The opinion of the court was delivered by: HURLEY
The captioned case involves eleven defendants. All but one, viz., William Grainger, are charged with violating the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq., via their respective activities as members of a criminal organization identified as the Hickey Organization. In addition, various other crimes are alleged in the Sixty Count Indictment against some, or all, of the defendants including, inter alia, mail fraud, 18 U.S.C. §§ 1341, 1346, and money laundering, 18 U.S.C. § 1956.
Although there are allegations in the introductory portion of the Indictment that the Hickey Organization, as well as certain identified organized crime families, operate not only here, but also in other parts of the United States, all of the conduct leading to the return of the original Indictment -- including the charges most relevant for purposes of the present motions, viz., the RICO, RICO conspiracy, mail fraud, and money laundering charges (hereinafter referred to as the "Islip fraud" or "the scheme") -- occurred in the Town of Islip. That conduct is well synopsized in the following excerpt from the September 10, 1996 affidavit of Special Agent Donald W. McCormick submitted in support of the application for the five search warrants that were issued in this case:
The indictment alleges that the defendants, and others, operated an enterprise which conducted a fraudulent scheme in order, among other goals, to make money and maintain control of the commercial garbage customers within the Town of Islip. At the time of the scheme alleged in the indictment, DENNIS C. HICKEY and his company HICKEY'S CARTING, INC., although barred from receiving a permit for commercial garbage collection in the Town of Islip, engaged a nominee company, GRAND CARTING, INC., to obtain a permit from the Town of Islip to collect the commercial garbage within the Town. Nominee companies, including COMPETITION CARTING, INC. and GRAND EAST, INC., were utilized by the defendants to hide the involvement of DENNIS C. HICKEY and his companies in the collection of commercial garbage in the Town of Islip. As set out in the indictment, bank accounts in the names of the nominee companies were utilized so that customers who were in fact serviced by HICKEY'S CARTING, INC. would write checks for carting to entities other that [sic] HICKEY'S CARTING, INC. The monies were then transferred, through a series of financial transactions, to accounts and deposited for the benefit of DENNIS C. HICKEY and others.
Defendants, in their joint motions, have attacked the legal sufficiency of a number of the counts, as well as the legitimacy of the searches conducted pursuant to search warrants which were executed contemporaneously with the defendants' arrests. In addition, defendants seek a bill of particulars, a list of the government's witnesses, and a severance for Maria Hickey and William Grainger.
Defendants' arguments shall be addressed seriatim.
Count One of the Indictment, i.e., the Substantive RICO Charge, Properly Charges a Violation of Section 1962(c)
Defendants seek the dismissal of Count One upon the ground that it impermissibly alleges a single, unitary pattern of racketeering activity under which each defendant is charged with responsibility for the racketeering acts of all of the other individuals named in the count. This, it is claimed, runs afoul of the principle that "under RICO, an accusatory instrument must allege, inter alia, that each defendant, individually, committed his or her own 'pattern of racketeering activity.'" (Defs.' Mem. at 3.)
Before further addressing this motion and the other applications made by defendants which are as yet undecided, a procedural point should be made. The present Indictment is the Third Superseding Indictment. Prior to that Indictment being returned, defendants made an omnibus motion directed at the Second Superseding Indictment. By letter dated March 10, 1998, the Court was advised by defendants "that, with the exception of subsection (d) of Point V [arguing that the money laundering racketeering acts are duplicitous] which is withdrawn, all of the defendants' previously filed pre-trial motions are equally applicable" to the present accusatory instrument.
Paragraph 49 of the Second Superseding Indictment alleged in pertinent part as follows:
In or about and between January 1979 and September 1996, both dates being approximate and inclusive, within the Eastern District and elsewhere, the defendants DENNIS C. HICKEY, MARIA HICKEY, JOSEPH CARIONE, ANGELO CARIONE, ANDREW RUSSO, DENNIS E. HICKEY, HICKEY'S CARTING, INC., GRAND EAST, INC., COMPETITION CARTING, INC., and GRAND CARTING, INC., together with others, known and unknown, being persons employed by and associated with the Hickey Organization, an enterprise which engaged in, and the activities of which affected interstate and foreign commerce, knowingly and intentionally conducted and participated, directly and indirectly, in the conduct of the affairs of that enterprise through a pattern of racketeering activity, that is, through the commission of Racketeering Acts One through Thirteen . . . ."
Paragraph 50 of the Third Superseding Indictment tracks the language of its predecessor, except it deletes the language at the end of the above excerpt, to wit, "that is, through the commission of Racketeering Acts One through Thirteen."
Against the backdrop of the relevant charging language from the earlier, as well as the current, Indictment, a brief review of the law pertaining to Count One will be provided.
The ten defendants named in the count have been charged with violating Section 1962(c) of Title 18, United States Code. That section renders it unlawful for "any person" to "conduct or participate, directly or indirectly, in the conduct of [an] . . . enterprise's affairs through a pattern of racketeering activity." 18 U.S.C. § 1962(c). An "enterprise" includes "any union or group of individuals associated in fact," § 1961(4), and a "pattern of racketeering activity" is defined as "at least two acts of racketeering," § 1961(5), with a showing of relatedness and continuity among the predicate acts. E.g., United States v. Aulicino, 44 F.3d 1102, 1110 (2d Cir. 1995) (citing H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 240, 106 L. Ed. 2d 195, 109 S. Ct. 2893 (1989)).
Defendants correctly underscore the principle that a RICO conviction requires proof that each defendant personally engaged in a pattern of racketeering activity. E.q., United States v. DiNome, 954 F.2d 839, 843 (2d Cir. 1992); United States v. Private Sanitation Indus. Assoc. of Nassau/Suffolk, Inc., 793 F. Supp. 1114, 1140-41 n.37 (E.D.N.Y. 1992). Which is to say "the focus of section 1962(c) is on the individual patterns of racketeering engaged in by a defendant, rather than the collective activities of the members of the enterprise . . . ." United States v. Persico, 832 F.2d 705, 714 (2d Cir. 1987).
With the above principles in mind, attention will be focused on the purported pleading deficiency in Count One. Defendants maintain that the count improperly charges each of the ten named defendants with vicarious responsibility for the alleged racketeering acts of the other defendants and, in so doing, endeavors to establish the requisite "pattern of racketeering activity" in a collective, as distinct from an individual, fashion. However, a perusal of the count indicates that it suffers from no such infirmity.
The arguably confusing manner in which each defendant is individually charged with having participated in a pattern of racketeering activity in paragraph 49 of the Second Superseding Indictment -- to wit, "through the commission of Racketeering Acts One through Thirteen" -- has been deleted. What remains in the corresponding portion of the current Indictment, (Indictment P 50), is straightforward and appropriately alleges a violation of Section 1962(c).
The mere fact that paragraph 50 retains the claim that defendants participated in the affairs of the Hickey Organization through a general pattern of racketeering activity does not void the pleading. Although a defendant may not be held to answer for the racketeering acts of another in determining whether he or she has personally engaged in a pattern of racketeering activity, that does not mean that the acts of co-defendants are irrelevant in assessing individual culpability. Indeed, the racketeering acts of others may be germane for a number of purposes, including to show the existence of the enterprise as well as to establish continuity and relatedness among the predicate acts with which each defendant is individually charged. E.g., DiNome, 954 F.2d at 843-44; United States v. Indelicato, 865 F.2d 1370, 1383, 1384 (2d Cir. 1989); United States v. Gambino, 809 F. Supp. 1061, 1075 (S.D.N.Y. 1992).
Finally, a perusal of Count One clearly indicates that it does not allege a "single, unitary 'pattern of racketeering activity'" as claimed by defendants. To the contrary, each racketeering act specifically lists those defendants who are alleged to have engaged in the criminal conduct cited, and the listing varies depending on the racketeering act. By way of example, Racketeering Act One, entitled "Mail Fraud," names all of the defendants, except for Grainger, whereas Racketeering Act Fourteen, entitled "Mail Fraud -- Garbage Truck No. 2," charges only Dennis C. Hickey and Hickey's Carting, Inc. ( "Hickey's Carting").
In sum, Count One does not allege a single pattern of racketeering activity and thus does not violate the requirement that each defendant must commit his or her own pattern of racketeering activity to be legitimately charged with a violation of Section 1962(c). Accordingly, defendants' motion to dismiss Count One on that ground is denied.
Count Two of the Indictment, i.e., the RICO Conspiracy Charge, Properly Charqes a Violation of Section 1962(d)
Count Two charges all defendants, except for Grainger, with membership in a RICO conspiracy in violation of Section 1962(d) of Title 18, United States Code. Defendants have attacked this count upon the same ground urged with respect to Count One, i.e., that it impermissibly pleads a single pattern of racketeering activity. (Defs.' Mem. at 13.)
That ground is similarly unavailing here for the reasons previously provided. Mention should also be made of the third paragraph of Count Two, that being paragraph 68 of the Indictment, which alleges that:
Each defendant named in paragraph 67 agreed that at least two of the acts of racketeering set forth in paragraphs 51 through 65 would be committed in the conduct of the affairs of the Hickey Organization.
That charging language dovetails with the holding in Salinas v. United States, U.S. , 118 S. Ct. 469, 139 L. Ed. 2d 352 (1997), in which the Supreme Court explained that "an actor who does not himself commit or agree to commit the two or more predicate acts requisite to the underlying offense" is not "excused from the reach of the [RICO] conspiracy provision." Id. at 478. Rather, a conspiracy conviction may be sustained under subsection (d) if a co-conspirator committed at least two acts of racketeering and the defendant "knew about and agreed to facilitate the scheme." Id.
For the reasons indicated, defendants' attack on Count Two is found to be without merit.
Racketeering Act One (A) And Count Four Properly Charge Mail Fraud
Racketeering Act One (A) and Count Four charge all of the defendants, but Grainger, with having devised an artifice to obtain "money and property" from the Town of Islip -- "to wit: revenues from fees to be derived from the lawful disposal of waste materials at [the] Town of Islip's disposal facilities, by means of false and fraudulent . . . representations" and with using the mails to further the fraudulent scheme. (Indictment PP 51, 74.)
In order to understand the nature of the property which the grand jury has charged that defendants schemed to obtain from Islip, one must refer back to paragraph 47 of the Indictment which is incorporated by reference in the prefatory language of both Racketeering Act One and Count Four. That paragraph reads:
At relevant times, the Town Code of the Town of Islip required that all solid waste generated within the Town be disposed of at Town facilities. In violation of this requirement of the Town Code, during relevant times GRAND EAST
did not dump 100% of the solid waste collected within the Town of Islip at Town facilities. This resulted in fewer billings from the Town for the use of Town facilities, and, consequently, an economic loss to the Town.
The defense claims that the effort by the government "to criminalize, through the mail fraud statute, a violation of the Islip 'flow control' ordinance" has resulted in a facially flawed count and racketeering act. (Defs.' Mem. at 21.) Its argument begins with a recitation of the essential elements of mail fraud under Section 1341 of Title 18, United States Code, viz., (1) a scheme to defraud, (2) intended to obtain money or property from a victim, and (3) use of the mails to further the scheme. (Id. citing, inter alia, United States v. Wallach, 935 F.2d 445, 461 (2d Cir. 1991)). The claimed defect in Racketeering Act One (A) and Count Four pertains to the second of the three elements. It is defendants' contention that neither the targeted racketeering act nor count "charges the deprivation of a property interest of the alleged victim since Islip did not have a property right, nor even an expectation of revenue from the differential between the dump fees defendants did pay to Islip and the revenue Islip would have received if Grand East, Inc. [("Grand East")] had dumped 100% of the waste collected in Islip." (Id. at 21-22.)
In C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383, 114 S. Ct. 1677, 128 L. Ed. 2d 399 (1994), the Supreme Court declared a flow control ordinance unconstitutional as improperly infringing on interstate commerce. Id. at 386, 114 S. Ct. at 1680. Defendants maintain that the flow control ordinance in C & A Carbone is "virtually identical" to Islip's. (Defs.' Mem. at 21.) For that reason, it is said that Islip had no protectable interests in "money or property" to be derived from the dump fees supposedly evaded by Grand East. (Id.)
Section 10 of Chapter 21 of the Code of the Town of Islip obligates a carting permit holder, such as Grand Carting, Inc. ("Grand Carting"), to bring the solid waste collected within the Town to Town disposal facilities. In the government's view, the purported unconstitutionality of this provision of the Town Code is not properly raised at this stage of the proceedings and is, in any event, irrelevant for present purposes, citing, inter alia, United States v. Trapilo, 130 F.3d 547 (2d Cir. 1997) [petition for cert. filed, 66 U.S.L.W. 3749 (May 5, 1998) (No. 97-1792)]. (See Gov't's Resp. at 14.)
The government has the better side of the argument. The question before the Court concerns the facial sufficiency of the accusatory instrument, not whether the government ultimately will make out a prima facie case or establish defendants' guilt beyond a reasonable doubt. Here, the targeted portions of the Indictment essentially track the language of Section 1341 and contain sufficient detail to permit each listed defendant to prepare his or her defense and to be in a position to assert the defense of double jeopardy should the need subsequently arise. Such being the case, Racketeering Act One (A) and Count Four are not facially flawed and thus not subject to dismissal.
But even if the analysis is taken beyond the face of the Indictment and consideration is given to the nature of the government's anticipated proof at trial, defendants' argument is off target. Section 1341 makes it illegal to devise a scheme to defraud, or for the obtaining of money or property by means of false or fraudulent representations, coupled with the use of the mails to advance the scheme.
Granted, Grand East's mere failure to comply with Islip's flow control ordinance, if established, would not satisfy the second, or "property," element of the crime. But if that failure was part of a scheme to defraud Islip of what defendants understood to be a property right of the Town -- as distinct from, e.g., being based on reservations about the ordinance's constitutionality or other non-fraudulent reasons -- the result would be otherwise. By way of analogy, if an individual schemes to defraud another of his or her life-savings which, unbeknownst to the schemer, are non-existent, and uses the mail for that purpose, he or she has committed mail fraud. Cf. Trapilo, 130 F.3d at 552 ("At the heart of this indictment is the misuse of the wires in furtherance of a scheme to defraud the Canadian government of tax revenue, not the validity of a foreign sovereign's revenue laws . . . [and thus] there is no obligation to pass on the validity of Canadian revenue law . . . .") (citations omitted).
In sum, Racketeering Act One (A) and Count Four allege the essential elements of Section 1341 and are otherwise facially adequate. Moreover, even if the purported insufficiency of the government's anticipated proof at trial is factored into the analysis, it appears that the targeted racketeering act and count are not subject to dismissal and, certainly, not at this stage of the proceedings.
Racketeering Act One (B) and Count Five Adequately Charge a Violation of Section 1346
Racketeering Act One (B) and Count Five allege that the named defendants devised "a scheme and artifice to defraud the Town of Islip of the intangible right of honest services, to wit: the ability to select qualified persons to provide solid waste collection and disposal services within the Town of Islip." (Indictment PP 52, 76.)
In seeking the dismissal of this racketeering act and the corresponding count, the defendants opine that the grand jury "apparently" intended to charge defendants with scheming "to deprive Islip of the honest services of its employee," viz., an employee involved in the issuance of carting permits. (Defs.' Mem. at 24.) The basis for defendants' assumption is the belief that an intent to corrupt a town employee is an essential element of the alleged mail fraud scheme. (Id. at 25.) The absence of such an allegation in the Indictment, defendants argue, renders the pleading facially insufficient.
Defendants further argue that "the intangible right to honest services utilized in Section 1346 is a precise term and refers to the situation where an individual owing a fiduciary duty . . . is corrupted." (Defs.' Reply at 16.)
Defendants' arguments will be addressed seriatim.
1. Section 1346 Does Not Require That Scheme Entail Efforts to Corrupt a Town Employee
Racketeering Act One (B) and Count Five charge a violation of 18 U.S.C. § 1346. That Section provides:
For the purposes of this chapter, the term "scheme or artifice to defraud" includes a scheme or artifice to deprive another of the intangible right of honest services.
Does Section 1346 pertain solely to a scheme intended to deprive the Town of Islip of its right to receive honest services from its governmental officials and employees?
As noted, Section 1341 provides that "whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses," has committed the crime of mail fraud if the mails are utilized to further the scheme. In McNally v. United States, 483 U.S. 350, 107 S. Ct. 2875, 97 L. Ed. 2d 292 (1987), the Supreme Court held that the terms "money or property" and "scheme or artifice to defraud" had to be read conjunctively, i.e., as limiting one another. See id. at 358-60, 107 S. Ct. 2880-82. Accordingly, the scope of Section 1341 -- as explained in McNally -- pertains solely to schemes in which the aim was to obtain money or property from the victim. That conclusion was contrary to prior holdings in numerous Courts of Appeals decisions, in which the two phrases were read in the disjunctive, thereby criminalizing both schemes to deprive another of money or property, as well as schemes aimed at depriving the victim of a less tangible right, such as the right to honest services. See id. at 355-56, 107 S. Ct. at 2879.
To legislatively override the Supreme Court decision in McNally, Section 1346 was enacted. As explained by Senator Biden, the then Chair of the Senate Judiciary Committee:
This section overturns the decision in McNally v. United States in which the Supreme Court held that the mail and wire fraud statutes protect property but not intangible rights. Under the amendment, those statutes will protect any person's intangible right to the honest services of another, including the right of the public to the honest services of public officials. The intent is to reinstate all of the pre-McNally caselaw pertaining to the mail and wire fraud statutes without change.
134 Cong. Rec. S17360-02 (Nov. 10, 1988) (statement of Senator Biden).
Defendants' argument has been advanced absent decisional support. It rests, rather, on a questionable reading of the previously quoted remarks of Senator Biden. Defendants synopsize those remarks thusly:
Prior to the enactment of 18 U.S.C. section 1346, Senator Joseph Biden, Chairman of the Senate Judiciary Committee, stated that the target of the scheme to defraud under section 1346 is the deprivation of the official's honest services. 34 Cong. Rec. S. at 17360-02, daily ed. 11/10/88. What is criminalized, ...