Rehearing and Rehearing En Banc Denied September 8, 1982.
FAY, Circuit Judge:
Three defendants appeal from their convictions of conspiracy, mail fraud, violations of the National Stolen Property Act, and a violation of the Racketeer Influenced and Corrupt Organization Act [RICO]. Their appeal has launched this Court into an extensive fishing expedition undertaken by the appellants. The defendants also appeal cumulative sentences imposed by Judge George C. Carr of the Middle District of Florida. The defendants, G. Cecil Hartley, Travis Dell, and Treasure Isle, Inc., baited their appellate hooks with a large assortment of tempting issues — fourteen by their count — in an attempt to land the prize catch — a reversal.
Treasure Isle, Inc., is a Florida corporation specializing in the production of breaded seafood products. Its production of frozen breaded shrimp for consumption by the military provided the basis of the thirty-three count indictment.
After approximately ten weeks of trial, a jury convicted the three defendants of all thirty-three counts.
The District Court denied the defendants' post-trial motions for an arrest of judgment, a judgment of acquittal, and a new trial.
At the center of this case are the imaginatively deceptive schemes designed to circumvent the inspection procedures implemented by the government to assure the quality of the shrimp purchased. The indictment covered a time period prior to 1970 and continuing to July, 1978. During this period three inspection procedures were employed — each inducing the defendants to charter another vessel with which to defraud the government.
Apparently the government had begun purchasing shrimp from Treasure Isle in the late 1960's. Pre-1974, military inspectors made individual examinations of each box of raw shrimp as well as every tank of peeled shrimp.
Testimony revealed that Dell directed Treasure Isle employees to remove "reject" cards from inspected tanks, replace them with "accept" cards from other inspected tanks, and destroy the "reject" cards. In this manner, tanks which had already been "accepted" would be reinspected only to again be approved by the military inspector. Rejected tanks would now bear the "accept" cards and would be placed into the subsequent production process. Treasure Isle's cooler foreman implemented the same plan on the boxes of raw shrimp at the instigation of Dell and Hartley. But, switching cards was just the beginning.
At the direction of Dell and Hartley, a Treasure Isle employee modified a weight used by the inspectors in determining the
Treasure Isle employees also falsified production sheets to allow for after-hour processing of shrimp, which would then be packed without having been inspected. And, employees were directed to inform the inspectors that they miscounted boxes of inspected shrimp permitting additional uninspected boxes to be added during the inspector's absence.
The government changed its inspection system in October, 1974. Rather than inspecting each individual box, the inspectors began a random sampling of the "end product." Under this new system, inspectors selected thirteen boxes of breaded shrimp from each day's production. The boxes were stored overnight in a locked freezer for which only the inspectors supposedly possessed a key. Each box was marked by the inspectors prior to being placed in the locked freezer. The following day, the inspectors would retrieve the samples and conduct an analysis to determine the shrimp's conformance with the requisite specifications. If the sample shrimp conformed, the inspectors approved the entire production lot for that day.
Upon receiving notice that an entire lot had been rejected under the new system, the defendants created a new means by which to accomplish their goal. Not to be outdone by the government's selective sampling, Treasure Isle employees prepared their own sample lot. Each day a "sample run" was made in which the largest shrimp were meticulously processed. Great care was taken to peel and devein the largest shrimp; and extra caution was taken to insure no more than 40% of the shrimp's total weight was attributable to breading. The "sample run" was then set aside for special work later that evening. The production then returned to "normal". Smaller shrimp, less careful cleaning and deveining, extra breading, and sloppy freezing became the order of the day.
Reminiscent of Houdini, each night after the inspectors had departed, Treasure Isle employees would sneak into the locked freezer,
This was not the extent of the defendants' scheme, however. Testimony revealed that chemicals were added to large batches of shrimp which had developed a foul odor to enable the shrimp to be processed and frozen undetected. Rejected shrimp would be secretly added to other production lots. Shrimp received from abroad were also processed in the lots sold to the government. Once again, false counts were given to inspectors to enable Treasure Isle to include uninspected shrimp in government orders. And the company developed signals to alert employees of an inspector's approach.
The conspiracy reached beyond the officers and employees of the corporation, and included military inspectors assigned to the plant. Boxes of shrimp, liquor, and money were used on several occasions to bribe inspectors to falsify reports. The schemes appeared to grow and diversify until uncovered by one of the military inspectors.
Years elapsed before the government learned of the shenanigans being played by Treasure Isle, its officers and employees and the military inspectors. In December, 1977, military inspector David Klopp, noticed a difference in the markings of the sample boxes stored for inspection and those inspected the following day. This prompted him to conduct an experiment by specially marking boxes in an unusual location
Once assured that the switch had taken place, Klopp's supervisors reported to the Quality Assurance Officer at the Defense Personnel Support Center, who assigned a criminal investigator to the case. Soon thereafter the investigator interviewed a Treasure Isle employee, who revealed that the random samples selected by Klopp and bearing his special markings had been placed back into production lots F6968 and F7008. Arrangements were then made to secure these lots at their intended destinations to allow for proper testing.
Lot F6968 arrived in Watertown, Massachusetts, and was subsequently tested there by both military and civilian personnel. Sections of lot F7008 were secured and tested in Norfolk, Virginia, and Fort Worth and San Antonio, Texas. The government found the samples did not conform to the requisite specifications.
With this collection of data, the prosecutorial wheels were set in motion. On August 8, 1979, the Grand Jury returned a fourteen-page indictment. Ten weeks of trial and thirty-three convictions later, the defendants appeal to this Court for relief. Armed with enough tackle to land the big one, the appellants have cast fourteen lines into the Court's sea.
The Octopus — Intracorporate Conspiracy
The appellants submit that absent proof of the military inspector's knowledge of the defendants' scheme to switch the sample lots, there is insufficient evidence to connect them with the conspiracy.
Because the government elected not to prosecute the military inspectors in this case, we are not confronted with an evaluation of the sufficiency of the evidence with respect to convictions of the inspectors. And yet, the essence of the appellants' intracorporate conspiracy issue revolves around the lack of evidence to prove the inspectors' knowledge of the switching scheme, labeled by appellants as the "linchpin" of the conspiracy. Our duty then is limited to examining the record to determine if it reveals sufficient evidence to
Testimony from the military inspectors disclosed numerous instances in which Inspectors Davis and Sims received gratuities in the form of money, shrimp, and liquor in exchange for falsifying inspection reports, which would otherwise have rendered unfavorable results for Treasure Isle. A Treasure Isle employee, Butch Sheffield, corroborated the inspectors' testimony. He testified to having given shrimp to Inspector Davis at the direction of Hartley and Dell. He also recounted an episode during which Inspector Davis retrieved money from Hartley's desk and commented to him: "I want you to look here what they give me for all I let them get by with." Record, vol. XXXIII, at 3675.
"Because a conspiratorial agreement is often reached in secrecy, the existence of the agreement or common purpose may be inferred from relevant and competent circumstantial evidence...." United States v. Ballard, 663 F.2d 534, 543 (5th Cir.1981) (citations omitted). Involvement in a single transaction may permit an "inference of knowledge of the broader conspiracy where the single act itself shows so much familiarity with or high-level participation in the overall conspiracy as to be in and of itself indicative of the broader conspiracy." United States v. Hawkins, 661 F.2d 436, 454 (5th Cir.1981) (quoting United States v. Torres, 503 F.2d 1120, 1124 (2d Cir.1974) (emphasis added)). All that is necessary is that the person "be aware of the essential nature and scope of the enterprise and intend to participate." United States v. Conroy, 589 F.2d 1258, 1269 (5th Cir.), cert. denied, 444 U.S. 831, 100 S.Ct. 60, 62 L.Ed.2d 40 (1979); see also United States v. Martino, 648 F.2d 367, 404 (5th Cir.), cert. denied, ___ U.S. ___, 102 S.Ct. 2020, 72 L.Ed.2d 474 (1982).
By their own admissions the inspectors knew of and participated in more than one transaction to falsify reports in exchange for gratuities bestowed upon them by Treasure Isle, its officers, and employees. There can be no doubt they "knew that criminal activity was afoot." United States v. Alvarez, 625 F.2d 1196, 1198 (5th Cir.1980) (en banc), cert. denied, 451 U.S. 938, 101 S.Ct. 2017, 68 L.Ed.2d 324 (1981).
Our review of the evidence convinces us that the inspectors were well aware of the appellants' intent to defraud the government by supplying it with nonconforming shrimp. This overall scheme to defraud encompassed not only the sample switching, but the bribing of the military inspectors. The evidence clearly reveals the inspectors' participation in the latter; lack of knowledge concerning the former does not negate the inspectors' involvement in the overall conspiracy.
We reemphasize that our intention is not to assume the role of a jury in evaluating the guilt of the inspectors. Rather, we have examined the record to assure the existence of sufficient evidence from which the jury could infer the existence of a conspiracy involving Treasure Isle, its officers and employees and the independent military inspectors. It is clear such exists. Even under the antitrust cases cited by appellants, an independent coconspirator provides the multiple entities so essential to
The difficulty in accepting the theory of intracorporate conspiracy is conceptual. Under elementary agency principles, a corporation is personified through the acts of its agents. Thus, the acts of its agents become the acts of the corporation as a single entity. The conceptual difficulty is easily overcome, however, by acknowledging the underlying purpose for the creation of this fiction — to expand corporate responsibility.
By personifying a corporation, the entity was forced to answer for its negligent acts and to shoulder financial responsibility for them. See Dussouy v. Gulf Coast Investment Corp., 660 F.2d 594, 608 (5th Cir.1981). The fiction was never intended to prohibit the imposition of criminal liability by allowing a corporation or its agents to hide behind the identity of the other. We decline to expand the fiction only to limit corporate responsibility in the context of the criminal conspiracy now before us.
Ours is not the first court to be unpersuaded by the attempted application of this agency principle in the conspiracy context. See Dussouy, noting with approval United States v. Consolidated Coal Co., 424 F.Supp. 577 (S.D.Ohio 1976) and Novotny v. Great American Savings & Loan Assn., 584 F.2d 1235, 1258 (3d Cir.1978) (en banc) (dictum) (limited to conspiracy among officers), vacated on other grounds, 442 U.S. 366, 99 S.Ct. 2345, 60 L.Ed.2d 957 (1979). "In these situations, the action by an incorporated collection of individuals creates the `group danger' at which conspiracy liability is aimed, and the view of the corporation as a single legal actor becomes a fiction without a purpose." 660 F.2d at 603.
The premier case applying general agency principles to preclude intracorporate conspiracy was Nelson Radio & Supply v. Motorola, 200 F.2d 911 (5th Cir.1952), cert. denied, 345 U.S. 925, 73 S.Ct. 783, 97 L.Ed. 1356 (1953). In Nelson Radio the Fifth Circuit examined an alleged conspiracy among a corporation, its officers and employees in the antitrust context.
Dissatisfaction with the rule came as early as the Nelson Radio opinion itself. In his dissent, Judge Rives referred to an earlier United States Supreme Court decision in which Mr. Justice Burton had acknowledged without concern that the complaint had alleged a conspiracy between a corporation and four of its officials. Judge Rives stated: "My brothers use such strong adjectives as `unique' and `absurd' in referring to the contention of a conspiracy to which only the corporation and its own officers and agents are parties. That thought did not
Antitrust litigation is a peculiar form of legal action. Indeed, the language of the Sherman Act alone gives pause for consideration of intracorporate conspiracy within its framework. Section one's reference to conspiracies "in restraint of trade" implies a requirement of multiple entities; whereas section two's prohibition of monopolies aims at a single conglomerate. If section one's conspiracy charge was satisfied by a single corporate entity, it would arguably render section two meaningless. See Dussouy, 660 F.2d at 603. But even in the antitrust areas courts have fashioned an exception to the general rule "when the officer has an independent personal stake in achieving the corporation's illegal objective." Greenville Publishing Co., Inc. v. The Daily Reflector, Inc., 496 F.2d 391, 399 (4th Cir.1974); Spectrofuge Corp. v. Beckman Instruments, Inc., 575 F.2d 256 (5th Cir.1978), cert. denied, 440 U.S. 939, 99 S.Ct. 1289, 59 L.Ed.2d 499 (1979); Jewel Foliage Co. v. Uniflora Overseas Florida, Inc., 497 F.Supp. 513 (M.D.Fla.1980).
Outside the antitrust sphere, the single entity concept has met sterner opposition. The issue has been encountered in § 1985 actions concerning conspiracies to discriminate. While the outcomes are far from consistent, it has been held that when more than one act of discrimination is alleged, a cause of action for conspiracy exists between corporate officers. Novotny v. Great American Federal Savings & Loan Assn., 584 F.2d 1235 (3d Cir.1978), vacated on other grounds, 442 U.S. 366, 99 S.Ct. 2345, 60 L.Ed.2d 957 (1979) (assuming but expressly withholding decision on this issue). See also Craft v. Board of Trustees, 516 F.Supp. 1317 (N.D.Ill.1981); An-Ti Chai v. Michigan Technological University, 493 F.Supp. 1137 (W.D.Mich.1980).
In United States v. Consolidated Coal Co., 424 F.Supp. 577 (S.D.Ohio 1976), the District Court confronted the single entity fiction in a criminal conspiracy setting. It held "that a corporation can be charged with conspiring with its corporate personnel." Id. at 581 (emphasis supplied). The court relied in part on the words of Mr. Justice Harlan in his concurring opinion in United States v. Wise, 370 U.S. 405, 82 S.Ct. 1354, 8 L.Ed.2d 590 (1962) (Harlan, J. concurring) (see note 12 supra). "[T]he fiction of corporate entity, operative to protect officers from contract liability, had never been applied as a shield against criminal
The former Fifth Circuit recognized this exception to the fiction in criminal conspiracy cases in Dussouy v. Gulf Coast Investment Corp., 660 F.2d 594 (5th Cir.1981) when it stated: "a corporation can be convicted of criminal charges of conspiracy based solely on conspiracy with its own employees." Id. at 603. We now adopt this exception and hold that it is possible for a corporation to conspire with its own officers, agents and employees in violation of 18 U.S.C. § 371.
Like the octopus, appellants' conspiracy issue possesses tentacles which reach out to allege the improper admission of coconspirator's statements, the trial court's refusal to instruct the jury on its James determination, and an improper denial of a judgment of acquittal. We find the tentacles no more persuasive than the octopus itself.
Tentacle I — Coconspirator's Statements
Federal Rule of Evidence 801(d)(2)(E) articulates the coconspirator exception to the hearsay rule. It provides for the admission of statements "by a coconspirator of a party during the course of and in furtherance of the conspiracy." Fed.R.Evid. 801(d)(2)(E). The appellants argue that absent proof that the military inspectors "were knowing participants in the schemes and conspiracy," their testimony should not have been admitted. Appellant Hartley's Brief at 14. Appellants are quick to point out statements made by the inspectors which implicate them in acceptance of gratuities and the falsification of inspection reports, but they are retiscent when it comes to any inferences to be derived from these facts. They claim the record is void of any testimony disclosing that the inspectors verbally informed the appellants of their falsification of the worksheets, that they were instructed by the appellants to do so, or that they entered into an agreement to do so.
In order to admit coconspirators statements, the trial judge is required to determine if evidence independent of the hearsay statements shows a conspiracy did exist, that the persons were members of the conspiracy, and that the statements were made during the course and in furtherance of it. United States v. James, 590 F.2d 575 (5th Cir.) (en banc), cert. denied, 442 U.S. 917, 99 S.Ct. 2836, 61 L.Ed.2d 283 (1979).
"The essence of conspiracy is the agreement to engage in concerted unlawful activity." United States v. Grassi, 616 F.2d 1295, 1301 (5th Cir.), cert. denied, 449 U.S. 956, 101 S.Ct. 363, 66 L.Ed.2d 220 (1980). There is no requirement, however, that the agreement be express. In fact, the secret nature of a conspiracy in most instances requires the trier of fact to infer its existence from the surrounding circumstances. A witness's "own statements constitute independent evidence for the purpose of applying the James standards as to that particular [participant]." United States v. Roe, 670 F.2d 956, 963 (11th Cir.1982). Inspector Davis's testimony revealed numerous instances where he accepted money and shrimp from Hartley and Dell. His testimony also revealed his alteration of inspection reports to reflect satisfactory conformance of shrimp which had previously been rejected under the stringent military specifications. Davis testified that he altered the reports after discussing the rejection of the shrimp with Dell. Appellants rebutted by contending that the inspectors stole the shrimp without the knowledge of Hartley and Dell and that the falsification of records was a unilateral action undertaken by Davis. But credibility is for the fact finders.
We have no difficulty in finding the trial court correctly determined the existence of credible evidence independent of hearsay statements showing the existence of a conspiracy. Likewise, we also find the court correctly concluded that the hearsay statements were made during the course of and in furtherance of the conspiracy. Thus, the District Court properly admitted Davis's testimony.
Appellants contend United States v. Jordan, 627 F.2d 683 (5th Cir.1980) compels a contrary ruling on this issue. Jordan involved a conspiracy to defraud the government through the falsification of invoices for milk and orangeade sold to a school participating in a federally funded lunch program. The court reversed the conviction of a clerical employee of the dairy, Jordan, who under instructions from his employer, falsified the invoices. The record had disclosed no evidence to show Jordan's knowledge of the purpose for altering the invoices, which the court found essential to support his conviction of participation in the conspiracy. Such facts are inapposite to those presented here.
Tentacle II — Jury Instructions
During the charge conference, the appellants requested the District Court to instruct the jury that in determining a defendant's participation in the conspiracy it should consider "only that evidence, if any, pertaining to his own acts and statements." The court refused their request. Citing the Fifth Circuit's holding in United States v. James, 590 F.2d 575 (5th Cir.) (en banc), cert. denied, 442 U.S. 917, 99 S.Ct. 2836, 61 L.Ed.2d 283 (1979), the appellants now argue that this refusal in combination with the court's refusal to advise the jury of its James determination impermissibly allowed the jury to consider hearsay evidence and acts other than those of each individual defendant in determining the appellants' participation in the conspiracy. The appellants would have the jury's consideration limited solely to each appellant's own acts and statements excluding all hearsay.
It is not surprising the appellants want to limit the evidence available for the jury's consideration of their guilt. But, James did not articulate such a restriction. It merely delegated the question of admissibility to the "trained legal mind of the trial judge." Id. at 579. Once this determination has been made, the jury is free to consider the hearsay and the acts of other coconspirators in arriving at its verdict, just as it is permissible for the court to consider the hearsay in determining the sufficiency of the evidence. United States v. Mesa, 660 F.2d 1070 (5th Cir.1981).
It appears the appellants misconceive the ramifications of James. Prior to James, trial courts subscribed to a system where the judge gave cautionary instructions to the jury concerning "the role of hearsay evidence in conspiracy cases...." United States v. Apollo, 476 F.2d 156, 163 (5th Cir.
The instruction to the jury on the restricted use of coconspirators' statements became known as the Apollo instruction. The jurors were instructed to consider only the acts and statements of the individual conspirator when deciding his participation in the conspiracy. Of course, as was later recognized, if the independent evidence satisfied the jury of the existence of the conspiracy and of the membership of the defendant(s) being considered, the coconspirator's hearsay was surplusage and unnecessary.
James eliminated the need for a jury instruction on the preliminary finding of the existence of a conspiracy and the defendant's participation in it. That task now rests with the trial judge. Unlike the jury, the trial judge is well acquainted with the limitation of considering only independent evidence of each individual's own acts in determining participation in the conspiracy. Implicit within the judge's admissibility determination then is a finding that the particular defendant's own acts and statements, independent of the hearsay, established his membership in the conspiracy. Once this determination has been made, the hearsay testimony achieves the same status as all the other direct and circumstantial evidence.
The jury's role is determining the defendant's guilt beyond a reasonable doubt. In order to properly make this determination, the judge instructs the jury on the applicable law. In this instance, the trial court correctly instructed the jury on the three requisite elements for a conspiracy conviction.
Record, vol. LXXVI, at 7872-73.
The third element obviously allows the jury to consider the acts of other coconspirators. Any overt act in furtherance of the conspiracy would satisfy it. Thus, an instruction limiting the jury's consideration to a defendant's own acts is not only unnecessary, but might tend to confuse the jury's consideration of the third element of a conspiracy.
Id. at 620 (emphasis supplied). The defendant argued this instruction improperly deferred the admissibility question to the jury. The Fifth Circuit disagreed. "The instruction is a variation of the standard jury instruction on proof of membership in a conspiracy." Id. at 621. "Once admitted, the jury assesses the weight and credibility of such statements, just as it evaluates all evidence." Id.
There is an unclear suggestion that the trial court should have instructed the jury on its James determination. It would have been improper for the judge to have done so. "Such an instruction can serve only to alert the jury that the judge has determined that a conspiracy involving the defendant has been proven by a preponderance of the evidence." United States v. Vinson, 606 F.2d 149, 153 (6th Cir.1979), cert. denied, 444 U.S. 1074, 100 S.Ct. 1020, 62 L.Ed.2d 756 (1980). See also United States v. Nickerson, 606 F.2d 156 (6th Cir.), cert. denied, 444 U.S. 994, 100 S.Ct. 528, 62 L.Ed.2d 424 (1979). The instruction could affect not only the jury's determination of witnesses' credibility, but ultimately the defendants' guilt.
We have reviewed the District Court's instructions on the conspiracy issue. We find that the charges as a whole completely and fairly educated the jury on the legal principles and the weighing of the evidence in arriving at its verdict. United States v. Hirst, 668 F.2d 1180 (11th Cir.1982); United States v. DeLeon, 641 F.2d 330 (5th Cir.1981); United States v. Diecidue, 603 F.2d 535 (5th Cir.1979), cert. denied, 445 U.S. 946, 100 S.Ct. 1345, 63 L.Ed.2d 781 (1980).
Tentacle III — Judgment of Acquittal
The District Court's denial of the defendants' motions for judgment of acquittal is the appellants' fourth attempt to convince us of the absence of sufficient evidence to support the conspiracy convictions. Like the attempts which have come before, this one will not save the sinking ship. In reviewing a trial court's denial of a judgment of acquittal, we are restricted to viewing the evidence in the light most favorable to the government. Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942). Viewed in this light, we must determine whether "a reasonable trier of fact could find that the evidence establishes guilt beyond a reasonable doubt." United
The appellants have cited this Court to the case of United States v. Rosenblatt, 554 F.2d 36 (2d Cir.1977) and have urged us that the similarity in facts requires us to arrive at the same conclusion. In Rosenblatt, the Second Circuit reversed the conviction of a defendant when it found the government had failed to plead or prove "an agreement on the essential nature of the fraud." Id. at 42. The stipulated facts showed that one party had made false entries in postal records in order to secure government checks payable to nonexistent accounts payables. The government stipulated that Rosenblatt had no knowledge of the falsification of the records nor of the fraudulent receipt of government monies. Rosenblatt had merely agreed to "launder" the checks on the assumption that the payees of the checks could avoid certain tax consequences. Since each member of the conspiracy operated under different conceptions of the ultimate objective, the court found no agreement as to "the essential nature" of the conspiracy.
The essential nature of the conspiracy before us was to defraud the government by supplying shrimp that did not conform to designated military specifications. All coconspirators worked toward that single objective, even though the schemes employed to accomplish it varied, as did the participants. "A single plan does not become many plans simply because some members [are] cast in roles more vital than others, or because certain members performed only a single function." United States v. Bates, 600 F.2d 505, 509 (5th Cir.1979), quoted in United States v. DeLeon, 641 F.2d 330, 334 (5th Cir.1981). Unlike the facts in Rosenblatt, our facts reveal the government pled and proved one single conspiracy comprised of multifareous schemes to supply the government with nonconforming shrimp. We are unpersuaded.
The Grunt — Rule 16
Rule 16(a)(1)(c) provides for the government's production, upon request, of documents in its possession or control "which are material to the preparation of [a] defense or are intended for use by the government as evidence in chief at the trial...." Fed.R.Crim.P. 16(a)(1)(C). When a party fails to comply with this rule, the District Court may impose sanctions which include prohibiting "the party from introducing evidence not disclosed, or it may enter such other order as it deems just under the circumstances." Id. (d)(2).
During the course of trial, specifically during Inspector Davis's direct testimony, the government sought to introduce records which Davis claimed showed alterations he had made in falsifying the inspection results. According to the government, these documents had been obtained from Davis only a few days prior to trial and the government had decided to use them the day before. Appellants entered an immediate objection to the introduction of these reports. The District Court ruled the government's failure to disclose the reports violated Rule 16 and did not permit their introduction. The court did, however, permit the government to elicit testimony from Davis and other inspectors concerning their falsification of the reports. In addition, the court prohibited either party from arguing to the jury that the altered documents were missing. The court directed the government to give the reports to defense counsel,
The trial court is granted broad discretion in imposing sanctions for discovery violations. United States v. Watson, 669 F.2d 1374 (11th Cir.1982). "Implicit in the discretion granted the district court under rule 16(d)(2) is that the district court, in deciding what sanction to impose, consider several factors: `the reason why disclosure was not made, the extent of the prejudice, if any, to the opposing party, the feasibility of rectifying that prejudice by a continuance, and any other relevant circumstances.'" United States v. Sarcinelli, 667 F.2d 5, 6-7 (5th Cir.1982) (quoting 8 Moore's Fed. Practice ¶ 16.04(3) (2d Ed. 1981)).
First, the government explained its last minute decision to offer the documents into evidence and that it had only obtained possession of them days before. Nevertheless, the court disallowed the introduction of them; a sanction which punished the government for violation of Rule 16 and protected the interests of the defendants.
Second, the appellants cite this Court to the record to substantiate the existence of prejudice. The record demonstrates that Inspector Davis had previously denied any wrongdoing in reporting his inspections of the shrimp. The defendants argue that they believed that the receipt of gratuities constituted the extent of the inspector's involvement. The prosecution's proffer alerted the defendants to the inspector's involvement in the falsification of records. The court's willingness to allow for future cross examination of Davis remedied any possible prejudice that might have occurred. Thus, we find the record has failed to establish any outstanding prejudice to the substantial rights of appellants. United States v. Arguelles, 594 F.2d 109 (5th Cir.), cert. denied, 444 U.S. 860, 100 S.Ct. 124, 62 L.Ed.2d 81 (1979); United States v. Valdes, 545 F.2d 957 (5th Cir.1977); United States v. Arcentales, 532 F.2d 1046 (5th Cir.1976).
Third, there is no indication that a continuance was requested or would have been justified.
Finally, the overwhelming evidence, the government's ability to have elicited the testimony without the reports, and the appropriate sanctions imposed lead us to conclude the District Court acted well within the bounds of discretion afforded him.
The Red Herrings — Fourth Amendment and Posse Comitatus Claims
Before trial, Treasure Isle moved to suppress any evidence connected to Inspector Klopp's plan to specially mark the sample boxes and the subsequent testing of lots F6968 and F7008, alleging a fourth amendment violation. Hartley and Treasure Isle subsequently filed suppression motions based on the use of military personnel in the investigation of this case alleging a violation of the Posse Comitatus Act.
The essence of the appellants' fourth amendment claim is that by specially marking the sample boxes, Inspector Klopp executed a warrantless search. They contend that the inspector's permissible presence on the plant was limited by contract to
The government had been permitted access to areas in the Treasure Isle plant ordinarily closed to the general public. The corporation and its officers and employees were fully aware of the government's presence and its purpose for being there. "Anyone tampering with the sample boxes under such conditions could not justifiably believe that their activities would escape the scrutiny of those charged with insuring that such activities did not occur." United States v. Hartley, 486 F.Supp. 1348, 1355 (M.D.Fla.1980).
The Posse Comitatus Act claims cause us even less concern. In ruling on the defendants' motion, the District Court held that no violation of the Act had occurred since the military inspectors had merely exercised their responsibilities pursuant to the contract between the government and Treasure Isle in order to assure the quality of the shrimp purchased.
The Blowfish — The Crustacean Confrontation Problem
Appellants raise a due process issue based on their alleged inability to test all the shrimp subject to the charge of nonconformity covered in the indictment. They assert a denial of fundamental fairness due to (1) the government's consumption of breaded shrimp subsequent to suspicion of its nonconformity; (2) the government's improper handling of the production lots F6968 and F7008 precluding the defendants from independently testing it; (3) the government's introduction of photographs of nonconforming samples; and, (4) the government's credibility attack on government employees who found the shrimp to conform to the military specifications. These points were raised in the appellants' motions to dismiss, to suppress and in limine. The District Court held an evidentiary hearing, reviewed supporting memoranda, and considered the relevant legal standards. The court concluded that the defendants had failed to establish an improper governmental motive for the intentional
The indictment covered shrimp sales for an extended period of time. In 1976, the Defense Investigative Service initiated the first investigation centered on alleged improprieties occurring within the inspection processes. The government terminated this investigation in December, 1976. A new investigation arose in the Spring of 1977, this time it focused on the alleged bribery of military inspectors. It was not until Inspector Klopp became suspicious in December, 1977, that a full-fledged investigation of the inspection system was undertaken. It was at this time two production lots (F6968 and F7008) became the central target for determining whether deception was being employed to supply the government with nonconforming shrimp.
The two production lots were traced to their intended destinations and held for subsequent testing. In the meantime, other shipments of shrimp continued to satisfy the appetites of military personnel. The two production lots retained, including boxes possessing the special markings made by Inspector Klopp, were tested on three separate occasions by military inspectors. These inspectors provided critical prosecution testimony revealing the nonconformity of shrimp in the two production lots.
Treasure Isle learned of the ongoing criminal investigation in May, 1979. At this time, the defendants contacted the government to obtain information on "the nature and extent" of the investigation. The government declined to divulge any information beyond the fact that the investigation was criminal in nature. Defendant Hartley subsequently requested the government to secure and preserve recently produced shrimp. The government advised him that most of the shrimp had been consumed in the ordinary course of use, but extended the opportunity to inspect the two production lots central to its investigation prior to the return of the indictment. Hartley travelled to Norfolk, Va., where he inspected and tested the shrimp. Dissatisfied with the testing procedures mandated by the government prosecutor, he did not take advantage of the additional opportunity to test shrimp from the samples retained in San Antonio.
Appellants contend that the government's consumption of the shrimp and its careless handling of the remaining samples, while exhibiting pictures of samples they found nonconforming, placed them on the "horns of a dilemma," without the ability to properly defend against the allegations presented. In addition, they argue the government further prohibited them from defending their position by attacking the credibility of government employees called as defense witnesses, who had allegedly tested the sample shrimp and obtained favorable results.
In United States v. Herndon, 536 F.2d 1027 (5th Cir.1976), the Fifth Circuit discussed due process as it relates to evidence which the government has lost or destroyed preventing the defendant from independently examining it. The court found that fundamental fairness entitles a defendant "to access to relevant and material evidence which is necessary for him to prepare his defense." Id. at 1029. "Whether a defendant has been deprived of this right of due
In applying these factors, the Fifth Circuit has developed a "bad faith" test.
In applying this standard to the consumption claim, the District Court found that "[w]hile the consumption of the shrimp was `intentional', [sic] there is no evidence that there was an improper governmental motive in this case .... [O]nce that shrimp was purchased it was not unreasonable for it to be consumed." Record, vol. CIII, at 1869. We agree. Assuming arguendo the untestable condition of the shrimp, we also agree with the District Court that appellants "have failed to sufficiently establish that there was intentional or even negligent conduct on the part of the Government agents which has caused the shrimp to be untestable for pertinent characteristics."
The admission of photographs of the nonconforming shrimp is also controlled by a demonstration of bad faith on the part of the government accompanied by resulting prejudice. United States v. Loud Hawk, 628 F.2d 1139 (9th Cir.1979), cert. denied, 445 U.S. 917, 100 S.Ct. 1279, 63 L.Ed.2d 602 (1980). As we have already noted, we find no evidence of bad faith. Further, the overwhelming volume of testimony concerning the nonconformity of the shrimp renders the supplement of photographs insufficient to establish any true prejudice to the defendants.
We perceive no error in the cross examination of government employees who found the shrimp to conform to the military specifications. The very purpose of cross examination is to allow opposing counsel to confront adverse testimony from witnesses. Nor do we find the prosecutor's comments regarding their qualifications as inspectors beyond the scope of permissible comment.
Once again the appellants have failed to convince us of an impropriety establishing cause for reversal.
The Swordfish — Exclusion of Test Results
One of the evidentiary issues raised by the appellants concerns the District Court's decision to exclude test results favorable to the appellants. What at first glance appears to be a harsh ruling approaching the level of error, upon further examination is exposed as an attempt by the defendants to wield two swords. This we cannot allow. We find the trial court's ruling proper and well within the discretion afforded it in such circumstances.
In February, 1978, the government changed its inspection procedures. The military inspectors were replaced with civilian employees working for the United States Department of Commerce. Along with the change in personnel, came a change in the inspection procedures and the specifications. The new inspectors evaluated the shrimp under similar criteria for many of the same defects outlined in the military specifications; such as, veins, black spots, shells, and breading percentages. However, the standards and the means for determining conformance varied from those previously employed.
The appellants argue that in case of fraud the court should be lenient in admitting evidence of collateral transactions which tend to negate the deceptive schemes with which they are charged. While this may be true, the appellants' argument suffers from a fatal flaw — they entered an objection which was never withdrawn. They cannot use one sword to slice into the prosecutor's proffer by convincing the trial court of the confusing nature of the evidence and subsequently switch blades to proffer evidence afflicted with the same defect. This fish has but one sword and its blade was dulled by defense counsel's prior objection.
"The trial court is afforded broad discretion in passing on the admissibility of evidence, and its determination will not be disturbed absent a clear showing of abuse." United States v. Dothard, 666 F.2d 498, 501 (11th Cir.1982). The court ruled in defendant's favor and excluded proffered evidence supporting the government's case. Its subsequent decision to rule consistently upon encountering an identical objection by the government is not an abuse of that discretion.
The Snook — Cross Examination
Inspector Davis provided extensive testimony during the government's case and has been at the forefront of many of the issues raised by the appellants. This time the appellants attack the District Court's decision to sustain Davis's assertion of his fifth amendment privilege during cross examination. The appellants contend his refusal to
"It is an inveterate principle that a defendant who takes the stand waives his fifth amendment privilege against self-incrimination at least to the extent of cross examination relevant to issues raised by his testimony." United States v. Beechum, 582 F.2d 898, 907 (5th Cir.1978) (en banc), cert. denied, 440 U.S. 920, 99 S.Ct. 1244, 59 L.Ed.2d 472 (1979) (citing Brown v. United States, 356 U.S. 148, 78 S.Ct. 622, 2 L.Ed.2d 589 (1958)). However, the fifth amendment's protection is not entirely lost when the testimony sought to be elicited would simultaneously incriminate the witness. Such is the case before us.
Prior to cross examination of Davis, defense counsel requested receipt of the tax forms and worksheets which Davis had brought pursuant to a subpoena duces tecum. A bench conference was held to discuss the admissibility of the documents and to determine whether the prosecution expected Davis to invoke his fifth amendment privilege. The prosecutor told the court that he did not anticipate an assertion of the privilege because, to his knowledge, Davis intended to testify that he considered the receipt of money and shrimp from the defendants to be gifts which did not require his reporting them as income on his tax returns. Defense counsel intended to dispute the existence of these gratuities by showing that Davis had failed to report them as income.
The District Court ordered Davis to give his tax returns to defense counsel for purposes of cross examination, but denied them access to Davis's worksheets. The court further ruled that Davis could invoke his fifth amendment privilege concerning whether he had included the alleged gratuities on his tax returns. Davis testified at great length about his receipt of shrimp and money from the appellants during his term of duty at Treasure Isle. During cross examination he admitted filing tax returns for 1974, 1975, and 1976, but invoked his fifth amendment privilege when asked:
Defense counsel asked the same question with respect to the years 1975 and 1976. Each time the defendant asserted his fifth amendment privilege; each time defense counsel asked the court to compel a response; and each time the court sustained Davis's right against self-incrimination.
"The ultimate inquiry is whether the defendant has been deprived of his right to test the truth of the direct testimony." Fountain v. United States, 384 F.2d 624, 628 (5th Cir.1967), cert. denied, 390 U.S. 1005, 88 S.Ct. 1246, 20 L.Ed.2d 105 (1968). Appellants argue that their inability to elicit these answers deprived them of the opportunity to rebut Davis's direct testimony concerning his receipt of gratuities. In view of the admission of the tax returns themselves and defense counsel's closing argument,
The Snapper — Prosecutorial Comment
The fifth amendment extends to a defendant the right to remain silent. "Concomitant with that right is the prohibition of prosecutorial comment on its exercise." McGahee v. Massey, 667 F.2d 1357, 1362 (11th Cir.1982) (citing Griffin v. California, 380 U.S. 609, 85 S.Ct. 1229, 14 L.Ed.2d 106 (1965)). The appellants claim the prosecutor impermissibly commented on Dell's silence by making the following statement during closing argument:
Record, vol. LXXI, at 7380.
The test for determining if a prosecutor has impermissibly commented on a defendant's silence is whether the prosecutor manifestly intended to comment upon the defendant's failure to testify or if the comment was "of such a character that the jury would naturally and necessarily take it to be a comment" on the defendant's failure to testify. Samuels v. United States, 398 F.2d 964, 968 (5th Cir.1968), cert. denied, 393 U.S. 1021, 89 S.Ct. 630, 21 L.Ed.2d 566 (1969), quoted in United States v. Harbin, 601 F.2d 773, 777 (5th Cir.), cert. denied, 444 U.S. 954, 100 S.Ct. 433, 62 L.Ed.2d 327 (1979). See also United States v. DeSimone, 660 F.2d 532 (5th Cir.1981); and Williams v. Wainwright, 673 F.2d 1182 (11th Cir.1982).
The comment by the prosecutor in this case manifests no intention to comment on Dell's silence nor is it of such a character that the jury would take it as a comment on Dell's exercise of his fifth amendment right. The snapper has broken appellants' line of reasoning on this issue.
The Frivolous Flounder — Insufficient Evidence (Counts 2-32)
The indictment charged the appellants with violations of the mail fraud statute
Appellants have proposed two theories upon which we are requested to find the evidence insufficient to support their convictions on these counts. Segregating counts nineteen through twenty-one (checks related to lots F6968 and F7008) from the others, the appellants argue that because the government had an awareness of possible fraudulent activity at the time these three checks were written, it could not have been defrauded. Appellants suggest that it is essential for a conviction under 18 U.S.C. § 2314 (1976) that the government prove it was deprived of the checks by fraud, that suspicion of fraudulent activity equates to knowledge, which in turn negates the existence of fraud. "Indeed, proof that the intended victim was actually defrauded is not required to sustain a mail fraud conviction." United States v. Goss, 650 F.2d 1336, 1343 (5th Cir.1981).
It is true the government, suspicious of the activities occurring at Treasure Isle, had begun its investigation into the fraudulent activity prior to the issuance of these three checks, but this does not establish "legal" knowledge of the fraud. "There is a wide disparity between `suspicion' and `knowledge'." Nowlin v. United States, 328 F.2d 262, 264 (10th Cir.1964) (citing United States v. Sheridan, 329 U.S. 379, 67 S.Ct. 332, 91 L.Ed. 359 (1946)).
In evaluating the sufficiency of the evidence we are, of course, required to view the evidence in the light most favorable to the government. United States v. Glasser, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942). Under the circumstances of this case, we are unwilling to find fault with the government's tactics for flushing out the various facets of the elaborate scheme to defraud the United States prior to altering the status quo by withholding payments to Treasure Isle. Nor are we willing to require less than a practical, meaningful knowledge of the scope of the illegal activity before an allegation of fraud loses its vitality.
Counts five through fifteen and twenty-two through thirty-two fall under a different attack. The appellants submit the government failed to establish that each of the eleven contracts connected to the invoices and checks listed in the indictment were part of the scheme to defraud. Absent an individual nexus with each contract, they argue the evidence "was insufficient to prove the specific allegations of fraud."
In order to satisfy appellant's conception of sufficiency, they argue it was necessary for the government to prove the shrimp in each of the eleven contracts was nonconforming, and that the evidence showed the defects (shells, veins, and black spots) substantial enough to render the shrimp nonconforming. According to appellants, the government failed to meet its burden. To support their position, they set forth testimony which they contend must have placed reasonable doubt in the minds of the jurors.
A conviction for mail fraud (counts five through eighteen) requires proof of: (1) the defendants' participation in a scheme to defraud; (2) use of the mails to implement the scheme; and (3) that a person connected with the scheme used or "caused" the use of the mails. United States v. Rodgers, 624 F.2d 1303 (5th Cir.1980), cert. denied, 450 U.S. 917, 101 S.Ct. 1360, 67 L.Ed.2d 342 (1981); United States v. Bethea, 672 F.2d 407 (5th Cir.1982); Pereira v. United States, 347 U.S. 1, 74 S.Ct. 358, 98 L.Ed. 435 (1954). Under these counts, the government presented evidence from which the jury found the defendants guilty of the offenses beyond a reasonable doubt. Evidence showed several means employed by the defendants to include nonconforming shrimp in orders for the military. The inspectors testified that they had received gratuities from the defendants. Inspector Davis recounted to the jury his altering of the inspection reports to reflect the shrimp's conformance, when, in fact, he had previously rejected the shrimp as nonconforming. Inspector Klopp testified about his discovery of the switching scheme. And finally, the test results of the target production lots demonstrated the nonconforming quality of the shrimp produced by the defendants. We find this evidence sufficient to support the jury's verdict on all elements of the offenses charged.
The appellants suggest the facts and evidence in this case mirror those of United States v. Herberman, 583 F.2d 222 (5th Cir.1978). Cf. United States v. Zicree,
A conviction under 18 U.S.C. § 2314 requires "(1) knowledge that certain property has been stolen or obtained by fraud, and (2) transporting it, or causing it to be transported, in interstate commerce." Pereira v. United States, 347 U.S. 1, 9, 74 S.Ct. 358, 363, 98 L.Ed. 435 (1953). (emphasis added). Counts nineteen through thirty-two focused on the checks issued in payment of the eleven contracts and lots F6968 and F7008. We have no difficulty in finding the evidence sufficient to sustain the convictions on these counts. Once the fraud had been established, the government need only have supplied evidence to prove the defendant's knowledge of the fraud and the actual transportation of the checks in interstate commerce. The evidence clearly supported the jury's verdict on these counts. The appellant's contention on this issue is without merit.
An Assortment — RICO (Count 33)
In count thirty-three, the government charged the defendants with a violation of 18 U.S.C. § 1962(c), a subpart of the Racketeering Influenced and Corrupt Organization Act [RICO].
We have exhausted the plethora of case law on RICO and the numerous interpretations of its statutory language, but find no express prohibition of Treasure Isle's dual role in the present case. Thus, for the reasons articulated below we hold that a corporation can simultaneously be named as a defendant and satisfy the "enterprise" requirement under RICO. We further find sufficient evidence to establish that its affairs were conducted "through" a pattern
(1) The Shark — "The Enterprise Element"
The Racketeering Influenced and Corrupt Organizations Act was passed as part of the Organized Crime Control Act and has been labeled as "a carefully crafted piece of legislation." Ianelli v. United States, 420 U.S. 770, 789, 95 S.Ct. 1284, 1295, 43 L.Ed.2d 616 (1975), quoted in United States v. Lee Stoller Enterprises, Inc., 652 F.2d 1313, 1316 (7th Cir.), cert. denied, 454 U.S. 1082, 102 S.Ct. 636, 70 L.Ed.2d 615 (1981). Its primary purpose was "to eradicate organized crime and corruption." Id. at 1317. While government prosecutors may not initially have made active use of the statute, it has subsequently become a formidable weapon in the government's arsenal to wage war against crime. See United States v. Anderson, 626 F.2d 1358, 1364 n.8 (8th Cir.1980), cert. denied, 450 U.S. 912, 101 S.Ct. 1351, 67 L.Ed.2d 336 (1981) (citing Atkinson, "Racketeer Influenced and Corrupt Organizations," 18 U.S.C. § 1961-68: Broadest of the Federal Criminal Statutes, 69 J.Crim.L. & Criminology 1, 3 n.21 (1978). With the government's increased use of RICO has come countless variations of attacks on its constitutionality and interpretation of its language. Foremost among the questions of interpretation is the scope to be given the term "enterprise."
Under 18 U.S.C. § 1962(c) the government must prove: "(1) the existence of an enterprise which affects interstate or foreign commerce; (2) that the defendant `associated with' the enterprise; (3) that the defendant participated in the conduct of the enterprise's affairs; and (4) that the participation was through a pattern of racketeering activity...." United States v. Phillips, 664 F.2d 971, 1011 (5th Cir.1981).
Recently, in United States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981), the United States Supreme Court reemphasized the separate and distinct identity of two RICO elements, the "enterprise" and the "pattern of racketeering activity." The Court read the statute broadly to include wholly illegitimate "enterprises" within its purview. If it were to do otherwise, "[w]hole areas of organized criminal activity would be placed beyond the substantive reach of the enactment." Id. at 589, 101 S.Ct. at 2532. Congress, itself, directed a liberal construction of the act "to effectuate its remedial purposes." Organized Crime Control Act of 1970, Pub.L.No. 91-452, Title IX, § 904, 84 Stat. 941 (1970).
Requests for a more limited interpretation have been made by defendants in attempts to find certain associations or entities outside the purview of the statute. Prior to Turkette, the Circuit Courts of Appeals were flooded with defendants who argued that illegitimate associations did not satisfy the "enterprise" requirement. See, e.g., United States v. Thevis, 665 F.2d 616 (5th Cir.1981); United States v. Elliott, 571 F.2d 880 (5th Cir.), cert. denied, 439 U.S. 953, 99 S.Ct. 349, 58 L.Ed.2d 344 (1978); United States v. Errico, 635 F.2d 152 (2d Cir.1980); United States v. Provenzano, 620 F.2d 985 (3d Cir.), cert. denied, 449 U.S. 899, 101 S.Ct. 267, 66 L.Ed.2d 129 (1980); United States v. Whitehead, 618 F.2d 523 (4th Cir.1980); United States v. Sutton, 642 F.2d 1001 (6th Cir.1980) (en banc), cert. denied, 453 U.S. 912, 101 S.Ct. 3143, 69 L.Ed.2d 995 (1981); United States v. Aleman, 609 F.2d 298 (7th Cir.1979), cert. denied, 445 U.S. 946, 100 S.Ct. 1345, 63 L.Ed.2d 780 (1980); United States v. Zemeck, 634 F.2d 1159 (9th Cir.1980), cert. denied, 450 U.S. 916, 101 S.Ct. 1359, 67 L.Ed.2d 341 (1981); United States v. Swiderski, 593 F.2d 1246 (D.C.Cir.1978), cert. denied, 441 U.S. 933, 99 S.Ct. 2055, 60 L.Ed.2d 662 (1979) (dictum).
Still, other courts have wrestled with allegations of failure to submit proof of an enterprise distinct from the evidence submitted as proof of a pattern of racketeering. United States v. Bledsoe, 674 F.2d 647 (8th Cir.1982); United States v. DeRosa, 670 F.2d 889 (9th Cir.1982); United States v. Bagnariol, 665 F.2d 877 (9th Cir.1981); United States v. Lee Stoller Enterprises, Inc., 652 F.2d 1313 (7th Cir.), cert. denied, 454 U.S. 1082, 102 S.Ct. 636, 70 L.Ed.2d 615 (1981).
None of these cases, nor any others uncovered in our search, have squarely dealt with the issue now before us. We are presented with a situation in which the entity clearly satisfies the "enterprise" requirement, and may clearly be a defendant. The question is whether the same entity can be both simultaneously.
Section 1961(4) of Title 48 defines an "enterprise" as including "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." 18 U.S.C. § 1961(4) (1976). Not even the appellants contest the inclusion of Treasure Isle within the literal reading of the statute. This relieves us of the arduous task of statutory interpretation, but does not resolve the issue.
Section 1962(c) prohibits "any person employed by or associated with any enterprise" from committing the proscribed conduct. 18 U.S.C. § 1962(c) (1976). "`[P]erson' includes any individual or entity capable of holding a legal or beneficial interest in property." 18 U.S.C. § 1961(3) (1976). Clearly Treasure Isle fits this definition.
Considering the broad reading given the term "enterprise" in Turkette, the Court's willingness to expand the scope of RICO's application, and absent any prohibition of Treasure Isle assuming a dual role, we answer our inquiry in the affirmative. A corporation may be simultaneously both a defendant and the enterprise under RICO.
Appellants suggest that if we allow the conviction to stand, we have "effectively eliminated" the enterprise element from section 1962(c). This simply is not true. "The enterprise is an entity, for present purposes a group of persons associated together for a common purpose of engaging in a course of conduct.... [It] is proved by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit." 452 U.S. at 583, 101 S.Ct. at 2528. The Fourth Circuit Court of Appeals suggested a form of proof for satisfaction of the enterprise element if a corporation was named as the enterprise. "Presumably ... it would involve proof simply of the `legal' existence of the corporation.... Neither the actual nor ostensible purpose of such an enterprise would seem directly relevant to proof of a RICO violation...." United States v. Griffin, 660 F.2d 996, 999 (4th Cir.1981), cert. denied, ___ U.S. ___, 102 S.Ct. 1029, 71 L.Ed.2d 313 (1982) (dictum). Thus, it would appear that evidence of Treasure Isle's corporate existence would supply the requisite proof of the enterprise element, a separate and distinct burden in satisfaction of the Supreme Court's mandate in Turkette.
The government also suggests, and the defendants concede, this problem would never have surfaced had it charged the defendants collectively as an "association in fact" and charged Treasure Isle singly as the enterprise. This is reminiscent of the old adage, "a rose by any other name." "There is no distinction, for `enterprise' purposes, between a duly formed corporation that elects officers and holds annual meetings and an amoebalike infra-structure that controls a secret criminal network." United States v. Elliott, 571 F.2d at 898. In fact, the former Fifth Circuit in discussing the distinction between a "legal entity" or a "group of individuals associated in fact although not a legal entity," has stated "there is no logical or statutory reason to force the government to choose between alternative enterprise theories ... as long as the indictment is otherwise sufficient." United States v. Stratton, 649 F.2d 1066, 1075 (5th Cir.1981).
A third plausible rationale can be derived from basic corporations law. Although a corporation is a distinct legal entity, "[i]n rare, special circumstances, ... courts will `pierce the corporate veil'...." FMC Finance Corp. v. Murphree, 632 F.2d 413, 421 (5th Cir.1980). We do not intend to analyze this issue under corporate doctrines, but by analogy Treasure Isle, Inc., can be dissected and viewed in a different light for each of the roles it assumes in this case. As a defendant, it can maintain its separate legal status as an ongoing business venture. By piercing through this sterile exterior, however, it can be revealed as an association of employees, officers, and agents working as a unit to effectuate a common purpose — to defraud the government. Viewed in this manner, it takes the form of a "group of individuals associated in fact," or in the words of the Court, "a group of persons associated together for a common purpose of engaging in a course of conduct." 452 U.S. at 583, 101 S.Ct. at 2528. Evidence of its ongoing nature, and "that the various associates function as a continuing unit" satisfies the enterprise element of RICO. Id. Treasure Isle's problem lies in the fact that its corporate structure admits the characteristics essential to the formation of an association in fact — a fate which renders its argument concerning the elimination of the enterprise element nugatory.
(2) The Barracuda — "Through a Pattern of Racketeering"
The appellants' second attack upon the validity of the RICO conviction concerns the government's proof that the corporation conducted its affairs "through" a pattern of "racketeering activity." They assert the government improperly charged the defendants with violation of RICO when the evidence merely proved "a series of violations of the False Claims Act...."
As can be seen by a reading of our analysis of the appellants' sufficiency of the evidence claims regarding the predicate acts of mail fraud and violations of the National Stolen Property Act,
"Whether to prosecute and what charge to file or bring before a grand jury are decisions that generally rest in the prosecutor's discretion." United States v. Batchelder, 442 U.S. 114, 124, 99 S.Ct. 2198, 2204, 60 L.Ed.2d 755 (1978). Absent an assertion of discrimination, and in consideration of the sufficiency of the evidence, we fail to perceive any constitutional violation in the government's prosecution of these defendants under RICO.
The appellants additionally assert that section 1962(c)'s requirement that an enterprise conduct its affairs "through" a pattern of racketeering activity requires proof that the enterprise benefitted economically from the illegal activity. They rely on United States v. Webster, 639 F.2d 174 (4th Cir.), cert. denied, 454 U.S. 857, 102 S.Ct. 307, 70 L.Ed.2d 152 (1981) in support. However, upon rehearing, the Fourth Circuit retracted the essential language upon which the appellants base their argument.
United States v. Webster, 669 F.2d 185, at 186 (4th Cir.1982).
The former Fifth Circuit encountered an identical attempt by defendants to rewrite the RICO statute to include a requirement of benefit or advancement in United States v. Welch, 656 F.2d 1039 (5th Cir.1981), cert. denied, ___ U.S. ___, 102 S.Ct. 1768, 72 L.Ed.2d 173 (1982). The Fourth Circuit's original panel opinion in Webster again provided the source for the argument. The Fifth Circuit found "the reasoning of the Fourth Circuit, and its interpretation of the word `through,' to be unduly restrictive." Id. at 1060-61. Citing an earlier Fifth Circuit opinion, United States v. Martino, 648 F.2d 367 (5th Cir.1981), the court held "that by the use of the word `through,' Congress intended only to require a sufficient nexus between the racketeering activities and the affairs of the enterprise." 656 F.2d at 1062 (emphasis supplied).
Under this standard and the facts presented, we have no difficulty in finding a sufficient nexus between the deceptive activities employed by the defendants in the inspection of the breaded shrimp and the common everyday affairs of the enterprise — the production of breaded shrimp. By establishing this nexus, the government met its burden of proving conduct "through" a pattern of racketeering activities.
(3) The Grouper — "Double Jeopardy & Cumulative Sentencing"
The District Court imposed fines totalling $167,000 on Treasure Isle for its conviction on the first thirty-two counts. In addition, a special condition of performing community service was imposed under count thirty-three, the RICO violation. Treasure Isle now complains that 18 U.S.C. § 1963 limits fines for violations of § 1962 to $25,000 and that the additional amount imposed for conviction of the predicate acts violates the double jeopardy clause of the United States Constitution. We find its position untenable.
The United States Supreme Court recently articulated the analysis to be applied to statutory schemes in order to evaluate them for double jeopardy purposes. Whalen v. United States, 445 U.S. 684, 100 S.Ct. 1432, 63 L.Ed.2d 715 (1980). First, the courts should apply the Blockburger test to determine whether "the same act or transaction constitutes a violation of two distinct statutory provisions...." Blockburger v. United States, 284 U.S. 299, 304, 52 S.Ct. 180, 182, 76 L.Ed. 306 (1932). "[T]he test to be applied to determine whether there are two offenses or only one is whether each provision requires proof of a fact which the other does not." Id. (emphasis supplied). If it is determined that the two statutory offenses are distinctly different, then the sentences may run consecutively. However, "where the offenses are the same under that test, cumulative sentences are not permitted, unless elsewhere specially authorized by Congress." 445 U.S. at 693, 100 S.Ct. at 1439. "The dispositive question, therefore, is whether Congress did so provide." Id. at 1436.
At first blush it would appear that the predicate offenses and the RICO violation run afoul of the Blockburger test.
Organized Crime Control Act of 1970, Pub.L.No. 91-452, 84 Stat. 923 (1970) (emphasis supplied). Additional support may be found in section 904(b), which states that "[n]othing in this title shall supersede any provision of Federal, State, or other law imposing criminal penalties or affording civil remedies in addition to those provided for in this title." Pub.L. 91-95, § 904(b). Indeed, the definition of racketeering activity enumerates in some detail the specific crimes which may be used to establish this element for purposes of a RICO conviction. Surely, Congress could not have meant to eliminate the penalties for these crimes by incorporating them as evidence of a more organized method of committing crime. In our opinion, the Congressional intent is clear.
The District Court properly imposed cumulative sentencing for RICO and the underlying predicate offenses.
Returning to Port
Appellants' fishing expedition has come to an end. The defendants' hooks were baited with too much bread and not enough shrimp. The big fish (government) wasn't fooled. All convictions and sentences are AFFIRMED.
15 U.S.C. § 1 (1976).
15 U.S.C. § 2 (1976).
Record, Vol. LXXVI, at 7884-85.
18 U.S.C. § 1385 (1976). Posse comitatus has been defined as: "The power or force of the county. The entire population of a county above the age of fifteen, which a sheriff may summon to his assistance in certain cases, as to aid him in keeping the peace, in pursuing and arresting felons, etc." Black's Law Dictionary 1046 (5th ed. 1979), quoted in United States v. Hartley, 486 F.Supp. 1348, 1356 n.10 (M.D.Fla.1980).
The District Court stated:
Record, vol. L, 5356.
Record, vol. LXXIII, at 7628-29.
18 U.S.C. § 1341 (1976).
18 U.S.C. § 2314 (1976).
Id. at 1131 (citations omitted).
Id. at 288.