An Affair To Remember

United States v. Sekhar, No. 11-4298 (2d Cir. June 26, 2012) (Jacobs, Parker, Hall, CJJ)

Defendant Skhar was convicted of Hobbs Act extortion and the interstate transmission of extortionate threats based on a particularly bizarre set of facts. He was a managing partner of a tech company into which the New York State Comptroller was considering investing state retirement funds. An earlier investment in the fund had been cleared, but never closed. That investment had been marketed by a placement agent, a process that was later banned. The current investment was not marketed by a placement agent but was "essentially the same" as the earlier one. While the Comprtroller’s General Counsel was considering the issue, he learned from the New York State Attorney General that the placement agent was under investigation; the General Counsel advised against moving forward with the deal, and that decision was then communicated to the fund.

Shortly thereafter, the General Counsel started receiving emails threatening that if he did not have a change of heart, and recommend moving forward with the investment, the writer would disclose that the General Counsel was having an extra-marital affair. This correspondence went on for several weeks. In the end, the emails were traced to Sekhar, who admitted sending them.

Sekhar moved to dismiss the indictment on the ground that it failed to state an offense, because the General Counsel’s recommendation was not "property," a core element of the definition of extortion. He defended at trial on this theory, and also raised it in a Rule 29 motion, all without success. On appeal, the circuit affirmed.

The Hobbs Act defines extortion as "the obtaining of property from another, with his consent, induced by the wrongful use of ... fear.' This definition is also incorporated into 18 U.S.C. § 875(d), which covers extortionate threats. According to the circuit, the "obtaining ... property" element has two parts: whether the defendant attempted to carry out "the deprivation of a property right from another" and whether he had "the intent to exercise, sell, transfer, or take some other analogous action with respect to that right." And property is not limited to "physical or tangible property or things," but also includes, "in a broad sense, any valuable right considered as a source or element of wealth." This includes the "right to pursue a lawful business."

The General Counsel’s job was to "provide legal advice to the Comptroller," in essence the sale of "time and advice." Thus, he had "a property right in rendering sound legal advice to the Comptroller and, specifically to recommend – free from threats – whether the Comptroller" should pursue the investment. Moreover, the government did not have to prove that the General Counsel would derive wealth specifically from his ability to make the recommendation. His ability to give unconflicted legal advice is itself a "source or element of wealth," but, more generally, the property right in an extortion case need not be a "source of wealth to the target of the extortion."

Thus, here, not only was there a deprivation of property, there was also sufficient evidence of an acquisition of property on the part of the defendant. A positive recommendation from the General Counsel was a means for the defendant to profit, and that is enough. That recommendation would have increased the chances that the investment would have occurred, and Sekhar, as a managing partner, would have profited. Since "opportunities have value," the evidence was sufficient.

Off The Waterfront

United States v. Coppola, No. 10-0065-cr (2d Cir. February 14, 2012) (Raggi, Lynch, Wallace, CJJ)

This very long, and very fact-bound mob-related RICO appeal covers very little new ground. However, it has an interesting discussion of the applicability of Skilling to extortion cases.

Defendant Michael Coppola spent three decades rising through the ranks of the Genovese crime family, ultimately becoming a captain. The particular conduct that resulted in his conviction, and sixteen-year sentence, related to the family’s criminal control of the New York and New Jersey waterfronts in general, and over the longshoremen’s union - ILA Local 1235, in particular. The family used intimidation and fear to extort money from the both the union and trucking companies doing business at the docks. The family also controlled the union directly, through three successive local presidents who were in the family’s pocket.

On appeal, Coppola challenged the validity of the extortion RICO predicates, invoking Skilling v. United States, 130 S.Ct. 2896 (2010). Skilling held that, in fraud prosecutions predicated on schemes to deprive the victim of the intangible right to honest services, there must be a bribery or kickback “core” to the conduct. Here, the extortion predicates were indeed based on an intangible property theory, that "property" being the statutory right of union members to receive the loyal service of the union’s officials. Coppola argued that there was little difference between this intangible right and the right to “honest services” at issue in Skilling.

But the circuit disagreed. Skilling did not identify vagueness concerns with all intangible rights, just the particularly ill-defined right to “honest services” mentioned in the fraud statutes. There is no equivalent vagueness in the statutory definition of a union official’s duties; the statute specifically enumerates both the duties and the persons from and to whom they are owed. Finally, the intangible right at issue here does not define the predicate crime; the Hobbs Act does, and that statute clearly does not proscribe mere self-dealing. Thus, the ambiguity concerns in the fraud statute that animated Skilling are not present under the Hobbs Act.

Labor Pains

United States v. Markle, No. 06-1600-cr (2d Cir. December 14, 2010) (Jacobs, Pooler, Parker, CJJ)

In United States v. Enmons, 410 U.S. 396 (1973), the Supreme Court held that extortion liability under the Hobbs Act, 18 U.S.C. § 1951, did not extend to violence in pursuit of “legitimate labor ends” that occurs during a lawful strike that is intended to achieve “legitimate collective-bargaining objectives.”

Defendant Markle was convicted of attempted Hobbs Act extortion after a violent confrontation arising from two unions' turf war over the right to perform “fine sweep work” - the preparation of a floor surface before installing tile - at a construction site in upstate New York. He argued both in the district court and on appeal that Enmons precluded liability.

The circuit disagreed. The Enmons defense is not available if there is no legitimate labor union objective. Courts have generally limited the defense to the context of strikes or collective bargaining negotiations between unions and employers. It does not apply to “violence committed by one union against another for the purpose of ‘establishing the proper allocation of work between’” two different groups of unionized workers. Violence committed “outside the context of a labor-management dispute, by one union against another, does not have a legitimate collective-bargaining objective under the Hobbs Act.”

Gambling Problem

United States v. Ivezaj, No. 06-3112-cr (2d Cir. June 11, 2009) (Feinberg, Miner, Parker, CJJ)

Six defendants were convicted of racketeering and related offenses arising from their efforts to break the hold that New York City’s traditional organized crime families had on illegal gambling.

The primary challenge on appeal concerned two RICO predicate acts that alleged violations of New York state’s extortion statute. In New York, extortion involves compelling another person to “deliver ... property” to himself or a third person through fear of a future injury. “Property” is any personal property or “article, substance or thing of value ... which is provided for a charge or compensation.” The defendants argued that control over illegal intangible property such as a gambling operation was not “property” and could not be “delivered.”

The circuit disagreed. Surveying New York case law, the court first concluded that the state recognizes that intangible property - for example, a tenant’s right to occupy an apartment - is covered by the extortion statute. New York courts have also held that “illegal tangible goods,” such as narcotics, can constitute “property.” From those two propositions, the circuit readily concluded that illegal intangibles are also “property” under New York law.

The circuit’s own Hobbs Act jurisprudence bolstered this conclusion. Indeed, the court in 2006 held that “intangible property rights can qualify as extortable property under the Hobbs Act,” whether legal or not.

The court characterized the defendants’ claim that control over an illegal gambling business could not be “obtain[ed]” or “deliver[ed]” as “imaginative but overly literal,” since New York courts have already held that intangible property rights can be extorted.

Relatedly, the defendants also claimed that one of their beating victims was not a “victim” of the inchoate extortion offense, since he was not an “owner” of the extorted property. The court held that, since the defendants were charged with attempt and conspiracy offenses, it was sufficient that the defendants thought he was an owner.

Finally, the defendants challenged their § 924(c) convictions, which related back to the substantive racketeering count, arguing that racketeering did not constitute a “crime of violence.” Applying the traditional “categorical approach” to both the racketeering statute and the statutes underlying the predicate acts, the court disagreed. “[W]here the government proves (1) the commission of at least two acts of racketeering and (2) at least two of those acts qualify as ‘crime[s] of violence’ under § 924(c)," a racketeering conviction serves as a predicate for a § 924(c) conviction.

Finally, the court tackled an open Guidelines question in racketeering cases. One defendant challenged his aggravating role enhancement on the ground that the district court should have looked only to the conduct alleged in the charged RICO predicates, and not to his role in the enterprise as a whole. The circuit disagreed, adopting the reasoning of a Seventh circuit case. In racketeering prosecutions, role adjustments function just as they do in any other prosecution: the sentencing court is to look to the count of conviction and all relevant conduct.