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United States v. Boffa

decided: August 25, 1982.

UNITED STATES OF AMERICA, APPELLEE
v.
EUGENE BOFFA, SR., ROBERT BOFFA, SR., LOUIS S. KALMAR, SR., AND CHANDLER LEMON, APPELLANTS



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

Seitz, Chief Judge, Sloviter and Becker, Circuit Judges.

Author: Seitz

Opinion OF THE COURT

SEITZ, Chief Judge.

Eugene Boffa, Sr., Robert Boffa, Sr., Louis Kalmar, Sr., and Chandler Lemon appeal from judgments imposing sentences of imprisonment fines, and forfeitures entered after their convictions of racketeering offenses. 18 U.S.C. § 1962(c) & (d) (1976). Eugene Boffa, Sr. and Lemon also appeal from judgments imposing sentences of imprisonment entered after their convictions of mail fraud. 18 U.S.C. § 1341 (1976). This court has jurisdiction under 28 U.S.C. § 1291 (1976).

I.

Appellants were tried before a jury on an eleven-count indictment, which also names as co-defendants Francis Sheeran, David Mishler, and Robert Rispo.*fn1 Count I charges appellants with conspiring to violate the Racketeer Influenced and Corrupt Organization Act (RICO), 18 U.S.C. § 1962(d). Count II alleges that appellants violated the substantive provisions of RICO, 18 U.S.C. § 1962(c). Counts V through XI charge appellants Eugene Boffa, Sr. and Chandler Lemon with violating the mail fraud statute, 18 U.S.C. § 1341.*fn2

Before describing the factual allegations in the indictment, we will briefly outline the statutory scheme of RICO as it relates to this case. Section 1962(c) of the Act provides:

It shall be unlawful for any person employed by or associated with an enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity.

Section 1962(d) makes it unlawful for any person to conspire to violate section 1962(c).

The term "enterprise" includes not only legal entities such as partnerships, corporations, and associations, but also any group of individuals "associated in fact." 18 U.S.C. § 1961(4). Section 1961 of RICO enumerates the racketeering activities, or "predicate acts," that are necessary to establish a RICO offense. These predicate acts include violations of 18 U.S.C. § 1341 (mail fraud), 29 U.S.C. § 186 (Taft-Hartley Act), and 18 U.S.C. § 1503 (obstruction of justice). To establis a "pattern" of racketeering activity, the Government must prove that at least two of these acts occurred within a ten-year period. 18 U.S.C. § 1961(5).

The indictment in this case is a complex document. It alleges sixty-two racketeering acts based on violations of three federal statutes, involving different combinations of appellants who were engaged in various transactions. The common strand running through the indictment is appellants' association with the enterprise, comprising "a group of individuals associated in fact for the purpose of making money and obtaining other financial benefits through the business of labor leasing and motor vehicle leasing." The enterprise was operated through nine separate corporations engaged in the labor leasing business and one corporation in the business of leasing motor vehicles. The indictment alleges that Eugene Boffa, Sr., along with one or more of the other appellants, "would control and participate inthe operation" of all ten corporations.

The predicate acts alleged in the indictment include violations of the mail fraud statute, the Taft-Hartley Act, and 18 U.S.C. § 1503 (obstruction of justice). We will summarize the factual allegations contained in the indictment as they relate to each predicate offense.

A. Mail Fraud

The indictment charges Eugene Boffa, Sr. and Chandler Lemon with ten violations of the mail fraud statute in connection with a "labor switch" at the Inland Container Corporation's facility at Newark, Delaware. In essence, the indictment alleges that appellants switched the labor leasing contracts at Inland from one corporation they controlled to another that was ostensibly independent, but which in fact they also controlled. By providing benefits to the official of the union that represented employees of the first corporation, the enterprise obtained his cooperation in the scheme. The indictment alleges that, as a result of the switch, employees were deprived of 1) the loyal, faithful, and honest services of the union official; 2) economic benefits they enjoyed through rights guaranteed them by the National Labor Relations Act (NLRA), 29 U.S.C. § 157; and 3) economic benefits they enjoyed through rights they had under an existing collective bargaining agreement.

The indictment describes the scheme in some detail. Between 1971 and 1977, Universal Coordinators, Inc. (UCI), a New Jersey Corporation controlled by Eugene Boffa, Sr. leased truck drivers to Inland's Newark facility. These drivers were represented by the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (Teamsters) Local 326, headed by co-defendant Francis Sheeran. Concerned about recurring labor disputes at the Inland plant, appellant Eugene Boffa, Sr. and Sheeran agreed that after the election of officers of Local 326 in November, 1976, Boffa would terminate the leasing contract between UCI and Inland and substitute for UCI a second leasing company controlled by the enterprise. The purpose of the switch was to "cause the employees of UCI . . . to be fired and not rehired by the second leasing company."

In furtherance of this scheme, Eugene Boffa, Sr. and Chandler Lemon incorporated Preferred Personnel of Miami, Florida, and Boffa terminated UCI's leasing contract with Inland. Shortly thereafter, Lemon contacted Inland on behalf of Preferred Personnel, and offered to provide drivers following the expiration of the UCI contract. Lemon stated that neither he nor the company were in any way associated with Eugene Boffa, Sr. or UCI. He offered to provide drivers represented by the Brotherhood of Railway and Airline Clerks, who he claimed would demand substantially lower wages and fringe benefits than the Teamsters. After Inland accepted Lemon's offer, Preferred Personnel supplied an entirely new group of drivers, and the UCI employees who had been working at Inland lost their jobs. The mails were used to effectuate the scheme when appellants caused termination notices to be sent to UCI drivers. The Inland Container labor switch also formed the basis for Counts V through XI of the indictment, which allege substantive violations of the mail fraud statute.

The indictment charges appellant Robert Boffa, Sr. with nine mail fraud violations in connection with a similar labor switch at the Van Wert, Ohio facility of Continental Can Corporation. From at least 1967 until 1975, UCI leased truck drivers, who were represented by Teamsters Local 908, to Continental Can. In 1975, Continental Can expressed dissatisfaction with the service provided by UCI, and UCI agreed to provide better service if its fees were increased by 25%. When Continental Can refused, Robert Boffa, Sr., acting through UCI, decided to terminate the contract and provide drivers to Continental through Country Wide Personnel of Chicago (CWP), which he controlled as well. The alleged purpose of this switch was to enable CWP to obtain higher fees from Continental Can than had been paid to UCI, while paying less to Teamsters Local 908 drivers.

Robert Boffa, Sr. directed co-defendants Mishler and Rispo to meet with the drivers at the Continental Plant and inform them that they would be losing their jobs with UCI because of the contract termination. On behalf of CWP, Mishler and Rispo offered to hire the UCI drivers, but at lower wage rates. Both men denied that there was any relationship between CWP and UCI. The scheme was completed when UCI sent termination notices to each of the drivers. After CWP had negotiated a contract with Continental Can, the former UCI employees, now employed by CWP, continued to work at the Van Wert, Ohio facility, but at lower wage and mileage rates than they had been paid by UCI. The mailing of the termination notices in furtherance of the scheme formed the basis for the mail fraud allegations. As a result of this scheme, the indictment alleges that UCI employees at Continental Can were deprived of 1) economic benefits they enjoyed through rights guaranteed by the NLRA; and 2) economic benefits they enjoyed under the collective bargaining agreement between UCI and Local 908.

B. Taft-Hartley

The indictment alleges that on four occasions, Eugene Boffa, Sr. and appellant Louis Kalmar, Sr., co-owners of UCI, "did cause UCI to deliver the free use for a month . . . of a 1975 Lincoln Continental . . . to Francis Sheeran . . . with intent to influence [Sheeran] in respect to his actions and duties as president of [Teamsters] Local 326, all in violation of [29 U.S.C. § 186(a) (4) & (d)]." Further, the indictment charges that Boffa and Kalmar, through All Purpose Leasing Inc., agreed to sell Sheeran the automobile at a price below its market value, also in an attempt to influence Sheeran in violation of § 186(a) (4) & (d).

C. Obstruction of Justice

The indictment charges that Eugene Boffa, Sr. knowingly turned over false and fictitious records of All Purpose Leasing, Inc. (APL) to the grand jury investigating the automobile transactions between APL and Sheeran, in violation of 18 U.S.C. § 1503.

D. The Jury Verdict

The jury, which recorded its findings as to each predicate act on a summary verdict sheet, convicted all four appellants of the conspiracy and substantive RICO counts. Eugene Boffa's RICO convictions were based on the following predicate acts: ten mail fraud violations in connection with the labor switch at Inland Container, five Taft-Hartley violations arising out of the lease and sale arrangement with Sheeran, and one violation of 18 U.S.C. § 1503. Chandler Lemon's RICO convictions were based on ten mail fraud violations, also in connection with the Inland switch. Five mail fraud violations in connection with the labor switch at Continental Can supported Robert Boffa's RICO convictions, and four Taft-Hartley violations in connection with the automobile lease arrangement with Sheeran supported Louis Kalmar's RICO convictions. The jury found that appellants owned at least part of the various corporations listed in the indictment, and thus that these interests were subject to forfeiture pursuant to 18 U.S.C. § 1963(a). After the jury verdict, the district court sentenced appellants to terms of imprisonment ranging from eight to 20 years, imposed fines of up to $47,000, and ordered that appellants forfeit to the United States their interests in the corporations associated with the enterprise.*fn3

II.

Appellants Eugene Boffa, Sr., Robert Boffa, Sr., and Chandler Lemon contend that the labor switches at the Inland Container and Continental Can plants were, at most, unfair labor practices prohibited by section 8 of the NLRA, 29 U.S.C. § 158 (1976), and therefore not properly the subject of a mail fraud prosecution. In essence, they assert that the "schemes to defraud" alleged in the indictment simply do not constitute crimes under 18 U.S.C. § 1341.

We begin with the mail fraud statute, which provides criminal penalties for devising "any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." 18 U.S.C. § 1341. Since the Supreme Court recognized that a "scheme or artifice to defraud" is not limited to the common law of fraud and false pretenses, Durland v. United States, 161 U.S. 306, 313-14, 40 L. Ed. 709, 16 S. Ct. 508 (1896), courts have struggled to define the contours of the mail fraud statute. Generally, it has been expansively construed to prohibit all schemes to defraud by any means of misrepresentation that in some way involve the use of the postal system. United States v. Pearlstein, 576 F.2d 531, 534 (3d Cir. 1978).

In accordance with the statutory policy of preventing the use of the mails to further such fraudulent schemes, most courts have rejected the argument that 18 U.S.C. § 1341 was intended to prohibit only schemes to defraud individuals of money or property. See, e.g., United States v. States, 488 F.2d 761, 763-64 (8th Cir. 1973), cert. denied, 417 U.S. 909, 94 S. Ct. 2605, 41 L. Ed. 2d 212 (1974); United States v. Lewis, 514 F. Supp. 169, 172-77 (M.D. Pa. 1981). Relying on the broad purposes of the statute, these courts have held that the mail fraud statute prohibits schemes to defraud individuals of "intangible" interests or rights as well. But cf. Comment, The Intangible-Rights Doctrine and Political-Corruption Prosecutions under the Mail Fraud Statute, 47 U. Chi. L.Rev. 526, 566 (1980) (legislative history of 18 U.S.C. § 1341 "indicate[s] that the statute only reaches schemes that have as their goal the transfer of something of economic value to defendant").

Thus, courts have sanctioned mail fraud prosecutions based on deprivations of a variety of intangible rights. See United States v. Bronston, 658 F.2d 920, 927 (2d Cir. 1981) (client's right to "undivided loyalty" of attorney); United States v. Von Barta, 635 F.2d 999 (2d Cir. 1980), cert. denied, 450 U.S. 998, 101 S. Ct. 1703, 68 L. Ed. 2d 199 (1981) (employer's right to the honest and faithful service of employees); United States v. Bohonus, 628 F.2d 1167 (9th Cir.), cert. denied, 447 U.S. 928, 65 L. Ed. 2d 1122, 100 S. Ct. 3026 (1980) (same); United States v. Condolon, 600 F.2d 7 (4th Cir. 1979) ("time, effort and expectations"); United States v. Louderman, 576 F.2d 1383 (7th Cir.), cert. denied, 439 U.S. 896, 58 L. Ed. 2d 243, 99 S. Ct. 257 (1978) (privacy rights); States, 488 F.2d at 765 ("certain intangible political rights"); Shushan v. United States, 117 F.2d 110 (5th Cir.), cert denied, 313 U.S. 574, 85 L. Ed. 1531, 61 S. Ct. 1085 (1941) (public's right to a public official's honest, faithful, and disinterested services); United States v. Fineman, 434 F. Supp. 189, 195 (E.D. Pa. 1977) (same). In perhaps the broadest statement of the reach of 18 U.S.C. § 1341, the United States Court of Appeals for the Fourth Circuit observed that the mail fraud statute proscribes any scheme "that is contrary to public policy and conflicts with accepted standards of moral uprightness, fundamental honesty, fair play, and right dealing." United States v. Mandel, 591 F.2d 1347, 1361 (4th Cir.), conviction aff'd in relevant part, 602 F.2d 653 (1979) (in banc), cert. denied, 445 U.S. 961, 100 S. Ct. 1647, 64 L. Ed. 2d 236 (1980); See also United States v. Serlin, 538 F.2d 737 (7th Cir. 1976).

Although we have not had occasion either to accept or reject the "intangible interest or right" theory of mail fraud, we find the reasoning employed by these courts persuasive, and thus recognize that a scheme to deprive persons of intangible rights or interests may be within the ambit of 18 U.S.C. § 1341. We do not believe that mail fraud prosecutions based on this theory are boundless, however, and we may not extend the reach of 18 U.S.C. § 1341 beyond the limits envisioned by Congress. Unfortunately, ascertaining those limits is no easy task; the legislative history of the mail fraud statute, which was first enacted in 1872, is of little assistance in determining whether Congress intended the statute to reach schemes to deprive individuals of a particular "intangible" right. See Von Barta, 635 F.2d at 1005.

We are not, however, entirely without congressional guidance. When construing a statute, courts generally may not accord great weight to expressions of intent by subsequent Congresses. See Consumer Product Safety Commission v. GTE Sylvania, 447 U.S. 102, 117, 64 L. Ed. 2d 766, 100 S. Ct. 2051 (1980). Nonetheless, the Supreme Court has recognized that such an examination may, in some cases, help define vague enactments. Labor Board v. Drivers Union, 362 U.S. 274, 291-92, 80 S. Ct. 706, 4 L. Ed. 2d 710 (1960) (" Courts may properly take into account the later Act when asked to extend the reach of the earlier Act's vague language to the limits which, if read literally, the words might permit."). See NLRB v. Allis-Chalmers Mfg. Co., 388 U.S. 175, 194, 18 L. Ed. 2d 1123, 87 S. Ct. 2001 (1967); In re Perisco, 522 F.2d 41, 64-65 (2d Cir. 1975). We believe that an examination of the language and the legislative history of a federal statute is necessary to determine whether it can serve as the source of an intangible right in a mail fraud prosecution. See United States v. DeLaurentis, 491 F.2d 208, 212 (2d Cir. 1974); United States v. Johnson, 390 U.S. 563, 564-66, 20 L. Ed. 2d 132, 88 S. Ct. 1231 (1968) (examining legislative history of the Civil Rights Act of 1964, 42 U.S.C. § 2000a, to determine whether prosecution for conspiracy to deprive individuals of rights guaranteed by that Act was permissible under federal civil rights conspiracy statute, 18 U.S.C. § 241 (1976)). As a matter of statutory construction, we are unwilling to sanction mail fraud prosecutions for schemes to deprive individuals of a particular intangible right when such a prosecution would contravene the intent of the Congress that created that right. Cf. Great American S&L Association v. Novotny, 442 U.S. 366, 372-76, 60 L. Ed. 2d 957, 99 S. Ct. 2345 (1979) (civil rights action under 42 U.S.C. § 1985(3) based on deprivations of rights guaranteed by Civil Rights Act of 1964 impermissible where such action would undermine policies of Title VII of that Act).

With these principles in mind, we proceed to examine the indictment's allegations relating to mail fraud.

A.

The indictment alleges that, in connection with the labor switches at Inland Container and Continental Can, appellants deprived employees of:

Economic benefits they enjoyed through rights guaranteed them under the National Labor Relations Act, [29 U.S.C. § 157], to self-organization, to form, join and assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining and other mutual aid and protection.

The premise of appellants' argument is that this portion of the indictment alleges a deprivation of "intangible rights" guaranteed by section 7 of the NLRA. From this, they contend that, in enacting the NLRA, Congress did not intend that violations of employees' section 7 rights could serve as the basis for a mail fraud prosecution.

The Government vigorously disputes appellants' characterization of the indictment. It contends that appellants' mail fraud violations did not rest on the commission of unfair labor practices. Instead, the Government asserts that the indictment alleges schemes to deprive employees of economic interests obtained through rights guaranteed them by the NLRA. Because, in the Government's view, the "scheme or artifice" involved a deprivation of employees' property interests, it falls squarely within the traditional scope of the mail fraud statute.

We believe that appellants' characterization of the scheme alleged in the indictment is more accurate. Reduced to its essence, the indictment alleges that the scheme deprived employees not of tangible property or money, but of their interest in rights guaranteed by the NLRA. That the Government has couched its allegations in terms of "economic benefits" does not alter our conclusion. We believe it is neither analytically helpful nor practically possible to distinguish the "economic benefits" of rights guaranteed by the NLRA from the rights themselves. To be sure, the rights guaranteed by section 7 are of economic value to employees covered by the NLRA. However, we cannot conclude that, as a consequence, statutory rights are transformed into analytically distinct "economic benefits." The source of those "economic benefits" lies exclusively in the statute, and appellants could deprive employees of those benefits only by committing one or more unfair labor practices.

Our conclusion as to the nature of the indictment crystallizes the issue before us. We must determine whether a scheme to deprive employees of rights guaranteed by section 7 of the NLRA is within the ambit of the mail fraud statute. This determination requires an examination of the congressional policies underlying the NLRA. We find two such policies particularly pertinent: the remedial nature of the ...


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