decided: March 20, 1990; As Corrected March 23, 1990.
On Appeal from the United States District Court for the District of New Jersey, D.N.J. Criminal No. 86-301.
Greenberg, Scirica, and Seitz, Circuit Judges.
GREENBERG, Circuit Judge.
I. Introduction Typescript at 3
II. The Facts Typescript at 5
1. The Dwek Loan Typescript at 6
2. The MCA Deal Typescript at 9
1. Jurisdiction Typescript at 14
Verdict on Count 1 Typescript at 19
Evidence on Count 2 Typescript at 28
C. The RICO Conspiracy Typescript at 32
Extortion Typescript at 36
Enterprise Typescript at 37
Loansharking Terms Typescript at 43
Protection Program Typescript at 47
New Counsel Typescript at 50
1. Background Typescript at 54
Surveillance Typescript at 56
IV. Conclusion Typescript at 63
Gaetano Vastola and Elias Saka appeal to this court from final judgments of conviction and sentence entered by the United States District Court for the District of New Jersey on May 3, 1989, following a jury trial in which they were found guilty of two substantive RICO offenses under 18 U.S.C. § 1962(c), a RICO conspiracy offense under 18 U.S.C. § 1962(d), and a conspiracy to use extortionate means to collect an extension of credit, in violation of 18 U.S.C. § 894. In addition, Saka was found guilty of various other extortion offenses and of mail and wire bankruptcy and insurance fraud. The United States, pursuant to 18 U.S.C. § 3731, appeals from an order of the district court, entered on April 28, 1989, granting Vastola's post-conviction motion for a judgment of acquittal on one of the two substantive RICO counts.
Appellants originally were indicted along with nineteen other defendants in a 114 count indictment charging a variety of crimes. By opinion and order dated September 1, 1987, the district court severed the case for separate trials. United States v. Vastola, 670 F. Supp. 1244, 1261 (D.N.J. 1987). Vastola and Saka ultimately were tried on a twenty-six count redacted superseding indictment, filed on February 23, 1989, which named Saka in twenty-five counts and Vastola in fourteen. Both appellants were sentenced to total prison terms of twenty years and, in addition, Vastola was ordered to pay fines totalling $70,000 and Saka was ordered to pay fines totalling $185,000.
On appeal, Vastola contests the sufficiency of the evidence to support his convictions for the extortionate collection conspiracy charged in Counts 4 and 9 of the superseding indictment, and the substantive RICO offense charged in Count 2. He also asserts various grounds for reversal of his RICO conspiracy conviction under Count 3, including an alleged defect in the jury instructions and insufficiency of the evidence of his involvement in the predicate acts underlying the conspiracy. Finally, he raises various challenges to the conduct of the trial itself, arguing, in part, that he suffered irreparable prejudice because of the government's denomination of the criminal enterprise as the Vastola Organization, and because of the district court's admission of expert testimony regarding the meaning of loansharking terms used by appellants.
Saka argues that the district court erred as a matter of law when it denied his pretrial motion to suppress tape recordings from the government's electronic surveillance of appellants' communications, on the ground that the government violated the Wiretap Act, 18 U.S.C. § 2510 et seq., when it relinquished custody of the tapes to a private party for enhancement. He also maintains that the district court abused its discretion when it denied his pretrial motion for appointment of new counsel and when it refused to suppress certain evidence seized pursuant to overbroad search warrants.
Finally, the government, in its appeal of the district court's grant of judgment of acquittal for Vastola on Count 1 of the superseding indictment, has advanced the legal question of whether the RICO conviction may stand, notwithstanding Vastola's acquittal of separately charged offenses making up three of the four predicate racketeering acts charged in the indictment.
We have considered the arguments raised by Vastola and Saka to the extent that they relate to both appeals, as Vastola and Saka have adopted each others' arguments pursuant to Fed. R. App. P. 28(i). Based on our review of the record, we agree with Vastola that there was insufficient evidence to support his RICO conviction under Count 2, and will reverse the district court's order entering judgment of conviction and sentence on that count. We also have determined that the district court erred as a matter of law in granting Vastola's motion for judgment of acquittal on Count 1, and therefore will reverse the order challenged in the government's appeal and remand Vastola's case for entry of judgment of conviction on Count 1 and for resentencing. In all other respects, under the applicable standards of review, we see no basis to disturb the district court's order with respect to Vastola, and will affirm his convictions on Counts 3, 4, and 9 of the superseding indictment. We will affirm Saka's convictions on all counts.
The prosecution's theory, as reflected in its opening statement, was that Vastola headed a "secret criminal enterprise," the "Vastola Organization," which "encouraged, aided and profited from" the illegal activities of its members. Ranking members of the enterprise were alleged to include Saka, "who came up with most of the fraudulent schemes the organization profited from," and Vastola's cousin, Palmer ("Sonny") Brocco, who carried out Vastola's orders. The enterprise was headquartered at the Video Warehouse in Monmouth County, New Jersey.
The indictment attributed various crimes to the enterprise, including a conspiracy to use and use of extortionate means to collect an extension of credit to John LaMonte in connection with a record purchase from MCA Records, Inc., numerous usurious loans, "bust-out" schemes to defraud suppliers to businesses controlled by the enterprise, and insurance and bankruptcy frauds. We will set forth the circumstances of only the two of these crimes necessary to our discussion.
Dwek was an executive at Chams Clothing Company. He testified that when he left the company, he negotiated a financial settlement which ultimately yielded him $40,000 in return for his relinquishment of certain contract rights. When that money was not immediately forthcoming, he began to experience "financial difficulty." A friend of his, Ralph Setton, put him in contact with Saka.
Saka and Dwek met in February, 1985 to discuss Dwek's prospects for obtaining a loan. Saka told Dwek that he could deliver $10,000 in cash within a day which would be payable at an interest rate of $250 per week. They consummated the deal in a subsequent meeting, at which Sonny Brocco gave Dwek $10,000 in cash. The debt was evidenced by a promissory note which did not contain any interest rate terms.
Dwek testified that he regularly paid the interest on his loan at the Video Warehouse and would give the money to whoever was present, normally, Saka, Sonny Brocco or Nick Massano. However, he understood Saka to be the obligee. When Dwek's settlement from Cham Clothing was further delayed, he borrowed an additional $5,000 from Saka at an interest rate of $125 per week. Dwek further testified that he saw Vastola at the Video Warehouse about two or three times over a six month period and knew him to be Saka's landlord.
Around this time, Dwek also entered a partnership with Saka to market a perfume developed by a clothing company called Jou Jou. They agreed to become equal partners, with Saka supplying the financing and Dwek, the business expertise. Although Saka and Dwek did not go far in this venture because the "monetary funds" were unavailable, they did form a small corporation for the purpose of effectuating the Jou Jou deal and Saka attempted to flesh out the details of how the profits would be allocated.*fn1
In any event, Dwek soon fell behind on his interest payments. In a telephone conversation on May 7, 1985, Brocco did not mince words on the subject of Dwek's lateness:
I don't appreciate get'n fucked around by you! Ya know what I mean, you said 10:30. You know what time it is now? And you been jerk'n me off for two weeks. Now how do you want to handle this? Do you want me to come over there and strangle you, is that what you want?
Dwek understandably replied, "No Sonny." Id.
On April 22, 1985, Saka and Brocco assessed the status of Dwek's debt. Saka reminded Brocco that Brocco had given Dwek $10,000 and that Saka had later given him $5,000. They concluded that Dwek owed them $15,000 plus the 'Juice," and that, of the principal, Brocco was entitled to $2,500. According to the government, Saka then pointed out, "I never squared you with Tommy [Vastola]."*fn2
The subject of Dwek's debt also came up in a conversation among Vastola, Saka and Brocco on April 26, 1985. After discussing various other loans, Vastola asked Saka, "what happened with that guy that had the problem with that guy that, uh, remember we met him here?" Saka explained the difficulties Dwek was experiencing in reaching a settlement with Chams Clothing and Vastola, referring to Dwek's former partners at Chams asked if they had gotten "a piece." Brocco then informed Vastola that when Dwek reached a settlement, "they" were going to lay claim to at least part of it. Vastola responded, "Take a piece (UI) give up a little bit, if it wasn't on account of you people. He would have gotten nothing."*fn3 Brocco questioned whether they had a claim to Dwek's settlement and Saka asserted that "it doesn't hurt to ask. All's he can say is no." To this Vastola urged, "Tell him, he's gotta put somethin' in the side. After all you came here for backup, you had the backup if there had been a problem. . . . So now you settled."
Dwek settled with Cham Clothing in April, 1985 and paid the $10,000 loan off in one lump sum payment. He paid off the $5,000 loan in September, 1985.
In early 1984, MCA Records, a Los Angeles based corporation, agreed to sell several million "cut-out" records and tapes,*fn4 valued at approximately $1,750,000, to Salvatore Pisello, an individual connected with Consultants for World Records, Inc. The only document evidencing the transaction was a purchase order from Roulette Records, the guarantor of the sale price. Roulette Records was owned by Morris Levy who was identified in the indictment as Vastola's and Saka's co-conspirator. Although there was no written agreement between MCA and Pisello, MCA officials understood Pisello to be the buyer in the transaction.
Pisello and Levy approached Vastola to find a buyer for the records and Vastola recommended John LaMonte, who owned a record distribution company called Out of the Past, Ltd. LaMonte had served time in a federal penitentiary with Vastola's cousin, Palmer ("Sonny") Brocco, and apparently Brocco suggested LaMonte to Vastola because he owed LaMonte a favor.
Pisello accepted LaMonte as buyer and the deal was consummated in the summer of 1984, when MCA shipped the records, at Roulette's request, to Betaco Enterprises in Brentwood, California, a customer of Pisello, and to LaMonte's company, Out of the Past, Ltd., in Darby, Pennsylvania. In 1984, MCA received sporadic payments for the records shipped to Pennsylvania from Pisello's company, Consultants for World Records, Inc., but no payments were forthcoming from January 1985 on. At that time, the balance due was approximately $800,000. MCA then looked to Roulette Records as the guarantor and eventually asked Pisello for assistance in securing the return of the merchandise. Out of the Past sent back a substantial number of records in mid-1985, leaving an outstanding balance of approximately $350,000.
MCA's Chief Financial Officer, Daniel McGill, then repeatedly telephoned Morris Levy and his associate, Howard Fisher, demanding payment of the remainder of the debt. As a result of those conversations, MCA received two additional checks, a check for $125,000 dated October 9, 1985, and a check for $120,000 dated January 29, 1986. The remaining balance of $100,000 was never paid to MCA.
The deal unravelled because LaMonte had failed to pay for the merchandise he received from MCA. LaMonte was expected to pay for the merchandise itself plus $300,000 in profits, which was to be divided equally among Pisello, Levy and Vastola as partners in the transaction.*fn5 LaMonte paid about $30,000 in cash. The remainder of his payments were in notes, most of which bounced.
As Vastola's and Levy's frustration with LaMonte mounted, they, along with Saka and Brocco, began formulating plans to recover either the balance due them or the merchandise. At the same time, Levy, with recurring frequency, blamed Vastola for bringing LaMonte into the deal and exerted pressure on him to get LaMonte to pay.
On December 18, 1984, Vastola instructed his cousin Brocco to get hold of LaMonte because "every fuckin' body is screamin' over those fuckin' payments, the notes, and that. . . ." He added that Levy and his associates were holding Brocco responsible for LaMonte's conduct because he had assisted LaMonte in negotiating the deal and that "[they] [wanted] [Brocco] to sit in the fuckin' joint, [LaMonte's warehouse] there and don't make a record go in and out until this money's paid." Later that day, when Fisher called Video Warehouse, Saka assured him that he, Brocco, and Vastola intended to visit LaMonte, and that Vastola planned to "read [LaMonte] the riot act."
The following day, Vastola told Saka that he planned to install Brocco in LaMonte's business to ensure that no merchandise or money was removed before Levy was paid: "the money's got to be taken and sent to ...