.2d 414 (2d Cir. 1977), cert. denied, 435

U.S. 952 (1978), the jurisdictional requirement would

have been met. H»wever, we see no reason to interpret

Congress’ legisiative power as dependent upon whether

the F.B.I. agents actually contract for a hotel site, pur-

chase machinery to dump garbage. or establish their

own fencing operation for the purchase of stolen goods.

To require that the government take that additional step

before it can constitutionally reach a proven conspiracy

which would have affected interstate commerce had the

facts been as represented misdirects the focus of the

conspiracy cases. As the Court noted in Feola. “|T|he

PA-79

law of conspiracy serves ends different from, and com-

plementary to, those served by criminal prohibitions of

the substantive offense.” 420 U.S. at 693. The Court

identified the dual purposes of conspiracy law, “protec-

tion of society from the dangers of concerted criminal ac-

tivity,” and sanctions against those agreements which

pose great likelihood of commission of an act due to well

formed criminal intent. Id. at 693-94.

In this case the jury found that the defendants con-

spired to violate the Hobbs Act by their acceptance of

payments in return for their promises to expedite com-

pletion of an elaborate hotel project which, had it been

constructed, would have entailed at least a $30 million

expenditure. Had the project actually been planned as

represented, defendants’ actions would have violated the

Hobbs Act even if unforeseen difficulties, such as the

overthrow of the “sheik”, prevented any further action

on the project. The federal interest in protecting inter-

state commerce is no less under the factual situation

presented in this case. The threat posed by defendants’

actions is just as great. Since Congress has exercised the

full scope of its commerce power in the Hobbs Act, we

cor:clude that there was Hobbs Act jurisdiction.

B.

Extortion “Under Color of Official Right”

As an additional ground for dismissing the Hobbs

Act count the district court held that defendants’ con-

duct did not constitute “extortion” under the Act be-

cause they, at most, “passive[ly]” accepted the bribes.

901 F. Supp. at 1185. The Act defines “extortion” as:

the obtaining of property from another, with his

consent, induced by wrongful use of actual or

threatened force, violence, or fear, or under color of

official right.

PA-80

18 U.S.C. §1951(b)(2).

The district court’s holding is inconsistent with the

rationale underlying the holdings of this court that the

Act is disjunctive and proscribes the “obtaining of prop-

erty from another .. . under color of official right,”

without proof of coercion by the defendant. United

States v. Kenny, 462 F.2d 1205, 1229 (3d Cir.), cert. de-

nied, 409 U.S. 914 (1972). We reaffirmed this principle

in United States v. Mazzei, 521 F.2d 639 (3d Cir.) (en

banc), cert. denied, 423 U.S. 1014 (1975), where we

stated:

A violation of the statute may be made out by show-

ing that a public official through the wrongful use of

office obtains preperty not due him or his office,

even though his acts are not accompanied by the

use of “force, violence or fear.”

Id. at 645 (citations omitted). In Mazzei, we observed

that “the ‘under color of official right’ language jof the

Hobbs Act] ‘repeats the common law definition of extor-

tion.’ Id. (citation omitted). At common law, extortion

was defined as “any officer’s unlawfully taking, by color

of his office, from any man, any money or thing of value

that is not due to him.” 4 W. Blackstone, Commentaries

“141. The requirement that the money be taken “by col-

or of his office” meant “simply that the officer must have

taken money not due him for the performance of his offi-

cial duties.” State v. Weleck, 10 N.J. 355, 372, 91 A.2d

751, 759 (1952). Thus, “[i]f the [Hobbs] Act is read in

full, the distinction between bribery and extortion be-

comes unnecessary where public officials are involved.”

Stern, Prosecutions of Local Political Corruption Under

the Hobbs Act: The Unnecessary Distinction Between

Bribery and Extortion, 3 Seton Hall L. Rev. 1, 14

(1971). More recently, in United States v. Cerilli, 603

F.2d 415 (3d Cir. 1979), cert. denied. 444 U.S. 1043

(1980), we upheld the conviction of state officials who

received bribes in return for conferring valuable state

a i i i i i i ee 8

PA-81

contracts, and approved the district court’s charge that

extortion under “|c]olor of official right is defined as the

taking by a public official of money not due him or his

Ges i

The holding in our cases that the Hobbs Act covers

the acceptance of bribes by public officials even when

payment was not obtained by force, threats, or use of

fear, and the further suggestion that there need be no

inducement or prior request for such payments, accords

with the view taken by other courts of appeals. In United

States v. Hedman, 630 F.2d 1184 (7th Cir. 1980), cert.

denied, 450 U.S. 965 (1981), the government proved at

trial that defendants, city building inspectors, accepted

money from builders who failed to conform with the

building code, but no solicitation of the bribes was

shown. In rejecting defendants’ argument that the gov-

ernment must show that the officials were the

“initiators” or “inducers” of the alleged payments, the

court stated:

It is settled law in this Circuit as well as others that

in a Hobbs Act prosecution for extortion under color

of official right it is unnecessary to show that the de-

fendant induced the extortionate payment... .

The Government is rnerely required to prove that a

public official obtained money to which he was not

entitled and whicl: he obtained only because of his

official position.

Jd. at 1195 (footnote omitted). The Sixth Circuit has also

held that the “technical overdrawn distinction” which

the public officials sought to make there between brib-

ery and extortion under the Hobbs Act is not in keeping

with the legislative intent, and that “in cases of misuse

of official power, bribery and extortion are not mutually

exclusive.” United States v. Butler, 618 F.2d 411, 417

(6th Cir. 1980), cert. denied, 447 U.S. 927 (1980) and

449 U.S. 1089 (1981).

PA-82

Defendants argue that in each of the cases in which

this court seemed to interpret the Hobbs Act to cover

passive acceptance of a bribe by a public official, the de-

fendant had in fact engaged in some conduct which

could be construed as inducement of the payment. Even

if the Hobbs Act were to be construed as requiring some

inducement on the part of the public official, defendants’

conduct in this case hardly constituted merely passive

acceptance of the payments. The evidence does not fit

the defendants’ posited illustration of an unexpected

bribe mailed to a public official's office. On the contrary,

rather than remaining in their own offices, the evidence

shows that each defendant arrived at the Barclay suite

after having been briefed about the purported hotel

project, the fact that there would be a payment made,

and the specific amount of the payment which would be

made to each. Although there is no verbatim record of

Criden’s earlier conversation with Schwartz, Criden re-

ported to Waid that he told Jannotti before the January

24th meeting that the hotel builders wished assurances

that there would be no municipally imposed obstacles to

the project, and that the builders were willing to pay for

such assurances. A897. As soon as each defendant was

in the Barclay suite, Wald, the F.B.I. agent, promptly re-

peated the need for such assurances. Thereafter,

Schwartz launched into a discourse on his own impor-

tance and power and his ability to control City Council

and the relevant municipa' officials and departments,

A692-96, 709-13, see pages 13-16 supra, and Jannotti

also confirmed his own power. A858-59, see page 21

supra. Further, each gave assurances that there would

be no obstacles or that the obstacles, if any, would be

manageable. Thus, each defendant’s appearance at the

Barclay in expectation of a payment and his conduct in

providing such assurances evidences more than mere

“passive” acceptance of the bribes,'° and falls within the

10. The district court's statement, without citation to the re-

cord, that the evidence “clearly” establishes that the defendants

PA-83

Hobbs Act definition of extortion under color of official

right.

Accordingly we hold that the district court erred in

dismissing Count III of the indictment.

Ill.

ENTRAPMENT

As Justice Harlan noted, the meaning, purpose, and

application of the defense of entrapment in criminal

cases are problems that have sharpiv divided the Court.

See Lopez v. United States, 373 U.S. 427, 434 (1963).

See also United States v. Russell, 411 U.S. 423, 439-40

(Stewart, J., dissenting) (1973). To a large extent, that

division has centered on whether the controlling stand-

ard focuses on the conduct of the government (the ob-

jective test) or the predisposition of the defendant (the

subjective test). The legal principles which determine

the application of the entrapment defense in this case,

however, are not in serious dispute. The parameters of

the entrapment defense are largely to be found from the

four principal cases in which the defense has been con-

sidered by the Supreme Court, Sorrells v. United States,

287 U.S. 435 (1932); Sherman v. United States, 356

U.S. 369 (1958); United States v. Russell, 411 U.S. 423

(1973); and Hampton v. United States, 425 U.S. 484

(1976).

In Sorrells v. United States, where the Court first

recognized the defense of entrapment, the Court held

the defendant was entitled to have the jury consider

“made it very clear that the payments would not be necessary,” 501

F. Supp. at 1185, does not fairly represent the only possible con-

struction of the evidence, and the jury accepted a contrary con-

struction. The district court's statement is also inconsistent with the

court's own finding that the evidence permitted the inference that

the payments were “in exchange for the defendants’ assurances of

using their official positions to pave the way for expeditious comple-

tion of the project.” 501 F. Supp. at 1184.

PA-84

whether his acts of possessing and selling one-half gal-

lon of whiskey in violation of the National Prohibition

Act were instigated by the prohibition agent who im-

planted in the “mind of an innocent person the disposi-

tion to commit the alleged offense and induce its com-

mission in order that [Government officials] may

prosecute.” 287 U.S. at 442. The nature of the defense

was outlined more fully when the Court next considered

the defense a quarter of a century later in Sherman uv.

United States. Chief Justice Warren, writing for the ma-

jority of the Court, stated that “[t}o determine whether

entrapment has been established, a line must be drawn

between the trap for the unwary innocent and the trap

for the unwary criminal.” 356 U.S. at 372. In concluding

that entrapment had been established as a matter of law,

the Court determined from the undisputed testimony of

the prosecution’s witnesses that the defendant was in-

duced to sell narcotics by the government informer and

that he was not predisposed, i.e., that he engaged in con-

duct he would not otherwise have attempted. The Court

noted, “Entrapment occurs only when the criminal con-

duct was ‘the product of the creative activity’ of law-

enforcement officials.” Jd. (emphasis in original).

In United States v. Russell, the Court expressly dis-

approved of the decisions of the lower federal courts

which had expanded the entrapment defense beyond

the Court’s opinions in Sorrells and Sherman. Instead,

the Court reiterated that the defense was not of constitu-

tional dimension, and reaffirmed its prior opinions that

established that entrapment is a “relatively limited de-

fense”, 411 U.S. at 435, which cannot be used by a pre-

disposed defendant. Most recently, in Hampton v. Unit-

ed States, a majority of the Court, in two separate

opinions, upheld defendant’s conviction arising from his

sales of heroin which had allegedly been procured from

a government informant, reaffirming once again the

PA-85

unavailability of the entrapment defense to a predis-

posed defendant.

Emerging from these cases are the principles which

guide our review of the evidence which defendants ar-

gue and the district court found established entrapment

as a matter of law. As the Court stated in Sorrells, “It is

well settled that the fact that officers or employees of the

Government merely afford opportunities or facilities for

the commission of the offense does not defeat the pros-

ecution.” 287 U.S. at 441. Entrapment occurs when a

defendant who was not predisposed to commit the crime

does so as a result of the government's inducement. The

entrapment defense thus focuses on “the intent or pre-

disposition of the defendant to commit the crime.” Unit-

ed States v. Russell, 411 U.S. at 429. As we have pre-

viously held, the government has the burden “to

disprove the whole [entrapment] defense beyond a rea-

sonable doubt,” United States v. Watson, 489 F.2d 504,

510 (3d Cir. 1973)."?

Finally, although there may be instances where the

undisputed facts establish the entrapment defense as a

matter of law, as in United States v. Sherman, or where

the evidence is simply insufficient to submit the issue to

the jury, see, e.g., United States v. Armocida, 515 F.2d

49, 55-56 (3d Cir. 1975); United States v. Payseur, 501

F.2d 966, 970-71 (9th Cir. 1974); United States v.

Smith, 489 F.2d 1330, 1334-35 (7th Cir. 1973), cert. de-

nied, 416 U.S. 994 (1974), entrapment is generally a

jury question. See United States v. Lentz, 624 F.2d

1280, 1286 (Sth Cir. 1980), cert. denied, 450 U.S. 995

(1981); United States v. Bocra, 623 F.2d 281, 288-89

(3d Cir.), cert. denied, 449 U.S. 875 (1980); United

States v. Twigg, 588 F.2d 373, 376 (3d Cir. 1978). See

also United States v. Klosterman, 248 F.2d 191, 194-95

11. See discussion of burden of proof in Murchison, The En-

trapment Defense in Federal Courts: Modern Developments, 47

Miss. L.J. 573, 604-06 (1976).

PA-86

(3d Cir. 1957); Tzimopoulos v. United States, 554 F.2d

1216, 1217 (lst Cir.) (per curiam), cert. denied, 434

U.S. 851 (1977). This court has held that a defendant is

entitled to an entrapment instruction,

however unreasonable the judge would consider a

verdict in favor of the defendant to be, when the ac-

cused shows (1) evidence that the Government ini-

tiated the crime, regardless of the amount of pres-

sure applied to the defendant, and (2) any evidence

negating the defendant’s propensity to commit the

crime.

United States v. Watson, 489 F.2d at 509.

The district court in this case submitted the issue of

entrapment to the jury following a jury charge on that

issue which is not here challenged. After the jury decid-

ed that defendants were not entrapped, the district court

reconsidered the propriety of such submission in ruling

on defendants’ motions for acquittal. The court summa-

vized the government’s evidence as relying exclusively

upon the fact that each defendant did accept money

from the agents. The district court agreed that “{ijn

some situations . . . a defendant’s ready acquiescence

in the Government’s suggestion may be enough to justi-

fy a finding of predisposition.” United States v. Jannotti.

501 F. Supp. at 1200. See, e.g., United States v. Valen-

cia, 645 F.2d 1158, 1167-68 (2d Cir. 1980) (ready re-

sponse to drug sale proposal); United States v. Viviano.

437 F.2d 295, 299 (2d Cir.), cert. denied, 402 U.S. 983

(1971) (ready response to bribe solicitation).

However, the district court overturned the jury's de-

cision. Although the court remarked that, “No-one who —

has viewed the videotape evidence in this case could _

avoid feelings of distress and disgust at the crass behav- ©

ior the tapes reveal,” it gave judgment for the defendants

because “(t]he evidence was, as a matter of law, insuffi-

cient to establish the defendants’ predisposition beyond

PA-87

a reasonable doubt.” 501 F. Supp. at 1200. In support of

that decision, the district court relied on three factors.

In my opinion, in their zeal to make sure that

the defendants would accept the tendered pay-

ments, the government agents offered such attrac-

tive inducements as to preclude any reliance upon

the defendants’ acceptance of the money as proof of

predisposition. In the first place, the amounts of-

fered were exceedingly generous. Standing alone,

the very amounts of the bribes were, to paraphrase

the language of the court in Scriber v. U.S., [4 F.2d

97 (6th Cir. 1925)], “a substantial temptation to a

first offense.”

In the second place, it was clear that the defen-

dants would not be asked or expected to do any-

thing improper on behalf of the proposed hotel ven-

ture; and they agreed to do nothing inconsistent

with their obligations as members of the City Coun-

cil, working for the benefit of their constituents.

Finally, and most importantly, they were led to

believe that if they did not accept the money, the

project would not come to Philadelphia. In the con-

text of the fiscal crises which beset all large cities

these days, and in the context of the problems of ur-

ban blight and decay, the governmental induce-

ment in this case was indeed calculated to

overwhelm.

Id. (emphasis added).

Before turning to that evidence, it will be useful to

reiterate briefly the applicable principles governing det-

erence to the jury’s findings. In ruling on a motion to

overturn a jury’s finding of predisposition the trial court

must view the evidence in the light most favorable to the

prosecution, and resolve all reasonable inferences there-

from in its favor. See Glasser v. United States, 315 U.S.

60, 80 (1942); United States v. Artuso, 618 F.2d 192,

195-96 (2d Cir.), cert. denied, 449 U.S. 861 (1980).

PA-88

Credibility determinations are for the jury. See, e.g.,

United States v. Bocra, 623 F.2d 281, 289 (3d Cir. ), cert.

denied, 449 U.S. 875 (1980). Viewing the evidence in

this light, the trial court must uphold the jury’s verdict

unless no reasonable jury could conclude beyond a rea-

sonable doubt that the defendant was predisposed to

commit the offense for which he was convicted. See

Burks v. United States, 437 U.S. 1, 16 (1978). Obvious-

ly, in reviewing a district court’s decision to disregard a

jury verdict, we apply the same standard. Id. at 17; Unit-

ed States v. Dixon, 658 F.2d 181, 188 (3d Cir. 1981).

Thus, we must independently examine the evidence on

the three factors relied upon by the district court to de-

termine whether it was as overwhelming for the defen-

dants as the district court found. If not, it was error to

withdraw the decision on the predisposition issue from

the jury.

A.

The size of the payments

The undisputed evidence shows that Schwartz,

chairman of Philadelphia City Council, accepted a pay-

ment in cash of $30,000 from an F.B.1. agent posing as a

representative of the sheik, that he looked inside the en-

velope, fingered the bills, and licked the envelope closed.

The evidence also shows that Jannotti, a member of

Philadelphia City Council, accepted a payment in cash

of $10,000 from the same F.B.I. representative, that he

placed the envelope in his pocket without opening it,

and that he declined to discuss the amount of the pay-

ment, repeating several times “We won’t even discuss

_

The district court, without any reference to the

record or any analysis of the issue, characterized the

amounts offered as “exceedingly generous” and deter-

mined that “the very amounts of the bribes were. . . ‘a

substantial temptation to a first offense.’ 501 F. Supp.

i

——

PA-89

at 1200. In effect, the district court held that no reason-

able jury could have found predisposition frerm the de-

fendants’ on-tape conduct because of the nature of the

inducement offered to the defendants.

Even if the dollar amount offered were relevant to

disprove predisposition, a question which we do not de-

cide, we find nothing in the record to support the district

court’s conclusion that in today’s inflationary times, city

councilmen would view sums of $30,000 or $10,000 as

so large or generous as to overcome an Official’s natural

reluctance to accept a bribe. Certainly, the question of

the generosity of the sums given must be viewed in rela-

tionship to the circumstances of the acceptors. What

would be tempting to an office clerk would plainly not be

enough to tempt a millionaire. Yet the record is almost

bare of any evidence of the defendants’ financial situa-

tions. What the record does disclose hardly suggests that

either man was in dire straits financially. Schwariz was

a practicing lawver until 1970 or 1971 and, until that

time, a partner of a large and active center city Philadel-

phia law firm. In his discussion with Wald, Schwartz

stated:

SCHWARTZ: And, uh, I was a senior partner

in a very large law firm, but decided to give up the

practice completely and sever my connections with

the firm to devote full time to my councilmatic du-

ties. I felt that, uh, it was the proper thing for me to

do, for my own discretion. The then mayor, who is

now out of office, Frank Rizzo, who was the former

police commissioner. And, uh, you know, you think

things out.

WALD: Uh-hmm.

SCHWARTZ: And fortunately, I didn’t have to

worry about earning a livelihood, I’ve, I’ve been a

real estate lawyer, corporate practice real estate, ad-

ministrative agency law.

PA-90

A694-95. Furthermore. Schwartz did not expect to keep

the entire $30,000. As the district court found.

However. Schwartz accompanied Criden to a meet-

ing with the undercover agents on January 23.

1980, and the videotape of that meeting, together

with other evidence. demonstrates that Schwartz

knew he would be paid $30,000. and that the pav-

ment would be shared in some way with Criden.

501 F. Supp. at 1198.

Jannotti, who in addition to his City Council salary

also owned a bar, made a statement to an F.B.I. agent

during the subsequent investigation that his bar made

“more than $10,000 and there would be no reason for

him to take that kind of money.” A925.

In United States v. Myers. Nos. CR80-00249,

CR80-00253, CR80-00291, slip op. at 59 (E.D.N.Y. July

24, 1981). the district court was faced with a similar is-

sue and commented that today “$50,000 is simply mot an

overpowering sum of money.” It also noted that other

legislators approached with bribes of sums greater than

$30,000 found themselves capable of rejecting the of-

fers. Id. at 53, 60.

The jury was well aware of the amount of the bribes

as well as the defendants’ stations in life. Since there is

nothing in the record to support the district court’s con-

clusion that the amounts involved were, as a matter of

law, so generous and enticing as to overcome any possi-

ble refusal by the defendants, the court’s action in over-

turning the jury’s resolution of this issue was plainly an

intrusion on the jury’s prerogative.

B.

The “benignity” of the payments

The second of the three factors which the district

court stressed in holding that the evidence was msuffi-

cient as a matter of law to establish that the defendants’

PA-9]

acceptance of the money showed their predisposition

was that “the defendants would not be asked or expected

to do anything improper on behalf of the proposed hotel

venture” and that “they agreed to do nothing inconsis-

tent with their obligations as members of the City Coun-

cil, working for the benefit of their constituents.” 501 F.

Supp. at 1200. The district court stated that “there was

no suggestion that the putative sheik required or expect-

ed any violation of the law in exchange for the pavment:

he merely wished to be assured that he had ‘friends’ in

high places.” Id. at 1194.

There is a fundamental inconsistency in the district

court’s view of the evidence in this part of its opinion and

the court’s earlier statement in the same opinion that

[t}here is no dispute about the defendants’ receipt of

the payments, and the evidence permitted, although

it did not compel, the inference that the payments

represented bribes paid in exchange for the defen-

dants’ assurances of using their official positions to

pave the way for expeditious completion of the

project.

501 F. Supp. at 1184 (emphasis added). The district

court never attempted to reconcile the two statements. It

may be that the district court, in stating that defendants

agreed to do nothing “improper”, was referring to the de-

fendants’ repeated statements on tape that they as-

sumed that the hotel was to be a legitimate venture and

their frequent comments that the project would be good

for Philadelphia. However, as the district court acknowl-

edged, the evidence permitted the inference that the

payments represented “bribes” to elected public officials

in return for the use of their official positions. We fail to

see how any court anywhere under any circumstances

can fail to characterize a public official's acceptance of

payment to “pave the way for expeditious completion of

the project” as “improper”.

PA-92

The government argues that defendants’ arrival at

the hotel room after 10 o’clock in the evening to meet

with total strangers, and the statements of Criden and

Johanson indicating that Schwartz and Jannotti would

be ready and willing to accept payments in return for po-

litical favors and that they had done so in the past, see,

e.g., A497-500, support the jury’s determination that the

defendants were predisposed. However, even if we were

to look only at the defendants’ own statements and ac-

tions shown on the tapes, there is no justification for tak-

ing from the jury the question of the nature of defen-

dants’ undertaking.

To recapitulate some of the relevant evidence, early

in the meeting at the Barclay Hotel between Schwartz,

Wald and Criden, Wald made it clear that he was seek-

ing political favors in connection with the hotel venture.

Thus, whatever Schwartz’ expectations actually were

about the services he was to perform for the anticipated

fee following Judge Shiomos’ references to a “consulting

opinion”, a reasonable jury could have found that in the

course of Schwartz’ meeting at the Barclay it became

clear that what was at stake was the exchange of future

political favors by the President of Philadelphia’s City

Council for cash to be paid on the spot. See pp. 12-17

supra.

Furthermore, in light of Schwartz’ response to

Wald’s overture (“we got five or six [city council] mem-

bers that came in. . . you tell me your birth date. I'll

give them to you for your birthday,” A695-6), a reason-

able jury could find that Schwartz quickly dispelled any

notion that he thought he was meeting Wald for legiti-

mate “consulting” work. City Council members are

simply not “given” as birthday gifts to prospective

enterpreneurs as part of a “consultation.”

The evidence as to Jannotti, if not quite as strong as

that against Schwartz, also could be construed by a rea-

sonable jury as proving that the payment was made for

PA-93

political support. tor Jannotti’s vote. thereby belving any

suggestion that it was made for “fmendship’. With

Jannotti as with Schwartz. Wald explained “I'm onl,

here tor one reason. te bring back some assurances.”

A849. and characterized the understanding between

them as a “cash business transaction’ in which Jannotti

“guaranteed. . . that we dont have a problem in Phila-

delphia. . . .” A863. A reasonable jury could view the

assurances given by Jannotti as his willingness to com-

mit his Citv Council vote, A853-54. and to use his politi-

cal influence. A863-67. See pp. 19-24 supra.

The district court stressed the concern expressed by

both Schwartz a

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