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United States v. Ferriero

United States Court of Appeals, Third Circuit

August 4, 2017

UNITED STATES OF AMERICA
v.
JOSEPH A. FERRIERO, Appellant

          ARGUED: November 1, 2016

         On Appeal from the United States District Court for the District of New Jersey (D.C. Criminal No. 2-13-cr-00592-001) District Judge: Honorable Esther Salas

          Peter Goldberger, Esq. [ARGUED] Counsel for Appellant.

          Mark E. Coyne, Esq. Bruce P. Keller, Esq. [ARGUED] Counsel for Appellee.

          Before: HARDIMAN and SCIRICA, Circuit Judges, and ROSENTHAL, [*] District Judge.

          OPINION

          SCIRICA, CIRCUIT JUDGE.

         Joseph A. Ferriero appeals his judgments of conviction, forfeiture, and sentence based on violations of the Travel Act, 18 U.S.C. § 1952, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), id. § 1962(c), and the federal wire fraud statute, id. § 1343. We will affirm.[1]

         I.

         Joseph Ferriero served as chairman of the Bergen County Democratic Organization (BCDO) from 1998 until he resigned in January 2009. As party chair, Ferriero wielded significant power in the process of nominating Democrats in local elections and in the process of choosing which issues and candidates the party supported. In his role, he raised money for the Democratic Party, helped elect Democratic candidates to local office, and managed campaigns in important local elections. Significantly for this case, one aspect of party business was connecting and recommending vendors to Democrats elected or appointed to local office in Bergen County.

         Ferriero's convictions stem from payments he took from a particular vendor, John Carrino, in exchange for recommending to certain officials that their towns hire Carrino's firm. Carrino owned C3 Holdings, LLC (hereinafter, "C3")-short for Citizen Communications Center-a New Jersey corporation that provided emergency-notification systems for local governments.[2] Carrino also owned Braveside Capital, LLC, a New Jersey corporation he described as the "sales arm" of C3.

         Since Carrino sought municipal contracts for C3, Ferriero was uniquely situated to influence Democratic municipal officials by virtue of his position as their county party chair. The two struck an agreement. Ferriero would recommend C3 to local governments in exchange for a 25- to 33-percent commission on contracts for the towns that ultimately hired the company. They memorialized the agreement in a contract between Carrino's Braveside Capital and SJC Consulting, a new company Ferriero had incorporated under the laws of Nevada. The contract, executed April 22, 2008, describes the relationship as an "agreement . . . to provide governmental relations consulting services required in connection with marketing of a product known as C3 and any other related products or services."

         To that end, Ferriero had drawn up a list of target Bergen County municipalities with corresponding names of Democrats in local office, and over the course of about a year, he "pushed hard for C3." Relevant to his convictions, he recommended C3 to local officials for the boroughs of Dumont, Cliffside Park, and Wood-Ridge, and for Saddle Brook and Teaneck townships.

         Ferriero made these recommendations at BCDO-sponsored events, at local political fundraisers, at informal meetings, or simply over email. For example, Ferriero made inroads for C3 with Dumont's leadership at a 2007 lunch where he introduced Carrino to the borough's mayor, Matthew McHale. Ferriero recommended C3 to the mayor and followed up with an email asking, "How [are] we doing with C-3"? Mayor McHale ultimately brought C3 to the borough administrator, who in turn took the idea to the borough council. The borough council voted to license C3's software. Neither McHale, the borough administrator, nor the councilmembers knew Ferriero would make money as a result.

         In August 2007, Ferriero introduced Carrino to Teaneck councilman El-Natan Rudolph, whose name Ferriero had written next to Teaneck on the list of municipal sales targets. Rudolph put Carrino in touch with Teaneck's town manager, Helene Fall, who that very day emailed Carrino about C3's web services. In December, the Teaneck council unanimously voted for a resolution, introduced by Rudolph, authorizing the town to pay up to $24, 000 to hire C3 for the year 2008.

         In November 2007, Ferriero introduced Carrino to Saddle Brook Mayor Louis D'Arminio at a BCDO-sponsored gala. Ferriero recommended C3's products, and D'Arminio and Carrino exchanged business cards. The town council ultimately voted to contract with C3 without D'Arminio or the township council having been aware that Ferriero stood to benefit financially from the contract.

         Sometime in 2008, Ferriero called Cliffside Park's borough attorney Chris Diktas to vouch for C3 after Carrino pitched the service to town leaders. Councilwoman Dana Spoto testified that, before the borough council voted on the matter, Diktas advised her that Ferriero had vouched for C3 and that "Joe wanted it." The Cliffside Park council voted to contract with C3, resolving to authorize a $2, 000-per-month contract, though neither Diktas nor Councilwoman Spoto were aware Ferriero stood to gain financially from the contract.

         As Carrino's local contracts moved forward, Ferriero profited as well. Over the course of 2008, Carrino paid Ferriero's SJC Consulting at least $11, 875 with checks that included those four town names in the checks' memo lines. On a check dated May 16, 2008, the memo line read "Q1/Q2 SB / Q1 Dumont." A check dated July 27, 2008, had a memo line that read "Q1: Teaneck Q2: Teaneck, Dumont CP - Q2 (2m)." And the memo line of a check dated September 18, 2008, read "Q3: Saddlebrook & Dumont."

         Sometime that same year, Cliffside Park's mayor grew concerned about Ferriero's role in the town's contract with C3. He asked the borough's Chief Financial Officer, Frank Berardo, about the contract's details and directed Berardo to find out "who the owners of the company were." On July 9, 2008, Berardo called Carrino to inquire into the contract and "the owners of th[e] corporation." Carrino said he would respond by email, and roughly one hour later, emailed Berardo with a reply:

Frank,
Per our conversation this morning, please find attached copies of the State of New Jersey Business Certificate as well as C3's Standard Software as a Service Licensing Agreement.
Please call me if you have any questions. My cell is: [***.***.****]
By way of this email I am also cc'ing [Borough Attorney Chris] Diktas for his review.

         Attached to the email were copies of the contract and C3's certification of formation, which listed only Carrino under "Members/Managers." There was no reference to Joseph Ferriero. Cliffside Park paid Carrino for services in June and July with a $4, 000 check dated July 9.

         Not all of the localities on Ferriero's list ultimately hired C3. The Borough of Wood-Ridge declined to contract with C3, but the borough's mayor Paul Sarlo still felt pressured to do so. Mayor Sarlo broke the news of Wood-Ridge's decision to Ferriero and Carrino at a local political fundraiser. Ferriero and Carrino were upset and the ensuing conversation "got tense and . . . heated" until a Sarlo staffer intervened.

         Ferriero pushed Democratic officials from Bergen County towns to contract with C3, and four of the localities on his list eventually did so. He was paid thousands of dollars based on those four contracts in checks listing out which payments corresponded to which town. But none of the local Democratic officials to whom Ferriero recommended C3 were aware he stood to profit.

         II.

         A federal grand jury returned a five-count Indictment that charged Ferriero with violations of RICO, the Travel Act, and federal mail and wire fraud statutes. Count 1 charged Ferriero with violating RICO, 18 U.S.C. § 1962(c), alleging he conducted the Bergen County Democratic Organization through a pattern of racketeering activity. As proof of that pattern, the Indictment alleged seven predicate racketeering acts. Racketeering acts #1 and #2 were based on allegations of bribery, extortion, and honest services fraud unrelated to Ferriero's contract with C3.[3] Predicate racketeering acts #3 through #7 alleged the payments made in exchange for Ferriero's recommendations to local Democratic officials in favor of contracting with C3 violated New Jersey's bribery statute. That provision prohibits "accept[ing] or agree[ing] to accept . . . [a]ny benefit as consideration for a decision, opinion, recommendation, vote or exercise of discretion of a public servant, party official or voter on any public issue or in any public election." N.J. Stat. Ann. § 2C:27-2 (emphasis added).

         Count 2 charged Ferriero with conspiracy to commit mail fraud, 18 U.S.C. § 1341, wire fraud, id. § 1343, and violations of the Travel Act, id. § 1952. Count 3 charged a substantive Travel Act violation based on an underlying violation of New Jersey's bribery statute. Counts 4 and 5 charged violations of mail and wire fraud, respectively, alleging Carrino and Ferriero defrauded Dumont (Count 4) and Cliffside Park (Count 5). Count 5's underlying fraud allegation stemmed from the Carrino email to Cliffside Park that failed to disclose Ferriero's financial interest in the borough's contract with C3.

         Before trial, Ferriero moved to dismiss Count 1 (RICO) on the ground the Indictment failed to allege RICO's so-called "nexus" requirement, and moved to dismiss Counts 1-3, arguing New Jersey's bribery statute was unconstitutionally overbroad and vague. Both motions were denied.

         The jury found Ferriero guilty on Count 1 (RICO), Count 3 (Travel Act), and Count 5 (wire fraud). As noted, the jury determined that, for Count 1's seven alleged racketeering acts, the government did not prove Ferriero committed racketeering acts #1 and #2, the alleged crimes unrelated to the C3 scheme. See supra, note 3. But the jury concluded Ferriero committed racketeering acts #3 through #7-that is, the jury concluded Ferriero committed bribery by agreeing to recommend C3's services in exchange for a share of any resulting contracts' revenues. The jury acquitted Ferriero of Count 2 (conspiracy) and Count 4 (mail fraud).

         Ferriero had moved for judgment of acquittal on all counts following the close of the government's case at trial, and he renewed that motion for Counts 1, 3, and 5, which the court denied. Ferriero was sentenced to three concurrent 35-month prison terms and ordered to forfeit the money equivalent of the proceeds he derived from the racketeering and wire fraud. Ferriero appealed.

         III.

         A.

         Ferriero mounts three challenges on the sufficiency of the evidence supporting his convictions for violating RICO and the Travel Act.[4]

         1.

         Ferriero asserts the evidence was insufficient to prove New Jersey bribery as a predicate act for his Travel Act and RICO convictions.

         The Travel Act prohibits using interstate travel, mail, or facilities with intent to carry out "any unlawful activity, " 18 U.S.C. § 1952(a)(3), or with intent to "distribute the proceeds of any unlawful activity, " id. § 1952(a)(1). The definition of "unlawful activity, " includes "bribery . . . in violation of the laws of the State in which committed." Id. § 1952(b)(2). RICO proscribes participating in the conduct of an interstate enterprise's affairs "through a pattern of racketeering activity, " id. § 1962(c), a term defined to include acts involving "bribery . . . which is chargeable under State law and punishable by imprisonment for more than one year, " id. § 1961(1)(A).

         Ferriero's Travel Act and RICO convictions both rest on the jury's determination that, as a party official, he violated New Jersey's prohibition against "[b]ribery in official and political matters." N.J. Stat. Ann. § 2C:27-2. According to that provision, "[a] person is guilty of bribery if he directly or indirectly offers, confers or agrees to confer upon another, or solicits, accepts or agrees to accept . . . [a]ny benefit as consideration for a decision, opinion, recommendation, vote or ...


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