Opinion
CRIMINAL ACTION NO: 96-207, SECTION: "R".
February 14, 2001.
ORDER AND REASONS
Before the Court is defendant Fred H. Goodson's motion to vacate his mail fraud, money laundering, Count 16, and RICO convictions, as well as the judgment of forfeiture under 18 U.S.C. § 982. For the following reasons, the Court vacates defendant Goodson's two mail fraud convictions, five money laundering convictions, and the forfeiture order under 18 U.S.C. § 982; the Court denies Goodson's motion to vacate his Count 16 and RICO convictions and the forfeiture order under 18 U.S.C. § 1963.
I. BACKGROUND
A jury convicted defendant Fred H. Goodson on June 27, 1997 of one count of racketeering, one count of racketeering conspiracy, two counts of mail fraud, five counts of money laundering, and three counts of using interstate communications in aid of state bribery. On October 15, 1997, this Court sentenced Goodson to 121 months in prison. Goodson appealed, and the Fifth Circuit affirmed his convictions, his sentence, and the forfeiture order on July 21, 1999. See United States v. Bankston, 182 F.3d 296, 302 (5th Cir. 1999). Goodson then appealed to the United States Supreme Court. Citing its opinion in Cleveland v. United States, 531 U.S. ___, 121 S.Ct. 365 (2000), the Supreme Court granted certiorari on November 13, 2000 and remanded the case to the Fifth Circuit. See Goodson v. United States, ___ U.S. ___, 121 S. Ct. 476 (2000). On January 4, 2001, the Fifth Circuit remanded the case to this Court to address the effect of the Supreme Court's Cleveland decision on Goodson's convictions, his sentence, and the forfeiture order. United States v. Cleveland, No. 98-30471, slip op. at 1-2 (5th Cir. Jan. 4, 2001). Accordingly, on January 10, 2001, this Court ordered Goodson and the Government to brief these issues. United States v. Cleveland, No. 96-207, slip op. at 1-2 (E.D. La. Jan. 10, 2001).
Citing this Court's May 25, 2000 opinion, Goodson first argues that the Supreme Court's decision in Cleveland requires this Court to vacate not only his mail fraud and money laundering convictions, but also the judgment of forfeiture under 18 U.S.C. § 982, which was predicated on his money laundering convictions. Goodson also argues that the Cleveland decision requires the Court to reverse his conviction on Count 16 of the indictment for using interstate communications in aid of state bribery because the evidence introduced on the mail fraud and money laundering counts "unquestionably" tended to incite or arouse the jury into convicting him on that count. (Def.'s Mem. Regarding Effect Supreme Ct.'s Decision at 4.) Goodson further argues that the Court should reverse his RICO convictions and the RICO forfeiture order because the predicate acts lack the requisite continuity to establish a pattern of racketeering activity and because there is no nexus between the predicate acts and the enterprise.
In response, the Government concedes that the Court should vacate Goodson's mail fraud and money laundering convictions, as well as the forfeiture under 18 U.S.C. § 982(a). The Government contests Goodson's motion to reverse his Count 16 and RICO convictions and the RICO forfeiture order. It argues that Goodson has not made the required showing of prejudice on Count 16 and that there is more than sufficient evidence of the requisite continuity and nexus to sustain the RICO convictions.
II. DISCUSSION
A. Mail Fraud and Money Laundering Convictions
Neither party disputes that Goodson's mail fraud and money laundering convictions should be vacated. The Court agrees. In Cleveland v. United States, the Supreme Court vacated Carl W. Cleveland's two mail fraud convictions because 18 U.S.C. § 1341 "requires the object of the fraud to be `property' in the victim's hands, [,] and a Louisiana video poker license in the State's hands is not `property' under § 1341." Cleveland, 531 U.S. at ___, 121 S.Ct. at 374-75. As Goodson was convicted of the same counts of mail fraud as Cleveland was, the Supreme Court's holding in Cleveland compels the Court to vacate Goodson's mail fraud convictions. The Court also vacates Goodson's five money laundering convictions because they were predicated on the mail fraud convictions. The Court further vacates the forfeiture order under 18 U.S.C. § 982 because that section was predicated on the money laundering convictions, which have been vacated. This holding does not affect the order of forfeiture under 18 U.S.C. § 1963.
B. Count 16: Prejudicial Spillover
Goodson argues the Court should reverse his conviction on Count 16 of the indictment, which charged him with aiding and abetting a May 23, 1995 interstate telephone communication between Maria Goodson and Joe Morgan regarding the 4.99% partnership interest of Louisiana State Senator B.B. Sixty Rayburn's children in Truck Stop Gaming, Ltd., in violation of 18 U.S.C. § 1952. Goodson questions the sufficiency of the evidence against him and contends that the evidence introduced on the mail fraud and money laundering counts "unquestionably" tended to incite or arouse the jury into finding that he offered that partnership interest to Senator Rayburn as a bribe.
As the Court's decision has vacated some, but not all, of the counts of Goodson's multicount conviction, the Court must evaluate whether Goodson suffered prejudicial spillover of evidence from the vacated counts. See United States v. Vebeliunas, 76 F.3d 1283, 1294 (5th Cir. 1996); United States v. Rooney, 37 F.3d 847, 855 (2d Cir. 1994). The Court accordingly considers three factors to determine whether, in the totality of the circumstances, it should reverse Goodson's conviction on Count 16. See Vebeliunas, 76 F.3d at 1294; Rooney, 37 F.3d at 855. First, the Court considers whether the evidence presented to support the vacated counts tended to incite or arouse the jury into convicting Goodson on Count 16. See Vebeliunas, 76 F.3d at 1294; Rooney, 37 F.3d at 855. Second, the Court compares the evidence and facts pertaining to the vacated counts with the evidence and facts pertaining to Count 16. See Vebeliunas, 76 F.3d at 1294; Rooney, 37 F.3d at 855. "In cases where the vacated and remaining counts emanate from similar facts, and the evidence introduced would have been admissible as to both, it is difficult for a defendant to make a showing or prejudicial spillover." Vebeliunas, 76 F.3d at 1294 (quoting United States v. Wapnick, 60 F.3d 948, 954 (2d Cir. 1995)). See also Rooney, 37 F.3d at 856 ("It is only in those cases in which evidence is introduced on the invalidated count that would otherwise be inadmissible on the remaining counts, and this evidence presented in such a manner that tends to indicate that the jury probably utilized this evidence is reaching a verdict on the remaining counts, that spillover prejudice is likely to occur."). Third, the Court considers the strength of the Government's case with respect to Count 16. See Vebeliunas, 76 F.3d at 1294; Rooney, 37 F.3d at 856.
Applying these factors, the Court does not find that the evidence presented by the Government in support of the vacated convictions was inflammatory. See, e.g., United States v. Holzer, 840 F.2d 1343, 1350 (7th Cir. 1988) ("[T]he evidence of mail fraud was not of the inflammatory sort: that might have swayed the jury to convict Holzer of the other charges . . . ."). Indeed, much of that evidence involved information about the video poker license application process and the nature of the ownership of the video poker license, hardly the type of evidence that would inflame the emotions of a jury. Second, the facts surrounding Goodson's conviction on Count 16 were related to the facts in his vacated convictions, and Goodson does not argue that any evidence relating to his conviction on Count 16 was inadmissible. Further, the jury convicted Goodson of some counts and acquitted him of others, demonstrating its ability to consider the evidence and follow the Court's instructions discretely for each of the counts — including Count 16. Third, the Court has already made elaborate findings on the sufficiency of the evidence to support Goodson's conviction on Count 16, to wit: a recorded December 28, 1994 conversation between Goodson and Louisiana State Senator Larry Bankston regarding Goodson's intent in transferring 4.99% of Truck Stop Gaming, Ltd. to the Rayburn children and what he could expect from Senator Rayburn in return; documentary evidence showing the no down payment, no real collateral, risk-free nature of this "sale" to the Rayburn children; the Rayburns' receipt of $50,000 without paying anything on the "note" they gave for the "purchase;" the May 23, 1995 conversation between Maria Goodson and Joe Morgan regarding the accounting for payments made by Truck Stop Gaming to the Rayburn children; and the July 7, 1995 conversation between Goodson and Senator Bankston regarding Senator Rayburn's interest in helping Goodson suppress a state investigation into his business because Senator Rayburn had a secret interest in Goodson's video poker license. See United States v. Cleveland, 1997 WL 539677, at *24-26 (E.D. La. Aug. 26, 1997). Furthermore, the Court finds that Goodson's protestations that the jury acquitted Senator Rayburn, Maria Goodson, and Joe Morgan on this count do not diminish the strength of the evidence supporting his conviction. Therefore, the totality of the circumstances compels the Court to reject Goodson's assertion of prejudicial spillover and to deny his motion to reverse his conviction on Count 16.
C. RICO Convictions
Goodson also contends that the Court should reverse his racketeering and racketeering conspiracy convictions as well as the RICO forfeiture order. He argues that the predicate acts necessary for those convictions lack the requisite continuity to establish a pattern of racketeering activity and that there is no nexus between the predicate acts and the enterprise, which was dedicated to the development and operation of video poker establishments at truck stops throughout Louisiana.
Both RICO counts alleged a pattern of racketeering activity consisting of eight racketeering acts. Racketeering Act 1 consisted of five acts of mail fraud, which also were charged as Counts 3 to 7, and Racketeering Act 2 consisted of five acts of money laundering, which also were charged as Counts 8 to 12. As the Court already explained, the Supreme Court's decision in Cleveland required the Court to vacate Goodson's mail fraud and money laundering convictions (Counts 3 to 12). Accordingly, neither Racketeering Act 1, nor Racketeering Act 2 can form a part of the pattern of racketeering activity. Cf. United States v. Marcello, 876 F.2d 1147, 1152 (5th Cir. 1989). When the jury convicted Goodson on the RICO and RICO conspiracy counts, it returned a general verdict without specifying which predicate acts it relied upon. However, Racketeering Acts 4 and 7 were also charged as substantive offenses, and a conviction of these offenses can serve as RICO predicates provided they then satisfy the other requirements of RICO. Racketeering Act 4 was charged as Count 16, and Racketeering Act 7 was charged as Counts 17, 18, and 19 (three counts charging Goodson with bribing Senator Bankston). The jury convicted Goodson on the substantive charges in Counts 16, 17, and 18 and acquitted him on Count 19. In sum, Goodson's RICO convictions survive if Racketeering Acts 4 and 7 are legally sufficient to support a pattern of racketeering activity and provide the required nexus. Otherwise, the RICO convictions must be vacated.
1. Pattern of Racketeering Activity
To establish a pattern of racketeering activity, the Government must show that the predicate acts are related and that they amount to or pose a threat of continued criminal activity. See H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239, 109 S.Ct. 2893, 2900 (1989); United States v. Bustamante, 45 F.3d 933, 941 (5th Cir. 1995). Goodson does not argue that the predicate acts are unrelated. Rather, he argues that the requisite continuity is lacking.
Continuity is centrally a temporal concept that is both closed-and open-ended. See H.J., Inc., 492 U.S. at 241-42, 109 S. Ct. at 2902; Tel-Phonic Servs., Inc. v. TBS Int'l, Inc., 975 F.2d 1134, 1140 (5th Cir. 1992) . Accordingly, it refers to "either a closed period of repeated conduct or to past conduct that by its nature projects into the future with a threat of repetition." H.J., Inc., 492 U.S. at 241, 109 S.Ct. at 2902. To demonstrate continuity over a closed-ended period, the Government must prove a series of related predicates extending over a substantial period of time. Predicate acts only extending over a few weeks or a few months do not satisfy this requirement because in enacting RICO Congress was concerned with long-term racketeering activity. See Id. at 242, 109 S.Ct. at 2902; TelPhonic Servs., Inc., 975 F.2d at 1140. To demonstrate continuity over an open-ended period, the Government must establish a threat of continued racketeering activity, which necessarily depends on the specific facts of each case. See H.J., Inc., 492 U.S. at 242, 109 S.Ct. at 2902. Such continuity may "be established if the related predicates themselves involve a distinct threat of long-term racketeering activity, either implicit or explicit." Id. For example, even though the number of predicate acts involved may be small and may occur close together in time, "the racketeering acts themselves [may] include a specific threat of repetition extending indefinitely into the future, and thus supply the requisite threat of continuity." Id. Furthermore, if it is shown that the predicate acts are a "regular way" of conducting defendant's ongoing legitimate business," then the continuity requirement is satisfied. Id. at 243, 109 S.Ct. at 2902.
Here, Racketeering Acts 4 and 7 involved Goodson bribing Senators Rayburn and Bankston. As a preliminary matter, the Court notes that bribery, by its nature, is a crime that suggests the threat of long-term activity. See id. at 241, 109 S.Ct. at 2902 (Open-ended continuity refers to "past conduct that by its nature projects into the future with a threat of repetition." (emphasis added)). This observation accords with similar general conclusions about the nature of bribery reached by the Fifth and Ninth Circuits. In United States v. Bustamante, the Fifth Circuit upheld a former Congressman's RICO conviction for which the predicate acts included his acceptance of a bribe in the form of a loan guaranty and the promise of future loans. Bustamante, 45 F.3d at 941. The Bustamante court found that the jury was entitled to conclude that Bustamante's actions threatened future criminal activity because the "gratuity" threatened to continue as long as the underlying business venture giving rise to the bribe continued. See Id. To buttress this finding, the Fifth Circuit cited United States v. Freeman, a Ninth Circuit case, for the proposition that "by their nature, crimes such as bribery suggest the threat of long-term activity." Id. at 942 (citing United States v. Freeman, 6 F.3d 586, 596 (9th Cir. 1983)). In Freeman, the Ninth Circuit affirmed the RICO convictions of a legislative aide who moved two special interest bills through the California legislature in exchange for payments from certain fictitious corporations. Freeman, 6 F.3d at 595. Although the court found that the facts were consistent with a closed-ended concept of continuity, it also found that the nature of his crime, bribery, and his statements about purchasing legislation "suggest the existence of a distinct threat of long-term racketeering." Id. at 596.
While bribery may suggest the threat of long-term racketeering, neither the Bustamante nor Freeman court held that that suggestion was sufficient to establish open-ended continuity. In both cases there was evidence to substantiate the threat, and the Court finds that such evidence is present in this case. See H.J., Inc., 492 U.S. at 237, 109 S.Ct. at 2899 (emphasizing "natural and common sense approach to RICO's pattern element"); Southwest Realty, Ltd. v. Daseke, 1990 WL 85921, at *5 (N.D. Tex. May 9, 1990) ("utiliz[ing] a `natural and common sense approach' in determining whether sufficient continuity exists").
First, the bribe Goodson extended to Senator Rayburn was a 4.99% partnership interest in Truck Stop Gaming, Ltd. The partnership interest entitled the Rayburn children to monthly payments, which brought them approximately $6,000 a month from December 1994 through June 1995. See Cleveland, 1997 WL 539677, at *25. That partnership interest was not for a limited term. Absent the unraveling of the enterprise under law enforcement pressure, there is no reason to believe that the payments to the Rayburn children would not have continued. Like Bustamante, this threat of continuing benefits supports a finding of open-ended continuity.
Second, as the Court already explained in its August 26, 1997 order denying defendant's motions for judgment of acquittal, the jury could reasonably have concluded that, in return for the condominium payments (the bribe), Senator Bankston committed himself to protecting video poker against adverse legislation in the future. See id. at *12 (reviewing evidence in which Goodson and Senator Bankston discusses Senator "Bankston's future role in helping the video poker industry politically"). The evidence of this commitment further undergirds a finding of open-ended continuity.
Third, the bribes and the numerous telephone calls introduced into evidence show that the predicate acts were a facet of Goodson's "regular way" of conducting his legitimate video poker business, and, as such, satisfy the continuity requirement. See H.J., Inc., 492 U.S. at 243, 109 S.Ct. at 2902. Indeed, as to the Bankston condominium transaction, Goodson told a lobbyist that he had made the same type of arrangement with Senator Bankston the year before. See Gov't Ex. T43B (Tab 47). Further, Goodson and Senator Bankaton discussed plans for secretly including other legislators in future video poker operations. See Gov't Ex. T18 (Tab 1). The Court therefore finds that Racketeering Acts 4 and 7 provide the requisite open-ended continuity to establish a pattern of racketeering activity.
2. Nexus
Notwithstanding their continuity, the predicate acts must also satisfy RICO's nexus requirement. To show the requisite nexus, the Government must prove beyond a reasonable doubt (1) that Goodson committed at least two of the alleged racketeering acts, (2) that Goodson's association with the enterprise facilitated his commission of the racketeering acts, and (3) that the predicate acts had some effect on the enterprise. See United States v. Carlock, 806 F.2d 535, 546 (5th Cir. 1986); United States v. Cauble, 706 F.2d 1322, 1333 (5th Cir. 1983)
In his motion Goodson focuses on the second factor and argues that his relationship with the enterprise, of which Truck Stop Gaming, Ltd. and Truck Stop Gaming, Inc. were core elements, did not provide him the means to accomplish the unlawful acts. Goodson's argument, however, ignores his pervasive control over the enterprise. As the Fifth Circuit explained in United States v. Cauble: "Of course, if the defendant exercised such control over the legal enterprise as to make his acts the acts of the enterprise, proof of the defendant's commission of racketeering acts satisfies both nexuses. In that event the defendant's connection with the racketeering acts is also the enterprise's connection." Cauble, 706 F.2d at 1333 n. 24.
Here, Goodson was an owner, the general manager, and the legislative liaison for the video poker enterprise, and these roles facilitated Goodson's bribes. First, the Rayburn bribe was a contract assigning a percentage of the Truck Stop Gaming revenue to Senator Rayburn's children. Goodson could not have caused that assignment but for his relationship with the enterprise. Cf Id. at 1341 (certain predicate acts would not have occurred but for defendant's relationship with the enterprise). Second, Goodson did not bribe Senator Bankston on a frolic and detour designed to produce some personal reward not connected to the goals of the enterprise. He dealt with Senator Bankston as the owner of the video poker business and as its legislative lobbyist, which is why Senator Bankston agreed to advance the interests of the video poker enterprise in exchange for the bribe. Cf. id. (defendant's position in the enterprise made certain predicate acts possible). Accordingly, the Court finds that the Government's proof satisfies the requirement that Goodson's position in the enterprise facilitated the commission of the predicate racketeering acts. As the Court finds both the requisite continuity and nexus, the Court denies Goodson's motion to reverse his RICO convictions and the RICO forfeiture order.
III. Conclusion
For the foregoing reasons, the Court vacates defendant Fred H. Goodson's two mail fraud convictions, five money laundering convictions, and the forfeiture order under 18 U.S.C. § 982. The Court denies defendant Fred H. Goodson's motion to vacate his Count 16 and RICO convictions and the RICO forfeiture order.