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United States District Court, Northern District of Illinois, E.D

December 2, 1985


The opinion of the court was delivered by: Shadur, District Judge.


On November 27, 1985 the United States Attorney obtained from the grand jury its fifth essay — the fourth superseding indictment (simply the "Indictment," except where it is necessary to distinguish the current version from prior versions) — at leveling multiple charges against Cyrus Yonan, Jr. ("Yonan"). This latest return to the drawing board was directed at correcting obvious drafting errors in the third superseding indictment,*fn1 which had itself made one important substantive change from the second superseding indictment, the version dealt with in this Court's November 15, 1985 memorandum opinion and order (the "Opinion," 622 F. Supp. 721).

For the same reasons discussed in the Opinion, id. at 722-26, Indictment Count Two (identical to Count One of the second superseding indictment) is dismissed. Indictment Count Three (identical to Count Two of the second superseding indictment) survives under the analysis in the Opinion, id. at 727-28. Mail fraud Indictment Counts Four through Eleven also stand, for the reasons stated in the Opinion, id. at 729-34 in dealing with corresponding Counts Three through Ten of the second superseding indictment.

That leaves for fresh consideration only Indictment Count One, which reflects a wholly new theory*fn2 for Yonan's conviction under 18 U.S.C. § 1962(c), one of the provisions of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961-1968.*fn3 According to new Count One ¶ 3(b), the RICO "enterprise" (see Section 1961(4)) was the Office of the Cook County State's Attorney (the "State's Attorney's Office"). Count One ¶ 5 charges Yonan with the same acts of bribery referred to in the Opinion, 622 F. Supp. at 728, all involving payments and offers of payment to Terrence Hake ("Hake") — an Assistant State's Attorney whom Yonan believed to be corrupt but who turned out to be an undercover agent — to fix criminal cases involving Yonan's clients. As Count One ¶ 3(c) would have it, that renders Yonan "associated with" the State's Attorney's Office enterprise — a necessary ingredient of any charge under Section 1962(c).

It is by now familiar lore that proper pleading of a Section 1962(c) charge requires the allegation that a "person" conducted or participated in the affairs of an "enterprise," each of the quotation-marked terms being an entity distinct from the other. Haroco, Inc. v. American National Bank & Trust Co., 747 F.2d 384, 400-02 (7th Cir. 1984) (citing with approval this Court's decision in Parnes v. Heinold Commodities, Inc., 548 F. Supp. 20, 23-24 (N.D.Ill. 1982)), aff'd per curiam, ___ U.S. ___, 105 S.Ct. 3291, 87 L.Ed.2d 437 (1985). Further, Section 1962(c) in terms attaches criminal responsibility only to a person "employed by or associated with" an enterprise.

Yonan (the "person") was obviously not "employed by" the State's Attorney's Office (the charged "enterprise"). Thus he must perforce have been "associated with" that office if Count One is to stand. Unfortunately, RICO's definitional Section 1961 does not prescribe the content of "associated with," nor is the legislative history very helpful. But a few basic propositions will serve to put Yonan's situation in proper perspective.

RICO's very sentence structure and normal use of the English language demonstrate that "associated with" is a concept wholly distinct from "conduct[ing] or participat[ing], directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity."*fn4 In that respect United States v. Forsythe, 560 F.2d 1127, 1136 (3d Cir. 1977), on which the government relies in part, simply misreads the statute. In RICO terms the phrase "associated with," like "employed by," defines a status relationship between the person and the enterprise. Acts of "racketeering" by the "person," though the rest of Section 1962(c) says they must have an effect on the conduct of the enterprise's affairs, do not themselves provide the status nexus between the racketeer and the enterprise. United States v. Bledsoe, 674 F.2d 647, 663 (8th Cir. 1982). Were it otherwise, robbing a bank twice would cause the robber to be "associated with" the bank. Just as the enterprise itself must amount to more than a sheer pattern of racketeering activity, United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 2528, 69 L.Ed.2d 246 (1981) ("enterprise" is "proved by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit"), one does not "associate with" an enterprise by committing crimes against it.

In part, Congress' use of the term "associated with" (and not simply the term "employed by") shows an intention to permit criminal charges against persons outside the organizational structure of an enterprise as well as within it.*fn5 United States v. Elliott, 571 F.2d 880, 903 (5th Cir.), cert. denied, 439 U.S. 953, 99 S.Ct. 349, 58 L.Ed.2d 344 (1978); United States v. Bright, 630 F.2d 804, 830 (5th Cir. 1980) (citing Elliott); United States v. Lee Stoller Enterprises, 652 F.2d 1313, 1320-21 (7th Cir. 1980) (en banc) (citing Bright), cert. denied, 454 U.S. 1082, 102 S.Ct. 636, 70 L.Ed.2d 615 (1981). But that does not answer what quality of "association" is required to permit the outside person to be swept into the criminal net.

RICO, it should be remembered, is directed against the acquisition and conduct of "enterprises" through specified types of criminal behavior by persons directly linked to those enterprises. Sections 1962(a) and (b) address the acquisition of interests in, and the maintenance of, enterprises through racketeering (Section 1962(b)) or through funds obtained from racketeering (Section 1962(a)). Section 1962(c) addresses the conduct of enterprises through racketeering activity by specified categories of persons.*fn6 Thus a prime instance of the sort of non-employee target Congress aimed at through RICO is the control of a corporate enterprise's activities by a majority shareholder — a "person" who is not necessarily an employee but who is clearly "associated with" the enterprise.*fn7

Subcontractors, accountants, lawyers and consultants all may be "associated with" an enterprise, see Schacht v. Brown, 711 F.2d 1343, 1360 (7th Cir.), cert. denied, 464 U.S. 1002, 104 S.Ct. 508, 78 L.Ed.2d 698 (1983) though they are not its employees.*fn8 And as n. 5 illustrates, if the enterprise is simply what Section 1961(4) calls "any union or group of individuals associated in fact although not a legal entity," logic as well as normal language usage tells us each of those individuals is ordinarily "associated with" the enterprise (whether or not its employee). Membership in a union or a club is an example, as well as membership in a criminal organization of the sort described in Turkette.

Whether inside or outside the enterprise's organizational structure, all of the "associates" given above as examples share two characteristics:

    1. All have a relationship with the enterprise
  characterized by a stake or interest in the goals
  of the enterprise — legitimate or illegitimate.

    2. All are associated with the enterprise as
  such, not merely with some other individual who is
  "employed by or associated with" the enterprise
  but is off on a frolic and detour of his or her

Both those characteristics are in a sense tautological. But that is due in large part to their obviousness. And given the government's myopia on this score, it is necessary to state them in that form to show exactly why Yonan's connections with Hake did not associate Yonan with the State's Attorney's Office.

There is a sharp distinction between the Yonan-Hake association and the situations that have been held to present "associated with" relationships in the cases the government has cited. In Bright, for example, Bright operated a bail bond agency involved in bribing the county sheriff. Bright was held a person "associated with" the enterprise of the County Sheriff's Office, 630 F.2d at 830. In like fashion, the sheriff's bagman and payoff collectors in his corrupt scheme were held "associated with" the enterprise, id. at 831-34. Of course the goals of a county sheriff's office are not supposed to be corruption of justice. But the involvement of the head of the office — the sheriff himself — as bribe-taker made his goals those of his own office qua "enterprise." Thus Bright shared the purpose of the charged enterprise, though Bright's own purpose (and that of the entrepreneur himself, the sheriff) was to subvert the goal the enterprise should have had. And because Bright and his co-defendants worked for the man who directed and set the policy of the enterprise, they were related to the enterprise as a whole, at the management level.

Yonan's case is critically different. Here the State's Attorney's Office itself is not alleged to have been corrupt or to have had a corrupt goal. Quite to the contrary, Yonan's goal was to undermine the Office's — the enterprise's — actual legitimate goals. Hake had (that is, pretended to have) a corrupt goal, but that was his own goal and not his employer's. Nor was Hake a policy-maker of the State's Attorney's Office as "enterprise." His own (feigned) corruption is not alleged to have infected anyone else. So Yonan was not associated through Hake with anyone but Hake.

Forsythe and Lee Stoller Enterprises are analytically identical to Bright. In each case the goal of the enterprise identified in the indictment — in Forsythe a bail bond agency and in Lee Stoller Enterprises a county sheriff's office — was corrupt, though in a perfect world it would not have been. And in each case the defendant — the person associated with the enterprise — shared that goal. In each case the defendant dealt with management-level people at the enterprise, so it could be said the defendant dealt with the enterprise as a whole, and not merely with a corrupt employee out to torpedo the enterprise's actual activities as set by its leader(s).

Finally, United States v. Starnes, 644 F.2d 673 (7th Cir. 1981), cert. denied, 454 U.S. 826, 102 S.Ct. 116, 70 L.Ed.2d 101 (1981), not cited by the parties, illustrates the same two principles in a context not involving official corruption. There Starnes, president of Tri-No Corporation, hired Roland to "torch" the building that housed Tri-No's operations. Our Court of Appeals focused its discussion principally on the question whether Roland, the arsonist, "participat[ed], directly or indirectly, in the conduct of the enterprise's affairs" by burning its headquarters, 644 F.2d at 679. But it is also clear (as it had to be for Roland's conviction) Roland was "associated with" Tri-No Corporation. Though Tri-No had been a legitimate business, its president had determined it was better off in cinders. Thus Roland shared the twisted goal that had been set for the enterprise, rather than working against it. Toward that end he dealt with the enterprise's policy-maker directly — with the enterprise as such, not (say) with a disgruntled shipping clerk whose purpose was revenge against Tri-No.

All the cases thus reflect the sense (and common sense) that must be ascribed to the "associated with" concept in Section 1962(c).*fn9 And that sense, and common sense, are flouted by Count One. Hake was himself only an employee of the State's Attorney's Office. Even had he been corrupt (as Yonan allegedly believed him to be), an association with him was not an association with the State's Attorney's Office — the "enterprise."*fn10 It was an association against that enterprise.

In sum, the government's latest attempt to frame a Section 1962(c) indictment against Yonan is a failure. Now that pleaders have finally understood Section 1962(c) requires the allegation of an "enterprise" distinct from the "person"-defendant, it is time they focused more carefully on the statutorily required relationship between the person and the enterprise. Merely picking an enterprise out of a hat will not do.


Counts One and Two of the Indictment are dismissed, but the other nine counts remain. Speedy trial concerns dictate an early decision by the government as to whether it is prepared to go to trial on those counts. Status for this case is next set for December 16, 1985 at 9:00 a.m., at which time the government will be required to advise this Court of its determination.

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