United States v. Kaplan , 133 F.3d 826 ( 1998 )

  •                                                             PUBLISH
                          FOR THE ELEVENTH CIRCUIT
                                  No. 95-4908
                        D. C. Docket No. 94-422-CR-SH
              Appeal from the United States District Court
                  for the Southern District of Florida
                             (January 22, 1998)
    Before ANDERSON and BIRCH, Circuit Judges, and WOODS,* Senior
    Circuit Judge.
            Honorable Henry Woods, Senior U.S. District Judge for the
    Eastern District of Arkansas, sitting by designation.
    BIRCH, Circuit Judge:
         This case requires us to determine whether a potential transfer
    of funds from a point outside the United States to a point inside a
    State, for the purpose of paying an extortion demand, establishes
    an effect on commerce sufficient to support federal jurisdiction
    under the Hobbs Act. See 18 U.S.C. § 1951. The district court
    held, and the government contends on appeal, that the simple
    payment of an extortion demand in interstate commerce, without any
    further effect on commerce, is sufficient to support a conviction
    under the Hobbs Act. We REVERSE.
         In 1984 and 1985, defendant-appellant, Barry Kaplan, a
    resident of Miami, Florida, placed several hundred thousand dollars
    into two Panamanian bank accounts with the assistance of Pablo
    Arosemena, a Panamanian lawyer. Kaplan also gave Arosemena
    power of attorney over the two bank accounts for the ostensible
    purpose of disguising his ownership of the money and thus evading
    taxation in the United States. Thereafter, Kaplan sought access to
    those funds, but Arosemena refused to return the money.          In
    January 1989, Kaplan met with Arosemena in his Panamanian
    office, where Kaplan claims Arosemena admitted that he had stolen
    the money. Kaplan also contends that Arosemena brandished a
    firearm during their conversation as he asked Kaplan what he was
    going to do about the theft.
         Kaplan consulted another Panamanian lawyer, Mario Fonseca,
    to attempt to recover his money.           Fonseca conducted an
    investigation into the matter and confirmed that Arosemena had
    stolen the money from the Panamanian accounts. When Fonseca
    met with Arosemena, Arosemena refused to deny the theft and
    warned Fonseca that he would report Kaplan's off-shore funds to the
    United States Internal Revenue Service if Kaplan pursued the
    matter. Fonseca immediately communicated this threat to Kaplan
    by letter, calling Arosemena's tactics “blackmail.”
         Fonseca testified that Kaplan could have brought a civil suit
    against Arosemena or sought criminal charges against him in
    Panama.1 Fonseca explained, however, that a civil suit would have
    served no purpose because Arosemena claimed to have no assets.
    Moreover, as a criminal prosecution certainly would have caused
    Arosemena to lose his license to practice law, thereby eliminating
    his primary means of earning money, any such course of action also
    would have defeated Kaplan's objective of repayment.
         Next, Kaplan discussed his predicament with Roy Gelber, then
    a Dade County Circuit Judge. Gelber had served as Kaplan's lawyer
    on another matter while he was still in private practice. Gelber
    volunteered to contact Raymond Takiff, a Florida lawyer who had
    represented General Manuel Noriega, then the de facto leader of
    Panama. Kaplan, Gelber, and Takiff began to discuss this matter in
    June 1989 and continued until the early part of 1990. Neither
             Fonseca hired another Panamanian lawyer, Dr. Rafael
    Rodriguez, to prepare a civil suit against Arosemena but Kaplan
    decided not to pursue it.
    Kaplan nor Gelber, however, were aware that Takiff had begun to
    cooperate with the federal government in an attempt to resolve his
    own criminal problems.       Takiff became an informant for the
    government on or about August 4, 1989, and he began to record his
    conversations with Kaplan and Gelber.2 During these conversations,
    Takiff offered to contact high ranking individuals in the Panamanian
    Defense Forces (“PDF”) who could retrieve the money from
    Arosemena in Panama. Although Takiff stated that his contacts
    would not kill Arosemena, the record shows that he expected those
    contacts to resort to violence or the threat of violence to obtain the
    money. On September 7, 1989, Takiff explained to Gelber and
    Kaplan that PDF soldiers would force Arosemena to sign cards to
    withdraw approximately $300,000 from a Panamanian bank account.
            Takiff's cooperation with the federal government was not
    limited to Kaplan's case.    Takiff played a part in “Operation
    Courtbroom,” an investigation into judicial corruption in Dade
    County. Takiff engaged in a series of secret transactions with
    Gelber in the course of this operation and Gelber eventually pled
    guilty to charges based on his acts of judicial corruption.
    Pursuant to his plea agreement, Gelber testified against Kaplan at
    Kaplan agreed to the details of the plan and was aware that violence
    would play a part in the transaction.
         Kaplan also decided that he would receive the money by
    accepting a check, in Florida, payable to a Bahamian attorney and
    referenced to another off-shore bank account.          Although the
    transaction never took place, it is clear that Kaplan sought access to
    these funds because he had exhausted his personal assets and the
    record supports the inference that he would have made some
    attempt to use the money in Florida.          Moreover, the record
    establishes that Gelber and Takiff were to receive a portion of the
    extortion demand as payment for their efforts.
         Kaplan, appeals his conviction for attempted extortion and
    conspiracy to commit extortion under the Hobbs Act and argues
    that the evidence the government presented at trial was
    insufficient to show any effect on commerce as contemplated by
    the statute. Kaplan presented this issue to the district court in a
    motion for a judgment of acquittal and new trial pursuant to Fed.
    R. Crim. P. 29(a) & 33, but the district court denied relief.
    Although Kaplan challenges his conviction on a number of
    additional grounds, since we hold that the district court erred by
    finding an effect on commerce on the facts of this case, we limit
    our discussion to that issue.
         The Hobbs Act provides for the federal prosecution of a
    defendant who attempts or conspires to extort property in a manner
    that obstructs or affects commerce. See 18 U.S.C. § 1951(a).3 The
    language of the statute, as well its historical context, demonstrate
    that Congress did not intend to transform every extortionate
             The Hobbs Act provides in pertinent part:
               (a) Whoever in any way or degree obstructs, delays,
               or affects commerce or the movement of any article
               or commodity in commerce, by robbery or extortion
               or attempts or conspires so to do . . . shall be
               fined under this title or imprisoned not more than
               twenty years, or both.
               (b) As used in this section–
               . . . .
                    (3) The term “commerce” means . . . all
                    commerce between any point in a State . . .
                    and any point outside thereof . . . and all
                    other commerce over which the United States
                    has jurisdiction.
    18 U.S.C. § 1951.
    transaction into a federal crime. Instead, the Hobbs Act applies only
    to those extortionate acts that affect interstate commerce. See
    generally United States v. Staszcuk, 
    517 F.2d 53
     (7th Cir. 1975) (en
    banc) (providing an excellent history of the Hobbs Act). As a result,
    the government must prove both extortion and an effect on
    commerce as the two essential elements of a Hobbs Act crime. See
    Stirone v. United States, 
    361 U.S. 212
    , 218, 
    80 S. Ct. 270
    , 274,
    4 L. Ed. 2d 252
     (1960) (“The charge that interstate commerce is
    affected is critical since the Federal Government’s jurisdiction of
    this crime rests only on that interference.”). Although the Hobbs
    Act’s definition of commerce is intended to be broad, and we have
    held that the required effect on commerce need only be minimal,
    some effect on commerce nevertheless must exist to support federal
    jurisdiction. See United States v. Castleberry, 
    116 F.3d 1384
    1386 (11th Cir.) (reaffirming that the government need only show
    that “the extortionate activity has a minimal effect on interstate
    commerce . . . .”), cert. denied, __U.S. __, 
    118 S. Ct. 341
         Kaplan argues that the government failed to provide evidence
    of how the extortion scheme in which he was involved could have
    produced an effect on commerce sufficient to support his conviction
    under the Hobbs Act. In reviewing the sufficiency of the evidence,
    we “consider the evidence in the light most favorable to the
    Government and draw all inferences and credibility choices in favor
    of the jury's verdict.” Id. at 1387-88. We, therefore, must affirm
    Kaplan's conviction if any reasonable construction of the evidence
    would have permitted the jury to find guilt beyond a reasonable
    doubt. See id. at 1388. As the courts have recognized, however,
    proving an effect on commerce when an individual rather than a
    business entity is the target of the extortion is no simple matter. See
    United States v. Collins, 
    40 F.3d 95
    , 99-100 (5th Cir. 1994).4
             The Collins court held that:
               Criminal acts directed towards individuals may
               violate section 1951(a) only if: (1) the acts
               deplete the assets of an individual who is directly
               and customarily engaged in interstate commerce; (2)
               if the acts cause or create the likelihood that the
               individual will deplete the assets of an entity
               engaged in interstate commerce; or (3) if the
               number of individuals victimized or the sum at
               stake is so large that there will be some
         The government advances two theories to support the
    conclusion that Kaplan’s plan, if completed, would have affected
    interstate commerce.   First, the government argues that it has
    satisfied the Hobbs Act’s jurisdictional prerequisite because if
    Kaplan’s extortion demand had been successful the ensuing transfer
    of money from Panama to Florida would have constituted a
    transaction in interstate commerce.5    In direct support of the
    government's argument, the Hobbs Act specifically defines
    commerce to include “all commerce between any point in a State .
    . . and any point outside thereof . . . .” 18 U.S.C. § 1951(b)(3).
    Nevertheless, the government has cited no case in which the
    victim’s payment of an extortion demand, standing alone, provided
              “cumulative effect on interstate commerce.”
    Collins, 40 F.3d at 100 (footnotes and citations omitted). The
    government has made no argument with regard to the first two
             Although the parties vigorously contest whether the
    government presented evidence that the money would have ever
    entered the United States, for the purposes of this appeal we
    assume, as we must, that the jury inferred that Kaplan, Gelber, or
    Takiff would have received money in Florida. See Castleberry, 116
    F.2d at 1387-88.
    the effect on commerce necessary to support a conviction under the
    Hobbs Act. The typical Hobbs Act case involves some element of
    commerce independent and apart from the transaction of paying an
    extortionist’s demand. Indeed, the courts have gone to great lengths
    to identify how a defendant’s actions affected that independent,
    preexisting commerce, rather than looking to the form of the
    extortion payment. See, e.g., United States v. Hollis, 
    725 F.2d 377
    380 (6th Cir. 1984) (basing jurisdiction on a preexisting interstate
    contract between the parties rather than on the movement of the
    extorted funds across state lines). This approach is consistent with
    the language of the Hobbs Act, which criminalizes extortion that
    “obstructs, delays, or affects” commerce rather than extortion that
    itself constitutes commerce.    18 U.S.C. § 1951(a).      Congress
    enacted the Hobbs Act (and its statutory predecessor) to “eliminate
    the ‘levy of blackmail upon industry’” and therefore intended the
    statute to “remove artificial restraints on the free flow of goods.”
    Staszcuk, 517 F.2d at 57, 58.        This legislative emphasis on
    protecting industry and business explains the judicial focus on the
    victim’s connection to interstate commerce rather than the form or
    structure of the extortion payment.
         The government’s argument, however, would require that we
    extend the Hobbs Act to every act of extortion that constitutes an
    interstate commercial transaction. Although we do not doubt that
    Congress has the power to make the receipt of an extortion
    payment across a State border a federal crime, cf. Castleberry,
    116 F.3d at 1387 (discussing the impact of United States v Lopez,
    514 U.S. 549
    115 S. Ct. 1624
    131 L. Ed. 2d 626
     (1995), on the
    Hobbs Act’s jurisdictional requirements), the language and history
    of the Hobbs Act does not indicate that Congress intended this
    statute to perform any such function.6
            Our own research has uncovered only two cases that even
    suggest that the Hobbs Act applies to a case in which the victim’s
    payment of an extortion demand would constitute the only nexus to
    interstate commerce. In United States v. Blair, a district court
    toyed with the idea that: “An individual may be extorted in a
    manner which affects interstate commerce if the actual extortionate
    payment forces the individual to perform a direct interstate
    762 F. Supp. 1384
    , 1389-90 n.7 (N.D. Cal. 1991)
    (citing United States v. Hoelker, 
    765 F.2d 1422
     (9th Cir. 1985)
    (per curiam)). For the reasons discussed above, we find that the
    Blair court’s reasoning on this point and its reading of Hoelker,
         The government’s contention that United States v. Davis, 
    707 F.2d 880
     (6th Cir. 1983), supports its theory of jurisdiction is
    unpersuasive.     In that case, the defendant, an elected sheriff in
    Ohio, required his deputies to make monthly contributions to his
    political war-chest and perform construction work at his home to
    ensure their continued employment. Some of these deputies were
    receiving funds under federal programs, and the evidence showed
    that some of this money was diverted to make contributions to the
    sheriff. The Sixth Circuit held that this diversion of funds in interstate
    commerce supported jurisdiction under the Hobbs Act. Id. at 884.
    In Davis, however, the court focused, not on the actual payment of
    the extortion demand to the sheriff (which by all indications would
    have been an intrastate transaction), but on the preexisting,
    which decides only that the McCarran-Ferguson Act does not take an
    insurance contract out of interstate commerce, to be seriously
    flawed. Similarly, in Hollis, 725 F.2d at 380 n.5, the court mused
    in dicta that the payment of an extortion demand might be
    sufficient to “affect commerce” when the defendant immediately took
    the money across state lines. Subsequent courts, however, have
    rejected such an approach.     See, e.g., Collins, 40 F.3d at 99
    (finding that the movement of robbery proceeds across state lines
    was insufficient to affect commerce within the meaning of the Hobbs
    independent commerce that the extortion affected: the payments to
    the deputies.7 In this case, however, there was no diversion of funds
    already in independent interstate commerce because the victim had
    secured them for his personal use in a Panamanian bank account.8
    Since we have found no support for the contention that the federal
    government can establish jurisdiction under the Hobbs Act by relying
    solely on the flow of the extortion payment itself through interstate
    commerce, we refuse to expand the scope of the Hobbs Act to affirm
    the conviction in this case.
         Second, the government asserts that federal jurisdiction is
    appropriate because, once the funds arrived in Florida, Kaplan and
    his co-conspirators reasonably could have been expected to use
            The government attempts to bolster this argument by citing
    United States v. Huynh, 
    60 F.3d 1386
    , 1388-89 (9th Cir. 1995), in
    which the defendant threatened to interrupt her victims'
    supplemental security income (“SSI”) payments, which traveled from
    Alabama to Washington state, if the victims refused to pay her and
    buy her gifts. By now it should be clear that, on the facts of the
    Huynh case, the defendant's conduct affected independent,
    preexisting interstate commerce (the government's payment of SSI
    benefits), an element that is missing from this case.
            The victim's withdrawal of the funds from a bank account
    also fails to provide the required connection to interstate
    commerce. See Blair, 762 F. Supp. at 1393-94 (collecting cases).
    that money in interstate commerce. Although the government’s
    argument does identify a reasonably probable effect on commerce
    as a result of the extortion scheme,9 it proves too much. Given the
    state of the modern national and international economy, in which
    almost anyone can purchase goods from distant corners of the
    globe, the government’s theory would make the Hobbs Act
    ubiquitous by supporting a federal prosecution in any case in which
    a defendant extorted any amount of money.           Moreover, the
    government's argument receives virtually no support in the cases.
    Although a few courts have suggested that the sheer size or scope
    of an extortion plot might provide the required effect on
           The government’s theory might be considered the converse of
    the “depletion of assets” theory, which has supported the federal
    prosecution of defendants whose extortion produced only an indirect
    effect on commerce. The theory permits a Hobbs Act conviction when
    a defendant extorts money from a business, thereby reducing its
    ability to purchase goods or participate in interstate commerce.
    See e.g., United States v. Alexander, 
    850 F.2d 1500
    , 1503-04 (11th
    Cir.) (upholding a Hobbs Act conviction against a defendant whose
    extortion depleted the assets of a school board that customarily
    engaged in interstate commerce), vacated, 
    492 U.S. 915
    109 S. Ct. 3236
    106 L. Ed. 2d 584
    , amended and reinstated, 
    888 F.2d 777
    Cir. 1989).
    commerce,10 no court has converted the state crime of extortion into
    a federal matter simply by virtue of its size. If such a theory could
    provide a sufficient nexus to interstate commerce there would be no
    need to engage in the extensive analyses of how particular acts of
    extortion affected a victim’s position in interstate commerce that are
    so prevalent in Hobbs Act cases. In United States v. DiCarlantonio,
    870 F.2d 1058
     (6th Cir. 1989), for example, the court reversed a
    Hobbs Act conviction even though the defendant received $30,000
    from the FBI. The defendant’s receipt of the money was insufficient
    to sustain the conviction because the court held that the money had
    no connection to interstate commerce.11 Id. at 1060-61; United
             This court, for example, has suggested, in      dicta and
    without the benefit of supporting authority, that a Hobbs Act
    prosecution may be appropriate if the sheer size of an extortion
    demand implies that the defendants’ use of the funds could be
    expected to affect interstate commerce.      See United States v.
    877 F.2d 870
    , 875-76 (11th Cir. 1989) (defendants had
    demanded in excess of $1.5 million); see also Collins, 40 F.3d at
    100 & n.21 (citing Jund v. Town of Hempstead, 
    941 F.2d 1271
    , 1285
    (2d Cir. 1991)(affirming the Hobbs Act conviction of defendants who
    required a large number of victims to make political contributions
    in order to win and to retain public employment)). We find such a
    result untenable, both on the facts of this case and as a matter of
            The DiCarlantonio court, however, sustained the convictions
    for conspiracy to violate the Hobbs Act because the defendants in
    that case expected the extorted funds to come from a business
    States v. Kaye, 
    593 F. Supp. 193
    , 196-99 (N.D. Ill. 1984) (“In plain
    English . . .    [the indictment] charges an effect on interstate
    commerce by the payment of money, a contention on which there
    has been a failure of proof in . . . [jurisdictional] terms.”); see also
    Collins, 40 F.3d at 99 (holding that the movement of a car, the
    proceeds of a robbery, in interstate travel was insufficient to support
    jurisdiction under the Hobbs Act).
         The government’s position also runs afoul of our requirement
    that the effect on commerce be adverse. See United States v. De
    805 F.2d 1447
    , 1450 (11th Cir. 1986); see also United States
    v. Waters, 
    850 F. Supp. 1550
    , 1562 (N.D. Ala. 1994) (applying the
    rule). Although a few of our sister circuits have criticized our choice
    of words in De Parias,12 the requirement of an adverse effect on
    engaged in interstate commerce. Id. at 1061-62.
             Perhaps most notably, the U.S. Court of Appeals for the
    Fourth Circuit has held that: “Although the word 'adverse' has been
    loosely used in expressing the effect on interstate commerce, such
    adverse effect is not an essential element of the crime that must
    be proved by the prosecution in a Hobbs Act case.” United States
    v. Bailey, 
    990 F.2d 119
    , 126 ( 4th Cir. 1993).      Compare United
    States v. Mattson, 
    671 F.2d 1020
    , 1024 (7th Cir. 1982) (“Even a
    beneficial effect on interstate commerce . . . is within the
    prohibition of the statute.”) and United States v. Tormos-Vega, 959
    commerce is consistent with the language of the statute and
    describes the typical Hobbs Act prosecution in which a defendant
    targets a business entity and thus hampers that victim’s ability to
    engage in commerce. Instead, the government’s argument focuses
    on an increase in interstate commerce arising out of the defendant’s
    ability to spend the proceeds of the extortion scheme. Moreover,
    even if we were inclined to agree with the government’s criticism of
    De Parias, “[t]he law in this circuit is emphatic that 938 F.2d 1255
    , 1258 (11th Cir. 1991) (per curiam) (quoting United
    States v. Machado, 
    804 F.2d 1537
    , 1543 (11th Cir. 1986)).
    F.2d 1103, 1113 (1st Cir. 1992) (same) with McLaughlin v. Anderson,
    962 F.2d 187
    , 194 (2d Cir. 1992)(requiring an adverse effect) and
    United States v. Snyder, 
    930 F.2d 1090
    , 1093 (5th Cir. 1991)(same).
         We conclude that the government failed to establish the effect
    on commerce required to support a prosecution for extortion under
    the Hobbs Act. Our decision, however, hardly vindicates Kaplan,
    and we note that the State of Florida remains free to prosecute
    Kaplan on the facts of this case. See Fla. Stat. Ann. § 836.05
    (defining the crime of extortion under Florida State law).
    Nevertheless, the evidence in this case does not support a federal
    prosecution under the Hobbs Act. Accordingly, we REVERSE his

Document Info

DocketNumber: 95-4908

Citation Numbers: 133 F.3d 826

Filed Date: 1/22/1998

Precedential Status: Precedential

Modified Date: 12/21/2014

Authorities (22)

Stirone v. United States , 361 U.S. 212 ( 1960 )

United States v. Lopez , 514 U.S. 549 ( 1995 )

United States v. Casimir Staszcuk , 517 F.2d 53 ( 1975 )

United States v. Ray T. Davis (80-5015) and Raymond Wallace ... , 707 F.2d 880 ( 1983 )

United States v. Kenneth E. Hollis , 725 F.2d 377 ( 1984 )

United States v. George Hoelker, United States of America v.... , 765 F.2d 1422 ( 1985 )

United States v. Victor MacHado Miguel Angel Victorero, ... , 804 F.2d 1537 ( 1986 )

United States v. Julita De Parias, Jessie Ramirez, A/K/A ... , 805 F.2d 1447 ( 1986 )

United States v. Dan G. Alexander, Jr., and Norman Grider , 850 F.2d 1500 ( 1988 )

United States v. Anthony Dicarlantonio (88-3151/3248), and ... , 870 F.2d 1058 ( 1989 )

United States v. Peter R. Farrell and Paul A. Farrell , 877 F.2d 870 ( 1989 )

United States v. Dan C. Alexander, Jr., and Norman Grider , 888 F.2d 777 ( 1989 )

United States v. D.W. Snyder , 930 F.2d 1090 ( 1991 )

United States v. Kimmy Lee Woodard , 938 F.2d 1255 ( 1991 )

John L. Jund v. The Town of Hempstead the Town of Hempstead ... , 941 F.2d 1271 ( 1991 )

thomas-v-mclaughlin-joseph-gall-macgall-inc-and-macgall-associates , 962 F.2d 187 ( 1992 )

United States v. Kenneth E. Bailey , 990 F.2d 119 ( 1993 )

95 Cal. Daily Op. Serv. 5589, 95 Daily Journal D.A.R. 9551 ... , 60 F.3d 1386 ( 1995 )

47 Fed. R. Evid. Serv. 424, 11 Fla. L. Weekly Fed. C 275, ... , 116 F.3d 1384 ( 1997 )

United States v. Blair , 762 F. Supp. 1384 ( 1991 )

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