*4 political history, of WINTER, visions we must consider Before KAUFMAN Cir WARD, Judges, may cuit where such lines be drawn Judge.* District in con- prosecution of a text criminal for mail KAUFMAN, IRVING R. Judge: Circuit Specifically, and extortion.5 fraud we are determine, significant alia, when, The played by political ever, role asked inter if municipal party in parties government political has leader who been a holds official an noted often characteristic of office American but who participates critics, life. urban contributing substantially governance Some in of a munici- prevailing mythology that poli- fiduciary duty machine owes a pality to the general controlled the citizenry, tics have corridors of and what local conduct violates such a government,1 highlighted opportu- fiduciary duty. The issues before us arise * Of the thing, United States knowingly District for the or Court such matter or causes to York, sitting by District of New by any des- Southern mail be delivered . .. such matter or ignation. thing, $1,000 shall be fined not more than or imprisoned years, not more than five or both. Robertson, Myth, 1. See J. American American Reality 265-66 (1976) provides pertinent 5. § 18 U.S.C. in part: Bryce, 2. J. See The American Commonwealth (a) way any obstructs, degree in Whoever or 1891). ed. delays, commerce or or affects the movement Robertson, supra J. See note at 265. For any commodity by of article or in commerce description, justification, amusing attempts conspires or or ... extortion so to machine, political operation of a see W. Rior- do, physical or commits threatens violence to don, Tammany (E. of Plunkitt Hall P.- Dutton any person property or in furtherance of a 1963). plan purpose anything or to do in violation of shall be fined this section not more than (1976) provides pertinent 4. 18 U.S.C. § $10,000 imprisoned twenty or than more part: years, or both. Whoever, having intending or devised (b) As used in this section— defraud, any or artifice to scheme or devise obtaining money property by for or means of (2) The term “extortion” means the obtain- pretenses, representations or false fraudulent another, property ing purpose executing of from with his con- promises ... of or for the sent, wrongful attempting use actual induced of or artifice or such scheme so to force, violence, fear, do, any places post' office threatened or under or authorized matter, depository any right. for matter or color official thing takes or receives ... or therefrom Judge retrial before Sifton Joseph prosecution against of a criminal
out contest. closely fought long-time Chairman of another Margiotta, proved M. weeks, lasting Following three Committees both Nassau trial Republican three conscientiously New Hempstead, jury the Town deliberated County and all on guilty verdict of charges days. Government It returned York. counts, of mail including mail fraud the one count count of in violation six one (1976) (1976)6 in violation of 18 U.S.C. 1341 counts of § five fraud § 18 U.S.C. of extortion in violation of 18 the five counts in violation U.S.C. extortion (1976). Judge with the Sifton for activities connection 18 U.S.C. § (1976)7 on to concurrent terms commissions sentenced distribution years two count. Margiotta’s political on each municipal properties imprisonment presented “evi- The Government allies. appeals Court spun of fraud into a web a scheme dence Judge of conviction entered judgment trial power”8 before a number of appeal, raises On Sifton. Sifton, nearly seventy at which witnesses claims, is- of which involve novel several during period three weeks. testified Margiotta argues his conviction sues. deliberating eight days, After fraud must be reversed and of mail deadlocked, hopelessly announced grounds dismissed indictment judge the trial declared a mistrial. statute, fraud federal mail Government, (1976), theory does not Upon request embrace a retrial, Judge fiduciary partici- of a recon- anticipation Sifton individuals *5 legal evidentiary process number of and but who do not pate sidered office, trial. judge Margiotta made at the trial and rulings occupy The that duty in which he citi- fiduciary general an order stated that entered owed rulings County at challenged zenry be followed of Nassau and the Town trial. federal law. Hempstead second The or state Government this Court for review of he asserts the evidence was appealed then prior order Judge support finding Sifton’s to the retrial. of fiduci- insufficient portions it were trial Judge ary found those Sifton’s even if held that the We indicating the court by would abide were not as a instructions erroneous court’s order addition, at instructions retrial were not of law. certain matter pursuant to 18 indictment and conviction appealable claims and, accordingly, rights dismissed his Amendment of free- (1976)9 First violate appeal in respect. expression, petition, association and Government’s dom portions concerning of the impermis- order the mail fraud and that statute is While evidentiary rulings appeal- vague face and him judge’s sibly applied were on its Furthermore, able, court case. he we concluded district facts on discretion, its within not fail to mate- well that he did disclose acted asserts in mail evidentiary the order rul- violation of the information affirmed rial statute. also claims ings. fraud jeopardy supra. clause United States Consti- 6. See note prosecution. prohibits further tution 5, supra. note 7. See appeal by the United shall lie An States appeals or order of from decision court v, Margiotta, 8. United States excluding suppressing evi- or a district court 1981). (2d Cir. prop- requiring seized the return of dence or provides pertinent (1976) 9. 18 U.S.C. § 3731 proceeding, erty made after in a criminal part: put jeopardy and has been the defendant appeal by In a criminal case the United finding an indictment or on before verdict appeals from a a court of lie to shall information.... decision, judgment, or of a district order provisions be liber- of this section shall dismissing informa- an indictment or court purposes. ally effectuate its construed counts, except or more as to one double appeal lie where the shall that no of five Town County. conviction counts of extortion in his As a practice, matter of Act, Hobbs violation of 18 U.S.C. 1951 the authority for obtaining insurance on (1976), should reversed indict- municipal properties delegated to a dismissed because ment he did commit designated of Record Broker the entities color “under right” extortion official serving at their pleasure. The Broker wrongful “fear,” use of only of Record was the individual who acted the district court’s allegedly because im- jurisdictions on behalf of these in placing instructions proper count policies. insurance The Broker received as jury’s consideration of prejudiced compensation for his services commissions charges. Act Hobbs Finally, Margiotta ar- portion consisting of a paid the monies Sifton gues admitting erred municipalities for the poli- insurance A. Williams’s Richard hearsay account of cies.10 alleged agreement father’s his with Margi- According Government, this munic- below, reasons otta. For the stated we ipal activity insurance was transformed into reject Margiotta’s contentions, and affirm a scheme to defraud the Hemp- citizens of judgment of respects. conviction in all County and Nassau stead 1968. At that Background I. time, Margiotta allegedly ap- contrived the Sons, of Richard B. pointment Williams & Since in this the conduct issue case Inc., an agency, (hereinafter fraud, an intricate scheme of involves we Agency” “Williams or “Agency”), as Broker facts in set forth detail. As noted must Record for Town Hempstead. above, Margiotta, M. Joseph atwas all rele- B. Williams Richard determined have the times the Chairman Republican vant Agency designated as Broker of Record for of both Nassau Committee and the Town, then position held one Mor- of.Hempstead, New York. Although Town Weis. Williams allegedly timer met with office, positions held no elective Weis to strike a secret Republican Chairman, County and Town ac- “deal”: The Williams Agency would be cording Government, afforded him Broker of Record for named the Town of power and prestige sufficient to exert sub- Hempstead, and Weis $10,- would become a over public control officials stantial *6 year consultant to Town. the In Hempstead and Nassau County who had appointment, for return the the office Williams elected to been candidates of the Agency would set aside the Party. control, 50% of insur- Republican This it was commissions and ance other compensation it charged, Margiotta enabled to exercise in- received, to be appointees distributed to insur- over the licensed fluence of these elected brokers and others spread designated by The ance Mar- as well. political officials of his thereafter, Shortly Caso, governments giotta. Ralph the over of the tentacles Town Presiding Supervisor County allegedly of Margiotta Hempstead, ap- offered and the engage opportunity pointed to in the highly Agency Hemp- Williams remuner- design fraudulent Broker of Record involving Margiot- the stead’s based ative distri- on of insurance recommendation. In bution on munici- ta’s commissions the Williams political to his properties Agency pal began to write associates. insurance for the Hempstead, of Town and commenced mak- responsibility The of County the Nassau ing “kickbacks” to by polit- brokers selected and the Executive Presiding Supervisor of leaders of local election ical districts in the Hempstead Town of in maintaining the the loyal who were to appellant. Town the operated owned properties by their re- jurisdictions was spective crux of this In 1970 County Caso was elected Execu- The holders these public artifice. offices County. of Nassau election, tive After his for responsible were obtaining insurance B. Williams met with to Richard properties coverage for the owned possibility Agen- the Williams discuss Moreover, appears County through personal 10. it that Nassau Record services contracts not occasionally compensated competitive bidding. the Broker subject also Town, governmental County affairs of for acting of Record Nassau as Broker
cy underly- 1, 1971, predicate January day on factual County. State. On office, in- was the above-described Ralph designated ing Caso One Count he took which, in Agency pursuant ruse as Broker Record commission Williams surance County arranged Margiotta’s agreement, Margiotta based on Nassau secret for thereafter, Agency as Soon the Wil- of the Williams appointment recommendation. Record the Town and Agency commenced to distribute 50% Broker liams payment kick- Agency’s earned the commissions Nassau in return desig- to brokers brokers and others County properties and others to insurance backs through by Margiotta. with Two Margiotta. allied Between nated Counts politically violating with according charged to the Govern- Six Agen- ment, by inducing the Williams compensation paid the Broker of Hobbs Act arrangement payments of the insurance cy in with this to make connection Record million, right color of two official excess two hun- commissions totalled wrongful fear. Among recipi- dollars. means use of thousand dred charged Margiotta five with extor- than hundred thousand Two of more Count ents payments were with the numerous connection kickbacks insur- dollars performed who were allies. legitimate who brokers brokers insurance ance other a Hobbs work, friends of set forth Act violation lawyers Margiot- Three Count obtaining no services in actions in rendered return for based on who ta $2,000 appellant monthly payments amount of compensation, him- their attorneys of this Williams Wil- The concealment fraudulent self. from scheme, according Government, and his son Neil liam Cahn Cahn between preparation Count Four predicated ficti- 1974 and fostered inspection $10,000 payment by property reports. As a re- the Williams tious on a Dowler, alleged- sult, appear recipi- that the to one Robert it was made agreement pay an one- commission ly of the insurance kickbacks entered into ents Margiotta. legitimately, earning money their Count commis- were half of arising Act Government has Hobbs offense Five described sions. payments totalling activities more were dis- a series charged, the Joseph M. by Margiotta $60,000 Reilly, a New through false and mis- guised than testimony Assemblyman, leading during the course and Count Six York State New York with con- investigation State Inves- extortion in charged payments by Commission. tigation nection Henry Dwyer, W. a New York Agency to November, grand jury a federal Assemblyman and consultant State Margiotta on count one of mail indicted County Republican Committee. Nassau of 18 fraud, violation *7 extortion, counts of the appeals spawned by five in vio- of this (1976), and The first arose pretrial of U.S.C. The mail from the maneu- § indictment lation (Count One) parties. was vering January count on a On based fraud the a pretrial to Town of filed Hempstead, Margiotta defraud motion to dismiss scheme State, One,11 County, alleging, alia, New York inter and their that Count Nassau Count right (1) the to have the to state an offense pursuant of affairs failed to One citizens Town, County and that the State Count du- conducted was § 18 U.S.C. of honestly, corruption, unconstitutionally from that it was free fraud and and plicitous, (2) response, of dishonesty, right to Government sub- Margiot- vague. participation describing faithful of in the an affidavit hundreds honest mitted ta’s Margiotta’s pretrial description alleged motion to before the dismiss was cret” 11. super- agreement prior that indictment was between filed under fraudulent January Agency. superseding filed on indictment This indict- seded an the Williams change superseding subsequent principal predicate has been the all 1981. The ment proceedings. was the addition of word “se- indictment through the mails tion of upon items sent which a the mistrial. In anticipation an- of charge of fraudulent use of the mail could hotly retrial, other contested battle at the Judge Sifton ruled be based. that Count sought Government reconsideration of a offense under stated an One but § legal of evidentiary rulings number the Government elect a single ordered had Judge Sifton made at the first trial. mailing the jury. to submit The Govern- challenged Judge The Government Sifton’s Judge appealed ment Sifton’s order to this instruction to jury that for the Govern- Court, held that which order ap- ment show had defrauded the and that the pealable Government was not County citizens Nassau Town of among to elect spec- numerous required Hempstead of the right to have the affairs mailings. United Margiotta, States v. ified those entities honestly, conducted free (2d 1981). F.2d 729 Cir. Trial com- corruption, dishonesty, on March 1981. While menced violation of mail fraud statute presented prove Government evidence to charged One, in Count the jury had to find Margiotta’s involvement in the insur- Margiotta owed some kind special was a defraud, scheme ance activities fiduciary duty to citizenry.12 The offered good defense of faith. sought also Government reconsideration attempted prove He that he had no se- court’s the district related instruction that a with agreement Agency cret of mail fraud violation under Count One for the distribution insurance commis- required showing additional of willful pro quid quo as a for securing sions concealment.13 the Government appointment as Broker of the district contended court erred in Admitting Record. that he recommended declining jury to instruct the that Margiot- to be Broker Record for both guilty, be found principal, ta could as a County and the the Town and that he di- under color of extortion official right the distribution rected commis- sions, argued he Instead, behavior violation of merely longstanding patronage Judge instructed Sifton that Margiotta arrangement practiced for decades Re- could be found guilty of pursuant extortion publicans and Democrats alike. As noted 2(b) only to 18 U.S.C. if jury found above, deliberating after carefully for more caused acting officials week, jury than a announced that right color of official induce verdict, agree on a could not and mistrial money.14 victim The Govern- was declared. also took issue with ment certain evidentia- rulings
This
ry
court’s second review of
made
Margi-
Sifton
the first
otta case followed Judge Sifton’s deelara-
The
trial.15
Government appealed from
adopt
12. The district
court declined
Margiotta,
13. See United States v.
requested charge
special
1981).
Government’s
that a
fiduciary relationship need not be established
One,
prove
“prong”
for it to
the first
of Count
2(b) (1976) provides
pertinent
14. 18
U.S.C. §
charged
which
scheme to de-
part:
fraud the citizens
Nassau
and the
Hempstead deprived
willfully
be done
right
Town
causes an act to
them the
Whoever
directly performed
him or anoth-
to have the
of those
affairs
entities conducted
if
fraud,
honestly,
against
corruption,
the United
free from
be an offense
and dis-
er
States,
honesty.
principal.
requested
punishable
as a
Government’s
instruc-
permitted
tion would have
to find the
*8
guilty
simply
of mail fraud
defendant
on the
trial, Judge
15. At the first
Sifton had excluded
Margiotta
basis of a
that
determination
had
(1)
Margiotta’s
evidence that
conduct violated
agreed
Agency
to recommend the Williams
law; (2)
prior
New York
evidence of a
similar
Agency’s
of Record in return for
Broker
the
dependence
involving
employee
the
act
of
sala-
participation
scheme,
in the kickback
without
ry
agreement
on their
increases
to contribute
question of
reference to the
a breach of a fidu-
percent
Republican
one
of their salaries to the
relationship by
ciary
the defendant.
Party;
(3)
appellant’s
and
certain statements of
ord, Margiotta
B.
testified that Richard
that he would
stating
Sifton’s order
Williams,
politi-
trial.
the
rulings
participant
second
an active
in
these
follow
the evi-
Town of
and
Hempstead
order on
affairs of the
affirmed
cal
This Court
rulings
appeal
County,
approached
had
him in 1968
dentiary
dismissed
Nassau
instruc-
as Bro-
respect
challenged jury
replace
Mortimer Weis
asked
with
that
tions,
portions
Hempstead.
the Town
ground
those
of
Record for
of
of
ker
relating to the jury instructions
that
the Williams
Margiotta
order
determined
by the
Agency
replace
not
Government
should
Weis as the Broker
appealable
were
Record,
implement-
and this decision
to 18
was
pursuant
of
Margiotta,
F.2d 131
In
after
was
Ralph
Caso.
Caso
ed
dismissing
ap-
Executive,
1981).
County
In
Government’s
Nassau
Mr. Wil-
elected
instructions,
to the again approached
to ex-
respect
Margiotta
with
peal
liams
we
express
intended to
to become
Record
explicitly stated
his desire
Broker of
we
press
County. Margiotta
merits of those
testified
claims.
views on
for Nassau
no
he determined
that
trial,
the Government
At
the second
anybody else
it above
“deserved
[he]
prove
Margiotta’s par-
that
sought to
again
of
capable
handling it.” On
thought was
insurance
in the
activities
ticipation
1, 1971,
day on
January
which he took
scheme of
an elaborate
amounted
designated
office, Ralph
the Williams
Caso
federal
mail fraud and
of
in violation
of
Agency as Broker
Record for Nassau
rather
politi-
than a mere
statutes
extortion
Margiotta’s
County based
recommenda-
system. The
patronage
Government
cal
tion.
Margiotta
show
evidence
that
presented
af-
deeply
himself into the
insinuated
Margiotta’s participation
in
in the
government
Hemp-
Town of
of
fairs
administration of insurance
“governmental
County,
the point
and Nassau
stead
more than
involved
the selection
affairs”
undertaking
in
effect
business
he
Record. Margiotta
Broker of
himself
not simply
the activities
government
occasion
that on one
he was direct-
testified
Party.
Republican
This evidence
concerning
in discussions
efforts
ly involved
Caso,
by testimony
provided
Ralph
County
insurance for the
to obtain
Nassau
Presiding Supervisor of the
was the
who
Veterans Hospital,
and the
Coliseum
until
Hempstead
Nassau
1971 and
Town
by Alphonse
he was consulted
D’Ama-
until
County
1977. Caso stated
Executive
Presiding Supervisor of the Town
to, then
“break” with
prior to his
in
Hempstead,
possibility
about
by Margiotta
“controlled”
he was
plan following
a self-insurance
in-
adopting
responsibilities was to
basic
“the
[he]
Investiga-
York
the New
State
quiries
out,” including appointments
of-
carry
Insurance brokers Dowl-
Commission.
such
the Broker
positions
fices
corroborated this evidence of
and Curran
er
Record.
municipal
dominance
insur-
They
they
stated
activities.
that when
ance
successor,
Purcell,
Francis
While Caso’s
County business,
they
sought the Town
the office
holds
of Nassau
still
with
not
Margiotta,
discussions
undertook
Executive,
not describe
rela-
did
the same
officials. After
over the affairs of
tionship
dominance
offers, they
appeal
their
did
declined
and County,
in Town
the testi-
because,
public officials
as broker Cur-
mony Margiotta himself and those who
testified,
was no place
“there
else to
ran
his directives established
out
carried
Margiotta’s version
these discus-
exercised a
appellant
grip
go.”
vise-like
over
the lie
Hemp-
put
does not
assertion
sions
governmental functions
basic
“in view of
County.
Curran that
explaining
and Nassau
told
[Williams’s]
stead
taking
I had
intention of
selection of the Williams
service
party
role
away
Similarly,
of Rec-
him.”
position
Broker
Department of Justice
submitted
attomeys
a memorandum
should
be indicted.
persuade
attempt
Attorney
in an
General
*9
Williams,
applicants
B.
positions
after
the founder of
interview
clerks,
Richard
for
Agency,
Margiot-
died in
the Williams
and
types
electricians
other
of laborers to
son,
that Williams’s
ta testified
Richard A.
government,
be hired
municipal
Mar-
Williams, approached him to
whether
giotta
ask
would interview individuals who
of his father
the death
would affect
their
applying
higher
positions,
for the
were
level
arrangement. Margiotta
stated
such as candidates
County
for
or Town At-
always
department
“retain
torneys
that he would
and recom-
and
heads. Riehl testi-
Agency
Williams
Broker of
mend”
fied that he contacted
on all
Woolnough
Moreover, Margiotta
involving
Record.
conceded
hiring, requests
promo-
for
cases
tions,
ever
salary
that if the
refused to
increases in excess of
$1,500.
concerning
Woolnough
follow his instructions
distri-
stated that he would
portions
convey
bution
insurance commis-
to Margiotta,
the information
sions,
he would
convened a meeting of
direct him to
would often
check with the
Committee of
Republican
Executive
Margiotta
person-
would
local leader.
also
Party,
would have
recommended that
or
ally approve
disapprove promotions and
replaced
the Williams
as the
salary
County posi-
increases for Nassau
of Record.
According
Broker
Woolnough, Margiot-
tions.
approval
upon
ta’s
would be based
the indi-
municipal
The
insurance activities were
“political activity.”
request
vidual’s
If a
Margiotta’s
sole concern in participat-
promotion
a
or
was
for
raise
Riehl
municipal government.
ing
Margiotta
simply
would
inform the appropriate de-
played
substantial
role
making
also
partment
decision,
head of the
but would
promotion
hiring and
Margiot-
decisions.
proffer
reasons for the
denial.
as a de facto Department
ta’s activities
Nassau
for
were
Margiotta played
Personnel
describ-
a similar role in the
Riehl,
by Alfred G.
program
trial
ed at
of the Town
Hempstead.
DeLac,
staffing officer Nassau
County,
Don-
Muriel
Director of Personnel for
Woolnough, the Republican headquar-
ald
of Hempstead
the Town
stated that she
functionary who was
ters
Margiotta’s
“unvarying practice”
ad-
followed the
seek-
Mr.
assistant.
promotions
ministrative
Riehl assumed
of raises and
ing approval
con-
program staffing
his duties as
cerning positions
officer fol-
with
Hemp-
Town of
meeting
lowing
with Margiotta,
by forwarding
request
which stead
Donald
directed
appellant
Riehl
Woolnough
Republican
to see Donald
at the
Committee.
Riehl and
Woolnough.
Woolnough
requests
dis-
would be
returned with the
for
procedure
requests
handling
notations, “approved”
cussed
or “denied.” Accord-
promotions
DeLac,
employment,
for
In
only
raises.
ing
ap-
to Ms.
individuals
essence,
was informed
hiring
Riehl
that whenever
were those
proved
referred
not covered
position
applicable
civil
Republican
Party.
the leaders
One
available,
became
regulations
Woolnough’s
Riehl
responsibilities
service
was
ob-
notify Woolnough. Woolnough
should
tes-
from Nassau County
tain lists
and the
Hempstead
tified that
would
those
showing
“disseminate”
Town of
the names of
$15,000
less than
paying
jobs
employees
salary
to local Re-
and the
they
all
earned.
Party
information,
leaders unless
publican
a number of
Armed
time,
available at
study
were made
one
would
relation-
jobs
his associates
would
ship
which case
instruct Wool-
between
amount
earned
money
nough on
local
and the
money
districts
an individual
amount of
employment
Republican Party
receive
opportuni-
contributed
before
should
both
According
Woolnough
denying
request
approving
a raise
ties.
himself,
short,
while
Woolnough
promotion.16
role
Parise,
According
knowledge”
employee
expected
to Andrew
that an
Chief Exec-
Presiding Supervisor
percent
salary
one
of his
to the Re-
utive Assistant
contribute
Party.
Hempstead,
expectation
publican
the Town
was “common
This
enforced
*10
purchase
party
distributed
County
loyalty,
in
affairs
Nassau
and
or,
friends,
Hempstead
purposes
designat-
for
he
may
be summarized
assist
Town
words,
ed,
spirit
“whenever
“every-
Donald
his
Woolnough:
the words
example,
Wil-
attorney
For
through his hands.”
moved
thing went
[him].”
Cahn,
for
attorney
liam
a former district
the Government, Margiotta
According
was
County,
by
“retained”
the Wil-
Nassau
this control
the governments
converted
over
$2,000
Agency
per
at
fee of
liams
month
County
Town and
into
scheme to de-
January,
Margiotta
1975 after
beginning
municipal
relating
insurance
whether the
could
Agency
asked
Williams
allegedly
The tale
activities.
way
its
clear to
“see
retain
The
[Cahn].”
corrupt agreement was recounted at trial
paid
$24,000
Agency
William Cahn
Williams
Williams,
A.
son
B.
by Richard
of Richard
year in 1975
and continued to
per
Williams,
the founder of
Williams
$2,000 per
April,
month in 1977.
pay
close
Mar-
Agency and
associate of
Agency began making
pay-
Williams accompanied
In 1968
his
giotta.
son, Neil,
after
ments
Cahn’s
William
meeting attended by Margiotta
to a
father
Margiotta
he
told
his son
wanted
Cahn
and Mortimer Weis. The
Williams
younger
money. The
Agen-
receive the
Williams
Later,
the meeting
outside
room.
waited
payments to
the Cahns
cy deducted
advised
his
was
father that the
Williams
from
allocated
the com-
amount
from
Agency would be
named Broker
Williams
by placing
earned
missions
insurance
the Town of
Hempstead
Record
properties.
County
Neither Wil-
Nassau
agreed
had
Agency
split its
any
rendered
legal
nor
Cahn
serv-
liam
Neil
on a
basis.” Margiotta
“50-50
commissions
Agency.
on behalf of the Williams
ices
this meeting
conceded
held.
has
was
beneficiary of
Another
insurance
Moreover,
testimony of
Williams that
D’Auria,
Michael
was
a former
scheme
agreed to set
father had
aside
of his
his
50%
who
Supreme Court Justice
was ulti-
State
commissions
corroborated
docu-
mately
Following Margiotta’s
disbarred.
by Williams and
father
prepared
ments
Agency
Williams
approval, the
a se-
made
specified
These documents
in 1969.
totalling
payments
approximately
ries
Agen-
of commissions the
amounts
Williams
$16,000
D’Auria,
1971 and 1975
between
received,
showed,
cy had
a col-
compensable legal
did no
work. More-
commissions,”
“50% of
that the
umn labeled
Sutter,
over,
a Nassau County
John
crimi-
divided
half.
young-
had been
The
funds
lawyer,
payments
received
from
nal
derived
that his
testified
had a
Williams
father
er
proceeds.
represented
insurance
Sutter
prior
conversation
others,
and several
including Mar-
Williams
of the Williams
appointment
Agency
Cahn,
William
Nassau County Exec-
giotta,
Nassau
Record for
County.
Broker
Purcell,
Assembly-
New York
utive
State
continued to
Agency
set
50%
aside
Williams
Reilly, and
Joseph
Deputy Nassau
man
it earned on
the commissions
Nassau
County
Henry Dwyer, following
Executive
Margi-
properties
distribution to
Investiga-
New
by the
York State
inquiries
political allies.
otta’s
grand jury
and a
Commission
into state
tion
the appointment
his control over
Through
practices in 1977. Sutter never
aspects
municipal
other
process
other clients
billed
generated
had
except
thus
Williams
Nassau
government,
fund,” the proceeds
County.
appears
could
a “slush
that Sutter
process
evidentiary ruling
Party’s
governing
second
hear-
control
trial. On
order,
appeal
promotions.
ing
theAt
first
trial
from
this
raises and
Government’s
Judge
ground
judge
precluded the
district
Government
Court affirmed
percent system
describing the
in de-
his discretion in bal-
one
within
Sifton acted well
probative
prejudicial
ground
ancing
probative
that its
value
im-
tail on the
value
prejudicial
impact.
Margiotta, supra,
As noted at
pact.
its
States v.
exceeded
mistrial,
declaring
page-,
Sif-
after
at 142.
follow this
ton
in an order that
stated
billed the
for work in-
with Williams concerning the sharing
*11
representing one John
curred in
Hansen
of commissions in 1971 was motivated in
matter,
state criminal
an unrelated
pursu-
by the
workload facing the brokers.
from Margiotta.
ant
to instructions
Fur-
trial, Margiotta
that,
At
maintained
al-
thermore,
presented
the Government
evi-
though he recommended the designation of
Margiotta had arranged
dence that
for a
Agency
the Williams
as Broker of Record
$5,000
of
payment
to himself. Robert
expected the Agency
to continue the
Margiotta
that
testified
Dowler
and Dowler
patronage system,
insurance
his recommen-
split
payment
a
agreed
$10,000
made
dation was not made contingent upon a
by
the Williams
to Dowler.
agreement
split
secret
the commissions
theory
its
that
support
To
a “50-50
Margiotta
the insurance
basis.”
asserted
a
arrangement was
scheme to
practice
defraud rath-
sharing
that
commission
faith
good
patronage practice,
among
good
brokers was
er than
the
faith continua-
sought
prove
long-standing
Government
that
Margiotta
widely-known
tion of
practice
the
by
patronage
tried to conceal
directing
political
arrangement
in New
of falsified
preparation
inspec-
Margiotta
property
argued
the
York.
that until
by
reports
recipients of
prohibited
York law
kickback New
the sharing of
who did no
payments
meaningful
municipal
among
work.
commissions
non-working
According
younger Williams, Margi-
emphasized
brokers.17 He
that
insur-
a meeting
otta convened
with
patronage
Williams in ance
scheme was discontinued
1975, responding to the
proposed
growing
Carey
concern after Governor
a new State
exposure of
regulation requiring
that
the performance
the insurance
by
activities would cause
brokers receiving
to services
embarrassment
commissions.
Republican Party.
English,
As
F.
former
result,
John
Nassau County
1978, the
of the
insurance
Chairman
Democratic Party,
who
Palmer
brokers
past
Farrington,
Presiding
portions
Supervisor
received
commissions earned
Hempstead,
Town of
by
the Williams
were
testified
directed to
distribution
insurance
inspections of
commissions on
make useless
properties and
properties to
municipal
non-working bro-
unnecessary reports. Thus,
to write
it was
system
a patronage
practiced
by
kers
recipients
appear
made to
Republicans
both Democrats and
proceeds were
insurance
legitimately earn-
County
for decades.
as-
further
ing their commissions.
In addition,
responsible
that he was not
serted
for the
presented
showing
Government
evidence
of fictitious
preparation
property inspection
attempted
to disguise
and that
reports,
he did not lie to the State
practices misleading
insurance
the State
Investigation Commission. After deliberat-
Investigation Commission when
inquired
days,
several
ing
empanelled
propriety
into the
the insurance scheme
second trial
for his
convicted Margiotta of
Many
1978.
in 1977 and
recipients
fraud and five counts
mail
of extortion.
kickbacks, represented by
a group of
length
We have set forth
some
the factu-
attorneys
paid
fees were
whose
the Nas-
al contentions
the Government
Mar-
Republican
sau
Committee, misrep-
points
so
giotta
appeal
raised on
resented to
Commission
they
the reason
may
against
be considered
the background
receiving
payments.
were
The witness-
bitterly
contested trial.
they worked and performed
es stated
they
the money
services
received. Mar-
appeal,
On
raises a cluster of
himself testified
giotta
that his
support
conversa-
arguments
his claims that his
Moreover, Margiotta
community.
response,
has called attention to
In
the Government
opinion
Department
rendered in
informal
has noted a 1950 Insurance
memo-
Depart-
stating
sharing
General
of the State Insurance
Counsel
that commission
randum
concluding
municipality
ment
could re-
“in
avoid
or other
desirable
order to
quire
placed municipal
a broker
of favoritism.”
kinds
commissions with other
share his
brokers
“intangible rights” theory
Hobbs
to a
mail
fraud and
Act convictions
non-office
reversed
indictment dis-
Margiotta represents
such as
an un-
should
holder
Moreover, he asserts that the trial
improper
missed.
mail
tenable
extension
admitting
into
erred
evidence
court
beyond its permissible
fraud statute
bounds.
Williams’s account of
A.
his fa-
Richard
construing
elements of
alleged agreement
Margiotta.
ther’s
fraud statute in
case of
first im
to the merits of
now
We turn
pression,
cautiously.
we tread most
As we
claims.
context,
noted in another
see
II. Mail Fraud
*12
Barta,
F.2d
States
1005-06
that
asserts
his conviction of
denied,
1980),
cert.
U.S.
(Count One)
fraud
must be reversed
mail
1703, 68
(1981),
L.Ed.2d 199
is
§
indictment
dismissed on the
and the
seemingly limitless on its face. We are not
statute,
the federal mail fraud
grounds that
unaware
time-honored tenet of statu
(1976),
does not
a
18 U.S.C.
embrace
§
that
tory
ambiguous
construction
laws
fiduciary
fraud
theory
private partici-
of
impose penal sanctions are
which
political process,
in the
and that
pants
Mar-
against
strictly construed
the Government.
fiduciary
giotta
duty
gener-
owed
to the
also
Id. at
See
United
Wilt
States v.
of
citizenry
Nassau
or the
al
Town
(5
berger,
Wheat.)
U.S.
L.Ed. 37
upon which a
Hempstead
of
fraud
Concomitantly,
is indisputable
be based.
could
Count One alleged
offense
are
there
situations in which
legis
that
Margiotta devised a
that
scheme to defraud
has intended to
lature
define
broadly
County and the Town
Hemp-
Nassau
of
criminal
scope
liability.
today
of
Our task
State,
stead,
York
and the
New
citizens of
complicated
provisions
because
broad
(1) of the
jurisdictions,
right to
these
have
statute
mail fraud
have been applied
of those entities
the affairs
conducted hon-
implicating two conflicting
in context
sets
estly,
corruption,
free from
fraud
dis-
values,
both
which merit stringent
(2) of the
honesty,
honest and faithful
hand,
one
protections.
prosecu
On
of Margiotta
participation
govern-
in the
who
par
those
simply
§
of those
affairs
entities. The
mental
basic
affairs of
ticipate
in the
in
predicate underlying
factual
Count One was
way, or
insubstantial
exercise influence in
Margiotta,
allegation
partici-
who
policymaking process, poses
danger
in the
extensively
pated
public
selection of
sweeping
within
ambit of the mail
Hempstead
in
officeholders
Nassau
conduct, such
lobbying
statute
fraud
into a
County, had entered
secret agree-
association,
party
which has been deemed
pursuant ment
Williams Agen-
the functioning
our
central
democratic
designated Broker of Record
cy was
least
system
days
since at
of Andrew
understanding that
kick
hand,
the other
an unduly
On
Jackson.
portion
substantial
of its
back a
commis-
reading of
leading
restrictive
with Margiotta’s
accordance
in-
sions in
of a rule
precludes,
formulation
as a
argues
structions.
an al-
law,
finding
person
that a
matter of
who
an “intangible
deprivation
leged
right”
public
hold
office owes a fiduciary
does
honest and faithful
to a defendant’s
serv-
citizenry, regardless
of that
duty
predicate for a
federal mail
forms
ices
processes
de facto control of the
individual’s
only where the defendant
fraud violation
government,
potential
eliminates
safe
fiduciary relationship
pu-
shares a
the public’s
interest in honest and
guard
Asserting that a fiduciary
victim.
tative
government. While we conclude
general citizenry
efficient
requiring
hon-
the application
are limitations on
participation
there
governmen-
faithful
est
recognized
has been
fraud statute to
only in
of the mail
violations
tal affairs
cases
involving
public
intangible right
“good government,”
defendants
are
offi-
cials,
concludes
that the statute reaches the con
novel we believe
of the mail
application
appellant
fraud statute on ah
case.
duct evidenced
Rights
of the mail
Doctrine
applicability
Corruption
and Political
A.
statute.
Prosecutions Under the Federal Mail Fraud
Statute,
(1980)
4R U.Chi.L.Rev. 562
[herein-
Margiotta argues that
the mail fraud
Intangible Rights"].
after
cannot,
law,
“Comment —
a matter of
embrace
statute
fiduciary fraud by private par
theory of
public sector,
In the
appel
as the
political process.
ticipants
Specifical
correctly points out,
lant
the mail fraud
emphasizes
although
1341 has
ly,
been employed
prosecutions
has
statute
applied
fiduciaries in
pub
been
both the
officials
allegedly
who have
de
sectors, the
private
fiduciary duty
lic and
citizenry
prived
intangible
of such
public’s
with the
intangible right
associated
right
rights
good government,
as the
honest
partic
to an individual’s
and faithful
right
to the honest and loyal services of
governmental
affairs
ipation
has been
governmental
its
officers. A number of
only where -the
accepted
defendant
is a
approved
prosecution
courts
See, e.g.,
official.
allegedly corrupt politicians who did not
Mandel,
(4th
Cir.),
aff’d
citizens of
deprive
anything
readily
part,
in relevant
banc
en
See,
economic
e.g.,
identifiable
value.
Unit
(1979),
*13
Mandel,
v.
supra;
ed States
United States
1647,
(1980);
236
L.Ed.2d
64
United States
Keane,
(7th
534
1975),
522 F.2d
v.
Cir.
cert.
Brown,
364,
F.2d
(8th
1976).
540
374
v.
Cir.
976,
denied,
1481,
424
96
U.S.
S.Ct.
47
reject
private
We
claim.
In the
(1976);
States,
746
United
L.Ed.2d
States v.
sector,
commonplace
it
is now a
that a
cases,
supra. From these
principle
basic
fiduciary duty in violation
of
of the
breach
may
public
be distilled:
official may be
may be
fraud statute
based on
artific
under 18
prosecuted
1341 when his
deprive any person
do not
which
of mon
es
alleged scheme
defraud has as its sole
tangible
of
property.
forms
other
See
ey or
of
object
deprivation
intangible
and ab
Barta,
v.
supra, 635
States
F.2d at
United
political
rights
and civil
gener
of the
stract
of
(deprivation
employer’s right
1005-06
citizenry. The definition
al
of fraud is thus
employee’s
services);
honest
faithful
broadly to
construed
effectuate the stat
Buckner,
v.
(2d
108
States
F.2d 921
purpose in prohibiting
fundamental
ute’s
denied,
Cir.),
669,
613,
309
cert.
U.S.
60 S.Ct.
of the mails to
misuse
further fraudu
1016 (1940).
L.Ed.2d
84
Fraudulent
enterprises of all
lent
kinds. See United
designed to cause losses of an in
schemes
States, supra,
v.
122
nings Estate,
ly,
241, 244,
we
not believe
employ
do
that a formal
Mich.
55 N.W.2d
relationship,
is,
office,
public
ment
(1952) (no
fiduciary relationship
rigid prerequisite
be a
finding
should
to a
showing
confidence,
absent
trust and
fiduciary duty
public
sector. Cf.
reliance); Trustees of Jesse Parke Williams
Toro,
v. Del
United States
Nisbet,
Hospital
821, 841,
v.
191 Ga.
(2d Cir.),
denied,
n.4
cert.
&
U.S.
64, 76 (1941) (fiduciary
S.E.2d
status based
41, 46 L.Ed.2d
(1975)
(prosecution
S.Ct.
position
control);
on
dominance and
Mir
conspiracy to defraud the
United States
Gee,
246, 249,
163 Wis.
anovitz
157 N.W.
of 18 U.S.C.
371).
violation
(1916) (reliance
superior
on
knowl
drawing of standards in this area is a
edge
fiduciary);
see also United
enterprise.
hand,
difficult
On the one
most
Mazzei,
(3d Cir.) (en banc),
government. 434, (1981). Margi- 102 S.Ct. persons selection in the pated criminal, alleges, imposition lia- otta County. Having under- in Nassau positions to the district court’s fiduci- bility pursuant of government, functions basic taken duty to disclose material right peti- at least eviscerates the ary owed doctrine give notice of his conflict of information by interfering polit- with the efforts of to those interest party freely lobby govern- leaders ical him, just as an employee, under upon relied on behalf of supporters. officials their ment Barta, owe his may employer duty to generally United Mine v. Pen- Workers See information. In addition material disclose 1585, nington, 381 U.S. 85 S.Ct. Margi- of non-disclosure of evidence (1965) (First L.Ed.2d 626 Amend- with the agreement Agency, otta’s influence protects concerted efforts to ment presented evidence that Government officials). to disclose corrupt failed ar- during the Investigation State rangement prosecution indictment and If the inquiries, during which he Commission’s for mail fraud on the basis of ordinary pa- artifice as an portrayed citizen fiduciary duty his breach result, ample As a evi- practice. tronage meaningfully implicated First Amend ry finding that Margiotta supports dence interests, ap we would be loathe to disclosure, ment an affirmative assumed by application failure to disclose of the mail fraud such an prove breached information. material purposes essential statute. One protect Amendment is to the un First Alleged D. First and Fourteenth affairs, limitations on the governmental Amendment discussion fettered fraud conviction. 218-19, Alabama, U.S. Mills see 1434, 1436-37, 16 L.Ed.2d trial court’s Margiotta argues lobbyists rights (1966), and activities of impairs important fiduciary doctrine provide warning fair notice con to exercise influence in the seek others who See, e.g., are basic in our statute. process proscribed democratic duct Louderman, First Amendment concerns system. The Margiotta, however, Cir.), are a chim (9th raised of the indictment One era. Count The broad L.Ed.2d *20 instructions do not jury statute, address pertinent language intended Con political participation process mere sufficiently be flexible to cover the gress to such as lobbying party conduct protected range of fraudulent schemes mankind wide Rather than resting gen on a devising, association. not capable of is unconstitution is duty to breach render disinter eralized vague because 1341 re ally contains the § part services of one partic ested that quirement defendant must have political process in un in the some ipates willfully a specific intent to acted way, the indictment and prosecu States, specified v. See Screws United 325 defraud. Margiotta’s corrupt on whether 101-02, 1031, 1035-36, focused tion S.Ct. U.S. breached a agreement fiduciary duty which (1945); United v. States L.Ed. as a signifi Manfredi, owed result of his 1973), F.2d governance Hempstead nom., cant role sub LaCosa v. denied United County. Since conduct States, and Nassau
charged in
Indictment was within the
(1974). Judge
appropri
Sifton
L.Ed.2d
United
to
power of the
States Government
charged
on
ately
this element of
there is no
indication that the
proscribe
Margiotta knew
offense.
of the mail fraud statute in this
application
reached was
to be
likely
conduct
protected
would deter
specific
political
law,
case
to
since he conceded at trial
contrary
contexts,
other
the prosecution
activities in
corrupt agreement pursuant
to which
One did
Count
not vio
Agency
he recommended
Williams
Amendment.
the First
See Broadrick
late
back
the condition
kick
Oklahoma,
supra, 413 U.S. at
v.
of its
be
fifty percent
commissions could
Moreover, there is simply
at 2917.
no au
light
illegal.
pay
the inclusion of
proposition
thority
scheme,
for the
a conviction
in the
non-brokers
ments
reversed and an
should be
indictment dis
of the mail fraud
application
statute
his
the underlying
“theory”
because
surprise.
missed
have come as
should
artifice
misused
may be
in other
result,
the case
situations
although
may not have
aAs
misapplied
constitutionally protected
precise legal
theory
accord
anticipated
conduct.
the insurance ruse was deemed
ing to which
fraudulent, Margiotta
given
warn
fair
response Margiot
passant,
En
his activities could
ing that
cause him
political
contention
other
leaders
ta’s
of the federal
fraud statute.
afoul
run
jeopardy
prosecution, we
believe
are
Material Information.
E.
overlooks our
argument
narrow con
the mail fraud
struction of
statute. The
Margiotta argues that
he did
meeting our restricted
necessity of
tests for
vio
material information in
fail to disclose
duty
of a
as a
the existence
the mail
lation of
fraud statute. Since
those who techni
fiduciary on
of an affirmative
to disclose
violation
precludes
office
cally hold no
the use
coupled
information
with a breach
material
dragnet prosecutions
party
1341 for
fiduciary duty violates
Unit
see
officials.
Newman,
19;
supra,
at
F.2d
ed States
Barta, supra,
Margiotta’s
only briefly
We need
consider
1006, Margiotta
claims that his conviction
mail fraud statute
argument
vague
both on its face
reversed because
information
impermissibly
must
al
concerning
of this
the insurance scheme he
facts
case.
applied to the
Section
material,
to disclose was not
repeated challenges
legedly
has withstood
failed
asserts,
for,
any broker would not
the claim that
as he
have raised
it does
which
policies
reduced the commissions on
written
This asser-
could not reduce commissions.
flies in
the evidence.
simply
Hempstead
the face of
the Town of
or Nassau
willing
obviously was
County. Accordingly,
the information con-
than the amount of the
for less
Margiotta’s
special arrangement
work
cerning
paid by
municipalities,
commissions
highly
been
material.
appears to have
relinquishing portions
since
Margiotta’s
concerning
all of
claims
Since
as kickbacks to be distributed
commissions
merit,
count are without
we
mail fraud
responsi-
allies.
If
conviction of mail
judgment of
affirm
Town
officials
ble
of 18
in violation
U.S.C. §
deal, the
the secret
concealment
known
Hobbs Act Convictions.
III.
potential
whose
excluded
bidders
might price
lowered the
competition
Extortion.
A.
municipalities
public,
could have
his conviction un-
Margiotta argues that
*21
significant
savings.
Since
derived
charging
Two
viola-
Six
Counts
der
arrangement
concealment
Act,
1951,
18
of the Hobbs
U.S.C. §
tions
public
potential24
reduc-
deprived
indictment dis-
be reversed
should
owning
property,
in the costs
tion
proscribes
1951
various
Section
missed.
by Margiotta
withheld
was ma-
information
extortionate interference with in-
kinds
Accordingly,
this case is unlike
terial.
commerce, and defines “extortion”
terstate
Ballard,
534,
v.
663 F.2d
542
United States
another,
obtaining
property
as “the
from
1981), in
(5th
which the court
Cir.
decided
consent,
by
induced
wrongful
his
use
with
by
information withheld
the al-
force, violence, fear,
or threatened
actual
was not material on the
“fiduciaries”
leged
right.”
of official
18
color
or
price
“the
paid
would have
ground
1951(b)(2)(1976). Margiotta
charged
§
. . .
by
disclosure.”
unaffected
been
violating
the Act
inducing the Wil-
Margiotta’s
upon
reliance
payments
make
means
liams
New
Insurance
York
Law is
188
“fear,” and
wrongful use of
alternative-
prohibits
section
That
a broker
misplaced.
right.”
Judge
of official
color
ly, “under
any portion
rebating
of his commis-
jury
that it
instructed
could find
Sifton
the insured. New
directly to
York
sion
Margiotta guilty if it decided that
he
(McKinney 1966).
188
In
Law §
Insurance
these two
employed one of
methods. We
case, the issue is not whether a broker
infecting
convic-
no error
find
part
rebated
of his
have
commis-
would
of extortion.
on five counts
insured, the municipality,
but
sion
“under color of
B. Extortion
possible
responsible
that the
it was
whether
right.”
official
could
found a broker who
officials
color
Extortion “under
of offi
willing to accept
have been
a lower
right”
when a
offi
public
is committed
cial
appeal, Margiotta
On
has con-
commission.
wrongful
makes
use of his office to
cial
theoretically
“a broker could
ceded
money not due him or his office.
obtain
accept
commission,”
a lower
al-
agree to
French,
1069,
v.
628 F.2d
States
witness,
that a
United
emphasizes
one
though he
denied,
Cir.),
956,
(8th
cert.
449 U.S.
Jaffee,
testified at trial that a
1072
bro-
Alfred
364,
(1980);
221
66 L.Ed.2d
United
premium
reduce its
S.Ct.
rate for
101
ker would
Trotta,
1096,
(2d
n.7
v.
525 F.2d
1100
municipality
particular
within a
States
only one
denied,
971,
1975),
96
cross-examination,
cert.
425 U.S.
On
Cir.
classification.
rate
2167,
(1976).
pub
L.Ed.2d 794
The
that a
48
broker’s commission
admitted
Jaffee
S.Ct.
reduced,
supplies
of his
misuse
office
Richard A. Williams
lic officer’s
could
coercion,
occasions,
necessary
that on a few
he
element
testified
himself
(1981);
prosecution
only prove
need
requirement
actu
24. There is
injury
harm,
was contem
tangible
actual harm
see United States v.
that some
ally
suffer
Dixon,
1980),
v.
536 F.2d
Barta,
999,
(2d
plated,
States
cert.
see United
Cir.
1976).
1388,
denied,
L.Ed.2d
n.11
Cir.
450 U.S.
wrongful
power
intermediary
use
official
need
not be
commits the act
accompanied
force,
actual or threatened
have a criminal intent. United States v.
violence,
fear.
See United
v.
States
Kelner,
1023;
supra, 534 F.2d at
Mazzei,
trial court’s
light
guidelines, Margi
In
of these
disagree, and conclude that
require
We
guilty
could
found
pur
otta
be
of extortion
2(b)
ments of 18 U.S.C.
were
§
met. This
2(b).
to 18 U.S.C.
One of
§
suant
the indis
precept
is based on
section
that an
elements in the extortion kick
requisite
pensable
criminal
individual
intent
from the Williams Agency
liable as a
was the
may
principal
be held
backs
if he is a
Ralph
act of
Caso
crime,
public
official
and other
in fact
commission of a
cause
of
notwithstanding
County
that
officials Nassau
proscribed
and the Town of
con
through
Hempstead
appointing
retaining
in
is achieved
actions of in
duct
as
Agency
intermediaries.25
Broker of
nocent
Williams
Record. Had
States v.
Kelner,
1020,
conduct,
(2d Cir.),
534 F.2d
the jury
cert.
that
which
could reason
denied,
1022,
429 U.S.
ably
find from the evidence
S.Ct.
was caused
(1976).
Margiotta,
occurred,
L.Ed.2d 623
See also
never
United States
the Williams
Giles,
48-49,
300 U.S.
not have
Agency
position
been in a
81 L.Ed.
It is unnecessary
challenged payments.
If the
to make
result,
commands,
2(b) accomplishes
procures
§
25. As a
U.S.C.
induces or
its commis-
through
sion,
punishable
principal.
from that
intended
different
result
is
as a
2(a) (1976),
provides
perti-
which
§
cannot aid and abet another
to do an
One
part:
meaning
2(a).
nent
act within
of
See
innocent
Cavalcante,
United States v. De
(a)
against
Whoever commits an offense
1971).
(3rd
aids, abets, counsels,
States or
the United
mere innocent
Agency
intermediary,
aware
and did
public officials were
that
making the kickbacks at the direction
participate
aspects
in all
was
the extortionate
a result of
Margiotta as
their exercise of
enterprise
subject
is the
that
matter of the
power in designating
retaining
official
See
criminal offense.
United States v.
Broker, the
Agency
public
as
Wiseman,
officials
supra. These
were
principles
re-
guilty
have been found
could
of extortion as
in Judge
jury
flected
Sifton’s careful
in-
unlawfully
obtaining the con
principals,
struction,
jury
that the
would have to find
payments
under
official
sent
color of
had
“caused officials
See,
Butler,
e.g., United States v.
right.
Hempstead
County
Town
and Nassau
Cir.),
(6th
color of office
under
contribute
137 and the declarant ed participated ledger defendant sheets dating from 1969 which conspiracy, by a fair preponderance contained a column labelled “50% of com- independent of hearsay the evidence missions,” and a list recipients sent See, e.g., United utterances. States v. Margiotta’s office to the Williams Agency Cambindo-Valencia, 609 603, F.2d (2d 630 designating amounts which exactly totalled 1979), denied, cert. 940, Cir. 446 U.S. 100 of the amount 50% of the commissions 2163, 64 L.Ed.2d (1980); 795 S.Ct. United ledger sheet shown as of the date of 417 Geaney, 1116, v. F.2d States (2d 1120 list. The Williams Agency paid 50% denied, 1969), 1028, cert. U.S. commissions to persons whose 1276, 25 L.Ed.2d (1970). S.Ct. In this appeared Indeed, on the list. names ample case, sufficient evidence independent of the supported also evidence a finding that Mar- challenged hearsay statements established and Williams giotta understood that their that a conspiracy existed, it was in arrangement illicit should remain secret. the time the existence statement was addition to In admission that he made, declarations were made did disclose the terms of the arrange- conspiracy, of the furtherance and that Ralph Caso officials, ment to or other elder Williams both the and Margiotta par recipients of the kickbacks were ultimately ticipated See, conspiracy. e.g., Unit to assist in the directed creation of falsified Lyles, v. (2d ed States inspection reports property ap- make it Cir.), cert. they performed pear work in exchange L.Ed.2d 794 (1979); United States they money for the received. In the case of Cafaro, v. Cir.), Cahn, parties William agreement nom., denied sub v. Schulman arrangement devised an of a legal retainer. States, 406 U.S. above, as noted numerous indi- This L.Ed.2d evidence includes associated viduals with the municipal insur- Margiotta’s own admissions concerning his provided scheme ance dissembling testimo- by, and approach meeting with Richard B. ny Investigation State Commission. Williams. during testified that short, non-hearsay evidence was suf- meeting, Williams stated that he would existed, ficient to show a conspiracy “system” “continue” carried on Mor existence at the time the Weis, the Broker of timer Record for made, and that statement both Wil- Hempstead at that time. Moreover, Margi Margiotta participated liams if the otta testified Williams Furthermore, agreement. parties since the ever have ceased should distributing por agreement desired keep the terms commissions, tions of its he would have secret, pact of the and Richard A. Williams meeting of the convened Executive Com necessarily participate in the distri- Republican Party, mittee and would of insurance commissions, bution the elder “probably” voted to replace Williams. declaration Williams’s to his son can reason- Margiotta stated that he never Ralph told ably be considered to have been made “in Caso, public officials, or other about of” the furtherance conspiracy. See United arrangement to share commissions on a Lyles, supra, States F.2d at 194. basis.” “50-50 Furthermore, Margiotta claims that non-hearsay despite evidence evi- dence, showed that soon as the trial court erred in admitting challenged the Town’s hearsay obtained insurance business fol- statements because it lowing designation Record, explicitly its findings Broker of did make the articu- Agency, which had been sharing in United ap- Geaney, supra, lated percent proximately ten progeny. This Court required commissions its has never by placement generated of policies prop- court to use a district talismanic words by the erties owned Town of Oyster admitting Bay, testimony when under the co- setting aside began fifty percent conspirator exception to the hearsay rule. earned. This commissions evidence includ- v. Cambindo-Valencia, In United States su- has appellant always draw, 609 F.2d at been difficult pra, Cambindo- we be- argued application that the trial lieve that the of the mail fraud judge failed Valencia *28 permissible statute is on the facts of this finding explicit of sufficient to make prose- context of a case. In the mail fraud This independent rejected evidence. Court cution, per se reject precluding, rule we error, ground claim as a of his reversible law, the finding fiduciary a matter aof noting possible it was “infer duty citizenry to the render honest and finding was made implicitly when the on the part faithful services of individuals admitted statements court the de- over technically hold no office who official objections.” Id. In light Judge fense’s participate gover- yet substantially in the familiarity with this evidence after Sifton’s communities. We that as an nance of hold completion of the trial, first infer- this who was de facto individual leader of especially seems ence warranted government upon by was relied also case. See facts United States in for the adminis- individuals Rosenstein, 711-12 governmental affairs, Margiotta tration of 1973). be found properly fiduciary could owe a any event, In explaining in the admission duty general citizenry Hempstead A. Williams’s hearsay of Richard account of County, and Nassau breach of which agreement, his father’s secret Judge Sifton predicate lay the could for a violation was “a observed that there fairly substan- mail fraud statute. showing at least as an tial initial mat- support was sufficient to finding evidence starting point 50/50,” ter there was a assumed a fiduciary duty to agreement. that there was “a his secret Properly sufficient basis” for disclose cir- here, inferring that as it was there was cumscribed “some indictment agreed upon prosecution Margiotta arrangement made in for mail fraud advance.” Such lan- his First not violate rights did Amendment Judge makes clear guage made Sifton expression, freedom of association and requisite Geaney findings, in haec if not rejeet petition, and we his claim that in Finally, stating verba. that there was a impermissibly vague face or as its present basis sufficient Williams’s testi- applied to the facts of the instant case. mony to “for jury them to decide addition, evidence ample supports the find- not, it or accept” whether Sifton Margiotta failed ing that to disclose materi- permitting jury to decide in al information violation of the mail fraud co-conspirator whether exception was statute. Rather, he was merely noting available. Addressing ourselves to Hobbs Act hearsay account once the was admit- convictions, hold having we that Margiotta, ted, accept could or reject public officials caused take actions which result, testimony. As district court the consent induced the Williams principle not violate the did that determin- payments, make the reasonably could admissibility ing the of challenged testimo- the requirements to have met found of 18 court, for the ny is function jury. not the 2(b). aAs result we conclude that v. Rosenstein, United States supra, See satisfied all the Government the elements F.2d at 712. For all reasons, these convicting of extortion “un- not err in court did admitting district Rich- right.” Moreover, official color of der hearsay A. Williams’s ard account of his support was sufficient to evidence a verdict statements. father’s appellant that the committed extortion V. Conclusion. wrongful use Finally, of “fear.” properly the trial court Richard A. admitted unraveling of the tangled our Since skein hearsay Williams’s account of his father’s Margiotta’s fraudulent anal- artifice and concerning agree- the secret statements of his claims has taken ysis us lengthy on a ment. briefly we set forth journey, our conclu- the line legitimate While between sions. Accordingly, judgment of conviction patronage and fraud on respects. in all is affirmed ence WINTER, to disclose to the Judge (con- citizens of Town K. Circuit RALPH Hempstead and Nassau dissenting curring part): knowledge that the Williams Agency would agree every particular While I do willing to act have been as Broker Rec- analysis of the majority’s convic- considerably smaller ord commissions Act, the Hobbs I rendered con- paid. actually were those than Because Margiotta was in the result. not the cur might compelled citizens the munici- party organization aof execu- instrument they reduce these palities costs had been ting patronage understood practices well information, it is a given this material fact. personal instead exercised discretion but *29 kickback scheme is to The relevant Mar- recipients kickbacks, the as to case each (i) conviction because it giotta’s proves that This, to including payments himself. I be- the Williams would have will- been lieve, to is sufficient characterize the entire ing procure to insurance for commissions scheme as extortionate. kickback considerably smaller than those actually however, dissent, as the to I mail fraud (ii) that and knew it. paid Had majority’s use of mail The as fraud count. secured Williams’ appointment political prohibition disingenu- a catch-all past political support knowing because expands that legislation beyond any ousness the the size of that commissions far exceed- Congressional claim intent and colorable to performed, value of services ed the danger prosecutorial a real abuse creates have been complete. fraud would as the partisan political purposes. Moreover, Judge charged, Sifton and the agrees, majority government that the need I that prove savings not actual taxpayers to resulted from emphasized the would have disclosure. Fi- It should be outset that, although Margiotta is a nally, partisan while a kickback scheme1 is local relevant leader and the Margiotta’s political conviction scheme involves mu- fraud, for mail to funds, no violation nicipal or Nor is the state local government not essential. is necessary support to law2 is the federal required prove any loss to whatsoever to since conviction a is mail fraud free to taxpayers a violation of New York law. to duty a federal find disclose material essentials, to majority Reduced holds facts. a mail fraud upheld conviction will be that active politically person a is found when majority pays lip The service constru- to assumed a jury to have disclose criminal against govern- law ing general facts citizenry material and gives then ment but mail fraud statute deliberately failed do so. .Margiotta’s interpretation sweeping than a more upon his is based failure as conviction has addressed which the statute to court political great leader with partisan influ- that this statute has date. Given occa- My public They argue scheme” activists or use of “kickback officials. 1. includes what ability “sale Margiotta’s to as a has been referred office.” to influence official action phrase subject While that serves useful obligations as window him renders the same majority, dressing not it is clear for the wheth- law as are borne the official under state referring post they of Broker of are er jure having power de to take such action. Republican Record Chairman. assuming that state law would treat Mar- Even ruled that the former is Sifton public assumption giotta officer —an as law, New officer under York while the supported authority New York is —there private position. fortiori a It latter seems a nothing legal to indicate such officers matter, however, does not since the crux of the obligations under state law such those im- theory majority’s is non-disclosure a materi- posed Margiotta by majority. The ma- on fact, i.e., excessive nature of the insur- al jority’s contrary assertions are thus Whether these ance commissions. offices are is, ipse dixit. Since New York law as the sheer “public” or “sold” is irrelevant under either notes, majority itself irrelevant federal theory. conviction, why I fail to fraud understand mail they pains patently such to make a inade- take authority majority cites no New York argument. quate they impose establishing duties cooperative because that is more ap- comment candidate a number of courts to sioned guilty steady party organization, its is past about with the prehensively is unless is no mean feat. that motive disclosed to expansion,3 public. partisan political A leader who itself demonstrates The indictment elected officials to fail modernize causes theory underlying Margiotta’s scope of jobs to retain the party charged It him with defrauding conviction. guilty is unless mail fraud faithful State, Town of Hempstead and Nas disclosed. In each of these cases the fact is (i) County and their citizens “of the sau fact is as “material” as the undisclosed affairs ... conducted right to have [their] disclose, Margiotta failed to facts impartially, bribery, free from honestly, is at least as substantial harm fraud, bias, dishonesty, corruption, de resulting Margiotta’s harm (ii) “of honest faithful ceit” scheme, dishonesty, partiality, bias [Margiotta] af participation [their] failing to disclose those deceit facts sweeping charge this Given fairs.” present. say This is not to equally opinion, no amount of majority rhetoric conduct as a whole is not more seeking holding to limit to the facts of than the conduct described in these odious conceal that can there is no end case That is not hypotheticals. the issue. The *30 practices political which may common by Margiotta is that actions taken point swept within the ambit of mail now be relevant to mail fraud the ma- deemed adopted by the doctrine Since fraud. each present are in case: jority relation- applies candidates as well majority disclosure, calling for a material ship fact office, holding United States v. those candidate, official or party known States, (8th 1978), F.2d 761 Cir. 488 cert. leader, and a failure to disclose it. 909, 2605, 94 denied, U.S. S.Ct. 417 41 (1974), a 212 candidate mails majority quite who is simply wrong L.Ed.2d in The containing a promise brochure which brushing aside First Amendment issues.. knows cannot they be carried out theory adopt subjects is politically candidate The committing an even more surely persons direct mail criminal active sanctions based what upon they say than did here. what solely say fraud An do not political official purposes public elected discussions affairs. The ma- their imposing act unnecessary explicitly an performs jority costs bottoms mail guilty is taxpayers of mail fraud if say on dis conviction on his failure to fraud some- public. parti not made to the logic easily closure is A thing. Its extend to the sup leader who Indeed, throws decisive campaign san literature. content a candidate known great foresight behind to the leader port to envision an takes in- qualified opponent less than his or to be her framed the theory adopted by on dictment See, Rabbitt, propriety. e.g., United States v. sonal 583 ... F.2d Government here is 1978) 1014, (8th (“Every attempting cupidity case 1024 Cir. to criminalize and we do breach of trust and misfeasance office believe 1341 be extended to not can mailing showing with some in connection which has without a of additional extreme facts clearly bring within does and cannot fall occurred the conduct within § 1341. statute.”), penal mail confines of the nied, cert. de 1341 is a with Section statute limitations 1116, 1022, scope, grossly U.S. 99 59 439 S.Ct. L.Ed.2d its which limitations were as to Louderman, (1979); present case.”); United States v. 75 576 in the United exceeded States 1383, (9th Cir.) Edwards, (“[T]he 875, (5th Cir.) (“A 1388 [mail F.2d 458 v. F.2d 880 fraud] carefully strictly narrow, especially ap con statute should careful construction is beyond where, here, propriate avoid extension strued to limits stat [mail fraud] denied, Congress.”), cert. 439 intended 896, U.S. criminal conduct threatens reach ute 257, (1978); can, 58 99 S.Ct. L.Ed.2d 243 Unit domestic relations which the state field of control.”), McNeive, 1245, (8th should, effectively appropriately 536 F.2d 1252 ed States v. 1976) (Government attempt prosecute denied, 891, 118, Cir. 93 t. 409 U.S. S.Ct. cer payment gratuities “tipping” (1972); Kelem, to official of 148 v. L.Ed.2d United States 34 city 346, agency (9th 1969), denied, “would effect a further extension 347 F.2d cert. 416 Cir. 952, 977, 1341 so as to all actions which cover 90 25 L.Ed.2d U.S. S.Ct. 134 397 might per- (1970). offend the Government’s sense of
141
loss or
majority
alleging
fraud based
concrete harm
need not be
speeches.
beyond the
employer
shown
fact
deprived
might
information which
II
Barta,
affected his
judgment.
or her
striking
are not
out on their
My brethren
supra.
pushing
mail fraud statute to
own
can,
seeming logic,
One
move from
Congressional
exceeding any
int
far
limits
propositions
proposition
that a
those
contrary, much of
they
To the
what
ent.4
holding governmental
person
employment
precedent.
and direct
substantial
say has
by the same
United
bound
standards.
statutory
example,
proscriptions
For
Bush,
v.
641,
522 F.2d
(7th
646—49
States
to common law
limited
fraud or
are
denied,
cert.
1975),
977,
424
96
Cir.
U.S.
extend
dishonest
gen
but
schemes
deceit
1484,
(1976);
L.Ed.2d
S.Ct.
Barta,
United States v.
erally.
635 F.2d
Brown,
364,
(8th
v.
540 F.2d
Cir.
denied,
cert.
999,
1980),
Cir.
1005-06
Toro,
v.
1976);
United States Del
998,
1703,
101 S.Ct.
formed broker of record policies when were award- perform; designated
ed, politically broker was particular for each policy broker
named the the commission.” While the and received Matter of the Tax Liabilities of In the to distinguish seeks this DOES, Unidentified Clients and John there was no saying sale of of- scheme Participated Who Invested or Customers irrelevant to the point theory of the fice —a Dairy Programs Cattle Promoted count6 —the mail fraud New York State Co., Agricultural Management Asset was, anything, if scheme more harmful so Inc., years 1978, 1979 and 1980. taxpayers were as the In far concerned. County, the Williams Agency did Nassau AGRICULTURAL ASSET MANAGE- services in perform some return for the CO., INC., Appellant, MENT practice The state pay was to commissions. do the work employees and distrib- state America, and Ar- STATES UNITED the commissions brokers who did ute McDonald, Agent, Revenue Inter- thur nothing Notwithstanding at all. the state- Service, Appellees. Revenue nal of what existence the majority’s wide fraud, only was mail view 82-6112. Docket No. indicted. Appeals, United States Court of case, arguing this the United States Circuit. Second Attorney left no doubt prosecuted that he political corruption general- Argued 1982. July problem that ly.7 stretching Aug. Decided to fit case; statute we create applies equally persons crime not done the evil things Margiot- who have done, is said to catch-all political
ta 1, supra. Attorney supposed note 6. See “a District who was former convicted, gets enforcing law to be he’s *34 During argument, compari- oral there were $2,000 paid off month to make sure “systems “Leonid Brezhnev” and sons to stay in the closet.” skeletons country,” to our statements such as are alien Mineóla, Moscow,” “in and a reference to