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United States v. Cappetto

decided: September 4, 1974.

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
LEONARD L. CAPPETTO, INDIVIDUALLY AND DOING BUSINESS AS WESTERN AVENUE BILLIARDS, STANLEY J. MIKOLAJCZAK, JOSEPH A. CORARI, THOMAS J. WILSON, JOSEPH I. MANTIA, GEORGE J. MUSTEIKAS AND NICHOLAS J. PIDONE, DEFENDANTS-APPELLANTS



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 74 C 503 FRANK J. MCGARR, Judge.

Stevens, Sprecher and Tone, Circuit Judges.

Author: Tone

TONE, Circuit Judge.

The constitutionality of the civil remedies provision of the Organized Crime Control Act of 1970 (18 U.S.C. § 1964) is challenged in this appeal from an order granting a preliminary injunction against further gambling activities, a related default order, and a contempt order.

The provisions of the Act pertinent here provide as follows: Section 1955 of Title 18 makes it an offense to participate in an illegal gambling business, which is defined as a gambling business violative of state law involving five or more participants that remains in substantially continuous operation for over 30 days or has a gross revenue of $2,000 in any one day. Section 1961 defines "racketeering activity" to include, inter alia, any act indictable under Section 1955 and "pattern of racketeering activity" to mean at least two acts of racketeering activity, with qualifications not germane here. Section 1962, in subsection (b), makes it unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or whose activities affect, interstate or foreign commerce. Subsection (c) of that section makes it unlawful for any person employed by or associated with such an enterprise to participate in the conduct of the enterprise's affairs through a pattern of racketeering activity or collection of an unlawful debt. Subsection (d) makes it unlawful to conspire to violate any of the other subsections of Section 1962. Section 1963, which is not invoked by the government in this case, prescribes criminal penalties for violation of Section 1962. Finally, Section 1964, under which this action is brought, gives the District Courts of the United States "jurisdiction to prevent and restrain violations of section 1962," and lists by way of illustration several types of equitable relief that may be granted.

The Act thus gives the government both civil and criminal remedies for the enforcement of Section 1962. In this case the government elected to use its civil remedy.

The complaint alleges the following facts: On various occasions from October 26, 1973 to the date of the filing of the complaint, defendants Joseph A. Corabi, Stanley J. Mikolajczak, and Thomas J. Wilson used a building known as Western Avenue Billiards in Chicago and the telephone located there to receive horse race and sports wagers and to transmit wagering information. This activity took place with the knowledge of the owner, defendant Leonard L. Cappetto. Defendants Joseph I. Mantia, George J. Musteikas, and Nicholas J. Pidone, and others known to the government only by nickname, placed wagers with defendants Corabi, Mikolajczak, and Wilson for persons other than themselves. On various occasions another person known to the plaintiff only as "Joe" received wagers from, and gave wagering information to defendant Corabi. Defendant Pidone also allowed his residence to be used for the gambling operation. These activities are alleged to constitute an illegal gambling business having a gross revenue of over $2,000 on a single day and involving five or more persons in violation of Illinois law and Section 1955 which has diverted money and goods from legitimate enterprises into illegal channels.

In Count I of the complaint, which is laid under Section 1962(b), it is alleged that, through a pattern of racketeering activity consisting of participating on two or more occasions in an illegal gambling business violative of Section 1955, or through collection of an unlawful debt, the defendants acquired or maintained interests in or control of an enterprise, viz., an illegal gambling business proscribed by Section 1955, which was engaged in, or the activities of which affected, interstate commerce. In Count II it is alleged that the defendants violated Section 1962(c) by conducting the enterprise's affairs through a pattern of racketeering activity. In Count III it is alleged that the defendants violated Section 1962(d) by conspiring to do the acts charged in Counts I and II. Jurisdiction is alleged under Section 1964 and also under the general jurisdictional grant of 28 U.S.C. § 1345.

In addition to preliminary and permanent injunctions restraining the defendants and those acting in concert with them from engaging in the illegal gambling operation, the government seeks divestiture by defendant Cappetto of his interest in the building; disclosure of the identities of those persons acting in concert with defendants in the gambling business complained of, including those known to the government only by nickname; an order directing each of the defendants to submit to the United States Attorney for a period of ten years sworn quarterly reports stating his current address, business, sources of income and other information bearing on his compliance with the injunction the court is asked to enter; and such further relief as the court deems just.

After the entry of a preliminary restraining order without notice, the propriety of which is not before us, the District Court denied a motion to dismiss the complaint and entered various discovery orders, including an order granting defendant Corabi "use" immunity under 18 U.S.C. §§ 6002 and 6003. Defendants, relying on the Fifth Amendment, refused to comply with the discovery orders and refused even to appear for depositions and be sworn. The District Court then entered the three orders from which this appeal is taken. The first order provided that, by reason of defendants' refusal to obey the discovery orders, the material allegations of the complaint were taken as true, the defendants were adjudged in default, and default judgment was entered against them. In the second order the court preliminarily enjoined the defendants from carrying on the gambling activities described in the complaint. In the third order the court also held defendants in contempt and ordered them committed until they obeyed the discovery orders. The execution of the latter order has been stayed pending appeal.

Defendants' principal argument is that this action under Section 1964 is essentially a criminal proceeding, and therefore they are entitled to the rights guaranteed by the Constitution to defendants in criminal cases. They also argue that Section 1964 is unconstitutionally vague. In addition, they argue that Congress lacks authority under the commerce clause of the Constitution (Article I, Section 8, Clause 3) to prohibit gambling, and that Section 1964, and Section 1955 as well, are unconstitutional for that additional reason.

The latter argument need not detain us long. The power of Congress to prohibit activities made unlawful by state law which take place in, or affect, interstate commerce has long been settled. Caminetti v. United States, 242 U.S. 470, 61 L. Ed. 442, 37 S. Ct. 192 (1917); Wickard v. Filburn, 317 U.S. 111, 87 L. Ed. 122, 63 S. Ct. 82 (1942). The Supreme Court has upheld the federal loanshark statute (18 U.S.C. § 891 et seq.) against a challenge similar to the one made by defendants here. Perez v. United States, 402 U.S. 146, 28 L. Ed. 2d 686, 91 S. Ct. 1357 (1971). This court and other courts of appeals have held that Section 1955 is authorized by the commerce clause. United States v. Hunter, 478 F.2d 1019, 1020-1021 (7th Cir. 1973), cert. denied, 414 U.S. 857, 38 L. Ed. 2d 107, 94 S. Ct. 162 (1973); United States v. Becker, 461 F.2d 230, 233-234 (2d Cir. 1972); United States v. Riehl, 460 F.2d 454, 458 (3rd Cir. 1972); United States v. Ceraso, 467 F.2d 653, 657-658 (3rd Cir. 1972); United States v. Harris, 460 F.2d 1041, 1043-1049 (5th Cir. 1972), cert. denied, 409 U.S. 877, 34 L. Ed. 2d 130, 93 S. Ct. 128 (1972); Schneider v. United States, 459 F.2d 540, 541-542 (8th Cir. 1972), cert. denied, 409 U.S. 877, 34 L. Ed. 2d 131, 93 S. Ct. 129 (1972); United States v. Sacco, 491 F.2d 995, 999-1001 (9th Cir. 1974). These cases demonstrate that Congress had power to determine that the class of activities described in Section 1955 adversely affects interstate commerce and, based upon that finding, to prohibit those activities. It is also settled, on the authority of Perez, that the statute is valid "even when applied to individual members of the class whose own activities may not have any demonstrable impact on interstate commerce." United States v. Hunter, supra, 478 F.2d at 1021. See also Schneider v. United States, supra, 459 F.2d at 541; and United States v. Becker, supra, 461 F.2d at 233-234.

Congress also has power to provide for civil injunctive relief against activities which adversely affect interstate commerce, and that power extends to activities which are made criminal by state or federal law. Long ago the Supreme Court, in the case of In re Debs, 158 U.S. 564, 39 L. Ed. 1092, 15 S. Ct. 900 (1895), held that the commerce clause authorizes the federal government, through injunctive relief granted by its courts, to restrain or remove obstructions to interstate commerce, stating:

". . . the jurisdiction of courts to interfere in such matters by injunction is one recognized from ancient times and by indubitable authority; . . . such jurisdiction is not ousted by the fact that the obstructions are accompanied by or consist of acts in themselves violations of the criminal law; . . . the proceeding by injunction is of a civil character, and may be enforced by proceedings in contempt; ...


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