In U.S. v. Brown, No. 05-11137 (Oct. 25, 2007), the Court affirmed the convictions and sentences of defendants convicted of fraud involving union moneys, in violation of RICO and Taft-Hartley Act laws. The defendants were the executive director of a union and his assistant, who received payments from firms who employed potential union members.
The Court rejected the argument that there was insufficient evidence to support the Taft-Hartley counts. The defendants argued that employees of a firm that made payments to them belonged to another union, and therefore could not be considered persons who might be "admitted to membership" in defendants’ firm, a requirement for Taft-Hartley liability. But the Court found that because these employees could have been solicited to join the defendants’ union despite this roadblock.
Declining to follow a Second Circuit precedent, the Court found that despite the infirmity of certain predicate acts of RICO conspiracy, the jury’s general verdict was valid, because the "continuity: element could be inferred from the 2 valid predicate acts which the jury found. This continuity was provided by the fraudulent vouchers for reimbursement that were submitted over a six year period.
The Court also sustained the RICO conspiracy conviction, finding that evidence of Brown’s concealment of his receipt of funds showed the agreement on the overall objective of the conspiracy.
The Court further sustained the conviction for depriving the union of "honest services." The Court found that the payments Brown received, payments he concealed from the union, supported this count of conviction.
The Court found that, even assuming the district court erroneously failed to instruct the jury that the existence of employees, not supervisors, in a firm from which the defendant receives prohibited payments, were one element the Taft-Hartley violations, the error was harmless – the jury would still have convicted.
The Court rejected the argument that Brown should have been granted a severance from his assistant. Brown claimed that, had they been tried separately, he would have called his assistant as an exculpatory witness. The Court found no "compelling prejudice" in the denial of the severance.
Turning to the assistant’s appeal, the Court rejected the argument that a RICO "enterprise" can also be the victim of the RICO offense. The "enterprise" need not be the instrument "through which" the violation occurs. It can be the victim.
The Court found "ample evidence" that the assistant was aware of the overall purpose of the conspiracy, noting her "extraordinary control" over the union books, and her ability to enrich herself.
The Court upheld a jury instruction which stated that a "lower level" participant in an enterprise could be held criminally responsible for a RICO offense, finding it in accord with Circuit precedent.
Finally, turning to sentencing, the Court upheld an order of forfeiture in excess of $500,000. The Court upheld finding the assistant jointly liable for the total amount of the loss. Though this amount was not reasonably foreseeable, it was valid. The Court declined to follow contrary holdings in other circuits, noting the "punitive" character of forfeiture. The Court again cited the punitive character of forfeitures in declining to credit the assistant for moneys that she had returned to the union. The Court also rejected the argument that the forfeiture was unconstitutionally excessive.http://www.ca11.uscourts.gov/opinions/ops/200511137.pdf