Appeal by Herbert Hochreiter and Lizza Industries, Inc. from judgments of conviction entered against them in the United States District Court for the Eastern District of New York (Mishler, J.) for mail fraud, 18 U.S.C. § 1341, and RICO violations, 18 U.S.C. § 1961 et seq. Hochreiter also appeals a perjury conviction, 18 U.S.C. § 1623. Judge Van Graafeiland concurs in part and dissents in part. Affirmed.
CARDAMONE, Circuit Judge :
Herbert Hochreiter and Lizza Industries, Inc. appeal their convictions, entered in the Eastern District of New York (Mishler, J.), for 32 counts of mail fraud in violation of 18 U.S.C. § 1341 (1982) and one count each of engaging in and using income derived from a pattern of unlawful activity in violation of the Racketeering and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961-1968 (1982). Hochreiter also appeals his conviction one one count of perjury, 18 U.S.C. § 1623 (1982).
Hochreiter claims that his perjury count should have been dismissed on due process grounds, and both appellants urge that the prosecutor's questioning of a government witness, which revealed that the witness was testifying under a grant of use immunity, was error requiring reversal. Appellants also contend that the district court incorrectly calculated the amount subject to forfeiture; they say that only net, not gross, profits are subject to forfeiture under RICO. Because none of appellants' claims is persuasive, we affirm.
The proof at trial showed that Lizza Industries, a major Long Island construction firm, and Herbert Hochreiter, Lizza's president and part-owner, were active participants in a large bid-rigging conspiracy. The conspirators colluded on the bidding of four publicly funded contracts for the repair and building of public roads and highways on Long Island.
Lizza Industries and Hochreiter, together with several other defendants, were first tried in March, 1984 on charges of using the mails to defraud the state and county, in violation of 18 U.S.C. 1341 (1982), and with engaging in and using income derived from a pattern of unlawful activity in violation of 18 U.S.C. § 1961-1968 (1982). Although that trial ended in convictions for some defendants, there was a "hung" jury with respect to the two appellants. Hence, a mistrial was declared and a new trial scheduled.
Prior to the second trial, the prosecution sought and obtained a superseding indictment. The new indictment eliminated charges that related solely to the other codefendants, narrowed the scope of the fraud charge, eliminated a conspiracy count, and added a perjury count against Hochreiter, based on his testimony at the first trial. Hochreiter had lied to the jury about the origin of certain incriminating evidence.
At the same time that the prosecutors sought the new indictment, they were engaged in ongoing plea negotiations with both Lizza's and Hochreiter's defense counsel. The prosecution advised defense counsel that a perjury count was contemplated. When negotiations broke down, proceedings on the superseding indictment and added perjury count were initiated. Defendants moved unsuccessfully for dismissal or, alternatively, for severance of the new count. Upon denial of their motions, defendants proceeded to trial.
As part of its direct case, the government presented a former Lizza employee, Stephen Schreiber, as a witness. Schreiber, in response to prosecution questions, testified that he was appearing pursuant to an order the compelled his testimony and granted him use immunity, which ensured him that his testimony could not be used against him.*fn1 Based on this questioning, defense counsel unsuccessfully moved for a mistrial.
At trial, the only issue was the defendants' guilt. The trial judge bifurcated that trial and did not permit a determination of amounts to be forfeited until a jury first found defendants guilty of the underlying charges. The judge determined that gross rather than net profits could be used to calculate the forfeiture of profits from defendant's pattern of unlawful conduct. That is, the defendant's pattern of unlawful conduct. That is, the defendants could deduct direct costs incurred on each project for which they had been indicted, but could not deduct general overhead and business expenses that otherwise would have been incurred in the operation of their business.
Once the jury rendered its guilty verdict on the RICO count, the defense entered into a stipulation with the government regarding the amount of their gross profits. Under the gross profits formula agreed upon, Lizza would forfeit $1,000,000 and Hochreiter would forfeit $40,000. The parties also agreed that defendants reserved their right to appeal the trial court's ruling on the gross profits formula and the amount subject to forfeiture. The guilty verdicts against both defendants resulted in the recited forfeitures, plus fines of $52,000 and $62,000 against Lizza and Hochreiter respectively. In addition, Hochreiter was given two year concurrent sentences on each of the 34 counts for which he was convicted. The sentences and forfeitures have all been stayed pending this appeal.