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United States v. McNary

UNITED STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT


April 29, 1980

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
JACK O. MCNARY, DEFENDANT-APPELLANT

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 77 CR 1023; Bernard M. Decker, Judge.

Philip W. Tone, Circuit Judge, William J. Bauer, Circuit Judge, Dudley B. Bonsal, Senior Judge.*fn*

Order

In this unpublished order supplementing the published opinion filed in this case on this date, we address the remaining issues presented by the appellant for review on appeal from his conviction on two counts of violating the racketeer Influenced and Corrupt Organization (RICO) Act (18 U.S.C. § 1961 et seq.) and on one count of violating the Hobbs Act (18 U.S.C. § 1951). The facts of this case are fully set forth in the opinion and will there fore not be related here, except as necessary to an understanding of our disposition of the seven claims of error reviewed by this order. We affirm the convictions for the reasons set forth below.

I

Count III of the indictment charged the appellant with a violation of the Hobbs Act in that he used the power and authority of his position as Mayor of Lansing and president of the Board of Trustees of the Village to obtain, under color of official right, a payment of $20,010.98 from Richard Mook and Gordon Dicke, the developers of the Salem Cross apartment complex. McNary contends on appeal that the evidence at trial was insufficient to sustain the jury's verdict of guilty on Count III because Mook and Dicke, the victims of the appellant's extortion, did not maintain a reasonable belief that the power of McNary's office included the authority to determine or effectively control their right to building and occupancy permits for the Salem Cross apartment complex. We find this contention to be devoid of merit.

It is not disputed that the office of Mayor in the Village of Lansing does not have a de jure power to grant or withhold building and occupancy permits. E.g., Lansing Illinois Zoning Ordinance, Art. XII, §§ 12.6(a), 12.27 (1961). But it is the use of office to obtain payments which is the crux of the statutory requirement of "under color of official right," and where the motivation for the payment focuses on the recipient's office the conduct falls within the ambit of 18 U.S.C. § 1951. United States v. Kuta, 518 F.2d 947, 950 (7th Cir. 1975), cert. denied, 423 U.S. 1014 (1975). Thus, in order to find that the appellant acted under color of official right, the jury need not have concluded that McNary had actual de jure power to secure the grant of the permits so long as it found that Mook and Dicke held, and the appellant exploited, a reasonable belief that the Village system so operated that the power of McNary's office included the effective authority to determine the issuance of the permits. See, e.g., United States v. Mazzei, 521 F.2d 639 (3d Cir. 1975), cert. denied, 423 U.S. 1014 (1975).

We find the evidence sufficient to sustain the finding by the jury that Mook and Dicke reasonably believed that as a concomitant of his official position the appellant possessed effective power to determine the issuance of the permits. After Mook and Dicke submitted an application for the building permits, they became concerned over their rejection of McNary's bid for a subcontracting job on the Salem Cross project and met with Gerald Pals, a real estate broker and business associate of the appellant's, to discuss the matter. Pals then spoke with McNary and subsequently reported to Dicke that McNary wanted $20,000. Mook and Dicke then met with McNary and explained that the payment would not be available until financing was obtained for the project and that, in turn, the financing was contingent upon the issuance of the building permits. Mook inquired when they would receive the permits and McNary instructed them to see Pals to work it out. After the meeting McNary telephoned Pals and told him to prepare an agreement which would assure the $20,000 payment. Mook and Dicke thereafter signed two promissory notes totalling $20,000 and made the payment to McNary in three installments, the last of which was motivated by their concern over receiving occupancy permits for the project. Finally, both Mook and Dicke testified that they made the $20,000 payment to McNary only because of his position as Mayor, and their conversation with the Mayor in his office confirmed their belief that they payment was required to secure official village action for the issuance of the permits. Thus, the evidence showed that McNary exploited a reasonable belief of the victims of his extortion in the power of his office, and we accordingly affirm the conviction on Count III.

II

The appellant also argues that the evidence at trial was insufficient to establish that the property interests and monies he received in connection with the purchase and sale of the Salem Cross and Lansing Square properties were bribes as charged in Counts I and II of the indictment. McNary contends on appeal, as he did at trial, that he held a legitimate interest in these properties, that he did not perceive the properties or payments related to them as bribes, and that neither Pals nor anyone else had an intent to bribe him. We conclude that the evidence, both direct and circumstantial, was sufficient to sustain the jury's finding that these properties as well as the income and personal advantage derived therefrom were promised, tendered, and received as bribes in violation of the Illinois Bribery Statute.

As this Court stated in United States v. Isaacs, 493 F.2d 1124 (7th Cir. 1974), cert. denied, 417 U.S. 976 (1974):

Subsection 33-1(d) of the Illinois Bribery Statute provides that bribery occurs when property is accepted by a public official with knowledge that it is offered with intent to influence the performance of any act related to his public position. No particular act need be contemplated by offeror or offeree. There is bribery if the offer is made with intent that the offeree act favorably to the offeror when necessary.

493 F.2d at 1145. McNary contends the record is devoid of any intent to bribe him. In consideration of this contention, we turn to the evidence at trial concerning the conduct of Gerald Pals and Mayor McNary with respect to these two properties as the focal point for determining their respective mental states, knowledge, and complicity in the transactions. This evidence showed that the jury could have reasonably concluded that Pals' motivation in providing McNary with the financial resources to obtain or maintain his personal advantage in these two properties was predicated upon an intent to influence the performance of an official act and that Mayor McNary's motivation was predicated upon a corrupt intent to profit from these transactions.

McNary's involvement in these properties was governed by a pattern of concealment as indicated by the letters of direction, payments to intermediaries, and the non-disclosure of any interest in the properties on either his Statements of Economic Interests filed with the Village or his federal tax returns. As to the Salem Cross project, Pals testified that the reason McNary was involved was because of his official position as Mayor. Based on Pals' investment in the property McNary received a $25,000 profit from the proceeds of the sale of the property. Pals also advanced funds to facilitate McNary's investment in the Lansing Square project, and McNary received nearly $16,000 from the proceeds of the sale.

The evidence with respect to McNary's official conduct showed that immediately after the ZBA recommendation to deny rezoning for Parcel 2 at Salem Cross, Pals went to see McNary. McNary told Pals he would work it out. At a subsequent Board meeting, McNary introduced Harry Rodenburg and permitted him, contrary to the customary practice, to address the Board prior to the vote on the rezoning. The Board then approved the rezoning request, although it did not know that McNary was a silent partner with Rodenburg in Salem Cross. Similarly, after the Village Board ordered construction halted on the Lansing Square project, McNary unilaterally approved resumption of construction but failed to disclose his financial interest in the project to the Board. McNary testified that it never occurred to him that his interest in the property constituted a conflict of interest, although when it was learned that the engineering firm which acted as the Village Engineer was involved in the planning of Lansing Square, McNary suggested an independent firm be retained to act as the Village's engineer.

These factors provide a sufficient and reasonable basis from which the jury could have properly concluded that the appellant knew why Pals made possible the personal advantages derived from his interests in the Salem Cross and Lansing Square projects, and that McNary agreed to receive and did receive it with the same understanding with which it was made.

III

McNary also contends that there was insufficient evidence upon which the jury could rely in convicting him of the acts of bribery charged in connection with the Marathon rezoning, the Dealers Transit annexation and rezoning, and the Office Building annexation and rezoning. We find the verdicts to be fully supported by the evidence adduced at trial.

The indictment charged that McNary received $10,000 as a bribe for his official actions on behalf of the Marathon project. The evidence showed that Pals approached McNary for assistance in obtaining the requisite rezoning of the Marathon property. McNary assured Pals that he would handle the matter in exchange for $10,000. After the ZBA, with Markby as chairman, voted to recommend denial of the rezoning petition, Pals went to see McNary, who told him that he would take care of it. The petitioner then formally requested that the matter be placed on the agenda of the Village Board, but McNary instructed the Village Clerk to defer action on the request and the matter was later referred back to the ZBA. McNary ultimately succeeded in his efforts to replace Markby as Chairman of the ZBA. The ZBA, under a new chairman and notwithstanding the disapproval of the Plan Commission, subsequently recommended to approve the rezoning petition. That recommendation was adopted by the Village Board thirteen days later.

Pals also approached McNary on the Dealers Transit project and McNary assured Pals that the requisite annexation, rezoning and extension of utilities could be obtained in return for $10,000. After McNary signed the appropriate ordinances permitting these changes, he informed Pals that the $10,000 was to be paid in cash. Pals negotiated three checks totalling $10,000 and delivered this sum in cash to McNary. McNary then deposited the majority of this sum in his bank account in three separate amounts and on three successive days.

Pals again approached McNary concerning the Office Building project. McNary informed Pals that the requisite annexation and rezoning could be obtained in exchange for $4,000. After the appropriate ordinance was signed by the Mayor, Pals prepared a $4,000 check which McNary directed him to exchange for a $3,000 cashier's check and $1,000 in cash. Pals delivered the $3,000 check to McNary, which he deposited in his personal account, and at a later date Pals delivered the $1,000 in cash to McNary.

In view of the pattern of concealment surrounding these transactions, the testimony and documentary evidence concerning the Mayor's activities on behalf of these projects, and his demands for payment as well as his specifications as to the form of the payments, it is clear that the jury refused to credit the explanations offered by the appellant to account for his receipt of these payments. Finding the evidence sufficient to sustain the jury's findings, we affirm the verdicts of guilty as to Counts I and II.

IV

In his next argument on appeal, McNary contends that because there was no evidence that the income derived from three of his alleged acts of racketeering was invested in an enterprise affecting interstate commerce, the paragraphs in the indictment charging those acts should have been stricken. Specifically, the appellant complains that the charge relating to his receipt of $12,857.60 from the second disbursal of the Salem Cross purchase money and the charges relating to his receipt of a $3,000 and $1,000 bribe in connection with the Office Building project should not have been submitted to the jury.

The government concedes that there was no direct proof that these monies were deposited into B & M Manufacturing Company or Ports of Call or any other enterprise affecting interstate commerce.

Such proof was unnecessary, however, to the admissibility of the evidence. Among the elements the prosecution was required to prove in support of the RICO counts was "a pattern of racketeering activity," defined in 18 U.S.C. § 1961(5) insofar as pertinent here, as at least two acts of racketeering activity. Because the statute is satisfied if any part of the income derived from a pattern of racketeering activity is invested in an enterprise affecting interstate commerce, it is enough if income from only one act was so invested even though two acts must be found to have occurred. Inasmuch as the prosecution cannot know in advance that the jury will credit evidence of any particular act, it is not limited to proof of only two acts, one of which produced income that was invested. It may offer evidence of a number of acts, within reason, even though a finding in its favor as to two will be enough. Therefore, so long as there is proof of one act producing income that was so invested, the prosecution may show pattern by offering evidence of other acts as to which it cannot prove investment.

The element that the appellant claims is missing with respect to these three payments was properly given to the jury as an essential element of both RICO counts. The jury was instructed that at least part of the illicit income received must have been used or invested in an enterprise affecting commerce and therefore, the jury could not then have convicted the appellant solely on the basis of the illicit activity set out in the paragraphs of the indictment covering these three payments. The court also instructed the jury that, in addition to finding the requisite elements of a RICO offense, they must find that the appellant committed at least one of the predicate offenses after November 15, 1972, the date of the general statute of limitations under the RICO Act. Because each of the three payments at issue here was charged and proven to have been committed prior to that date, the jury must have found the appellant to have committed at least one of the two predicate offenses charged and proven as having been committed after that date. The illicit income derived from these two predicate offenses, the Mook-Dicke extortion and the bribery proceeds of the Lansing Square project, was shown to have been used or invested by the appellant in B & M Manufacturing Company, an enterprise affecting interstate commerce. Appellant's reliance on United States v. Nerone, 563 F.2d 836 (7th Cir. 1977) is therefore misplaced in view of his stipulation that both B & M and Ports of Call engaged in, and their activities affected, interstate commerce.

The jury's necessary finding of guilt as to these two predicate offenses and the admitted investment and use of this income in B & M Manufacturing renders immaterial the fact that there was no evidence that the defendant directly used or invested he illicit income derived from the three challenged racketeering acts. The statute speaks in terms of use or investment of income derived from a pattern of racketeering activity, not use or investment of every penny of the income derived from each and every act of racketeering activity. Necessarily included in that pattern was a finding of guilty on one or both of the two predicate offenses charged as having been committed after November 15, 1972. The income derived from both of these predicate acts was used or invested in an enterprise affecting commerce, thus satisfying the requirement of Section 1962(a) that part of the illicit income derived from a pattern of racketeering be so used or invested. We therefore conclude that the trial court properly permitted evidence to be presented to the jury concerning these three acts of racketeering as charged in paragraphs 4(d), (e) and (f) of the indictment.

V

After returning its verdict on the indictment, the jury returned a special verdict finding that the appellant held a 50% partnership interest in Ports of Call and that this interest was subject to forfeiture under the provisions of the RICO Act, 18 U.S.C. § 1963(a). McNary contends that this finding was not supported by the evidence at trial because his partnership interest was only 11%. We find this contention to be without merit.

The evidence with respect to McNary's interest in Ports of Call consisted of its partnership tax returns for the years 1972 through 1976. These returns identified McNary and his wife as the only partners and indicated that they shared the profits and losses of the partnership on an equal basis McNary, in an attempt to rebut the evidence of his 50% interest in the partnership, introduced a partnership agreement dated 1970 which showed that McNary and his three sons each held an 11% interest in the partnership, with his wife retaining a 56% interest. This document was demonstrated to be an unreliable indicator of the elements and operation of the partnership. Michael McNary, one of the appellant's sons, testified that he had not examined the document since the date it was signed, that the profits and losses were not distributed according to the agreement, that the partnership did not operate pursuant to the agreement, that the partnership business was not conducted at the location specified in the document, and that the partnership monies were not deposited in the banking institution specified in the document. Thus, whether the jury concluded that the document was intended to merely create the partnership or that the agreement was subsequently modified to, inter alia, increase the appellant's share of the profits of the partnership, the evidence adduced at trial was sufficient to permit the jury to find that the appellant possessed a 50% partnership interest in Ports of Call. We therefore sustain the special verdict of the jury.

VI

The appellant also contends that the district court erred in denying his motion to continue the trial until his witness, Edward Carlson, was sufficiently recovered from his cardiac dysfunction. It is well-settled that a trial court's action on an application for a continuance is purely a matter of discretion and is not subject to review unless there is a clear showing of abuse or that a manifest injustice would result. United States v. Marzec, 249 F.2d 941, 943 (7th Cir. 1957).

No such showing was made in this case. Although Carlson did not testify at trial, the defendant was permitted by stipulation to have the substance of his testimony read to the jury. While this testimony may have been corroborative of certain claims of the appellant, it cannot be said that the failure of Carlson to testify resulted in a manifest injustice to the appellant. We therefore affirm the denial of the motion for a continuance.

VII

Finally, the appellant claims that the district court erred in denying his motion to strike the government's Bill of Particulars on the ground that the bill unlawfully amended the indictment. We disagree.

Nine days after the return of the indictment, the government filed a Bill of Particulars advising the appellant that the indictment contained two typographical and proof-reading errors in that paragraphs 4(d) and 4(g) referred to property situated on "Bernice Road" when the proper reference was "Burnham Avenue." Thus, the purpose of the bill was to advise the appellant of a clerical error; it was not filed to amend the indictment. Nor did the variance in the language result in prejudice to the appellant since he was fully apprised of the charges against him more than seven months prior to trial and no showing was made that he was thereby placed in double jeopardy. See, e.g., United States v. Radowitz, 507 F.2d 109, 111-112 (3d Cir. 1974). We therefore affirm the order of the district court denying the appellant's motion to strike the Bill of Particulars.

For the foregoing reasons, the judgments appealed from are affirmed, and the Clerk of this Court is directed to enter judgment accordingly.

AFFIRMED.

Unpublished Per Curiam Order

This cause came on to be heard on the transcript of the record from the United States District Court for the Northern District of Illinois, Eastern Division, and was argued by counsel.

On consideration whereof, it is ordered and adjudged by this court that the judgment of the said District Court in this cause appealed from be, and the same is hereby, AFFIRMED, in accordance with the order of this court entered this date.

Disposition

AFFIRMED.


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