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UNITED STATES v. REILLY

July 18, 1978

UNITED STATES of America
v.
William REILLY



The opinion of the court was delivered by: BRODERICK

MEMORANDUM

Defendant, William Reilly, was found guilty by a jury on a two-count indictment charging him with attempted extortion and extortion in violation of the Hobbs Act, 18 U.S.C. § 1951. *fn1" Defendant has filed a motion renewing his motion for judgment of acquittal which he made at the time of trial. In the alternative, he has moved for arrest of judgment or for a new trial. Oral argument was had on the motions. For the reasons hereinafter set forth, defendant's motions will be denied.

 I. Motion for Judgment of Acquittal.

 In his motion for judgment of acquittal, defendant contends that the evidence was insufficient to support the jury's verdict in connection with Counts I and II, and that the evidence was insufficient to find that the defendant acted under "color of office". The evidence produced at trial, viewed in a light most favorable to the Government, Glasser v. United States, 315 U.S. 60, 80, 62 S. Ct. 457, 86 L. Ed. 680 (1942); United States v. Cahalane, 560 F.2d 601, 603 (3d Cir. 1977), Cert. denied, 434 U.S. 1045, 98 S. Ct. 890, 54 L. Ed. 2d 796 (1978), is more than sufficient to support the verdict and to find that the defendant acted under "color of office". We summarize it as follows:

 The defendant has been employed at West Chester State College ("the college" or "West Chester") in West Chester, Pennsylvania since 1970. Until 1975 he held the position of Deputy Assistant to the Director of Physical Planning. In 1975, the defendant was promoted to the position of Director of Facilities at the college. The Government's case was built primarily around the testimony of Donald Radbill, a contractor who had worked on construction contracts at the college, and tape recordings of conversations between Mr. Radbill and the defendant, which were played at trial.

 Mr. Radbill testified that his dealings with the college and the defendant went back to 1971 and that, as a result of these past dealings, it was his understanding that in order to be awarded a bid contract and to be assured of expedited payment from the state, the defendant demanded a cash payment. He further testified that it was his understanding, based upon his conversations with the defendant, that the defendant had the ability to control who would be the successful bidder on contracts of less than $ 25,000 at the college. Mr. Radbill stated that in the summer of 1976, bid invitations were being prepared for the resurfacing and striping of parking lot K at the college. Prior to mailing the bid invitations, the defendant met with Mr. Radbill and demanded "two bills" for the award of this contract. Over the next year, Mr. Radbill testified that he paid the defendant $ 2,000 in installments. The last installment of $ 1,000 was not paid until after Mr. Radbill had been advised that the defendant had removed him from the list of bidders. Mr. Radbill testified that he made the final payment of $ 1,000 to the defendant on October 19, 1977, the day the FBI arrested the defendant and a search incident to the arrest revealed the $ 1,000 in marked money. The tape recordings substantially corroborated Mr. Radbill's testimony.

 The defendant took the stand in his own defense. He admitted that Mr. Radbill had paid him $ 2,200, but claimed that the payments were for services which he had rendered to Mr. Radbill. The Government's case was strong, and the evidence was more than sufficient to support the jury's verdict as to each of the two counts of the indictment.

 Defendant also contends that the evidence was insufficient to support the jury's finding that the defendant acted under "color of office". As the Third Circuit has recently made clear, extortion under the Hobbs Act can be established either when property is obtained through the use of fear or by one acting under color of official right. United States v. Mazzei, 521 F.2d 639, 644-45 (3d Cir.), Cert. denied, 423 U.S. 1014, 96 S. Ct. 446, 46 L. Ed. 2d 385 (1975); United States v. Kenny, 462 F.2d 1205, 1229 (3d Cir.), Cert. denied, 409 U.S. 914, 93 S. Ct. 233, 34 L. Ed. 2d 176, 93 S. Ct. 234 (1972); See also United States v. Harding, 563 F.2d 299, 305-06 (6th Cir. 1977). Fear within the meaning of the Hobbs Act embraces fear of economic loss as well as fear of physical violence. United States v. Addonizio, 451 F.2d 49, 72 (3d Cir. 1971), Cert. denied, 405 U.S. 936, 92 S. Ct. 949, 30 L. Ed. 2d 812 (1972); See United States v. Duhon, 565 F.2d 345, 351 (5th Cir. 1978). Thus, for the jury to have convicted the defendant it would have had to find beyond a reasonable doubt either that he acted under color of official right or that the payments were made through the use of fear of economic loss. There was sufficient evidence in this record for the jury to find beyond a reasonable doubt that Mr. Radbill was placed in fear of economic loss by the defendant's actions. In addition, there was ample evidence to support the jury's finding beyond a reasonable doubt that the defendant was acting "under color of official right" within the meaning of the Hobbs Act. West Chester is a state owned and operated institution of higher learning within the Commonwealth of Pennsylvania. 24 P.S. § 20-2002. The Director of Facilities at West Chester State College is paid from the Treasury of the Commonwealth of Pennsylvania and is afforded the protection of the Pennsylvania Civil Service system and upon retirement is entitled to state pension benefits. As Director of Facilities, the defendant was responsible for supervising all departments within the facilities division which includes over 200 employees. It was his responsibility to develop requirements for the college budget related to the construction, maintenance and repair of the physical facilities at the college. He had major responsibility in connection with construction projects at the college costing $ 25,000 and less, and a vital administrative role in projects exceeding that amount. Moreover, the ultimate question for the jury was not whether the defendant in his official capacity had the power to control the selection of bidders on projects at the college, but rather whether it was reasonable for Mr. Radbill to believe that the defendant's position gave him this power. As stated by the Third Circuit in United States v. Mazzei, 521 F.2d at 643:

 
It is clear, of course, that defendant had no statutory power as a state senator to control the granting of leases by state executive agencies. But in order to find that defendant acted "under color of official right", the jury need not have concluded that he had actual De jure power to secure grant of the lease so long as it found that Kelly held, and defendant exploited, a reasonable belief that the state system so operated that the power in fact of defendant's office included the effective authority to determine recipients of the state leases here involved. . . . The issue of Kelly's belief and its reasonableness was a jury question . . . .

 See also United States v. Harding, 563 F.2d 299, 306-7 (6th Cir. 1977). In the instant case, Mr. Radbill's belief in the defendant's power over the selection of the successful bidder is amply established by the record. The tape recordings, as well as Mr. Radbill's testimony, lend ample support for the jury's determination that Mr. Radbill's belief was reasonable, and that this belief was exploited by the defendant.

 II. Motion for Arrest of Judgment.

 Defendant advances two grounds in support of his motion for arrest of judgment:

 
(a) That the indictment, to the extent that it purports to allege a violation of the Hobbs Act "under color of office", does not state an offense cognizable under the laws of the United States; and
 
(b) That the Court erred in failing to dismiss the indictment where the Government had presented its case to the grand jury through Agent Duall, a hearsay witness, rather than through the testimony of Donald Radbill, who was the only person with first-hand knowledge of the operative facts of this prosecution and who was available to testify before the grand jury.

 The first issue merits little discussion in light of the Third Circuit's opinions in United States v. Mazzei, 521 F.2d 639 (3d Cir.), Cert. denied, 423 U.S. 1014, 96 S. Ct. 446, 46 L. Ed. 2d 385 (1975) and United States v. Kenny, 462 F.2d 1205 (3d Cir.), Cert. denied, 409 U.S. 914, 93 S. Ct. 233, 34 L. Ed. 2d 176, 93 S. Ct. 234 (1972), in which the court held that an offense was stated under the Hobbs Act for extortion committed under color of office.

 As to the second issue, at the start of the trial the defendant moved to dismiss the indictment on the ground that the grand jury had been presented only with hearsay testimony through FBI special agent Duall, an agent who was involved in the Government's investigation in this matter. The Court denied the defendant's motion to dismiss the indictment. The law is clear that the grand jury constitutionally may consider hearsay evidence. Costello v. United States, 350 U.S. 359, 76 S. Ct. 406, 100 L. Ed. 397 (1956); See Bracy v. United States, 435 U.S. 1301, 98 S. Ct. 1171, 1172, 55 L. Ed. 2d 489 (1978). However, defendant contends that the prosecutorial practice of using hearsay testimony in presenting a case to the grand jury when first-hand testimony is readily available "has the effect of depriving the defense of an opportunity to cross-examine key government witnesses concerning prior statements under oath", and thereby undermines the intent of the Jencks Act, 18 U.S.C. § 3500. A similar contention was made in United States v. Short, 493 F.2d 1170, 1172-73 (9th Cir.), Cert. denied, 419 U.S. 1000, 95 S. Ct. 317, 42 L. Ed. 2d 275 (1974), wherein the court, in rejecting defendant's claim, stated:

 
Short argues that the indictment should have been dismissed because the testimony before the grand jury was predominantly hearsay and the government did not bring the key witness, Qualls, before the grand jury. He argues that in relying on hearsay, the government undermined the spirit and effectiveness of the Jencks Act, 18 U.S.C. § 3500, by denying the defense the opportunity to impeach the key government witness with a Jencks Act statement. The failure of the government to produce key witnesses before the grand jury and its reliance upon hearsay in grand jury proceedings does not substantially hinder the advancement of some of the goals of the Jencks Act . . . . However, the Supreme Court has held and this circuit has consistently reaffirmed that hearsay evidence is admissible before the grand jury. . . .
 
It has been held that, where the prosecutor has deceived the grand jury into believing that it is receiving first hand information rather than hearsay, or where there is a high probability that with direct testimony the grand jury would not have indicted the defendant, a reversal is required. United States v. Estepa, 2 Cir., 1972, 471 F.2d 1132, 1137. We do not face this question here. Short does not argue that such abuses appear on this record.

 See also United States v. Chanen, 549 F.2d 1306, 1311 (9th Cir.), Cert. denied, 434 U.S. 825, 98 S. Ct. 72, 54 L. Ed. 2d 83 (1977); United States v. Cruz, 478 F.2d 408, 410-11 (5th Cir. 1973), Cert. denied, 414 U.S. 910, 94 S. Ct. 231, 38 L. Ed. 2d 148 (1974).

 Moreover, as the Supreme Court recently stated in United States v. Calandra, 414 U.S. 338, 344-5, 94 S. Ct. 613, 618, 38 L. Ed. 2d 561 (1974):

 
The grand jury's sources of information are widely drawn, and the validity of an indictment is not affected by the character of the evidence considered. Thus, an indictment valid on its face is not subject to challenge on the ground that the grand jury acted on the basis of inadequate or incompetent evidence . . .

 In support of his contention that the indictment should have been dismissed, defendant cites a series of Second Circuit opinions: United States v. Estepa, 471 F.2d 1132, 1136-37 (2d Cir. 1972); United States v. Leibowitz, 420 F.2d 39, 41-42 (2d Cir. 1969); United States v. Arcuri, 405 F.2d 691 (2d Cir. 1968), Cert. denied, 395 U.S. 913, 89 S. Ct. 1760, 23 L. Ed. 2d 227 (1969); United States v. Malofsky, 388 F.2d 288, 289 (2d Cir.), Cert. denied, 390 U.S. 1017, 88 S. Ct. 1273, 20 L. Ed. 2d 168 (1968); United States v. Umans, 368 F.2d 725, 730-31 (2d Cir. 1966). The rule *fn2" established by the Second Circuit, as summarized by the court in United States v. Cruz, 478 F.2d at 410, is that an indictment based on hearsay is invalid where: "(1) non-hearsay evidence is readily available; (2) the grand jury is misled into believing that it was hearing direct testimony rather than hearsay; and (3) there is a high probability that had the grand jury heard the eye witnesses it would not have indicted." Even if this Court were to apply this Second Circuit guideline to the instant case, the indictment would not have been dismissed. While it is undisputed that the government could have produced Mr. Radbill before the grand jury, there can be little doubt in light of the jury's verdict that had Mr. Radbill appeared before the grand jury, it would have indicted the defendant. Moreover, the Assistant United States Attorney represented to the Court that the grand jury was aware that the testimony of Agent Duall was hearsay and that the grand jury was not mislead. See United States v. Marchand, 564 F.2d 983, 1001 n. 29 (2d Cir. 1977), Cert. denied, 434 U.S. 1015, 98 S. Ct. 732, 54 L. Ed. 2d 760 (1978).

 III. Motion for New Trial.

 Defendant claims the following errors in support of his motion ...


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