As indicated, the prosecutors have requested a stay pending appeal. That request will be denied. First, there appears to be no appealable order, since the element of finality is lacking. No decision of any court has been cited to this Court that an order of the kind here involved is sufficiently independent of the main cause of action that it is appealable notwithstanding its lack of finality. Compare Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949). Second, the type of decision that is here involved is one that, of necessity, is entrusted to the discretion of this Court, and an appeal (or a writ of mandamus) would therefore be unlikely to succeed on the merits for that reason alone. Third, to grant a stay to the prosecution pending resolution of any appeal would be tantamount to a deprivation of necessary living expenses to this defendant between the present and the conclusion of the trial. To put it another way, the grant of a stay -- given the delays necessarily inherent in the appellate process -- would be a denial by this Court by its left hand of the relief that it had just granted with its right. The request for a stay will accordingly be denied.
Surveillance, Mail Cover, Grand Jury
request that the prosecution inform them whether any evidence in its possession was obtained through any form of surveillance or mail cover, and they request a description of such evidence. They further request to be informed whether any unauthorized persons were in the grand jury room and whether any grand jury testimony was left unrecorded. The prosecutors have stated in open court that they are not aware of any electronic surveillance of defendants, that they have not obtained any evidence from surveillance or mail covers, that no unauthorized persons were in the grand jury room, and that no grand jury testimony was left unrecorded. In the absence of any evidence that these representations are incorrect, the motion must and will be denied.
Conspiracy and RICO Counts
claim that Count One, conspiracy, and Count Two, criminal RICO, are mutually exclusive, and that the Court must therefore dismiss one of the two counts or, in the alternative, compel the government to elect between them. Basically, it is defendants' theory that a single conspiracy or scheme to defraud, as stated in the indictment, cannot also constitute the requisite "pattern of racketeering activity" for a RICO violation.
The law on this issue is not entirely clear. The Supreme Court has not squarely decided the issue of whether a single scheme also may constitute a pattern of racketeering activity. However, in a footnote in Sedima, S.P.R.L. v. Imrex, 473 U.S. 479, 105 S. Ct. 3275, 3285, 87 L. Ed. 2d 346 n.14 (1985), the Court provided some guidance for determining what constitutes such a pattern of activity, stating that "criminal conduct forms a pattern if it embraces criminal acts that have results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events." Construing the decision and dicta in Sedima, the various Circuits have divided over the issue of whether a single scheme also may constitute a pattern of racketeering activity. Compare Bank of America v. Touche Ross & Co., 782 F.2d 966, 971 (11th Cir. 1986), Morgan v. Bank of Waukegan, 804 F.2d 970 (7th Cir. 1986), United States v. Ianniello, 808 F.2d 184, slip op. at 18-23 (2d Cir. Dec. 4, 1986) with Superior Oil Company v. Fulmer, 785 F.2d 252, 257 (8th Cir. 1986). District courts that have found a pattern of racketeering activity when there has been a single scheme include Rush v. Oppenheimer, 628 F. Supp. 1188 (S.D.N.Y. 1986), United States v. Freshie Co., 639 F. Supp. 442 (E.D. Pa. 1986), and United States v. Yonan, 622 F. Supp. 721 (N.D. Ill. 1985). The Court of Appeals for this Circuit, however, has not addressed this issue, and this Court is thus not bound by either view.
Upon review of the relevant authorities, and the reasoning underlying them, it is the opinion of this Court that, depending upon the facts, a single conspiracy or scheme may also constitute a pattern of racketeering activity. It is apparent, at this juncture at least, that the requisite determination must be made on a case-by-case basis after consideration of such relevant factors as (1) the number, variety and interrelation of predicate acts and the length of time over which they were committed; (2) the number of victims; (3) the presence of separate schemes; and (4) the occurrence of distinct injuries. See Sedima, 105 S. Ct. at 3285 n.14; Morgan, slip op. at 8-9.
Consideration of these factors leads the Court to conclude that, while defendants in this case may have engaged in a single scheme to defraud, they could also and at the same time have participated in a pattern of racketeering activity. The predicate acts in this case satisfy the "pattern" element inasmuch as they arise out of twenty-three distinct real estate transactions, each transaction involving the same or substantially similar predicate acts as the others and occurring over a span of approximately five years. While the government and defendants appear to agree that a single scheme to defraud is being charged, there are allegedly many victims of defendants' acts: the Department of Housing and Urban Development, the Federal Housing Administration, the Veterans' Administration, and, not least, the twenty-three buyers in the real estate transactions that are the subject of the indictment. Finally, each real estate transaction, involving numerous predicate acts, caused the infliction of a new injury on the particular victim.
Contrary to defendants' contentions, it is not illogical to charge and, depending upon the evidence, to find both a single agreement or conspiracy fraudulently to secure FHA financing, and the commission of numerous predicate acts with similar purposes and methods sufficient to constitute a pattern of racketeering activity. Since the defendants here allegedly participated in a single scheme to defraud the government and, while so doing, engaged in a variety of predicate acts over several years causing many distinct injuries, the Court concludes that both the conspiracy count and the RICO count may stand. Accordingly, the Court will deny defendants' motion to dismiss one of the two pertinent counts, and it will also deny the request to compel the prosecution to elect between the counts.
For the reasons stated in the Memorandum being issued contemporaneously herewith, it is this 16th day of January, 1987
ORDERED that defendants' motion to dismiss for vagueness be and it is hereby denied; and it is further
ORDERED that defendants' motion for a bill of particulars be and it is hereby granted insofar as the indictment charges that defendants violated certain unspecified laws and regulations of the United States and denied in all other respects; and it is further
ORDERED that defendants' motion for pretrial discovery be and it is hereby granted with respect to defendants' request for pretrial discovery of nonwitness co-conspirators' statements, but only to the extent that such statements would be discoverable under Fed. R. Crim. P. 16 if made by defendant and with respect to defendants' motion for pretrial discovery of the government's witness list, and defendants' motion is denied in all other respects; and it is further
ORDERED that defendant Friedman's motion to modify the November 5, 1986 restraining order to permit that defendant to use $26,250 identified in that order as representing the return of a purchase deposit paid on real property for the payment of reasonable and ordinary living expenses be, and it is hereby granted, and the order is hereby modified accordingly; and it is further
ORDERED that defendant Friedman's motion to modify the November 5, 1986 restraining order to permit him to expend funds from his Standard Federal Savings & Loan Account No. 0041400182 identified in subparagraph (d)(x) of said order, to the extent necessary for payment of federal and Maryland income taxes due January 1987, be and it is hereby granted, and the order is hereby modified accordingly; and it is further
ORDERED that the government's request for a stay of the order modifying the temporary restraining order be and it is hereby denied; and it is further
ORDERED that defendants' request for information concerning surveillance, mail cover, unauthorized persons in the grand jury and unrecorded grand jury testimony be and it is hereby denied; and it is further
ORDERED that defendants' motion to dismiss Count Two or, in the alternative, Count One, or, further in the alternative, to compel election of counts, be and it is hereby denied.