Petition — Cauble v. United States
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Office -Supreme Court, U.S,
FILED
88-585 OT 7 1963
No. 83-__ La
IN THE
Supreme Court of the Gnited States
OCTOBER TERM, 1983
Rex C. CAuBLe, Individually and
Doing Business as Cauble Enterprises,
Petitioner,
Vv.
UNITED STATES OF AMERICA.
PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
MICHAEL E. TIGAR
(Counsel of Record)
SAMUEL J. BUFFONE
JOHN J. PRIVITERA
TIGAR & BUFFONE,
A Professional Corporation
1302 18th Street, N.W.
Washington, D.C. 20036
(202) 785-8900
MELVIN CARSON BRUDER
BRUDER AND COOPER
2514 Cedar Springs
Dallas, Texas 75201
(214) 742-3224
Attorneys for Petitioner
——, ST ST
PRESS OF BYRON S. ADAMS PRINTING, INC., WASHINGTON, D.C. (202) 347-8203
i
QUESTIONS PRESENTED
1. Did the trial judge amend the indictment in this
Racketeer Influenced and Corrupt Organizations Act, 18
U.S.C. § 1961, et seg. (RICO) case and direct a verdict of
guilt on the “enterprise” element of the RICO charge, in
that:
(a) the proof at trial showed that there was a sepa-
rate, loose-knit enterprise-in-fact engaged in marijuana
smuggling, assisted in its unlawful endeavors by at most a
few of the constitutent entities and assets of the charged
enterprise, Cauble Enterprises; and.
(b) the trial judge charged in effect that the “enter-
prise” was Cauble Enterprises, a Texas partnership con-
sisting of dozens of entities and separate assets; and
(c) the amendment of the indictment and direction of
verdict of guilty usurped the jury’s role and masked a
substantial variance between the indictment and the
proof?
2. Did the multi-million dollar in personam
forfeiture—the largest forfeiture in American history—
violate due process of law and the plain meaning of RICO
by forfeiting assets and entities whose activities had no
nexus to any alleged or proven illegal conduct on the part
of their owner, Rex C. Cauble?
3. Did the forfeiture order in this case violate due
process of law by purporting to cut off, without notice and
judicial hearing, the rights of innocent limited partners
who under Texas law have an undivided interest in each
of the assets of the partnership, Cauble Enterprises,
when
(a) the court held it has no discretion or power to
modify a forfeiture to protect their interests; and
‘i
(b) the court held that the third parties are remitted
to an unreviewable administrative proceeding in the De-
partment of Justice?
4. May acourt of appeals decline to follow clear prece-
dent from this Court and affirm a conviction for
misapplication of bank funds, 18 U.S.C. § 656, based upon
repaid loans made with the approval of the bank’s board of
directors and guaranteed by a person with more than
ample resources to effect repayment?
TABLE OF CONTENTS
SEINE abo cs ch-0 8 0s ¥ 400.0 ede cued bes wealwen
I nies b's a vbli de sibvdvececvtetbesiesesben
CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED
I SUE CONE nk bic wie cies vaccccrcadpanevas
REASONS FOR GRANTING THE WRIT ............--+-5¢-
I.
II.
III.
IV.
THE DISTRICT COURT AMENDED THE iw -
DICTMENT AND DIRECTED A VERDICT OF
GUILT ON THE ENTERPRISE ELEMENT.
THE COURT OF APPEALS’ OPINION UP-
HOLDS THIS PROCEDURE ..................
THE IN PERSONAM FORFEITURE IN THIS
CASE IS AT WAR WITH THE STATUTE AND
VIOLATES DUE PROCESS OF LAW .........
A. The Unprecedented Forfeiture In This Case Is
WEEE, icc kasekcbbnyadoveseteys
B. This Court Should Provide Guidance To Trial
Judges As To The Nexus Which Must Be
Pleaded And Proved Between The Criminal
Enterprise, The Racketeering Activity And
PE OOO Sica ve ndnciwans savnathiae
THIS COURT SHOULD DECIDE WHAT, IF
ANY, DISCRETION A DISTRICT COURT
JUDGE HAS UNDER 18 U.S.C. § 1963(a) WHEN
AN IN PERSONAM FORFEITURE ORDER IS
FINALLY LEVIED AGAINST PROPERTY IN
WHICH THIRD PARTIES HAVE AN UNDI-
VIDED INTEREST. THE COURTS OF
APPEALS ARE IN DISARRAY ON THE ISSUE
THE COURT OF APPEALS REJECTED PRE-
CEDENT FROM THIS COURT IN UPHOLDING
PETITIONER’S CONVICTION FOR
MISAPPLICATION OF BANK FUNDS .......
RIN is oo Bee, kee et ekipewda woud cal
10
15
18
iv
TABLE OF AUTHORITIES
CASES: Page
Armstrong v. Manzo, 380 U.S. 545 (1965) ........... 20
Boffa v. United States, 688 F.2d 919 (3d Cir. 1982), cert.
SOE, TS Cs Be CSO) oc cecsccortae sain
Colero-Toledo v. Pearson Yacht Leasing Co., 416 U.S.
EE Gos pac Pee ob ne Caneves's oPaeies 11, 20
Connecticut v. Johnson, 103 S.Ct. 969 (1983) ........ 8
Dunn v. United States, 442 U.S. 100 (1979) ... 8, 9, 13, 14
Farmers’ & M. Nat. Bank v. Dearing, 91 U.S. 29 (1875) 11
Fuentes v. Shevin, 407 U.S. 67 (1972) .............-. 20
Harmony v. United States, 43 U.S. (2 How.) 210 (1844) 12
Holland v. United States, 348 U.S. 121 (1954) ....... 17
Johnson v. Robison, 415 U.S. 361 (1974) ............ 19
King v. United States, 364 F.2d 235 (5th Cir. 1966) .. 11
Mullane v. Central Hanover Bank & Trust Co., 339 U.S.
Ng re as NY ee ee eo g ke wie
The Palmyra, 25 U.S. (12 Wheat.) 1 (1827) .......... 11
Russell v. United States, 369 U.S. 749 (1962) ....... 8, 22
Sniadach v. Family Finance Corp., 395 U.S. 337 (1969) 20
Solem v. Helm, 103 S.Ct. 3001 (1983) ............... 16
Stirone v. United States, 361 U.S. 212 (1960) ........ 8
United Brotherhood of Carpenters & Joiners v. United
GIR. EE Usd SOP ANOET) «6 oxic cadersncenenseepe 8, 9
United States v. Britton, 107 U.S. 655 (1883) ........ 22
United States v. Britton, 108 U.S. 193 (1883) ........ 22
mine pen v. Dennis, 458 F. Supp. 197 (E.D. Mo.
United States v. Grande, 620 F.2d 1026 (4th Cir.), cert.
denied, 449 1J.S. 830 (1980) ............ cece eee
a _— v. Hamm, 659 F.2d 624 (5th Cir. 1981) (en
Oe ee eo otae o's ibe Meme tile ses uae
United States v. Hawkins, 658 F.2d 279 (5th Cir. 1981) 3
United States v. Huber, 603 F.2d 387 (2d Cir. 1979), cert.
denied, 445 U.S. 927 (1980) ............... 12, 14, 20
Vv
Table of Authorities Continued
Page
United States v. L’Hoste, 609 F.2d 796 (5th Cir.), reh.
den, 615 F.2d 383, cert. denied, 449 U.S. 833
RSE E TRIMS ES vite ity rad Sian ene late Cea 7, 14, 18, 20
United States v. Long, 654 F.2d 911 (3d Cir. 1981) ... 12
United States v. Mandel, 591 F.2d 1347 (4th Cir. 1979),
cer. denied, 445 U.S. 961 (1980) ................ 17
United States v. Mann, 517 F.2d 259 (5th Cir. 1975), cert.
‘ denied, 423 U.S. 1087 (1976) ...... BP Pee Ce 22
United States v. Martino, 681 F.2d 952 (5th Cir. 1982) (en
banc), rev’g, 648 F.2d 367 (1981), cert. granted sub
nom. Russello v. United States, 103 S.Ct. 721 (1983) 10
United States v. Nerone, 563 F.2d 836 (7th Cir. 1977),
cert. denied, 435 U.S. 951 (1978) ...............-. 16
United States v. One 1936 Model Ford V8, 307 U.S. 219
BIN aiid eos aie Kd Gila cake down Deteee a eee een 11
United States v. One 1970 Buick Ser. 494870H910774, 463
F.2d 1168, (5th Cir.), cert. denied, 409 U.S. 980
ST As 65s as phic oaaee 600.00) sas op pee 19
United States v. One 1976 Mercedes Benz, 618 F.2d 453
> Mie UREA Garae nimi pepere it Se LF 5 oo Ses 11
United States v. One Tintoretto Painting, 691 F.2d 603
Se I HD ons va vies ..ccks2kcancdaeuenianens 19
United States v. Phillips, 664 F.2d 971 (5th Cir. 1981),
cert. denied, 457 U.S. 1136 (1982) ............... 16
United States v. Robinson, 30 F.2d 25 (6th Cir. 1929) . 22
United States v. Rodgers, 103 S.Ct. 2132 (1983) ...... 20
United States v. Ruppel, 666 F.2d 261 (5th Cir.), cert.
denied, 102 S.Ct. 3487 (1982) ..............2008- 3
United States v. Scotto, 641 F.2d 47 (2d Cir. 1980), cert.
denied, 452 U.S. 961 (1981) .......ccccccccccces 17
United States v. Spilotro, 680 F.2d 612 (9th Cir. 1982) 20
United States v. Turkette, 452 U.S. 576
Pe sre or hoor kl cuales ema 7, 8, 9, 15, 16
United States v. Zang, 703 F.2d 1186 (10th Cir.
DEE. Sesich vse ke ket sas tc unae (a0 ah eeeaee 14, 20
vi
Table of Authorities Continued
Page
Vance v. United States, 676 F.2d 183 (5th Cir. 1982) . 11
Wallach v. Van Riswick, 92 U.S. 202 (1876) ......... 11
Williams v. United States, 458 U.S. 279 (1982) ..... 13, 14
STATUTES:
se ME CLEMLS opine doa pda pebeaee caren ncewihe 7
Es EME. 6 Site on.0-o oad as ald ahve Reabeloe vusmael 20
IEEE id's aca'oigd v's db was cdeidbunn ne ee 14,21,2
SR ES an oo o% vin Soe nab oe + dh np amen emiess 1,4
Bey SAE MEE“ sao Clas « oo bine duu oe deueTeneue l
WUBC. FISD 2... ..606 Sd « adiee oa bow ieee uae 2, 6, 14
Liaw inion aps heawadeneae tee 4, 6, 16
IEE POPP OCT ET eee Ter 4, 16
RRC EID o's sds con ccbcnsigadoekendammeer 4
ST EY, vine ou 600 6S) dened wees shbaeeeoke 2
Se IIIf oad. d.0 sits o.0.0-6.0 6 Sobol a orn wae 14, 18
PEE, . . n.c.c00 ccd bounasoaenaeenuun 19
Se SE fas ck aces acoepeepabake 2, 11, 12, 14, 15
REED. 3s nave Ses ou 0d dene epenceueedon 12
RE Sha, a's 00:0 ov'o os suena ne eeeke eae 4
MEE ci. -c.as bon oss docwcdbacsebans oeeeieen 2
POUND 0 a akc wun ce ob ehs ve aw eas ab 8, 12, 15
Ed din 6 dna 60's bs'> 0 veie Ooh ele Meee 9
rs S25. s 6dcs ved dad dase deabaeke kane 15
CONSTITUTIONAL AUTHORITIES:
United States Constitution, Article III, Section3 .... 11
United States Constitution, Fifth Amendment ....... 2
United States Constitution, Eighth Amendment ..... 2
vii
Table of Authorities Continued
OTHER AUTHORITIES:
1 F. Pollock and F. Maitland, History of English Law (2d
DECC a, Vk ods cnt dscd seuteh VAREU Marae eS
3 W. Holdsworth, History of English Law (2d ed. 1927)
Act of April 30, 1790, Sec. 24, 1 Stat. 112 (1790) .....
Hearings concerning H.R. 3299, The Comprehensive
Drug Penalty Act of 1983 Before the Subcom. on
Crime of the House Com. on the Judiciary, 98th
Cong., lst Sess. 16 (1983) (Statement of James I.K.
Knapp, Deputy Assistant Attorney General, Crimi-
EE 2 6 nin tS bi in kde bat evcrndeews seavee
O. Holmes, The Common Law (1881) ................
RICO Forfeitures and the Rights of Innocent Third Par-
ties, 18 Cal. W.L.Rev. 341 (1962) - .........ccceee
Tarlow, RICO Revisited, 17 Ga.L.Rev. 291 (1983) ....
U.S. Department of Justice, Narcotics Newsletter, vol.
eg ee, A EE -db-vinicbscnsckuhsenvensoek ot
Page
19
12
18
17
IN THE
Supreme Court of the Anited States
OCTOBER TERM, 1983
No. 83-___
Rex C. CAuBLE, Individually and
Doing Business as Cauble Enterprises,
Petitioner,
v.
UNITED STATES OF AMERICA.
PETITION FOR .. WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
of
Rex C. Cauble, individually and doing business as Cau-
ble Enterprises, a Texas limited partnership, petitions
this Court for a writ of certiorari to the United States
Court of Appeals for the Fifth Circuit, to review his
conviction for violation of the Racketeer Influenced and
Corrupt Organizations statute, 18 U.S.C. § 1961 et seq.
(RICO), the Trave! Act, 18 U.S.C. § 1952, and 18 U.S.C.
§ 656 (misapplication of bank funds), his five year sent-
ence, and the forfeiture order involving several millions
of dollars in assets.
OPINION BELOW
The court of appeals opinion, reported at 706 F.2d 1322,
is Appendix A.
2
JURISDICTION
A timely petition for rehearing was denied August 11,
1983. Appendix D. This Court has jurisdiction under 28
U.S.C. § 1254.
CONSTITUTIONAL AND STATUTORY PROVISIONS
INVOLVED
We rely throughout this petition upon the due process
clause of the fifth ameniment. We maintain that the
forfeiture order violates 18 U.S.C. § 3563 and the cruel
and unusual punishment clause of the eighth amendment.
We further contend that the provisions of RICO for
determining criminal liability and penaities, 18 U.S.C.
§§ 1962, 1963, were misapplied. The text of each of these
provisions is reprinted as Appendix E.
STATEMENT OF THE CASE
Rex C. Cauble is a 70-year old Texas businessman with
no previous criminal record. He is one of the founders and
is the general partner of Cauble Enterprises, a Texas
limited partnership in which he holds approximately 31%;
his wife and son are the limited partners.
The government’s chief appellate attorney has written
that this case involves “what is probably the biggest
forfeiture in American history” and that the court of
appeals’ opinion is “an encyclopedia of RICO law.”' We
seek certiorari because this forfeiture poses a serious
threat to the due process values reflected in 18 U.S.C.
§ 3563 and misconceives RICO; further, the “encyc-
lopedia” is seriously flawed.
The government amply proved that tons of marijuana
were smuggled into the United States aboard four fishing
‘U.S. Department of Justice, Narcotics Newsletter, vol. V, no. 5,
June, 1983, p. 11.
3
vessels, with the participation of Cauble’s ranch foreman
Charles “Muscles” Foster and two former employees of
Cauble Enterprises’ many businesses and entities. This
marijuana smuggling activity had been the subject of
earlier cases, in which the government’s theory had been
that others than Cauble played a directing role.’ Foster
was acquitted in one of these earlier cases by reason of
insanity. There is no question that Cauble and banks in
which he was a principal stockholder loaned Foster
money during this period, nor that the loans were repaid.
There is no question that Foster and others used ranches
owned by Cauble Enterprises to store, weigh and repack-
age marijuana shipments trucked from the coastal off-
loading sites. Alleged conspirators stayed in an apart-
ment owned by Cutter Bill, a Western clothing chain
owned by Cauble Enterprises. The alleged conspirators
also used an airplane owned by Cauble Enterprises, pay-
ing for such use on each occasion.
The leading figures in the smuggling operation por-
trayed themselves, according to Cauble and other de-
fense witnesses, as young, wealthy individuals interested
in ranching and cattle purchases. Indeed, one of them,
Hawkins, did buy ranchland from Cauble Enterprises,
and there was evidence from which cattle sales to these
inuividuals could be inferred. Cauble maintained that he
had no knowledge of the smuggling activities, and there
was evidence that he had not visited most of these ranch
properties for some years; other witnesses, including
participants in the importation scheme, testified that the
smugglers actively sought to keep Cauble unaware of
their illegal activities.
* See United States v. Ruppel, 666 F .2d 261 (5th Cir.), cert. denied,
102 S.Ct. 3487 (1982); United States v. Hamm, 659 F.2d 624 (5th Cir.
1981) (en banc); United States v. Hawkins, 658 F.2d 279 (5th Cir.
1981).
4
The government also presented evidence of cash de-
posits to Cauble Enterprises’ accounts, claiming that the
size and timing of these deposits was consistent with
Cauble’s knowledge and with investment of the proceeds
of illegality. Cauble testified that these deposits repre-
sented cash cattle sales and gambling winnings, which
was corroborated by notations on the deposit slips. 706
F.2d at 1339 n.55; 23a n.55.
The court of appeals concluded, based upon a review of
the record, that the mostly-circumstantial evidence of
Cauble’s activities would justify a reasonable jury in
rejecting his defense of lack of knowledge. To be sure, the -
witnesses whose testimony would have supported the
government’s theory were drawn from the ranks of the
already-convicted, and were subject to substantial
impeachment. But those questions of credibility, the
court of appeals concluded, were for the jury.
The jury convicted Cauble of conspiracy to violate
RICO, 18 U.S.C. § 1962(d); investment of proceeds of
unlawful activity, 18 U.S.C. § 1962(a); and conduct of an
enterprise through a pattern of racketeering activity, 18
U.S.C. § 1962(c). The predicate offenses for each of these
counts were six alleged violations of 18 U.S.C. § 1952, the
Travel Act, and six alleged violations of 21 U.S.C. § 952,
marijuana smuggling. Each smuggling predicate was
mirrored in one of the Travel Act predicates. (There was
an additional Travel Act predicate in each RICO count as
well.)
The indictment also charged, and the jury convicted on,
other Travel Act counts not made RICO predicates.
Finally, Cauble was convicted of misapplication of bank
funds, 18 U.S.C § 656, on the basis of four repaid loans
made to Foster by banks in which Cauble had an interest.
5
The indictment contained a “Notice of Holdings Sub-
ject to Forfeiture.” This list, attached as Appendix B,
purported to incorporate by reference the Articles of
Limited Partnership of Cauble Enterprises, but in fact
the Articles were never made part of the trial record. The
list includes a number of ranches, Cutter Bill Western
Wear, a steel company, a trailer company, and Cauble’s
personal controlling interest in three banks which Cauble
Enterprises, as a Texas limited partnership, could not
own under Texas law. See 61a n.6. An analysis of these
assets, complete with record references, is attached as
Appendix C.
The court of appeals’ opinion contains its detailed
analysis of the record. Our petition focuses upon that
court’s characterization of what was done in the trial
court, and upon its refusal to limit the reach of RICO to
assets found culpably related to the conduct of the unlaw-
ful activity. We note, as Appendix F makes clear, that the
marijuana smuggling activities of the principals in the
scheme antedated Cauble’s alleged involvement. They
had already imported and distributed at least one large
load before they had any significant contact with him; this
much is conceded, at least implicitly, by the government
not charging him with any crime in connection with that
importation.
Second, we focus upon the RICO element of “enter-
prise,” and the requirement of a “nexus” between the
enterprise and the defendant’s conduct. This aspect of
RICO is vital not only to considering the sentence of
imprisonment imposed on the RICO counts, but also to
review of whether the forfeiture ordered is out of all
proportion to alleged guilt, in violation of constitutional
strictures and RICO’s plain language.
6
The government alleged that Cauble Enterprises was
the RICO enterprise. Its proof at trial showed that a
loose-knit enterprise-in-fact was engaged in marijuana
smuggling and began at some point to use some of Cauble
Enterprises’ assets and entities in furtherance of its acti-
vities. This variance presented at least a jury issue as to
whether Cauble was guilty of the conduct the indictment
charged.
The district judge’s charge on the enterprise and
“neaxus”—in statutory terms, “conduct. . . through,” 18
U.S.C. § 1962(c)—was barren of explanatory content.
The court of appeals sustained his simply telling the jury
that “the enterprise charged in this case in [the RICO
counts]... is Cauble Enterprises,” and giving the jury
no clear statement that might have permitted it to decide
otherwise.
Following the jury’s verdict of guilty, the court then
submitted a forfeiture inquiry. The jury was asked (a)
whether Cauble maintained his interest in Cauble Enter-
prises in violation of 18 U.S.C. § 1962, (b) whether his
interest afforded a source of control over the enterprise,
and (c) whether the entirety of that interest would be
forfeited. The jury responded affirmatively to each ques-
tion. 706 F.2d at 1346 n.90; 38a n.90.
The record is barren of a complete and authoritive
listing of Cauble Enterprises’ many assets—ranches,
separate business corporations, shares of stock, build-
ings, and so forth. The jury was not asked te determine
the forfeiture question on an individual asset oasis.
The court of appeals, declining to find and observe
limits on RICO’s forfeiture provisions that might have
resulted from studying the opinions of other circuits,
upheld the trial court’s action and the jury’s verdict.
a4
7
The result was that Cauble has been ordered to forfeit
not only his position as general partner, but all of his
interest in every one of Cauble Enterprises’ assets. Given
the fact, undisputed on this record, that Cauble, his wife
and son elected many years ago to place almost all of their
assets in the partnership form, Cauble has effectively
been stripped of his entire estate.’
The forfeiture order may also adversely affect the in-
terests of the limited partners, who have never had notice
or judicial hearing. The court of appeals waived away
such objections, relying upon its decision in United States
v. L’Hoste, 609 F.2d 796 (5th Cir.), reh. den, 615¥.2d 383,
cert. denied, 449 U.S. 833 (1980), remitting the limited
partners to their administrative remedy in the Depart-
ment of Justice, 28 C.F.R. §§ 9.1-9.7 (1982).
REASONS FOR GRANTING THE WRIT
The manner in which this case was pleaded, proved and
charged to the jury raises compelling constitutional and
important statutory issues. We first analyze the “enter-
prise” element of the RICO offenses in light of the teach-
ings in United States v. Turkette, 452 U.S. 576 (1981) and
then address the massive, in personam forfeiture.
The issues are interrelated, bound by a common con-
cern with the “enterprise” and “conduct ... through” |
elements of a RICO offense. The latter element we, con-
sistent with the court of appeals’ usage, have termed the
“nexus” requirement.
‘The court of appeals relied extensively upon Cauble’s trial coun-
sel’s failure to raise objections to jury instructions. Appellate coun-
sel, also counsel in this Court, has claimed plain error as to some
questions of alleged error, and submits that the issues here tendered
are sufficiently preserved on this record. Of course, direction of a
verdict of guilty, and juridical amendment of the indictment, are
always plain error.
8
I. THE DISTRICT COURT AMENDED THE INDICT-
MENT AND DIRECTED A VERDICT OF GUILT ON
THE ENTERPRISE ELEMENT. THE COURT OF
APPEALS’ OPINION UPHOLDS THIS PROCEDURE
Turkette holds: “The existence of an enterprise at all
times remains a separate element which must be proved
by the Government.” 452 U.S. at 583 [footnote omitted. ]
Consistent with Russell v. United States, 369 U.S. 749
(1962), this element of the offense must be pleaded with
specificity.‘ Stirone v. United States, 361 U.S. 212 (1960)
and Dunn v. United States, 442 U.S. 100 (1979), confirm
that the government may not charge one crime and ride to.
judgment by proving another. Finally, each element of
the offense must be the subject of proper jury instruction
so as to avoid a judicial directed verdict. United Brother-
hood of Carpenters & Joiners v. United States, 330 U.S.
395, 408-09 (1947); Connecticut v. Johnson, 103 S.Ct. 969
(1983).
The treatment of the enterprise element in this case
violated each of these principles. The indictment charged
that “Cauble Enterprises” was the enterprise, yet failed
to plead a theory of liability or enumerate the alleged role
of each asset listed in the Notice which was attached to
the indictment. See Appendix B.
At trial, proof of the enterprise element coalesced with
that of the “pattern of racketeering activity” conducted
by the “Cowboy Mafia,” 706 F.2d at 1329 n.1; 2an.1, who
had been the subject of earlier prosecutions, thus
establishing a wholly illegitimate enterprise-in-fact dif-
ferent from the enterprise charged. The trial court’s in-
structions to the jury were critically flawed by failure to
instruct “enterprise” as a separate element of the offense
‘When forfeiture is sought, the requirements of F.R.Crim.P.
7(c(2) myst also be met.
9
which had to be proved beyond a reasonable doubt. The
trial court simply stated that Cauble Enterprises was
charged as the enterprise. This functioned as a directed
verdict on the enterprise element, and permitted the
government to vary its proof from its pleading. The trial
court’s action in effect amended the indictment by paper-
ing over any issue of whether the government had proved
the charges it had made.’
The critical mistake of the court of appeals’ opinion in
scrutinizing the jury instructions was its finding that a
directed verdict would only have been accomplished if the
trial judge told the jurors “that Cauble enterprises was
the RICO enterprise.” [Footnote omitted.] 706 F.2d at
1343; 32a. This is not the lesson of Carpenters & Joiners
and its progeny. A directed verdict is accomplished if the
trial court’s instructions preclude jury consideration of an
element of the offense as was done here.
Since Turkette has underscored the critical importance
of the enterprise element, the court of appeals’ analysis
poses serious dangers to the proper administration of
RICO. More than harmony to the teaching of Carpenters
& Joiners and Dunn is at stake here, though the princi-
ples upon which those cases rest would amply justify
issuing the writ: If the government is permitted to play
fast and loose with the enterprise element, and then to
have its shifting theories ratified by the trial court, the
accused, as happened in those cases, is convicted without
due process. The enterprise element, once vested with
chameleon qualities, changes hue as necessary to permit
forfeiture of as many of the the accused’s assets—indeed
5 The variance/directed verdict point is preserved by timely Rule
29 motions and by the plain error doctrine.
10
his entire estate, as here—as can be fit into the govern-
ment’s constantly shifting definition.’
II. THE IN PERSONAM FORFEITURE IN THIS CASE IS
AT WAR WITH THE STATUTE AND VIOLATES DUE
PROCESS OF LAW
A. The Unprecedented Forfeiture In This Case Is Worthy
Of Review’
Prior to the American Revolution, a well-established
common law rule provided that conviction of felony for-
feited the defendant’s personalty to the Crown and esche-
ated all realty to his lord; the convicted traitor forfeited
both to the Crown." In 1787, the framers of the United
States Constitution banned imposition of forfeiture of
estate and corruption of blood upon conviction of treason,’
* The Court’s ultimate view of the facts is irrelevant to the proper
resolution for the question we present, and to evaluation of its im-
portance. It is either proper to direct a verdict of guilty or it is not; the
trial judge either did that or did not. The record fairly presents the
“shifting enterprise theory” question on any view of the facts.
7 The forfeiture issue may be guided to some limited extent by this
Court’s decision in United States v. Martino, 681 F.2d 952 (5th Cir.
1982) (en banc), rev’g, 648 F.2d 367 (1981), cert. granted sub nom.
Russello v. United States, 103 S.Ct. 721 (1983), because if the profits
from a pattern of racketeering activity are not forfeitable, then they
should not carry with them such a taint that they forfeit defendant’s
estate when they are placed in the mainstream of his or her legitimate
business activities. But, Martino was properly pieaded and proved
as a wholly illegitimate enterprise-in-fact, and thus is not likely to
address the issués raised by forfeiture of assets legitimately acquired
preindictment, as here.
53 W. Holdsworth, History of English Law 68-77 (2d Ed. 1927); 1
F. Pollock and F. Maitland, History of English Law 351 (2d ed.
1909).
°“The Congress shall have power to declare the Punishment of
Treason but no Attainder of Treason shall work Corruption of a Blood
ll
and three years later the first Congress abolished forfeit-
ure of estate for all convictions and judgments.” The
constitutional backdrop has led to the common judicial
observation that forfeitures are not favored. See, e.g.,
United States v. One 1936 Model Ford V8, 307 U.S. 219
(1939); Farmers’ & M. Nat. Bank v. Dearing, 91 U.S. 29
(1875).
Until the enactment of RICO, in personam forfeiture
was Virtually unknown in American jurisprudence. Most
forfeiture statutes provide for a proceeding in rem, in
which if the government prevails, the interests of all
claimants are settled: See generally Colero-Toledo v.
Pearson Yacht Leasing Co., 416 U.S. 663 (1974). In such
proceedings, the claimant almost always has the right toa
jury trial, Vance v. United States, 676 F.2d 183 (5th Cir.
1982); United States v. One 1976 Mercedes Benz, 618 F.2d
453 (7th Cir. 1980). No item of property may be forfeited
without proof that it was involved in some unlawful
transaction, King v. United States, 364 F.2d 235 (5th Cir.
1966) (Tuttle, C.J.). The common law history, as reflected
in American constitutional and statutory tradition, is re-
viewed ably in United States v. One 1976 Mercedes Benz,
supra.
This Court’s opinions have generally distinguished the
disfavored remedy of in personam forfeiture from in rem
proceedings where “the thingis. . . primarily considered
the offender,” The Palmyra, 25 U.S. (12 Wheat.) 1, 14
or Forfeiture except during the life of the person attained.” U.S. .
Const. Art. III, Sec. 3, See generally Wallach v. Van Riswick, 92
U.S. 202 (1876).
0 “Provided always, and be it enacted, That no conviction or judg-
ment for any of the offenses aforesaid, shall work corruption of blood,
or any forfeiture of estate.” Act of April 30, 1790, Sec. 24, 1 Stat. 112
(1790), revised and codified to 18 U.S.C. § 3563 (1976).
12
(1827), notwithstanding the established innocence of the
owner of the res. Harmony v. United States, 43 U.S. (2
How.) 210 (1844). All the challenges to the historical
rationale for in rem forfeitures aside, they at least estab-
lish the limit of an owner’s liability. See O. Holmes, “The
Common Law” 27 (1881).
By contrast, “what is innovative about RICO is not that
it imposes forfeiture as a consequence of criminal activity,
but rather that it imposes it directly on an individual as
part of criminal prosecution rather than in. a separate
proceeding in rem against the property.” United States
v. Huber, 603 F.2d 387, 396 (2d Cir. 1979), cert. denied,
445 U.S. 927 (1980). See also United States v. Grande, 620
F.2d 1026, 1038 n.5 (4th Cir.), cert. denied, 449 U.S. 830
(1980), discussing the written views of then-Deputy
Attorney General Kleindienst which constitute almost
the entire legislative history of the RICO forfeiture pro-
visions. In Grande, however, the court followed Huber
and declined to agree with Mr. Kleindienst that RICO
revives common law “forfeiture of estate,” or amends 18
U.S.C. § 3563. American law has never disinherited, and
RICO ought not now to “disinherit men because they
were kindred to felons.” 620 F.2d at 1038. The interest
sought must, of course, be set out in the indictment,
F.R.Crim.P. 7(c)(2), and the proof must sustain the con-
nection of each interest sought to be forfeited to the
proven RICO enterprise, which must in turn be the same
“enterprise” alleged in the indictment. Nor does the
RICO forfeiture reach so far as the in personam forfeit-
ure provisions of the “continuing criminal enterprise”
statute, 21 U.S.C. § 848(d). See United States v. Long,
654 F.2d 911, 915 n.6 (3d Cir. 1981).
Because RICO forfeitures are punitive, and incident to
a criminal prosecution, the principle of lenity of course
13
applies. Williams v. United States, 458 U.S. 279 (1982);
Dunn v. United States, 442 U.S. 100 (1979).
We can in this petition only suggest the depth of con-
stitutional concern raised by a forfeiture of virtually a!! of
petitioner’s estate. The court of appeals reached this
result by shearing forfsicure of intelligible constitutional
limits, and—as we noted above—by permitting the
government's definition of enterprise to change at will.
The court first noted that since this is not an in rem
forfeiture, the proof need not connect any particular item
of forfeited property, even if it should consist of thou-
sands of shares of stock in a public company, to culpability
in the manner required for forfeiture of a boat, a car, ora
rifle.
The court also declined, as noted above, to find error in
the district judge’s cavalier treatment of the enterprise
element of the offense. It then found sufficient the allega-
tions of the Notice of Holdings Subject to Forfeiture.
Finally, building upon this series of arguments, the court
held that the jury was not required to specify which
assets and entities of Cauble Enterprises were subject to
forfeiture—all of them were. It reached this result by
noting that, after all, the indictment alleged that Cauble
Enterprises was the “enterprise,” forgetting again that
allegations and proof can, and in this case at least arguab-
ly did, diverge considerably.
Thus was one set of procedural protections against
unwarranted forfeiture shorn away by mechanistic in-
vocation of the in rem/in personam distinction, and
another set shorn away by ignoring salutary limits upon
RICO itself and prosecutorial misconduct. Petitioner,
through the adventitious choice of a means of conducting
his many business activities, lost everything, including
14
assets acquired long before any alleged connection with
wrongdoing and assets having no colorable connection
with the charges against him."
There must be some limits here. This is the case to set
them. RICO mandates forfeiture, but not a dispropor-
tionate one. In United States v. Huber, supra, the Second
Circuit cautioned against too exuberant an application of
RICO forfeiture provisions, and approved a special ver-
dict procedure designed to make sure that entities were
not included in the “enterprise” and forfeited merely
because the defendant owned them. 603 F.2d at 394-95.
United States v. Zang, 703 F.2d 1186 (10th Cir. 1982),
suggests that forfeiture reaches only “tainted interests”
in an enterprise, and not all its assets.
After all, § 1963(a) does not automatically require for-
feiture of all interest in an “enterprise” found to have
existed and to have satisfied the RICO criteria. Rather,
the defendant must forfeit any “interest” acquired and
maintained in violation of § 1962, and any “interest”
affording a source of influence over the enterprise. View-
ing this language narrowly not only heeds the principle of
lenity, See Williams v. United States, supra; Dunn v.
United States, supra, but pretermits consideration of the
serious constitutional problems that would attend a for-
feiture all out of proportion to a defendant’s guilt. The
jury, properly charged, might have identified particular
'' The court of appeals declared itself and the district court power-
less to do anything about this state of affairs, citing its prior opinion in
L’Hoste, supra. 706 F.2d at 1346-47; 39a.
"Given the passage of the Bill of Rights by the same body of
lawmakers and citizenry that produced the antiforfeiture statute, 18
U.S.C. § 3563, one may conclude that the forfeiture of a person’s
15
properties that it fourd to be both part of the enterprise
and the basis for the defendant’s control.” The trial
court’s fundamentally uninformative charge left the jury
with no basis to do anything other than render a blanket
forfeiture verdict.
To say that a conviction of crime should entail forfeiture
of a person’s entire wealth harks back to a common law
tradition that fortunately found no welcome on our
shores. To say so based on the verdict of ajury that had no
guidance and no limits—though they be precious few—on
this far-reaching statute is particularly odious and begs
review. Rex Cauble has been deprived of his wealth
simply because he has it, not because it was accumulated
through crime. This Court analyzed the overall purpose
of RICO in Turkette, and found “[T]he aim is to divest the
association of the fruits of its ill-gotten gains.” 452 U.S. at
585. Congress must have intended that in personam for-
feiture under RICO be so limited because it failed to
abrogate 18 U.S.C. § 3563.
B. This Court Should Provide Guidance To Trial Judges
As To The Nexus Which Must Be Pleaded And Proved
Between The Criminal Enterprise, The Racketeering
Activity And Forfeited Assets
The root of most evils in the court of appeals’ opinion is
that court’s failure to propound and apply a consistent
test limiting application of RICO to conduct connected to
estate is a per se violation of the eighth amendment. This Court has
recently reaffirmed that a punishment may be unconstitutional if its
harshness is disproportionate to the gravity of the offense. Solem v.
Helm, 103 S.Ct. 3001 (1983).
'8Of what use are the special verdict provisions of F.R.Crim.P.
32(b)(2) and the forfeiture allegation requirements of F.R.Crim.P.
7(c)(2) if the extent of forfeiture is so predetermined that the jury’s
function is reduced to that of a rubber stamp?
16
the enterprise and to the assets sought to be forfeited.
The test adopted by the court seems at first reading a
modest proposal, but we have seen how, when applied to
both the guiit and forfeiture phases of a RICO trial, it
palters in a double sense.
Section 1962(a) prohibits the use or investment of in-
come derived from a pattern of racketeering activities in
the operation” of an enterprise and section 1962(c) pro-
hibits conduct of the affairs of the enterprise “through” a
pattern of racketeering activities. The relationship be-
tween the income derived from the predicate acts, the
defendant’s commission of the predicate acts and the
conduct of the affairs of the enterprise are critical ele-
ments in proving enterprise-based liability.
Turkette establishes that the “enterprise” and the
“racketeering activity” must be “connected.” 452 U.S. at
583. This Court has never fashioned a test to determine if
such a relationship exists." The court of appeals formu-
lated the following:
‘ The charges here were necessarily limited to operation of Cauble
Enterprises. Mr. Cauble had acquired his interest in and established
Cauble Enterprises long before the alleged pattern of racketeering
activities.
‘5 Many courts have grappled with this nexus problem and have
generally agreed that the government must prove a relationship
between the predicate acts, the defendant’s conduct, and the affairs
of the enterprise. More than mere association or knowledge is re-
quired. See United States v. Phillips, 664 F.2d 971, 1011-1012 (5th
Cir. 1981), cert. denied, 457 U.S. 1136 (1982) (each predicate act must
be related to and intended to further enterprise affairs); United
States v. Nerone, 563 F.2d 836 (7th Cir. 1977), cert. denied, 435 U.S.
951 (1978); United States v. Dennis, 458 F. Supp. 197, 199 (E.D. Mo.
1978) (nexus between defendant and enterprise is insufficient if no
relationship between alleged activities and conduct of enterprise).
There is a dispute, however, in the courts of appeals regarding the
17
A defendant does not ‘conduct’ or ‘participate in the
conduct’ of a lawful enterprise’s affairs, unless [1] the
defendant has in fact committed the racketeering
acts as alleged; and [2] the defendant’s position in the
enterprise facilitated his commission of the
racketeering acts, and [3] the predicate acts had
some effect on the lawful enterprise.
706 F.2d at 1332-33; 10a.
The court of appeals then found that “the deposit of
money into the enterprise’s bank account” established
sufficient evidence of a direct effect under the third prong
of the test. 706 F.2d at i341 n.62; 10a n.24. The govern-
ment’s proof at trial established little more than cash
deposits into one of Cauble Enterprises’ many checking
accounts. These deposits were not linked to proceeds of
any identified illegal iriportation.
This Court has recognized the dangers in findings of
criminal liability on the basis of cash income absent a
showing by the government of the unavailability of any
legitimate source for such income. See Holland v. United
States, 348 U.S. 121 (1954).
The court of appeals reliance on the cash deposits
strained its nexus test to the breaking point. The ex-
istence of cash deposits was the basis for a finding of
investment of illegally derived income. This same invest-
ment was then used as the basis for a finding of both
conduct of the enterprise’s affairs “through” a pattern of
racketeering activity and nexus between the illegal acts
and individual assets to justify forfeiture.
degree of relatedness that must be shown. See United States v.
Scotto, 641 F.2d 47 (2d Cir. 1980), cert. denied, 452 U.S. 961 (1982);
United States v. Mandel, 591 F.2d 1347 (4th Cir. 1979), cert. denied,
445 U.S. 961 (1980); Tarlow, RICO Revisited, 17 Ga.L.Rev. 291,
371-376 (1983).
¥
i
18
Mr. Cauble proved at trial a legitimate source, cattle
sales, and a legal, though to some an opprobrious source,
gambling, for the bulk of the cash income. The existence
of cash deposits over a two-year period in a multimillion
dollar business such as Cauble Enterprises cannot sup-
port a finding of nexus or derivation from an illegal
source.
Turning to the forfeiture issue, neither the indictment
nor the proof at trial established any relationship be-
tween the diverse assets of Cauble Enterprises and the
criminality which underlay the RICO charges.
III. THIS COURT SHOULD DECIDE WHAT, IF ANY, DIS-
CRETION A DISTRICT COURT JUDGE HAS UNDER
18 U.S.C. § 1963(a) WHEN AN IN PERSONAM FOR-
FEITURE ORDER IS FINALLY LEVIED AGAINST
PROPERTY IN WHICH THIRD PARTIES HAVE AN
UNDIVIDED INTEREST. THE COURTS OF
APPEALS ARE IN DISARRAY ON THE ISSUE
The court of appeals found that the limited partners of
Cauble Enterprises had no right to notice or a judicial
hearing concerning their undivided vested property in-
terest, a holding thought compelied by United States v.
L’Hoste, 609 F.2d 796 (5th Cir.), reh. den., 615 F.2d 383,
cert. denied, 449 U.S. 833 (1980)."° They had neither the
right to participate in the trial proceedings, nor any right
to notice or hearing prior to the entry ofa forfeiture order
‘6 Beside L’Hoste, the court of appeals relied on a student com-
ment, RICO Forfeitures and the Rights of Innocent Third Parties, i8
Cal. W.L. Rev. 345 (1982). 706 F.2d at 1346 n.89; 37a n.89. This article
not only contains a gross mischaracterization of the L’Hoste opinion
as holding that Congress implicitly repealed the statutory prohibi-
tion of forfeiture of estate in passing the RICO statute, id. at 351 and
n.84, but is riddled with tendentious remark and speculation. Jd. at
358.
19
purporting to remove a general partner and install the
government in his place as holder of an undivided interest
in all of Cauble Enterprises’ assets.
The court of appeals decided that the limited partners
need not be provided a judicial forum at any time and are
relegated to the filing of an unreviewable petition to the
Attorney General of the United States for a remission or
mitigation of the forfeiture." It is unlikely that the Attor-
ney General’s exercise of discretion is reviewable.”
The Department of Justice has recently changed its
policy regarding such petitions and now recognizes that
third party claimants:
[A]sserting a legal interest in forfeited property that
cannot be co-extensive with the order of forfeiture—
are entitled to a judicial resolution of their claims,
and that it is improper and arguably even unconstitu-
tional for the remission and mitigation process,
which has traditionally been viewed as solely a mat-
ter of executive discretion, to be used as a forum for
resolution of their asserted interests.”
The court of appeals approach to 18 U.S.C. § 1963(c) is
also contrary to that dictated in Johnson v. Robison, 415
‘7 The regulations which define this procedure provide little guid-
ance and no assurance of due process. 28 C.F.R. §§ 9.1-9.7 (1982).
8 See United States v. One 1970 Buick Ser. 494870H910774, 463
F.2d 1168, 1170 (5th Cir.), (on suggestion for hearing en banc), cert.
denied, 409 U.S. 980 (1972). Cf., United States v. One Tintoretto
Painting, 691 F.2d 603, 609 (2d Cir. 1982) (failure to exhaust adminis-
trative remedies for remission does not deprive in rem claimant of
standing to file action for return of seized property in federal court.)
'* Hearings concerning H.R. 3299, The Comprehensive Drug
Penalty Act of 1983 Before the Subcommittee on Crime of the House
Committee on the Judiciary, 98th Cong., 1st Sess. 16 (1983) (State-
ment of James I.K. Knapp, Deputy Assistant Attorney General,
Criminal Division).
20
U.S. 361, 373-4 (1974) (statute cannot be construed to
restrict access to judicial review in absence of clear and
convincing evidence of congressional intent to prevent
such review). A claimant should at least be allowed those
judicial challenges afforded by, e.g., Colero-Toledo v.
Pearson Yacht Leasing Co., 416 U.S. 663 (1974).
An exercise of discretion by the Attorney General can-
not be a substitute for due process rights. The protections
of the Administrative Procedure Act, 5 U.S.C. § 551, et:
seq. are not apparent in the skeletal regulations on
mitigation and remission. We ask that the procedural
fairness of this suggested procedure be examined by this
Court in light of the teachings of Fuentes v. Shevin, 407
U.S. 67, 80-83 (1972); Sniadach v. Family Finance
Corp., 395 U.S. 337, 339-42 (1969); Mullane v. Central
Hanover Bank & Trust Co., 389 U.S. 306, 314 (1950); and,
Armstrong v. Manzo, 380 U.S. 545, 552 (1965); see also
United States v. Spilotro, 680 F.2d 612, 617 (9th Cir.
1982) (applying Fuentes to RICO forfeitures).
Since L‘Hoste the United States Court of Appeals for
the Tenth Circuit has squarely held that a district court
has power under 18 U.S.C. § 1963(c) to establish the
terms and conditions of forfeiture and to protect the
interests of innocent third parties. United States v. Zang,
703 F.2d 1186, 1197 (1982). Accord, Boffa v. United
States, 688 F.2d 919, 939 (3d Cir. 1982), cert. denied, 103
S.Ct. 1272 (1983). See also United States v. Huber, su-
pra. Thus, the Fifth Circuit stands alone in holding that
district court has no discretion under § 1963(c).
Finally, the most compelling reason for review of the
forfeiture is this Court’s decision in United States v.
Rodgers, 103 S.Ct. 2132 (1983), decided t!e same day as
this case below. In marked contrast to the judicial defer-
ence to nonliable third party interests suggested in Rod-
21
gers, the court of appeal here rejected the suggestion that
procedural fairness must attach to the process whereby
undivided property interests are divided, holding that
the suggestion “would make the validity of federal RICO
forfeitures subject to the nuances of state property law.”
706 F.2d at 1347, 39a. We respectfully submit that the
message of Rodgers is that the nuances of state property
law must be considered by a trial court in the exercise of
its equitable discretion upon the entry of a forfeiture
order.
IV. THE COURT OF APPEALS REJECTED PRECEDENT
FROM THIS COURT IN UPHOLDING PETITIONER’S
CONVICTION FOR MISAPPLICATION OF BANK
FUNDS
Cauble was convicted of four counts of misapplication,
18 U.S.C. § 656, in connection with four loans made to
Charles “Muscles” Foster by the Western State Bank and
the South Main Bank.
18 U.S.C. § 656 punishes one who “embezzles, ab-
stracts, purloins or willfully misapplies” the funds of a
federally-insured bank. See 706 F.2d at 1352-56, 50a-58a,
for the court of appeals’ discussion of this issue.
Embezzlement and purloining—stealing—pose few
conceptual difficulties in this context. Misapplication—a
type of conversion that may, as here, allegedly occur
when the bank does routine transactions such as loaning
money, has posed significant problems of interpretation.
Banks are in the business of loaning money. Thus, the
boundary between criminal and noncriminal conduct is
the same as that between the bank’s lawful duty and
22
misapplication.” The banks loaned money to Foster on
four occasions. The loans were all paid back. The alleged
crime arises because Cauble allegedly induced the bank to
make the loans knowing that Foster was a “high risk”
borrower.
In this area, this Court has been careful to stress that
the distinction between maladministration and
misapplication must be carefully preserved, for
misapplication has no settled technical meaning. United
States v. Britton, 107 U.S. 655, 669 (1883). In another
opinion respecting the same Mr. Britton, this Court
heaped scorn upon the idea that a loan action concurred in
by the board of directors of a bank could occasion criminal
liability for an officer who was also on the board. United
States v. Britton, 108 U.S. 193, 197 (1883).
Yet the court of appeals, conceding that Britton “may
be construed as recognizing a consent defense,” affirmed
petitioner’s conviction under § 656. It did so in full retreat
from some of its own prior cases, e.g., United States v.
Mann, 517 F.2d 259, 268 (5th Cir. 1975), cert. denied, 423
U.S. 1087 (1976). See also United States v. Robinson, 30
F.2d 25, 27 (6th Cir. 1929).”
” The court of appeals also upheld the sufficiency of the indictment,
even though it did not allege a transaction amounting to misapplica-
tion, nor the name of the borrower whose unreliability was allegedly
the crucial issue. Surely this falls afoul of the cases cited in text, as
well as of Russell v. United States, 369 U.S. 749 (1962).
“ The court of appeals recognized how crucial intent was to the
jury’s determination, and said that if trial counsel had asked for an
instruction that consent should be considered by the jury, the trial
judge should have given it. 709 F.2d at n.137, 57a n.137.
23
CONCLUSION
For all of the above reasons, it is respectfully prayed
that the writ of certiorari be granted.
: Respectfully submitted,
MICHAEL E. TIGAR
(Counsel of Record)
SAMUEL J. BUFFONE
JOHN J. PRIVITERA
TIGAR & BUFFONE,
A Professional Corporation
1302 18th Street, N.W.
Washington, D.C. 20036
(202) 785-8900
MELVIN CARSON BRUDER
BRUDER AND COOPER
2514 Cedar Springs
Dallas, Texas 75201
(214) 742-3224
Attorneys for Petitioner
Dated: October 10, 1983
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APPENDIX A
UNITED STATES COURT OF APPEALS,
FIFTH CIRCUIT.
MAY 31, 1983
No. 82-2087
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
if
Rex C. CAuBLE, Individually and
doing business as Cauble Enterprises,
Defendant-Appellant.
Defendant was convicted in the United States District Court
for the Eastern District of Texas, William M. Steger, J., of
substantive violations of Racketeer Influenced and Corrupt
Organizations Act, conspiracy to violate RICO, three viola-
tions of Travel Act, and four counts of misapplication of bank
funds, and he appealed. The Court of Appeals, Alvin B. Rubin,
Circuit Judge, held that: (1) evidence was sufficient to support
defendant’s convictions under Racketeer Influenced and Cor-
rupt Organizations Act; (2) defendant’s general partnership
interest in business was subject to forfeiture under RICO; (3)
evidence supported defendant’s convictions under Travel Act;
and (4) evidence supported defendant’s convictions for
misapplication of bank funds.
Affirmed.
Appeal from the United States District Court for the East-
ern District of Texas.
Before WispoM, RuBIN.and Tare, Circuit Judges.
ALVIN B. Rustin, Circuit Judge:
Rex C. Caubie appeals his conviction on a ten-count indict-
ment charging him with violating the Racketeer Influenced
2a
and Corrupt Organizations statute (RICO) and the Travel Act
and with miasapplication of bank funds. Cauble, a wealthy
Texas businessman, was in effect accused of being the range
boss of the highly publicized “Cowboy Mafia,” a loosely-knit
group responsible for importing and distributing over 147,000
pounds of marijuana from 1976 through 1978.' The indictment
charged Cauble with substantive violations of RICO* based on
conduct of an enterprise through a pattern of racketeering
activity and investment of income from racketeering activity in
' The “Cowboy Mafia” included a number of Cauble Enterprises’
employees and others. Its composition and exploits are chronicled in
several or our earlier opinions. See United States v. Ruppel, 666 F.2d
261 (5th Cir.), cert. denied, _ U.S. —_, 102 S.Ct. 3487, 73
L.Ed.2d 1369 (1982); United States v. Hamm, 659 F.2d 624 (5th
Cir.1981) (en banc); United States v. Hawkins, 658 F.2d 279 (5th
Cir. 1981)
* (a) It shali be unlawful for any person who has received any
income derived, directly or indirectly, from a pattern of racket-
eering activity or through collection of an unlawful debt in which
such person has participated as a principal within the meaning of
section 2, title 18, United States Code, to use or invest, direct]
or indirectly, any part of such income, or the proceeds of suc
income, in acquisition of any interest in, or the establishment or
operation of, any enterprise which is engaged in, or the activities
of which affect, interstate or foreign commerce. A purchase of
securities on the open market for purposes of investment, and
without the intention of controlling or participating in the con-
trol of the issuer, or of assisting another to do so, shall not be
unlawful under this subsection if the securities of the issuer held
by the purchaser, the members of his immediate family, and his
or their accomplices in any pattern or [sic] racketeering activity
or the collection of an unlawful debt after such purchase do not
amount in the aggregate to one percent of the outstanding secur-
ities of any one class, and do not confer, either in law or in fact,
the power to elect one or more directors of the issuer.
(b) It shall be unlawful for any person through a pattern of
racketeering activity or through collection of an unlawful debt to
acquire or maintain, directly or indirectly, any interest in or
control of any enterprise which is engaged in, or the activities of
which affect, interstate or foreign commerce.
(c) It shall be unlawful for any person employed by or associ-
ated with any enterpise engaged in, or the activities of which
3a
an interstate enterprise; conspiracy to violate RICO; three
violations of the Travel Act,’ and four counts of misapplication
of bank funds.‘ The jury convicted him on all counts and found
that Cauble’s share of Cauble Enterprises should be forfeited.
eect. interstate or foreign commerce, to conduct or participate,
ly or indirectly, in the conduct of such enterprise’s affairs
aa a pattern of racketeering activity or collection of unlaw-
ebt.
(d) It shall be unlawful for any person to conspire to violate any
of the provisions of subsections (a), (b), or (c) of this section.
18 U.S.C. § 1962 (1976).
* (a) Whoever travels in interstate or foreign commerce or uses
any facility in interstate or foreign commerce, including the
mail, with intent to—
(1) distribute the proceeds of any unlawful activity; or
(2) commit any crime of violence to further any unlawful
activity; or
(3) otherwise promote, manage, establish, carry on, or facili-
tate the promotion, management, establishment, or carrying
on, of any unlawful activity,
and thereafter performs or attempts to a any of the acts
specified in pi na (1), (2), and (3), shall be fined not
0 than $10,000 or imprisoned for nut more than five years, or
th.
(b) As used in this section “unlawful activity” means (1) any
business enterprise involving gambling, liquor on which the
Federal excise tax has not been paid, narcotics, or controlled
substances (as defined in section 102(6) of the Controlled Sub-
stances Act) or prostitution offenses in violation of the laws of
the State in which they are committed or of the United States, or
(2) extortion, bribery, or arson in violation of the laws of the
State in which committed or of the United States.
(c) Investigations of violations under this section involving
a ow shall be conducted under the supervision of the Secretary
of the Treasury.
18 U.S.C. § 1952 (1976).
* Whoever, being an officer, director, agent or employee of, or
connected in any Sa gem with any Federal Reserve bank, mem-
ber bank, natio beak or insured bank, or a receiver of a
national bank, or any agent or employee of the receiver, or a
Federal Reserve Agent, a or employee of a Federal
Reserve Agent or of the of Governors of the Federal
4a
The trial judge imposed a five-year sentence on Count One and
concurrent five-year sentences on the other counts and
ordered the forfeiture. Cauble’s appeal raises myriad chal-
lenges to the indictment, the sufficiency of the evidence
adduced at trial, and the legality of the forfeiture. Having
reviewed the sixteen-volume record, we conclude that the trial
was fair, the evidence was sufficient, and the assertions of
error are without merit. We, therefore, affirm the judgment of
conviction and forfeiture.
I. THE RICO CLAIMS
A. Background
Congress adopted the Racketeer Influenced and Corrupt
Organizations provisions’ “to provide a blueprint for federal
action against organized crime. .. .”” Although it suffered
Reserve System, embezzles, abstracts, purloins or willfully mis-
applies any of the moneys, funds or credits of such bank or any
moneys, funds, assets or securities intrusted [sic] to the sgn
or care of any such bank, or to the custody or care of any suc
agent, officer, director, employee or receiver, shall be fined not
more than $5,000 or imprisoned not more than five years, or
both; but if the amount embezzled, abstracted, purloined or
oy gg does not exceed $100, he shall be fined not more than
$1,000 or imprisoned not more than one year, or both.
As used in this section, the term “national bank” is synonymous
with “national banking association”; “member bank” means and
includes any national bank, state bank, or bank and trust com-
which has become a member of one of the Federal Reserve
; and “insured bank” includes any bank, banking associa-
tion, trust company, savings bank, or other satan 6 institution,
the deposits of which are insured by the Federal Deposit In-
surance Corporation.
18 U.S.C. § 656 (1976).
5 Organized Crime Control Act of 1970, Title IX, Pub.L. No.
91-452, 84 Stat. 922, 941 (codified at 18 U.S.C. §§ 1961-1968 (1976 &
Supp. V 1981)).
® Note, Elliott v. United States: Conspiracy Law and the Judicial
Pursuit of Organized Crime Through RICO, 65 Va.L.Rev. 109, 109
(1979).
5a
initially from limited use, RICO is now a frequently-employed
arrow in the federal prosecutor’s crime-fighting quiver.
RICO’s application and effectiveness have been enhanced by
the judicial consensus that it may be used even though no
organized crime activity is charged’ and by the Supreme
Court’s decision that it applies not only to legitimate enter-
prises conducted through a pattern of racketeering activity,
but to wholly illegitimate enterprises as well.”
1. What RICO Prohibits .
RICO’s purpose is “the imposition of enhanced criminal
penalties and new civil sanctions to provide new legal remedies
for all types of criminal behavior, that is, enterprise
criminality—from simple political corruption to sophisticated
white-collar crime schemes to traditional Mafia-type
endeavors.”” RICO does not, however, criminalize conduct
that was legal before its enactment. Its application depends on
the existence of racketeering activity violating some other
criminal statute, state or federal."
* See Tarlow, RICO: The New Darling of the Prosecutor's Nurse-
ry, 49 Fordham L. Rev. 165, 175 & n. 48 (1980). This article, although
generally critical of RICO, states that the courts’ conclusion that an
organized crime link is not required is persuasively supported by
Congress’ refusal to incorporate a definition of organized crime into
RICO. See also Blakey & Gettings, Racketeer Influenced and Cor-
rupt Organizations (RICO): Basic Concepts — Criminal and Civil
Remedies, 53 Temp.L.Q. 1009, 1013-14 (1980) (RICO applies to all
types of organized criminal! behavior); cf. Note, The Racketeer In-
fluenced and Corrupt Organizations Act: An Analysis of the Con-
fusion in its Application and a Proposai for Reform, 33 Vand.
L. Rev. 441, 441 n. 4 (1980) (organized crime describes “the different
groups of individuals who supply illegal goods and services . . . to
countless numbers of citizen customers”).
® United States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69
L.Ed.2d 246 (1981).
* Blakey & Gettings, supra note 7, at 1013-1014.
‘. Thus Blakey and Gettings describe RICO as a “remedial” rather
than a “criminal” statute. See id. at 1021 n. 71.
6a
Section 1962(a) of the statute prohibits the use of illegally-
derived funds to acquire or maintain an interest in an enter-
prise by legal means."' Section 1962(c) proscribes the illegal use
of an enterprise. Section 1962(d) makes illegal a conspiracy to
violate RICO’s substantive provisions, requiring the govern-
ment to prove that the defendant agreed to participate in the
enterprise’s affairs through a pattern of racketeering. Each
section requires that the enterprise atfect interstate com-
merce.
The government establishes a § 1962(a) violation by proving
the existence of an enterprise, the defendant’s derivation of
income fiom a pattern of racketeering activity, and the use of
any part of that income in acquiring an interest in or operating
the enterprise. The government establishes a § 1962(c) viola-
tion by proving the existence of an enterprise, the defendant’s
employment by or association with that enterprise, and the
defendant’s conduct of or participation in the conduct of the
enterprise’s affairs through a pattern of racketeering
activity.'* Because this case requires us to examine the proof
necessary to demonstrate both the existence of an enterprise
and the connection of a defendant to it, we discuss each element
briefly.
2. Enterprise
The statute states: “ ‘enterprise’ includes any individual,
partnership, corporation, association, or other legal entity,
and any union or group of individuals associated in fact al-
though not a legal entity.”’* The Supreme Court has held that
this language encompasses both wholly legal entities and
'. Section 1962(b) forbids the takeover of an enterprise by the use
of illegal means. Cauble was not charged under this section.
'2 United States v. Kopituk, 690 F.2d 1289 (11th Cir. 1982); United
States v. Phillips, 664 F.2d 971, 1011 (5th Cir. 1981), cert. denied,
U.S. ——, 103 S.Ct. 208, 74 L.Ed.2d 166 (1982).
18 U.S.C. § 1961(4) (1976).
7a
\
completely illegal associations-in-fact.'* But “(t]he ‘enterprise’
is not the ‘pattern of racketeering activity’; it is an entity
separate and apart from the pattern of activity in which it
engages.”"® Therefore, in every case the government must
prove not only that there was a pattern of racketeering activity
but that it was conducted through an enterprise as thus de-
fined.
In this case the indictment charged that Cauble Enterprises,
a legal partnership consisting of Cauble, his wife, and his son,
was the enterprise used in violation of both §§ 1962(a) and (c)."
3. Pattern Of Racketeering Activity
The statute defines a “pattern of racketeering activity” as
“at least two acts of racketeering activity. . . the last of which
occured within ten years. . . after the commission of a prior act
of racketeering activity.” “Racketeering activity” includes an
array of crimes that violate either state or federal law."
Turkette, 452 U.S. at 592, 101 S.Ct. at 2533, 69 L.Ed.2d at 260.
8 Td. at 583, 101 S.Ct. 2528-29, 69 L.Ed.2d at 255. The court stated
that an enterprise is “an entity, for present purposes a group of
persons associated together for a common purpose of engaging in a
course of conduct.” /d. at 583, 101 S.Ct. at 2528, 69 L.Ed.2d at 254.
. © In United States v. Stratton, 649 F.2d 1066, 1075 (5th Cir. 1981),
we held that the prosecution need not specify whether the enterprise
is a “legal entity” or a “group of individuals associated in fact although
not a legal entity” because “there is no logical or statutory reason to
force the government to choose between alternative enterprise
theories as long as the indictment is otherwise sufficient.” (citation
ommitted). When, however, the indictment makes clear that the
government is proceeding on the theory that the enterprise is one or
the other of these two kinds of enterprise, it must prove the existence
of “the associational enterprise on which [it] rested its case.” United
States v. Lemm, 680 F.2d 1193, 1198 (8th Cir.1982), cert. denied,
U.S. , 103 S.Ct. 739, 74 L.Ed.2d 960 (1983).
7. 18 U.S.C. § 1961(5) (1976).
8 Td. § 1961(1) (Supp. V 1981). The racketeering activity alleged in
this case included “dealing in narcotic or other dangerous drugs,” id.,
and Travel Act violations.
8a
4. Nexus Between The Enterprise And The
Racketeering Activity
RICO criminalizes the conduct of an enterprise through a
pattern of racketeering activity and not merely the defendant’s
engaging in racketeering activity. '* Therefore, there must be a
nexus between the enterprise, the defendant, and the pattern
of racketeering activity. The 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.” Similarly, a defendant’s
mere association with a lawful enterprise whose affairs are
conducted through a pattern of racketeering activity in which
he is not personally engaged does not establish his guilt under
RICO.”
'% Phillips, 644 F.2d at 1011 (gravamen of RICO offense is conduct
of an enterprise through a pattern of racketeering activity); United
States v. Martino, 648 F.2d 367, 381 (5th Cir. 1981) (RICO proscribes
the furthering of the enterprise, not the predicate acts), cert. denied,
456 U.S. 949, 102 S.Ct. 2020, 72 L.Ed.2d 474 (1982).
20. See, eg., United States v. Dennis, 458 F.Supp. 197
(E.D.Mo. 1978) (defendant's employment by General Motors Assem-
bly Division and collection of unlawful debts on its premises failed to
establish nexus), aff'd, 625 F.2d 782 (8th Cir. 1980).
*!. For example, in United States v. Barber, 668 F.2d 778 (4th Cir.),
cert denied, ___ U.S. —__, 103 S.Ct. 66, 74 L.Ed.2d 67 (1982), the
enterprise charged was the West Virginia Alcoholic Beverage Con-
trol Commission. The defendant, a Commission official from 1969 to
1973 and Commissioner from 1973 until 1976, was convicted of
manipulating the “withdrawal” and “breakage” rules to obtain free
liquor for himself and others. If, however, the proof had shown that
subordinate Commission employees manipulated these rules to get
liquor without the defendant’s knowledge, consent, or participation,
he could not have been convicted under RICO. This is because,
although the Commissioner would have “conducted” the affairs of a
RICO “enterprise,” he would not h» ve done so “through” a pattern of
racketeering activity.
9a
In several opinions we have discussed the requirement that
there be a nexus between the enterprise and the racketeering
activity. We have not, however, formulated a test to deter-
mine whether the requisite nexus has been established by the
government’s proof.~ Even in our most recent discussion of
legal enterprises, United States v. Dozier, 672 F.2d 531 (5th
Cir.), cert. denied, ___ U.S. —__, 103 S.Ct. 256, 74 L.Ed.2d
200 (1982), we did not define the nexus required but concluded
that “the nexus is clear” because “(oJnly [the defendant’s}
position in the [enterprise] and his control over its affairs
enabled him to hawk its services for personal gain.” 672 F.2d at
544.
Two courts havé held that the test for determining whether
the government has met the nexus requirement is whether it
has proved that “(1) [the defendant] is enabled to commit the
predicate offenses solely by virtue of his position in or control
over the affairs of the enterprise, or (2) the predicate offenses
are related to the activities of that enterprise.” This test
appears to us essentially to combine the two required connec-
tions under part (1) of the inquiry. Because the
enterprise-racketeering nexus should be distinct from the
defendant-racketeering connection, we find it necessary to
= We stated in Martino that the predicate crimes must be “related
to the affairs of the enterprise.” 648 F.2d at 403. In United States v.
Welch, 656 F.2d 1039, 1061 (5th Cir.1981), cert. denied, 456 U.S. 915,
102 S.Ct. 1768, 72 L.Ed.2d 173 (1982), we stated that there must be
“a relation between the predicate offenses and the affairs of the
enterprise.” We added: “Congress intended only to require a suffi-
cent nexus between the racketeering activities and the affairs of the
enterprise.” 656 F.2d 1062. See also United States v. Hartley, 678
F.2d 961, 991 (11th Cir.1982) ‘applying Martino formulation; “no
difficulty in finding a sufficient nexus between the deceptive activi-
ties employed by the defendants ... and the common everyday
affairs of the enterprise .. . .”), cert. denied, ___ U.S. —__.,, 108
S.Ct. 815, 74 L.Ed.2d 1014 (1983).
3. United States v. Provenzano, 688 F.2d 194, 200 (3rd Cir.), cert.
denied, ___ U.S. ___.,, 108 S.Ct. 492, 74 L. Ed.2d 634 (1982); United
States v. Scotto, 641 F.2d 47, 54 (2d Cir. 1980), cert. denied, 452 U.S.
10a
modify this formulation. A defendant does not “conduct” or
“participate in the conduct” of a lawful enterprise’s affairs,
unless (1) the defendant has in fact committed the racketeering
acts as alleged; (2) the defendant’s position in the enterprise
facilitated his commission of the racketeering acts, and (3) the
predicate acts had some effect on the lawful enterprise.”
B. Challenges To The Indictment
Cauble challenges each RICO count on the ground that it
fails to state an offense against the United States.” Count One
961, 101 S.Ct. 3109, 69 L.Ed.2d 971 (1981). The Scotto Court held it
unnecessary to show that the defendarit enhanced or solidified his
position in the enterprise through commission of the predicate viola-
tions. 641 F.2d at 54. That question is not raised by this case and we
need not address it.
* The effect may be direct, such as the deposit of money in the
enterprise’s bank account, or indirect, such as the retention of the
enterprise's existing clients. The government need not prove that
the racketeering activity “benefitted” or “advanced the affiars of” the
enterprise. See Hartley, 678 F.2d at 990-91; Welch, 656 F.2d at 1062;
cf. United States v. Webster, 669 F.2d 185, 187 (4th Cir.) (modifying
earlier opinion holding that enterprise’s affairs must bé benefitted),
cert. denied, 456 U.S. 935, 102 S.Ct. 1991, 72 L. Ed.2d 455 (1982). Nor
must the government demonstrate that the enterprise itself was
corrupt or that it authorized the defendant’s conduct. The prosecu-
tion need prove only that the racketeering acts affected the enter-
prise in some fashion.
Of course, if the defendant exercised such control over the legal
enterprise as to make his acts the acts of the enterprise, proof of the
defendant's commission of racketeering acts satisfies both nexuses.
In that event the defendant’s connection with the racketeering acts is
also the enterprise’s connection. This is “conduct” of a legal enter-
prise through a pattern of racketeering activity. Cf, Martino, 648
F.2d at 382 (“conducts” simply means performance of activities nec-
essary or helpful to operation of enterprise).
* Although this claim was not raised in the district court, we
consider it on appeal because a challenge to the indictment’s sufficien-
cy may be raised at any time. United States v. Meacham, 626 F.2d
lla
of Cauble’s indictment, the conspiracy charge, details the pre-
dicate offenses and overt acts with great specificity. It alleges
that as part of the conspiracy Cauble Enterprises’ “lands,
buildings, automobiles, aircrafts [sic], employees and assets”
would be used. It then lists thirty-seven overt acts, alleging
that Cauble and Cauble Enterprises loaned money to, financed
travel by, and provided ranches and an airplane for use by the
conspirators. Cauble nonetheless contends that this count is
defective because its charging portion does not include refer-
ences to the particular means by which Cauble Enterprises’ »
affairs were conducted through a pattern of racketeering activ-
ity. He also contends that the allegation that he acted “in-
dividually and-doing business as Cauble Enterprises” “leaves a
question whether some agency theory more arcane than con-
templated by 18 U.S.C. § 2 is being invoked.” Finally, he
charges that the count is too vague to permit a clear answer.
The indictment’s purpose is to inform the accused of the
charges; it must be read in the light of that purpose. An
503 (5th Cir. 1980); see Fed. R.Crim.P. 12(b)(2). When the question is
not raised below, however, we construe the indictment liberally and
will not reverse unless it cannot within reason be construed to charge
crime. United States v. Hart, 640 F.2d 856, 857-58 (6th Cir.), cert.
denied, 451 U.S. 992, 101 S.Ct. 2334, 68 L.Ed.2d 853 (1981).
%. 18 U.S.C. § 2 (1976) deals with liability of principals. The indict-
ment charges Cauble individually and doing business as Cauble En-
terprises. It charges that Cauble Enterprises was a limited part-
nership in which Rex C. Cauble was general partner. The indictment
does not charge Cauble Enterprises with any corrupt or criminal
conduct. Hence the designation of Cauble “doing business as Cauble
Enterprises” further identifies the individual and particularizes the
charge by showing in what guise he engaged in the conspiracy. See
United States v. Zitomer, 251 F.Supp. 357, 359 (D.Conn. 1966) (and
cases cited therein). We see neither error nor arcane agency principle
in this form of indictment. See United States v. Cappetto, 502 F.2d
1351 (7th Cir. 1974) (civil injunction), cert. denied, 420 U.S. 925, 95
S.Ct. 1121, 43 L.Ed.2d 395 (1975).
12a
indictment is sufficient if it contains the elements of the offense
charged, fairly informs the defendant what charge he must be
prepared to meet, and enables the accused to plead acquittal or
conviction in bar of future prosecutions for the same offense.
Stratton, 649 F.2d at 1073.
In Stratton, the defendant argued that the indictment was
defective because it alleged too broad an enterprise. We
stated: “The agreements which were part of the alleged con-
spiracy, the ‘overt acts’ in furtherance of the conspiracy, and
the substantive racketeering offenses are all related in great
detail.” Jd. We, therefore, concluded that the indictment left
_no room for doubt about the charges lodged against each de-
fendant and protected them from double jeopardy.
Count One of this indictment, whose detail we have already
summarized, is sufficient to inform Caubie of the charges
against him and to permit him to answer these charges. Furth-
ermore, the list of overt acts adequately specifies the means by
which Cauble Enterprises’ affairs were conducted through a
pattern of racketeering activity.
Count Two, brought under § 1962(a), charges Cauble with
aiding and abetting six incidents of marijuana smuggling and
with committing or aiding and abetting various acts of travel as
part of a pattern of racketeering activity. It charges that
Cauble received income from these activities and invested it in
Cauble Enterprises. Cauble claims that this count fails to state
an offense because it can be read consistently with innocence
and fails to give notice of the amount of racketeering income
invested in the enterprise and the nature of its investment.
The indictment charges Cauble with investing income de-
rived from racketeering activity in an interstate enterprise. It
lists the acts alleged as the pattern of racketeering activity.
These are the essential elements of the offense charged.
Cauble nevertheless cuntends that the indictment did not
put him on notice of the “source, amount, and nature of the
‘income’. . . and the destination, amount and nature of the
a
13a
‘investment’. . . .” But the substantive offense charged is the
“investment” of “income” in an enterprise and the indictment’s
wording makes clear that this is the charge against which
Cauble must defend. The defendant is entitled to a “plain,
concise statement of the essential facts constituting the
offenses charged,” but the indictment need not set forth
every evidentiary detail necessary to establish the elements of
the offense.”
Count Three, brought under § 1962(c), charges Cauble with
conducting the affairs of Cauble Enterprises through a pattern
of racketeering activity and incorporates by reference the
allegations in Count Two that Cauble aided and abetted
smuggling and acts of criminal travel. It thus puts Cauble on
notice first that he is charged with conducting Cauble Enter-
prises’ affairs through a pattern of racketeering and second
that the acts of racketeering are those set forth in Count Two.
Cauble argues that this count is vague because it fails to
explain how its allegations are related to the holdings of Cauble
Enterprises sought to be forfeited. The indictment is clear to
all but the captious. It plainly and concisely states the charge
and that suffices.”
Cauble contends that Count Two, charging investment in
the enterprise, and Count Three, charging conduct of the
7. United States v. Williams, 679 F.2d 504, 508 (5th Cir.1982)
(emphasis added), cert. denied, _. U.S. — _, 103 S.Ct. 742, 74
L.Ed.2d 963 (1983).
=. Williams, 679 F.2d at 508; see 1 L. Orfield, Criminal Procedure
Under the Federal Rules § 7.53 (1966).
*. Cauble also claims that there was a fatal variance between the
indictment and the proof of the “enterprise.” We consider that con-
tention infra in our discussion of evidentiary sufficiency, for our rule
is that the issue of variance is waived if not presented to the district
court. See United States v. Lerma, 657 F .2d 786 (5th Cir. 1981), cert.
denied, 455 U.S. 921, 102 S.Ct. 1279, 71 L.Ed.2d 463 (1982); Fed.R.
Crim.P. 12(b)(2).
lda
enterprise, are multiplicitous.” Rule 12(b)(2) requires that
defenses and objections based on defects in the indictment be
raised before trial. In United States v. Bradsby, 628 F.2d 901,
905-06 (5th Cir. 1980), we held that a failure to raise the
multiplicity argument before trial did not waive the right to
object to multiple sentences. We reasoned that the defendant
should not be forced to serve an erroneous sentence imposed on
each count of a multiplicitous indictment because of waiver.
In this case, however, Cauble received a concurrent sent-
ence on the allegedly multiplicitous counts. Therefore, this
claim is arguably waived.
Even if not waived, this contention lacks merit. To sustain a
conviction on Count Two the goverment must prove that the
defendant derived and invested income. To convict on Count
Three the government must satisfy the three-pronged test we
have set out above.” These are plainly different offenses,
requiring proof of different elements, so the counts are not
multiplicitous.*
C. The Evidence”
The government’s proof focused on a series of smuggling
episodes involving the shrimp boats MONKEY, JUBILEE,
BAYOU BLUES, and AGNES PAULINE and their connec-
*®. Multiplicity is charging a single offense in more than one count.
United States v. DeLaTorre, 634 F.2d 792, 794 (5th Cir.1981).
3. See supra text accompanying note 24.
® See generally Phillips, 664 F.2d at 1014; Martino, 648 F.2d at
382-83. In both of those cases we rejected the contention that counts
charging “conducting” and “conspiriity to conduct” were multiplici-
tous despite “considerable overlap in the evidence . . . .” Martino,
648 F.2d at 383: These counts, by contrast, overlap only in that the
government must prove the existence of an enterprise affecting
interstate commerce.
®. In reviewing a jury verdict of guilty, we view the evidence and
all reasonable inferences from the evidence in the light most favor-
able to the government. Glasser v. United States, 315 U.S. 60, 62
l5a
tion to Cauble’s trusted ranch foreman, Charles “Muscles”
Foster.” The issue, as both trial counsel repeatedly stressed to
the jury, was whether Cauble knew of the smuggling activi-
ties; no one contested that the smugglers used many of Cauble
Enterprises’ assets. Much of the government’s evidence came
from the mouths of “Cowboy Mafia” members and former
Cauble Enterprises employees.
1. Jaruary-February !977: The Preliminaries
Raymond Hawkins, a confessed drug smuggler, met Foster
in 1972 and the two became reacquaintec in 1976.” Foster flew
by commercial airl:ner to Thomasville, Georgia, near Hawkins’
home, on February 1, 1977; Caub!e Enterprises paid for the
ticket. When Cauble made a $25,000 loan to Foster from Cau-
ble Enterprises funds on February 9, 1977, Foster told Cauble
that the money was to be reloaned to Hawkins. Hawkins flew
to New Jersey the next day to lease trucks to haul marijuana.
Caubie Enterprises paid for the ticket and Hawkins used all or
part of the $25,000 to pay for the trucks.” Foster helped unload
marijuana from the MONKEY on or about February 21, 1977.
S.Ct. 457, 86 L.Ed. 680 (1942); United States v. Beason, 690 F.2d
439, 442 (5th Cir. 1982), cert. denied, ___ U.S. ___., 103 S.Ct. 828, 74
L.Ed.2d 1023 (1983).
4 Foster was a defendant in Ruppel. He was acquitted by reason
of insanity. See 666 F.2d at 266.
*®. A load of marijuana arrived aboard tne MONKEY in October
1976. The government did not charge that Cauble was involved with
that load. Hawkins’ story is related in detail in United States v.
Hawkins, 658 F.2d 279 (5th Cir. 1981).
%*. Cauble Enterprises loaned Foster $6,000 more on February 22,
1977.
l6a
2. February-June 1977: The MONKEY
The smugglers decided to move the operation from Georgia
to Texas. Hawkins met with Foster and Carlos Gerdes” sever-
al times to plan the new operation; Foster flew to these meet-
ings aboard Cauble Enterprises’ private plane.
On February 26, 1977, Foster, Gerdes, Cauble, and Ms.
Fern Lynch flew from Denton to Houston; Cauble and Ms.
Lynch deplaned in Houston and Cauble told the pilot to con-
tinue to Orange. On March 2, 1977, Foster flew to Thomasville
to meet Hawkins and Gerdes. Gerdes gave Foster $250,000
cash for setting up the Texas operation.” On March 4, Foster
repaid his $31,000 debt to Cauble Enterprises.
From March through May Cauble Enterprises loaned Fos-
ter $18,000. Cauble Enterprises also paid for Foster’s travel to
Houston on May 11-13, 1977. The proceeds of a loan made on
May 11 were used to reimburse Hawkins for building a privacy
fence at Sneed’s Shipyard in Orange, Texas, where the
MONKEY was to arrive.
The MONKEY arrived in Orange on May 31, 1977. Foster
had arranged for trucks and drivers” to haul the load to the
L. R. Ranch near Meridian, Texas. The L. R. Ranch is owned
7”. Gerdes was also known as Carlos San Ramon. He was convicted
and the conviction was affirmed by this court. United States v.
Hawkins, 658 F.2d 279 (5th Cir. 1981).
* Foster showed a valise containing the money to pilot William
McKesson, who testified that Foster stated: “Mr. Cauble knows
[about the smuggling], but he just doesn’t ask questions.” McKesson
claimed that he quit the job two days later. The defense impeached
McKesson with his grand jury testimony that he “assumed that Mr.
Cauble knew, but as far as he [Foster] saying that Mr. Cauble knew,
he didn’t say that.” It also presented testimony that McKesson was
fired for poor flying and that he flew Cauble Enterprises’ plane after
the day on which he claimed that he resigned.
*. The drivers were Willis Butler and Charles Talkington. Talking-
ton pleaded guilty. Butler committed suicide.
l7a
by Cauble Enterprises. Foster paid the ranch foreman to take
a vacation and the smugglers used the ranch for approximately
two weeks in distributing the marijuana.”
Hawkins decided to move to Texas because smuggling was
becoming more difficult in Florida and Georgia. He agreed to
buy the Cherokee Ranch from Cauble Enterprises and paid
Cauble $100,000 down, in cash, which Cauble agreed not to
report on his income tax return.*' Hawkins also testified that
he met Foster, Cauble, and Ms. Lynch in Cauble’s bedroom
three weeks after the MONKEY arrived and paid Foster
$250,000 in Cauble’s presence; Foster then gave Cauble the
money.*
3. June 1977—May 1978: The BAYOU BLUES
After he split with Gerdes, Hawkins set up his own mari-
juana smuggling venture. He bought the BAYOU BLUES
*” While the group was at the L.R. Ranch, Hawkins had a dispute
with Gerdes and Foster left the group. Hawkins gave a pretrial
statement in which he referred to a disagreement over his share and
expressed the view that the smugglers were taking too many risks.
‘He testified at trial, however, that he left the group because he
thought that Gerdes was relying more on Foster's advice than on his.
“|. The date of this payment is unclear on the record. The govern-
ment in brief states that it occurred at the “bedroom counting ses-
sion.” See infra note 42 & accompanying text. Hawkins’ pretrial
statement indicated that he made the payment about April 4, 1977.
His testimony was that he made the payment at the counting session
“approximately three weeks after the MONKEY came in.”
*. Hawkins’ statement was that Foster handed two piles of
$125,000 to Cauble, saying of the second “this is your half.” His trial
testimony dwelled only on Foster’s handing Cauble the money until
the prosecutor refreshed his recollection about Foster’s words.
Cauble denied that the meeting took place. On appeal, defense coun-
sel also suggests that there is a question whether, if Cauble received
the money, he did so as a bailee for Foster or as a principal. We do not
see the relevance of this distinction; if the meeting occurred and
18a
through Martin Sneed, Sr.“ He and Foster used the Cauble
Enterprises’ plane to set up the deal.*
On September 12, 1977, Cauble flew to Las Vegas with
Hawkins and others.* Cauble arranged for Hawkins to launder
$100,000 and, on his return to Denton, deposited the money in
Hawkins’ account at the Western State Bank.
On May 2, 1978, the BAYOU BLUES arrived at Sneed’s
Shipyard in Orange, Texas. Foster became involved in trans-
porting and storing the marijuana at the last minute when one
of the trucks did not appear. The smugglers took the marijuana
to the Crockett Range in Crockett, Texas, which is owned by
Cauble Enterprises. The next day, however, Foster told Haw-
kins to get the truck off the ranch. Also on May 2, Foster flew
to Tampa at Cauble Enterprises’ expense to buy a small boat.
On May 4, 1978, Cauble flew to Las Vegas. Foster had told
Willis Butler, whom he owed $50,000, that Butler could have
the money in old bills or “the old man can go to Las Vegas and
clean it up for you.” Butler received $50,000 in new $100 bills
and later used some of them to pay his lawyer. Twenty-five of
Cauble was present, his knowledge of illegal activity afoot can hardly
be doubted.
Hawkins also testified that: he told Cauble he was a drug smuggler;
he smoked marijuana in Cauble’s presence; he discussed smuggling
with Ms. Lynch and Cauble; he gave Ms. Lynch marijuana cigarettes
on one occasion; Cauble warned him that Foster was talking too
much; and Foster told him several times that Cauble knew that
Cauble Enterprises’ ranches were being used for smuggling activi-
ties.
*®. Sneed, Sr. owned Sneeds’ Shipyards, where the MONKEY had
landed. He was convicted and his conviction was affirmed on appeal.
United States v. Hawkins, 658 F.2d 279 (5th Cir. 1981).
* Cauble required Foster and Hawkins to pay for using the plane.
Cauble wrote “bills” by hand.
* Hawkins paid Cauble about $3,200 for this plane trip.
19a
the bills had been delivered by the Federal Reserve Bank to
the Valley Bank of Nevada on May 4, 1978.
4. June 1977—April 1978: the JUBILEE
While the BAYOU BLUES operation was underway,
Gerdes’ organization was also planning more smuggling ven-
tures. On July 20, 1977, Gerdes, Foster, and others flew to Las
Vegas aboard Cauble Enterpises’ private plane to launder
money.” Gerdes and others returned to Texas on July 26 and
had breakfast with Cauble at Cauble’s home; Cauble ordered
the Cauble Enterprises pilot to fly Gerdes to his home in
Knoxville, Tennessee.
Gerdes’ organization sought a new boat in October 1977.
Foster was looking for a boat at the same time, allegedly to
begin a shrimping business. Cauble called two boat brokers on
October 5, 1977, seeking a shrimp boat, and later sent Fosterto
look at a boat in Aransas Pass, Texas. Gerdes’ lieutenants
bought the JUBILEE in November 1977, after meeting Fos-
ter while looking for a suitable boat.”
The JUBILEE smugglers met in November 1977 at a Hous-
ton apartment leased by Cutter Bill’s Western Wear, a busi-
ness owned by Cauble Enterprises. In late 1977 Foster asked
Cauble’s lawyer’s assistance in leasing a site suitable for a
shrimping operation. The lawyer and Foster looked at several
* Pilot Crownover testified that he was left alone for six days.
When Crownover called Cauble for instructions, Cauble explained
that he did not really know what was going on but told Crownover to
“hang tight.” Cauble Enterprises’ phone log of incoming calls for this
time was missing.
“. The three met in Corpus Christi, en route to Aransas Pass, and
again in Bayou La Batre, Alabama. Foster flew to Mobile, Alabama,
the closest airport to Bayou La Batre, aboard the Cauble Enterprises
plane on November 5, 1977. A “Mr. Carlos” telephoned Cauble on
November 4, 5, and 7, 1977.
20a
places an in January 1978 rented a site at High Island, Texas.”
Foster had a large metal structure built at the water’s edge.
On December 26, 1977 Foster flew aboard Cauble Enter-
prises’ plane to Sarasota and picked up Gerdes. They then flew
to Memphis and on to Houston; from there they boarded a
commercial plane and flew to Las Vegas. On December 30
Cauble flew to Las Vegas. On January 1, 1978, Cauble delayed
his party’s takeoff from Las Vegas to converse with Gerdes at
the airport.
The JUBILEE arrived at High Island on January 27, 1978.
Eight smugglers, including Gerdes, Foster, and three Cauble
Enterprises’ employees” awaited the JUBILEE’s arrival fora
week at the Cutter Bill’s apartment. The marijuana was un-
loaded and driven to the Crockett Ranch. Butler and Washing-
ton then took one truckload to the Mercer Rauch, near Fort
Worth.” Cauble Enterprises also owns the Mercer Ranch. The
* The owner of the High Island property told the attorney and
Foster that it was unsuitable for a shrizuping operation because it
was too far from the Gulf, lacked facilties, and had no source of clean
water for making ice. He and his brother later received $15,000 from
Foster, allegedly as salary and reimbursement for funds spent on
materials and labor in building a fishhouse and drilling a well at High
Island.
* Butler, Talkington, and Larry Washington.
* The Mercer Ranch was much-discussed after the second
JUBILEE load. A smuggler known as “Big Nose” opened every sack
of marijuana in the truck and some marijuana spilled and was left at
the ranch. Foster told Larry Washington that the Texas Rangers had
found the marijuana and that he would have to pay a judge $10,000 to
get the heat off.
Texas State Judge Byron Matthews told Cauble of a rumor that
marijuana residue had been found at the Mercer Ranch. Cauble
called Foster in and told him that a Texas Ranger had told Judge
Matthews that there was marijuana at the Mercer Ranch. Foster
denied knowing anything about it and this denial satisfied Cauble
that the report was untrue.
2la
smugglers distributed the marijuana from the Crockett Ranch
during the next two weeks.
During February and March 1978, the Cauble Enterprises
plane made three trips to Alcoa, Tennessee, near the home of
John Ruppel.*' On March 21, 1978, Foster and Gerdes flew by
commercial aircraft to Memphis and Cauble Enterprises paix
their fare.
On April 4, 1978, the JUBILEE arrived at High Island. For
the week before its arrival the smugglers had again resided at
the Cutter Bill’s apartment. Butler and Washington again
trucked the marijuana to the Crocke*t Ranch and the smug-
glers distributed it during-the next two weeks. -
In April or May 1978 Larry Washington called Cauble to find
out whether Foster had left Washington $5,000 due him from
the second JUBILEE load. Washington asked whether Foster
had left a package for him and Cauble said: “No. What was it?”
Washington replied: “Money.” Cauble told Washington to
come to the ranch for the money. When he arrived, Cauble
gave him a briefcase, which Washington had given to Foster,
containing $5,000; Cauble asked Washington if it was a loan or
if Foster owed him the money.
5. June-November 1978: The AGNES PAULINE
During June and July 1978, Foster flew to Tampa, Florida,
Beaumont, Texas, and Knoxville, Tennessee, at Cauble Enter-
prises’ expense. Foster, Butler, Washington, and James Hol-
land discussed smuggling another load of marijuana in August
1978.
During August or September 1978, Cauble told Washington
that Carlos had called to warn Cauble that Foster was talking
5. Ruppel was convicted on several charges in connection with the
smuggling schemes. We affirmed his convictions in United States v.
Ruppel, 666 F.2d 261 (5th Cir.), cert. denied, __ U.S. —_, 102
S.Ct. 3487, 73 L.Ed.2d 1369 (1982).
22a
too much and to say that he “didn’t want to do any more
business with” Foster. Cauble also warned Butler and Wash-
ington not to have any more dealings with Foster. Foster
disappeared during August 1978.
The AGNES PAULINE arrived in Port Arthur, Texas, on
November 29, 1978. It was seized by agents of the Drug
Enforcement Administration.
6. The Cash Deposits
During late 1976 and early 1977, Cauble Enterprises was
burdened with debt. The partnership lost money during each
of the years involved here except 1978, in which it broke even.
In January 1978 Cauble Enterprises’ special account at West-
ern State Bank was $100,000 overdrawn; it also showed a
deficit balance on March 1, 1978.
On April 8, 1978, Cauble flew to Les Vegas to play in the
World Series of Poker. He lost his $10,000 entry fee but, when
he returned to Texas, he told John Gray, Chairman of the
Board of the Dallas International Bank, that he had won
$260,000 in a side game and wanted it worked into his accounts
at the bank.” Gray suggested that Cauble take the money to
“his own bank in Denton.”™
At Western State Bank, Cauble Enterprises was on a list of
persons and businesses exempt from the requirement that all
cash deposts exceeding $10,000 be reported to the Internal
Revenue Service. Cauble Enterprises deposited $113,900
cash to its Western State Bank Special Account in Apri! 1978;
52. At that time Cauble, either individually or through Cauble En-
terprises, owned 20% of Dallas International Bank’s stock. He later
gained control of 55% of the bank’s stock.
5. Cauble or Cauble Enterprises owned 87% of the shares of the
Western State Bank of Denton.
4 See 31 U.S.C. § 1081 (1976); 31 C.F.R. § 103.22 (1981). Hawkins
and Foster were also on this exempt list.
23a
$182,000 cash in May, and $124,300 cash in June. Cash deposits
in 1978 totaled more than $692,000; cash deposits in 1977
amounted to approximately $220,000; in 1976 cash deposits
were $14,600.”
D. Challenges To The Evidence
1. The Predicate Acts
Cauble contends that the proof of the RICO predicate
offenses was insufficient because the government failed to
prove beyond a reasonable doubt that he aided and abetted
either the smuggling episodes or the acts of travel. In determ-
ing whether the evidence is sufficient, we inquire whether a
reasonable juror might have been convinced of the defendant’s
guilt beyond a reasonable doubt.”
To prove a person guilty of aiding and abetting, the govern-
ment must show that the defendant associated himself with an
unlawful venture, participated in it with the desire of
accomplishing the illegal end, and sought by his actions to
% Total cash deposits in 1979 amounted to $100,700. This figure
included an $80,000 deposit on January 9, 1979. The deposit slip
stated that this amount was the remainder of Hawkins’ down pay-
ment on the Cherokee Ranch.
Many of the carbon copies of deposit slips Cauble Enterprises turned
over to the grand jury in response to its subpoena had hand- or
typewritten notes explaining the source of the cash, such as “cattle
sales” and “gambling winnings.” These notations did not appear on
the bank’s original deposit slips. For example, a deposit slip dated
March 17, 1978, for $20,700 carried the notation “Down Payment on
Sale of Cherokee Ranch to Raymond Hawkins.” Cauble testified that
the deposit was unrelated to the Cherokee Ranch sale but that he
“may have” instructed the bookkeeper to type the information on the
slip.
%. United States v. Bell, 678 F.2d 547, 549 (5th Cir.) (en banc), cert.
granted on other grounds, U.S. , 103 S.Ct. 444, 74 L.Ed.2d
600 (1982).
24a
make it succeed.” The defendant must intend to commit the
offense and participate in some manner to aid its commission,
but need only aid and abet, rather than commit, each element
of the crime.*
Cauble’s brief states that the proof “nowhere discloses” that
he was or could have been aware of any of the specific smuggl-
ing episodes or of the purpose of the airplaine flights. This
assertion is flatly contradicted by the record.
Both Hawkins and Washington testified that, in their opin-
ion, Cauble knew about the smuggling. McKesson testified
that Foster told him that Cauble knew about the smuggling.
Although the evidence was contradicted, a reasonable juror
might have believed it.
Furthermore, there was voluminous circumstantial evi-
dence of Cauble’s knowledge. This included several large loans
to Foster from Cauble Enterprises, including one that was to
be reloaned to Hawkins; Cauble’s communications with Carlos
Gerdes; his trips to Las Vegas; his paying for Foster to look for
a boat; and his making significant changes in the business
practices of Cauble Enterprises during the years in which the
smuggling occurred.” There was also repeated testimony that
only Cauble could authorize the use of the airpline. One pilot
was dismissed for flying the plane to have it cleaned without
Cauble’s permission. This testimony provided support for the
possible inference that Cauble knew of the various uses of the
plane.
57. United States v. Ballard, 663 F.2d 534, 542-43 (5th Cir. 1981),
modified, 680 F.2d 352 (5th Cir.1982) (per curiam).
%* United States v. Fischel, 686 F.2d 1082, 1087 (5th Cir. 1982).
5%. There was, for example, testimony that Foster never flew on the
Cauble Enterprises’ airplane without Cauble before late 1977. There
was also evidence that Cauble Enterprises had cash deposits of only
some $14,600 in 1976 as opposed to $200,000 in 1977 and $692,000 in
1978.
25a
A reasonable jury might have concluded on the record that
Cauble knew of the drug-smuggling activities and knew the
purpose of the acts of travel. Having reached the decision to
reject Cauble’s lack-of-knowledge defense, it might have con-
cluded that Cauble was associated with, participating in, and
seeking the success of a series of smuggling incidents. It might
have decided that activities leading up to the ultimate acts of
smuggling included the many acts of travel charged. In short,
we are unable to say that a reasonable person would necessari-
ly have entertained a reasonable doubt, after hearing the
government’s proof, that Cauble aided and abetted the acts of
travel and the smuggling.
2. The Enterpise Element
Cauble argues that all of his RICO convictions must be set
aside because the government failed to prove that he was in
any way culpably connected with any enterprise. We treat this
as a challenge to both the government’s proof that there was a
RICO enterprise and that there was a nexus between the
enterprise, the racketeering activities, and Cauble.
Cauble contends that the government’s proof demonstrated
only that the racketeering activities were committed by and
related to an enterprise-in-fact, the “Cowboy Mafia.” Thus, he
suggests, the government failed to adduce sufficient evidence
to show that Cauble Enterprises was the RICO enterprise.
In Turkette, the Supreme Court held that the existence of an
enterprise “is proved by evidence of an ongoing organization,
formal or informal, and by evidence that the various associates
function as a continuing unit.”” In cases in which the govern-
. 452 U.S. at 583, 101 S.Ct. at 2528, 69 L.Ed.2d at 254. Whether
the government must prove the enterprise element with proof differ-
ent from that used to demonstrate the pattern of racketeering activ-
ity seems to be an open question. See United States v. Cagnina, 697
F.2d 915, 920-21 (11th Cir. 1983). Because in this case the evidence of
these two elements did not coalesce, we need not address the ques-
tion. Nor do we need to decide whether, as the court held in United
26a
ment charges that a legal entity is the enterprise, proof that
the entity has a legal existence satisfies the enterprise ele-
ment. This is because, by definition, a legal organization such
as a partnership has an ascertainable structure, operates as a
continuing unit, and has a purpose common to its members and
employees.
The government’s proof demonstrated that Cauble Enter-
prises is as a limited partnership organized under the laws of
Texas. It proved that the partnership has a formal organiza-
tion and has operated continuously since 1972 for the purpose
of seeking maximum long-term appreciation of the partners’
capital. It demonstrated that Cauble Enterprises is an entity
different from both the person, Rex C. Cauble, and the pattern
of racketeering activity it sought to punish. Having shown that
this entity existed, the government met the burden of proving
the enterprise element.”
3. “Conducting” The Enterprise's Affairs “Through”
A Pattern Of Racketeering Activity
Cauble contends that the government’s proof demontrated a
nexus between the smuggling activity and the “Cowboy
States v. Bledsoe, 674 F.2d 647, 664-65 (8th Cir.), cert. denied, __
U.S. ——, 103 S.Ct. 456, 74 L. Ed.2d 608 (1982), it is essential that an
enterprise have an ascertainable structure, operate as a continuing
unit, and have a goal common to its members. See Cagnina, 697 F.2d
at 921 (suggesting that this test conflicts with Fifth Circuit test).
Here the enterprise had all of these characteristics.
5. See United States v. Griffin, 660 F.2d 996, 999 (4th Cir.1981),
cert. denied, 454 U.S. 1156, 102S.Ct. 1029, 71 L.Ed.2d 313 (1982); see
also Bennett v. Berg, 685 F.2d 1053, 1060 (8th Cir.1982) (“Legal
entities are garden-variety ‘enterprises’ which generally pose no
problem of separateness from the predicate acts”); Hartley, 678 F.2d
at 987-90 (corporation as both enterprise and defendant); cf. United
States v. Computer Sciences Corp., 689 F.2d 1181, 1190 (4th
Cir. 1982), (division of corporation may be RICO enterprise but can-
not be RICO conspiracy defendant), cert. denied, U.S. , 103
S.Ct. 729, 74 L.Ed.2d 953 (1988).
27a
Mafia,” rather than Cauble Enterprises. Therefore, he con-
tends, the evidence was insufficient to prove that he “con-
ducted” Cauble Enterprise’s affairs “through” acts of racket-
eering.
Because we have concluded that a reasonable jury might
have believed that Cauble aided and abetted the commission of
the charged racketeering acts, we inquire whether his position
in Cauble Enterprises facilitated the commission of the acts
and whether the acts affected Cauble Enterprises. Based on
the evidence, a reasonable jury might have concluded that
none of the acts of travel would have occurred but for Cauble’s
ability to dispatch the Cauble Enterprises’ assets to pay for
commercial flights. Furthermore, a jury might reasonably
have concluded that Cauble’s position in Cauble Enterprises
made it possible for him to make available the funds for loans,
the ranches, and the other assets of the enterprise that the
smugglers used. Therefore, the government’s proof was suffi-
cient to satisfy the requirement that the defendant’s position in
the enterprise facilitated the commission of the racketeering
acts.
Finally, there is the question whether the racketeering acts
affected the enterprise. In this case a reasonable juror might
have concluded that the racketeering acts led directly to the
successful smuggling ventures, which, in turn, led to the large
cash deposits to Cauble Enterprises’ account at Western State
Bank. This is a sufficient effect to satisfy the test. We, there-
fore, conclude that the government successfully shouldered its
burden of proving that Cauble conducted or participated in the
conduct of the enterprise’s affairs through a pattern of racket-
eering activity.”
®.This disposes of Cauble’s challenge to his conviction under
§ 1962(c). This case is simply not like United States v. Nerone, 563
F.2d 836 (7th Cir.1977), cert. denied, 435 U.S. 951, 98 S.Ct. 1577, 55
L.Ed.2d 801 (1978), which Cauble relies on. In Nerone the court held
that the government failed to prove the nexus between a legitimate
corporation and gambling activity conducted on premises owned by
28a
4. The Conspiracy Count
Cauble was charged with conspiracy to conduct and parti-
ciapte in the conduct of Cauble Enterprises’ affairs through a
pattern of racketeering activity. He contends that his convic-
tion under § 1962(d) must be reversed because the government
failed to prove that he “agreed to join an enterprise by means of
committing two predicate acts.”
Our decisions establish that a § 1962(d) conviction requires
proof of the enterprise and racketeering elements plus the
defendant’s objective manifestation of intent to- participate,
either directly or indirectly, in the affairs of the enterprise.”
As we stated in Phillips, in order to prove a RICO conspiracy
the government must prove “the additional element of agree-
ment.” 664 F.2d at 1012.”
A reasonable jury might have concluded that Cauble agreed
to conduct Cauble Enterprises’ affairs through a pattern of
racketeering activity. It might have believed the direct testi-
mony of Hawkins and Washington that Cauble was involved in
the smuggling and, therefore, concluded that Cauble agreed
the corporation. It stated: “(The government] made no attempt to
show that the proceeds of the casino operation were invested in [the
corporation]. Nor did it endeavor to show that gambling revenues
were used by or in any way channelled into the corporation or that
persons were paid out of gambling revenues to perform services for
{the corporation].” 563 F.2d at 851. In this case a jury might have
concluded that proceeds of smuggling were deposited te Cauble
Enterprises’ bank account and used in conducting the partnership’s
day-to-day affairs.
®. United States v. Elliott, 571 F.2d 880, 903 (5th Cir.), cert.
denied, 439 U.S. 953, 99 S.Ct. 349, 58 L. Ed.2d 344 (1978); see Kopi-
tuk, 690 F.2d at 1323.
*. The agreement involved must include the vital element of agree-
ing to commit the predicate acts of racketeering. Martino, 648 F.2d
at 383.
29a
to commit or aid and abet the smuggling predicates.* It might
have believed the circumstantial evidence that Cauble used
Cauble Enterprises’ assets to loan money to the smugglers and
to finance their travel ard, therefore, that Cauble agreed to
commit or aid and abet the acts of travel. It might also have
believed the circumstantial evidence that Cauble was aware
that other assets were being used to arrange marijuana
smuggling deals, to provide a haven for the smugglers, and to
store and distribute marijuana. The evidence is sufficient to
support Cauble’s conviction on the conspiracy count.
5. The Investment Count
Cauble next contends that the evidence was insufficient to
convict on the § 1962(a) count. He contends that the govern-
ment failed to prove that he gained “income” from a pattern of
racketeering activity. He also maintains that the government
failed to prove that particular funds invested in the enterprise
were derived from a particular unlawful transaction in which
he was culpably involved.
Cauble argues that he derived no income because money
advanced or loaned to the smugglers and later repaid was not
“income.” We neei not decide the validity of this contention”
because a reasor .ble juror might have concluded that Cauble
received “income” based on the substantial cash deposits to
Cauble Enterprises’ special account during 1977 and 1978.
Cauble also argues that the government must do more to
support a § 1962(a) conviction than prove that the income was
%. There was contradictory testimony on this point from Cauble
and from James Holland. The decision which witnesses to believe
was, however, for the jury. See Elliott, 571 F.2d at 884.
%. The Supreme Court has agreed to consider our broad construc-
tion of the word “interest” in the RICO forfeiture provision, 18
U.S.C. § 1963(a)(1) (1976). United States v. Martino, 681 F.2d 952
(5th Cir.1982) (en banc), cert. granted sub nom. Russello v. United
States, ___ U.S. —__, 103 S.Ct. 721, 74 L.Ed.2d 948 (1983).
30a
derived from a pattern of racketeering activity. He contends
that RICO’s legislative history demonstrates that Congress
intended to require the government to “trace” illicitly-derived
funds from a particular unlawful act to the enterprise.
Cauble relies on the Justice Department’s observation on a
related bill that “tracing of funds known to be derived from
racketeering activities to their eventual investment in a busi-
ness enterprise [is required] in establishing a violation of sub-
section (a) of Section 1962.” He also relies on a law review
article by one of RICO’s primary sponsors stating “only one of
the three pi © > sitions in Title IX requires tracing of funds.”™
We do i:c* .mpart to the word “tracing” as used in these
statements the same precision as does Cauble. If the prosecu-
tion had demonstrated that Cauble made substantial, unex-
plained cash deposits into his personal account but not that the
money was ever used in any way related to Cauble Enter-
prises, it would have failed to meet its burden of “tracing.””
But the prosecution need prove only that illegally derived
funds flowed into the enterprise;” it need not follow a trail of
specific dollars from a paiticular criminal act.
The government presented evidence of large cash deposits
to Cauble Enterprises’ account and of marijuana smuggling in
which Cauble and Cauble Enteprises’ employees played a role.
7. Measures Relating to Organized Crime, 1969: Hearings Before
the Subcomm. on Criminal Laws and Procedure of the Senate
Judiciary Comm., 91st Cong., lst Sess. 387-88 (1969).
%. McClellan, The Organized Crime Act (S. 30) or its Critics:
Which Threatens Civil Liberties?, 46 Notre Dame Law. 55, 145
(1970). See 116 Cong.Rec. 18,941 (1970) (same; giving as example
“FBI[’s] trac{ing] money skimmed from Las Vegas casinos into Swiss
bank accounts”).
®. Cf. United States v. McNary, 620 F.2d 621 (7th Cir. 1980) (stat-
ute does not require showing of direct employment of illicit income).
7. See, e.g., Nerone, 563 F.2d at 851, quoted in supra note 62.
3la
The jury might reasonably have inferred that there was a
sufficient nexus between the money and the enterprise to
satisfy the “investment” requirement of § 1962(a).”
E. Jury Instructions
Cauble challenges several of the court’s instructions to the
jury. Because his lawyers lodged no objection to the charge
below, we review each of the allegedly defective instructions
only for plain error.~ This means that we will not reverse
unless the instruction is so clearly wrong that our failure to
notice it would result in a miscarriage of justice or would
seriously affect the integrity or public reputation of the judicial
proceeding.”
Cauble first claims that the trial judge erred in charging the
jury on the enterprise element. He contencis that the judge’s
instructions failed to make clear that the government was
required to prove beyond a reasonable doubt that Cauble En-
terprises was the RICO enterprise whose affairs were con-
ducted through a pattern of racketeering activity. This in-
struction, Cauble claims, amounted to a directed verdict of
guilt on the enterprise element.”
7. See United States v. Parness, 503 F.2d 430, 436 (2d Cir. 1974)
(given the nature of the enterprise involved, the government’s in-
ability to trace the proceeds of particular unlawful debt collections to
the enterprise the defendant acquired was “not surprising”), cert.
denied, 419 U.S. 1105, 95 S.Ct. 775, 42 L.Ed.2d 801 (1975).
™ Fed.R.Crim.P. 30, 52(a).
. United States v. Graves, 669 F.2d 964, 971 (5th Cir.1982);
United States v. Thevis, 665 F.2d 616, 645 (5th Cir.) (RICO case),
cert. denied, U.S. , 103 S.Ct. 57, 74 L.Ed.2d 61 (1982).
Patently not all prejudicial errors amount to plain error. See United
States v. Herzog, 632 F.2d 469, 472 (5th Cir. 1980); 6 L. Orfield, supra
note 28, at 448.
%. A directed verdict of guilt is always plain error. United States v.
Musgrave, 444 F.2d 755, 762 (5th Cir.1971).
he
32a
The trial! judge defined “enterprise” by reading the statuto-
ry definition to the jury.” He then stated:
The “enterprise” charged in this case in Counts 1, 2 and 3is
Cauble Enterprises. Cauble Enterprises is a limited part-
nership formed pursuant to the laws of Texas with Rex C.
Cauble as the sole general partner. Under the Texas Uni-
form Limited Partnership Act, as the general partner,
Rex C. Cauble has the mght to control and manage the
affairs of Cauble Enterprises and is liable for all debts and
obligations of Cauble Enterprises.
The judge then instructed the jury on the three substantive
RICO counts. He prefaced his charge on each count with the
admonition that “the Government must prove each of the
following essential elements beyond a reasonable doubt.” Each
charge included the enterprise element and in no charge did
the judge tell the jurors that Cauble Enterprises was the
RICO enterprise.”
In short, the judge’s instructions adequately conveyed to the
jury the requirement that they conclude beyond a reasonable
See supra note 13 & accompanying test.
* The relevant portion of the § 1962(a) charge stated:
Fourth: That the Defendant used or invested, directly or in-
directly, any part of such income, in acquisition of any interest
in, or the establishment or operation of the enterprise.
Fifth: That the enterprise engaged in, or its activities affected
interstate or foreign commerce. (emphasis added.)
The § 1962(c) charge stated in pertinent part:
Fourth: That through the commission of two or more connected
offenses the Defendant conducted or participated in the conduct
of the en‘*erprise.
Fifth: That the enterprise engaged in, or that its activities
affected interstate or foreign commerce. (emphasis added.)
The § 1962(d) charge stated:
First: That a conspiracy to conduct or participate directly or
indirectly in the conduct of the affairs of an enterprise engaged in
or affecting foreign or interstate commerce through a pattern of
racketeering activity, consisting of the commission of two or
more acts or racketeering activity, was willfully formed by two
33a
doubt that Cauble Enterprises was the RICO enterprise. The
judge told the jurors that the enterprise charged was Cauble
Enterprises; he never told them that the RICO enterprise was
Cauble Enterprises. The directive left the jury free to conclude
that the government failed to prove that Cauble Enterprises
was the RICO enterprise. Accordingly, it was not plainly
erroneous.
Cauble nevertheless argues that the trial judge’s instruction
on Count Three was wrong because it impermissibly combined
the RICO enterprise and Cauble Enterprises.” But this part of
the instruction was merely a summary of the indictment and
not a direction to the jury. As our previous discussion of the
charge demonstrates, the trial judge made a distinction be-
tween Cauble Enterprises and the RICO enterprise in in-
structing the jury about the elements of the offense. There was
no plain error here.
Cauble next faults the district judge’s failure to define the
word “income” in the § 1962(a) count instructions. He argues
that the failure was particularly prejudicial because “fund
sources were a critical issue at trial.”
or more persons and was existing at the time alleged in the
indictment.
Second: That the Defendant, with knowledge of the conspiracy,
willfully became a member of the conspiracy by agreeing to
participate directly or indirectly in the conduct of the affairs of
the enterprise. . . . (emphasis added. )
7 The judge stated that the indictment charged that:
Rex C. Cauble, individually and doing business as Cauble Enter-
prises, was employed by and was associated with an “enter-
prise” as defined by Title 18, United States Code, Section
1961(4). It is further alleged that the Defendant did unlawfully,
setter | and willfully conduct and participate, directly and
indirectly, in the conduct of the affairs of Cauble En ses,
through a pattern of racketeering activity. Count 3 her
c s that the alleged enterprise did engage in and its activi-
- affect interstate and foreign commerce. (emphasis add-
34a
This ingenious transition from sources of income to existence
of income points up the weakness of Cauble’s argument. The
defense did not dispute at trial and does not dispute now that
Cauble Enterprises’ Special Account received substantial de-
posits of cash. It disputed whether the funds came from drug
smuggling or cattle sales. The judge’s failure to define this
word of common usage and meaning did not fall to the level of
plain error.”
Cauble next challenges the trial judge’s charge on the RICO
predicates. He suggests that the judge’s instruction that the ©
jury could consider “any act” in violation of the Travel Act as an
instance of racketeering activity impermissibly amended the
indictment by allowing the jury to consider the Travel Act
violations alleged in Counts Four, Nine, and Ten as RICO
predicates even though they were not charged as such.”
The trial judge should have made it clear to the jurors that
only the predicate acts alleged in the RICO counts could sup-
port a RICO conviction.” His failure to do so was not plain
error, however, in view of his instruction to the jury that: “A
separate crime or offense is charged against the Defendant in
each count of the Indictment. Each offense and the evidence
pertaining to it should be considered separately.” We find no
™. United States v. Anderton, 629 F.2d 1044, 1049 (5th Cir. 1980);
United States v. Crockett, 506 F.2d 759, 762 (5th Cir.), cert. denied,
423 U.S. 824, 96 S.Ct. 37, 46 L.Ed.2d 40 (1975).
® The instruction read:
An act in violation of either of these statutes [18 U.S.C. § 1952 or
21 U.S.C. § 952] on one occasion would constitute “an act of
racketeering activity” separate and apart from a later act in
violation of the same statute.
” Contrary to the government’s suggestion, merely drawing the
jury’s attention to the predicate offenses alleged during a summary of
the indictment does not suffice to limit the jury’s consideration on the
RICO counts to the predicates. Nor does the district judge’s instruc-
tion that “{iJn considering racketeering acts . . . you are limited to
those acts charged in the /ndictment... .” (emphasis added).
35a
miscarriage of justice in the trial judge’s failure to make ex-
plicit what was implicit."
Cauble finally assaults the judge’s failure to instruct the jury
that its verdict on the RICO predicates had to be unanimous.
The judge stated that the government had to prove two acts of
racketeering activity beyond a reasonable doubt, and that the
jury’s verdict had to be unanimous. It might have been better
practice to reinforce this by telling the jury that the jurors
must be unanimous on each predicate, but had trial counsel
made such a request the trial judge would have been able to
ecnsider it and likely would have granted it. When counsel sits
idly by,.the trial judge is not given the opportunity to reassess
the charge. In the absence of objection, it was not necessary for
the judge to elaborate this phase of the charge because he gave
an express instruction that each juror had to agree to the
verdict. No miscarriage of justice resulted from this
omission.”
*!. Our task in evaluating jury instructions is to assess the instruc-
tions in the light of the entire trial to determine whether the charge
adequately presented the issues to the jury. Graves, 669 F.2d at 970.
Reversible error—much less piain error—does not occur so long as
the charge viewed as a whole accurately frames the legal questions.
See United States v. Taylor, 680 F.2d 378 (5th Cir.1982).
* The judge also told the jury, in instructing on the Travel Act
violations charged in Counts Four, Nine, and Ten that if it found
beyond a reasonable doubt that “one method or mode of violating the
law occurred, that is sufficient [to convict] so long as you agree
unanimously on the particular mode or method involved.” (emphasis
added).
®. See United States v. Raffone, 693 F.2d 1343, 1347-48 (11th
Cir. 1982) (no plain error in failing to instruct jury that it had to agree
unanimously on identity of conspirators); id. at 1350 (Anderson, J.,
concurring) (charge read as a whole fairly instructed jury it must be
unanimous).
36a
II. THE RICO FORFEITURE
A. Background
American antipathy for the English common law’s “forfeit-
ure of estate,” which disinherited those unfortunate enough to
be kin to felons, dates from the founding of the nation.“ Crimi-
nal forfeiture has, therefore, been largely unknown in the
United States.”
Congress added the forfeiture provisions” to RICO in order
4 18 U.S.C. § 3563 (1976) states: “No conviction or judgm- it shall
work corruption of blood or any forfeiture of estate.” This provision
was enacted as the Act of Apr. 30, 1790, ch. 9, § 24, 1 Stat. 117. See
also U.S. Const. art. III, § 3, cl. 2. Forfeiture of estate meant that all
of the convicted felon’s chattels and goods went to the government
and all of his land to his lord. See Weiner, Crime Must Not Pay: RICO
Forfeiture in Perspective, 1 N.Ill.U.L.Rev. 225, 229-30 (1981).
* The lifetime estates of Confederate sympathizers were, how-
ever, forfeited during the Civil War. See Miller v. United States, 78
U.S. 268, 20 L.Ed. 135 (1870); Bigelow v. Forrest, 76 U.S. 339, 19
L.Ed. 696 (1869).
(a) Whoever violates any provision of section 1962 of this chap-
ter shall be fined not more than $25,000 or imprisoned not more than
twenty years, or both, and shall forfeit to the United States (1) any
interest he has acquired or maintained in violation of section 1962,
and (2) any interest in, security of, claim against, or property or
contractual right of any kind affording a source of influence over, any
enterprise which he has established, operated, controlled, con-
ducted, or participated in the conduct of, in violation of section 1962.
(ec) Upon conviction of a person under this section, the court shall
authorize the Attorney General to seize all property or other interest
declared forfeited under this section upon such terms and conditions
as the court shall deem proper. Ifa property right or other interest is
not exercisable or transferable for value by the United States, it shall
expire, and shall not revert to the convicted person. All provisions of
law relating to the disposition of property, or the proceeds from the
sale thereof, or the remission or mitigation of forfeitures for violation
37a
to attack the sources of economic power of organized crime” in
addition to removing from power and imprisoning those in-
dividuals who violate the statute. It viewed the sanctions and
remedies against organized crime then available to the govern-
ment as “unnecessarily limited in scope and impact.’”™ As
enacted the forfeiture provisions are meant to reach “the illgot-
ten gains of criminals where they enter or operate an organiza-
tion through a pattern of racketeering activity.””
B. Claims Of Error
After finding Cauble guilty on the RICO counts, the jury
responded to special interrogatories regarding the forfeiture
of the customs laws, and the compromise of claims and the award of
compensation to informers in respect of such forfeitures shall apply to
forfeitures incurred, or alleged to have been incurred, under the
provisions of this section, insofar as applicable and not inconsistent
with the provisions hereof. Such duties as are imposed upon the
collector of customs or any other person with respect to the disposi-
tion of property under the customs laws shal! be performed under
this chapter by the Attorney General. The United States shall dis-
pose of all such property as soon as commercially feasible, making
due provision for the rights of innocent persons.
18 U.S.C. § 1963 (1976).
7. See S.Rep. No. 617, 91st Cong., lst Sess. 79 (1969).
%. Statement of Findings and Purpose to Title IX, reprinted at 18
U.S.C. following § 1961 (1976); S.Rep. No. 617, 91st Cong., 1st Sess.
78-79 (1969).
®. 116 Cong. Rec. 592 (1970) (remarks of Sen. McClellan). See also
Comment, RICO Forfeitures and the Rights of Innocent Third Par-
ties, 18 Cal. W.L. Rev. 345, 345 (1982) (“divorce the convicted defend-
ant’s corrupting influence from the corrupted enterprise”) [hereinaf-
ter cited as Rights of Innocent Parties).
38a
of his interest in Cauble Enterprises.” Cauble now launches a
barrage of attacks against the validity of the forfeiture.
1. Due Process
Cauble first contends that the forfeiture violates the due
process clause because it affects property rights of the limited
partners of Cauble Enterprises, neither of whom were given
notice of the forfeiture and an opportunity to be heard. He
claims that the government may not partition the undivided
partnership interest and remove the general partner without a
finding against all owners that partnership property was used
or acquired in violation of law.”
” The interrogatories and the jury’s answers to them read:
Interrogatory No. 1
Do you find from [sic] a reasonable doubt that Rex C. Cauble’s
interest in Cauble Enterprises was maintained in violation of 18
U.S.C., Section 1962?
Answer: We do.
Interrogatory No. 2
Do you find beyond a reasonable doubt the’ Rex C. Cauble’s
interest in Cauble Enterprises afforded a suurce of influence
over the enterprise which he has operated, controlled, con-
ducted or participated in the conduct of, in violation of Title 18,
Section 1962?
Answer: We do.
Interrogatory No. 3
It is indisputed that Rex C. Cauble owns approximately one-
third of the Limited Partnership known as Cauble Enterprises.
Do you find beyond a reasonable doubt that the Defendant, Rex
C. Cauble, has made his interest in Cauble Enterprises,
ther with all of his contractual rights and offices therein,
subject to forfeiture as a result of conviction of one or more of the
offenses charged in Counts 1, 2 and 3 of the Indictment?
Answer: We do.
”. The government claims that Cauble lacks standing to raise this
issue. In view of our disposition of this claim we do not consider that
argument.
Neither of the limited partners has sought to be heard in this
case. Their remedy, as we made explicit in United States v.
L’Hoste, 609 F.2d 796 (5th Cir.), cert. denied, 449 U.S. 833, 101
S.Ct. 104, 66 L.Ed.2d 39 (1980), is to petition the Attorney
General for remission or mitigation of the forfeiture. As we
stated in that case, “Congress plainly addressed the possible
hardship that forfeiture could cause to those innocent parties
holding an interest in forfeited property and gave responsibil-
ity to the United States, not the district court, to alleviate the
hardship.” 609 F.2d at 812.” This directive applies with equal
force to the court of appeals.
Cauble asks that we distinguish L’Hoste on the grounds that
it involved freely transferable corporate shares rather than
undivided partnership interests and that it involved inchoate
rather than vested property rights. These distinctions lack
substance. The former would permit a defendant to avoid
RICO forfeiture by forming a partnership, but not a corpora-
tion, with an innocent party; the latter would make the validity
of federal RICO forfeitures subject to the nuances of state
property law. Therefore, L’Hoste squarely controls this claim
of error.
2. Conflict Of Interest
Cauble next contends that, because Cauble Enterprises’
property interests were affected by the trial and consequent
forfeiture, it was entitled to separate representation. He
claims that trial counsel made an insufficient effort to demon-
strate that there was no connection between the drug-
smuggling conspiracy and Cauble Enterprises because he was
%. See Rights of Innocent Parties, supra note 89, at 355-58; see also
United States v. Mandel, 505 F.Supp. 189 (D.Md.1981).
Judges Rubin and Tate adhere to the position stated in Judge Tate’s
dissent from the denial of rehearing en banc in L’Hoste. 615 F.2d 383
(5th Cir.) (Tate, J., dissenting), cert. denied, 449 U.S. 833, 101 S.Ct.
104, 66 L.Ed.2d 39 (1980).
sad
,
4a
more concerned with proving Cauble’s lack-of-knowledge de-
fense.
If Caubie Enterprises had been charged as a RICO defend-
ant instead of or in addition to being charged as the enterprise,
it would have been entitled to separate counsel.” But Cauble
Enterprises was charged with no crime and suffers no punish-
ment as a result of Cauble’s conviction.
The forfeiture in this case is of Rex C. Cauble’s property
interest in Cauble Enterprises. It is in personam, imposed
directly on a guilty person, rather than in rem, imposed on
“guilty” property. Therefore, Cauble Enterprises had no stake
in the proceeding and was not entitled to separate counsel.
3. Defects In The Indictment
Cauble next claims that the notice of forfeiture fails to advise
him of the nature, cause, and extent of the forfeiture sought.
These claims focus on the allegedly confusing character of the
notice, were not presented to the district court, and do not
assert that the indictment failed to charge an offense. There-
fore, they are waived.“ Even if not waived, however, these
claims would not support a reversal. The purpose of the notice
of forfeiture in the indictment is to inform the defendant that
the government seeks forfeiture as a remedy.” Barebones
pleading suffices so long as it puts the defendant on notice that
the government seeks forfeiture and identifies the assets sub-
ject to forfeiture with sufficient specificity to permit the de-
fendant to marshal evidence in their defense.” This the indict-
ment did by noticing that the government sought to forfeit “the
*. See, e.g., Thevis, 665 F.2d at 644-46; cf. Wood v. Georgia, 450
U.S. 261, 101 S.Ct. 1097, 67 L.Ed.2d 220 (1981) (conflict possible
when employer’s lawyer represented employees).
* See Lerma, 657 F.2d at 789-90 (and cases cited therein).
*®. See Fed.R.Crim.P. 7(c)(2).
*. United States v. Boffa, 688 F.2d 919, 939 (3d Cir.1982) (“by
alleging that all of the appellants’ interest in the enumerated corpora-
tions was subject to forfeiture, the indictment alleged the ‘extent of
4la
interests [sic] of Rex C. Cauble in Cauble Enterprises” and by
listing thirteen assets included in Cauble Enterprises’ hold-
ings.
4. Jury Instructions And Special Verdict
Cauble challenges the judge’s charge to the jury and the
adequacy of the special verdict form the jury completed in
ordering the forfeiture. He claims that the instructions failed
to inform the jury of its role in determining the scope of the
defendant’s interest in the enterprise, in effect directing a
verdict on the extent of the forfeiture.
The judge explained the forfeiture allegation in the indict-
ment to the jury, stated that the government sought to forfeit
only Cauble’s one-third interest in Cauble Enterprises, and
re-summarized the allegations of all three RICO counts. He
then read the forfeiture provision, § 1963(a), to the jury and
added” “[(I]f you find beyond a reasonable doubt that the De-
fendant is guilty of any of the offenses charged in Counts 1, 2 or
3 of the Indictment, it will be your duty to determine whether
the government has proven beyond a reasonable doubt that
Rex C. Cauble’s interest in Cauble Enterprises is subject to
forfeiture to the United States.” The judge also gave the jury
the special forfeiture verdict.
Before considering Cauble’s claims of error, we pause to
explain briefly how some of the complaints he raises can be
avoided in future RICO trials. The substantive jury charge in
the interest or property subject to forfeiture’” required by Rule
7(¢)(2)), cert. denied, __. U.S. ___., 103 S.Ct. 1272, 75 L.Ed.2d 494
(1983); United States v. Grammatikos, 633 F.2d 1013, 1024 (2d
Cir. 1980) (same); see United States v. Peacock, 654 F.2d 339, 251 (5th
Cir. 1981) modified, 686 F.2d 356 (5th Cir. 1982) (per curiam), petition
for cert. filed, __. U.S. —, 103 S.Ct. __, 75 L.Ed.2d —_., 51
U.S.L.W. 3512 (U.S. Nov. 23, 1982) (No. 82-1069).
". See supra note 90. The special verdict was essentially identical
to the one we approved in L’Hoste, 609 F.2d at 813.
42a
these trials is ordinarily extremely long” and requires the
jurors to pay close attention to a number of definitions and
elements. Therefore, it is not surprising that the instructions
on forfeiture, which ordinarily come at the end of the substan-
tive charge, are often brief—perhaps excessively so.
To ease the jurors’ task in determining guilt or innocence,
the forfeiture issue should be withheld from them until after
they have returned a general verdict. At that time the trial
judge can instruct the jurors fully about forfeiture and submit
the special verdict to them. Such a bifurcated trial—using, of
course, only one jury—is not only convenient for the judge and
fairer to the defendant. It also prevents the potential penalty
of forfeiture from influencing the jurors’ deliberations about
guilt or innocence.
That practice was not followed here, but Cauble made no
objection to the judge’s method, instructions, or special verdict
form. We, therefore, review only for plain error.
Cauble argues that the instructions failed to inform the jury
that only interests “acquired or maintained” in violation of
§ 1962 or “affording a source of influence over the enterprise”
are subject to forfeiture. He claims that the instructions and
verdict form made it appear that a RICO conviction carried a
penalty of automatic forfeiture of his entire interest in Cauble
Enterprises. This claim is belied, however, by the fact that the
judge read § 1963(a) to the jury and, therefore, used the pre-
cise words Cauble emphasizes in defining the interest subject
to forfeiture. Furthermore, the special verdict specifically
asked the jury whether Cauble’s interest in Cauble Enter-
prises afforded him a source of influence over the enterprise.
Although the judge might have expanded the entire forfeiture
charge and emphasized this point in his instructions, the
* The charge in this case was the longest the trial judge had ever
given. It took him approximately one and one-half hours to deliver
and covers 55 pages in the trial transcript.
43a
charge he gave, read together with the special verdict form,
accurately presented the relevant legal issue to the jury.
Cauble next argues that the jury was not informed that it
had to find a nexus between the racketeering activity and the
property claimed. We agree that proper jury instructions
should “include language that suggests that a jury may find an
interest or contrac‘ual right forfeitable if there is evidence
linking the defendan’'s conduct to the property interest and
the government has proved such a nexus beyond a reasonable
doubt.”” Nevertheless, the omission of this charge did not
amount to plain error. The substantive RICO instructions
required the government to prove that Cauble conducted the
enterprise’s affairs through a pattern of racketeering activity.
Therefore, the jury had already found beyond a reasonable
doubt a link between Cauble’s conduct, the enterprise, and the
racketeering activity.
Furthermore, the second question in the special verdict
form required the | ury again to find beyond a reasonable doubt
that Cauble “conducted” the enterprise through a pattern of
racketeering activity. The jury answered the question
affirmatively and, therefore, found the nexus required. The
omission of the nexus instruction from the forfeiture charge
was not plain error.
Cauble next claims that the charge made it impossible for the
jurors to render anything but a blanket verdict of forfeiture
because they were not furnished a list of the Cauble Enter-
prises’ assets so that they might forfeit only those that were
the basis for Cauble’s control and were not asked to determine
what “manner of forfeiture” would deprive him of his influence
over the enterprise."” Cauble emphasizes the minor role of
some of Cauble Enterprises’ assets and the absence of evidence
* Weiner, supra note 84, at 252 n. 105 (emphasis in original).
® The government correctly points out that Cauble’s claim that
Cauble Enterprises does not own some of the assets listed in the
Notice of Holings Subject to Forfeiture is made for the first time in
dda
that some assets were involved at all. This argument, how-
ever, is based on an incorrect view of the operation of RICO’s
forfeiture provisions.
The RICO forfeiture is in personam: a punishment imposed
on a guilty defendant. It deprives that defendant of all of the
assets that allow him to maintain an interest in a RICO entep-
rise, regardless whether those assets are themselves “tainted”
by use in connection with the racketeering activity. Thus, in
United States v. Hess, 691 F.2d 188, 190-91 (4th Cir. 1982), the
court held that the jury may not find that less than the full
amount of the defendant’s interest in an enterprise is subject to
forfeiture because § 1963 is mandatory. The court concluded
that the only issues for the jury are whether the defendant
violated RICO and what interest the defendant held in the
enterprise."
In United States v. Huber, 603 F.2d 387, 396 (2d Cir. 1979),
cert. denied, 445 U.S. 927, 100 S.Ct. 1312, 638 L.Ed.2d 758
(1980), the jury was “required to specify which corporations
were part of the enterprise and the percentage of [the defend-
ant’s] interest in each.” The indictment in that case, however,
charged an enterprise-in-fact composed of a number of
corporations. Therefore, it was necessary for the jury to decide
which corporations were, in fact, part of the enterprise.'”
this court. At trial Cauble’s attorney asked him: “Every asset that
you have, and that [your wife] has, and that [your son] has, is an asset
of Cauble Enterprises?” Cauble replied: “Yes, sir.” He testified that
Cauble Enterprises even owned the suit he was wearing.
“* Here that Caubie owned approximately a one-third share of
Cauble Enterprises was undisputed.
wt Indeed, the Huber court expressly stated: “Given the nature of
the enterprise alleged, it was obviously necessary for the jury to say
which entities were part of it. . . in order to determine the ‘extent of
the. . . property subject to forfeiture.’ ” 603 F.2d at 396 (emphasis
added).
45a
In this case, however, the enterprise charged was a single
pre-existing legal entity. Once Cauble was convicted his in-
terest in that entity was subject to forfeiture in accordance
with § 1963(a). The jury was not required to select only certain
of that entity’s assets for forfeiture, just as the jury in Huber
was not required to determine which assets or divisions of the
several corporations were subject to forfeiture.'”
5. Sufficiency Of The Evidence
Cauble’s challenge to the sufficiency of the evidence support-
ing forfeiture reargues his claim that there is no culpable
connection between Cauble’s conduct and the forfeited proper-
ty. For the reasons in our discussion of the sufficiency of the
evidence to support the substantive RICO convictions, we
conclude that a reasonable juror might have been persuaded of
such a nexus beyond a reasonable doubt.
Cauble further argues that, even if the evidence supports a
connection between bank accounts, assets, and entities, this
proof does not justify forfeiture of Cauble’s entire undivided
interest in Cauble Enterprises. We reiterate that property
forfeited under RICO need not be “guilty.” RICO forfeiture is
aimed at divorcing guilty persors from the enterprises they
have corrupted. A reasonable juror might have been per-
suaded that this task would be accomplished by forfeiting
Cauble’s share of Cauble Enterprises.
3. In Grammatikos, the government sought to forfeit fourteen
pieces of property. The judge submitted a list of nine items to the
jury, which forfeited two under the provisions of 21 U.S.C.
§ 848(a)(2) (1976). 633 F.2d at 1024. By contrast in this case the
government sought forfeiture of only one “piece” of property: Cau-
ble’s share of Cauble Enterprises. The jury was asked whether that
“item” was subject to forfeiture and concluded that it was. See United
States v. Tunnell, 667 F.2d 1182, 1188 (Sth Cir.1982) (jury not
required to determine what part of motel used in prostitution enter-
prise and what part used legally).
46a
6. Character Of Cauble’s Interest
Cauble finally argues that, because his general partnership
interest in Cauble Enterprises is “not exercisable or transfer-
able for value by the United States,”™ it is subject only to
expiration and not to forfeiture. He argues that a forfeiture
order installing the United States as general partner of Cauble
Enterprises is impermissible under both the partnership arti-
cles and Texas law.
The language in § 1962(c) on which Cauble relies has been
construed only once.” In that case we noted that the defend-
ant’s offices in various unions and employee benefit plans could
not meaningfully be transferred to the United States and
were, therefore, subject only to termination.'”
Every court that has considered the broader question what
“interests” are subject to forfeiture has concluded that
§ 1963(a) requires forfeiture of interests in the nature of own-
ership of or control over an enterprise.'” Cauble’s general
partnership interest in Cauble Enterprises is a source both of
18 U.S.C. § 1963(c) (1976).
5. [/nited States v. Rubin, 559 F.2d 975 (5th Cir.1977), vacated,
439 U.S. 810, 99 S.Ct. 67, 58 L.Ed.2d 102 (1978), affd in relevant
part, 591 F.2d 278 (5th Cir.), cert. denied, 444 U.S. 864, 100 S.Ct.
133, 62 L.Ed.2d 87 (1979).
106. 559 F.2d at 992 & n. 18.
7. See Martino, 681 F.2d at 957 n. 18 (interests such as stock
holdings or real property ownership and interests affording influence
on or control over enterprise); United States v. Thevis, 474 F.Supp.
134, 143 (N.D.Ga.1979) (assuming forfeitability of “capital interest in
a partnership”), aff'd, 665 F.2d 616 (5th Cir.), cert. denied, ___ U.S.
——., 103 S.Ct. 57, 74 L.Ed.2d 61 (1982). See generally Annot., 61
A.L.R.Fed. 879 (1983).
47a
ownership and control. This interest is a property interest,
valuable and heritable. It is not merely a “position.”"”
The forfeiture provision of RICO is designed to prevent a
convicted defendant from being replaced by the enterprise or
from exercising control over the enterprise’s affairs in
absentia.” In McNary, the court upheld forfeiture of the
defendant’s partnership interest in a family-owned travel serv-
ice. 620 F.2d at 622, 628-29. In L’Hoste, we upheld forfeiture of
astockholder’s interest in a corporation. 609 F.2d at 809, 812."
There is no reason to make the effect of a forfeiture depend on
the form of the enterprise’s organization. Accordingly, we hold
that Cauble’s general partnership interest in Cauble Enter-
prises is forfeitable to the United States.
III. THE TRAVEL ACT COUNTS
Counts Four, Nine, and Ten charge Cauble with aiding and
abetting or causing acts of travel in violation of § 1952. Count
Four alleges as a violation Foster’s flight from Denton to
Thomasville on March 3, 1977. Count Ten alleges a flight from
Denton to Bogata, Colombia on December 12, 1976.
In Rubin, we stated that Congress’ goal of eradicating the
economic base of organized criminal activity translated readily into
eliminating “ownership interests” and “self-perpetuating economic
power.” 559 F.2d at 922.
108. See 116 Cong. Rec. 591 (1970) (remarks of Sen. McClellan) (“ex-
perience has shown that it is insufficient to merely remove and
imprison individual mob members”); id. at 607 (remarks of Sen.
Bryd) (legislation removes leaders of organized crime from positions
of ownership, prevents them and their associates from regaining
control, and visits heavy economic sanctions).
0. See also, e.g., Huber, 603 F.2d at 396 (shares of various corpora-
tions). The only commentator who has discussed this point states:
“{A] continuing proprietary right in the nature of a partnership or
stock ownership . . . would obviously be subject to forfeiture under
section 1963(a)(2).” Weiner, supra note 84, at 245 (footnote omitted).
4a
Cauble claims that Count Four is multiplicitous of the RICO
predicate charging a Travel Act violation based on Foster’s
return flight from Thomasville to Denton. This contention is
arguably waived for the reasons we have discussed above."
The contention, if not waived, is meritless. First, each act of
interstate travel constitutes a separately punishable offense. '*
Second, even if this indictment in fact charged the same trip as
a RICO predicate and a substantive offense, an indictment
charging RICO predicates as separate offenses is not
multiplicitous.'”
Cauble next contends that the indictment failed to charge an
offense because it did not allege the conduct or omission con-
stituting the violation of the law. The essential elements of a
Travel Act violation are travel in interstate commerce, specific
intent to promote, manage, establish, or carry on “unlawful
activity,” or to distribute the proceeds of unlawful activity, and
knowing and willful commission of an act in furtherance of that
intent subsequent to the act of travel. Because the statute fully
and unambiguously sets out the essential elements of the
'. See supra text following note 30.
2 B.g., United States vy. Alsobrook, 620 F.2d 139, 142 (6th Cir.),
cert. denied, 449 U.S. 843, 101 S.Ct. 124, 66 L.Ed.2d 51 (1980).
Cauble argues in brief that “A/sobrook stands for the proposition that
each round trip under the Travel! Act is a separate unit of prosecu-
tion. Yet that court stated: “the grand jury could have indicted
Alsobrook in separate counts for each of his trips to Michigan.” 620
F.2d at 142 (emphasis added). This despite the fact that the return
trips charged were stricken from the indictment. /d. n.3.
18. Tn Peacock, we held that double jeopardy is not offended by the
imposition of consecutive sentences on a RICO count and a mail fraud
count charged both as a separate crime and a RICO predicate. 654
F.2d at 348-49. Implicit in that holding is the conclusion that the
counts did not charge the same crime. See United States v. Boylan,
620 F.2d 359, 360-61 (2d Cir.), cert. denied, 449 U.S. 833, 101 S.Ct.
103, 66 L.Ed.2d 38 (1980).
49a
offense, indictments drafted substantially in its language are
sufficient. '"
Cauble finally claims that the evidence is insufficient to
support his conviction on these counts. The district judge
limited the jury’s consideration to aiding and abetting, for the
evidence demonstrated that Cauble did not travel on any of
these occasions.
Cauble argues that his conviction on Count Four cannot
stand because there was no evidence he knew Foster was
traveling to distribute marijuana proceeds or was involved in
marijuana smuggling in 1977. A reasonable jury might, how-
ever, have believed the testimony of William McKesson that
Foster told him or implied to him that Cauble knew about the
smuggling activities. It could also have believed from the other
evidence detailed above’ that Cauble was associated with and
participating in the venture and, by paying for tickets, loaning
money, and allowing use of the airplane, was acting to make it
succeed. Therefore, the evidence was sufficient to convict on
Count Four.
Cauble claims that the evidence was insufficient to convict
on Count Nine because he merely furnished the airplane to
Foster without knowledge that it would be used for criminal
purposes.'” He suggests that his testimony that he made re-
peated phone calls inquiring why Foster had not returned
proves that he did not know of the activity.
14. See generally United States v. Ramos, 666 F.2d 469, 474 (11th
Cir.1982). For cases holding that the Travel Act sets out the ele-
ments of the offense with sufficient clarity to permit indictments
framed in the statutory language, see Spinelli v. United States, 382
F.2d 871, 888 (8th Cir.1967) (en banc), rev’d on other grounds, 393
U.S. 410, 89 S.Ct. 584, 21 L.Ed.2d 637 (1969); Turf Center, Inc. v.
United States, 325 F.2d 793, 796 (9th Cir. 1963).
5. See supra notes 35-38 & accompanying text.
6 One cannot be convicted of aiding and abetting without knowl-
edge of the criminal venture. United States v. Williams, 569 F.2d 823
(5th Cir.1978).
50a
The jury, however, apparently chose not to believe Cauble’s
testimony.'” It instead seems to have believed Pilot Crown-
ver’s testimony that Cauble told him to “hang tight” for six
days. A reasonable jury might have concluded from the evi-
dence that Cauble knew the purpose of the trip and was guilty
as an aider and abettor.
Cauble argues that his conviction on Count Ten must be
reversed because Cauble Enterprises’ mere payment for a
ticket, for which it was later allegedly reimbursed, is in-
sufficient to “cause” an act of travel absent evidence of Cau-
ble’s knowledge of or participation in a marijuana smuggling
scheme. The evidence supporting this conviction is Hawkins’
testimony that Foster told him that he was going to Colombia
to set up a gig, Cauble Enterprises’ payment for the ticket, and
its loan of $3,500 to Foster on December 10, 1976. Cauble
claimed that the loan was for a vacation and that the price of the
ticket was repaid.'’ Although the question is a close one, we
conclude that a reasonable juror might infer from this evidence
that Cauble knew the purpose of the trip.
IV. THE BANK MISAPPLICATION COUNTS
Cauble challenges the convictions under § 656 on the ground
that the indictment fails to state an offense and the evidence is
insufficient to support a conviction. Each count is predicated
on a bank loan made to Charles Foster at Cauble’s request.
Count Five charges that Cauble willfully misapplied $37,706
of Western State Bank’s funds on March 13, 1978. Count Six
charges that Cauble willfully misapplied $10,000 of South Main
Bank’s funds on March 31, 1978. Count Seven charges that
"7. No calls to Las Vegas appear on Cauble’s telephone bill during
this period. The Cauble Enterprises log of incoming and outgoing
calls was missing. See supra note 46 & accompanying text.
48 Cauble claims in brief that the evidence of reimbursement is
“undisputed.” The testimony was: “Q: You paid for the ticket for him?
A. He paid it back.” The jury was not required to believe this
“undisputed” evidence.
5la
Cauble willfully misapplied $50,000 of Western State Bank’s
funds on May 2, 1978. Count Eight charges that Cauble willful-
ly misapplied $50,000 of South Main Bank’s funds on May 30,
1978. Each loan was ultimately repaid in full; Cauble personal-
ly guaranteed the $37,000 loan and the $50,000 South Main
loan.
Cauble argues that the indictment fails to charge a crime
because it does not allege what acts constituted the “willful
misapplication” subjecting him to criminal liability. The essen-
tial elements of a violation of § 656 are that the accused was a
bank officer, the bank was connected in some capacity with a
national bank, the accused willfully misapplied bank funds, and
the accused acted with intent to injure or defraud the bank.'”
We have long held that an indictment framed in the statutory
language charges on offense under § 656 and that the term
“willful misapplication” is not so vague as to require
supplementation by further averment. This claim of error is,
therefore, without merit.
Cauble next claims that the evidence was insufficient to
support his convictions. He contends first that consent by the
bank to a loan is a defense to the charge of willful misapplica-
tion. Therefore, he urges, the board of directors’ approval of
the loan charged in Count Seven and the loan committee’s
9. [Jnited States v. Welliver, 601 F.2d 203, 207 (5th Cir.1979).
120. United States v. Broome, 628 F.2d 403, 405 (5th Cir. 1980) (per
curiam); Weiliver, 601 F.2d at 207-08; United States v. Davis, 592
F.2d 1325 (5th Cir.), cert. denied, 442 U.S. 946, 99 S.Ct. 2894, 61
L.Ed.2d 318 (1979); United States v. Manin, 517 F.2d 259, 267 (5th
Cir. 1975); cert. denied, 423 U.S. 1087, 96 S.Ct. 878, 47 L.Ed.2d 97
(1976); United States v. Bearden, 423 F.2d 805, 810-11 (5th Cir.),
cert. denied, 400 U.S. 836, 91 S.Ct. 73, 27 L.Ed.2d 68 (1970). Other
circuits are in accord. See United States v. Duncan, 598 F.2d 839 (4th
Cir.), cert. denied, 444 U.S. 871, 100 S.Ct. 148, 62 L. Ed.2d 96 (1979);
United States v. Fortunato, 402 F.2d 79 (2d Cir. 1968), cert. denied,
394 U.S. 933, 89 S.Ct. 1205, 22 L.Ed.2d 463 (1969).
52a
approval of the loan charged in Count Eight compels reversal
of these convictions.
Although some cases state that the bank’s consent to a loan is
a complete defense to a willful misapplication charge," it is not
clear that consent alone is an absolute bar. Thus, in Mulloney
v. United States, 79 F.2d 566, 583 (1st Cir. 1935), cert. denied,
296 U.S. 658, 56 S.Ct. 383, 80 L.Ed. 468 (1936), the court said:
“It is, no doubt, true that consent by a bank toa loan would be a
defense to the crime of willful misapplication, since there could
be no conversion of funds if there was a valid consent by the
bank or its board of directors.” The court found no valid assent,
however, because a disinterested majority of the board had
never approved the transaction.
However, in a number of other cases courts have held that
Knowledge,” ratification,'” and consent™ are not per se de-
fenses to the charge. Instead these are evidentiary matters
that may be considered as part of the defense that there was
'2). Cauble relies on United States v. Britton, 108 U.S. 193, 2S.Ct.
526, 27 L.Ed. 701 (1883) for the proposition that the bank’s consent is
a defense. That case involved the question whether an indictment
failing to allege that the board of directors did not consent charged a
crime under the predecessor to § 656. There is language in Britton
that may be construed as recognizing a consent defense. See id. at
197, 2 S.Ct. at 529, 27 L.Ed. at 702; United States v. Sorensen, 330
F.Supp. 642, 645-46 (D. Mont.1971).
1 Stout v. United States, 227 F. 799, 802-03 (8th Cir.1915), cert.
denied, 241 U.S. 664, 36 S.Ct. 549, 60 L.Ed. i227 (1916); Keliher v.
United States, 193 F. 8, 15 (1st Cir.1912).
‘3. Simpson v. United States, 229 F. 940, 945 (9th Cir.), cert.
denied, 241 U.S. 668, 36 S.Ct. 552, 60 L.Ed. 1229 (1916).
'%* United States v. Morse, 161 F. 429, 435 (C.C. S.D.N. Y.1908)
(“authority” to commit a crime impossible), aff'd per curiam, 174 F.
539 (2d Cir.), cert. denied, 215 U.S. 605, 30 S.Ct. 406, 54 L.Ed. 346
(1909); Rieger v. United States, 107 F. 916, 925 (8th Cir.), cert.
denied, 181 U.S. 617, 21 S.Ct. 923, 45 L.Ed. 1080 (1901).
sp ail
53a
either no willful misapplication or no intent to injure the bank.
As the court stated in United States v. Breese, 173 F. 402, 410
(C.C.W.D.N.C. 1909), affd 203 F. 824 (4th Cir. 1913), “The
most formal vote of the board of directors could not authorize
the embezzlement, abstraction, or willful misapplication of the
funds of the bank.” In Mann, we rejected the contention that
the indictment must allege that the misapplication was without
the consent of the bank or its directors. We stated, citing
Mulloney and United States v. Klock, 210 F.2d 217 (2d Cir.
1954): “consent is a matter of defense.” 517 F2d at 268. In
United States v. Riley, 550 F.2d 233 (5th Cir. 1977), the trial
court excluded evidence that the bank frequently allowed
other persons to conduct business as the defendant had. We
reversed the conviction, reasoning that although “a general
practice is not an absolute defense to criminality . . . the wiser
. approach is to let the jury consider the practice in
determining whether [the defendant] intended to injure and
defraud the bank.” /d. at 236. We stated that Mann had
“implicitly recognized” that the jury should consider whether
the bank’s consent vitiated the defendant’s intent to injure or
defraud the bank and added:
The government’s contention that [the defendant] was the
chief executive officer of the bank and therefore could not
rely on this [authorization] defense is a jury ry ra not
a legal one. The jury might have rejected this defense as a
sham. It might have considered the alleged policy to be
(the defendant’s] cynical generosity to a few cronies at the
expense of others, but that was for the jury to resolve.
In United States v. Salina, 654 F.2d 319 (5th Cir. 1981), the
defendant contended that a series of loans could not constitute
criminal misapplication because they were authorized by the
bank’s board of directors. We sta’ed:
[W)hile valid consent by a bank’s board of directors may be
a defense toa of misapplication, no such board can
vitiate a fraud on the bank. Thus, if the [defendants]. . .
had an intent to defraud, “approval of the board of
tors is no oe id material to whether there was a
j a er . . found such an
intent; the fact that the board of may have re-
54a
viewed the loan at some point does not absolve the [de-
fendants] from culpability.”
Patently an entire bank board, acting unanimously, could
not without violating the statute invest bank funds to purhcase
a boatload of marijuana or make a loan secured only by a chattel
mortgage on a kilogram of cocaine. Approval by the bank is a
factor, indeed an important one, to be considered in deciding
whether making of the loan itself constituted a misapplication
and whether a defendant had the intent to
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