Opposition Brief — Fryar v. Abell

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alt Supreme Court, U,S,

(3) FILED

No. 91-1470 APR 13 1992

———— ———!

OFFICE OF THE CLERK

In The

Supreme Court of the United States

October Term, 1991

JOE E. FRYAR,

Petitioner,

versus

EDWARD C. ABELL, JR. AND CAREY WALTON,

INDIVIDUALLY AND AS REPRESENTATIVES OF THE

CLASS OF PURCHASERS OF WESTSIDE

HABILITATION CENTER REVENUE BONDS,

Respondents.

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Fifth Circuit

BRIEF ON BEHALF OF EDWARD C. ABELL, JR.

AND CAREY WALTON, INDIVIDUALLY AND AS

REPRESENTATIVES OF THE CLASS OF

PURCHASERS OF WESTSIDE HABILITATION

CENTER REVENUE BONDS OPPOSING JOE E.

FRYAR’S PETITION FOR CERTIORARI

Puitur A. WittMaANN

KyYLe SCHONEKAS

Jupy Y. Barrasso

C. LAwrENcE ORLANSKY

STONE, PIGMAN, WALTHER,

WITTMANN & HurcHINson

546 Carondelet Street

New Orleans, Louisiana 70130

Telephone: (504) 581-3200

Attorneys for Respondents

COCKLE LAW BRIEF PRINTING CO, (800) 225-6964

OR CALL COLLECT (402) 342-283

TABLE OF CONTENTS

Page

WRRIO GIP CITI ooo ce cca nin vncccsccne i

ey ey. ee ii

STATEMENT OF THE CASE.....................5. 1

Es EE ea Waals ban Favs Moee kee Goats eas <e 1

De es Cie ee bak cew is doshas das sa vidn ee 2

a. Origin of the Project ....................... 3

b. The Property Transaction................... 5

c. The Bond Issuance......................... Yd

d. Fryar’s Operation of Westside.............. 8

TOME RIO onc ncn dkevcunecenccuesac 8

i. Geibery of the jury ..............0.ccccescas 9

g- The District Court’s Judgment.............. 10

3. Fryar’s Petition for Certiorari.................. 16

4. Reasons for Denying the Writ.................. 16

5. Fryar’s Newly-Raised Constitutional Attacks

ee ere eee 17

6. The RICO Statute is Not Unconstitutionally

bi Ee RE TT Oe rg a ee A A a 19

7. Fryar’s Due Process Rights Were Not Violated.... 23

8. Reconsideration by the District Court did not

Infringe Upon Fryar’s Right to Trial by yury... 2

PE noun lanes esa wae ene eee es 26

TABLE OF AUTHORITIES

Page

CASES

Abell v. Potomac Insurance Co., 858 F.2d 1104 (5th

Cir, 1968) ........ccccccsuncnconsnansses 8, 12, 13, 25

Abell v. Potomac Insurance Co., 884 F.2d 196 (Sth

Cir, 1989) ......ssscccacsccscenhsesstneeasennaee es 13

Abell v. Potomac Insurance Co., 946 F.2d 1160 (5th

Cir, 1991) ...00000s00cuehesssumene eeeeeeeenee= passim

Bouie v. City of Columbia, 378 U.S. 347, 84 S. Ct.

1697 (1964). ....cccccccccccccnnsnnssscssssnnecenss 24

Chase Manhattan Bank v. Malatesta, No. 86 Civ.

1808, 1990 U.S. Dist. LEXIS 9222 (S.D.N.Y. 1990) .... 20

Fryar v. Abell, 492 U.S. 914, 109 S. Ct. 3236 (1989) .... 13

Glass v. Pfeffer, 849 F.2d 1261 (10th Cir. 1988).....17, 18

H.J. Inc. v. Northwestern Bell Telephone Co., Inc., 492

U.S. 229, 109 S.:Ct. 2893 (1989) ........--+++-- passim

In Re Crazy Eddie Securities Litigation, 747 F. Supp.

850 (E.D.N.Y. 1990) .......- cece cece eee eee e ee eeees 21

In Re Par Pharmaceutical, Inc. Securities Litigation,

733 F. Supp. 668 (S.D.N.Y. 1990) ...-..-.-+-- sees ees 21

Liquid Air Corp. v. Rogers, 834 F.2d 1297 (7th Cir.

1987), cert. denied, 492 U.S. 917, 109 S. Ct. 3241

(tt) Me 22

Marks v. U.S., 430 U.S. 188, 97 S. Ct. 990 (1977)..... 24

Martin Oil Co. v. Gulf Insurance Co., 605 F.2d 197

(Sth Cir. 1979).....000sssueseeenan sae neeeeeensenss 17

Minpeco, S.A. v. Hunt, 724 F. Supp. 259 (S.D.N.Y.

CS) 19

iii

TABLE OF AUTHORITIES - Continued

Ostrofe v. H.S. Crocker Co., 740 F.2d 739 (9th Cir.

AE DESEO 18, 19

R.A.G.S. Couture, Inc. v. Hyatt, 774 F.2d 1350 (5th

CREE ASUS R eA eds bce Kewkhandncn des 2, 23, 25

Robinson v. Ariyoshi, 854 F.2d 1189 (9th Cir. 1988) .... 18

Shearson/American Express, Inc. v. McMahon, 482

U.S. 220, 107 S. Ct. 2332 (1987)................ 21, 22

Shingleton v. Armor Velvet Corp., 621 F.2d 180 (5th

EE ee 17

U.S. v. 1966 Beechcraft Aircraft Model King Air, 777

SR WO ec vce scanccsavebccnscas 25

U.S. v. Angiulo, 847 F.2d 956 (1st Cir.), cert. denied

sub nom, Cincotti v. U.S., 499 U.S. 852, 109 S. Ct.

138, cert. denied, 488 U.S. 928, 109 S. Ct. 314

ee enh a Nib's vse bo veka sa eeecsseeuss 24

U.S. v. Angiulo, 897 F.2d 1169 (1st Cir.), cert. denied,

oo AG Se et) 20, 22

U.S. v. Cappetto, 502 F.2d 1351 (7th Cir. 1974), cert.

denied, 420 U.S. 925, 95 S. Ct. 1121 (1975)......... 22

U.S. v. Church, No. 89-8509, 1992 U.S. App. LEXIS

I ER gk cakes sks cascusecvsceeed 18

U.S. v. Coiro, 922 F.2d 1008 (2d Cir.), cert. denied,

es cep BEE DS. Ct. 2626 (1991) ............... 20

U.S. v. Fryar, 867 F.2d 850 (5th Cir. 1989) ......... 3, 10

U.S. v. Fryar, No. CR-87-60027-01 (W.D. La. 1988) ..3, 10

U.S. v. Fryar, No. CR-89-160 (E.D. La. 1989)......... 10

U.S. v. Glecier, 923 F.2d 496 (7th Cir.), cert. denied,

oS | ke ae a” 2, ) 20

TABLE OF AUTHORITIES — Continued

U.S. v. Marchese, No. 89 Cr. 229, 1991 U.S. Dist.

LEXIS 4767 (S.D.N.Y. orenncde etn eek: 20

U.S. v. Martino, 648 F.2d 367 (Sth Cir. 1981), cert.

denied sub nom, Lazzara v. U.S., 456 U.S. 943, 102

S. Ct. 2007 (1982), cert. denied, 456 U.S. 949, 102

SNe I sorcerer ee 24

U.S. v. National On Lelong Chinese Merchants Ass‘n,

No. 90 CR 760, 1991 U.S. Dist. LEXIS 2341 (N.D.

senlcicats es Moccicc,, TERETE Pn ee eee 22

U.S. v. Pungitore, 910 F.2d 1084 (3rd Cir. 1990), cert.

denied sub nom, Scarfo v. U.S., __ US. oo ee a,

Ct. 2009, 111 S. Ct. 2010, 111 S. Ct. 2011 (1991) .20, 22

U.S. v. Tripp, 782 F.2d 38 (6th Cir.), cert. denied, 475

U.S. 1128, 106 S. Ct. 1656 (1986).................. 20

U.S. v. Van Dorn, 925 F.2d 1331 (11th Cir. 1991)..... 20

Uniroyal Goodrich Tire Co. v. Mutual Trading Corp.,

749 F. Supp. 869 (N.D. Ill. 1990).................. 21

STATEMENT OF THE CASE

1. Introduction.

Petitioner Joe E. Fryar (“Fryar”) seeks review of a

decision of the United States Court of Appeals for the

Fifth Circuit (“Court of Appeals”) affirming a judgment

entered by the district court reinstating a jury verdict

rendered after a nine-week trial in favor of the plaintiff

class. The verdict found Fryar and All American Services

Company, Limited (“AA”), a Bermuda corporation orga-

nized and controlled by Fryar, liable for violations of

RICO. Fryar attacks the Court of Appeals’ decision,

asserting that (1) the RICO statute is unconstitutionally

vague; (2) the district court’s reconsideration of the jury’s

RICO verdict in light of the decision in H.J., Inc. v. North-

western Bell Telephone Co., 492 U.S. 229, 109 S. Ct. 2893

(1989) pursuant to this Court’s mandate violated Fryar’s

due process rights by retroactively applying a substantive

change in the law; (3) and the remand and reconsidera-

tion by the district court somehow constitutes an

infringement of Fryar’s right to trial by jury under the

Seventh Amendment. Fryar’s petition is meritless, failing

to present any basis for review of the decision below on

writ of certiorari. First, Fryar’s constitutional challenge to

the RICO statute which was first asserted six years after

commencement of the case, four years after a nine-week

jury trial resulting in a jury verdict in favor of plaintiff,

and two and one-half years after the Court of Appeals

affirmed the jury verdict is untimely and should not be

considered. Fryar’s two other constitutional challenges

raised for the first time in the Court of Appeals on

petition for rehearing also are untimely and should not be

considered. Second, as found by the Court of Appeals,

Fryar’s facial attack on the constitutionality of RICO is

simply too superficial to accept. Fryar has not and cannot

establish that the statute failed to give fair notice that his

conduct was forbidden as required to support a vagueness

challenge outside the First Amendment context. Third,

the consideration of the H.J. decision which did not con-

stitute a substantive expansion of the law, did not violate

Fryar’s due process rights. Moreover, if H.J. did effect a

substantive change in the law which should not be

applied retroactively, the prior law as stated in R.A.G.S.

Couture, Inc. v. Hyatt, 774 F.2d 1350 (5th Cir. 1985) should

apply. Accordingly, the original Court of Appeals’ deci-

sion affirming the jury’s RICO verdict under R.A.G.S. is

correct and should not be reviewed. Finally, reconsidera-

tion of the jury verdict in light of H.J. by the district court

rather than a new jury did not violate Fryar’s right to

trial by jury. Fryar who opposed the remand to the dis-

trict court and who failed to request in the courts below a

trial by jury of the reconsideration issue waived his right,

if any, to trial by jury. Further, a party does not have a

constitutional right to trial by jury of the reconsideration

of a prior jury verdict.

2. Background.

Beginning in 1976 and continuing through the trial in

1987, Fryar and AA conducted a scheme to defraud bond-

holders and enrich themselves. In essence, Fryar formed

an allegedly non-profit corporation, Westside Habilita-

tion Center, Inc. (“Westside”) to own and operate a home

for the mentally retarded in Cheneyville, Louisiana.

Fryar, with the assistance of AA and others, caused West-

side to issue bonds in the amount of $13,550,000 to the

public and used the proceeds to finance the acquisition

and construction of the facility at grossly inflated prices

for his own enrichment. Fryar, thereafter, reaped substan-

tial profits during his operation of the facility by, among

other things, submitting false reimbursement claims to

the State of Louisiana Medicaid program and refusing to

pay the bondholders interest due. Fryar concealed the

fraud by interposing AA in the chain of title to the

property purchased by Westside and by failing to disclose

to Westside’s accountant the true state of affairs. Fryar’s

and/or AA’s concealment of the deceit continued

throughout this litigation by concealing documents, fabri-

cating documents, threatening a witness to prevent his

appearing to testify, and finally by attempting to bribe

the jury at trial.

a. Origin of the Project.

Fryar masterminded the Westside project. First, he

obtained certification from the State of Louisiana to build

a facility having a projected cost of $1,983,500, despite

opposition from officials in the Louisiana Department of

Health and Human Resources because of the excessive

costs, anticipated substantial profit and questionable

need.

Next, Fryar purchased 6.47 acres and a thirty year

old vacant school building in Cheneyville, Louisiana

‘ Fryar subsequently was convicted of attempting to bribe

the jury. U.S. v. Fryar, No. CR-87-60027-01 (W.D. La. 1988).

Fryar’s conviction was affirmed by the Court of Appeals. U.S.

v. Fryar, 867 F.2d 850 (5th Cir. 1989). (A-1).

(“Cheneyville Property”) from the Rapides Parish School

Board for $100,000, its appraised value. Fryar then hired

his attorney to incorporate Westside, which had no Capi-

tal assets. Although a five member board of directors of

Westside was appointed, the board never collectively

made any decision on behalf of Westside. Rather, Fryar

made all decisions, including setting the purchase price

for the Cheneyville Property as well as his own fees. As

found by the district court, “Fryar fomented and directed

the Westside project, and that Fryar, not the board of

directors, actually made all important decisions for West-

side.”

When Fryar was unable to obtain conventional

financing for the project, he turned to the possibility of

financing through tax-exempt bonds. Fryar enlisted the

assistance of Joseph D. Hancock (“Hancock”) and his

underwriting firm, Hancock, Joseph & Daniels (“HJD”)

with whom he had previously worked on a similar bond

financing for public housing projects in Louisiana. At the

time Hancock and HJD were the subject of investigations

by the F.B.I., S.E.C. and NASD.

To facilitate the marketing of tax-exempt bonds,

Fryar hired Booz, Allen & Hamilton, Inc. (“Booz Allen”),

a nationally known consulting firm with extensive expe-

rience in evaluating health care facilities in Louisiana, to

evaluate the feasibility of the project. Booz Allen con-

cluded that the project was not financially feasible, noting

several areas of concern. Despite subsequent consider-

ation of possible solutions, Booz Allen never retracted its

concerns regarding the financial structure of Westside.

Fryar thereafter threatened Booz Allen with suit because

of its adverse conclusions. Booz Allen then agreed to sign

a letter drafted by underwriter’s counsel which merely

noted that Booz Allen’s conclusions may not necessarily

still be applicable. The letter did not state that Booz

Allen’s concerns regarding the financial structure had

been ameliorated. Undeterred, Fryar retained a firm with

little experience in health care and with no knowledge of

the Louisiana Medicaid program from whom he obtained

a favorable report.

Fryar continued to encounter other difficulties in

effecting his scheme. He initially sought approval from

the Louisiana State Bond Commission for the Westside

bond issuance. The Commission, however, declined to

approve financing for Westside bonds due to, among

other things, questions regarding the principals involved,

the amount of profit anticipated to inure to the principals,

and opposition to the project by officials of the State of

Louisiana Department of Health and Human Resources.

Still undeterred, Fryar was able to circumvent the Com-

mission by convincing the Town of Cheneyville to

approve a bond issuance by Westside in the amount of

$12,850,000 pursuant to an obscure and seldom used rev-

enue ruling. Although the town’s official records only

reflect approval of a bond issuance in the amount of

$12,850,000, bonds in the amount of $13,550,000 were

issued and the resolution in the closing documents

reflects approval of the larger issuance. According to the

testimony of the Cheneyville Town Clerk, the resolution

was altered.

b. The Property Transaction.

Fryar determined that he would be paid in excess of

$5,000,000 to renovate, construct and operate the facility

for an estimated seven months until it became self-suffi-

cient. In addition, Fryar decided to inflate by over

$2,300,000 the price to be paid by Westside to purchase

the Cheneyville Property he bought for $100,000. Fre-

quently using the mails and wires to communicate mes-

Sages and transmit documents, Fryar and AA devised a

complicated transaction to conceal Fryar’s profit and

avoid payment by Fryar of taxes on his huge profit. Fryar

first sold the Cheneyville Property for $150,000 in late

1981 to AA, his Bermuda corporation. In order to give the

transaction a semblance of regularity, the act of sale

whereby Fryar sold the property to AA was dated August

21, 1981, notwithstanding that AA had not been orga-

nized as of that date. The funds for AA’s purchase were

obtained from Fryar’s underwriting account in a related

Bermuda company. AA then resold the Cheneyville Prop-

erty to Westside for $2,459,700 — $2,000,000 in Westside

bonds and the remainder in cash. Retaining its ownership

interest in the bonds, AA pledged the bonds to secure

Fryar’s performance as developer, an obligation under-

taken by Fryar pursuant to the development agreement

for which he was to be paid $5,000,000. This transaction

accomplished several things. First, it concealed from

investors the fact that Fryar realized an additional

$2,000,000 on the property transaction and would receive

substantial tax-free interest payments on the $2,000,000

bonds.? The transaction also concealed from investors

that Fryar had no money at risk, and, that in fact, the

? As of trial, Fryar and AA had received approximately

$900,000 in interest payments on the $2,000,000 bonds.

investors themselves were providing the security for

Fryar’s performance.

Although Fryar contends that the $2,459,000 was

paid to AA for assuming Fryar’s obligations under the

development agreement, as found by the district court,

“[such assertion . . . ] is completely belied by the evidence

adduced at trial... .” The evidence of AA’s assumptions

of Fryar’s obligations for which he was to be paid

$5,000,000 was “a copy of a resolution, with no available

original, which resolution was not produced during dis-

covery and which mysteriously appeared during the

course of the trial.” Fryar also relied on a handwritten

letter from AA’s President dated November 24, 1981 as

proof of AA’s assumptions of his obligations. The trial

court questioned the authenticity of this letter, stating:

The evidence presented by defendants to prove

All American’s obligations on behalf of Joe

Fryar, in consideration for receiving $2,459,000

for a piece of property that cost it only $150,000,

was a letter from All American which myste-

riously appeared during the course of the trial.

The letter was dated November, 1981, wherein

All American agreed to buy the property which

it had already purchased in August, 1981... .

In fact, the trial court found that AA was “organized for

the express purpose of concealing that a profit in excess

of $2,000,000 was to be made on the sale of the Che-

neyville Property.”

c. The Bond Issuance.

Fryar proceeded to issue the bonds with the assis-

tance of the other defendants. As found by the Court of

Appeals, the bonds were sold using sales circulars erro-

neously portraying Fryar as having $2,000,000 at risk.

Abell v. Potomac Insurance Co., 858 F.2d 1104, 1129 (5th Cir.

1988).

d. Fryar’s Operation of Westside.

Fryar thereafter constructed and operated Westside.

During Fryar’s operation, he submitted reimbursement

claims to the State of Louisiana Medicaid program which

misrepresented the true cost of the facility, the obligations

of Westside and the fact that the bondholders were not

being paid the interest owed. As a result of these misrep-

resentations, Fryar received payments from the State of

Louisiana Medicaid program substantially in excess of

what should have been paid. More importantly, Fryar

pocketed the money paid as reimbursement on debts to

the bondholders, thereby profiting personally by an

amount in excess of $1,300,000. Abell v. Potomac Insurance

Co., 946 F.2d 1160, 1163, n.4 (5th Cir. 1991). Westside’s

Own accountant admitted on cross-examination that such

misrepresentations constituted Medicaid fraud.

e. The Litigation.

Fryar’s fraud and deceit continued throughout this

litigation. During the pretrial discovery proceedings,

Fryar and AA attempted to thwart and obstruct these

proceedings. For example, although respondents sought

for over two years to obtain all documents from AA

pertaining to the transaction at issue by subpoenas and

requests for production of documents, on the eve of trial

AA produced previously undisclosed copies of docu-

ments purporting to be corporate records of AA, corre-

spondence between AA and Fryar, and correspondence

between AA and its counsel. The originals of the “new

documents” were not produced, notwithstanding the

questionable authenticity of the copies.

Fryar’s attempt to circumvent the rules went far

beyond his “concealment” of documents. He also inter-

fered with the discovery by threatening a witness to

dissuade him from testifying. Prior to trial, respondents

sought to take the deposition testimony in Bermuda of

AA’s officer and auditor, Ian Fleming. Mr. Fleming’s testi-

mony was critical because AA had consistently produced

as representatives persons with no personal knowledge

of the transaction at issue. These persons, in fact, testified

that Mr. Fleming was more competent to testify in the

matters at issue.

Although Mr. Fleming originally agreed to appear for

his deposition, he failed to appear. He then moved

through an attorney previously representing AA to quash

the subpoena requiring his appearance. Mr. Fleming’s

change of heart resulted from threats by AA to dissuade

him from testifying as established by a telex discovered

during trial. (A-15). After a two day evidentiary hearing

during trial, the trial court held that although the telex

came from Bermuda, its probative value was outweighed

by the prejudicial effect.

f. Bribery of the Jury.

Fryar’s final attempt to thwart justice occurred dur-

ing the trial when he attempted to bribe two of the jurors.

A little over a month into the trial, the trial judge

received information from the F.B.I. that Fryar was

attempting to bribe several members of the jury. The

judge questioned the F.B.I. agent in camera, outside the

presence of the defendants and their attorneys, satisfying

itself that probable cause existed to believe that Fryar

indeed had attempted to bribe two jurors. Prior to charg-

ing the jury, the judge excused two jurors.

Fryar’s subsequent conviction of eight counts of

obstruction of justice was affirmed by the Court of

Appeals.? More recently, Fryar was convicted of money

laundering.4

g- The District Court’s Judgment.

Following a nine week trial, a jury returned a verdict

for the plaintiffs finding Fryar and AA liable for viola-

tions of RICO. The trial court entered judgment on Febru-

ary 19, 1987, awarding damages, inter alia, in the amount

of $2,550,000 for the RICO violations and attorneys’ fees

in the amount of $2,567,323.80. The trial court thereafter

denied Fryar’s post-trial motions in a lengthy opinion

which thoroughly reviewed the evidence. The trial court

held that “[t]he evidence adduced at trial convinces this

Court beyond any doubt that the jury’s verdict is reason-

able.” The court stated:

3 U.S. v. Fryar, No. CR-87-60027-01) (W.D. La. 1988); U.S.

v. Fryar, 867 F.2d 850 (5th Cir. 1989). (A-1).

* U.S. v. Fryar, No. CR-89-160 (E.D. La. 1989). (A-17).

The evidence at trial abundantly supported

the jury’s finding that Fryar violated Section

1962(a) of the RICO Act. It is clear that Fryar

and All American derived in excess of $2 million

from the pattern of racketeering activity which

resulted from the issuance of the Westside

bonds. It is also well established that at least

$2.4 million of the racketeering monies was used

by Fryar and All American to acquire an interest

in Westside by the purchase of Westside bonds,

and that at least part of the proceeds of that

investment, the interest payments, were paid to

Fryar, who was operating Westside.

The evidence adduced at trial also supports

the reasonableness of the jury’s finding that

Fryar and All American violated Section 1962(b)

of the RICO Act. Fryar and All American used

the racketeering monies to acquire over $2 mil-

lion of Westside bonds. As a result of the

scheme, Fryar controlled and operated Westside,

during which time he received all revenues paid

by the state of Louisiana to Westside, including

revenues paid as reimbursement for the interest

owed by Westside to plaintiffs. Nevertheless,

Fryar refused to pay this interest to plaintiffs.

Moreover, the fact that Westside failed to make

demand upon Fryar for return of the revenues

further indicates that Fryar controlled Westside.

The evidence also abundantly supports the

jury’s finding that Fryar and All American vio-

lated Section 1962(c) of the RICO Act. The evi-

dence discussed above clearly indicates that

Fryar and All American participated in the

scheme to issue and to market the Westside

bonds, within the meaning of Section 1962(c).

On appeal, the Fifth Circuit affirmed the jury’s RICO

verdict, finding that “evidence Strongly supports the

jury’s RICO verdict.”5 The court explained:

... The record amply supports the jury’s conclu-

sion that Fryar, intending to defraud potential

investors, devised and employed a scheme to

sell Westside bonds. Fryar knowingly misled

Prospective bondholders about a land transac-

tion that significantly affected Westside’s finan-

cial structure. He falsely suggested that he had

backed the health care Project with $2,000,000 of

his own money. Obviously, the jury could find

that Fryar had a reasonably calculated plan to

deceive persons of ordinary prudence and com-

prehension into giving Westside their money.

Nor does Fryar contest whether he used the

mails repeatedly to execute this scheme; indeed,

the evidence is overwhelming that he did. Fryar

used the mails to obtain and transmit the appli-

cation forms for Westside’s certificate of need; to

help create All American and interpose it in the

transaction; and to send the land transaction

documents to All American. He also caused

others to use the mails to transmit the sales

circulars that erroneously portrayed Fryar as

purchasing and Pledging $2,000,000 of bonds

with his own money; and finally, he caused the

mails to be used in an attempt to cover up the

fraud and deceive bondholders into believing

> The court of appeals reversed the judgment in favor of

the class on its securities law and State law fraud claims. The

court affirmed the jury verdict finding Fryar liable to Abell and

Walton individually for violations of § 10(b) of the Securities &

Exchange Act. Abell v. Potomac Insurance Co., 858 F.2d 1104,

1147 (Sth Cir. 1988).

All American was performing more obligations

than it had actually undertaken.

858 F.2d at 1130.

The Fifth Circuit also affirmed the RICO damage award

in favor of the plaintiff class against Fryar, holding that

“the jury awarded plaintiffs considerably less than the

damages which they proved at trial.” 858 F.2d at 1140.

On March 13, 1989, Fryar filed a Petition for Cer-

tiorari to the United States Supreme Court, arguing that —

plaintiffs failed to establish a pattern of racketeering

activity because distinct multiple schemes were not estab-

lished. On July 3, 1989, the United States Supreme Court

granted petitions for certiorari in nine cases, including

this one, in which the issue of sufficiency of a pattern of

racketeering activity was raised. Fryar v. Abell, 492 U.S.

914, 109 S. Ct. 3236 (1989). The Court systematically

remanded the nine cases for reconsideration in light of

the decision in H.J. Inc. v. Northwestern Bell Telephone Co.,

Inc., 492 U.S. 229, 109 S. Ct. 2893 (1989) pertaining to the

appropriate standard for establishing a pattern of rack-

eteering activity under RICO. Abell v. Potomac Insurance

Co., 946 F.2d 1160, 1164 (5th Cir. 1991).

On September 12, 1989, the Court of Appeals

remanded the matter to the district court for further

consideration in light of H.J. and Fryar’s pending bank-

ruptcy proceeding. Abell v. Potomac Insurance Co., 884

F.2d 196 (Sth Cir. 1989). The plaintiffs moved for

6 Fryar commenced a proceeding under Chapter 11 of the

United States Bankruptcy Code on May 2, 1989. The

(Continued on following page)

reinstatement of the jury’s RICO verdict and the award of

attorney’s fees, and Fryar-moved to dismiss plaintiffs’

RICO claims, arguing fof the first time that the RICO

Statute was unconstitutionally vague. (A-20).

The district court granted plaintiffs’ motion, uphold-

ing the jury’s RICO verdict in light of H.J. The district

court stated:

In consideration of the principles enunci-

ated in H.J., this Court still holds that the find-

ing of RICO violations is abundantly supported

by the evidence. . . . H.J. defines a “pattern of

racketeering activity” to require a showing of

related racketeering predicates amounting to or

posing a threat of continued criminal activity.

The district court rejected Fryar’s argument that the

RICO statute is unconstitutionally vague.

On appeal, the Fifth Circuit again affirmed the jury’s

RICO verdict, finding that Fryar’s conduct “easily sur-

passed the RICO threshold”. The court explained:

[T]his Court has already affirmed the judg-

ment for plaintiffs’ RICO claims against Fryar

for the activities in question, noting that the

(Continued from previous page)

proceeding was converted to a Chapter 7 proceeding on July

13, 1990. By order dated January 3, 1990, the court granted

plaintiffs’ motion for relief from Stay, permitting them to pur-

Sue these claims. Plaintiffs filed an adversary proceeding,

alleging that Fryar’s debt to Abell, Waiton, and the class is

nondischargeable pursuant to 11 U.S.C. §§ 523(a)(2)(A) and (B),

(a)(4) and (a)(6); 523(c) and Bankruptcy Rule 4007. The bank-

ruptcy court has continued the proceeding, pending resolution

of Fryar’s appeal.

“evidence strongly supports the jury’s RICO ver-

dict.” 858 F.2d 1130 (emphasis added). H.J. has,

if anything, resolved rather than revolutionized

the law, and the Fryar facts have not

changed... .

H.J.’s relatedness and continuity tests are

fact-specific and the facts adduced at trial and

piled up high against Fryar — some 500 bond-

holders were cheated out of millions of dollars

in a scheme that spread itself out over more

than six years - are damning. We have no need

to sharpen our pencils for subtle RICO analysis:

Fryar’s mail fraud violations and the fact that

these violations were, as observed by the district

court, strung together by the making-money-at-

the-expense-of-bondholders objective realized

by Fryar are enough. Fryar’s conduct has, there-

fore, easily surpassed the RICO threshold, and

we affirm the district court’s RICO judgment

against him.

946 F.2d at 1167-68.

The Court of Appeals expressly rejected Fryar’s con-

stitutional challenge to the RICO statute, noting that it

was untimely and, more importantly, fatally flawed. The

court explained:

In bringing his constitutional contention to

us, Fryar is apparently overlooking the principle

that ‘outside the First Amendment context, a

party has standing to raise a vagueness chal-

lenge only insofar as the statute is vague as

applied to his or her speeific conduct.’ [Citations

omitted.] . .. A myriad of fraudulent acts span-

ning more than six years and involving more

than five hundred victims — based on the evi-

dence adduced at trial, it follows that Fryar’s

———————————————

facial attack on the constitutionality of RICO is

simply too superficial to accept.

946 F.2d at 1167.

(Emphasis in original).

3. Fryar’s Petition for Certiorari.

Fryar now seeks review of the Court of Appeals’

decision affirming the reinstatement of the jury verdict

finding Fryar liable for violations of RICO. In support of

his petition, Fryar asserts three untimely constitutional

challenges: (1) the RICO statute is unconstitutionally

vague; (2) his due process rights were violated because

reconsideration of the jury’s verdict in light of H.J. some-

how constitutes an impermissible application of a sub-

stantive change in the law; (3) and his right to a trial by

jury was violated by reconsideration of the jury verdict in

light of H.J. by the district court rather than a jury.

4. Reasons for Denying the Writ.

Fryar has failed to identify any special or important

reasons for granting his petition for writ of certiorari.

Indeed, no such special or important reasons obtain to

this case. No other court of appeals has rendered a deci-

sion that conflicts with the decision rendered in the court

below. The decision below does not conflict with applica-

ble decisions of this Court. Nor did the decision below

decide an important question of federal law which has

not been but should be settled by this Court. Indeed, two

of the three arguments asserted were not even considered

by the Court of Appeals. Hence, this case is inappropriate

for review.

More importantly, the Court of Appeals merely found

that fraudulent conduct cheating 500 bondholders out of

millions of dollars in a scheme that spanned more than

six years “easily surpassed the RICO threshold”. 946 F.2d

at 1168. The decision is correct and should not be

reviewed. Further, Fryar’s constitutional arguments are

untimely and meritless.

5. Fryar’s Newly-Raised Constitutional Attacks Cannot

be Considered.

Six years after commencement of this case, four years

after a nine-week jury trial resulting in a jury verdict in

favor of the plaintiffs, and two and one-half years after

the Fifth Circuit affirmed the jury’s RICO verdict, Fryar

asserted for the first time on remand a constitutional

attack on the RICO statute. Fryar argued that the RICO

statute is unconstitutionally vague requiring dismissal of

plaintiffs’ RICO claims. Subsequent to the second Court

of Appeals’ decision, Fryar asserted for the first time on

Petition for Rehearing two additional constitutional argu-

ments: (1) retroactive application of H.]. violated his due

process rights; and (2) reconsideration by the Court

rather than a new jury infringed upon his right to trial by

jury. Fryar’s newly-raised constitutional attacks should

not be considered.

It is well established that issues not raised before trial

are considered waived and cannot be considered on

appeal or remand. See e.g., Shingleton v. Armor Velvet

Corp., 621 F.2d 180, 183 (5th Cir. 1980); Martin Oil Co. v.

Gulf Insurance Co., 605 F.2d 197, 199 (5th Cir. 1979). In

Glass v. Pfeffer, 849 F.2d 1261 (10th Cir. 1988), the Tenth

Circuit has explained:

[b]y failing to raise a § 1985(2) legal theory

before the district court, plaintiffs foreclosed

themselves from arguing that theory on appeal

or on remand...

849 F.2d at 1264.

(Emphasis supplied).

That the case was remanded with an explicit mandate

for reconsideration in light of H.J. did not reopen the case

for consideration of all issues. As explained by the court

below:

We did not lower a pinata of issues for

Fryar to split open, returning to this Court with

his arms full.

946 F.2d at 1165.

The decision below is consistent with other courts of

appeals decisions. In U.S. v. Church, No. 89-8509, 1992

U.S. App. LEXIS 3931 (11th Cir. 1992), the Eleventh Cir-

cuit refused to consider a vagueness challenge to the

RICO statute “because appellants failed to raise it in the

district court”. In Robinson v. Ariyoshi, 854 F.2d 1189 (9th

Cir. 1988), the Ninth Circuit considered the scope of a

remand pursuant to language identical to the language

used in remanding this case, and concluded that a

remand on one narrow question does not reopen the

whole case for reconsideration of all issues, including

issues that may have been changed by law in the interim.

Rather, upon remand the court may consider only the

effect of the Supreme Court’s decision and its progeny

upon the case before it. See also Ostrofe v. H.S. Crocker Co.,

eee eee

740 F.2d 739, 748 (9th Cir. 1984) (remand required recon-

sideration in light of Associated General Contractors and

nothing more); Minpeco, S.A. v. Hunt, 724 F. Supp. 259,

260 (S.D.N.Y. 1989) (defendants criticized for first assert-

ing a constitutional challenge to RICO after trial and

disposition of post-trial motions).

Ignoring these decisions, Fryar has offered no argu-

ment supporting his attempt to have legal issues consid-

ered for the first time on remand or on petition for

rehearing in the Court of Appeals. Fryar’s constitutional

attacks are untimely and should not be considered.

6. The RICO Statute is Not Unconstitutionally Vague.

Although the Court of Appeals found Fryar’s vague-

ness argument untimely it, nevertheless, considered and

rejected the constitutional attack on the RICO statute. 946

F.2d at 1165-67. The court reasoned that “outside the First

Amendment context, a party has standing to raise a

vagueness challenge only insofar as the statute is vague

as applied to his or her specific conduct”. 946 F.2d at

1167. That is, “Fryar would have had to show . . . that the

scope of RICO’s ‘pattern’ element was so unclear that a

person of ordinary intelligence in Fryar’s position would

not have had adequate notice that his actions constituted

‘a pattern of racketeering activity.’ ” Id. Considering the

evidence adduced at trial - “[a] myriad of fraudulent acts

spanning more than six years and involving more than

five hundred victims” — the court concluded that “Fryar’s

facial attack on the constitutionality of RICO is simply too

superficial to accept”. Id. (Emphasis in original).

The Court of Appeals’ decision is consistent with the

decisions of the majority of courts which have considered

the vagueness argument urged here by Fryar. Since H.J.,

seven circuits, including the court below, have rejected

the argument. In U.S. v. Van Dorn, 925 F.2d 1331, 1334 n.2

(11th Cir. 1991) the Eleventh Circuit found defendants’

vagueness argument to be “completely lacking in merit.”

In U.S. v. Glecier, 923 F.2d 496, 497-98 n.1 (7th Cir.), cert.

denied, __ U.S. __, 112 S. Ct. 54 (1991), the Seventh

Circuit rejected a vagueness challenge, noting that

“[w]e . . . join the First and Third Circuits in reaffirming

that the RICO statute is not unconstitutional despite Jus-

tice Scalia’s statements concerning the pattern require-

ment in his concurrence in H.J....” In U.S. v. Tripp, 782

F.2d 38, 41-42 (6th Cir.), cert. denied, 475 U.S. 1128, 106 S.

Ct. 1656 (1986), the Sixth Circuit squarely rejected the

vagueness argument. In U.S. v. Coiro, 922 F.2d 1008, 1017

(2d Cir.), cert. denied, __ U.S. __, 111 S. Ct. 2826 (1991),

the Second Circuit reiterated that RICO was not uncon-

Stitutionally vague. In U.S. v. Pungitore, 910 F.2d 1084,

1102-05 (3rd Cir. 1990), cert. denied sub nom, Scarfo v. U.S.

—___: U.S. __, 111 S. Ct. 2009, 111 S. Ct. 2010, 111 S. Ct.

2011 (1991), the Third Circuit rejected a vagueness chal-

lenge. In U.S. v. Angiulo, 897 F.2d 1169, 1179-80 (1st Cir.),

cert. denied, __ U.S. __, 111 S.Ct. 130 (1990), the First

Circuit rejected a vagueness argument. A flood of district

court cases likewise have rejected vagueness attacks. See

e.g., U.S. v. Marchese, No. 89 Cr. 229, 1991 U.S. Dist. LEXIS

4767 (S.D.N.Y. 1991) (rejecting argument that RICO stat-

ute is unconstitutionally vague); Chase Manhattan Bank v.

Malatesta, No. 86 Civ. 1808, 1990 U.S. Dist. LEXIS 9222

(S.D.N.Y. 1990) (rejecting vagueness argument in light of

Supreme Court’s recent interpretation of “pattern” and

fair warning provided by statutes listed under § 1961(1));

Uniroyal Goodrich Tire Co. v. Mutual Trading Corp., 749 F.

Supp. 869 (N.D. Ill. 1990) (finding RICO’s pattern require-

ment constitutional); In Re Crazy Eddie Securities Litiga-

tion, 747 F. Supp. 850 (E.D.N.Y. 1990) (finding the statute

constitutional); In Re Par Pharmaceutical, Inc. Securities

Litigation, 733 F. Supp. 668, 683 n.15 (S.D.N.Y. 1990)

(declining to strike down RICO statute).

Fryar has not cited one decision holding to the con-

trary. Instead, ignoring the numerous decisions squarely

rejecting the vagueness argument in a RICO case, Fryar

relies heavily on Justice Scalia’s dictum in his H.J. concur-

rence and argues that the statute is void on its face.

Fryar’s reliance is misplaced. Justice Scalia’s language

seized upon by Fryar does not hold that the RICO statute

is unconstitutionally vague. Indeed, Justice Scalia

acknowledged that “[n]o constitutional challenge to this

law has been raised in the present case, and so that issue

is not before us.” 109 S. Ct. at 2909. Justice Scalia’s com-

ments merely are dictum.

More importantly, Fryar’s facial challenge to the

RICO statute ignores the well-established principle recog-

nized by the Court of Appeals that outside the First

Amendment context, a facial challenge to a statute will

not lie.” Rather, the vagueness challenge must be limited

” Fryar also argues without authority that in a civil action

suit the RICO statute must be considered a criminal statute. To

the contrary, courts, including this one, have held that RICO is

not to be judged by criminal standards. Shearson/American

Express, Inc. v. McMahon, 482 U.S. 220, 240, 107 S. Ct. 2332, 2344

(Continued on following page)

to whether the statute is vague as applied to the defen-

dant’s conduct. U.S. v. Pungitore, 910 F.2d 1084, 1104 (3rd

Cir. 1990), cert. denied sub nom Scarfo v. U.S.,__ US. _,

111 S. Ct. 2009, 111 S. Ct. 2010, 111 S. Ct. 2011 (1991)

(“outside the First Amendment context, a party has

standing to raise a vagueness challenge only insofar as

the statute is vague as applied to his or her specific

conduct”); U.S. v. Angiulo, 897 F.2d 1169, 1179 (1st Cir.),

cert. denied, ___ U.S. ___, 111 S. Ct. 130 (1990) (in absence

of First Amendment considerations, vagueness challenge

must be examined in light of a case’s particular facts); see

also U.S. v. National On Lelong Chinese Merchants Ass‘n,

No. 90 CR 760, 1991 U.S. Dist. LEXIS 2341 (N.D. Ill. Feb.

15, 1991). Thus, the proper inquiry is whether persons of

ordinary intelligence would know that Fryar’s myriad of

criminal offenses at issue here constitutes a pattern of

racketeering activity. Fryar has not and cannot establish

that the statute failed to give fair notice that his conduct

was forbidden. A person of ordinary intelligence could

hardly not realize that Fryar’s repeated use of the mails

and wires to knowingly mislead over 500 prospective

bondholders about a land transaction that significantly

affected Westside’s financial structure from which he

(Continued from previous page)

(1987) (rejecting argument that RICO claims were quasi-crimi-

nal and not subject to arbitration); Liquid Air Corp. v. Rogers,

834 F.2d 1297, 1302-03 (7th Cir. 1987), cert. denied, 492 U.S. 917,

109 S. Ct. 3241 (1989) (rejecting the argument that RICO was

quasi-criminal in nature); U.S. v. Cappetto, 502 F.2d-1351 (7th

Cir. 1974), cert. denied, 420 U.S. 925, 95 S. Ct. 1121 (1975) (a civil

RICO action should not be judged by the criminal standards of

constitutional protection).

te AD A A

enriched himself by more than $2,000,000 did not fall

within the ambit of RICO. Fryar’s constitutional chal-

lenge is totally devoid of merit.

7. Fryar’s Due Process Rights Were Not Violated.

Fryar argued for the first time in his Petition for

Rehearing (A-51) to the Court of Appeals that recon-

sideration of the jury verdict in light of this Court's

decision in H.J. constitutes an “impermissible retroactive

application of a change of substantive law” violative of

his due process rights.§ Fryar cites no authority for this

novel proposition. Moreover, the basic premise of Fryar’s

argument is faulty - that this Court’s decision in H.J.

constituted a substantive expansive change in the law.

(Petition for Certiorari, pp. 35-36). To the contrary, as

explained by the Court of Appeals:

H.J. has, if anything, resolved rather than

revolutionized the law .. .

946 F.2d at 1167.

Fryar, nevertheless, argues that this Court’s decision

in H.J. expanded the parameters of RICO. Fryar’s argu-

ment turns logic on its head. H.J., if anything, casts a

significantly smaller net over RICO defendants than

under R.A.G.S. Couture, Inc. v. Hyatt, 774 F.2d 1350 (5th

Cir. 1985), the prior Fifth Circuit precedent under which

proof of only two predicate acts established a pattern of

® The Court of Appeals specifically identified the three

questions of law before it on appeal. 946 F.2d at 1165. Cortspic-

uously absent from the list are Fryar’s due process and Sev-

enth Amendment arguments asserted here.

racketeering activity. H.J., thus, narrowed and clarified

the statute rather than expanded it. No authority has

been found supporting the proposition that application of

a decision clarifying and narrowing of a statute violates

due process.? Indeed, courts have rejected Fryar’s argu-

ment where judicial expansion of a Statutory construction

occurs if such construction is expected and defensible.

U.S. v. Martino, 648 F.2d 367 (Sth Cir. 1981), cert. denied

sub nom, Lazzara v. U.S., 456 U.S. 943, 102 S. Ct. 2007

(1982), cert. denied, 456 U.S. 949, 102 S. Ct. 2020 (1982);

U.S. v. Angiulo, 847 F.2d 956 (1st Cir.), cert. denied sub nom,

Cincotti v. U.S., 488 U.S. 852, 109 S. Ct. 138, cert. denied,

488 U.S. 928, 109 S. Ct. 314 (1988) (rejecting due process

argument where change of construction of RICO statute

regarding “enterprise” was foreseeable). If an expected

and defensible judicial expansion of a statute may be

retroactively applied without violating due process, a

fortiori judicial narrowing and classification of a statute

may be retroactively applied.

Further, acceptance of Fryar’s argument does not

require review of the decision below. If Fryar’s argument

is correct, then the law in effect at the time as enunciated

* In contrast, where a decision clearly expands the scope

of a criminal statute prohibiting conduct implicating First

Amendment ‘values, the decision cannot be applied retroac-

tively. Marks v. U.S., 430 U.S. 188, 97 S. Ct. 990 (1977) (peti-

tioners entitled to jury instructions fashioned under prior case

law where decision expanded definition of obscenity); Bouie v.

City of Columbia, 378 U.S. 347, 84 S. Ct. 1697 (1964) (judicial

expansion of criminal statute cannot be applied retroactively).

The principles of Marks and Bouie cited by Fryar do not apply

to this case involving neither a criminal Statute nor First

Amendment conduct.

aa cara eaecemailmiaaaai

in R.A.G.S. must apply. Under R.A.G.S., Fryar’s conduct

clearly was violative of RICO, as previously found by the

Fifth Circuit. Abell v. Potomac Ins. Co., 858 F.2d 1104 (5th

Cir. 1988). Further review is not required.

8. Reconsideration by the District Court did not

Infringe Upon Fryar’s Right to Trial by Jury.

Fryar also argued for the first time in his Petition for

Rehearing that reconsideration of the jury verdict in light

of H.J. by the district court infringed upon his right to a

trial by jury, violative of the Seventh Amendment. Fryar’s

argument is disingenuous and diametrically opposed to

Fryar’s contentions in the Court of Appeals. Rather than

arguing that a jury must reconsider the verdict in light of

H.J., in the Court of Appeals Fryar sought to prevent the

district court from considering the issues. In a Motion to

Recall the order remanding the case to the district court,

Fryar argued to the Court of Appeals that “the legality of

respondents’ civil RICO claims against movant should be

decided by this Court based on the record on appeal”.

(A-61). Fryar never requested that the issue be considered

by a jury. (A-59). Having so argued that the case should

be reconsidered based on the record on appeal, and hav-

ing failed to request a new trial by jury or to object to

entry of the judgment on that ground, Fryar clearly has

waived his right to do so. U.S. v. 1966 Beechcraft Aircraft

Model King Air, 777 F.2d 947 (4th Cir. 1985) (claimants

failure to object to district court’s resolution of issues

constitutes a waiver of right to jury trial).

Further, Fryar’s argument rests upon a faulty prem-

ise - that every remand for reconsideration of a jury

verdict in light of a subsequent appellate decision

requires a remand to the district court for a new trial. To

the contrary, as Fryar Previously argued the Supreme

Court’s directive clearly contemplated that “the legality

of respondents’ civil RICO claims against movant should

be decided by this Court based on the record on appeal. The

resolution of that legal question by this Court will impart

finality thereto, except as the Supreme Court may decide

to review such a decision on application for a writ of

certiorari.” (A-61-62). Accordingly, Fryar’s right to a jury

trial has not been infringed.

CONCLUSION

Fryar’s failure to timely urge the arguments offered

in his Petition for Certiorari is fatal; the untimely argu-

ments should not be considered. Moreover, the argu-

ments are meritless. The RICO statute as applied to

Fryar’s fraudulent conduct spanning more than ten years

and victimizing over 500 bondholders is not unconstitu-

tionally vague. Consideration of the jury’s verdict in light

of H.J. neither is violative of Fryar’s due process rights or

the right to a trial by jury. For these reasons, Fryar’s

Petition for Writ of Certiorari should be denied.

Respectfully submitted,

PHiture A. WITTMANN, 13625

KYLE SCHONEKAS, 11817

Jupy Y. Barrasso, 2814

C. LAwreNcE OrLANSKy, 2039

STONE, PIGMAN, WALTHER,

WITTMANN & HuTCHINSON

546 Carondelet Street

New Orleans, Louisiana 70130

Telephone: (504) 581-3200

Attorneys for Respondents

A-1

UNITED STATES of America,

Plaintiff-Appellee,

Joe E. FRYAR, Defendant-Appellant.

No. 88-4200.

United States Court of Appeals,

Fifth Circuit.

March 1, 1989.

Rehearing Denied April 18, 1989.

Clinard J. Hanby, Houston, Tex., J. Minos Simon,

Lafayette, La., for defendant-appellant.

John P. Lydick, Asst. U.S. Atty., Joseph S. Cage, Jr.,

U.S. Atty., John A. Broadwell, Asst. U.S. Atty., Shre-

veport, La., for plaintiff-appellee.

Appeal from the United States District Court for the

Western District of Louisiana.

Before BROWN, JOHNSON and DAVIS, Circuit

Judges.

W. EUGENE DAVIS, Circuit Judge:

Appellant, Joe E. Fryar, challenges his-conviction fol-

lowing a jury’s guilty verdict on eight counts of jury

tampering and conspiracy to corruptly influence a jury.

We find no error and affirm.

A jury convicted Fryar on eight counts of obstruction

of justice, conspiracy, and aiding and abetting under 18

A-2

U.S.C. §§ 2, 371, and 1503. The charges stemmed from

efforts to bribe three jurors during the trial of a civil case

in the United States District Court for the Western Dis-

_trict of Louisiana, in which Fryar was a defendant. The

government presented evidence that Fryar conveyed

bribe offers to two jurors using intermediaries. Two of

those intermediaries testified for the prosecution.

On the government’s motion, the district court

sequestered the jury that was hearing Fryar’s jury tam-

pering case in a section of the Holiday Inn in Monroe,

Louisiana. Two marshals were stationed in an end room

at the head of the staircase; another was positioned in a

room at the other end of the jurors’ rooms. The drapes in

both rooms were open. The marshals also placed yellow

cones bearing “No Trespassing” signs at each end of the

balcony.

As the jurors chatted in the courthouse jury room on

Saturday, January 30, 1988, juror Steven Faulkner stated

that a woman had come to his room about 1:30 a.m.

Saturday. Several jurors, including Pam Guillot, advised

him to report the visit to the marshals. Faulkner said he

had told the marshals about the visit that morning, and

then clarified his description of the visit. Faulkner, whose

room, 250, was three doors down from the guards’ com-

mand post room, told the other jurors that a young

woman had knocked on his motel door the night before

looking for a fraternity party. He said he told the woman

he knew nothing about the party and closed his door.

While the jurors watched a movie Saturday night in

one of the hotel rooms, a dance scene prompted Guillot io

ask Faulkner if the dancer looked like the woman who

A-3

had come to his room the night before. Deputy Marshal

James Rea overheard the remark and asked Guillot what

she was talking about; she repeated Faulkner’s earlier

statements. Rea told two other marshals about the state-

ment, after which the three marshals asked Faulkner to

step out of the room. When they asked him which mar-

shal he had told about the visit, Faulkner said he could

not remember.

On Sunday morning one of the marshals told Deputy

Marshall James Pleicones about Faulkner’s statements.

Faulkner repeated his story to Pleicones outside the pres-

ence of the other jurors. When Pleicones asked which

marshal Faulkner had informed, Faulkner first said he

had told Pleicones. After Pleicones denied being told,

Faulkner said he must have told Deputy Marshal David

Murphy. When Murphy also denied being told, Faulkner

said he could not remember who he had told but added

that juror Guillot would know. Pleicones then talked with

Guillot alone, who recounted her jury room conversation

with Faulkner but said she did not see Faulkner tell any

marshals about the incident.

After the morning break on Monday, February 1,

1988, the district court recessed the trial temporarily to

interview the marshals and jurors in chambers. The three

marshals on guard duty during the Friday-to-Saturday

overnight shift told the court they neither saw nor heard

anyone walking on the balcony or knocking on the jurors’

doors. The district court then interviewed Faulkner and

Guillot separately. Faulkner described the visit and its

aftermath again. Guillot confirmed the jury room conver-

sation with Faulkner but stated that she did not think the

visit had occurred. Guillot also stated that the Faulkner

A-4

incident would not influence her ability to decide the case

fairly and impartially. The court did not ask Faulkner

whether he still could decide the case fairly and impar-

tially.

The district court then excused Faulkner from the

jury over Fryar’s objection. The court concluded that

Faulkner lied about the visit, had continued to lie in the

face of questioning, and thus was not fit to serve as a

juror. Alternate juror Eddie Rice took Faulkner’s place

and eventually became the foreman. The court denied

Fryar’s motion to remove Guillot from the jury.

The court then interviewed the remaining jurors sep-

arately about the incident. Five said they believed the

visit had not occurred, five thought it had occurred, and

three said they were not sure. All said the Faulkner

incident would not affect their impartiality. The court

admonished each juror individually not to discuss the

interview with the other jurors.

After reconvening, the district court instructed all of

the jurors with Fryar’s consent to draw no conclusions or

inferences from Faulkner’s excusal. Fryar moved for a

mistrial on grounds that the taint of Faulkner’s dismissal

persisted because five jurors believed his story about the

visit. The court denied this motion and Fryar’s renewed

motion to excuse Guillot.

Fryar moved for a new trial after his conviction on

grounds that the district court had excused juror Fau-

Ikner erroneously. During a post-trial hearing on the

motion, Fryar presented Karen Gant and her sister,

Juanita Woods, in an effort to prove that a woman had

knocked on Faulkner’s door early Saturday mornifg.

A-5

Gant testified that her sister had told her that a

fraternity would be holding a party Friday night, January

29, 1988, in room 254 or 250 at the Holiday Inn in Monroe.

She stated that she knocked on three or four doors in the

250-series while looking for the party; one person fitting

the general physical description of juror Faulkner opened

the door and told her she had the wrong room, according

to Gant. She testified that she spoke loudly at the doors,

Saw No warning signs or open drapes, and saw nothing to

distinguish the row of rooms from any other in the hotel.

Deputy Marshal Richard Frandsen also testified dur-

ing the hearing about the placement of warning signs in

the hotel stairwells. Frandsen, who was not on duty that

Friday night, said he told each deputy of the sign require-

ment and, in anticipation of the fraternity party, warned

them to be especially watchful Friday night. Frandsen

stated that the warning signs were in open view each

time he visited the hotel during the jury’s sequestration.

The district court concluded that Gant did not know for

certain which doors she had knocked on that night and

denied Fryar’s new trial motion.

Following the sentencing and after filing notice of

appeal, Fryar moved for release on bond pending appeal

and filed a supplement to the motion. The supplement

alleged that juror Eddie Rice had failed to disclose a prior

conviction for driving while intoxicated after being asked

on voir dire whether he had ever been convicted of or

pled guilty to a crime. The court, with the parties’ con-

sent, treated the supplement as a motion for new trial and

ordered a hearing. Rice acknowledged at the hearing that

he had pled guilty to a D.W.I. charge in 1987. However,

tee)

A-6

the court concluded that Rice had mistakenly but justifia-

bly assumed that a D.W.I. conviction was considered a

traffic offense rather than a crime, and denied Fryar’s

motion for new trial. Fryar appeals.

IT.

In his first attack, Fryar seeks to portray the alleged

visit to Faulkner as an extrinsic influence on a juror

regarding a matter pending before the jury, which creates

a rebuttable presumption of prejudice to the defendant.

Remmer v. Uniled States, 347 U.S. 227, 229, 74 S.Ct. 450,

451, 98 L.Ed. 654 (1954); United States v. Webster, 750 F.2d

307, 338 (Sth Cir.1984), cert. denied, 471 U.S. 1106, 105 S.Ct.

2340, 85 L.Ed.2d 855 (1985). But the Faulkner incident is

more properly characterized as juror misconduct given

the district court’s finding that the purported visit did

not happen. As such, we review the district court’s

actions under the abuse of discretion standard. See United

States v. Dominguez, 615 F.2d 1093, 1095 (5th Cir.1980);

United States v. Smith, 550 F.2d 277, 285 (5th Cir.) cert.

denied sub nom. Wallace v. United States, 434 U.S. 841, 98

S.Ct. 138, 54 L.Ed.2d 105 (1977). Further, the Remmer

presumption of prejudice does not come into play here

even if we assume that the contact occurred because

absolutely no evidence suggests that the purported visi-

tor tried to talk to Faulkner about the trial. See Remmer,

347 U.S. at 229, 74 S.Ct. at 451; United States v. Burke, 496

F.2d 373, 377 (5th Cir.), cert. denied, 419 U.S. 966, 95 S.Ct.

229, 42 L.Ed.2d 182 (1974).

A-7

Fryar, relying heavily on the testimony of Karen

Gant, argues that the district court erred when it con-

cluded that no visit occurred and dismissed Juror Fau-

lkner. We cannot agree that the district court’s resolution

of this fact issue, based on the conflicting testimony of

Faulkner, Gant and the marshals, is “wholly unsupported

by the evidence.” See United States v. O'Keefe, 722 F.2d

1175, 1178 (Sth Cir.1983); United States v. Granza, 427 F.2d

184, 185 (5th Cir.1970).

Gant’s testimony about the incident was imprecise

and uncertain. She recalled that she knocked on doors 254

and 250 while searching for the party, yelled or talked

loudly through the hotel doors, and stated that a short

and sleepy-looking black man answered door 250. She

also stated that she saw no warning signs, marshals or

open drapes. But Gant, who testified that she was

“vague” about the details of her search because she was

anticipating the party at the time, repeatedly said she was

not sure about particular room numbers.

The district court was entitled to weigh this equivo-

cal testimony against the statements of the marshals on

guard duty that night. The marshals stated that (1) they

heard and saw no visitors in the hall that night; and (2)

the placement of their guard posts — one of which was

three doors down from Faulkner’s room - made it

unlikely that a visitor could escape detection while

knocking and yelling at the jurors’ doors.

The marshal’s testimony supports the distict court’s

decision to reject Faulkner’s testimony. The district court

also was entitled to resolve the dispute about whether

Faulkner reported the alleged visit to the marshals and

A-8

conclude that Faulkner lied about reporting it. The court

did not abuse its discretion in concluding that the visit

did not occur and that Faulkner had lied.

The district court has the discretion to excuse an

untruthful juror. See Dominguez, 615 F.2d at 1095; Smith,

550 F.2d at 285. Nor did the court exceed its discretion

when it evaluated juror Guillot’s statements, accepted her

pledge of impartiality and refused to excuse her for lack

of candor or her contacts with Faulkner. Her conversa-

tions with the marshals and the Court related to the

Faulkner incident, not to Fryar’s case.

Similarly, the scope of an investigation into juror

misconduct rests with the court’s discretion. Tillman v.

United States, 406 F.2d 930, 938 (Sth Cir.), vacated on other

grounds, 395 U.S. 830, 89 S.Ct. 2143, 23 L.Ed.2d 742 (1969).

We detect no abuse of that discretion in the court’s indi-

vidual interviews with the jurors and marshals, or in its

instruction that the jurors should draw no conclusions

from Faulkner’s dismissal. Nor do we detect any actual

Prejudice to Fryar from this incident. All of the remaining

jurors affirmed their ability to decide this case impar-

tially; we see no reason to doubt the district court’s

determination that they were sincere. See Smith v. Phillips,

455 U.S. 209, 217 n. 7, 102 S.Ct. 940, 946 n. 7,71 L.Ed.2d 78

(1982).

We decline Fryar’s invitation to presume that this

juror misconduct prejudiced Fryar because the miscon-

duct and investigation inv>ived a sequestered jury hear-

ing a jury tampering case. Fryar’s reliance on !Jnited

States v. Shapiro, 669 F.2d 593 (9th Cir.1982), is misplaced.

In Shapiro, the Ninth Circuit held that the district court

A-9

should have granted a mistrial after one juror attempted

to extort money from a party in return for a favorable

verdict. The Ninth Circuit concluded that the entire panel

had been tainted because: (1) several jurors’ responses to

a special voir dire indicated that the jurors had discussed

the case among themselves; and (2) the form of the dis-

trict court’s voir dire questioning planted the idea in

jurors’ minds that out-of-court misconduct by the pros-

ecution or the defendants had prompted the questioning. !

Given this situation, the Ninth Circuit presumed that the

defendants had been prejudiced. Id. at 603.

* The Ninth Circuit included this excerpt from the trial

transcript:

THE COURT: Do you have any idea or suspicion

about the reason for this questioning of you?

JUROR CHUMLEY: I really hadn’t thought about it,

but no, I don’t. It does make a person wonder. There

obviously has to be a reason.

THE COURT: Do you think this questioning has

been occasioned by any out-of-court misconduct by

the prosecution or any of the defendants?

JUROR CHUMLEY: Now this is what I should have

been — normally would have been thinking about

during lunch and everything, but we had a large

lunch and we have been playing cards and I really

had not thought about it.

THE COURT: I am just planting thoughts in your

mind, huh?

JUROR CHUMLEY: In a sense, yes.

Shapiro, 669 F.2d at 601. Another juror responded unequivo-

cally that she did believe a party’s misconduct had prompted

the court’s questioning. Id. at 602.

A-10

Fryar’s case does not present such an egregious situ-

ation. The district court asked the jurors individually (1)

what they had heard about the incident; (2) what infer-

ences they drew from it; and (3) whether it would affect

their ability to be fair and impartial. Unlike that court’s

questions in Shapiro, these generic questions do not sug-

gest misconduct by either party.

Similarly, Faulkner’s misconduct itself is insufficient

to create a presumption of prejudice here. The Fifth Cir-

cuit considered Shapiro in a case in which a juror

announced in the jury room before closing arguments had

ended that the defendants “were guilty from day one

[and] that he . . . wasn’t listening to the argument.”

Webster, 750 F.2d at 336. The court dismissed the offend-

ing juror, interviewed the remaining jurors individually

and concluded that they had not been tainted. Id. at 337.

In refusing to adopt Shapiro's presumption of prejudice in

these circumstances this court stated:

[S]itting as we do far from the daily rigors of

trial, we are in a particularly inappropriate posi-

tion from which to judge the effect of a juror’s

premature expression of an opinion as to guilt

on the minds of the other members of the jury

panel. That is precisely why we have tradi-

tionally left the manner of handling jury mis-

conduct to the sound discretion of the trial

judge.

Webster, 750 F.2d at 338 (citations omitted). This reasoning

applies with equal force to Fryar’s situation.

Finally, Fryar asks us to find prejudice in the mar-

Shals’ interviews with Faulkner and Guillot on Saturday

A-11

and Sunday. Once again we perceive no abuse of discre-

tion in the district court’s refusal to grant a new trial

based on these contacts. See United States v. Albert, 595

F.2d 283, 290 (Sth Cir.), cert. denied, 444 U.S. 963, 100 S.Ct.

448, 62 L.Ed.2d 375 (1979). We also note that Fryar has

waived any argument to excuse Guillot based on the

contacts with marshals because he made no motion below

to excuse her on these grounds.

Fryar argues that juror Eddie Rice’s failure to dis-

close on voir dire a prior conviction for driving while

intoxicated denied him the right to an impartial jury. We

review the district court’s refusal to grant a new trial on

these grounds for abuse of discretion. United States v.

Fowler, 735 F.2d 823 (5th Cir.1984).

At the post-trial hearing Rice admitted that he had

pled guilty to a D.W.I. charge in 1987. However, he stated

that he did not remember hearing the question about

prior convictions when the district court asked it gener-

ally of the jurors. Rice also stated that if he had heard the

question he would have considered D.W.I. to be a mere

traffic violation rather than a “crime;” he added that his

lawyer told him it counted as a traffic violation.

The court concluded that Rice probably heard the

question but did not purposely answer it untruthfully.

The court noted a possible source of Rice’s confusion in

its colloquy with another juror; when that juror asked if

traffic violations counted as “crimes,” the court

responded that speeding was not a crime. Under these

facts we perceive neither an abuse of discretion by the

A-12

district court nor any reason to presume bias to Fryar

from Rice’s inaccurate answer. See United States v. Nell,

526 F.2d 1223, 1229 (5th Cir.1976). Thus, we find no merit

in Fryar’s companion argument that Rice’s inaccurate

answer impaired Fryar’s ability to exercise his peremp-

tory challenges.

In his next point, Fryar claims that the district court

improperly excluded evidence of prior grand jury testi-

mony during his cross-examination of Richard Davis,

who testified for the government under a grant of immu-

nity. Davis testified that Fryar asked him to find a way to

contact three jurors and get them to vote in Fryar’s favor

in the civil case. During an offer of proof outside the

jury’s presence, Davis stated that he had testified before

grand juries in 1960, 1972 and 1983 or ‘84; he testified

under a grant of immunity at the 1972 grand jury appear-

ance. The district court, finding that the potentially-preju-

diciai effect of the testimony exceeded its probative

value, excluded the testimony under Fed.R.Evid. 403.

The scope of cross-examination and its limits rest

with the district court’s discretion. United States v. Bal-

liviero, 708 F.2d 934, 940 (Sth Cir.), cert. denied, 464 US.

939, 104 S.Ct. 351, 78 L.Ed.2d 316 (1983). Fryar argues that

Davis’ prior grand jury appearances were crucial to his

theory that Davis acted on his own in trying to bribe the

jurors because he knew he could make a deal with the

government if he got into trouble. We find no abuse of

discretion in the court’s conclusion that the danger of

prejudice from evidence of a fifteen-year-old grant of

A-13

immunity and two unrelated grand jury appearances dat-

ing back twenty-eight years outweighed the probative

value. This history provides no significant support to

Fryar’s argument that the government would approve

future grants of immunity.

Finally, Fryar claims that the district court infringed

his sixth amendment right to confront witnesses when it

denied his request to reveal a confidential informant’s

identity.

Under Roviaro v. United States, 353 U.S. 53, 62, 77 S.Ct.

623, 628, 1 L.Ed.2d 639 (1957), courts must make dis-

closure decisions by balancing the individual’s right to

prepare a defense against the public interest in encourag-

ing the flow of information from informants by preserv-

ing their anonymity. In applying this test, this court has

held that Roviaro does not require the disclosure of the

identities of “mere tipsters.” United States v. Fisher, 531

F.2d 783, 787 (5th Cir.1976); see also United States v. De Los

Santos, 810 F.2d 1326, 1334-35 (5th Cir.) (informant’s privi-

lege overrides sixth amendment right to confrontation),

cert denied, __ U.S. __, 108 S.Ct. 490, 98 L.Ed.2d 488

(1987).

After reviewing the sealed F.B.I1. documents included

in this record and the edited transcript from the civil trial

hearing at which the F.B.I. first brought the information

to light, we conclude that the informant was a tipster. The

A-14

district court did not err in denying disclosure of the

tipster’s identity.

The court’s judgment of conviction is

AFFIRMED.

) A-15

EXHIBIT 3

TO MAX RE: FLEMING

THE TRIAL IS A CIVIL ACTION AND OCCURS ON

DECEMBER 1, 1986. IT IS NOT CRIMINAL - FLEMING

DOES NOT HAVE TO TESTIFY AND SHOULD NOT.

FLEMING SHOULD RESIST BEING DEPOSED.

HARGAN IS ACQUAINTED WITH THE CASE AND

SHOULD REPRESENT HIM. THE FOLLOWING POINTS

ARE MADE:

A.A. IS AN EXEMPT COMPANY AND

SHOULD BE PROTECTED BY BERMUDA’S

SECRECY LAWS.

FLEMING HAS A DUTY AND OBLIGA-

TION OF CONFIDENTIALITY REGARD-

ING HIS ‘CLIENTS BUSINESS AND

RECORDS.

FLEMING HAS NO RIGHT TO POSSESS

ANY ORIGINALS, COPIES, CORRESPON-

DENCE, RECORDS OR RECOLLECTIONS

PERTAINING TO A.A. AND SHOULD

IMMEDIATELY SURRENDER ANY THAT

HE HAS TO THE COMPANY AND FORGET

ANYTHING THAT HE RECALLS.

TESTIMONY RELATIVE TO FUNDING

A.A. VIA ANGLO AND FRYAR’S

INVOLVEMENT WITH ANGLO WOULD

BE VERY DAMAGING TO A.A.’S EFFORTS

TO RECOVER THE BONDS.

ANY LOSS THAT A.A. SUFFERS BECAUSE

OF FLEMING’S RECORDS, TESTIMONY

OR VIOLATING THE CONFIDENTIALITY

OF A.A.’S BUSINESS WILL CAUSE A.A. TO

A-16

SEEK ECONOMIC RECOVERY VIA LEGAL

ACTION AGAINST FLEMING.

6. IF HE AVOIDS BEING DEPOSED OR UPON

BEING DEPOSED, RESPECTS THE CONFI-

DENTIAL RELATIONSHIP BETWEEN HIM-

SELF AND A.A., THEN HE CAN EXPECT

TO RETAIN A GOOD AND GENEROUS

CLIENT. BUT IF HE DIVULGES OUR BUSI-

NESS, THEN IT WILL BE INCUMBENT ON

A.A. THRU THE COURTS TO LET HIS PRE-

SENT AND FUTURE CLIENTS KNOW THE

LOOSENESS WITH WHICH THEIR BUSI-

NESS DEALINGS ARE HANDELED [sic].

~ THIS WILL HARDLY INSPIRE CONFI-

DENCE IN CLIENTS OF FLEMING.

J. H. SMITHERS

A-17

89-160

CRIMINAL DOCKET ,

TITLE OF CASE

THE UNITED STATES

US.

MICHAEL WAYNE BOUDREAUX (CTS. 1 - 14)

JOSEPH E. FRYAR (CTS. 7 - 11)

MALCOLM ZIEGLER (CTS. 7-11 &

14)

LUTHER RICHARDSON, JR. Crs. 7, 9, 1%)

Super. Indict.- LEO FONTENOT (CT. 7)

THOMAS M. BOUTWELL

RORY HARRIS

REPORT CURRENCY TRANSACTIONS

18:371 Ct. 7

18:1956(a)(3) Cts. 8 & 9

18:2 Cts. 8-11 & 14

31:5313(a) Cts. 1 - 6 & 10 - 14)

31:5322(b) Cts. 1 - 6 & 10 - 14)

31:5324(3) Cts. 2, 4, 6 & 13)

31:5324(1) Cts. 10 & 11

A-18

31CFR 103.22 Cts. 1-6 & 10 - 14)

31CFR 103.25 Cts. 1-6 & 10-14)

ATTORNEYS

For U.S.: | WALTER BECKER

500 Camp St.

New Orleans, LA 70130

William McSherry

For Defendant! DANIEL MARKEY

2912 Canal St.

New Orleans, LA 70199

(504) 821-1886

For: Ziegler & Fryar

FRANK SLOAN

148 Crapemyrtle Rd.

Covington, LA 70433

(504) 893-4058

For: Richardson

ADDL ATTYS CO:

CASH RECEIVED AND DISBURSED

DATE

MONDAY, OCTOBER 30, 1989

9:30 AM

Courtroom Deputy: Pam Radosta

Court Reporter - Tom Conrad

ARRAIGNMENT ON 4th SUPERSEDING

INDICTMENT (DEFT. JOSEPH FRYAR)

Deft. present to Plea Guilty as to COUNTS 2 AND 6 of

the 4th Superseding Indictment.

A-19

Deft. Sworn and questioned by the court.

Deft. informed of rights to trial by jury or the court and

waives same.

4th Superseding Indictment (Cts 2 & 6) read to the deft

by the court.

Deft. informed of the maximum penalties.

Deft. informed of sentence guidelines.

Deft. enters a plea of Guilty.

Plea Bargain disclosed to the court in letter form and

same is filed.

Government states the facts of the case to the court

Plea Accepted and deft. is Adjudged Guilty on plea

Guilty.

Pre-sentence investigation ORDERED.

Deft. remanded

DATE OF ENTRY NOV 02 1989

A-20

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA

LAFAYETTE-OPELOUSAS DIVISION

EDWARD C. ABELL, JR., and CIVIL

CAREY WALTON, ET AL ACTION

VERSUS NUMBER:

POTOMAC INSURANCE 84-1786 “O

COMPANY, ET AL (JUDGE SHAW)

(MAGISTRATE

METHVIN)

MEMORANDUM IN SUPPORT OF DEFENDANT'S

MOTION TO DISMISS CIVIL RICO CLAIMS AND IN

OPPOSITION TO PLAINTIFFS’ MOTION FOR ORDER

UPHOLDING JURY VERDICT, READJUSTING ATTOR-

NEYS’ FEE AWARD, AND RECALCULATING INDIVID-

UAL PLAINTIFFS’ DAMAGE AWARD

MAY IT PLEASE THE COURT:

(1). STATEMENT OF THE CASE

This Court has granted defendant Joe E. Fryar until

Monday, May 7, 1990, to provide it with his pleadings

and memoranda directed to the issues raised by the

United States Court of Appeals for the Fifth Circuit's

remand of the above captioned civil action for further

proceedings in light of H.J. Inc. v. Northwestern Bell

Telephone Company, 492 U.S. __, 109 S.Ct. 2893, 106

L.Ed.2d 195 (1989). Defendant has responded by filing

A-21

simultaneously herewith a motion to dismiss the civil

RICO claims asserted against him by the plaintiff-class of

bondholders in Westside Rehabilitation Center (plain-

tiffs). Defendant submits this memorandum in support of

his motion to dismiss and in opposition to plaintiffs’

motion for order upholding jury verdict, readjusting

attorneys’ fee award, and recalculating individual plain-

tiffs’ damage award.

Defendant’s motion to dismiss sets forth the tortured

procedural history of this case in detail, as well as the

grounds relied upon for the relief he seeks. Succinctly

stated, defendant alleges that this Court should find that

18 U.S.C. §§ 1961, et. seq., violates the procedural due

process guarantee of U.S.C. Const. Amend. 5 that appro-

priate notice of a proscription must be given before a

person can be held accountable for its violation. Alter-

natively, defendant alleges that this Court should find

that 18 U.S.C. §§ 1961, et. seq., does not reach the isolated

and sporadic criminal acts shown by respondents in this

case. Thereafter, based on either of these findings, this

Court should dismiss the civil RICO claims asserted by

plaintiffs against defendant.

(II). LAW AND ARGUMENT

(A). 18 U.S.C. §§ 1961, ET. SEQ., IS VOID

FOR VAGUENESS

Defendant initially contends that 18 U.S.C. §§ 1961,

et. seq., violates one of the procedural due process guar-

antees emanating from U.S.C. Const. Amend. 5, i.e.,

appropriate notice of a proscription must be given before

A-22

a person can be held accountable for its violation. Plain-

tiffs’ civil RICO claims asserted against defendant arise

under 18 U.S.C. §§ 1961, et. seq. In particular, plaintiffs

rely on 18 U.S.C. § 1964(c), which provides:

“§ 1964. Civil remedies

property by reason of a violation of section

1962 of this chapter may sue therefor in any

appropriate United States district court and

shall recover threefold the damages he sustains

and the cost of the suit, including a reasonable

attorney’s fee.” (Emphasis added). (COPR. (C)

WEST 1990 NO CLAIM TO ORIG. U.S. GOVT.

WORKS).

Consequently, plaintiffs alleged and attempted to

prove that defendant violated 18 U.S.C. “§ 1962, which

provides:

“§ 1962. Prohibited activities

(a) It shall be unlawful for any person

who has received any income derived, directly

or indirectly, from a pattern of racketeering

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, directly

or indirectly, any part of such income, or the

proceeds of such income, in acquisition of any

interest in, or the establishment or operation of,

any enterprise which is engaged in, or the activ-

ities of which affect, interstate or foreign com-

merce. A purchase of securities on the open

market for purposes of investment, and without

the intention of controlling or participating in

the control of the issuer, or of assisting another

A-23

to do so, shall not be unlawful under this sub-

section 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

racketeering activity or the collection of an

unlawful debt after such purchase do not

amount in the aggregate to one percent of the

outstanding securities 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 per-

son 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.

employed by or associated with any enterprise

engaged in, or the activities of which affect,

interstate or foreign commerce, to conduct or

participate,directly or indirectly, in the conduct

of such enterprise’s affairs through a pattern of

racketeering activity or collection of unlawful

debt. sa

(d) It shall be unlawful for any person to

conspire to violate any of the provisions of sub-

section (a), (b), or (c) of this section.” (Emphasis

added). (COPR. (C) WEST 1990 NO CLAIM TO

ORIG. U.S. GOVT. WORKS).

Based on this statutory language, 18 U.S.C. §§ 1962

and 1964 render civilly liable “any person” who uses or

invests income derived “from a pattern of racketeering

activity” to acquire an interest in or to operate an enter-

prise engaged in interstate commerce, 18 U.S.C. § 1962(a);

A-24

who acquires or maintains an interest in or control of

such an enterprise “through a pattern of racketeering

activity,” 18 U.S.C. § 1962(b); who, being employed by or

associated with such an enterprise, conducts or partici-

pates in the conduct of its affairs “through a pattern of

racketeering activity,” 18 U.S.C. § 1962(c); or, finally, who

conspires to violate the first three subsections of 18

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

drastic remedies: conviction for a violation of RICO car-

ries severe criminal penalties and forfeiture of illegal

proceeds, 18 U.S.C. § 1963; and a person found in a

private civil action to have violated RICO is liable for

treble damages, costs, and attorney’s fees, 18 U.S.C.

§ 1964(c).

The essential elements a plaintiff must prove to

establish a civil RICO claim depend upon which subsec-

tion of 18 U.S.C. § 1962 the plaintiff is alleging the defen-

dant violated. However, the well-settled jurisprudence

establishes that there are certain essential elements com-

mon to all civil RICO claims. The district court in Occu-

pational-Urgent Care Health Systems, Inc. v. Sutro &

Company, Inc., 711 F. Supp. 1016 (E.D. Ca. 1989), noted

the essential elements common to all civil RICO claims,

when it held:

“The precise requirement for establishing a

civil RICO cause of action depends on which

subsection of the statute a plaintiff invokes;

however, the following are essential elements of

any civil RICO action: (I) the existence of a

RICO ‘enterprise’ (2) the existence of a ‘pattern

of racketeering activity’; (3) a nexus between

the defendant and either the pattern of rack-

eteering activity or the RICO ‘enterprise’; and

A-25

(4) resulting injury to plaintiff, in his ‘business

or property.’ See [citations omitted].” (Emphasis

added). (COPR. (C) WEST 1990 NO CLAIM TO

ORIG. U.S. GOVT. WORKS).

Id. p. 1021.

See also Klapper v. Commonwealth Realty Trust, 657

F.Supp. 948 (D. Del. 1987); and, Eaby v. Richmond, 561

F.Supp. 131 (E.D. Pa. 1983).

Thus, it is essential to the proscriptions of 18 U.S.C.

§§ 1961, et. seq., to determine what is meant by a “pat-

tern of racketeering activity”. A defendant may not be

held civilly or criminally liable under 18 U.S.C. §§ 1961,

et. seq., unless a “pattern of racketeering activity” can be

shown to exist. 18 U.S.C. § 1961(5) purports to define this

essential element of a “pattern of racketeering activity”:

§ 1961. Definitions

As used in this chapter -

(5) “pattern of racketeering activity”

requires at least two acts of racketeering activ-

ity, one of which occurred after the effective

date of this chapter and the last of which

occurred within ten years (excluding any period

of imprisonment) after the commission of a

prior act of racketeering activity; ... ”

(Emphasis added). (COPR. (C) WEST 1990 NO

CLAIM TO ORIG. U.S. GOVT. WORKS).

Clearly, 18 U.S.C. § 1961(5) does not set forth a

definition or notice of what constitutes a “pattern of

racketeering activity.” Instead, the statute only sets forth a

minimum necessary condition for the existence of such a

pattern. 18 U.S.C. §§ 1961, et. seq., does not contain any

A-26

other provision relating to the essential element of a

“pattern of racketeering activity.”

U.S.C. Const. Amend. 5 provides:“Amendment

5 - Grand jury indictment for capital crimes;

Double jeopardy; Self-incrimination; Due pro-

cess of law; Just compensation for property

No person shall be held to answer for a

capital, or otherwise infamous crime, unless on

a presentment or indictment of a Grand Jury,

except in cases arising in the land or naval

forces, or in the Militia, when in actual service

in time of War or public danger; nor shall any

person be subject for the same offence to be

twice put in jeopardy of life or limb; nor shall be

compelled in any criminal case to be a witness

against himself, nor be deprived of life, liberty,

or property, without due process of law; nor

shall private property be taken for public use,

without just compensation.” (Emphasis added).

(COPR. (C) WEST 1990 NO CLAIM TO ORIG.

U.S. GOVT. WORKS).

As such, U.S.C. Const. Amend. 5 guarantees to

defendant the right not to be deprived of his property

without due process of law. This guarantee of procedural

due process includes the requirement that defendant be

given appropriate notice of the proscriptions of 18 U.S.C.

§§ 1961, et. seq., before he can be held accountable for

violating those statutes. The fact that plaintiffs are pro-

ceeding under the civil provisions of 18 U.S.C. §§ 1961,

et. seq., is of no moment, as the aforementioned pro-

cedural due process guarantee applies to civil statutes as

well criminal statutes.

A-27

The Supreme Court in A. B. Small Company v. Amer-

ican Sugar Refining Company, 267 U.S. 233, 45 S.Ct. 295,

69 L.Ed. 589 (1925) affirmed a district court’s judgment,

which held certain portions of the Lever Act regulating

profits made on the sale of certain necessaries such as

sugar to be unconstitutional. In particular, the district

court found that those sections which utilized terms such

‘4

as “unjust”, “unreasonable” and “excessive” in describ-

ing prohibited transactions were unconstitutionally

vague. On Writ of Error to the Supreme Court, the defen-

dants argued that the void-for-vagueness doctrine

applied only to criminal statutes and thus could not be

used to invalidate the civil statute at issue. A. B. Small

Company, supra, rejected the defendants’ arguments,

holding:

“The defendant attempts to distinguish

those cases because they were criminal prosecu-

tions. But that is not an adequate distinction.

The ground or principle of the decisions was not

such as to be applicable only to criminal pros-

ecutions.It was not the criminal penalty that

was held invalid, but the exaction of obedience

to a rule or standard which was so vague and

indefinite as really to be no rule or standard at

all. Any other means of exaction, such as declar-

ing the transaction unlawful or stripping a par-

ticipant of his rights under it, was equally

within the principle of those cases. They have

been so construed and applied by other courts in

civil proceedings. [citations omitted]. In the first

of these citations, the Court of Appeals of New

York, referring to this court’s ruling in the

Cohen Grocery Co. Case, well said:

A-28

‘The ground on which it placed its judg-

ment applies, and with like consequences,

to civil suits as well. The prohibition was

declared a nullity because too vague to be

intelligible. No standard of duty had been

established. * * * The variant views of

judges of the District Courts were quoted as

evidence of the absence of a standard. If this

is the rationale of the decision, its conse-

quences are not limited to criminal prosecu-

tions.A prohibition so indefinite as to be

unintelligible is not a prohibition by which

conduct can be governed. It is not a rule at

all; it is merely exhortation and entreaty.’

Id. 45 S.Ct., at p. 297.

See also Giaccio v. State of Pennsylvania, 382 U.S.

399, 86 S.Ct. 518, 15 L.Ed.2d 447 (1966); Jones v. City of

Lubbock, 727 F.2d 364 (5th Cir. 1984); Exxon Corporation

v. Busbee, 644 F.2d 1030 (5th Cir. 1981); and, Leonen v.

Johns-Manvilie Corporation, 717 F.Supp. 272 (D. N.J.

1989).

The standards for evaluating vagueness were enunci-

ated by the Supreme Court in Grayned v. City of Rock-

ford, 408 U.S. 104, 92 S.Ct. 2294, 33 L.Ed.2d 222 (1972). In

that case, the Supreme Court upheld an anti-noise ordi-

nance against a challenge that it was unconstitutionally

vague. However, in discussing the principles underlying

the void-for-vagueness doctrine, Grayned, supra, held:

“The anti-noise ordinance reads, in perti-

nent part, as follows:

A-29

Appellant claims that, on its face, this ordi-

nance is both vague and overbroad, and there-

fore unconstitutional. We conclude, however,

that the ordinance suffers from neither of these

related infirmities.

A. Vagueness

It is a basic principle of due process that an

enactment is void for vagueness if its prohibi-

tions are not clearly defined.Vague laws offend

several important values. First, because we

assume that man is free to steer between lawful

and unlawful conduct, we insist that laws give

the person of ordinary intelligence a reasonable

opportunity to know what is prohibited, so that

he may act accordingly. Vague laws may trap

the innocent by not providing fair warning. Sec-

ond, if arbitrary and discriminatory enforce-

ment is to be prevented, laws must provide

explicit standards for those who apply them. A

vague law impermissibly delegates basic policy

matters to policemen, judges, and juries for res-

olution on an ad hoc and subjective basis, with

the attendant dangers of arbitrary and discrimi-

natory application. Third, but related, where a

vague statute ‘abut(s) upon sensitive areas of

basic First Amendment freedoms,’ it ‘operates to

inhibit the exercise of (those) freedoms.’ Uncer-

tain meanings inevitably lead citizens to “steer

far wider of the unlawful zone’... than if the

boundaries of the forbidden areas were clearly

marked.’ ” (Emphasis added). (COPR. (C) WEST

1990 NO CLAIM TO ORIG. U.S. GOVT.

WORKS).

Id. 92 S.Ct., at pp. 2298 and 2299.

A-30

See also Village of Hoffman Estates v. Flipside, Hoff-

man Estates, Inc., 455 U.S. 489, 102 S.Ct. 1186, 71 L.Ed.2d

362 (1982); Papachristou v. City of Jacksonville, 405 U.S.

156, 92 S.Ct. 839, 31 L.Ed.2d 110 (1972); United States v.

Professional Air Traffic Controllers Organization, 678

F.2d 1 (1st Cir. 1982); and, Postscript Enterprises, Inc. v.

Whuley, 658 F.2d 1249 (8th Cir. 1981).

Similarly, in DiLeo v. Greenfield, 541 F.2d 949 (2nd

Cir. 1976), the United States Court of Appeals for the

Second Circuit noted the constitutional requirement of

adequate, prior warning of prohibited behavior, holding:

“The notion of due process requires that

sanctions be imposed on individuals only if

they could reasonably have known in advance

that their questioned behavior had been pro-

scribed. In accordance with this principle, the

Supreme Court has held that a statute may be

void for vagueness in order to ensure that indi-

viduals are fairly apprised in advance regarding

the specific conduct which the legislature has

prohibited. See [citations omitted]. DiLeo con-

tends that the Connecticut statute which autho-

rized his dismissal for “other due and sufficient

cause” failed sufficiently to inform him of the

kind of conduct which is proscribed. We dis-

agree.

We do not agree with the district court that

vagueness in the statute could be cured by sub-

sequent explanation by the Board of which acts

it charged as falling within the scope of

§ 10-151(b)(6). Due process requires prior notice

of what constitutes forbidden behavior. See

[citation omitted].” (Emphasis added). (COPR. |

A-31

GOVT. WORKS).

Id. p. 953.

The Supreme Court in Federal Communications

Commission v. American Broadcasting Company, Inc., et

al, 347 U.S. 284, 74 S.Ct. 593, 98 L.Ed. 699 (1954), had

occasion to construe certain statutes that, like the RICO

statutes, provided both civil and criminal penalties for

their violation. In that case, the Supreme Court rejected

the FCC’s contention that the statutes could be broadly

construed in the civil context, but narrowly construed in

the criminal context. Federal Communications Commis-

sion, supra, held:

“It is true, as contended by the Commis-

sion, that these are not criminal! cases, but it is

a criminal statute that we must interpret. There

cannot be one construction for the Federal Com-

munications Commission and another for the

Department of Justice. If we should give § 1304

the broad construction urged by the Commis-

sion, the same construction would likewise

apply in criminal cases. We do not believe this

construction can be sustained. Not only does it

lack support in the decided cases, judicial and

administrative, but also it would do violence to

the well-established principle that penal stat-

utes are to be construed strictly.” (Emphasis

added). (COPR. (C) WEST 1990 NO CLAIM TO

ORIG. U.S. GOVT. WORKS).

Id. 74 S.Ct., at pp. 600-601.

In his dissent in H.J., Inc., Justice Scalia cites Federal

Communications Commission, supra, for the proposition

that RICO, since it has criminal applications, must, even

A-32

in its civil applications, possess the degree of certainty

required for criminal laws. Thus, a court may not broadly

construe RICO’s provisions in the civil context, but then

narrowly construe those same provisions in the criminal

context. As a penal statute, RICO is to be strictly con-

strued whatever its meaning.

The United States Court of Appeals for the Fifth

Circuit in Exxon Corporation, supra, noted that the void-

for-vagueness doctrine is most rigorously applied in the

context of penal statutes. On this issue, Exxon Corpora-

tion, supra, held:

“While it is true that the void-for-vagueness

doctrine is most rigorously applied in the con-

text of penal statutes, [citation omitted], and in

the area of first amendment rights, [citation

omitted], the Supreme Court has recognized

that “(v)ague laws in any area suffer a constitu-

tional infirmity.” [citations omitted].”

(Emphasis added). (COPR. (C) WEST 1990 NO

CLAIM TO ORIG. U.S. GOVT. WORKS).

Id. p. 1033.

The holdings of Federal Communications Commis-

sion, supra, and Exxon Corporation, supra, are important

because the United States Court of Appeals for the Fifth

Circuit has recognized in the case sub judice that the civil

RICO statutes are penal in nature. On this point, Abell, et

al v. Potomac Insurance Company, et al, 858 F.2d 1104

(5th Cir. 1988), rehearing en banc denied 863 F.2d 882 (5th

Cir. 1988), held:

“We hold that the portion of RICO damages

in excess of actual damages is penal. Those

added damages are “not limited to the damages

iaaeeenineemeeneeeiel

A-33

suffered”; they seem more designed to deter than

fo compensate. As Congress constructed them,

the civil provisions of RICO compensate primar-

ily victims of fraud or fraudulent schemes. Had

Congress merely wanted to make whole this

new class of plaintiffs, it would have limited

civil RICO damages to the actual damages com-

monly available to fraud victims.

However, in promulgating RICO, Congress

expressly found that the problem of racketeer-

ing was primarily public, not private, including

draining resources from the economy, subvert-

ing the democratic process, and undermining

the general welfare, [citations omitted]. We con-

clude, therefore, that Congress trebled RICO

damages as as [sic] part of this overall attack

on the public wrongs of organized crime.”

(Emphasis added). (COPR. (C) WEST 1990 NO

CLAIM TO ORIG. U.S. GOVT. WORKS).

Id. p. 1141.

Under this well-settled jurisprudence, a statute can

neither forbid nor require “the doing of an act in terms s

vague that men of common intelligence must necessarily

guess at its meaning and differ as to its application

Stated another way, no statute may exact “obedience to a

rule or standard so vague and indefinite as really to be n

standard at all.” In enacting 18 U.S.C. §§ 1961, et. seq.,

The Congress was required to adhere to these require

ments of procedural due process.

18 U.S.C. § 1961(5) purports to define the essential!

element of “pattern of racketeering activity” found in 18

U.S.C. § 1962(a), (b) and (c), but this subsection does

nothing more than set forth a minimum requirement

A-34

therefor, i.e., “two acts of racketeering activity, one of

which occurred after the effective date of this chapter and

the last of which occurred within ten years (excluding

any period of imprisonment) after the commission of a

prior act of racketeering activity.” Nowhere in 18 U.S.C.

§§ 1961, et. seq., is any further definition or guidance

given with respect to the meaning of “pattern of rack-

eteering activity.”

_ This constitutional defect existing in 18 U.S.C.

§§ 1961, et. seq., was recognized by Justice Scalia, in his

concurring opinion in H.J. Inc., supra, wherein he stated:

“Four terms ago, in [citation omitted], we

gave lower courts the following four clues con-

cerning the meaning of the enigmatic term “pat-

tern of racketeering activity” in the Racketeer

Influenced and Corrupt Organizations Act

(RICO or the Act), [citation omitted]. First, we

stated that the statutory definition of the term in

18 U.S.C. § 1961(5) implies “that while two acts

are necessary, they may not be sufficient.” [cita-

tion omitted]. Second, we pointed out that “two

isolated acts of racketeering activity,” “sporadic

activity,” and “proof of two acts of racketeering

activity, without more” would not be enough to

constitute a pattern. [citation omitted]. Third,

we quoted a snippet from the legislative history

stating “[i]t is this factor of continuity plus rela-

tionship which combines to produce a pattern.”

[citation omitted]. Finally, we directed lower

courts’ attention to [citation omitted], which

defined the term “pattern of conduct which was

criminal” used in a different title of the same

Act, and instructed them that “[t]his language

may be useful in interpreting other sections of

the Act,” [citation omitted]. Thus enlightened,

A-35

the district and circuit courts set out “to

develop a meaningful concept of ‘pattern,’ ”

[citation omitted], and promptly produced the

widest and most persistent circuit split on an

issue of federal law in recent memory, see, e.g.,

[citation omitted]. Today, four years and count-

less millions in damages and attorney’s fees

later (not to mention prison sentences under the

criminal provisions of RICO), the Court does

little more than repromulgate those hints as to

what RICO means, though with the caveat that

Congress intended that they be applied using a

“flexible approach.” [citation omitted].

Thus, when 18 U.S.C. §§ 1961(5) says that a

pattern “requires at least two acts of racketeer-

ing activity” it is describing what is needful but

not sufficient. (If that were not the case, the

concept of ‘pattern’ would have been unnecess-

ary, and the statute could simply have attached

liability to ‘multiple acts of racketeering activ-

ity.") But what that something more is, is

beyond me. As I have suggested, it is also

beyond the Court. Today’s opinion has added

nothing to improve our prior guidance, which

has created a kaleidoscope of circuit positions,

except to clarify that RICO may in addition be

violated when there is a “threat of continuity.”

It seems to me this increases rather than

removes the vagueness. There is no reason to

believe that the Courts of Appeals will be any

more unified in the future, than they have in the

past, regarding the content of this law.

That situation is bad enough with respect

to any statute, but it is intolerable with respect

A-36

to RICO. For it is not only true, as Justice Mar-

shall commented in [citation omitted], that our

interpretation of RICO has “quite simply revolu-

tionize[d] private litigation” and “validate[d]

the federalization of broad areas of state com-

mon law of frauds,” [citation omitted], so that

clarity and predictability in RICO’s civil applica-

tions are particularly important; but it is also

true that RICO, since it has criminal applica-

tions as well, must, even in its civil applica-

tions, possess the degree of certainty required

for criminal laws, [citation omitted]. No consti-

tutional challenge to this law has been raised in

the present case, and so that issue is not before

us. That the highest Court in the land has been

unable to derive from this statute anything

more than today’s meager guidance bodes ill for

the day when that challenge is presented.”

(Emphasis added). (COPR. (C) WEST 1990 NO

CLAIM TO ORIG. U.S. GOVT. WORKS).

Id. 109 S.Ct. at 2906 through 2909.

Similarly, the majority in H.J., Inc., supra, virtually

conceded the constitutional infirmities existing in 18

U.S.C. §§ 1961, et. seq., when it held:

“The limits of the relationship and continu-

ity concepts that combine to define a RICO

pattern, and the precise methods by which

relatedness and continuity or its threat may be

proved, cannot be fixed in advance with such

clarity that it will always be apparent whether

in a particular case a “pattern of racketeering

activity” exists. The development of these con-

cepts must await future cases, absent a decision

by Congress to revisit RICO to provide clearer

guidance as to the Act’s intended scope.”

A-37

(Emphasis added). (COPR. (C) WEST 1990 NO

CLAIM TO ORIG. U.S. GOVT. WORKS).

Id. 109 S.Ct., at p. 2902.

Certainly, if the justices of the Supreme Court, the

circuit judges sitting on the various Courts of Appeals

and the district court judges are unable to discern the

meaning of “pattern of racketeering acitity” from 18

U.S.C. §§ 1961, et. Seq., then men of common intelligence

must necessarily guess at its meaning and differ as to its

application. As such, 18 U.S.C. §§ 1961, et. seq., violates

the procedural due process guarantee of U.S.C. Const.

Amend. 5 that appropriate notice of a proscription must

be given before a person can be held accountable for its

violation. In particular, 18 U.S.C. §§ 1961, et. seq., forbids

“the doing of [acts] in terms so vague that men of com-

mon intelligence must necessarily guess at its meaning

and differ as to its application.” Stated another way, 18

U.S.C. §§ 1961, et. Seq., exacts “obedience to a rule or

standard so vague and indefinite as really to be no stan-

dard at all.”

For these reasons, this Court should find that 18

U.S.C. §§ 1961, et. seq., violates the procedural due pro-

cess guarantees of U.S.C. Const. Amend. 5, and it should

dismiss plaintiffs’ civil RICO claims asserted against

defendant under those statutes.

(B). PLAINTIFFS FAILED TO PROVE ANY-

THING MORE THAN “ISOLATED” AND

“SPORADIC” CRIMINAL ACTS

Alternatively, defendant contends that plaintiffs

failed to prove “a pattern of racketeering activity” under

A-38

the specific facts of this case, as that essential element is

vaguely defined in H.J. Inc., supra. In particular, plain-

tiffs failed to produce any evidence of racketeering activ-

ities engaged in by defendant that amounted to or

threatened long-term criminal activity, i.e., the “continu-

ity” requirement for proving the existence of a “pattern of

racketeering activity”. Instead, plaintiffs were only able

to show that defendant engaged in isolated and sporadic

criminal acts related to the Westside bond offer. Plaintiffs

were thus unable to establish the “continuity” require-

ment for a “pattern of racketeering activity”, which

requirement was described by the Supreme Court in H.]J.,

Inc., supra, as racketeering activities that amount to or

threaten long-term criminal activity. Plaintiffs’ failure to

prove “continuity” was memorialized by the Court of

Appeals in Abell, supra, when it held:

“Fryar also contends that RICO requires

plaintiffs to prove at least two related predicate

acts arising from DISTINCT schemes. See 18

U.S.C. § 1962 (requiring a RICO plaintiff to

prove a “pattern of racketeering”). Fryar’s brief

correctly notes that “[p]laintiffs have fashioned

their RICO claim from the matrix of their secu-

rities law fraud claims.” From this observation,

Fryar concludes that the plaintiffs failed to

prove the predicate acts necessary to establish a

“pattern of racketeering.”

Our cases, however, belie Fryar’s legal anal-

ysis. In [citation omitted], we held that RICO

requires only that the predicate acts alleged be

related, not that they arise from separate

schemes or incidents. Here, plaintiffs have

alleged over half a dozen acts of mail fraud and

wire fraud, each of which stems from Westside’s

A-39

bond offer. R.A.G.S. requires no more. But see

[citations omitted]. (Each of these cases criti-

cizes R.A.G.S., but notes that only the court

sitting en banc or the Supreme Court may over-

turn R.A.G.S.).” (Emphasis added). (COPR. (C)

WEST 1990 NO CLAIM TO ORIG. U.S. GOVT

WORKS).

Id. p. 1120.

Certainly, a half dozen acts of mail fraud and wire

fraud spread over a seven (7) year period (a half dozen

racketeering acts occurring between 1976 and 1983

according to plaintiffs) all of which are related to a single,

discrete objective which is accomplished do not amount

to or threaten long-term criminal activity. Parenthetically,

as noted by the Supreme Court in H.J., Inc., supra, The

Congress did not intend that 18 U.S.C. §§ 1961, et. seq.,

: reach such isolated and sporadic criminal acts as those

) shown by plaintiffs in this case. Rather, The Congress

intended that the RICO statutes reach long-term criminal

activity:

“Insofar as the concurrence seems to sug-

gest, post, at __ that very short periods of

criminal activity that do not in any way carry a

threat of continued criminal activity constitute

“obvious racketeer[ing]” to which Congress

intended RICO, with its enhanced penalties, to

apply, we have concluded that it is mistaken,

and that when Congress said predicates must

demonstrate “continuity” before they may form

a RICO pattern, it expressed an intent that

RICO reach activities that amount to or

threaten long-term criminal activity.”

(Emphasis added). (COPR. (C) WEST 1999 NO

CLAIM TO ORIG. U.S. GOVT. WORKS).

A-40

Id. 109 S.Ct., at p. 2902 (footnote 4)

The majority in H.J., Inc., supra, began its unsuccess-

ful attempt to define the “continuity” requirement for a

“pattern of racketeering activity” by describing the con-

cept and stating what is not sufficient to show that it

exists:

“[sic]|“Continuity” is both a closed- and

open-ended concept, referring either to a closed

period of repeated conduct, or to past conduct

that by its nature projects into the future with a

threat of repetition. See [citation omitted]. It is,

in either case, centrally a temporal concept -

and particularly so in the RICO context, where

what must be continuous, RICO’s predicate acts

or offenses, and the relationship these predi-

cates must bear one to another, are distinct

requirements. A party alleging a RICO violation

may demonstrate continuity over a closed

period by proving a series of related predicates

extending over a substantial period of time.

Predicate acts extending over a few weeks or

months and threatening no future criminal con-

duct do not satisfy this requirement: Congress

was concerned in RICO with long-term criminal

conduct. Often a RICO action will be brought

before continuity can be established in this way.

In such cases, liability depends on whether the

threat of continuity is demonstrated. See [cita-

tion omitted].” (Emphasis added). (COPR. (C)

WEST 1990 NO CLAIM TO ORIG. U.S. GOVT.

WORKS).

Id. 109 S.Ct., at 2902.

The majority in H.J., Inc., supra, then proceeded to

give examples of those situations it believed would show

that “continuity” was present in a given case:

A-41

“Whether the predicates proved establish a

threat of continued racketeering activity

depends on the specific facts of each case. With-

out making any claim to cover the field of possi-

bilities - preferring to deal with this issue in the

context of concrete factual situations presented

for decision ~ we offer some examples of how

this element might be satisfied. A RICO pattern

may surely be established if the related predi-

cates themselves involve q distinct threat of

long-term racketeering activity, either implicit

or explicit. Suppose a hoodlum were to sell

“insurance” to a neighborhood’s storekeepers to

cover them against breakage of their windows,

telling his victims he would be reappearing each

month to collect the “premium” that would con-

tinue their “coverage.” Though the number of

related predicates involved may be small and

they may occur close together in time, the rack-

eteering acts themselves include a specific threat

of repetition extending indefinitely into the

future, and thus supply the requisite threat of

continuity. In other cases, the threat of continu-

ity may be established by showing that the

predicate acts or offenses are part of an ongoing

entity’s regular way of doing business. Thus, the

threat of continuity is sufficiently established

Where the predicates can be attributed to a

defendant Operating as part of a long-term

association that exists for criminal purposes.

Such associations include, but extend well

beyond, those traditionally 8rouped under the

Phrase “organized crime.” The continuity

requirement is likewise satisfied where it is

shown that the predicates are a regular way of

conducting defendant's ongoing legitimate busi-

ness (in the sense that it is not a business that

A-42

exists for criminal purposes), or of conducting

or participating in an ongoing and legitimate

RICO “enterprise.” (Emphasis added). (COPR.

GOVT. WORKS).

Id. 109 S.Ct., at p. 2902.

A study of these examples establishes that the

Supreme Court was merely restating the same basic idea

throughout, i.e., there must be evidence of racketeering

activities that amount to or threaten long-term criminal

activity. The impossibility of extracting anything more

than this simple core concept from H.J., Inc., supra, is

amply demonstrated by one of the most recent decisions

of the United States Court of Appeals for the Fifth Circuit

on the civil RICO statutes, i.e., Howell Hydrocarbons, Inc.

v. Adams, 897 F.2d 183 (5th Cir. 1990). In that case, the

Fifth Circuit affirmed a district court’s summary judg-

ment rendered in favor of the defendants on the ground

that the plaintiff had failed to prove the existence of a

“pattern of racketeering activity”. In noting the plaintiff’s

failure, Howell, supra, held:

“The Racketeer Influenced and Corrupt

Organizations Act, [citation omitted], imposes

civil liability on those who engage in certain

“prohibited activities,” defined as requiring

proof of either “a pattern of racketeering activ-

ity” or “collection of an unlawful debt.” [cita-

tion omitted]. “Racketeering activity” means

any act indictable under various specified fed-

eral statutes, and certain federal offenses. [cita-

tion omitted]. The statute indicates only that a

“yattern” “requires at least two acts of rack-

eteering activity” within a ten year period.

[citation omitted].

A-43

A civil RICO claim under [citation omitted]

must involve a person who engages in a pattern

of racketeering activity connected to the acquisi-

tion, establishment, conduct or control of an

enterprise. [citations omitted]. The Supreme

Court has rejected both the view that predicate

acts of racketeering may form a pattern only

when they are part of separate illegal schemes,

see [citation omitted], and the equally extreme

view that a pattern is established merely by

proving two predicate acts, see, e.g., [citation

omitted]. H.J. Inc., [citation omitted]. “While

two acts are necessary, they may not be suffi-

cient.” [citation omitted].

RICO’s legislative history reveals Congress’

intent that to prove a pattern of racketeer-

ing activity a plaintiff... must show that

the racketeering predicates are related, and

that they amount to or pose a threat of

continued criminal activity.

[citation omitted]. The Supreme Court further

explained this concept of “continuity” as either

“a Closed period of repeated conduct,” or “past

conduct that by its nature projects into the

future with a threat of repetition.” [citation

omitted]. But, “predicate acts extending over a

few weeks or months and threatening no future

criminal conduct do not Satisfy this require-

ment.” [citation omitted]. The Court provided

several examples of activity showing this conti-

nuity, all indicating activities that amount to or

threaten long-term criminal activity. [citation

omitted].

A-44

There has been no indication of activities that

amount to or threaten long term criminal activ-

ity. See [citation omitted].” (Emphasis added).

(COPR. (C) WEST 1990 NO CLAIM TO ORIG.

U.S. GOVT. WORKS).

Id. p. 190 and 193.

Thus, at this point in time, this Court has nothing

more than the vague concept of “activities that amount to

or threaten long term criminal activity” to utilize in deter-

mining whether plaintiffs proved that the requirement of

“continuity” for the essential element of a “pattern of

racketeering activity” existed in this case. The United

States Court of Appeals for the Seventh Circuit in Suther-

land v. O'Malley, 882 F.2d 1196 (7th Cir. 1989), described

some of the factors it considered relevant to a determina-

tion of whether the racketeering activities alleged to exist

in a particular case have the “continuity” required to

constitute a “pattern of racketeering activity”:

“Ms. Sutherland cannot, however, establish

that these predicate acts have the continuity

required to constitute a pattern of racketeering

activity. To satisfy the continuity element, the

plaintiff must show that the alleged predicate

acts “themselves amount to, or that they other-

wise constitute a threat of, continuing rack-

eteering activity.” [citation omitted]. The

plaintiff must prove “continuity of racketeering

activity, or its threat, simpliciter.” [citation omit-

ted]. The Court has not formulated any general

test for continuity in the abstract. Instead, the

specific facts of each case must be examined to

determine whether the predicate acts relied

upon by the plaintiff establish a threat of con-

tinuing racketeering activity. [citation omitted].

A-45

Courts must examine a number of relevant fac-

tors when determining whether the predicate

acts alleged are sufficiently continuous to con-

Stitute a pattern; these factors include “ ‘the

number and variety of predicate acts and the

length of time over which they were committed,

the number of victims, the presence of separate

schemes and the occurrence of distinct injuries.’ ”

[citations omitted] (“The quest for ‘continuity

plus relationship’ necessarily involves a fact-

specific analysis.”); [citation omitted]. The

Supreme Court in [citation Omitted] also

explained, however, that “[p]redicate acts

extending over a few weeks or months and

threatening no future criminal conduct do not

Satisfy [the continuity] requirement: Congress

was concerned in RICO with long-term criminal

conduct.” [citations omitted] (“Our cases dem-

onstrate an expansive reading of civil RICO, but

only where a true ‘pattern’ of prohibited activ-

ity, not just sporadic or isolated instances of

fraud, are shown.”); [citation omitted] (continy-

ity requirement not satisfied where case

“involves the type of ‘isolated event’ that fails

to manifest the threat of continuing illegal

activity indicative of a ‘pattern’ of racketeering

activity”).

In light of these standards, we conclude that

Mr. O’Malley’s allegedly wrongful conduct does

not satisfy the pattern requirement’s continuity

element. While a RICO pattern can be estab-

lished, in some circumstances, by proof of a

single scheme, it is not irrelevant, in analyzing

the continuity requirement, that there is only

one scheme. See [citation omitted] (“proof that a

RICO defendant has been involved in multiple

A-46

criminal schemes would certainly be highly rel-

evant to the inquiry into the continuity of the

defendant's racketeering activity”).” (Emphasis

added). (COPR. (C) WEST 1990 NO CLAIM TO

ORIG. U.S. GOVT. WORKS).

Id. p. 1204.

See also Phelps v. Wichita Eagle-Beacon, 886 F.2d

1262 (10th Cir. 1989); and, Menasco v. Wasserman, 886

F.2d 6891 (4th Cir. 1989).

In the case sub judice, plaintiffs have failed to prove

anything more than related racketeering acts occurring at

the rate of less than one per year. Parenthetically, plain-

tiffs were only able to show that defendant engaged in

isolated and sporadic criminal acts related to the West-

side bond offer. Consequently, plaintiffs were unable to

establish the “continuity” requirement for a “pattern of

racketeering activity”, which requirement was described

by the Supreme Court in H.J., Inc., supra, as racketeering

activities that “amount to or threaten long-term criminal

activity.” Plaintiffs’ failure to prove “continuity” was

memorialized by the Court of Appeals in Abell, supra,

when it found that “plaintiffs have alleged over half a

dozen acts of mail fraud and wire fraud, each of which

stems from Westside’s bond offer.”

For these reasons, this Court should find that 18

U.S.C. §§ 1961, et. seq., does not reach the isolated and

sporadic criminal acts shown by plaintiffs in this case,

and it should dismiss plaintiffs’ civil RICO claims

asserted against defendant under those statutes.

A-47

(C). THE ATTORNEY’S FEES AWARDED TO

PLAINTIFFS SHOULD BE SUBSTANTIALLY

REDUCED OR ELIMINATED ALTOGETHER

Defendant contends that this Court should substan-

tially reduce or eliminate altogether its award of attor-

ney’s fees to plaintiffs. Defendant's contention is based

on the decision of the United States Court of Appeals for

the Fifth Circuit in Abell, supra, wherein it held:

“Nonetheless, we cannot simply affirm the

district court’s award, for that court awarded

attorneys’ fees against all of the defendants who

Stood trial. Thus, the court awarded attorneys’

fees for all of the legal work necessary to

develop and try plaintiffs’ case. Plaintiffs devel-

oped much of their case, however, to obtain a

verdict against WL]. Several of plaintiffs’ legal

theories and arguments applied only to WL];

indeed, at least one of their claims (for legal

malpractice) implicates only WLI]. Conse-

quently, the district court must readjust the

attorneys’ fees award to compensate plaintiffs

only for the legal resources which they expended

to develop a case against Fryar and All Ameri-

can. For this purpose, we will remand.’

(Emphasis added). (COPR. (C) WEST 1990 NO

CLAIM TO ORIG. USS. GOVT. WORKS).

Id. p. 1142.

Thus, the Court of Appeals itself envisioned a sub.

stantial reduction in the attorney’s fees this Court

awarded to plaintiffs. As noted by the Court of Appeals

plaintiffs developed much of their case to obtain a verdict

against defendant Wright, Lindsey & Jennings, and this

Court awarded Plaintiffs attorney’s fees for that legal

work. However, this Court's award of attorney’s fees

A-48

must now be reduced to reflect only the legal resources

expended by plaintiffs to develop their case against

defendant. Of course, if this Court dismisses plaintiffs’

civil RICO claims against defendant, it will be required to

virtually eliminate the award of attorney’s fees made to

plaintiffs.

For these reasons, this Court should substantially

reduce or eliminate altogether the attorney’s fees awards

made to plaintiffs.

(III). CONCLUSION

Defendant has shown that 18 U.S.C. §§ 1961, et. seq.,

is void-for-vagueness. This is so because 18 U.S.C.

§§ 1961, et. seq., forbids “the doing of [acts] in terms so

vague that men of common intelligence must necessarily

guess at its meaning and differ as to its application.”

Stated another way, 18 U.S.C. §§ 1961, et. seq., exacts

“obedience to a rule or standard so vague and indefinite

as really to be no standard to all.” Alternatively, defen-

dant has shown that plaintiffs failed to prove the “conti-

nuity” requirement necessary for the existence of a

“pattern of racketeering activity.” This is because plain-

tiffs were only able to show that defendant engaged in

isolated and sporadic criminal acts related to the West-

side bond offer. Finally, defendant has shown that this

Court’s award of attorney’s fees to plaintiffs must be

substantially reduced or eliminated altogether. Clearly,

such a course of action is mandated by the specific find-

ings of the United States Court of Appeals for the Fifth

Circuit in Abell, supra.

A-49

FOR THE FOREGOING REASONS, this Court should

dismiss the civil the civil [sic] RICO claims asserted

against defendant Joe E. Fryar by the plaintiff-class of

bondholders in Westside Rehabilitation Center.

FURTHER, this Court should substantially reduce or

eliminate altogether the attorney’s fees awarded to plain-

tiffs.

Respectfully submitted:

LAW OFFICES OF

J. MINOS SIMON

Attorneys at Law

1408 West Pinhook Road

Post Office Box 52116

Lafayette, Louisiana 70505-2116

(318) 233-4625

By: /s/ J. Minos Simon

J. MINOS SIMON

Bar Roll No. 12278

By: /s/ Miles Edward Tilly

MILES EDWARD

TILLY

Bar Roll No. 12795

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a copy of this memoran-

dum in support of defendant’s motion to dismiss civil

RICO claims and in Opposition to plaintiffs’ motion for

order upholding jury verdict, readjusting attorneys’ fee

award, and recalculating individual plaintiffs’ damage

award has this date been supplied to Opposing counsel of

A-50

record by United States Mail, postage prepaid and prop-

erly addressed.

Lafayette, Louisiana, this 7th day of May, 1990.

/s/ J. Minos Simon

J. MINOS SIMON

A-51

IN THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

DOCKET NUMBER: 90-4737

EDWARD C. ABELL, JR., and

CAREY WALTON, ET AL

Plaintiffs-Appellees and

Cross-Appellants

VERSUS

POTOMAC INSURANCE COMPANY, ET AL

Defendants

Joe E. Fryar, Wright, Lindsey and Jennings, and

Valley Forge Insurance Company

Defendants-Appellants and

Cross-Appellees

ON APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE WESTERN DISTRICT OF LOUISIANA,

HONORABLE JOHN M. SHAW, UNITED STATES

DISTRICT JUDGE PRESIDING

PETITION OF JOE E. FRYAR,

DEFENDANT-APPELLANT, FOR REHEARING

J. MINOS SIMON, LTD.

1408 West Pinhook road

Post Office Box 52116

Lafayette, Louisiana 70505

(318) 233-4625

By: J. MINOS SIMON

ATTORNEY FOR

DEFENDANT-

APPELLANT JOE E. FRYAR

A-52

TO THE HONORABLE, THE UNITED STATES COURT

OF APPEAL, FIFTH CIRCUIT:

Petitioner, Joe E. Fryar, defendant-appellant in the

captioned cause, respectfully petitions the Court to grant

a rehearing as to the decision of the Court of November

13, 1991, in support whereof petitioner respectfully gives

the Court to understand the following:

The November 13, 1991 decision works a violation of

your petitioner’s constitutional rights in that:

A. It denies to petitioner his due process rights under

the Fifth Amendment to the United States Constitu-

tion, and

B. It denies to petitioner his right to trial by jury in

violation of the Seventh Amendment to the United

States Constitution.

A. IT DENIES TO PETITIONER HIS DUE PRO-

CESS RIGHTS UNDER THE FIFTH AMEND-

MENT TO THE UNITED STATES

CONSTITUTION

On July 5, 1984 a class action was filed on behalf of

the bondholders of Westside Habilitation, Inc. setting

forth, among others, a claim against petitioner pursuant

to the provisions of 18 U.S.C., § 1961, et seq., (a RICO

civil claim).

Trial on the merits to a jury commenced on December

8, 1986 and concluded in February, 1987.

A-53

On October 30, 1985, which date subsumes all mate-

rial time periods involved in the RICO civil claims

against Joe E. Fryar, this Court decided the case of

R.A.G.S. Couture, Inc. 0. Hyatt, 774 F.2d 1350. In that

decision this Court expressly held that two (2) related

acts of mail fraud constituted a “pattern of racketeering

activity”, without more, within the meaning of the RICO

Statute. Thus as of October 30, 1985, continuously

through the trial date of the RICO civil claims filed

against petitioner, the rule of law applicable to the RICO

claims against petitioner was that a “pattern of racketeer-

ing activity” consisted of two (2) or more related predi-

cate acts, without more. The RICO civil claims against

petitioner were to be tested and actually were in fact

tested according to the rule of law established by

R.A.G.S., supra. On appeal from an adverse judgment

concerning the RICO civil claims, petitioner challenged

the correctness of the R.A.G.S. decision. But this Court

affirmed R.A.G.S. Abell v. Potomac Insurance Company, 858

F.2d 1104 (5th Cir. 1988).

On June 26, 1989 the Supreme Court decided the case

of H.J., Inc., et al v. Northwestern Bell Telephone Company, et

al, 109 S.Ct. 2893. That decision expanded the meaning of

“pattern of racketeering activity” far beyond the rule of

law established by R.A.G.S., supra. H.J. established two

(2) essential constituents of the pattern requirement of the

RICO statute: (a) relationship or relatedness of two or

more predicate acts and (b) continuity or threatening

future criminal conduct.

The November 13, 1991 decision of this Court

engaged the Court in utilizing the H.J. decision, which

expanded the “pattern of racketeering activity” rule of

A-54

law far beyond the compass of R.A.G.S., as a procrustean

bed, upon which the perceived body of evidence devel-

oped during petitioner’s trial was placed, and its limbs

were extended, rather than chopped off, to make that

body of evidence fit the procrustean bed. In short the

newly expanded meaning of “pattern of racketeering

activity” established in 1989 by H.J. was retroactively

applied to conduct attributed to petitioner originating in

1976, some nine (9) years prior to the 1985 R.A.G.S. deci-

sion, thus creating a judicial ex post facto rule of law.

At all times material to the RICO civil claims against

petitioner, your petitioner had no warning of the H.].

conduct which imposed civil and criminal liability upon

him; he had no warning of what conduct to avoid or to

defend against. He was not informed, for example, that

“predicate acts extending over a few weeks or months

and threatening no future criminal conduct do not satisfy

this requirement” (109 S.Ct. at p. 2902). Thus he was not

given the opportunity or informed of the right to so tailor

his conduct as to fall within the shelter of this defined

“pattern of racketeering activity”. Nor was petitioner

informed that “though the number of related predicates

involved may be small and they may occu: close together

in time, the racketeering acts themselves include a specific

threat of repetition extending indefinitely into the future,

and thus supply the requisite threat of continuity” (109

S.Ct. at p. 2902). Had he been informed of the multi-

factors involved in the H.J. definition of “pattern of rack-

eteering activity”, then during his trial he would have

had the opportunity to present evidence to rebut any

incriminatory evidence and particularly the conclusion

that “the racketeering acts themselves include a specific

A-55

threat of repetition extending indefinitely into the

future”. Moreover, generally speaking, had petitioner

been placed on notice of the conduct proscribed by H./.,

he could have avoided the Prohibited conduct, and dur-

ing trial, he could have presented evidence in defense of

the claims asserted against him and thus could have had

the Opportunity to exonerate himself completely from

liability.

Petitioner’s right to “fair warning” of the nature and

character of the conduct Proscribed “is fundamental to

Our concept of constitutional liberty. (citations omitted)

As such, that right is protected against judicial action by

the Due Process Clause of the Fifth Amendment”. Marks

v. United States, 97 S.Ct. 9909 (1977). See also Bouie v. City of

Columbia, 378 U.S. 347, 84 S.Ct. 1697 (1964). Thus the

November 13, 1991 decision of this Court complained of

herein operates to deny to petitioner his due process

rights in violation of the Fifth Amendment.

B. IT DENIES TO PETITIONER HIS RIGHT TO

TRIAL BY JURY IN VIOLATION OF THE SEV-

ENTH AMENDMENT TO THE UNITED STATES

CONSTITUTION

Pertinent to this assignment of error is the following

excerpt of this Court from its November 13, 1991 deci-

sion:

“Along with these relatedness and continuity

requirements, the Court introduced tests to

establish their presence. See Kehr Packages, Inc.,

v. Fidelcor, Inc., 926 F.2d 1406, 1412-13 (3rd Cir.

1991). For relatedness, the Court adopted a

broad multi-factor test that turns on whether the

A-56

alleged predicate acts ‘are interrelated by distin-

guishing characteristics and are not isolated

events.’ H.J. 492 U.S. at 240, 109 S.Ct. at 2901

(quotation omitted). As for continuity, the Court

noted that proof of multiple schemes is “highly

relevant’ to the question of continuity but not a

prerequisite!?, and defined continuity as ‘refer-

ring either to a closed period of repeated con-

duct, or to past conduct that by its nature

projects into the future with a threat of repeti-

tion.’ Id. at 241, 109 S.Ct. at 2902. As was recog-

nized by the Court, these tests are highly fact-

and case- specific. See id. at 237, 242, 109 S.Ct. at

2899, 2902; Kehr Packages, 926 F.2d at 1412-13.”

(page 748 of the opinion)

Paraphrasing this Court’s foregoing statement, if

indeed “these tests are highly fact- and case-specific”,

then, in petitioner’s case, they are to be decided by the

jury impaneled to try the case against your petitioner.

The fact question of whether the predicate acts attributa-

ble to petitioner “are interrelated by distinguishing char-

acteristics and are not isolated events” was never

presented to the jury involved in the trial of petitioner’s

case. Thus none of the multiple factors involved in the

issues of relatedness of the predicate acts and the conti-

nuity requirements of the RICO statute was ever pre-

sented to the jury called upon to try petitioner’s case.

Petitioner’s case indeed was a suit at common law, and

the value in controversy exceeded Twenty and No/100

($20.00) Dollars. As to such a suit the Seventh Amend-

ment provides:

12 See id. 492 U.S. at 240, 109 S.Ct. at 2901.

A-57

“In suits at common law, where the value in

controversy shall exceed $20.00, the right of trial

by jury shall be preserved, and no fact tried bya

jury, shall be otherwise re-examined in any

court of the United States, than according to the

rules of the common law.”

Overriding and essential fact questions involved in

the RICO claims against your petitioner and relied upon

by this Court for its November 13, 1991 decision were

never presented to the jury impaneled to try petitioner’s

case. The jury in petitioner’s case was never called upon

to render a verdict as to the relatedness of the alleged

Predicate acts and as to the continuity factual characteris-

tics of these alleged Predicate acts. The November 13,

1991 decision complained of herein instances the act of

this Court usurping the prerogative of the jury in deter-

mining these facts. In so doing this Honorable Court has

denied to your Petitioner trial by jury in violation of the

Seventh Amendment to the United States Constitution.

Thus, the November 13, 1991 decision works a viola-

tion of your petitioner’s constitutional rights in that (a) it

denies to petitioner his due Process rights under the Fifth

Amendment to the United States Constitution, and (b) it

denies to petitioner his right to trial by jury in violation

of the Seventh Amendment to the United States Constitu-

tion.

WHEREFORE petitioner respectfully prays that his

petition for rehearing be granted and on rehearing that

the November 13, 1991 decision be recalled and the deci-

sion of the district court be reversed as Originally prayed

A-58

for by petitioner in his appeal from the district court

decision.

J. MINOS SIMON, LTD.

1408 West Pinhook Road

Post Office Box 52116

Lafayette, Louisiana 70505-2116

(318) 233-4625

By: /s/ J. Minos Simon

J. MINOS SIMON

Bar Roll No. 12278

CERTIFICATE

I HEREBY CERTIFY that a copy of the foregoing

rehearing application has been forwarded to all counsel

of record by United States Mail, postage prepaid and

properly addressed.

Lafayette, Louisiana, this 22nd day of November,

1991.

/s/ J.Minos Simon

J. MINOS SIMON

A-59

IN THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

EDWARD C. ABELL, JR., and

CAREY WALTON, ET AL

VERSUS DOCKET NUMBER: 87-4260

POTOMAC INSURANCE COMPANY, ET AL

a TT Tee ielnleteeeeELLLT T e t eee

MOTION TO RECALL ORDER

COMES NOW, through undersigned counsel, defen-

dant-appellant Joe E. Fryar (movant), who respectfully

moves this Honorable Court to recall its order of Septem-

ber 12, 1989, remanding this cause to the district court, in

Support whereof movant gives this Court to understand

the following:

OPERATIVE SALIENT FACTS

1. On February 19, 1987, the district court, in accor-

dance with a jury’s verdict, entered judgment in the

amount of Twelve Million Ninety-Six Thousand Eight

Hundred Sixty-Six and 80/100 ($12,096,866.80) Dollars in

favor of plaintiffs-appellees Edward C. Abell, [r., and

Carey Walton, et al, (respondents) and against movant

and others in that certain civi| action entitled “Edward C.

Abell, Jr., et al v. Potomac Insurance Company of IIli-

nois, et al”, Docket Number 84-1786 “O”, United States

District Court for the Western District of Louisiana,

Lafayette-Opelousas Division.

A-60

2. The district court’s judgment in favor of respon-

dents and against movani was affirmed in part, reversed

in part, and remanded by this Court in Abell, et al ov.

Potomac Insurance Company, et al, 858 F.2d 1104 (5th

Cir. 1988), rehearing en banc denied 863 F.2d 882 (5th Cir.

1988), to the district court for a redetermination of the

attorneys’ fees and damages awards made against

movant.

3. Subsequently, in Fryar v. Abell, et al,___ U.S. __,

109 S.Ct. 3236, 106 L.Ed.2d 584 (1989), a petition for writ

of certiorari filed by movant was granted by the Supreme

Court, summarily vacating that portion of this Court’s

judgment which had affirmed the district court’s judg-

ment holding movant liable to respondents on the civil

RICO claims asserted against him. The Supreme Court's

order vacating this Court’s judgment specifically pro-

vided that “the case is remanded to the United States

Court of Appeals for the Fifth Circuit for further con-

sideration in light of H.J. Inc. v. Northwestern Bell Tele-

phone Company, 492 U.S. ___, 109 S.Ct. 2893, 106 L.Ed.2d

195 (1989).”

4. On July 3, 1989, in Edward C. Abell, Jr., et al v.

Wright, Lindsey & Jennings, et al, ___ U.S. __, 109 S.Ct.

3242, __ L.Ed.2d ___ (1989), the Supreme Court denied

respondents’ petition for writ of certiorari, imparting

finality to this Court’s judgment that had reversed the

district court’s nearly Ten Million and No/100

($10,000,000.00) Dollars judgment against movant on

respondents’ securities law claims.

5. In Abell, et al v. Potomac Insurance Company, et

al, 884 F.2d 196 (5th Cir. 1989), this Court entered an

A-61

order, remanding respondents’ case against movant to the

district court for further consideration in light of H.J. Inc.,

supra. Additionally, this Court directed the district court

to consider the appropriate disposition of this matter in

light of movant’s pending bankruptcy proceeding, i.e

“In Re Joe E. Fryar, Debtor”, Docket Number 89-

BK-80,595, United States Bankruptcy Court for the West-

ern District of Louisiana, Alexandria Division.

6. On January 3, 1990, an order was entered by Hon.

Henley A. Hunter in the aforementioned bankruptcy pro-

ceeding, lifting the automatic bankruptcy stay for the

purpose of completing the litigation between movant and

respondents. Thus, there is no longer any basis for an

concerns this Court might have had regarding the auto-

matic stay imposed by law upon the filing of movant’s

bankruptcy petition and the effect thereof on its ability t

Proceed to a determination of this matter.

7. In light of the foregoing, and for the additional!

reasons hereinafter recited, the remand of this case to the

district court is without substantive legal basis and prac-

tical support. Additionally, this remand, if continued, wil!

work to impose undue burden on the district court,

which is already overextended by virtue of an existing

vacant judgeship, and unnecessary and oppressive

expense on the parties.

8. The Supreme Court’s directive Clearly contem

plated that the legality of respondents’ civil RICO claims

against movant should be decided by this Court based on

the record on appeal. The resolution of that legal question

by this Court will impart finality thereto, except as the

A-62

Supreme Court may decide to review such a decision on

application for a writ of certiorari.

9. To have the district court, instead of this Court,

decide the legality of respondents’ civil RICO claims

against movant but invites a circvity of judicial proceed-

ings in that such a decision would be appealable to this

Court. On appeal, this Court would be called upon to

decide the very legal question which the Supreme Court

has already directed it to determine. Consequently, this

circuitous judicial misadventure would exact a heavy toll

on the interests of judicial economy and efficiency and an

oppressive financial burden on the parties.

10. For all these reasons, this Court’s recall of its

order of September 12, 1989, is in the interests of judicial

efficiency and economy, as well as the parties’ interests in

attaining an expeditious and economical resolution of

this controversy. This recall will allow this Court to

reconsider this matter based on the record on appeal,

resulting in substantial savings of judicial time to the

district court and of litigation expenses to the parties.

WHEREFORE, MOVANT RESPECTFULLY PRAYS

that this Court recall, vacate and set aside its order of

September 12, 1989, remanding this case to the district

court.

Respectfully submitted:

LAW OFFICES OF J. MINOS SIMON

Attorneys at Law

1408 West Pinhock Road

Post Office Box 52116

Lafayette, Louisiana 70505-2116

(318) 233-4625

A-63

By: /s/ J. Minos Simon

J. MINOS SIMON

Bar Roll No. 12278

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a

recall order has this date been

counsel of record by United States

and properly addressed.

copy of this motion to

Supplied to Opposing

Mail, postage prepaid

Lafayette, Louisiana, this 22nd day of March, 1990.

/s/ J. Minos Simon

J. MINOS SIMON

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.