Petition for Writ of Certiorari — Lary v. Ansari

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S87 552

SEP 15 1987

ANMIOL, JR.

CLERK

No:

In The

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1987

JOHN H. LARY, JR.,

Petitioner,

v.

MANSOUR ANSARI and MANSOUR

ANSARI ORIENTAL RUGS, INC. ,

Respondeats.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

John H. Lary, Jr.

600 St. Clair Street S. W.

Huntsville, Alabama35801

Telephone: 205/533-1510

Petitioner

i

QUESTIONS PRESENTED

May a district court grant summary judgement on the basis

of res judicata where trial transcript of prior action is not

introduced at hearing?

May a plaintiff who earlier lost a civil lawsuit alleging

fraud later maintain against the same defendant a second

lawsuit alleging RICO violations, where the same fraudulent

conduct of defendant underlies both actions, on the theory that

civil fraud and RICO violations are sufficiently different so as

not to offend doctrine of res judicata?

May a plaintiff who earlier lost a civil lawsuit alleging

fraud later maintain against the same defendant a second

lawsuit alleging conspiracy to commit RICO violations, on the

theory that commission of civil fraud and conspiracy to commit

RICO violations are sufficiently different so as not to offend

doctrine of res judicata?

May a plaintiff who earlier lost a civil lawsuit alleging

fraud, where defendant lied and denied during deposition

the pertinent fact that he had discussed with others his "secret

sales," thereby concealing existence of conspiracy with

another, later maintain against the same defendant a second

lawsuit alleging conspiracy to commit RICO violations, on the

theory that defendant's misconduct made it impossible for the

conspiracy allegation to be litigated during first lawsuit?

May a plaintiff who earlier lost a civil lawsuit alleging

fraud, where defendant there successfully interposed the

defense of plaintiff's contractual covenant not to sue defendant

for failure to perform in connection with their business arrange-

ment, later maintain against the same defendant a second law-

suit aegis civil fraud, RICO violations, and conspiracy to

commit RICO violations together with the allegation that the

defendant refused, after the completion of the first lawsuit, to

perform under the aforesaid contract (thereby voiding the

covenant not to sue contained therein), on the theory that the

civil fraud or RICO allegations coupled with the allegation of

eo - }Y

ii

defendant's subsequent refusal to perform, when taken

together, form a cause of action that could not have been

litigated inthe firstlawsuit?

May a plaintiff who earlier lost a civil lawsuit alleging

fraud later maintain against the same defendant a second

lawsuit alleging RICO violations and conspiracy to commit

RICO violations, on the theory that plaintiff serves in a quasi-

ublic capacity as a “private attorney general" in a RICO

wsuil?

Did the District Court and the Appellate Court err in their

refusal to admit and consider an affidavit of a juror at the trial

of the first lawsuit introduced by the plaintiff in the second

lawsuit, where purpose of the affidavit was not to attempt to

impeach the verdict in the first lawsuit but to show that the

verdict was based solely on the covenant not to sue and that

jury in first action did not reach the ultimate issue of the alleged

fraud?

LIST OF INTERESTED PERSONS

The Honorble E. B. Haltom, Jr., U. S. District Judge

The Honorable James H. Hancock, U. S. District Judge

John H. Lary, Jr. , Plaintiff-Petitioner

Mansour Ansari and Mansour Ansari Oriental Rugs, Inc.,

Respondents

Ahmad Momeni and Momeni, Inc.

Stephen E. O'Day and the firm of Hurt, Richardson, Garner,

Todd & Cadenhead, attorneys for respondents.

Robert S. Lamar, Jr. and the firm of Lamar & McDorman,

attorneys for respondents.

Norman D. Fiedler, attorney for Ahmad Momeni and Momeni,

Inc.

TABLE OF CONTENTS

SESE RR ee tt i

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tail ca susecssakapalbnstiowbabadese rescsvievtevunies ili

ais iislctinslatensnriactaiceasssnieavoseseasaes iv

ish catpinsiseannsbnarhossrhbocidintensiscetentsannboess 1

ie stk eel Seccuah dads seudissaiabukiiniandnckadeonans 1

stich dias ticki keiavsoevnvadeaiinbtbosdentens cas 1

ih asi rcuivn detail kckssicessubengloeoriveuas 2

Reasons the Writ Should be Granted ...................ccccceeeeeeeeee 6

I. No Transcript of the Trial in Prior Action was Introduced at

the Hearing.

I]. Allegations of Civil Fraud and Allegations of RICO

Violations Are Sufficiently Different so as Not to Offend

Docirine of Res Judicata.

III. Allegations of Conspiracy and Allegations of Commission

of Underlying Offenses are Different Causes of Action not

Offending Doctrine of Res Judicata.

IV. Respondent's Fraudulent Concealment of Pertinent Con-

spiracy Facts During Prior Litigation Should not Profit

Him Here.

V. Fraud Allegations and Breach of Contract Allegations

Taken Together Form Cause of Action that Could not Have

Been Litigated in Prior Action.

VI. RICO Plaintiff Serves as Private Attorney General.

VII. Introduction of Affidavit of Juror Should Have Been

Allowed.

iV

TABLE OF AUTHORITIES

Cases:

foe Se ee perior Court of Fulton

uaty, Georgia, civil no. D- 3708 —) eras

Ps Soya Beadekovic, 693 ee

Earique Rivera v. Umited States (1952 CAI

PR TRIE FRING i iincesosccccescecesccsvecsescceseee:

Hart v. Yahama-Parts Distributors, Iac., 787

ice eenaudennebvsvnsedeces

1.A. Durbin, Inc. v. Jefferson Nat'l Bank, 793

eR Me ge 8 errr

Lary v. Amsari, 817 F.2d 1521 (il Cir 1987)........

Morris v. United States, (1925 CA8 Ark) 7 F.2d

785, cert den 270 U.S. 640, 46 S.Ct. 205 0...

Morrisoa v. Huater, 161 F.2d 723 (CA10 Kan)...

Pereira v. United States, 347 U.S. 1, 74S8.Ct. 358

sel eelilices Nivnipsscechasnacbesdnssuesndesensens

Pettibone v. United States, (1893) 148 U.S. 197,

STRESS ee OO a

Sedima v. Imrex, 105 S.Ct. 3275 (1985)...........

United States v. Bell, (1943, DC Cal) 48 F Supp

United States v. Boyle, (1973) 157 App DC 166,

482 F.2d 755, 24 ALK Fed 144, cert den 414 U.S.

— Se Breen rere

— States v. Bradley, (1970 CA6 Ky) 421 F.2d

United States v. Bravermaa, (1975 CA7 lil) 522

F.2d 218, cert den 423 U.S. 985, 96 S.Ct. 392 ..........

United States v. De Angelo, (1943 CA3 NJ) 138

I Sia ska k ecard Nadi edcinéyes vAdanaeheseen se’

United States v. Fiorella, (1972 CA2 NY) 468

F.2d 688, cert den 417 U.S. 917, 94S.Ct. 2622, reh

Gam SEP UB. GRE, SS BGK. 1B]... cccccccseccccocssesss.

United States v. Forsythe, (1977 CA3 Pa) 560

Oe ei es ie salar eh aad emixanaiua bes vit

United States v. Heck, (1974 CA9 Cal) 499 F.2d

778, cert den 419 U.S. 1088, 95 S.Ct. 677 «0.0...

Cases (cont. ):

United States v. Smith, (1978 CAS Fla) 574 F.2d

I dteidintaiasal cakschseinminbdebdnilnnsmesantaacacnmeniaices 11

United States v. Williams, (1951) 341 U.S. 70,

Fe RE sncidscahaebnsiduamsishcienbininakinian comes 10

Woodmaa v. United States, (1929, CAS Tex) 30

F.2d 482, cert den 279 U.S. 855, 49 S.Ct. 351.......... 10

Statutes:

18 U.S.C. Secs. 1961-1968, Racketeer Influenced and

Corrupt Organizations Act ................6cceeee 8,9,11,14

$16 U.S.C. Soe. TPG1, BRE PIS x... cccsccvcnsecssess 8

18 U.S.C. Sec. 1343, Wire Frand ...................c000 8

In The

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1987

JOHN H. LARY, JR.,

Petitioner,

v.

MANSOUR ANSARI and MANSOUR

ANSARI ORIENTAL RUGS, INC.,

Respoadeats.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

Petitioner, John H. Lary, Jr., requests that a writ of certiorari

issue to review the judgement of the United States Court of Appeals

forthe Eleventh Circuit.

OPINIONS BELOW

The unpublished opinion of the United States District Court for

the Northern District of Alabama, Northeastern Division, is printed as

Exhibit A. The published opinion of the United States Court of

Appeals forthe Eleventh Circuitis printed as Exhibit B.

JURISDICTION

The judgement of the Court of Appeals was entered June 1,

1987. A tumely petition for rehearing of petitioner was denied by the

Court of Appeals on July 16, 1987.

STATUTES INVOLVED

Title 18 United States Code, Sections 1961-1968 (Racketeer

Influenced and Corrupt Organizations Act); Section 1341 (Mail

Fraud); and Section 1343 (Wire Fraud).

STATEMENT OF THE CASE

Beginning in 1978 and ending in December of 1980, Lary and

Ansari were in business together selling oriental rugs. The primary

sales location was in Atlanta, Georgia, where Ansari lived, and

Ansari managed the day to day operations of the business with little

supervision from Lary, who lived in Huntsville, Alabama. Lary,

whose primary occupation was that of a physician, provided all the

money used to open and operate the business while Ansari, whose

primary occupation was that of oriental rug salesman and store

manager, provided most of the work needed to keep the business

operating. Lary owned the business bank account into which all

receipts from the sale of rugs were to be deposited and from which

sales expenses and inventory purchases were to be paid and from

which Ansari received a regular monthly withdrawal of funds. Since

the opening of the business in 1978, some of the inventory was fully

paid for with Lary's funds while much of it was received on credit or

consignment from various oriental rug wholesalers. One of the first

rug wholesalers from which the business obtained rugs on credit and

consignment, beginning in 1978, was Momeni, Inc., a New York

wholesaler whose president is Ahmad Momeni . (Shortly before

opening the oriental rug business in Georgia, both Lary and Ansari

had visited Momeni's New York wholesale showroom and there

discussed with Momeni their business plans. )

Ansari kept an inventory book, of which Lary periodically

received a copy, listing by inventory number all the fully paid for

rugs but which did not list the unsold rugs obtained on credit or

consignment. The records of these unsold credit and consignment

rugs were kept in Ansari's desk in Atlanta. Ansari, as a regular

business practice, listed and numbered on the inventory book the

credit or consignment rugs after they were sold to customers. Ansari,

as a regular business practice, kept customer receipts of all rug sales,

a sales of credit and consignment rugs, and mailed monthly

ies of all such sales receipts to Lary in Alabama.

‘foe 1978 and the earlier part of 1979, Ansari sold rugs,

including rugs on credit and consignment from Momeni, deposited all

sales proceeds into Lary’s business bank account, and notified Lary

of all sales. At some time in 1979, Ansari becamed dissatisfied with

his business arrangement with Lary and complained to Momeni about

it. Momeni suggested to Ansari that Ansari sell the consignment

rugs (of which Lary had no record) from Lary’s business premises,

deposit the sales proceeds into Ansari's personal bank account or

pocket, pay Momeni, Inc. the wholesale cost of the rugs out of those

sales proceeds, that Ansari keep for himself the difference between

the retail sales price and the wholesale costs of those credit and

consignment rugs, and conceal from Lary what was going on.

Subsequently, during the later part of 1979 and all of 1980, Ansari,

Momeni, Momeni, Inc., and possibly others allegedly did conspired

to sell and did sell oriental rugs from Lary's business premises to

Lary's customers without Lary’s knowledege or consent, paying for

sales expenses out of ee business bank account (which Ansari

controlled as manager of the Georgia oriental rug business) but

secretly diverting receipts from those sales into Ansari's personal

bank account or pocket. Ansari mailed to Momeni checks from

Ansari's bank account to pay for those credit and consignment rugs

sold. Ansari continued to mail to Lary copies of the inventory book

purportedly containing records of all rug sales, but Ansari ceased

entering therein records of sales of credit or consignment rugs.

Ansari continued to mail to Lary copies of sales receipts surporting to

be copies of all sales receipts, but failed to mail any receipt for the

sale of any credit or consignment rug. Ansari continued to mail to

Lary bank records of sales rear Ma to be expenses of rug

sales made by Ansari in Lary'sb but containing in addition sales

expenses for the "secret sales" Ansari made secretly in Ansari's and

Momeni's behalf. Lary noticed the drop in reported sales and

quesuoned Ansari about this during interstate telephone calls. Ansari

blamed the fall off in sales to the poor economy and untruthfully told

Lary that there had been a marked reduction in customer traffic

through the shop and a marked reduction in rug sales. As a result of

those "secret sales,” Lary's oriental rug business failed, and as a

result Lary sold the business to Ansari in December, 1980 on terms

favorable to Ansari, all-the-while still ignorant of the existence of

either the conspiracy orthe “secret sales. "

As part of the termination of that business arangement which had

existed between Lary and Ansari, those two parties signed a

Termination Agreement which contained these three important

provisions:

3(F) That he (Lary) shall make no claim or suit of any kind

against Ansari for any failure of Ansari to perform or comply

with the terms of any prior agreement, written or oral, between

Ansari and Lary in connection with the business arrangement

between Ansari and Lary.

5 The parties agree that Lary shall have the right at any time and

from tume to ume to exchange any of the rugs described in

Exhibit “A hereto for an oriental rugs or rugs belongi

Ansari or his firm or business based on the respective costs of the

rugs exchanged.

9 and Ansar agree that the purpose of this agreement is to

terminate and liquidate the business arrangement _—

between them according to the terms and conditions h

However, in the event either party materially breaches any term,

covenant, or condition of this agreement, then all the terms,

conditions, and covenants hereof shall be of no further force and

effect.

In 1983, Lary sued Ansari for breach of that Termination

Agreement and for fraud in the inducement of that agreement. During

discovery, Lary first learned of the existence of the “secret sales’

made by Ansari from 's business locations to Lary's customers

during 1979 and 1980. amended his complaint to include a

fraud allegation on account of those “secret sales." In 1984, that suit

went to jury trial in the District Court for the Northern District of

Alabama, the Honorable Judge James Hancock presiding. During the

trial, Lary first learned that Momeni and Momeni, Inc. were involved

in Ansari's “secret sales." (Lary had asked Ansari during deposition

several months before the trial if he had discussed these “secret sales”

with anyone; Ansari answered in the negative and as a result of that

untruthful answer Lary did not seek out information about the

activities of thet then-unknown co-conspirators. )

Ansari admitted during the trial that he had engaged inthe alleged

“secret sales." He claimed that such activity did not violate any prior

agreement between the parties but did not deny that it amounted to

competition with Lary’s oriental rug business.

At the conclusion of the tnal, Ansari moved for summary

judgement based on paragraph 3(F) of the Termination Agreement,

the covenant not to sue. Judge Hancock granted the motion, but

allowed the case to go to the jury, after instructing the jury that the

Termination Agreement was acompiete bar to Lary's claims against

Ansari unless they found that Ansari had somehow caused the

Termination Agreement to be void. The jury subsequently returned a

verdict in Ansari's favor.

In December, 1985, Lary filed the instant suit, alleging conspiracy

to violate the RICO statute and requesting civil damages on account of

that conspiracy and violations and the resulting injury to and loss of

Lary's business. ny alleged RICO predicate acts of mail fraud and

ore

wire fraud. Before being served with process in this suit and before

learning of the existence of this suit, Ansari refused to perform under

paragraph 5 of the Termination Agreement, citing Lary's 1983 suit as

having voided, under paragraph 9 thereof, the agreement and

released the parties from the obligations of the agreement. Lary

amended his complaint in the instant suit to include the allegation of

that fact of Ansari's refusal to perform under paragraph 5 and the

resulting removal of the —, 3(F) bar. Lary sued the

corporation, Mansour Ansari Oriental Rugs, Inc. , on the theory that it

was the racketeering associated enterprise and that it was a sham

corporation and Ansari's alter ego around which Ansari had cloaked

himself.

The defendants moved to dismiss the instant suit. The District

Court, the Honorable Judge E.B. Haltom presiding, heard the motion

as one for summary judgement, receiving in evidence a copy of

Lary's 7 in the prior action, a copy of the judgement, a

transcript of the post-trial discussion between Judge Hancock and the

attorneys concerning the motion for summary judgement, anda

transcript of Judge Hancock's jury instructions. No tramscript of

the trial itself was introduced during that hearing. Judge

Haltom refused to allow Lary the introduction of an affidavit made

by one of the juror in the prior action in which it was stated that the

jury had considered only the issue of the bar of paragraph 3(F) of the

ermination Agreement and had decided in Ansari s favor ay So

issue. After receiving the evidence and hearing the arguments, Judge

Haltom granted summary judgement in all defendant's favor, citing

res judicata as justification for the dismissal of Ansari and collateral

estoppel as justification for dismissal of all other defendants. Lary

appealed tothe Court of Appeals.

(After the grant of summary Ay sages by Judge Haltom, Ansari

and Mansour Ansari Oriental Rugs, Inc. filed suit against Lary in the

Superior Court of Fulton county in the State of Georgia, Amsari et

al. v. Lary, civil action aumber D-37086, alleging breach of

the Termination Agreement by Lary on account of Lary's prior

action and on account of Lary's present action and further alleging

malicious prosecution by Lary in his prosecution of both actions.

Lary's motion to dismiss, which the court may rule upon as a motion

for summary judgement, is currently pending before the Honorable

Judge Jenrette. A ruling on that motion is expected before the

~~ Court rules on this petition for certiorari. )

e Court of Appeals judicial panel reversed and remanded with

respect to Lary's claims against Momeni and Momeni, Inc, but let

stand the dismissal of Ansari and Mansour Ansari Oriental Rugs,

Inc., a it substituted res judicata as the justification for the

dismissal of the corporation, which it held to be in privity with

Ansari. The panel found collateral estoppel not to apply inthis case,

since it found that the jury verdict did not necessarily result from a

determination of the issue of Ansari's alleged fraud, but could have

resulted from the jury's having found in Ansari's favor solely due to

the covenant not to sue contained in the Termination Agreement.

Lary timely filed a petition for rehearing with the Eleventh Circuit.

That petition was denied on July 16, 1987. Lary now petitions the

Supreme Court for a writ of certiorari.

REASONS THE WRIT SHOULD BE GRANTED

I

No Transcript of the Trial in Prior Action Was

[atroduced at the Hearing.

In Concordia v. Beadekovic, 693 F.2d 1073, the Eleventh

Circuit Court of Appeals found that:

Where record consisted of allegations that the issue of assault and

battery was litigated in state proceeding, copy of complaintant's

counterclaim in state proceeding alleging essentially same facts as

in federal civil rights action ..., and copy of judgement in state

proceeding denying the complaintant relief on counterclaim, amd

record of state court proceeding was not introduced,

evidence did not satisfy minimum requirement, in order to apply

doctrine of res judicata in context of either motion to dismiss or

motion for —e judgement, that defense of res Jy we

from face of complaint (emphasis added). Fed. Rules

iv. Proc. Rules 12(6\6), 56, 28 USCA, 42

U.S.C.A. Secs. 1983, 1985.

In the instant suit, as in Comcordia, the evidence before the

court does not satisfy the minimum requirement in order to apply the

doctrine of res judicata in context of either a motion to dismiss or a

motion for summary judgement. Without the trial transcript, neither

the district court nor the appellate court knows what was litigated in

prior action. In the instant case, as in Comcordia, the introduction

into evidence of copy of the allegations in prior suit and copy of the

judgement in prior suit, without introduction of the record of court

ings, is not enough to satisfy the minimum requirements for

the application of doctrine of res judicata.

II

Allegations of Civil Fraud and Allegations of RICO

Violatioas Are Sufficieatly Differeat So As Not to

Offend Doctriae of Res Judicata.

The appellate court found that principle of res jucicata barred

Lary's claims against Ansari and those in privity with him. But, fora

prior judgement to bar a subsequent action under principle of res

judicata, four elements must be present:

(1) there must be a final judgement on the merits

(2) the decision must be rendered by a court of competent

jurisdiction

(3) the parties, or those in privity with them, must be identical in

both suits, and

(4) the same cause of action must be involved in both cases.

I.A. Durbia, lac. v. Jeffersom Nat'l Bank, 793 F.2d 1541,

1549 (11 Cir 1986), Hart v. Yahama-Parts Distributors, lac.,

787 F.2d at 1470, Lary v. Amsari, 817 F.2d 1521 (11 Cir 1987).

The court in the instant suit erroneously found that the same cause

of action was present in both this suit and the prior litigation. This is

clearly wrong, since Ansari's admitted during the prior litigation to

competition with Lary in the sale of oriental rugs to the public. That

business competition resulted in an injury to Lary's business that is

necessarily compensable under the RICO statute, subsection (c) of

Title 18, section 1964 of the U.S. Code, but not necessarily

compensable under common law fraud. (i.e. , an individual tainted by

common law fraud may lawfully compete with other businessmen; an

individual tainted by RICO violations may not, for if he does he falls

within the net of 18 U.S.C. 1964(c) and is liable thereby for triple

damages and attorney's fees. )

In Te mona d fraud, one of the proscribed acts under the

RICO e Supreme Court wrote that, “Violations of 18

U.S.C. 1341 and of National Stolen Property Act, 18 U.S.C. 2314,

constitute two seperate offenses...even though charges arise from

single act or series of acts, as long as each charge requires proof of

fact not essential to proof of other," Pereira v. Usited States

(1954) 347 U.S. 1, 74S.Ct. 358. Compare that legal opinion to the

instant suit, where violation of the RICO statute and common law

fraud claim are seperate offenses, even though claims arise from the

same series of acts, because each claim requires proof of fact not

essential to proof of other (i.e. the RICO claim requires proof of (1)

mail fraud or wire fraud, (2) a pattern of racketeering activity, and (3)

the conduct of a racketeering associated enterprise, none of which are

required for proof of common law fraud. Common law fraud claim

requires proof of damages that are not merely losses due to business

competition, while proof of competitive business losses alone will

sustain judgement under RICO).

Under RICO, it is the effect on interstate commerce that is

punished rather than the underlying racketeering acts, and those

underlying acts are enumerated in the act for definitional purposes

only and are not gravamen of the RICO offense, Usited States v.

Forsythe (1977 CA3 Pa) 560 F.2d 1127. Thus, a RICO claim for

damages is not the same cause of action as a common law fraud

claim. Accordingly, the fourth test for the application of the res

judicata bar is not met.

The Court of Appeals in this instant suit found, at page 2889, that,

“Sime eaiamenard vecdictia favor Of Anz, we are

unable to determine whether the jury found that Lary's claim was

barred by the covenant not to sue or whether the jury ruled om the

merits of Lary's substantive claim (emphasis added). Since the

Court of Appeals finds that it cannot determine whether the judgement

in the prior suit was “on the merits" or not, the first test for the

application of the doctrine of res judicata is not met. (Of course, this

Supreme Court can determine that the judgement of the jury was not

“on the merits” by reading the affidavit of one of the jurors introduced

by Lary into the trial record but not considered by the district court. )

iil

Allegations of Conspiracy aad Allegations of Com-

mission of Underlying Offeuses Are Differeat Causes

of Action Not Offending Priaciple of Res Judicata.

It is settled law that the commission of a substantive offense and

the conspircy to commit it are seperate and distinct crimes. It is just

as settled that acquital of a particular crime does not, on principles of

either res judicata or double jeopardy, bar subsequent prosecution for

conspiracy to commit the same crime. Since, in the instant suit, Lary

charged Ansari with RICO conspiracy as well as with underly:

substantive violations of law, the Court of Appeals should at least

have allowed Lary's RICO conspiracy claims against Ansari to go

forward.

The Appellate Court ruled that, “Although styled asa RICO claim,

the complaint here relies on the same allegations of misconduct by

Ansari as did the prior suit. The present action against Ansari is

therefore barred by res judicata," v. Amsari, 817 F.2d 1521.

That opinion applies to Lary's claims that Ansari violated subsections

(a), a, eae (c) of Title 18 Section 1962 of the United States

Code. It does not address Lary's claim against Ansari for violation of

subsection (d) of that Code section, which reads,"(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.” Lary has alleged that

Ansari not only ware ae of subsections (a), (b), and (c) of

Title 18 section 1962 of the U.S. Code but also that he conspired

with Momeni and others to violate those provisions (i.e., that he

violates subsection (d) as well). Since conspiracy to commit RICO

violations is a different crime from committing the RICO violations,

a finding that res judicata precludes Lary from prosecuting his claims

under subsections (a), (b), and (c) does not preclude Lary from

ing his claims against Ansari under subsection (4).

Lary alleged Ansari's part in the RICO conspiracy, ed it

before the district court, and briefed it in his appeal to the Eleventh

10

Circuit (See page 9, paragraph 2 of Lary's brief and page

1 and page 4 paragraphs 2 Mod 3-of Laey's nip Sa oes eed

that cons is a different cause of action from that of the common

law sa ct litigated in the prior suit. The court of appeals did

not address that question in its opinion, mentioning the conspiracy

only in passing. Lary again argued that difference between

conspiracy and common law fraud in his petition for rehearing and

again that question was not answered (see page sv and page 1,

paragraph 1 of Lary's petation for reconsideration). Lary again raises

the same unanswered arguments here.

A conspiracy is a combination of two or more persons to

ae some unlawful purpose, or some lawful purpose by

unlawful means, United States v. Heck, (1974 CA9 Cal) 499

F.2d 778, cert den 419 U.S. 1088, 95 S.Ct. 677, 678, Pettibone

v. United States, (1893) 148 US. 197, 13 S.Ct. 542.

“Conspiracy ordinarily consisted in uniting to violate any provisions

of federal criminal and regulatory statutes of United States," United

States v. Bell (1943, DC Cal) 48 F Supp 986. “The commission

of a substantive offense and a conspiracy to commit it are seperate

and distinct crimes, " Usited States v. Boyle (1973) 157 App DC

166, 482 F.2d 755, 24 ALR Fed 144, cert den 414 U.S. 1076, 94

S.Ct. 593, United States v. Bradley, (1970 CA6 K y) 421 F.2d

924, Morrison v. Huater (CAI0 Kun) 161 F.2d ne. “Aquittal

on an accessory count does not bar a conviction on a conspiracy

count based on the same facts," United States v. Braverman

(1975 CA7 il) 522 F.2d 218, cert den 423 U.S. 985, 96S.Ct. 392.

“Ordinarily, acquittal of particular crime does not, on principle of res

judicata, operate as bar to prosecution for conspiracy to commit the

crime," Woodman v. United States, (1929, CA5 Tex) 30 F.2d

482, cert den 279 U.S. 855, 49 S.Ct. 351, Emrique Rivera v.

United States (1932 CAl Puerto Rico) 57 F.2d 816, United

States v. De Angelo (1943 CA3 NJ) 138 F.2d 466. “Acquittal of

aa crime does not, on theory of former acquittal or j sede

ar subsequent prosecution for muse commit crime,

Seebeny. Williams (1951) 341 U.S. 70, 71 S.Ct. 581.

“Acquittal on 18 counts of indictment charging scheme to defraud,

and using mails to carry out such scheme, did not prevent conviction

on count charging conspiracy to defraud by use of mails," Morris

v. United States (1925 CA8 Ark) 7 F.2d 785, cert den 270 U.S.

640, 46 S.Ct. 205. "Prosecution under 18 U.S.C. 1962(d) for

11

Ts to engage in racketeering and 1962(c) for substantive

offense of racketeering did not violate defendant's double j

rights,“ United States v. Smith, (1978 CA5 Fla) 574 F.2d 308.

Under a related racketeering statute, the court wrote that," Verdict of

acquittal on substantive offense under 18 U.S.C. 1955 is not

inconsistent with conviction,” Usited States v.

Fiorelia(1972 CA2 NY) 468 F.2d 688, cert den 417 U.S. 917, 94

S.Ct. 2622, reh den 419 U.S. 885, 95 S.Ct. 156.

In the instant suit, ee “Lary further

alleges that Momeni and Momeni, Inc. conspired with Ansari."

Conspiracy is atwo way street; if Momeni conspired with Ansari then

Ansari must have conspired with Momeni. Since Momeni and

Momeni, Inc. are to stand trial, Ansari (and his corporate alter ego,

Mansour Ansari Oriental Rugs, Inc.) should stand trial alongside for

his role in violations of subsection (d) of 18 U.S.C. 1962 and sub-

section (c) of 18 U.S.C. 1964.

Since a conspiracy is “a partnership for criminal purposes in

which each member becomes agent for every other member," Usited

States v. Heck, supra, a a. grove against Momeni or Momeni,

Inc. would be collectable Ansari or any other co-conspirator,

although it would require yet another trial to establish Ansari's role in

the conspiracy if Ansari were not to be a defendant in this action

beside Momeni. Judicial economy is reason enough to settle the

dispute between the litigants in this one suit, rather than this suit plus

another, all dealing with the same set of facts. There would be,

additionally, the danger of inconsistent results in two trials, one for

Momeni and Momeni, Inc. and another for his co-conspirator Ansari.

IV

Respoadeat's Frauduleat Coamccalmeat of Pertincat

Conspiracy Facts Dering Prior Litigation Should Not

Profit Him Here.

Lary alleged in his complaint, me ae a a 1F and 1G,

that he did not learn of the conspiracy until 4, 1984 (a date

during the trial of the first lawsuit) and that he was prevented from

learning of its existence earlier because of Ansari's untruthful sworn

statements. Lary argued that point before the district court at the May

29, 1986 hearing (see page 27 line 18 through page 28 line 1 of the

12

hearing transcript), introduced evidence of those untruthful satements

by Ansari by a sworn affidavit coupled with a copy of Ansari's

pertinent ul answer at his deposition in the prior suit, again

argued that point in his brief to the court of appeals (see pages 12 and

13 of Lary's brief and pages 4 and 5 of Lary’s replv brief). Both the

district court and the court of appeals ign hat point in their

decisions and made no mention of it. In his petition for rehearing,

Lary again raised that point (see page v and page 1 of that petition) to

no avail. The district court and the court of appeals merely admonish

Lary that he had a full and fair oportunity to litigate all issues in the

prior litigation, but do not explain how Lary could have litigated there

issues that had been fraudently concealed by Ansari's untruthful

sworn statements and were therefore unknown at the time of trial.

Since neither the district court nor the court of appeals addressed or

answered that point, Lary raises it again here.

During his sworn deposition in the prior action Ansari concealed

the existence of the conspiracy between himself and Momeni by

untruthfully denying that he had ever had any conversations with

anyone about the "secret sales" that formed the basis for the prior

litigation. Since, due to Ansari's false answers at deposition, the

conspiracy claim against Ansari and his co-conspirators was not and

could not have been litigated in the prior action, the Supreme Court

should reverse and remand to the district court at least the conspi

claim against Ansari. To allow Ansari to profit from his fraudulent

denial under oath of pertinent facts, where such untruthful denial

concealed the existence of the conspiracy, is toinvite wholesale fraud

upon the courts of the United States. If frauds upon the courts are to

be tolerated and rewarded, rather than punished, then what will

become of our system of justice?

V

Fraed Allegations And Breach of Coatract Alleg-

ations Takea Together Form Cause of Action That

Could Not Have Been Litigated im Prior Action.

Lary alleged in his amended complaint that Ansari, subsequent to

his victory in the prior litigation and before the district court dismissal

of the instant action, refused to perform under paragraph 5 of the

Termination Agreement. Lary argued that point before the district

13

court at the May 29 hearing (see page 23 line 2 through page 2+ line

23 eh Sanlc through page 26 line 4 of the transcript of that

he oo argued that in his briefs before the appeals

acne Seas tnaah 11 et Lexy stciet anders |

and 4-08 Lay's feet ‘brief The decision of the court of a

states only that, "...first lawsuit had provided oportunity to litigate

Clams, and recent violation of termination agreement had been

alleged in amended claim only to overcome barrier posed by covenant

Not to sue," but did not explain how that “recent violation" could have

possibly been litigated at a time when it had not yet occurred. Lary

again raised this point in his petition for rehearing (see page vi and

page vii of that petition). Lary againraises it here.

Ansari's refusal to comply Bis st raph 5 voids the

Termination Agreement under the terms of paragraph 9 thereof and

denies to Ansari any further protection afforded by the covenant not

to sue contained in paragraph 3(F). It was the protection of that

covenant which had shielded Ansari and given him his victory in the

prior litigation, as is clearly shown by the affidavit of a juror in that

case, which introduction was attempted by plaintiff but not allowed

by the district court judge in this action. Even if one ignores the

affidavit, the court of appeals noted that it could not be determined

from the judgement whether Lary's claim had been barred by

covenant not to sue or had been defeated on the merits.

Since Ansari's breach of paragraph 5 of the Termination

Agreement did not occur until after the completion of the prior

litigation, it obviously could not have been litigated there and the

effects of that breach on Ansari's defense of the covenant not to sue

could not have been felt. Unless the Supreme Court is to allow

Ansari to enjoy the benefits of the Termination Agreement without

having to perform his obligations thereunder, Ansari should have to

here face the fraud allegations coupled with the later breach of

Termination Agreement allegations. Those fraud allegations plus the

breach of Termination Agreemeni allegations form a cause of action

different from the cause of actioa litigated in the prior suit, since

different evidence is needed to sustain a verdict in each case and since

different wrongs are alleged in the two suits.

Vi

RICO Plaiatiff Serves as Private Attoracy General.

14

The Supreme Court found in Sedima v. Imrex, 105 S.C.

3275 (1985), that under RICO plaintiff serves as a "private attorney

general" and as an adjunct to overburdened public officials in

prosecuting violations of the law. It is not the law that a public

official is to be bound in his official capacity by restraints that he must

conform to in his strictly private capacity. A public official who lost a

private civil lawsuit to a defendant cannot be barred by principle of

res judicata from prosecuting in his official capacity same defendant

for same offense in a later RICO tial. Since Lary, in his

quasi-official role as “private attorney general,” attempts here to

secute Ansari for his quasi-criminal RICO offenses, the bar of res

judicata should not beraised against Lary.

VII

Introduction of Affidavit of Juror Should Have Been

Allowed.

The district court should have allowed the introduction of the

affidavit of a juror in the prior action. That affidavit did not attempt to

impeach the verdict in prior action; it did show that the ju verdict in

the prior action did not reach the question of the fraud ed there

but instead addressed only the defense raised by the defendant

Ansari. Since the bar of res judicata is not absolute and should not be

allowed where ends of justice or public policy would be twarted and

since it is settled principle that courts should decide disputes, where

seg by deciding ultimate issues, consideration of affidavit might

ave caused district court to deny defendant the protection of res

judicata.

CONCLUSION

The writ should be granted.

Respectfully submitted,

John H. Lary, Jr.

600 St. Clair Street S. W.

Huntsville, Alabama 35801

Telephone: 205/533-1510

Petitioner

APPENDIX A

IN THE UNITED STATES DISTRICT peal

FOR THE NORTHERN DISTRICT OF ALAB

NORTHEASTERN DIVISION

JOHN H. LARY, JR.,

Plaintiff,

-V-

MANSOUR ANSARI, AHMAD

MOMENI; MANSOUR ANSARI

NO. CV 85-HM-5778-NE

mee ee ee ee ee a ee ee eee ee Nee ee ee”

ORIENTAL RUGS, INC., a ENTERED

Georgia ion; MAY 30 1986

MOMENI, INC., a New

York corporation

Defendants.

ORDER

The above entitled civil action came to be heard in the courtroom

of the Federal Courthouse in Huntsville, Alabama on May 29, 1986,

commencing at 2:00P.M., for oral arguments on defendants’ motion

for summary judgement with respect to all claims assered by the

laintiff against defendants in the above entitled civil action. A

ederal Court reporter was present and all proceedings recorded.

Upon consideration of such motion for summary judgement, all

evidenuary matter offered in support thereof and in opposition

thereto, the pleadings, briefs and oral arguments on behalf of the

parties and stipulations made of record, the Court is of the opinion

that defendants’ motion for summary judgement is due to be granted

for the reasons appearing and dictated of record in the May 29, 1986

hearing. The Court expressly finds and determines that there i3 no

Defendants filed 12(6X6), Fed. R. Civ. P., motion to dismiss

and other Rule 12 motions and gponeit factual matters outside

A

the pleadings in support thereo: — the Court treated

the 12(b)(6) motion as one for summary ju portess and gave the

requisite Rule 56, Fed. R. Civ. P., nouce of submission.

A-2

genuine issue of material fact in this litigation, that defendants are

entitled to judgement in their favor as a matter of law and that there is

No just Cause or reason for delay in entry of final judgement herein in

favor of defendants. It is therefore ORDERED, ADJUDGED and

DECREED that defendants’ motion for summary judgement in their

favor with to all claims herein asserted by plaintiff against

defendants in the above entitled civil action be and the same hereby is

GRANTED and ENTERED, that plaintiff have and recover

NOTHING of defendants in this action, and that costs are taxed

ainst plaintiff, for which let execution issue. And it is further

ORDERED, ADJUDGED and DECREED that defendants’ motion for

the imposition of monetary sanctions against plaintiff in this case is

oe,

ONE and ORDERED this 30th day of May, 1986.

E. B. HALTOM, JR.,

UNITED STATES DISTRICT JUDGE

EXHIBIT B

Joha H. LARY, Jr., Piaintiff- Appeliast,

Fe

Maasour ANSARI: “ Momeni; Massoer Agsari

Orieatal Rugs, Jac., a Georgia ion; Momeni,

Inc., a New ork Corp.. Defendaats- ees.

No. 86-7416

United States Court af Appeals,

Eleventh circuit.

June 1, 1987

from the United States District Court for the Northern

District of Alabama.

Before GODBOLT, VANCE and JOHNSON, Circuit Judges.

PER CURIAM:

John Lary brought this RICO action against Mansour Ansari,

Masour Ansari Oriental Rugs, Inc., Ahmad Momeni, and Momeni,

Inc. The district court granted summary judgement to all defendants

on the grounds of res judicata and collateral estoppel. We affirm as to

defendants Ansari and Mansour Ansari Oriental Rugs, Inc. and

reverse and remand as to defendants Momeni and Momeni, Inc.

FACTUAL BACKGROUND

In 1978 Lary and Ansari entered into a business relationship

under which they bought and sold oriental rugs. Lary provided the

capital for the business, and Ansari, who was experienced in the

oriental rug business, managed the business. In December 1980 Lary

and Ansari entered into a written termination agreement in which Lary

agreed, among other things, not to bring an action against Ansari for

any claim arising out of their former business relationship.

B-2

Lary filed an action in federal court against Ansari in 1983,

alleging fraud and breach of agreements betweem the parties

pao Fh their former business relationship. The district judge

that it could not reach the merits of Lary's claims

mori So ound that the covenant not to sue in the termination

agreement was void and unenforceable. The jury returned a general

verdict in favor of Ansari. No appeal was taken from the ensuing

ee

Lary brought the present action in 1985. Although couched in

terms of RICO, the action does not differ from Lary's iraud claim in

his previous suit against Ansari. Lary alleges that although Ansari

had agreed in their original business arrangement not to engage in

other business activities or to compete with the business, he sold

oriental rugs “on the side" and kept the for himself. Lary

further alleges that Momeni and Momeni, Inc. conspired with Ansari

omer ap sar epi that he sald for his own account.

1} The defendants filed a motion to dismiss the action, which

the district court treated as a motion for summary judgement. (1)

After a full hearing the court granted the defendants'\motion for

summary judgement on the grounds that the claim against Ansari was

barred by res sodicata and the claim against the remaining defendants

was barred by collateral estoppel. Lary appeals from this judgement.

ANSARI AND MANSOUR ANSARI

ORIENTAL RUGS, INC.

The court held that Lary's RICO claim against Ansari was

(1) The court converted the defendants’ motion into one for

summary judgement and instructed the parties to submit any other

relevant materials. The court, however, did not. cally inform

Lary of the consequences of default, and thus di oe felly | comply

". Waiswnphe 3 E: uirements of Fed. R. Civ. P. 56(0) See Griffitl

v. Waa F.2d 822, 825 (11 Cir. 1985). Nevertheless,

Vay ste Co agiar al Goabed i cave ert as if he had

received proper notice; the court's oversight was therefore harmless

error. Management & Investmeats, Inc. v. Lewis, 752

F.2d 599, 605 (11 Cir. 1985).

B-3

barred by res judicata. Under the doctrine of res judicata (or claim

preclusion), a final judgement on the merits bars the parties from

relitigating issues that were or could have been raised in the previous

action. J A. Durbin, lac. v. Jefferson Nat Bank, 793 F.2d 1541,

1549 (11th Cir. 1986). For a prior judgement to bar a vent

action, four elements must be present: “(1) there must a final

judgement on the merits, (2) the decision must be remndered by a

court of competent jurisdiction, (3) the parties, or those in privi

wich them, eves helboenieel ia'totic dake and 64) aniogt aay

action must be involved in both cases." /7.

Se eee ae 0 Sem selgement on

the merits was rendered was by a court of com

jurisdiction in Lary's action against Ansari in 1983. The only issue is

whether the cause of action asserted in this action is the same as that

involved in the earlier lawsuit. We find that it is.

In his first lawsuit Lary alleged that Ansari had fraudently

induced him to enter into a too-favorable termination agreement,

breached provisions of the termination agreement relating to the

recovery of of certain rugs and payments due Lary, defrauded him by

Pr wine Ponape gi ae pag ay pra sap and

him by selling oriental rugs for his own account and not

depositing those funds in the business bank account and by

ing that fact when they negotiated the termination ent.

[2] Because Lary had an opportunity in his first it to

litigate claims relating to his business relationship with Ansari, any

future claims relating to the same business relationship are barred by

res judicata. Although styled as a RICO claim, the complaint here

relies on the same allegations of miscinduct by Ansari as did the prior

ee The present action against Ansari is therefore barred by res

judicata.

Lary contends that there is another element to this suit against

Ansari that could not have been brought in the first suit, and therefore

he is saved from the res judicata bar. In his amended complaint he

EA TS ET Ey LT AY

to exchange certain oriental rugs in March and April of 1986 (2).

(2) Lary filed his amended complaint on the day of the hearing on

the defendants’ motion forsummary judgement. Although the district

BA

Lary intended to persue this amended claim as an independent cause

of action, it would not be barred by res judicata. As Lary essentially

admits in his brief on appeal, however, the only purpose of the

amended claim is to get around the barrier posed by the covenant not

to sue in the termnation catty hee. pdt

underlying fraud claim (3). Taxy’s action ogeinn Ansari

barred by res judicata, and the district court did not err in granting

em ement to Ansari (4).

ay Ansari Oriental Rugs, Inc. did not come into

pererenray tence Pye and Ansari had terminated their business

wp ocelot iaveinbtaadia eny eaniadiltg Suing

iaoir veueaw soheii Lary explained at the hearing on the

defendants’ motion for summary judgement that he named the

oak rsenar ane esd cts: ho. oc igh ~segaranan in

corporated form, of Anssr:'s ori business on

was therefore in privity with Ansari, p pygttimpan sop

Pare by re oat See LA. Durbin, Inc., 793 F.2d at 1549;

Cop. v. Astew, 511 F.2d 710, 719 (Sth Cir.),

pea red, US. 908, 96 S.C. 210, 46 L.Ed.2d 137(1975)

(5).

jedge discussed the amended complaint at the hearing, he did not

formally allow the complaint to be amended. Given the liberal

amendment policy embodied in Fed. R. Civ. P. 15(a) and the court's

discussion of the amendment at the hearing, we will treat the

amendment as having been allowed. See Lace Star Motor Impact

lac. v. Citreaa Cars Comp., 288 F.2d 69, 75 (Sth Cir. 1961).

(3) Lary's argument that “[tJhe R.1.C.O. isve joined with the issve

of Ansari's 1986 breach of [the termination agreement] forms a single

cause of action" is not persuasive.

(4) _Lary's argument that res judicata should not be applied to bar

RICO actions and that application of res judicata bar in this case

would result ininjustice are without merit.

(5) Although the district court held that Lary's claim against the

corporation was barred by collateral estoppel, the judges comments

during the hearing on the defendants’ motion for summary judgement

were castin res judicata terms.

Sn ce ne ee ee Ne om

ee

propes

B-5

MOMENI AND MOMENI, INC.

The district court held that Lary's action against Momeni and

paagerpre Rem ie Ay Po cag ga

(or issue ion) prevents relitigating of an issue of fact or

then hag teta NOE Gd Gotided la c bce omee. LA. Durbin,

lac., 793 F.2d at 1549. Collateral emoppel applies only if the

followi isites are met:

(} cote ee etapa ical to the one involved in

the prior litigation; (2) the issue must have been actually liti in

an po ae mr ional the imeota the plac egeice

must have been a critical and necessary part of the judgement in that

action; and (4) the against the earlier decision is

asserted must have had a full and fair opportunity to litigate the issue

inthe earlierproceeding.

id.

[4] Three of these prerequisites are clearly met--Lary's claim

ing to the secret sales, whether fashioned as a common law fraud

or RI claim, was involved in the prior action, and Lary had a full

and fair opportunity to litigate, and did in fact litigate, the claim in the

earlier proceeding. The only issue is whether the determination of the

Sn ences eels clsicul and necernery of

the judgement.“ we cannot answer this last question, 's

action against Momeni and Momeni, Inc. is not barred by collateral

estoppel.

In Lary's original lawsuit against Ansari the district court

instructed the jury that it could not consider Lary's substantive

claims, including the fraud claim, unless it first found that the

covenant not to sue in the termination agreement was void or

unenforceable. The judge explained that the covenant was

enforceable only if Ansari had not breached a material provision of

the termination agreement or had fraudently induced Lary to enter into

theagreement.

Because the jury entered a general verdict in favor of Ansari,

we are unable to determine whether the jury found that Lary's claim

was barred by the covenant not to sue or whether the jury ruled on the

merits of Lary's substantive claims. Resolution of Lary's fraud calim

therefore was not a “critical and necessary part of the judgement” in

the original action, and a collateral estoppel bar of the claim is

inappropriate inthis case. See la re Memill, 594 F.2d 1064, 1067

B-6

(Sth Cir. 1979) (6).

The district court did not consider whether Lary's RICO claim

States aclaim against Momeni and Momeni, Inc. , and therefore we do

not. This is for the district court in the first instance.

AFFIRMED in part, REVERSED in part, and REMANDED.

(6) The defendants contend that the same fraudulent conduct was

Oe a eee ee

underlying substantive fraud claim and thus was a necessary part of

the prior judgement. This contention is without merit. Lary

conceded when he was arguing against Ansari's motion for a

Ge aieatie Latest eee

claim was b entirely on Ansari’s ed misreppresentation to

Lary that he was “broke. " be

APPENDIX C

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

NO. 86-7416

JOHN H. LARY, JR.,

MANSOUR ANSARI; AHMAD MOMENI;

MANSOUR ANSARI ORIENTAL RUGS, INC.,

a ia corp.; MOMENI, INC. , a New York

corp. ,

Defendants-Appellees.

Appeal from the United States District Court for the

Northern District of Alabama

ON PETITION FOR REHEARING AND SUGGESTION FOR

REHEARING EN BANC

(Opinion JUNE 1, 11 Cir., 1987, F.2d )

(JUL 16, 1987)

Before GOLDBOLT, VANCE and JOHNSON, Circuit Judges.

PER CURIAM:

The Petition for Rehearing is DENIED and no member of this

panel nor Judge in regular active Se oe as

requested that the Court be polled on rehearing en banc (Rule 35,

Federal Rules of Appellate Procedure; Eleventh Circuit Rule 26), the

Suggestion for Rehearing En Banc is DENIED.

ENTERED FOR THE COURT:

Robert D. Vance

United States Circuit Judge

EXHIBIT D

TITLE 18 UNITED STATES CODE

Sec. 1341. Frauds aad swiadies

Whoever, having divised or intending to devise any scheme or

artifice ‘o defraud, or for obtaining money or property by means of

Seas at tan ge gn “Saten.| i...

obligation, security, cea hoor enthes ewe

intimated or held out to be such counterfeit or spurious article, for the

purpose of such scheme or artifice or attempting so to do,

places ia say past ce or authorized for mail matter, any

matter or thing whatever to be sent or the Postal Service,

or takes or receives therefrom, amy such matter or thing, or

knowingly causes to be delivered by mail according to the direction

thereon, or at the place at which it is directed to be delivered by the

seer plerpiemey vs gas any such matter or thing, shall be

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

or both.

Sec. 1343. Frand by wire, radio, or television

Whoever, a ee ta

artifice to defraud, or for obtaining money or property by means of

false of fraudulent pretenses, representations, or promises, transmits

or causes to be transmitted by means of wire, radio, or television

communication in interstate or foreign commerce, any writings.

signs, signals, pictures, or sounds for the purpose of executing such

scheme or artifice, shall be fined not more than $1 ,000 or imprisoned

not more than five years, or both.

Sec. 1961. Definitions

As used in this chapter—

(1) “racketeering activity" means (A) any act or threat involving

murder, kidnaping, gambling, arson, robbery, bribery, extortion, or

D-2

ing in narcotic or other dangerious drugs, which is chargeable

under law and punishable by imprisonment for more than one

year, (B) act which is indictable under any of the following

ions of title 18, United States Code, resend Zag ~

section 224 (relating to sports bri sections

and d/h ipauingwocopmedictiog) section 659 (relating to theft from

sci: wo pmem) if the act indictable under section 659 is

feloniovs, section 664 (relating to embezzlement from pension and

welfare funds), sections 891-894 (relating to extortionate credit

transactions), sie, Se ce a

information), section 1341 —— to mail fraud), section 134

(relating to wire fraud), secti (relating to obstruction of

justice), section 1510 (relating to obstruction of criminal

sn Peace gg to the obstructious of State or

—_ sag ag sre 1 (relating to interference with

aaa section 1952 (relating to

an ing), section 1953 (relating to interstate transporation of

wagering ), section 1954 (relating to unlawful welfare

fund payments), section 1955 (relating to the prohibition of illegal

g businesses), sections 2314 and 2315 (relating to interstate

ion of stolen ), sections 2341-2346 (relating to

cking in contraband cigarettes), sections 2421-24 (relating to

white slave traffic), (C) any act which is indictable under title 29,

United States Code, section 186 (dealing with restrictions on

payments and loans to labor organizations) or section 501(c) (relating

to embezzlement fron union funds), or (D) any offense involving

fraud connected with a case under title 11, tela Qidhe &

securities, or the felonious manufacture, importation, receiving,

concealment, buying, selling, or otherwise dealing in narcotic or

other dangerious drugs, punishable under any law of the United

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

Columbia, the Commonwealth of Peurto Rico, any territory or

possession of thé United States, any political subdivion, or any

pa ae “so , OF instrum thereof;

includes any individual or entity capable of

boldiagsaban pul ectendticialinseriatia

(4) “enterprise” includes any individual, partnership,

corporation, association, or other legal entity, and amy umion or group

of individuals associated infact although not ina legal entity;

D-3

(S) “pattern of racketeering activity" requires at least two acts of

activity, one of which occurred after the effective date of

this chapter and the last of which ocurred within ten years (excluding

any period of imprisonment) after the commission of a prior act of

(6) “unlawful debt" means a debt (A) incurred or contracted in

ambling activity which was in violation of the law of the United

a State of ical subdivision thereof, or which is

unenforceable under of Federal law in whole or in part as to

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

which was incurred in connection with the business of gambling in

violation of the law of the United States, a State or political

subdivision thereof, or the busines of lending money or a thing of

welue 0 6.diet Geddes aul Mat Madea law. where the

usurious rate is at least twice the enforceable rate;

meansany attorney or ator

so denigaioed by the Aesenty Gamers Sd Goerged eich tbe dy of

orcing or carrying into effect this chapter,

ey basen nn nen means any inquiry conducted by

any racketeering invesig of whether

any has been involved in any wolation of this chapter or of

any order, judgment, or decree of amy court of the United States,

duly entered in any case or proceeding arising under this chapter,

(9) documentary material" includes any book, paper,

document, record, recording, or othermaterial; and

(10) “Attorney General" includes the Attorney General of the

United States, the Deputy Attorney General of the United States, any

Sec. 1962. Prokibited activities

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

income derived, directly orindirectly, from a pattern of racketeering

D4

Beams ess through collection of an unlawful debt in which such

as a principal within the meaning of section 2,

title file 18, United § Code, to use or invest; directly or i

any part of such income, or the proceeds of such income, in

acquisition of any interest in, or the establishment or operation af,

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 in the control of the issuer, or of assisting

another to do so, shall not be unlawful under this subsection if the

ee eee ot einen or

immediate family, and his or their accompli

rechaniehapaulivay arte callenlaagtaneientl

Str a Soe

securities of any one and do no confer, either in

law orin fact, ee a ee

(b) It shali be unlawful for any person through a pattern of

racketeering activity or through collection of an unlawful debt to

pr moss oem directly, or indirectly, any interest in or control

any enterprise which is engaged in, or the activities of which

sfteeh oc iabersaeorforeigcommerce

(c) It shall be or em by or

associated with any enterprise matantia, rape which

affect, interstate or foreign commerce, to conduct or parti sag

directly or indirectly, in the conduct of such enterprise's

through a pattern of racketeering activity or collection of unlawful

debt.

(d) It shall be unlawful for any person to ire to violate

any of the provisions of subsections (a), (b), or (c) of this section.

Sec. 1963. Criminal penalties

(a) Whoever violates any provision of section 1962 of this

chapter 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)

pr Agere teins me li gone ma

1 and (2) any interest in security of claim against or property

or contractual right of any kind affording a source of influence over

ary which he has established, operated, controlled,

rg , OF participated in the conduct of, in violation of section

1962.

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(b) In any action brought by the United States under this

section, the district courts of the United States shal! have jurisdiction

to enter such restraining orders or prohibitions, or to take such other

actions, incl but not fi to, the ce of satisf

pees in connection with aay prepa ieiierianeres:

subject to forfeiture under this section, as it deem proper.

(c) 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. If a right or other

interest is not exercisable or transferable for value by the United

States, it shall , and shall not revert to the convicted person.

All ions of relating to the disposition of property, or the

rien or the remission or mitigation of

orfeitures for violation of the customs laws, and the compromise of

inane rap 4

forfeitures shall eitares incurred, or all sepa

incurred, under ard tal section, as applicable

and not inconsistent with the provisions hereof. Soch duties as are

imposed the collector of customs or any other person with

to the disposition of property under the customs laws shall be

ormed under this by the Attorney General. The United

shal! dispose of all such property as soon as commercially

feasible, making due provision for the rights of innocent persons.

Sec. 1964. Civil remedies

(a) The district courts of the United States shall have

jurisdiction to prevent and restrain violations of section 1962 of this

chapter by issuing appropriate orders, including, but not Limited to:

amy person to divest himself of any interest, direct or

indirect, in any enterprise; imposing reasonable restrictions on the

future ectivities or investments of any person, including, but not

limited to, prohibiting any person from engaging in the same type of

endenver as tha Gansineais uniplinnt ta, the activities of which affect

interstate or foreign commerce, or ing dissolution or

pr aa Nt: iat making due provision for the rights

Th Attorney General proceedings under thi

(b) The may institute Ss under this

section. In any action brought by the United States under this

a |

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section, the court shall proceed a? icable to the hearing

and determination thereof. ag cob determination thereof, the

court may at any ime orto: pha orders or ee

or take such other actions, iactadhas tak the acceptance 0:

peformance bonds, as it shall deem

(c) Any person injured in his business meer

a violation of section 1962 of this chapter may sue therefor in

United Sass Gienclex: devek aed eat oacover theneteld the

damages he sustains and the cost of the suit, including a reasonable

attorney'sfee.

(d) A final judgment or decree rendered in favor of the United

States in any criminal brought by the United States under

this chapter shall estop the defendant from denying the essential

allegations of the criminal offense in any subsequent civil proceeding

brought by the United States.

(e) In any action under section 1964 of this chapter in any

district court of the United States in which it is shown that the ends of

justice require that other parties residing in any other district be

brought before the court, the coutr may cause such parties to be

summoned, and process for that may be served in any

judicial district of the United States y the m mactiadthevect

(f) In any civil or criminal action or proceeding instituted by the

United States’ under this chapter in the district court of the United

States for any judicial district, subpenas issued by such court to

compel the attendance of witnesses may be served in any other

— district, except thatin any civil action or proceeding no such

shall be issued for service upon any individual who resides

in another district ata place more than one hrndred miles from the

place at which such court is held without approval given by a judge of

such court a showing of good cause.

(g) All other process in any action or proceeding under this

pe pion hs served Ca eee district in which

person resides, is found, has an agent, or transacts his affairs.

Sec. 1965. Vemve and processs

3(a) Any civil action or proceeding under this chapter against

any person may be instituted in the disrict court of the United States

for any district in which such person resides, is found, has an agent,

or transacts his affairs.