Appeal from the United States District Court for the District of Delaware; D.C. Criminal Action Nos. 89-00015-3, 89-00015-2, 89-00015-1.
Hutchinson, Nygaard and Rosenn, Circuit Judges.
HUTCHINSON, Circuit Judge
In these three consolidated appeals, Antonio Inigo (Inigo), Raul Giordano (Giordano) and Bruno Skerianz (Skerianz) seek to overturn their Hobbs Act convictions for attempting and conspiring to extort $10,000,000.00 from E.I. DuPont de Nemours and Company, Inc. (DuPont), in violation of 18 U.S.C.A. § 1951 (West 1984). After a jury found them all guilty of both charges, the United States District Court for the District of Delaware sentenced Skerianz to two concurrent seventy-eight-month terms of imprisonment and three years of supervised release, and ordered him to pay a $100.00 special assessment. Giordano and Inigo were each sentenced to two concurrent forty-two-month terms and three years of supervised release and were also ordered each to pay a $100.00 special assessment.
They all claim that there is insufficient evidence to sustain their convictions, that the blackmail sentencing guideline rather than the extortion sentencing guideline should have been applied and that their motions for severance and change of venue were erroneously denied.
Skerianz also argues independently that the documents seized at the time of his arrest should have been suppressed, the testimony of his two former attorneys was inadmissible because it was protected by the attorney-client privilege, he was entrapped, the sentencing guideline enhancing his sentence because he was the organizer or leader of criminal activity did not apply to him and the district court erred in relying on hearsay evidence in determining his sentence.
Additionally, Giordano and Inigo both contend, independently of Skerianz, that their sentences should have been reduced because they accepted responsibility for their acts, they were minimal rather than minor participants within the meaning of the sentencing guidelines and because the amount of money involved in the crime that the court held them responsible for was too high.
Finally, Inigo argues that certain testimony by Maria deBianchini (deBianchini) regarding a dream that he had and the theft of documents by him from DuPont's Ducilo plant in Mercedes, Argentina should have been ruled inadmissible.
While there was substantial evidence to support Skerianz's convictions, we hold that the evidence against Giordano and Inigo was insufficient as to the crimes charged against them in the indictment. We will therefore reverse their convictions. Reversal on this ground eliminates the necessity of considering their other contentions. The only one of Skerianz's other claims that has merit is his contention that the blackmail, not the extortion guideline governs his case. We will therefore remand Skerianz's case to the district court for resentencing.
DuPont is the world's largest producer of spandex fiber, which it markets under the trade name, Lycra. Because of superior technology in this highly complex technical area, it enjoys a competitive advantage in the marketplace for spandex. It manufactures Lycra in eight plants worldwide, one of which is a wholly owned subsidiary, Ducilo. Ducilo has a plant in Mercedes, Argentina.
In 1987, Skerianz, who had been in the textile industry for many years, became interested in manufacturing spandex. That November he offered his brother Carlos Skerjanc (Carlos), a DuPont employee assigned to the Engineering Department of the Ducilo plant, a job in that field. Carlos declined but gave Skerianz the names of some DuPont employees who might be interested in working for him. One of them was Jose Petrosino.*fn1 Carlos told his other brother Ferri Scherianz (Ferri), DuPont's Director of Manufacturing for Argentina, about Skerianz's proposal. Ferri advised Carlos to tell other DuPont officials about Skerianz's offer.*fn2
Skerianz formed a partnership named PNB to pursue a spandex venture with Giuseppe Casucci (Casucci) and Fernando Riva (Riva). In the spring of 1988, Skerianz and Riva interviewed some Ducilo plant employees for positions with PNB. Among the DuPont employees interviewed were Giordano, Inigo and Petrosino. They were then employed in supervisory technical positions at the Ducilo plant. We will collectively refer to them as the "technicians". Inigo told his girlfriend, deBianchini,*fn3 that Skerianz wanted him to help build and start a Lycra plant and had offered him a salary of $4,000.00 per month. The other technicians were apparently given similar offers, and each eventually accepted his offer.
In August of 1988, Inigo resigned from his position as maintenance supervisor at Ducilo. In the next few months, Giordano resigned from his position as maintenance supervisor there and Petrosino resigned his position as a process engineer. All of them had signed agreements not to compete with DuPont when they first started to work for DuPont, and Giordano and Inigo signed reaffirmations of these agreements when they left the Ducilo plant. All three technicians accepted contracts to work for Skerianz's company, PNB, in Italy. None disclosed this to DuPont, and Giordano and Inigo gave DuPont false reasons for leaving. DeBianchini, secretary to the superintendent of the Ducilo plant and its document librarian, also quit at about the same time to join Inigo in Italy. At trial, deBianchini testified that she heard the men talk about stealing DuPont's Lycra technology so they could take it with them.
In November, 1988, Isaac Assa (Assa), owner of Lycratex, a Mexican company doing business with DuPont and Skerianz, contacted DuPont. Assa informed DuPont that he had acquired Lycra technology, through Skerianz and current and former DuPont employees, and was planning to produce Lycra with Skerianz's assistance. He asked DuPont for $20,000,000.00 and other compensation to squelch the project and return the technology. DuPont persuaded Assa to stop doing business with Skerianz.
The technicians, who initially understood that they would work in Mexico, were informed that the Mexican Lycra project had fallen through, but they would go on working on a similar project for the Radici Company, an Italian textile concern. Learning of this, DuPont also contacted Radici and persuaded it too to stop doing business with Skerianz. In December 1988 Skerianz informed the technicians that the Radici project would be postponed, and that they should take a vacation. When they came back to work in early January, it was at Cassuci's house.
DuPont officials first contacted the Federal Bureau of Investigation (FBI) and the United States Attorney's Office about Skerianz's Lycra activity shortly before Thanksgiving of 1988. The FBI took no action as a result of this contact. Skerianz was then contacted by his brother Ferri. Ferri was acting on behalf of DuPont at the behest of Salim Ibrahim (Ibrahim), DuPont's World-Wide Director of Lycra. After telling Ferri that he would only talk about the technology for $10,000,000.00, Skerianz agreed to meet with DuPont officials in Wilmington, Delaware.
Skerianz, along with Casucci, met with his lawyer, John Byrne (Byrne), in the morning on December 20, 1988, the day of Skerianz's first meeting with DuPont. They discussed Skerianz's proposed Lycra project and Skerianz told Byrne that he had hired three former DuPont employees. Later Skerianz and Byrne, but not Casucci, met with DuPont officials. Ibrahim and Paul Gillease, DuPont's Director of Textile Operations, represented DuPont, and DuPont secretly taped the meeting. During the meeting Skerianz indicated that the technology was his own and that he could either use it himself or sell it to certain interested buyers. He denied possession of any DuPont proprietary information and also denied employing recent DuPont employees. He proposed selling the technology to DuPont and providing non-competition agreements from everyone in his company for $10,000,000.00 and a substantial Lycra contract. No agreement was reached, but a follow-up meeting was scheduled for January.
Shortly after this meeting with DuPont Byrne withdrew as Skerianz's counsel. Byrne testified at trial that he did not know that Skerianz was using technical documents stolen from DuPont and that he never inspected any of Skerianz's technical documents. Byrne testified that he believed that Skerianz and Casucci were a team, and he was surprised that only Skerianz attended the December 20th meeting. Inigo and Giordano were under the impression that Skerianz was sailing or in Mexico at the time that the first Wilmington meeting took place.
In early January, 1989, before the next scheduled meeting between DuPont and Skerianz in Wilmington, the FBI opened a case file on Skerianz and assigned it to Special Agent Michael Kirchenbaurer. On January 9, the second secretly taped meeting took place, this time at the Hotel DuPont in Wilmington. Present at this meeting were Skerianz, his new attorney, Marvin Gersten (Gersten), Ibrahim, Gillease and FBI Special Agent Robert Rush. Rush passed himself off as DuPont employee Bob Huie. Inigo and Giordano again did not know of this January 9th meeting. Because Skerianz did not bring any sample documents with him, a third meeting was set for January 27, 1989, in Milan, Italy.
The January 27 meeting was attended by Skerianz, Ibrahim, Dr. Jacob Kleinschuster (Kleinschuster), Director of Research and Development for DuPont's Textile Division, and Jose Charre (Charre), former Ducilo plant superintendent. One of Skerianz's two security men brought in a folder of material. Skerianz inspected it, allowed the DuPont officials to see the documents in it and then, after inspecting the folder again, returned it to the security men. During the inspection thirty-three folders and approximately 1350 documents were viewed in this fashion. It was obvious that the material in the folder included DuPont technology because many of the documents bore DuPont's symbol. Some of it, however, was already in the public domain. Inigo and Giordano were not present and were unaware of this meeting or its purpose.
After the January 27 meeting, Skerianz agreed to return the documents and provide DuPont with agreements not to compete on his own and his employees' behalf for a Lycra supply contract and $10,000,000.00. Between January 30 and February 20, 1989, detailed negotiations aimed at consummating such an agreement took place. This resulted in a draft agreement under which Skerianz and the technicians would promise not to produce Lycra in competition with DuPont and would turn over all documents to DuPont in exchange for $10,000,000.00. Eventually a meeting was scheduled for February 27 in Geneva, Switzerland, to close the deal.
Gersten says that he did not know that the technology was DuPont's property, and felt that DuPont was merely posturing in arguing that Skerianz had misappropriated the information. He also notes that he never informed the technicians of the deal, and Skerianz in fact specifically requested him not to do so.
During the months of January and February, Giordano, Inigo and Petrosino worked with Skerianz at Casucci's home. DeBianchini later testified that they joked about the documents they stole from Ducilo and occasionally used an index of the documents while working in Casucci's home. She also testified that about a week before their arrest Inigo awakened from a nightmare and asked her not to wear a certain purple sweater in Geneva on the day of the meeting. In a letter to deBianchini written after they were arrested, Inigo explained that he asked her not to wear that sweater because she was wearing it in his dream when they were arrested.
On February 20, Skerianz announced to Inigo and deBianchini that he had sold the project to DuPont. Skerianz did not mention how much money he sold it for. DeBianchini testified that Inigo later speculated that Skerianz would receive between $2,000,000.00 and $3,000,000.00. Skerianz did tell Inigo that he would give Inigo, as well as Giordano and Petrosino, $50,000.00 now for signing agreements not to compete with DuPont for five years and another $50,000.00 at the end of five years. This money was to be held for them in Swiss bank accounts after DuPont paid Skerianz. Finally, Skerianz noted that he had shown DuPont the documents and would be returning them as part of the deal.
The technicians and deBianchini accompanied Skerianz to the United States Embassy in Milan where all five executed non-competition agreements. In relevant part they read:*fn4
The undersigned . . . for valuable consideration received from E.I. DuPont De Nemours & Company (DuPont), the receipt and sufficiency of which are hereby expressly acknowledged, hereby covenants and agrees that he will not at any time utilize or disclose any trade secrets or other proprietary information of DuPont or its subsidiaries of which he may have knowledge.
The undersigned represents and warrants that he has not retained any documents or copies thereof relating to DuPont technology or know-how pertaining to elastane fiber production . . . .
Joint Appendix (J.A.) at 1760-64. Three days later, deBianchini, Skerianz, Inigo, Giordano and Petrosino traveled with Skerianz's attorney, Gersten, to Milan, Italy to have the non-competition agreements notarized. On the same day, Skerianz and Gersten assured the group that the deal was legal. DeBianchini testified that the group then "checked" two identical sets of documents in Gersten's presence. Gersten testified that the February 23 meeting took place, but also testified that deBianchini was not present and that he never saw any documents.
The next day Skerianz met with Ibrahim to finalize the details of the exchange. On February 26, 1989, Skerianz, Inigo, Giordano, Petrosino and deBianchini drove to Geneva, Switzerland. The exchange was to take place the next morning at 11:00 a.m. at the Citibank building. Although Gersten advised Skerianz not to go through with the deal, Skerianz chose not to heed his advice. The meeting was aborted, however, when Skerianz's own counter-surveillance told him not to go to the meeting because Swiss police were detected nearby. Skerianz told the others to go back to the hotel and instructed Inigo and Petrosino to get their cars. As Skerianz, Inigo, Giordano and deBianchini were about to enter their cars, they were arrested by Swiss police who also seized the documents. Petrosino avoided arrest at that time but was arrested months later in Italy.
In addition to the testimony of the government agents, Byrne, Gersten, deBianchini and the DuPont employees who had negotiated with Skerianz, physical evidence was produced at trial. It included fingerprints of Inigo, Giordano and Skerianz that were found on the folders containing the copies of the documents, handwriting on the folders containing the original documents that was identified as Petrosino's and notations made in Inigo's handwriting found on two labels on the folders and some of the documents themselves.
A federal district court has jurisdiction over federal criminal cases under 18 U.S.C.A. § 3231 (West 1985). The technicians and Skerianz were here indicted for violations of 18 U.S.C.A. § 1951. It reads:
(a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined not more than $10,000 or imprisoned not more than twenty years, or both.
(b) As used in this section --
(2) The term "extortion" means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.
(3) The term "commerce" means commerce within the District of Columbia, or any Territory or Possession of the United States; all commerce between any point in a State, Territory or Possession, or the District of Columbia and any point outside thereof; all commerce between points within the same State through any place outside such State; and all other commerce over which the United States has jurisdiction.
18 U.S.C.A. § 1951 (West 1984). In determining whether the district court's assertion of jurisdiction was proper, the definition of commerce under § 1951 takes on added significance. To resolve this issue, we assume the acts as charged were proved and ask whether they would affect commerce as commerce is defined in the statute, not whether the evidence is sufficient to prove them. The question arises here because most of the conduct alleged took place in Europe and South America and the holdings of DuPont are so great that even this relatively large extortionate demand might not inflict crippling harm upon it. Of course, proof of these facts also does go to the merits issue of sufficiency.
Even if none of the parties' overt acts had occurred in this country, as indeed is the case with Inigo and Giordano, Congress could give the district court jurisdiction under the commerce clause so long as their activities affected DuPont's commercial ventures in interstate commerce within the United States. See Stirone v. United States, 361 U.S. 212, 215, 80 S. Ct. 270, 4 L. Ed. 2d 252 (1960) (Hobbs Act utilizes all of Congress's commerce clause power and reaches even a minimal interference with commerce); United States v. Staszcuk, 517 F.2d 53, 59-60 (7th Cir.) (in banc) (same), cert. denied, 423 U.S. 837, 96 S. Ct. 65, 46 L. Ed. 2d 56 (1975). The jurisdictional question thus resolves itself into whether Congress intended to reach extortionate crimes that have only a slight effect on interstate commerce because the loss of $10,000,000.00, while large in absolute terms, would arguably be ...