COUNSEL: STEPHEN J. RIEGEL, Assistant United States Attorney,
Brooklyn, New York (Zachary W. Carter, United States Attorney for the
Eastern District of New York, Deborah B. Zwany, Assistant United States
Attorney, Brooklyn, New York, on the brief), for Plaintiff-Appellee.
CHARLES G. SLEPIAN, New York, New York (Abraham Abramovsky, Jonathan I.
Edelstein, New York, New York, on the brief), for Defendant-Appellant.
JUDGES: Before: OAKES, KEARSE, and CABRANES, Circuit Judges.
OPINIONBY: KEARSE
OPINION:
[*284]
KEARSE, Circuit Judge:
Defendant Robert Sasso appeals from an amended judgment of the United
States District Court for the Eastern District of New York, Thomas C.
Platt, Judge, ordering him to contribute $ 136,000 toward the cost of
monitoring the operations of defendant Local 282 of the International
Brotherhood of Teamsters ("Local 282"). The district court granted the
[**2]
government's motion to compel such contribution in light of, inter alia,
Sasso's association with organized crime and his participation in a
conspiracy to conduct the affairs of Local 282 through a pattern of
racketeering activity, in violation of the Racketeer Influenced and
Corrupt Organizations Act ("RICO"),
18 U.S.C. § 1961 et seq. (1994). On appeal, Sasso contends
principally that the court (1) lacked authority to order contribution,
and (2) failed to make factual findings sufficient to support the amount
of contribution ordered. For the reasons that follow, we reject all of
Sasso's challenges to liability, but we vacate and remand for findings
with respect to the amount of contribution to be paid.
I. BACKGROUND
In 1992, the government commenced a criminal prosecution against
defendants Michael Carbone, Michael Bourgal, John Probeyahn, Joseph
Matarazzo, and Sasso (collectively the "individual defendants"),
charging them with, inter alia, conspiring to conduct the affairs of
Local 282 through a pattern of racketeering activity, in violation of
18 U.S.C. §§ 1962(c) and (d). In March 1994, Sasso pleaded guilty to
that conspiracy
[**3] charge;
he was sentenced principally to 41 months' imprisonment, followed by
three years' supervised release, and was ordered to pay a $ 7,500 fine,
plus $ 51,172 for the costs of his imprisonment.
Insofar as the present appeal is concerned, most of the events described
below were established by Sasso's plea of guilty. See
18 U.S.C. § 1964(d) (
HN1
"A final
judgment or decree rendered in favor of the United States in any
criminal proceeding brought
[*285] by
the United States under this chapter shall estop the defendant from
denying the essential allegations of the criminal offense in any
subsequent civil proceeding brought by the United States."); see
generally
United States v. Podell, 572 F.2d 31, 35 (2d Cir. 1978)
HN2("a
criminal conviction, whether by jury verdict or guilty plea, constitutes
estoppel in favor of the United States in a subsequent civil proceeding
as to those matters determined by the judgment in the criminal case");
United States v. Smith, 407 F.2d 33, 35 (2d Cir. 1969) ("a plea of
guilty admits all facts well pleaded").
A. The Present Civil RICO Action and the Events Leading to It
Local 282 is a labor organization
[**4]
representing, among others, truck drivers and other transporters of
building materials and equipment to and from construction sites in the
New York City metropolitan area. At the pertinent times, the individual
defendants were officers of Local 282. Between the late 1970s and the
early 1990s, by means of threats of physical, economic, and financial
harm, including work stoppages, the individual defendants unlawfully
obtained cash payments from representatives of companies whose employees
were members or were eligible to be members of Local 282. Such companies
were assured of lax enforcement of their agreements with Local 282 or
were allowed to operate in the absence of a collective bargaining
agreement without experiencing labor unrest.
Sasso was an officer of Local 282 from 1968 to 1992, holding at various
times the positions of business agent, vice-president, and
secretary-treasurer, and serving as its president from 1984 to 1992.
Sasso was also an associate of the
Gambino Organized Crime Family of
La Cosa Nostra ("
Gambino Crime Family" or "
Gambino
Family"), part of a nationwide criminal organization. Sasso and the
other individual defendants shared the unlawful payments described
[**5] above
with members and associates of the
Gambino Crime Family. In addition,
companies affiliated with the
Gambino Family received favorable
treatment at the expense of their competitors, and official positions
within Local 282 were filled with persons favored by the
Gambino Family. The individual defendants also engaged in conduct
designed to prevent government detection of their unlawful collaboration
with the
Gambino Family by, inter alia, accepting illegal payments in
cash, arranging clandestine meetings, transferring money
surreptitiously, and lying during depositions taken under oath.
In June 1994, the government commenced the present civil action against
Local 282 and the individual defendants pursuant to
HN3
18 U.S.C. § 1964, which authorizes the district court to issue
appropriate orders to prevent or restrain violations of RICO. The
complaint, inter alia, alleged a 25-year history of "systemic
infiltration, control and corruption" of Local 282 by members of the
Gambino Crime Family (Complaint P 1), reiterated the allegations
of the count of the indictment to which Sasso had pleaded guilty, and
set out 44 acts of racketeering activity. The principal
[**6]
difference between the civil complaint and the criminal indictment was
that, whereas in the criminal case the RICO enterprise had been defined
as Local 282, in the civil RICO action the enterprise was defined as the
"Local 282/
Gambino Enterprise." The complaint
asserted two claims, alleging that each individual defendant (1) had
conducted the affairs of the Local 282/
Gambino Enterprise through a
pattern of racketeering activity, in violation of
18 U.S.C. § 1962(c), and (2) had conspired to do so, in violation of
18 U.S.C. § 1962(d). The complaint sought equitable relief designed
to "eliminate and enjoin organized crime's control, infiltration and
corruption of Local 282, to prevent Local 282's and organized crime's
extortion of construction businesses, and to have the Individual
Defendants divest and disgorge any interests and proceeds they have
received from the enterprise described herein."
[*286]
(Complaint P 2.) It also asked that the court "appoint a trustee . . .
to assume control of and direct all operations of defendant Local 282
until such time as Local 282 is cleaned of all racketeering or organized
crime influence" (Complaint Wherefore
[**7] P F),
and eventually to conduct elections of new officers free of intimidation
and corruption.
In early 1995, the government, Local 282, and the Local's parent union,
International Brotherhood of Teamsters ("IBT"), entered into a Consent
Judgment calling for the establishment of a monitorship to oversee Local
282's activities and to eliminate corruption within the Local. It
provided for IBT, subject to approval by the government and the district
court, to appoint a Trustee for the Local (the "IBT Trustee"); and it
established procedures for the selection of a Corruption Officer by IBT,
the government, and the court, and for the selection of a Corruption
Counsel by the government and the court.
The Consent Judgment also provided that the expenses of the Corruption
Officer, not to exceed $ 100,000 for the first year and $ 87,500 for
each succeeding year, were to be funded from settlement payments made by
individual defendants, augmented periodically by payments from Local 282
to bring the fund to the level of $ 100,000. By the time of the Consent
Judgment, Carbone had settled the government's civil RICO claims against
him, and some $ 92,000 had been deposited into the fund.
B.
[**8] The
Motion To Compel Contribution by Sasso
In June 1997, the government moved for summary judgment against Sasso,
seeking disgorgement of his ill-gotten gains, an injunction barring him
from any involvement in union activities or in the local construction,
demolition, and trucking industries, and an order requiring him to pay
an equitable share of the funding of the monitorship. In support of its
motion, the government submitted, inter alia, declarations of Corruption
Officer Robert A. Machado describing activities of Sasso during his
incarceration from January 1996 to March 1997. Records of visitors and
telephone calls showed that Sasso had, inter alia, received visits from
several persons believed to be associated with members of organized
crime; made numerous telephone calls to a Local 282 on-site steward and
other persons who were associated with the Local; and placed more than
50 calls to a business that had a collective bargaining agreement with
Local 282 and whose owners had previously made illegal payments to Local
282 officials.
In support of its request for an order requiring Sasso to contribute to
the expenses of the monitorship, the government stated as follows:
[**9]
It is well-established that federal courts not only have the
authority under § 1964(a) to order the independent monitorship of a
union or a business to eliminate corruption and organized crime
control, but have the concomitant power to order which parties shall
pay for the costs and expenses of the monitorship. . . . The
evidence in support of the current motion establishes that defendant
Sasso, before his indictment in 1992, was the highest-ranking and
most powerful person in Local 282 engaged in the racketeering
activities described in the complaint, was organized crime's
"representative" in charge of the local and had close ties with the
highest members of the Gambino Crime Family, and was
receiving a large share of the proceeds from the extortion, bribery
and other illegal activities he engaged in with organized crime
members.
As such, of all the individual defendants, Sasso is the most
responsible for and in turn most benefited from the corrupt
activities and organized crime's control in Local 282, which the
government, the IBT and the Corruption Officer and Corruption
Counsel appointed by this Court are now engaged in a lengthy,
expensive and comprehensive [*287]
effort to eradicate. [**10] As a
part of the monitoring of Local 282, the Corruption Officer has had
to expend time and resources to investigate Sasso's contacts with
Local 282 members and construction industry employers, and to take
appropriate actions. . . . It would simply be fair and just for
defendant Sasso to be required to pay a substantial amount to fund
the current monitorship of Local 282.
(Government's Memorandum of Law in Support of Its Motions for Summary
Judgment on the RICO Claim Against Individual Defendant Sasso and for
Injunctive and Other Equitable Relief Against Him, at 23-24.)
In an order dated January 5, 1998, the district court stated that
further proof should be presented with respect to the government's first
claim for relief, but it granted summary judgment on the second claim,
finding that Sasso had engaged in the alleged RICO conspiracy. The court
permanently enjoined Sasso from, inter alia, (1) owning, operating, or
working for any business that engaged in, or any part of the trucking
industry that engaged in, construction, demolition, or excavation; (2)
belonging to or doing business with Local 282 or any other labor
organization; and (3) associating for any commercial
[**11]
purpose with any member or associate of organized crime. The court
referred the government's requests for disgorgement and contribution to
a United States magistrate judge for further discovery proceedings.
In July 1998, the government renewed its request that Sasso be ordered
to contribute to the funding of the monitorship. The government
submitted Sasso's plea of guilty to the criminal RICO charge and
resubmitted, inter alia, the declarations of Machado describing Sasso's
activities while incarcerated. It also submitted a declaration by the
IBT Trustee stating that the monitorship had thus far expended nearly $
681,000; that expenditures totaling $ 225,000 more were expected before
the scheduled end of the monitorship in May 1999; and that an
anticipated proposal for a four-year extension of the monitorship
envisioned an additional cost of $ 800,000. The government stated that
other individual defendants had contributed a total of $ 209,500 toward
the funding of the monitorship as part of their respective settlement
agreements. The government requested that Sasso be ordered to contribute
$ 400,000.
In opposition to the renewed motion for contribution, Sasso argued that
the
[**12]
government had failed to prove that he engaged in the racketeering
activities alleged in the civil complaint, that RICO does not permit a
civil defendant to be required to fund a monitorship, that the
government lacked standing to request such relief, that the declarations
submitted by the government were irrelevant, and that the remedy was
punitive and thus barred by the Double Jeopardy Clause of the Fifth
Amendment. He argued that the relief requested by the government would
be contrary to this Court's decision in
United States v. Carson, 52 F.3d 1173 (2d Cir. 1995) ("Carson"),
cert. denied,
516 U.S. 1122, 133 L. Ed. 2d 861, 116 S. Ct. 934 (1996).
In a Memorandum and Order dated July 31, 1998, published at
13 F. Supp. 2d 401, the district court granted the government's
motion to the extent of ordering Sasso to pay $ 136,000 toward the
funding of the monitorship. The court rejected Sasso's contention that
the government had failed to prove the allegations that he engaged in
racketeering activity, pointing out that the court had already granted
summary judgment against him in light of the admissions contained in his
plea of guilty.
[**13] In
that plea, Sasso had admitted, inter alia, using his position as a union
officer to demand and collect unlawful payments, using fear of physical,
economic, and financial harm to coerce those payments, engaging in
racketeering activity, and being an associate of the
Gambino Crime Family for the
purpose of reaping financial gain.
[*288]
The court also rejected Sasso's contention that a contribution of the
type requested by the government was not authorized under RICO and was
foreclosed by Carson:
HN4Under
RICO § 1964(a), district courts have jurisdiction to "prevent and
restrain violations of [RICO] by issuing appropriate orders."
18 U.S.C. § 1964(a) (1994). Appropriate orders are "forward
looking . . . and calculated to prevent RICO violations in the
future."
United States v. Carson, 52 F.3d 1173, 1181 (2d Cir. 1995). The
Supreme Court recognized district courts' ample discretion in
designing remedies under RICO when it noted that RICO should be
"'liberally construed to effectuate its remedial purpose.'"
Sedima v. Imrex Co., Inc., 473 U.S. 479, 498, 105 S. Ct. 3275, 87 L.
Ed. 2d 346 (1985) quoting Pub.L. 91-452, § 904(a), [**14] 84
Stat. 947. Additionally, courts' broad powers to fashion appropriate
equitable remedies under § 1964(a) is evidenced by the section's
legislative history which indicates that "the equitable relief
available under RICO is intended to be 'broad enough to do all that
is necessary.'"
Carson, 52 F.3d at 1181, quoting S.Rep. No. 91-617, at 79
(1969).
HN5Under
the powers granted by section 1964(a), district courts have
established monitorships over unions to eliminate corruption. See
United States v. Local 295 of Int'l. Bhd. of Teamsters, 784 F. Supp.
15, 22 (E.D.N.Y.1992) (appointing a trustee to supervise the
actions of a corrupt union); see also
United States v. Local 560, Int'l Bhd. of Teamsters, Chauffeurs,
Warehousemen, and Helpers of America, 581 F. Supp. 279, 321
(D.N.J.1984) (granting trustees the power to administer a
corrupt union during a curative period), aff'd,
780 F.2d 267, 296 (3d Cir. 1985).
. . . .
The broad discretion in fashioning remedies granted by section
1964(a) affords this Court the power to order Sasso to fund the
monitorship which the Consent Judgment created.
13 F. Supp. 2d at 402-03. [**15] The
court emphasized that the contribution order was not tantamount to an
order for disgorgement of past ill-gotten gains but rather was relief
that was forward-looking:
funding a monitorship furthers the prevention and the restraint of
future illegal conduct. . . . Here, there is no question that
additional funding for the Local 282 monitorship will help prevent
the illegal conduct Sasso fostered at Local 282. Indeed, the
monitorship in this case was created for the express purpose of
eradicating the possibility of future labor racketeering by Local
282 officials. Additionally, funding the monitorship will further
prevent future illegal conduct by Sasso. Sasso will be deterred from
engaging in labor racketeering because a fully funded monitorship is
difficult to evade.
Id. at 403.
As to the amount that Sasso should contribute, the court stated as
follows:
Given all of the former and present facts, the Court feels defendant
should bear approximately fifteen (15%) percent of the costs of this
first period, or $ 136,000, at this time, without prejudice to a
future application by the government if an extension of the
monitoring period is granted. [**16]
Id.
A partial final judgment was entered reflecting these rulings.
Thereafter, following the entry of an Amended Consent Judgment extending
the monitorship for an additional four years, and a stipulation
dismissing the government's remaining claims against Sasso, the district
court entered the amended final judgment pursuant to
Fed. R. Civ. P. 54(b), resolving all claims in this action against
Sasso.
II. DISCUSSION
On appeal, Sasso, still relying largely on Carson, contends principally
that
[*289] §
1964(a) does not authorize the court to order a retired union officer to
contribute to the funding of a union monitorship. He also argues, inter
alia, that the government lacked standing to seek a contribution order
and that the district court made insufficient factual findings to
support the conclusion that he should pay 15 percent of the monitorship
cost. For the reasons that follow, we conclude that a contribution order
was a permissible exercise of the court's discretion. However, we remand
for further findings as to the appropriate amount of contribution by
Sasso.
A. Authority Under RICO To Order Contribution
HN6Section
1964(a), pursuant to which the district
[**17] court
ordered Sasso's contribution, provides as follows:
The district courts of the United States shall have jurisdiction to
prevent and restrain violations of section 1962 of this chapter by
issuing appropriate orders, including, but not limited to: ordering
any person to divest himself of any interest, direct or indirect, in
any enterprise; imposing reasonable restrictions on the future
activities or investments of any person, including, but not limited
to, prohibiting any person from engaging in the same type of
endeavor as the enterprise engaged in, the activities of which
affect interstate or foreign commerce; or ordering dissolution or
reorganization of any enterprise, making due provision for the
rights of innocent persons.
18
U.S.C. § 1964(a) (emphasis added).
HN7Although
the section does not expressly mention orders for contribution, it
states that the types of relief authorized are "not limited to" those
listed. As a general matter, we note that
when Congress entrusts to an equity court the enforcement of
prohibitions contained in a regulatory enactment, it must be taken
to have acted cognizant of the historic power of equity [**18] to
provide complete relief in light of the statutory purposes. As . . .
long ago recognized, "there is inherent in the Courts of Equity a
jurisdiction to . . . give effect to the policy of the legislature."
Clark v. Smith, [38 U.S. 195] 13 Pet. 195, 203, 10 L. Ed. 123.
Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 291-92, 4 L. Ed.
2d 323, 80 S. Ct. 332 (1960).
HN8Thus,
unless a statute expressly, "or by a necessary and inescapable
inference, restricts the court's jurisdiction in equity," we will infer
that "all the inherent equitable powers of the District Court are
available for the proper and complete exercise of that jurisdiction."
Porter v. Warner Holding Co., 328 U.S. 395, 398, 90 L. Ed. 1332, 66 S.
Ct. 1086 (1946). We therefore consider whether a contribution order
is an "appropriate order[],"
18 U.S.C. § 1964(a), i.e., one that is within the equity power of
the court and that is not, expressly or by inescapable inference,
inconsistent with other aspects of § 1964(a) or with the overall
framework of RICO.
As the Supreme Court has discussed in cases dealing with other remedial
provisions of RICO,
HN9RICO was
designed
[**19] to be
an "aggressive initiative to supplement old remedies and develop new
methods for fighting crime."
Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 498, 87 L. Ed. 2d 346, 105
S. Ct. 3275 (1985). Thus, in interpreting the scope of a RICO
provision authorizing the forfeiture of "any interest [the defendant]
has acquired . . . in violation of section 1962,"
18 U.S.C. § 1963(a)(1), the Court noted that "the legislative
history clearly demonstrates that the RICO statute was intended to
provide new weapons of unprecedented scope for an assault upon organized
crime and its economic roots,"
Russello v. United States, 464 U.S. 16, 26, 78 L. Ed. 2d 17, 104 S. Ct.
296 (1983).
Similarly, in determining the scope of a provision authorizing a private
civil action to recover treble damages for injury "by reason of a
violation of" any of RICO's substantive provisions,
18 U.S.C. § 1964(c), the Court concluded that
HN10§ 1964(c)
should be "read broadly" in light
[*290] of
"Congress' self-consciously expansive language and overall approach" in
crafting RICO and Congress's "express admonition that RICO is to 'be
liberally construed
[**20] to
effectuate its remedial purposes,'"
Sedima, 473 U.S. at 497-98 (quoting Pub. L. 91-452, § 904(a), 84
Stat. 947). The Sedima Court stated that, "indeed, if Congress'
liberal-construction mandate is to be applied anywhere, it is in § 1964,
where RICO's remedial purposes are most evident."
473 U.S. at 491 n.10.
This Court too, in considering orders enjoining civil RICO defendants
from, inter alia, participating in their prior business and associating
with their codefendants for any commercial purpose, and/or ordering them
to disgorge assets derived from their unlawful conduct, has recognized
that the district court has "broad discretion in fashioning relief"
under § 1964(a).
United States v. Private Sanitation Industry Association of
Nassau/Suffolk, Inc., 44 F.3d 1082, 1084 (2d 1995) (denying motion
by defendant Ferrante for stay of injunctive and disgorgement orders
pending appeal); see also
United States v. Private Sanitation Industry Association of
Nassau/Suffolk, Inc., 47 F.3d 1158 (2d Cir. Cir.) (summarily
affirming those orders against Ferrante), cert. denied,
516 U.S. 806 (1995);
United States v. Private Sanitation Industry Association of
Nassau/Suffolk, Inc., 995 F.2d 375, 377 (2d Cir. 1993) [**21]
(affirming injunctive order against defendant Avellino and noting that
RICO "grants courts broad discretion and latitude in enjoining violators
from activities that might lead to future violations").
HN11The
legislative history of § 1964(a) in particular reveals that Congress
intended that subsection to constitute broad authorization for entry of
remedial orders. The Report of the Judiciary Committee of the House of
Representatives on the Organized Crime Control Act of 1970, of which
RICO was part, stated that the provision that would eventually become §
1964(a)
contains broad provisions to allow for reform of corrupted
organizations. Although certain remedies are set out, the list is
not meant to be exhaustive, and the only limit on remedies is that
they accomplish the aim set out of removing the corrupting influence
and make due provision for the rights of innocent persons.
H.R. Rep. No. 91-1549, reprinted in 1970 U.S.C.C.A.N. 4007, 4034
(emphasis added). Similarly, the Senate Judiciary Committee Report on
that legislation stated that
where an organization is acquired or run by defined racketeering
methods, then the persons involved can be legally separated [**22] from
the organization, either by the criminal law approach . . . or
through a civil law approach of equitable relief broad enough to do
all that is necessary to free the channels of commerce from all
illicit activity.
S. Rep. No. 91-617, at 79 (1969) (emphasis added).
In United States v. Carson, we considered the scope of § 1964(a) in
connection with a district court order requiring a civil RICO defendant,
a retired labor union official, to disgorge sums he had embezzled or
received as kickbacks during his stewardship of the union. Noting that §
1964 provides the only source of authority for the granting of relief in
a civil RICO action brought by the government, and that § 1964(a) speaks
in terms of "preventing" and "restraining" RICO violations, we concluded
that
HN12§ 1964(a)
is a forward-looking section: "the jurisdictional powers in § 1964(a)
serve the goal of foreclosing future violations, and do not afford
broader redress,"
Carson, 52 F.3d at 1182. We thus framed the question as "whether the
disgorgements ordered here are designed to 'prevent and restrain' future
conduct rather than to punish past conduct." Id. (quoting
18 U.S.C. § 1964 [**23] (a))
(emphases in original).
HN13While
recognizing the legislative history as to § 1964(a)'s intended
[*291]
breadth, see
Carson, 52 F.3d at 1181, we rejected the proposition that
"categorical disgorgement of all ill-gotten gains [can] be justified
simply on the ground that whatever hurts a civil RICO violator
necessarily serves to prevent and restrain future RICO violations,"
id. at 1182 (internal quotation marks omitted). "Ordinarily, the
disgorgement of gains ill-gotten long in the past will not serve the
goal of preventing and restraining future violations unless there is a
finding that the gains are being used to fund or promote the illegal
conduct, or constitute capital available for that purpose." Id.
(internal quotation marks omitted). We therefore remanded to the
district court "for a determination as to which disgorgement amounts, if
any, were intended solely to prevent and restrain future RICO
violations." Id. (internal quotation marks omitted).
Sasso's reliance on Carson for the proposition that a former union
officer cannot be compelled to contribute to the cost of ridding the
enterprise he corrupted of the vestiges of his racketeering
[**24]
activities is entirely misplaced. In Carson, we dealt with a
disgorgement order, not with an order of contribution to the funding of
a monitorship; and we reversed only to the extent that the sums ordered
disgorged were not meant for the prevention of future RICO violations.
Our remand plainly allowed an order requiring the payment of any amounts
that were "intended solely to prevent and restrain future RICO
violations."
52 F.3d at 1182 (internal quotation marks omitted).
In the present case, we deal with an order for Sasso's payment of money
into a fund that plainly is to be used to prevent further violations of
section 1962. The mission of the Local 282 monitorship is to oversee the
operations of the Local until it is cleansed of all racketeering and
organized crime influence, and honest elections may be held. That
mission is unquestionably forward-looking, and it cannot be accomplished
unless the monitorship is adequately funded. As the district court
stated,
there is no question that additional funding for the Local 282
monitorship will help prevent the illegal conduct Sasso fostered at
Local 282. Indeed, the monitorship in this case was created for the [**25]
express purpose of eradicating the possibility of future labor
racketeering by Local 282 officials.