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United States v. Scotto

decided: September 2, 1980.


Appeal from judgments after a jury trial entered in the United States District Court for the Southern District of New York, Charles E. Stewart, Judge, convicting appellant Scotto of violation of the Racketeer Influenced and Corrupt Organizations (RICO) statute, 18 U.S.C. § 1962(c), and convicting appellants Scotto and Anastasio of conspiracy to violate the RICO statute, 18 U.S.C. § 1962(d), Taft-Hartley violations, 29 U.S.C. § 186(b), and income tax violations, 26 U.S.C. §§ 7201, 7206(1). Over allegations of errors in the district court's charges to the jury and rulings on appellants' misjoinder claims, the judgments are affirmed.

Before Oakes and Meskill, Circuit Judges, and Bonsal, District Judge.*fn*

Author: Oakes

Anthony M. Scotto and Anthony Anastasio, not contesting the sufficiency of the evidence, appeal from judgments of convictions on forty-three counts entered after an eight-week jury trial in the United States District Court for the Southern District of New York, Charles E. Stewart, Judge. The counts included one against Scotto, then president of Local 1814 of the International Longshoremen's Association (ILA) for participating in the affairs of the ILA through a pattern of racketeering activity from 1974 through part of January 1979 in violation of 18 U.S.C. § 1962(c) (Count 1); a count charging both Scotto and Anastasio, then executive vice president of Local 1814, with conspiring to participate in the affairs of the ILA through a pattern of racketeering activity, in violation of 18 U.S.C. §§ 1962(d) (Count 50); twenty-four counts against Scotto (Counts 2-9, 16-30, 34), eight counts against Anastasio (38-45) and three counts against both (Counts 35-37) for demanding and receiving unlawful "labor" payments totalling in excess of $250,000, in violation of the Taft-Hartley Act, 29 U.S.C. § 186(b); and four counts against Scotto (Counts 53-56) and two counts against Anastasio (Counts 59, 60) for failure to report and pay federal income taxes on the unlawful amounts obtained from the foregoing activities, in violation of 26 U.S.C. §§ 7201 and 7206(1). The jury was unable to reach a verdict on seventeen other counts alleging additional Taft-Hartley and tax violations (Counts 10-15, 31-33, 46-49, 51-52, 57-58). The sentences are set out in the margin.*fn1 We affirm the judgments.


From 1975 through 1979, appellant Scotto was president of ILA Local 1814 in Brooklyn and vice president for legislative affairs for the ILA nationally. From 1975 through April of 1978, Anastasio was secretary-treasurer of an associated ILA local in Brooklyn, and he subsequently became executive vice president of Scotto's Local 1814. He was also an ILA national organizer. The Government's evidence was that they individually and jointly received illegal labor payoffs during the period from 1975 through 1979 from six separate waterfront businesses employing ILA members. The evidence showed the receipt of more than forty separate cash payments, some as high as $15,000, as kickbacks or commissions on business and as "extra" Christmas bonuses.

Walter D. O'Hearn, chief executive of John W. McGrath Corp. of Brooklyn, a stevedore company, paid Scotto $15,000 quarterly and $5,000 at Christmas, for a total of $65,000 annually, to obtain his assistance in reducing fraudulent and exaggerated workmen's compensation claims filed by members of Scotto's local. William Montella, general manager of Quin Marine Services, Inc., of Brooklyn, paid Scotto $5,000 quarterly and $5,000 extra each Christmas for a three-year period to secure his assistance in getting new business and keeping existing customers from competitor shipping and stevedoring companies with which Scotto dealt as a labor leader. Nicholas Seregos of Jackson Engineering Co., Inc., an ILA-affiliated marine engineering company doing general ship repair, paid Anastasio a 10% "commission" on business obtained for his company with Scotto's and Anastasio's assistance from Prudential Lines, Inc., and United States Lines. Additionally, other cash payments of thousands of dollars were received by Scotto alone or by Scotto and Anastasio from individuals representing waterfront employers of ILA labor, including C. C. Lumber Co. of Brooklyn, American Navigation Co. of Baltimore, Marine Repair Services, Inc., of Staten Island, and Joseph Vinal Ship Maintenance Co. of Manhattan. The proof also established that Scotto and Anastasio failed to declare the payoffs on their federal income tax returns, amounting in Scotto's case to $69,700 in 1975, $90,000 in 1976, and $83,500 in 1977, and in Anastasio's case to $6,500 in 1976 and $16,500 in 1977.

Scotto, who took the stand in his own defense, denied receiving any payments from Montella or O'Hearn before January of 1977. As to the payments made thereafter, Scotto admitted accepting them, but claimed he was acting only as a conduit for campaign contributions, $50,000 to the 1977 New York City mayoral campaign of Mario Cuomo, and $25,000 to the 1978 New York state gubernatorial campaign of Governor Hugh Carey. Louis Valentino, a state official, testified that he received the $50,000 in cash for the Cuomo campaign from Anastasio at Scotto's direction, and Joseph Colozza, an ILA official from Scotto's local in charge of Governor Carey's Queens campaign, testified to receiving $25,000 in cash from Scotto. However, no records of these transactions and no reports to the New York State Board of Elections were ever made. Cross-examination of Scotto revealed that, in a tape-recorded conversation with Montella in October 1978, Scotto said that if any inquiries were ever made, he would claim the illegal monies received were for political and charitable contributions. Scotto denied the 10% commission arrangement with Nicholas Seregos, as well as receipt of any cash payoffs by Scotto and Anastasio from Joseph Vinal Ship Maintenance Co. or Marine Repair Services, Inc. He explained that the cash payment from Joseph Lacqua, an officer of C. C. Lumber Co. and American Navigation Co., was intended for and ultimately given to Scotto's wife. The jury disbelieved the "conduit" defense and other exculpatory testimony.

Anastasio did not testify on his own behalf. He did call one character witness and Anthony Valvo, a shop steward who testified to contacting Anastasio on behalf of Seregos in 1974 concerning the unionizing of Jackson Engineering Co.


I. The RICO and RICO conspiracy convictions instruction on the element of "conduct of (the) enterprise's affairs"

Among the principal arguments on appeal are those focusing on the "RICO" and "RICO conspiracy" convictions. RICO, an acronym for the part of the Organized Crime Control Act of 1970 dealing with Racketeer Influenced and Corrupt Organizations, 18 U.S.C. §§ 1961-68; see generally H.R.Rep.No. 91-1549, 91st Cong., 2d Sess., reprinted in (1970) U.S.Code Cong. & Admin.News, pp. 4007, 4010, 4032-33, specifically includes within its definition of "racketeering activity" a wide variety of serious criminal acts under federal and state law, among them "any act which is indictable under title 29, United States Code, section 186 (dealing with restrictions on payments and loans to labor organizations)." Id. § 1961(1)(C). It furthermore defines "pattern of racketeering activity" as "requiring at least two acts of racketeering activity." Id. § 1961(5). The term "enterprise" includes "any union." Id. § 1961(4). Under 18 U.S.C. § 1962(c),*fn2 it is unlawful "for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity . . . ." Id. There also is a prohibition against "conspiring to violate any of the provisions" of subsection (c) of § 1962. Id. (d).

The RICO statute has been upheld as not unconstitutionally vague. E. g., United States v. Huber, 603 F.2d 387, 393 (2d Cir. 1979), cert. denied, 445 U.S. 927, 100 S. Ct. 1312, 63 L. Ed. 2d 759 (1980); United States v. Swiderski, 193 U.S. App. D.C. 92, 593 F.2d 1246, 1249 (D.C.Cir.1978), cert. denied, 441 U.S. 933, 99 S. Ct. 2056, 60 L. Ed. 2d 662 (1979); United States v. Campanale, 518 F.2d 352, 364 (9th Cir. 1975) (per curiam), cert. denied, 423 U.S. 1050, 96 S. Ct. 777, 46 L. Ed. 2d 638 (1976); United States v. Field, 432 F. Supp. 55, 58 (S.D.N.Y.1977), aff'd, 578 F.2d 1371 (2d Cir.), cert. dismissed, 439 U.S. 801, 99 S. Ct. 43, 58 L. Ed. 2d 94 (1978). It has been applied in a variety of circumstances, e. g., United States v. Boylan, 620 F.2d 359, 360-62 (2d Cir. 1980) (RICO count and illegal labor payments counts not multiplicious and not violative of double jeopardy; RICO count does not include separate scienter element over and above that required for predicate crimes), cert. denied, 449 U.S. 833, 101 S. Ct. 103, 66 L. Ed. 2d 38 (1980); United States v. Weisman, 624 F.2d 1118 (2d Cir. 1980), cert. denied, 449 U.S. 871, 101 S. Ct. 209, 66 L. Ed. 2d 91 (1980) (affairs of theater conducted through a pattern of racketeering activity including predicate acts of securities and bankruptcy fraud); United States v. Huber, supra, 603 F.2d at 387 (pattern of racketeering activity, involving fraudulent execution of medical services and supplies contracts by a group of corporations).

Appellant Scotto's basic argument is that the jury was inadequately instructed on the issue whether he conducted the union's affairs through a pattern of racketeering activity, namely through the Taft-Hartley violations. He suggests that the district court's charge was inadequate because of a failure to require a sufficient nexus between the predicate misconduct and the conduct of the enterprise, and a failure to explore more fully the statutory language pertaining to the "conduct of such enterprise's affairs." Scotto notes that in cases in which an established legitimate entity as opposed to a criminal enterprise is involved, the conduct of the affairs element assumes great significance. Appellant places principal reliance on United States v. Nerone, 563 F.2d 836, 851-52 (7th Cir. 1977), cert. denied, 435 U.S. 951, 98 S. Ct. 1577, 55 L. Ed. 2d 801 (1978), holding that the Government's case failed because of inadequate proof of a connection between the racketeering activities, illegal gambling, and the corporation operating the trailer park where the gambling occurred. See also United States v. Huber, supra, 603 F.2d at 395 (summarizing Nerone ). He also cites, among other cases, United States v. Dennis, 458 F. Supp. 197 (E.D.Mo.1978), in which the court found an indictment faulty under RICO because of its failure to assert any nexus between the alleged activities and the conduct of the enterprise. The court noted: "The mere fact that defendant is employed by the enterprise (General Motors Assembly Division) and collects unlawful debts on the premises of the enterprise . . . does not establish that the defendant participated in the conduct of the enterprise's affairs through the collection of the debts." Id. at 199.

The Government first argues that Scotto failed properly to preserve this claim regarding the court's jury charge. It is true that the district court during an all-day charging conference read verbatim the portion of its charge about which Scotto now complains and that defense counsel at that time declined to object to the charge. However, Scotto did both submit his own request to charge on the subject*fn3 and make a blanket objection to the court's failure to incorporate Scotto's suggested charges in the court's ...

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