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UNITED STATES v. UNITED SKATES OF AMERICA

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION


December 13, 1989

UNITED STATES OF AMERICA, Plaintiff,
v.
UNITED SKATES OF AMERICA, INC., Defendant

The opinion of the court was delivered by: ASPEN

MEMORANDUM OPINION AND ORDER

 MARVIN E. ASPEN, UNITED STATES DISTRICT JUDGE

 The defendant, United Skates of America, Inc. ("United Skates") has moved pursuant to Rule 29(c) of the Federal Rules of Criminal Procedure for an order setting aside the jury's verdict of guilty as to Count III of the indictment against United Skates and entering a judgment of acquittal as to Count III. For the reasons stated below, we grant United Skates' motion.

 Count III of the indictment against United Skates charges United Skates with a violation of 18 U.S.C. § 1962(a) for receiving income, which United Skates used and invested in its operation, that was "derived . . . from a pattern of racketeering activity." *fn1" Count III describes the pattern of racketeering activity as multiple acts of bribery committed by James A. Dvorak and others on behalf of United Skates, in violation of Illinois Revised Statutes, chapter 38, section 33-1.

 The special verdict form signed by the jury recited that the jury had unanimously concluded beyond a reasonable doubt that United Skates had received income from two bribe payments made for the purpose of obtaining a 4:00 a.m. liquor license for a roller-skating rink owned and operated by United Skates in Chicago. The jury did not find that United Skates violated 18 U.S.C. § 1962(a) as a result of any other racketeering acts charged in the indictment. *fn2"

 United Skates has raised five challenges to the jury's finding of guilty. Two of the challenges relate to a recurring question in RICO litigation: whether the jury could properly have found a pattern of racketeering activity within the meaning of the statute and United States Supreme Court precedent. *fn3" Another argument concerns whether the jury could have properly found that money bribes were actually paid to public officials who granted a license otherwise unavailable to United Skates such that the income from the license could be said to have "derived from the racketeering activity." United Skates also has raised a novel issue concerning whether state law or federal law controls the question of corporate liability under RICO for predicate acts committed by its employees solely based on violation of state criminal law. *fn4" While we acknowledge that these are not frivolous arguments, we need not address them since United Skates' remaining argument adequately supports a finding in its favor on the motion to set aside the verdict. We turn instead to United Skates' remaining argument.

 United Skates contends that the government failed to establish an essential element of its proof -- that United Skates "received any income derived, directly or indirectly," from the 4:00 a.m. liquor license which the jury concluded had been obtained by racketeering activities. 18 U.S.C. § 1962 (a).

 At trial, United Skates provided evidence that it received gross revenues from the sale of liquor during the Chicago rink's late night operations. At the time, the rink operated at night under a 2:00 a.m. basic liquor license, which the jury did not find had been obtained as a result of racketeering activity, and the 4:00 a.m. license. The evidence, however, does not indicate at what time of night particular revenues may have been generated. Thus, as United Skates points out, there was no direct evidence that any portion of the revenues was attributable to liquor sales obtained during the period of "illegitimate" operation between 2:00 a.m. and 4:00 a.m.

 The government does not contest this characterization of the evidence. Rather, the government agrees that, based on the evidence that gross revenues were generated and evidence that the bar was open between 2:00 a.m. and 4:00 a.m., it would be rational circumstantially to infer that a sale occurred between 2:00 a.m. and 4:00 a.m. We must therefore determine whether such circumstantial evidence is sufficient to satisfy the government's burden of showing beyond a reasonable doubt that United Skates actually received income from its racketeering activity.

 In support of its argument, the government cites several cases for the propositions that 18 U.S.C. § 1962(a) does not require the government to prove a specific sum as proceeds of racketeering activity or to trace the specific uses to which such proceeds were ultimately put. These propositions, however, are irrelevant to our threshold concern as to whether there is sufficient circumstantial evidence to establish that any proceeds were derived at all. On this point neither the government nor United Skates has provided any legal support. Nor have we found any factually analogous cases construing § 1962(a). We must therefore rely on general principles of criminal evidence.

 While circumstantial evidence and the inferences drawn therefrom may certainly be sufficient to support a finding on a particular element of an offense, Jackson v. Virginia, 443 U.S. 307, 324-25, 99 S. Ct. 2781, 2791-92, 61 L. Ed. 2d 560 (1979), mere suspicion or speculation cannot be the basis for the creation of logical inferences. United Skates argues that the government has failed to provide the necessary hard facts from which the jury could properly make a circumstantial inference that United Skates derived income from the sale of liquor after 2:00 a.m. We agree.

 We do not believe that the fact the bar was open from 2:00 a.m. to 4:00 a.m. supports any valid inference that liquor was served and sold during that time. And without some indication that operating under the 4:00 a.m. license led to an increase in revenue above that obtained from the otherwise legitimate late night operations, we can only conclude that the jury's finding was based purely on speculation. Accordingly, the government failed to establish that United Skates derived income from racketeering activity in accordance with the mandates of 18 U.S.C. § 1962(a) and acquittal is warranted. United Skates' motion is allowed, and the jury's verdict of guilty as to Count III is set aside. United Skates is acquitted as to Count III. It is so ordered.

 DATED December 13, 1989


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