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United States v. Chaimson

decided: April 24, 1985.

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
SAMUEL M. CHAIMSON, DEFENDANT-APPELLANT



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 83 CR 380 -- Marvin E. Aspen, Judge.

Cudahy, Posner, and Coffey, Circuit Judges. Cudahy, Circuit Judge, concurring.

Author: Coffey

COFFEY, Circuit Judge

The defendant-appellant, Samuel Chaimson, appeals his conviction for fifteen counts of mail fraud in violation of 18 U.S.C. § 1341 and one count of racketeering in violation of 18 U.S.C. § 1962(c). We affirm.

I

This case involves a scheme among employees at the Cook County Board of Appeals, Chicago area attorneys, and Chicago area tax consultants to fraudulently reduce real estate assessments in Cook County, Illinois. The record reveals that Cook County, encompassing the city of Chicago, Illinois, contains approximately 1,300,000 parcels of real estate. The Cook County Assessor's Office divides the county into four regions and assesses the property in each region on a quadrennial basis. The assessment is used as a base figure in calculating the real estate tax due and owing on each parcel of land within the county.*fn1 In the event the property owner disputes the assessment, he may file an informal complaint with the Cook County Assessor's Office. If the complaint is denied, the property owner may then file a claim with the Cook County Board of Appeals on his own behalf or through an attorney.*fn2 According to this procedure, the property owner, or his attorney, submits a formal complaint to the Board of Appeals, the complaint is assigned a file number, and all relevant documentation in support of the claim is placed in a complaint file folder. A hearing examiner initially inspects the file, ensures that the supporting data is complete, and then forwards the file to one of the two elected commissioners on the Board of Appeals. The first commissioner reviews the file and, if he denies the claim, marks the file "no change," dismissing the case. In contrast, if the first commissioner agrees with the property owner's claim, he authorizes the change in the property valuation, initials the file, and sends it to the Board of Appeals' data processing room for the computation of a new assessment. The commissioner then approves the new valuation, affixes his initials to the file, and forwards the file to the second commissioner. Pursuant to Illinois statute, each commissioner must approve a change in the property valuation before such change is entered in the official county records. See Ill. Rev. Stat. ch. 120, § 599 (1983). Thus, if the second commissioner denies the claim, the case is dismissed. If, however, the second commissioner approves the lower assessment, he initials the file and forwards it to the Cook County Assessor's Office for entry of the reduced assessment in the official county records.

During the relevant time period in this case, July 1976 thru September 1979, the elected commissioners on the Cook County Board of Appeals were Seymour Zaban and Harry Semrow. Due to the dramatic increase in the number of cases submitted to the Board during this period, the commissioners agreed to authorize their deputy commissioners to review files and approve or deny the property owners' claims.*fn3 The deputy commissioners involved in the instant case include Thomas Lavin and Robert Hosty, who were employed by commissioner Semrow, and Donald Erskine, who was employed by commissioner Zaban. These three deputy commissioners, along with the Board of Appeals' computer operator David Woodlock and a number of hearing examiners, comprised the "inner core" of the fraudulent assessment reduction scheme at the Cook County Board of Appeals. The scheme consisted of Chicago area attorneys and tax consultants paying off these Board employees to unlawfully approve reductions in real estate assessments. The payoffs included hard currency, household furniture, and even suites of bedroom furniture. In turn, the attorneys and tax consultants charged their clients a percentage of the assessment reduction as a fee.

The operation of the scheme was relatively simple; certain Chicago area lawyers and tax consultants would supply Erskine, Lavin, or Hosty with a list containing the name and file number of those cases that were to receive a fraudulent assessment reduction. Erskine would retrieve the file, place a suggested assessment reduction in the file folder without ever reviewing the merits of the claim, and forward the file to Lavin who would write the reduction in the appropriate box on the file folder and forge commissioner Semrow's signature of approval. Lavin would then send the file to computer operator Woodlock who would calculate the new assessment and return the file to Lavin. Upon receipt of the file, Lavin would direct commissioner Semrow's secretary to affix the commissioner's signature to the file. Pursuant to normal Board procedure, the file would then be routed to commissioner Zaban's office where Erskine would direct Zaban's secretary to affix Zaban's signature of approval on the file. Finally, the file would be transferred to the Cook County Assessor's Office and the new assessment would be entered in the official county records. During this process, commissioners Zaban and Semrow would never have an opportunity to personally see the file much less review the merits of the property owner's claim.

The fraudulent assessment reduction scheme continued uninterrupted until January 1978, when Lavin resigned from the Board of Appeals due to accusations that he illegally participated in fraudulent assessment reductions while employed for commissioner Semrow. Lavin was the only Board employee adept at forging commissioner Semrow's signature, thus following Lavin's departure from the Board, the members of the scheme were forced to transport files to Lavin outside the office in order to obtain precise forgeries of Semrow's signature. This new procedure continued until November 1978, when Erskine resigned from the Board following public allegations of misconduct. Some ten months later, in August 1979, the Board discovered that computer operator Woodlock had reduced an assessment without the authorization of either of the commissioners. Soon thereafter, an extensive state and Federal investigation of the Cook County Board of Appeals uncovered the fraudulent scheme. According to a report compiled by the Federal Bureau of Investigation ("FBI"), Lavin received an estimated $250,000, Erskine received an estimated $150,000, and Woodlock received and estimated $67,000 in bribes for their participation in fraudulent real estate assessment reductions. All three Board employees were indicted by a Federal Grand Jury on numerous counts of racketeering, mail fraud, perjury, and filing of fraudulent income tax returns. All three individuals pled guilty to a limited number of the offenses charged, obtained qualified immunity from the Government, and agreed to cooperate with the Government in obtaining additional incriminating evidence against the Chicago area attorneys and tax consultants involved in the scheme. As a part of this "sting" operation, Erskine participated in wire-tapped conversations, both in person and over the telephone, with various Chicago attorneys, including the defendant, Samuel Chaimson. On May 5, 1983, a Federal Grand Jury returned an indictment against Chaimson for fifteen counts of mail fraud in violation of 18 U.S.C. § 1341 and one count of racketeering in violation of 18 U.S.C. § 1962(c). Chaimson pled not guilty to the crimes charged.

At trial, the Government established that Chaimson hired Peter Alexander in November 1971 to work as an associate at his law firm of Welfeld & Chaimson. The firm, managed by the defendant and specializing in state, municipal, and real estate tax law, frequently appeared before the Board of Appeals contesting real estate assessments. Chaimson trained Alexander to represent the firm's clients before the Board and thereby replace Phillip Fleischman, the attorney previously responsible for such work who had recently left the firm. As part of this training, Chaimson introduced Alexander to Donald Erskine, the deputy commissioner to commissioner Zaban and a linchpin in the assessment reduction scheme. Alexander and Erskine soon developed a close personal relationship, attending social functions together, meeting daily for breakfast at a downtown Chicago restaurant, and even pooling their funds to purchase four condominium units on the near north side of Chicago. In July 1976, Erskine met with Alexander and the defendant, Samuel Chaimson, in Chaimson's office to discuss the status of the Welfeld & Chaimson files then pending before the Board. According to the testimony of Erskine and Alexander, at the close of this meeting Chaimson thanked Erskine for his assistance and personally handed him a plain, white, letter-size envelope containing $300-$400 in cash. During the following Board session, from September 1976 thru June 1977, Alexander accompanied Erskine to Chaimson's office three or four more times and at the close each meeting, Chaimson personally handed Erskine a plain, white, letter-size envelope containing cash. The record reveals that during this 1976-77 Board session, Erskine received approximately $800 in cash from Chaimson and, in return, 97% of the Welfeld & Chaimson cases pending before the Board received fraudulently approved real estate assessment reductions. Similarly, during the Board session from September 1977 thru June 1978, Chaimson personally handed Erskine plain, white, letter-size envelopes five or six more times, containing payoffs in excess of $1,700. As a result, 94% of Welfeld & Chaimson's real estate assessment reduction claims filed during the 1977-78 Board session were fraudulently granted.

The Government further established that in June 1977, Chaimson handed a plain, white, letter-size envelope, containing $150 in cash, to Alexander with instructions to deliver the envelope to David Woodlock, the Board of Appeals' computer operator. The record reveals that during the 1977-78 Board session, Woodlock received $700 from Alexander in plain, white, letter-size envelopes supplied by Chaimson and that during the 1978-79 Board session, Woodlock received another $800 from Alexander and the defendant's son, Fred Chaimson, in similar fashion.*fn4 In sum, the Government's evidence established that between the years 1976 and 1979, the law firm of Welfeld & Chaimson had some 295 cases fraudulently approved at the Board of Appeals, yielding total reductions of $10,146,463 and legal fees in the amount of $294,030,89.*fn5

Following the close of the Government's case-in-chief, Chaimson took the stand and denied any knowledge of the fraud scheme at the Board of Appeals, denied any participation in the scheme, and denied paying any bribes directly to Erskine or authorizing any bribe payments to Woodlock in plain, white, letter-size envelopes. On cross-examination, when Chaimson continued to deny any knowledge of the scheme, the Government informed the court, out of the presence of the jury, that it was going to inquire about previous bribe payments that Chaimson had made to the Chief Deputy Assessor of Cook County. The Government advised the court that Alexander was prepared to testify on rebuttal that Chaimson had told him "this isn't like the old days, when we used to pay money to Russ Johnson over at the Assessor's Office." The Government also informed the court that Marshall Fleischman, a former attorney at Welfeld & Chaimson, was prepared to testify on rebuttal that Chaimson asked him to deliver a plain, white, letter-size envelope, described as dark in the center and light around the edges as if containing money, to Russ Johnson, the Chief Deputy Assessor of Cook County. Chaimson's defense counsel objected to the subject matter of the Government's proposed questions and rebuttal evidence on the ground that the testimony was not clear and convincing evidence of an improper act and therefore was inadmissible under Fed. R. Evid. 404(b). The court overruled the objection and permitted the Government to cross-examine Chaimson as follows, "do you recall an incident in 1971 where you sent Mr. Fleischman over to the Assessor's office with a plain white envelope to give to Russ Johnson?" Chaimson responded, "It's a possibility. But it's 1971, this is 1983, 12 years. I don't remember." The Government then asked Chaimson if recently, between 1976 and 1980, "you had a conversation with Mr. Alexander in your law firm and during that conversation you made reference to the fact that in the past you had paid Russ Johnson in connection with cases at the Assessor's office." Chaimson replied "Absolutely not."

On rebuttal, the Government introduced evidence to show that Chaimson did, in fact, make monthly case bribe payments to the Chief Deputy Assessor of Cook County. Alexander testified that sometime after July 1976 but before 1980, Chaimson told him that "when Mr. Johnson was the Chief Deputy Assessor, he [Chaimson] had been making payments to Mr. Johnson on a regular monthly basis." In addition, Marshall Fleischman testified that in January 1971, Chaimson asked him to deliver a "small white sealed envelope" to Russ Johnson, the then Chief Deputy Assessor of Cook County. According to Fleischman, when he examined the letter-size envelope before a light, he observed that it contained "something dark . . . [and] around the edges it was light." Based upon the totality of the evidence presented, the jury returned a verdict of guilty against Chaimson on all fifteen counts of mail fraud in violation of 18 U.S.C. § 1341 and the one count of racketeering in violation of 18 U.S.C. § 1962(c). On January 12, 1984, the district court judge sentenced Chaimson to sixteen concurrent year-and-one-day prison terms, fined him $1,000 for each mail fraud count, and $25,000 for the racketeering count. On appeal, Chaimson contends that the trial court committed reversible error by admitting evidence of the previous cash payments to the Chief Deputy Assessor of Cook County. Chaimson further claims that the prosecutor's alleged misconduct deprived him of a fair trial.

II

A. "OTHER ACTS" EVIDENCE

The initial issue before this court is whether the Government's rebuttal evidence of previous cash bribe payments to the Chief Deputy Assessor of Cook County satisfies the ...


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