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UNITED STATES v. FRIEDMAN

May 29, 1986

UNITED STATES OF AMERICA, Plaintiff, against STANLEY FRIEDMAN, MICHAEL LAZAR, LESTER SHAFRAN, MARVIN KAPLAN, MARVIN BERGMAN and DAVID LEFF, Defendants


The opinion of the court was delivered by: KNAPP

MEMORANDUM & ORDER

WHITMAN KNAPP, U.S.D.J.

 A wide variety of motions have been presented by the several defendants. Most of them have, as a practical matter, been disposed of in the course of oral argument. The following will be dealt with in this opinion: 1) Should any of the defendants (except Leff who has not yet had an opportunity to be heard) receive separate trials either as a matter of right or discretion? 2) With respect to the defendant Kaplan, is a pattern of racketeering activity sufficiently alleged under the Racketeer Influenced And Corruption Organizations Act (RICO), 18 U.S.C. § 1961 et seq (1984)? 3) What, if any, relief can this Court afford the defendants because of the publicity surrounding the Grand Jury investigation?

 SEVERANCE

 The government alleges that Geoffrey Lindenauer and Donald Manes systematically converted the New York City Parking Violations Bureau into a racketeering enterprise from in or about late 1979 to in or about January 1986. It further alleges that at some point within that time period each defendant, with realization of its scope, knowingly became involved in contributing to the success of that enterprise through a pattern of racketeering activity. If the government can prove this as to each defendant, each would be properly convicted of a violation of RICO. It follows that they are properly joined in one indictment under Fed. R. Crim. P. 8. No defendant therefore is entitled to a severance as a matter of law.

 In considering the question of prejudicial joinder under Fed. R. Crim. P. 14, we cannot be governed by our personal belief that the RICO statute is an unwise and unfair piece of legislation. Therefore we can, without concluding that defendants are entitled to separate trials, accept their argument that some of them would be subject to "spillover" in the sense of having to be tried in a case involving fraudulent activities much more extensive than anything in which they specifically agreed to participate. It was precisely because the Congress was concerned with the seriousness of "racketeering activity" that it wished to make it easier for the government to convict those even periferally engaged therein, provided that they themselves were aware of the broader scope of the activity involved. Consequently it seems to us that a court should not grant a severance in a RICO case unless it concludes: 1) as did Judge Duffy in United States v. Castellano (S.D.N.Y. Sept. l985) 84 Cr. 63 (KTD), that the number of defendants and transactions grouped together in one indictment would render the trial unmanageable; or 2) that some defendant or defendants were "prejudiced" in some manner not contemplated by the Congress; or 3) that some defendant or defendants have successfully made some other particularized appeal to the court's conscience. None of these considerations apply to the defendants now before us.

 With respect to spillover, no defendant has been able to demonstrate that any evidence would be admissible at a joint trial which the government could not, if it wished, offer in a separate trial against him. In that respect this case is clearly distinguishable from United States v. Figueroa (2d Cir. 1980) 618 F.2d 934, 946, upon which defendants rely in making the spillover argument. In Figueroa the Court of Appeals held that the erroneous admission of evidence of prior criminal acts by a co-defendant unfairly prejudiced the other defendants as well. Since evidence of another person's criminal record, unlike the enterprise proof in a RICO case, would never be admissible against a defendant being tried alone, Figueroa is inapposite to the case at bar.

 PATTERN OF RACKETEERING ACTIVITY

 Defendant Kaplan argues that the allegations against him fail to allege a "pattern" of racketeering activity because, at most, he is charged with arranging to pay two bribes in order to get a contract for his company. Relying on a footnote in Sedima S.P.R.L. v. Imrex Co., Inc., (1985) 473 U.S. 479, n.14, 105 S. Ct. 3275, 3283, 87 L. Ed. 2d 346, and subsequent opinions in the civil context interpreting the pattern requirement in light of that footnote, see Superior Oil Co. v. Fulmer (8th Cir. 1986) 785 F.2d 252; Soper v. Simmons (S.D.N.Y. February 27, 1986)(Sand, J.) 84 Civ. 0072(LBS)(and cases cited therein); Northern Trust Bank/O'Hare, N.A. v. Inryco, Inc. (N.D.Ill. 1985) 615 F. Supp. 828, Kaplan urges that since the government has not alleged that he committed a pattern, he is entitled to dismissal of the indictment. We disagree.

 A pattern of racketeering activity is defined by the RICO statute as requiring "at least two acts of racketeering activity... within ten years." 18 U.S.C. § 1961(5). The oft-cited Sedima footnote first observes that

 the definition of "pattern of racketeering activity" differs from the other provisions in § 1961 in that it states that a pattern "requires at least two acts of racketeering activity." § 1961(5) (emphasis added by Supreme Court), not that it "means" two such acts. The implication is that while two acts are necessary they may not be sufficient.

 It then quotes with approval from Senate and House Reports regarding the bill.

 "The target of RICO is thus not sporadic activity. The infiltration of legitimate business normally requires more than one 'racketeering activity' and the threat of continuing activity to be effective. It is this factor of continuity plus relationship which combines to produce a pattern..." Significantly, in defining "pattern" in the same bill, Congress was more enlightening: "criminal conduct forms a pattern if it embraces criminal acts that have the same or similar purposes, results, participants, ...


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