decided: November 28, 1975; As Amended April 8, 1976.
Appeal from judgments of conviction of conspiracy to use, and use of, extortionate means, to collect extensions of credit, 18 U.S.C. §§ 894 and 2, by the United States District Court for the Southern District of New York, Lloyd F. MacMahon, Judge, challenging instructions of and interrogation by court; prosecution's failure to produce grand jury testimony of, and examination of, chief defense witness; admissibility of notebook seized at time of arrest; and admissibility of evidence of other crimes. Affirmed.
Waterman, Oakes and Meskill, Circuit Judges.
This criminal appeal involves a number of trial court rulings but no question of sufficiency of the evidence of applicability of the statute. Joseph Natale and Frank Russo appeal from judgments of conviction entered on May 15, 1975, after a jury trial in the Southern District of New York before Judge Lloyd F. MacMahon. They were tried, along with a codefendant, John Conti, under a three count indictment which charged them with a conspiracy to collect extensions of credit by extortionate means, with the substantive crime of using such means to collect such extensions, 18 U.S.C. §§ 2 and 894,*fn1 and with an attempt to obstruct commerce by extortion, in violation of 18 U.S.C. § 1951.*fn2 The jury found appellants Natale and Russo guilty on the extortionate collection counts, but not guilty on the obstructing commerce count. Defendant Conti was acquitted on all counts. Judge MacMahon sentenced the appellants to concurrent terms of five years' imprisonment on each guilty count. We affirm.
The heart of the crime for which Natale and Russo have been convicted is the use, or threatened use, of force or violence to a person, his reputation or his property, as a means of collecting money lent. See 18 U.S.C. § 891(7). The transactions which come under the purview of this statute are normally usurious and, therefore, are unenforceable in courts of law.*fn3 It is the effort of usurious money lenders, or "loan sharks," to seek extra-legal methods of enforcing their unconscionable agreements which this statute is designed to restrain.*fn4 And it is just such efforts which have been proved at trial in this case.
Frank Russo had a neighbor, Peter Amato, who, during 1974 and the first part of 1975, worked as the bookkeeper for Barbara Creations, Inc., a Manhattan manufacturer of bridal veils. Barbara Creations was having cash flow problems late in 1974 and Amato evidently proposed to its owner, Murray Weiss, that Amato loan a sum to the corporation to assist it in its financial straits. Weiss agreed to accept temporary loans from Amato of $7,000 on December 3, 1974, $3,000 on January 24, 1975, and $5,000 on January 31, 1975.
Apparently unbeknownst to Weiss, the source of these funds was not really Amato, but was Joseph Natale and Frank Russo. Amato had contacted his neighbor Russo, from whom he had previously borrowed at usurious rates, in November of 1974, and informed him that if Russo could loan him a substantial sum of money he would be able to use it to solidify his position at Barbara Creations. Apparently Amato led Russo to believe that Amato held an ownership interest in the company. Russo told Amato to meet with him and Frank Natale in Russo's office at 1430 Broadway in New York to discuss a possible loan. At their meeting, Amato provided Natale and Russo and their attorney, Harris Lapin, with information concerning Barbara Creations and its officers. On December 3, 1974, Russo and Natale gave Amato $10,000 in cash, with the understanding that a weekly payment of $300 interest ("vigorish") would be due until the principal was repaid in full. On the basis that no collateral had been provided to secure the loan, Russo asked Amato to leave $3,000 of the amount lent with him, as a "token" for the favor of the loan. Amato agreed and deposited the remaining $7,000 in the Barbara Creations bank account. Three hundred dollars per week on a net $7,000 loan approximates 222 per cent interest per annum, even without compounding.
On January 22, 1975, Amato again contacted Russo with a request to borrow funds for Barbara Creations. He told Russo that the corporation was overdrawn at the bank and needed money to cover the checks it was writing.*fn5 Russo agreed to loan Amato $3,000, with the understanding that repayment in the amount of $4,000 was to be made in three weeks. Amato repaid this loan a few weeks later with money provided by Barbara Creations' president, Weiss.
On January 31, 1975, the corporation's account again became overdrawn, and Amato, once again flirting with the loan sharks' jaws, sought a loan of $5,000 from appellants. He met with them in Russo's office that day. Amato was given the $5,000, but with instruction to pay back $6,500 no later than February 6, 1975. It was the failure to repay this loan, as well as delay in repayment of a portion of the December, 1974, advance, which led to the offense charged in this case.
When Amato began to fall behind on his payments, he was given a series of extensions which culminated in a deadline of 10:00 a.m. on February 11. On the morning of the 11th Russo met his neighbor Amato as he was leaving his home. He was friendly enough to tell Amato that he had better come up with the money by 10:00 a.m. or that Natale "will just waste you, and not worry about the money at all." Amato decided to report this threat to the police. An officer was assigned to the case, and the officer and Amato went to Russo's office in Manhattan. The officer posed as a friend of Amato's who was trying to help him raise money to repay the loan. While the officer was there, and in Russo's presence Natale told Amato that if he kept "giving me this kind of story about not paying me back . . . then the money won't matter. I will just kill you."
The next day, Russo called Amato on the telephone at work and threatened to take Weiss' car and Amato's house if the loan wasn't repaid immediately. On the 14th, Amato had obtained $3,000 to repay part of his loan and took it to Russo's office. When he arrived Natale and John Conti were waiting along with Russo. Amato paid over the money which was handed by Russo and Natale to Conti. Later that day, Russo told his neighbor Amato that Conti was a "hit man . . . there to size you up" in case Amato hadn't paid.
The final chapter in this saga occurred on February 19, 1975. Russo and Natale went to the offices at Barbara Creations to meet with Weiss and Amato. At this meeting, Weiss informed the appellants that Amato had no ownership interest in Barbara Creations, that he had been stealing from the company, that Weiss was not responsible for any of Amato's debts and accordingly would not pay them anything. Apparently this was a surprise to Russo, for later that day he went to Amato's home and told him, "What's it going to be? - you lied and now you are in trouble and to put you in their good eyes is going to cost you $5,000 extra for lying to them, stringing them along all this time." Amato testified that "Russo said to me if I did not come up with this money that Joey will come into my house, do a job on my wife and children in front of me, while I watched."
For the above series of events, Russo and Natale were convicted of the use of extortionate means to collect extensions of credit. On this appeal they urge seven separate grounds for reversal of their conviction.
I. Charge to the Jury on the Elements of the Offense. The judge at trial instructed the jury that there are three separate elements of the § 894 substantive offense charged in this case. The Government must prove (1) that there was principal or interest outstanding on the loans, (2) that the defendants actually collected or attempted to collect sums due, and (3) that the defendants employed extortionate means to collect same. Judge MacMahon stated that, as to the first two elements of the offense, "I don't think there is any dispute in the evidence. . . ." Appellants ...