United States v. Charles Novak

443 F.3d 150, 2006 U.S. App. LEXIS 8187, 2006 WL 851673
CourtCourt of Appeals for the Second Circuit
DecidedApril 3, 2006
DocketDocket 05-0108-CR
StatusPublished
Cited by34 cases

This text of 443 F.3d 150 (United States v. Charles Novak) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Charles Novak, 443 F.3d 150, 2006 U.S. App. LEXIS 8187, 2006 WL 851673 (2d Cir. 2006).

Opinion

EATON, Judge.

Defendant-Appellant Charles Novak (“Novak”) appeals from a January 7, 2005 judgment of conviction entered in the United States District Court for the Eastern District of New York (Trager, J.) following a jury trial. Novak was found guilty of offenses related to his position as a union official, including the unlawful receipt of labor payments (29 U.S.C. § 186(b)(1) (2000)), making false statements under the Employee Retirement Income Security Act (“ERISA”) (18 U.S.C. § 1027 (2000)), mail fraud (18 U.S.C. § 1341 (2000)), money laundering (18 U.S.C. § 1956(a) (2000)), racketeering (18 U.S.C. § 1962(c) (2000)), and conspiracy (18 U.S.C. §§ 371, 1956(h) and 1962(d) (2000)). He was sentenced principally to 108 months’ imprisonment. Before us is Novak’s appeal of the convictions for unlawful receipt of labor payments, mail fraud, making false ERISA statements, and, consequently, the conspiracy and Racketeering Influenced and Corrupt Organization Act (“RICO”) charges. For the reasons set forth below, we affirm the convictions for unlawful receipt of labor payments and for the RICO conspiracy and substantive RICO violations, reverse the convictions for mail fraud and making false ERISA statements, and order supplemental briefing regarding Novak’s remaining convictions.

I.

Novak was the vice-president and business manager of Local One of the International Union of Elevator Constructors (“Local One” or “the Union”). Among other things, the Union’s members operate the temporary elevators used to carry workers at construction sites in New York City. Part of Novak’s job was to ensure that employers (usually construction contractors) at the sites complied with the Union’s collective bargaining agreement. Novak received his salary directly from Local One.

At each job site, a “lead operator” supervised the other Union operators and decided what hours they were to work. In addition, at the close of each work week, the lead operator filled out the employees’ time sheets, submitted them to a representative of the employer, and often distributed the weekly paychecks to the elevator operators. The lead operator’s salary was paid by the contractor, not the Union. Nevertheless, Novak determined which Union members would act as lead operators.

The evidence at trial demonstrated that the submitted time sheets regularly included hours not actually worked by Union members. For a variety of reasons, however, the contractors agreed to the submis *154 sion of these “no-show” hours. For example, the discovery that a contractor was using non-union labor to operate the elevators might lead to the issuance of a check to a Local One operator for hours not actually worked. This payment would constitute a settlement for the contractor’s violation of the collective bargaining agreement. On other occasions, advance agreements between the Union and a contractor would allow the use of non-union labor, or permit a contractor to employ Union elevator operators for fewer than the contractually agreed-upon hours. These agreements required the contractor to pay the Union operators as if they had worked those hours. In each case, a time sheet would be submitted for a Local One member claiming the hours, and the contractor would issue a check payable to that member. Novak’s scheme took advantage of the contractors’ payments by requiring the check’s recipient to kick back a portion of the wages received for the no-show hours. These kickback payments to Novak were made without the contractors’ knowledge.

In order to gain the cooperation of the Union members in his corrupt arrangement, Novak used his power to assign jobs. Local One maintained hiring lists, which contained the names of members who had been laid off or were between jobs. According to Union practice, a preference was to be accorded Union members who had been on the list for the longest period of time. In other words, those who had been out of work the longest were to be the first hired. Novak, however, with the assistance of his chosen lead operators, would often ignore the hiring lists and instead refer for work favored Union members whom he trusted to participate in his kickback plan without objection. By controlling the lead operators and the assigned Union workers, Novak assured his receipt of the kickback payments. This activity served as the foundation for No-vak’s indictment and subsequent convictions at trial.

II.

“It [is] unlawful for an officer of a labor organization to receive or accept anything of value from someone who employs members of that labor organization.” United States v. Cody, 722 F.2d 1052, 1057 (2d Cir.1983); 29 U.S.C. § 186(b)(1). Likewise, it is also a crime for an employer to “pay, lend, or deliver” anything of value to any representative of his or her employees. 29 U.S.C. § 186(a)(1). “[A]ny person who willfully violates this section shall, upon conviction thereof, be guilty of a felony.” 29 U.S.C. § 186(d)(2). Novak argues that his conviction under § 186(b)(1) should be overturned because the contractors were not aware that he was receiving any of the money paid to the operators. According to Novak, this absence of knowledge by the contractors is fatal to the Government’s charge. It is the Government’s position, and that of the district court, that Novak’s receipt of a portion of the contractors’ payments as kickbacks was alone sufficient to justify a conviction under the statute. This being the case, we must determine whether Novak’s conviction for violating § 186(b)(1) can be sustained if the contractors were not aware that a portion of their payments to their employees was being received by a union representative.

We first note that not all payments from an employer to a labor representative are prohibited by § 186. For instance, the statute provides an exception-for certain payments made by an employer for deposit in an employee trust fund. See 29 U.S.C. § 186(c). 1 Indeed, the Supreme Court in *155 Arroyo v. United States, 359 U.S. 419, 79 S.Ct.

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Bluebook (online)
443 F.3d 150, 2006 U.S. App. LEXIS 8187, 2006 WL 851673, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-charles-novak-ca2-2006.