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U.S. v. Sarbello

filed: February 2, 1993; As amended February 17, 1993.

UNITED STATES OF AMERICA
v.
MICHAEL SARBELLO, APPELLANT IN NO. 91-5327 UNITED STATES OF AMERICA V. JOSEPH JOHN CENTURIONE, APPELLANT IN NO. 91-5328 UNITED STATES OF AMERICA V. MICHAEL SARBELLO, APPELLANT IN NO. 91-5650



Appeal from the United States District Court for the District of New Jersey. (D.C. C. No. 90-00190-01). (D.C. C. No. 90-00190-03). (D.C. C. No. 90-00190).

Before: Mansmann and Hutchinson, Circuit Judges, and Bartle, District Judge.*fn*

Author: Mansmann

Opinion OF THE COURT

MANSMANN, Circuit Judge.

This appeal arises from the criminal forfeiture under RICO*fn1 provision 18 U.S.C. § 1963 of Michael Sarbello's and Joseph Centurione's entire interest in a legitimate corrugated box manufacturing business, which the jury found Sarbello and his co-defendants "established, operated, controlled, conducted or participated in the conduct of in violation of the racketeering laws" to the extent of 10% of the total assets of the enterprise.

Sarbello and Centurione argue that the scope of the forfeiture authorized under the statute violates the eighth and fifth amendments because the forfeiture is grossly disproportionate to the criminal activity involving the assets of the enterprise.

We are thus confronted with the difficult question of whether the Constitution permits the courts to reduce an otherwise mandatory 100% statutory criminal forfeiture on the basis of an analysis which proportions the seriousness of the offense to the severity of the criminal sanction, and if so, whether the facts of this case warrant such a judicial resentencing.

We hold that the court may reduce the statutory penalty in order to conform to the eighth amendment. We further hold that Sarbello has established a prima facie showing of an eighth amendment infringement. We will thus remand for a more than summary finding as to whether the forfeiture provision of the statute as applied to Sarbello's interest in the RICO enterprise is either an unconstitutionally "cruel and unusual punishment" or an "excessive fine."

Sarbello and Centurione further appeal on the question of whether a technical discrepancy pertaining to the theory under which forfeiture was pleaded in the indictment justifies vacating the order of forfeiture going to the RICO enterprise, and also whether an alleged abuse of the district court's discretion in limiting cross-examination of the government's key witness warrants a retrial. Finally, Sarbello contests a contempt finding against him made on the basis that he violated the district court's pre-trial restraining order. We find these arguments to be without merit.

I.

The United States District Court for the District of New Jersey assumed subject matter jurisdiction of this case under 18 U.S.C. § 3231. The district court's civil contempt order was made pursuant to § 1963(j). Our appellate jurisdiction is predicated upon 28 U.S.C. § 1291.

II.

The occurrence of the predicate acts constituting the substantive RICO offenses are not in issue here. Thus, it suffices to reiterate only that they consisted primarily in a bribery scheme which preempted organization of the appellants' business corporation by the Paper Workers Union by securing through bribes a contract with the International Ladies Garment Workers Union (ILGWU), and a kickback scheme which secured augmented sales of the corporation's product to a major customer, in violation of Taft-Hartley*fn2 and New Jersey commercial bribery laws.

Michael Sarbello and Joseph Centurione, president and vice-president respectively of Associated Packaging, Inc., (API), were indicted on 21 counts charging violations of 18 U.S.C. § 1962 and 29 U.S.C. § 186, by engaging in a pattern of racketeering through API, the RICO enterprise.*fn3 At the time of the forfeiture indictment, Sarbello had approximately a 67 percent interest in API; Centurione had approximately 11 percent. API was an existing legitimate business before the defendants became its owners and officers, and API remained primarily legitimate thereafter.*fn4

Count 1 of the indictment charged a RICO conspiracy under 18 U.S.C. § 1962(d); Count 2 charged the defendants with participation in the affairs of API through a pattern of racketeering in violation of section 1962(c); Count 3 charged the defendants with using proceeds of racketeering activity to acquire interest in companies other than API*fn5 in violation of 18 U.S.C. § 1962(a); Counts 4 through 21 charged misdemeanor Taft-Hartley payoffs to Harry Benn, the "on-the-take" official of the ILGWU. Finally, the indictment alleged § 1963 criminal forfeiture of the defendants' interest in API and in other companies acquired with racketeering proceeds. The jury convicted Sarbello of all of the charges,*fn6 but acquitted Centurione of all substantive charges except conspiracy.

The forfeiture allegation of the indictment was then tried to the same jury, which found in response to a special interrogatory that Sarbello's interest in API, the RICO enterprise, was tainted to the extent of 10%. (R. at 637). The jury found Centurione's interest in API tainted in the amount of 5%. (R. at 647). Subsequently, in an opinion dated January 3, 1991, the trial court held that the RICO statute required forfeiture of the defendants' entire interest in the RICO enterprise, notwithstanding the jury's determination. The court denied a stay of final forfeiture proceedings, and API has since been sold in what Sarbello characterizes as a "firesale."

In addition to forfeiture, Sarbello was sentenced to seven years' imprisonment with parole likely after two years, two years' consecutive probation, a $250,000 fine, plus $725 in special assessments. The court ordered restitution in the amount of $87,494 to Leone Industries, API's major customer and victim of the RICO kickback scam, which has subsequently been set off against a civil award to Leone.

On July 19, 1991, the district court held Sarbello in contempt of court for violating a pre-trial restraining order entered by the district court on July 24, 1990, on the basis of his use of the assets of API to pay the fees of his and Centurione's criminal defense.

III.

Rule 7(c)(2) of the Federal Rules of Criminal Procedure requires that notice of the extent of any interest subject to criminal forfeiture appear in the form of a forfeiture allegation in the criminal indictment or in the information.*fn7 Fed. R. Crim. P. 31(e) further provides that if an indictment alleges criminal forfeiture, a special verdict shall determine the extent of the forfeiture. See United States v. Ofchinick, 883 F.2d 1172, 1177 (3d Cir. 1989), cert. denied, 493 U.S. 1034 (1990). The advisory commentary to Rule 31(e) indicates that "criminal forfeiture is an element of the offense to be alleged and proven." See also Caplin & Drysdale v. United States, 491 U.S. 617, 109 S. Ct. 2646, 2654, 105 L. Ed. 2d 528, 109 S. Ct. 2667, n.5 (1989) (forfeiture is a substantive charge in the indictment); but cf. United States v. Grammatikos, 633 F.2d 1013, 1024-25 (2d Cir. 1980) (forfeiture is merely additional penalty and therefore the indictment need not allege forfeiture with particularity). A conclusory forfeiture allegation in the indictment that recognizably tracks the language of the applicable criminal forfeiture statute satisfies Rule 7(c)(2); minor incongruities in the tracking of allegations under RICO § 1963 will not fatally flaw forfeiture notice. See e.g., United States v. Porcelli, 865 F.2d 1352, 1366 (2d Cir.), cert. denied, 493 U.S. 810, 107 L. Ed. 2d 22, 110 S. Ct. 53 (1989). Similarly, Rule 7(c)(3) provides that "error in the citation or its omission shall not be ground for dismissal of the indictment . . . or for reversal . . . if the error or omission did not mislead the defendant to the defendant's prejudice." In short, the forfeiture indictment need only track in some minimal form the language of the applicable statute in order to permit a responsive defense strategy. Forfeiture notice, "barebones" as the courts have permitted,*fn8 is mandatory under the Rule, and a minimal compliance with the Rule also serves to satisfy the Constitution's notice requirements, albeit some other form of notice may be adequate for purposes of constitutional due process.

At issue in the case before us is whether an alleged defect in Sarbello's and Centurione's criminal forfeiture indictments with regard to their respective interests in API so violated the minimal notice standard of Rule 7(c)(2) as to render the forfeiture order ineffective as to that property. Specifically, the defendants contend that the special verdict sheets submitted to the jurors pursuant to Rule 31(e) improperly directed the jurors to consider a basis for forfeiture for the defendants' interest in API which was not alleged in the indictment. Hence, the court was without authority to issue the API forfeiture order based on the jury's response because Rule (7)(c)'s mandatory notification procedure was violated.

Interrogatory 3a of the special verdict form, drafted with the assistance of Sarbello's trial attorney, requested that the jurors resolve whether API was an "enterprise which the defendant . . . established, operated, controlled, conducted or participated in the conduct of in violation of the racketeering laws." (R. at 637 and 647). Sarbello and Centurione contend that the basis for forfeiture implied in this interrogatory, which precisely tracks the language of ยง 1963(a)(2) of RICO's forfeiture provision, was not ...


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