United States v. Sutton

605 F.2d 260
Court of Appeals for the Sixth Circuit·Decided September 4, 1979·No. Nos. 78-5134 to 78-5139, 78-5141 to 78-5143·Published·Cited by 47 cases

Opinions

MERRITT, Circuit Judge.

This case raises issues of first impression in our court concerning the scope of the federal enterprise racketeering statute, 18 U.S.C. §§ 1961-68 (1976). The law was enacted as Title IX of the Organized Crime Control Act of 1970 and is popularly knov/n as RICO, an acronym for “Racketeer Influenced and Corrupt Organizations,” the heading under which it appears in the crim[263] inal code. RICO’s central aim is to prevent and punish the financial infiltration and corrupt operation, through patterns of racketeering activity, of “legitimate business operations affecting interstate commerce.” Iannelli v. United States, 420 U.S. 770, 787 n. 19, 95 S.Ct. 1284, 1294, 43 L.Ed.2d 616 (1975). The question in this case is whether the statute may also be applied to persons engaged in racketeering activity unrelated to any legitimate organization but in furtherance of something the government terms “a criminal enterprise.” We hold that it may not.

I.

After a jury trial in the United States District Court for the Southern District of Ohio, on an indictment containing 329 counts, the nine appellants — Carl Sutton, Jr., Joseph Elkins, Dyeatra Carter, Edwin Adams, Otis Hensley, Prince Albert Rankin, Samuel Harris, Charles Cravens, and Viola Holmes — were each convicted of conducting the affairs of an “enterprise” affecting interstate commerce through a pattern of racketeering activity, 18 U.S.C. § 1962(c), and of conspiracy to commit that offense, 18 U.S.C. § 1962(d). Each was also convicted of one or more counts of using the telephone to facilitate drug offenses, 21 U.S.C. § 843(b), and of various substantive drug offenses, primarily possession and distribution of heroin, 21 U.S.C. § 842(a)(1). In addition, Adams was convicted of seven counts of mail fraud, 18 U.S.C. § 1341, and of transporting and receiving stolen property in interstate commerce, 18 U.S.C. §§ 2314-15; and, Hensley was convicted of eight counts of mail fraud, thirteen counts of receipt by a convicted felon of firearms shipped in interstate commerce, 18 U.S.C. § 922(h), and of unlicensed dealing in firearms, 18 U.S.C. § 922(a).

The government’s evidence showed both a significant heroin distribution business and a large-volume stolen property fencing operation. They were centered in the Cincinnati, Ohio area, and involved many of the same participants.

The central figures in the narcotics distribution business were appellant Sutton and Herschel Weintrub, who was not tried in the instant prosecution. Sutton, with the aid of appellant Holmes, purchased heroin from Elkins and Carter in Cleveland with money supplied by Weintrub. The drugs were redistributed by appellants Rankin, Craven, Adams, Hensley and Harris.

Weintrub, Hensley and Adams comprised the fencing operation. Weintrub’s role again was apparently that of financier. Adams and Hensley actually marketed the stolen property, principally household goods. There was evidence that the goods were supplied by several burglary rings over which Hensley and Adams once claimed control to an undercover government agent.

It was the government’s theory of the case that these were not discrete criminal ventures but were merely separate departments of a unitary “criminal enterprise” under the management and control of Weintrub and Sutton. For example, there was evidence that Adams often sold both heroin and stolen property to a single customer in the same transaction. Adams told one such buyer, a government informant, that the stolen goods he had on hand— stoves in that instance — had been provided by Hensley and that the heroin he was selling was supplied by “Carl” (Sutton) and “Herschel” (Weintrub). Weintrub, Hensley, Harris, and Sutton were often observed by government surveillance agents visiting Adams’ place of business, a jewelry store, from which the heroin and stolen property were usually sold. During court-authorized electronic surveillance Adams and Hensley, and Adams and Weintrub, frequently were overheard discussing both the narcotics and the fencing operations in a single telephone conversation.

The telephone interceptions also revealed that Adams and Weintrub assisted Hensley in obtaining false receipts for jewelry, appliances, and other items of personal property which Hensley had reported stolen from his home in a burglary. Hensley used the receipts to collect insurance money on [264] the items, and the mailings made in connection with the insurance claims formed the basis of the mail fraud counts. The proceeds of the fraud apparently were applied to a debt Hensley owed Weintrub for narcotics.

A warrant-authorized search of Hensley’s residence during the closing days of the investigation uncovered several ledger books documenting transactions in firearms and stolen property. Entries in one of the ledger books formed the basis for Hensley’s convictions of receipt by a convicted felon of firearms that had been shipped in interstate commerce.

II.

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