United States v. Richard Devincent
632 F.2d 147 (1980)
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Rule of Law:
In federal extortionate credit transactions cases, evidence of a creditor's reputation for using extortionate means and prior violent acts, and statements communicating such reputation to the debtor, are admissible to prove the debtor's understanding of the credit's extortionate nature and their fear, as their probative value generally outweighs prejudicial effect, especially with limiting instructions. Additionally, an indictment's validity is not undermined merely because it was presented to the grand jury after evidence was heard or not read aloud, absent strong evidence of fundamental irregularity.
Facts:
- Allan Klein, who owned a "bust-out" operation, met the appellant in April 1974 while delivering merchandise.
- Appellant agreed to accept Klein's bets and extend him credit for gambling.
- After initially winning, Klein later lost a significant amount (later referenced as a $1700 loan) and failed to pay appellant on the agreed day.
- Appellant verbally abused Klein and threatened to shoot him "in the face" or "break both of [his] goddamn legs" if he did not get the money, forcing Klein to borrow from another source to pay appellant.
- Klein's cousin, Kenneth Weiner, warned Klein that appellant was setting up a protection racket, demanding ten percent of merchandise sales from businesses like theirs, and advised compliance because appellant "had just got out of jail for loansharking and ... he was a pretty bad guy."
- In August, appellant visited Klein's store, accused him of "backdooring" merchandise, and punched Klein in the face, knocking him off his chair.
- Later in mid-August, Klein, having incurred additional gambling debts, sought to borrow $3,000 from Visconti.
- Appellant was present when Klein went to pick up the money and personally handed Klein $3,000, demanding $150 per week in "juice" (interest) that would not reduce the principal, and ordered him to be there "every Saturday," which Klein understood as a threat of violence for non-payment.
- Klein made the weekly interest payments for six to eight weeks before fully repaying the debt, fearing physical harm or death if he did not.
Procedural Posture:
- A special grand jury was impaneled in February 1976, and after hearing evidence, it presented an indictment against the appellant on February 7, 1979, for making an extortionate extension of credit and collection of an extension of credit by extortionate means in violation of 18 U.S.C. §§ 892 and 894.
- Appellant was previously indicted for conspiracy to violate 18 U.S.C. § 1962(c) (conducting an enterprise through racketeering or collection of unlawful debt), where one of the alleged overt acts was the August beating of Klein; a jury delivered a general verdict acquitting appellant of the conspiracy charge.
- In the present case, a jury in federal district court (trial court) delivered a verdict of guilty against the appellant.
- The appellant appealed his conviction to the U.S. Court of Appeals for the First Circuit, assigning numerous errors.
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Issue:
1. Does federal law permit the admission of evidence concerning a creditor's reputation for extortionate collection practices and specific instances of violence, including communication of a criminal record, to establish a debtor's understanding of an extortionate extension of credit under 18 U.S.C. §§ 892 and 894? 2. Does the validity of a grand jury indictment require that the indictment be read aloud to the grand jury or that it be presented before all evidence is heard?
Opinions:
Majority - Coffin, Chief Judge
Yes, federal law permits the admission of such evidence. The court held that evidence concerning appellant's reputation for loansharking, specific violent acts (the August beating, June threats), and statements communicating his criminal past (Weiner's warning) were admissible. This evidence was highly probative of Klein's understanding that nonpayment of the loan would result in extortionate punishment, which is an essential element under 18 U.S.C. §§ 892 and 894. The court clarified that such reputation evidence, when directly communicated to the debtor, is admissible under § 892(b)(3)(B) without requiring a showing that direct evidence of the debtor's state of mind is unavailable (as is required under § 892(c)). The statements about appellant's criminal past were not hearsay because they were offered not for their truth, but for their effect on Klein's state of mind, contributing to his reasonable belief of harm. While such evidence carries a risk of prejudice, its probative value for establishing the debtor's understanding—a critical element in loansharking—was not substantially outweighed by the danger of unfair prejudice, especially given the trial judge's careful limiting instructions. The court noted that a criminal reputation is often a valuable asset in the loansharking business. No, the validity of a grand jury indictment does not require that it be read aloud to the grand jury or presented before all evidence is heard. The court found that appellant failed to overcome the "strong presumption of regularity" accorded to grand jury findings, as he produced no evidence supporting his claims of irregularity. A grand jury functions as an ex parte investigatory body, not a final adjudicator of guilt, and is afforded considerable flexibility in its procedures and the evidence it considers. Citing Costello v. United States and United States v. Calandra, the court reiterated that an indictment valid on its face from a legally constituted and unbiased grand jury is sufficient for trial. Requiring evidence to be re-presented after an indictment is drafted or mandating that the indictment be read aloud would impose unnecessary duplication, delay, and hamper the investigatory grand jury's efficiency. The court also found that the prosecutor's opening statement, although "colorful," was not unduly inflammatory. Furthermore, the court rejected appellant's collateral estoppel argument regarding the August beating, concluding that a prior acquittal for conspiracy (where the beating was an alleged overt act) did not necessarily determine that the beating itself did not occur or that it was unrelated to the loans, thus not precluding its use in the present case. Finally, the court deemed the jury instruction on reasonable doubt permissible when viewed in the context of the overall charge, despite discouraging the use of "moral certainty" language.
Analysis:
This case is significant for clarifying the scope of admissible evidence in federal loansharking and extortion cases under 18 U.S.C. §§ 892 and 894, particularly regarding reputation evidence and specific prior acts of violence. It affirms that such evidence, when directly communicated to the debtor or relevant to their state of mind, is highly probative and generally admissible, even if prejudicial, so long as limiting instructions are given. The decision also reinforces the broad deference given to grand jury procedures, underscoring that technical procedural defects in presenting indictments or hearing evidence will not invalidate an indictment without strong evidence of fundamental irregularity. This helps prosecutors establish the essential 'understanding' and 'fear' elements crucial to these types of organized crime charges.
