United States v. Mills

Opinion

RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 ELECTRONIC CITATION: 2000 FED App. 0072P (6th Cir.) File Name: 00a0072p.06

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _________________

;  UNITED STATES OF AMERICA,  Plaintiff-Appellant,   No. 98-6179 v.  > ALTON RAY MILLS and   Defendants-Appellees.  STEPHEN D. TOARMINA,

 1 Appeal from the United States District Court for the Western District of Tennessee at Memphis. No. 96-20080—Jerome Turner, District Judge. Argued: December 16, 1999 Decided and Filed: February 28, 2000 Before: NELSON and DAUGHTREY, *Circuit Judges; DOWD, District Judge.

* The Honorable David D. Dowd, Jr., United States District Judge for the Northern District of Ohio, sitting by designation.

1 2 United States v. Mills, et al. No. 98-6179

_________________ COUNSEL ARGUED: Dan L. Newsom, ASSISTANT UNITED STATES ATTORNEY, SENIOR LITIGATION COUNSEL, Memphis, Tennessee, for Appellant. A. C. Wharton, Jr., WHARTON, WHARTON & ASSOCIATES, Memphis, Tennessee, James R. Garts, Jr., HARRIS, SHELTON, DUNLAP & COBB, Memphis, Tennessee, for Appellees. ON BRIEF: Dan L. Newsom, ASSISTANT UNITED STATES ATTORNEY, SENIOR LITIGATION COUNSEL, Memphis, Tennessee, for Appellant. A. C. Wharton, Jr., WHARTON, WHARTON & ASSOCIATES, Memphis, Tennessee, James D. Causey, CAUSEY, CAYWOOD, TAYLOR, MCMANUS & BAILEY, Memphis, Tennessee, James R. Garts, Jr., James D. Wilson, HARRIS, SHELTON, DUNLAP & COBB, Memphis, Tennessee, for Appellees. _________________ OPINION _________________ DAVID A. NELSON, Circuit Judge. This is an appeal by the government from a judgment of acquittal on certain Hobbs Act charges and related conspiracy and money laundering counts of which a jury had found the defendants guilty. The question presented is whether the defendants’ conduct – conduct that involved the solicitation and acceptance of bribes for appointments to deputy sheriff positions in Shelby County, Tennessee – affected interstate commerce, thereby giving rise to federal jurisdiction under the Hobbs Act. Because one or more of the conspirators involved in the solicitation of the bribes had actual knowledge that the bribe money would be obtained through loans made in interstate commerce, we answer this question in the affirmative. The judgment of acquittal will be reversed. No. 98-6179 United States v. Mills, et al. 3

I Defendant Alton Ray Mills was the Chief Deputy Sheriff of the Shelby County Sheriff’s Department. Defendant Stephen D. Toarmina held the title of Staff Special Deputy in the Department. During the early 1990s, defendant Toarmina or an intermediary approached a number of young men with offers to see that “the man downtown” – who proved to be defendant Mills – would appoint them as full-time deputy sheriffs in exchange for the payment of bribes of approximately $3,500 for each position. Six of the young men accepted this deal, paid the bribes, and were subsequently hired by Mills. All six of the aspiring deputy sheriffs were in their early 20s, and none had cash resources adequate to pay the sums demanded. Defendant Toarmina or one of his co-conspirators encouraged each of the young men to borrow the money from a Memphis loan company – First Metropolitan Financial Services, Inc. – with which Toarmina had an ongoing relationship. It is undisputed that the business of First Metropolitan was interstate in character. Five of the six young men accepted Toarmina’s suggestion, signing First Metropolitan loan forms on which Toarmina was listed as “source” or “reference.” First Metropolitan approved all five of the loan applications, notwithstanding that some of the applicants had negative credit references, and Toarmina personally co-signed at least one of the notes. The sixth individual, Derick Feathers, elected not to do business with First Metropolitan; he raised the bribe money by taking advances on his credit cards. All of the funds in question were turned over to Toarmina, who deposited the money in the bank account of a commercial enterprise called the Toarmina Grocery and Market. The assets of the grocery business were subsequently used by Messrs. Toarmina and Mills to satisfy personal obligations. 4 United States v. Mills, et al. No. 98-6179 No. 98-6179 United States v. Mills, et al. 9

In April of 1996 a federal grand jury handed up an 18-count Feathers advised that he did not have the money. He advised indictment charging Toarmina and Mills with a variety of that he could get some cash advances on his credit cards, offenses. Count 1 charged the two officials with conspiracy which he did.” between themselves and with other persons (known and unknown to the grand jury) to commit crimes that included It is true that the borrowing of the money from interstate affecting interstate commerce by extortion in violation of the lenders could not have been expected to “interfere” with Hobbs Act, 18 U.S.C. § 1951. The original indictment did interstate commerce. We are satisfied, however, that the not give the names of the unindicted co-conspirators known effect on commerce need not be adverse; even a beneficial to the grand jury, but these names – which included the effect can satisfy the statute. See Mattson, 671 F.2d at 1024. names of the six young men referred to above – were later In exercising its constitutional power to regulate commerce set forth in a bill of particulars. Other counts of the among the several states, Congress often prohibits conduct indictment charged the defendants with soliciting and that would have a stimulative effect on commerce as opposed accepting bribes in violation of 18 U.S.C. § 666, with to a depressive effect. And the Hobbs Act applies wherever specified extortionate acts violating the Hobbs Act, and with extortion “in any way or degree . . . affects commerce . . . .” money laundering in violation of 18 U.S.C. § 1956(a). (Emphasis supplied.) The district court granted a pre-trial motion to dismiss the The judgment of acquittal is REVERSED, and the case is bribery counts on the ground that the transactions at issue did REMANDED for the entry of judgment in accordance with not meet the $5,000 threshold specified in 18 U.S.C. § 666. the jury’s verdict. The government took an interlocutory appeal, and in United States v. Mills, 140 F.3d 630 (6th Cir. 1998), this court affirmed the dismissal of the bribery counts. The case subsequently went to trial on the counts that remained. Pursuant to Rule 29, Fed. R. Crim. P., the defendants moved for a judgment of acquittal. The district court allowed the case to go to the jury, but informed the parties outside the presence of the jury that the motion would be granted with respect to the counts at issue here. The jury returned verdicts of guilty on all counts, and, for reasons explained by the district court on the record, the court followed through on its earlier promise to grant acquittals. The government has perfected a timely appeal. II The Hobbs Act provides, in relevant part, that “Whoever in any way or degree obstructs, delays, or affects commerce . . . by robbery or extortion or attempts or conspires so to do . . . shall be fined under this title or 8 United States v. Mills, et al. No. 98-6179 No. 98-6179 United States v. Mills, et al. 5

The government apparently argued that resort to company imprisoned not more than twenty years, or both.” 18 assets was not in fact unlikely, most of Mr. Allen’s personal U.S.C. § 1951(a). assets having been illiquid. The Fourth Circuit was not impressed by this argument, pointing out that Allen had easy As used in this section, “commerce” is defined in terms that access to certificates of deposit. “[E]ven aside from these include all commerce between any point within a state and assets,” the court added, “we rely on the fact that, when any point outside the state, as well as “all other commerce pressed at oral argument, the government could offer no over which the United States has jurisdiction.” 18 U.S.C. convincing explanations as to why Allen could not easily § 1951(b)(3). secure a loan against his ample non-liquid assets.” Id. The Fourth Circuit’s opinion contains no discussion of whether The Supreme Court has made it clear that the Hobbs Act’s such a loan would itself have been likely to affect interstate broad jurisdictional language is to be read as meaning what it commerce. says:

In the case at bar, advancing an argument of a sort “[The] Act speaks in broad language, manifesting a apparently not made in Mattson or Buffey, the government purpose to use all the constitutional power Congress has contends that the requisite effect on interstate commerce has to punish interference with interstate commerce by been demonstrated here because the proofs showed a realistic extortion, robbery or physical violence. The Act outlaws probability that the bribe money would be borrowed from a such interference ‘in any way or degree.’ 18 U.S.C. company engaged in interstate commerce. We find the § 1951(a).” Stirone v. United States, 361 U.S. 212, 215 government’s argument persuasive, especially in view of the (1960). existence of substantial evidence that defendant Toarmina or one of his co-conspirators had actual knowledge of the The maxim “de minimis non curat lex” does not apply in interstate character of the funds before the money was turned determining whether an effect on commerce is sufficient to over. satisfy the jurisdictional predicate of the Hobbs Act. It has long been the understanding in this circuit that even a “de It is clear that unlike Mr. Allen in the Buffey case, the minimis” effect on interstate commerce will suffice. See aspiring deputy sheriffs from whom the defendants in this United States v. Peete, 919 F.2d 1168, 1174 (6th Cir. 1990) case solicited bribes were not wealthy men. It was virtually (citing cases). Both in our circuit and others, this certain that each of them would have to go into debt to raise understanding has survived the opinion in United States v. the bribe money. With respect to the five young men who Lopez, 514 U.S. 549 (1995), a case dealing with the borrowed the bribe money from First Metropolitan (at annual constitutionality of a statute that did not address interstate percentage interest rates exceeding 30%), moreover, it is clear commerce at all. See United States v. Smith, 182 F.3d 452, that defendant Toarmina or one of the co-conspirators who 456 (6th Cir. 1999), where we joined “[a]ll of the other did the soliciting on his behalf had actual knowledge of the circuits that have considered the issue [in holding] that the de source of the funds. The sixth young man, Derick Feathers, minimis standard for Hobbs Act charges survived Lopez . . . .” found First Metropolitan’s interest rate too high, so he borrowed the money on his credit cards. There was The government argues here, as it did before the district uncontradicted testimony from the member of the conspiracy court, that the requisite effect on commerce was shown by who solicited the bribe from Feathers that the conspirator (among other things) proof that there was from the outset a knew this was where the money was coming from: “Mr. reasonable probability that the would-be deputy sheriffs – none of whom seems to have had any appreciable savings – 6 United States v. Mills, et al. No. 98-6179 No. 98-6179 United States v. Mills, et al. 7

would borrow the bribe money from the loan company “In the case before us, it was only Anderson’s personal recommended by defendant Toarmina or from some other assets which were depleted by the $3,000 payment: The interstate lender, such as a credit card company. In rejecting record clearly established that Playboy never reimbursed this argument, the district court relied primarily on two pre- Anderson for the extorted sum. We would have a Lopez opinions from other circuits, United States v. Mattson, different case if Playboy, a business, had been the victim 671 F.2d 1020 (7th Cir. 1982), and United States v. Buffey, of the extortion instead of Anderson. But Anderson 899 F.2d 1402 (4th Cir. 1990). We are not persuaded that himself certainly was not conducting a business engaged either of these opinions should control the decision here. in, or purchasing items from, interstate commerce. The victim in this case was an individual who had no Mattson involved a $3,000 bribe paid by one Donald connection with interstate commerce at all . . . .” Id. at Anderson, a Playboy Club electrician, to secure a supervising 1024-25. electrician’s license from the City of Chicago. Although Anderson financed part of the bribe by taking out a personal The Seventh Circuit seems to have given no consideration to loan, the Seventh Circuit’s opinion gives no indication that the possibility that Anderson’s borrowing of a portion of the the government tried to hang its hat on this peg in maintaining money used for the bribe might have given him a connection that the evidence established the necessary nexus to interstate with interstate commerce. commerce. The second opinion relied on by the district court, the The Seventh Circuit acknowledged in Mattson that either Fourth Circuit’s opinion in Buffey, involved an attempt to a direct effect on commerce or an indirect effect would supply blackmail one James Allen, a wealthy businessman who had the requisite nexus. The court found no evidence of either been guilty of a sexual indiscretion. The defendants type of effect, however, in the record before it. conspired to demand $20,000 for keeping quiet about Allen’s peccadillo, and the main question before the court was First, the Seventh Circuit said, whether the indirect effect/“depletion of assets” theory could legitimately be applied to satisfy the Hobbs Act’s “There was no possibility of a direct effect on interstate jurisdictional prerequisite. (“[T]he government must commerce, because Anderson’s payment of $3,000 for an concede,” the court said, “[that] the acts [the defendants] electrician’s license neither actually nor potentially conspired to commit would not have affected interstate affected the purchase of electrical supplies from outside commerce directly.” Buffey, 899 F.2d at 1404.) Illinois for use in electrical repairs in the Playboy Building. Whether Playboy’s own staff did the work, or The company of which Mr. Allen was board chairman and Commercial Lighting was hired, the supplies would still majority stockholder was engaged in interstate commerce, and have to be purchased outside Illinois by Playboy or the Buffey court indicated that it would have recognized the Commercial Lighting. Neither of these enterprises were existence of the required nexus with commerce had it been victims of the extortion.” Id. at 1024. reasonably probable that Allen would dip into corporate funds in order to pay the blackmailers. Because of his wealth, Second, said the court, while the indirect effect represented however, the Fourth Circuit concluded that it was “highly by depletion of the assets of an interstate business can be unlikely that Allen would have satisfied an extortion demand jurisdictionally sufficient, there was no such depletion of by means of the Company’s assets rather than his personal assets in Mattson: assets.” Id. at 1405.