
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 96-2286                                    UNITED STATES,                                      Appellee,                                          v.                                 STANTON D. SHIFMAN,                                Defendant, Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                     [Hon. Robert E. Keeton, U.S. District Judge]                                             ___________________                                 ____________________                                        Before                                Torruella, Chief Judge,                                           ___________                           Campbell, Senior Circuit Judge,                                     ____________________                              and Boudin, Circuit Judge.                                          _____________                                 ____________________            Paul G. Holian for appellant.            ______________            Donald C. Lockhart, Trial Attorney, with whom Donald K. Stern,            __________________                            _______________        United States Attorney, were on brief for appellee.                                  ____________________                                   August 19, 1997                                 ____________________                      CAMPBELL, Senior Circuit Judge.  Stanton Shifman                                ____________________            challenges his convictions on charges arising out of an            illegal loan-sharking operation run by Joseph A Yerardi, Jr.             He argues, inter alia, that there was insufficient evidence            to support the convictions.                                          I.                      Stanton Shifman and nine others were indicted on            October 14, 1993 for multiple offenses based on their            involvement in an illegal gambling and loan-sharking            operation.  Shifman, whose activities pertained only to the            loan-sharking side of the operation, was charged with            violation of, and conspiracy to violate, the Racketeer            Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C.               1962(c) & (d).  He was also charged with four counts of            aiding and abetting the making of extortionate extensions of            credit, 18 U.S.C   892(a), and a single count of aiding and            abetting the collection of an extension of credit by            extortionate means, 18 U.S.C   894(a).                        Shifman was tried separately from the others.  The            government's evidence consisted primarily of the testimony of            the alleged victims of the loan-sharking activities, seized            records of loans, and admissions made by Shifman to law            enforcement officials.  We recite the facts in the light most            favorable to the verdicts being appealed.  United States v.                                                       _____________            Valerio, 48 F.3d 58, 63 (1st Cir. 1995).            _______                                         -2-                      Joseph Yerardi operated a large-scale gambling and            loan-sharking enterprise that made loans to borrowers at            weekly interest rates of from 3 percent to 5 percent.  These            rates translate into annual interest rates of from 153            percent to 260 percent.  The maximum legal annual rate            allowed in Massachusetts is 20 percent.  Mass. Gen. Laws. ch.            271,   49.                          Shifman first came into contact with Yerardi when            he needed the loan shark's services because of his own            mounting debts.  Shifman subsequently borrowed from Yerardi            numerous times and on each occasion made interest payments of            3 percent or 4 percent a week.  At times, Shifman fell behind            in his weekly payments and was threatened with physical            injury by a Yerardi employee, Jack Murphy, also known as Jack            Kelley.  At some point, Yerardi encouraged Shifman to refer            anyone he knew in need of money to Yerardi.  In return for            these referrals, which totaled approximately ten over a            twelve to sixteen month period, Shifman received either fees            from the borrowers or "points"    a reduction in the interest            rate on his loan    from Yerardi.  Lieutenant-Detective            William McDermott testified that Shifman admitted to him that            Yerardi would reduce his debt after he referred a customer            who proceeded to take out a loan from Yerardi.                      Much of the testimony came from the borrowers, Mark            LaChance, Gerald Moore, Craig Inge, Randall Gasbarro, and                                         -3-            Paul Mahoney, whose loans were all documented by entries in            the records seized from Yerardi.                        LaChance testified that he approached Shifman, who            he knew to be in the mortgage business, for legitimate            financing on his construction equipment.  Shifman told him            the financing would come through without a problem.  After            weeks of waiting, LaChance, desperately in need of money,            approached Shifman for help in obtaining a short-term loan.             Shifman referred LaChance to Yerardi, clearly conveying that            Yerardi was a loan shark.  The legitimate financing Shifman            was allegedly procuring for LaChance never materialized.                      Gerald Moore testified that he too was introduced            to Yerardi by Shifman.  He also testified that he was paying            4 percent interest a week on the money he borrowed from            Yerardi, and that he knew that he could be physically hurt if            he didn't repay the money.  Moore gave a portion of the            proceeds of his loan from Yerardi to Shifman.  At one point,            when Moore was behind in his payments, Jack Murphy and two            other men visited Moore on Yerardi's behalf and attempted to            break Moore's hand.                      Craig Inge testified that he went to Shifman with            the hope of obtaining legitimate financing for his video            business.  When the financing failed to materialize, Shifman            referred Inge to Yerardi.  Shifman represented that the loan            with Yerardi would serve only to meet Inge's needs until the                                         -4-            legitimate financing came through.  Again, the legitimate            financing never materialized.  Inge paid Shifman $1,000 from            the money he borrowed from Yerardi for what Shifman described            as a fee for his services.                      Randall Gasbarro and Paul Mahoney both testified            that Shifman referred them to Yerardi.  They both understood,            from Shifman's description, that Yerardi was a loan shark.             Both men testified that they were paying 3 percent interest a            week on the money they borrowed from Yerardi.  Mahoney            testified that he gave a portion of the money he borrowed            from Yerardi to Shifman.                      Another witness, Paul Terranova, testified that he            approached Shifman for a second mortgage on his home.  When            the mortgage didn't come through, Shifman referred Terranova            to Yerardi suggesting that the loan would be a short-term            loan to tide him over until the mortgage came through.  He            also testified that he paid Shifman approximately $2,500, and            that the mortgage never came through, causing him to remain            indebted to Yerardi.                       Shifman himself testified that he gave numerous            people Yerardi's telephone number, and that these people            would not have known about Yerardi, nor would they have taken            out extortionate loans from Yerardi, had he not referred            them.  Shifman testified to knowing Yerardi to be a loan                                         -5-            shark, and that people could be physically injured if they            did not repay the loans from Yerardi.                      The jury found Shifman guilty of both violating            RICO and conspiring to violate RICO.  The jury also found            Shifman guilty on all four counts of aiding and abetting the            making of extortionate extensions of credit.  The jury            acquitted Shifman on the charge that he had aided and abetted            the collection of an extension of credit by extortionate            means.  Shifman was sentenced to 51 months imprisonment.             This appeal followed.                                         II.            A.   Sufficiency of the Evidence                 ___________________________                      Shifman contends that the evidence was insufficient            as a matter of law to support his convictions.  "In reviewing            sufficiency claims, we consider the evidence 'in the light            most favorable to the prosecution' and then ask whether the            evidence 'would allow a rational jury to determine beyond a            reasonable doubt that the defendant[] w[as] guilty as            charged.'"  United States v. Hurley, 63 F.3d 1, 11 (1st Cir.                        _____________    ______            1995)(quoting United States v. Mena Robles, 4 F.3d 1026, 1031                          _____________    ___________            (1st Cir. 1993)), cert. denied, __ U.S. __, 116 S. Ct. 1322                              ____________            (1996).                   1.   The RICO Counts                      _______________                      For a defendant to be found guilty of a substantive            RICO violation, the government must prove beyond a reasonable                                         -6-            doubt that (1) the "enterprise affect[ed] interstate or            foreign commerce, (2) that the defendant under consideration            associated with the enterprise, (3) that [the] defendant            participated in the conduct of the enterprise's affairs, and            (4) that [the] defendant's participation was through a            pattern of racketeering activity."   Aetna Cas. Sur. Co. v. P                                                 ___________________    _            & B Autobody, 43 F.3d 1546, 1558 (1st Cir. 1994).1            ____________                      For a defendant to be found guilty of conspiring to                                                            __________            violate RICO, the government must prove "(1) the existence of            an enterprise affecting interstate commerce, (2) that the            defendant knowingly joined the conspiracy to participate in            the conduct of the affairs of the enterprise, (3) that the            defendant participated in the conduct of the affairs of the            enterprise, and (4) that the defendant did so through a            pattern of racketeering activity by agreeing to commit, or in            fact committing, two or more predicate offenses."  Id. at                                                               ___            1561.                      Hence liability for a substantive RICO violation            under   1962(c) and liability for a RICO conspiracy violation            under   1062(d) rest on very similar elements.  There are,            however, two notable differences.  As stated in Aetna:                                                            _____                                            ____________________            1.  Aetna dealt with a civil RICO claim, but it is                _____            appropriate to rely on civil RICO precedent when analyzing            criminal RICO liability.  The standard is the same for both            criminal and civil RICO violations.  See 18 U.S.C.   1962.                                                  ___            The RICO Act differentiates between criminal and civil            liability by providing for criminal penalties in 18 U.S.C.              1963, and civil remedies in 18 U.S.C.   1964.                                           -7-                      The major difference between a violation                      of   1962(c) itself . . . and a violation                      of   1962(d) based on   1962(c) . . . is                      the additional required element that the                      defendant knowingly joined a conspiracy                      to violate   1962(c).  Another difference                      is that, to prove that a defendant                      violated   1962(c), it is necessary for                      the plaintiff to prove two predicate                      offenses; under   1962(d), in contrast,                      this is not an element required to be                      proved.  To prove a violation of                        1962(d), it is enough to prove that a                      defendant agreed with one or more others                                ______                      that two predicate offenses be committed.            Id. at 1562.               ___                      a.   The Substantive RICO Violation                           ______________________________                           i.   Affecting Interstate Commerce                                _____________________________                      Shifman does not challenge the adequacy of the            proof that Yerardi's loan-sharking enterprise affected            interstate commerce.                            ii.   Association with the Enterprise                                _______________________________                      The second element of the substantive RICO violation          is "that the defendant under consideration associated with the          enterprise."  Id. at 1558.  The jury could reasonably have found                        ___          from the evidence presented that Shifman deliberately associated          himself with Yerardi's enterprise.  Not only did Shifman himself          borrow from Yerardi, he referred borrowers to Yerardi with the          goal of obtaining either a reduction in the interest rate on his          own debt to Yerardi, or a cash fee from the borrower.  Infra.                                                                 _____                         iii.   Participation in the Conduct                                ____________________________                                         -8-                      The third element of the substantive RICO violation          under   1962(c) requires that the defendant have participated in          the conduct of the enterprise's affairs.  The Supreme Court has          interpreted the phrase "to participate in the conduct of the          enterprise's affairs" to mean participation in the operation or          management of the criminal enterprise.  See Reves v. Ernst &                                                  ___ _____    _______          Young, 507 U.S. 170, 185 (1993).  Appellant argues that there was          _____          insufficient evidence for the jury to find that his conduct met          the "operation or management" test.  We disagree.                      Reves differs from the present case in that it                      _____          addressed the civil RICO liability of an independent adviser          outside of the RICO enterprise's chain of command.  The Supreme          Court held in Reves that an accounting firm employed by the                        _____          enterprise could not be held civilly liable under RICO for          preparing an inaccurate accounting statement as it had not          "participate[d] in the operation or management of the enterprise          itself."  Id.  Respecting Reves, we have said:                    ___             _____                      Special care is required in translating                      Reves' concern with "horizontal"                      _____                      connections--focusing on the liability of                      an outside adviser--into the "vertical"                      question of how far RICO liability may                      extend within the enterprise but down the                      organizational ladder.  In our view, the                      reason the accountants were not liable in                      Reves is that, while they were undeniably                      _____                      involved in the enterprise's decisions,                      they neither made those decisions nor                      carried them out; in other words, the                      accountants were outside the chain of                      command through which the enterprise's                      affairs were conducted.                                         -9-          United States v. Oreto, 37 F.3d 739, 750 (1st Cir. 1994).          _____________    _____                      We have held, post-Reves, however, that a defendant                                         _____          who is "plainly integral to carrying out" the enterprise's          activities may be held criminally liable under RICO."  See id.                                                                   ___ ___                      In the present case, Shifman was "plainly integral to          carrying out" Yerardi's loan-sharking plans.  There was evidence          that Yerardi encouraged Shifman to refer persons in need of money          to the enterprise and that Shifman did so on a number of          occasions.  The evidence was plain that Shifman knew Yerardi to          be engaged in illegal loan-sharking operations, that Shifman gave          Yerardi's number to many people, and that the victims would not          have known of Yerardi had Shifman not referred them.  Shifman,          moreover, could be found to have "set up" certain victims so as          to make it more likely they would borrow from Yerardi.  He did          this by first promising legitimate financing, and when this was          not forthcoming, and they were desperate, offering them Yerardi's          services.  The evidence also supported a finding that Shifman          benefitted financially from the transactions by either receiving          points on his debt to Yerardi, or else obtaining fees from the          borrowers.                      The jury could infer that, but for Shifman's          referrals, the extortionate loans to LaChance, Moore, Inge,          Gasbarro, and Mahoney would not have taken place, and that these          referrals were calculated and regular efforts taken by Shifman on          behalf of the Yerardi enterprise.  We are satisfied there was                                         -10-          sufficient proof of Shifman's participation in the conduct of the          enterprise's affairs, albeit at a relatively low level, to          support the verdict.                       iv.  Pattern of Racketeering Activity                           ________________________________                      The final element for substantive RICO liability is          that the defendant's participation was through a "pattern of          racketeering activity."                      In order to have engaged in a "pattern" of          racketeering activity, a defendant must have committed at least          two racketeering acts within ten years of one another.  See 18                                                                  ___          U.S.C.   1961(5).  These acts must be related and "amount to or          pose a threat of continued criminal activity."  H.J. Inc. v.                                                          _________          Northwestern Bell Telephone Co., 492 U.S. 229, 239 (1989).            _______________________________                      The definition of "racketeering activity" includes          making or conspiring to make an extortionate extension of credit.           See 18 U.S.C.   1961(1) (defining "racketeering activity" in part          ___          as including an offense indictable under 18 U.S.C.   892, which          bans the making of extortionate extensions of credit).  Aiding          and abetting one of the activities listed in   1961(1) as          racketeering activities makes one punishable as a principal and          amounts to engaging in that racketeering activity.  See 18 U.S.C.                                                              ___            2.2                                            ____________________            2.   (a) Whoever commits an offense against the United States            or aids, abets, counsels, commands, induces or procures its            commission, is punishable as a principal.                 (b) Whoever willfully causes an act to be done which if            directly performed by him or another would be an offense                                         -11-                      In this case, the racketeering acts that formed the          basis of Shifman's RICO conviction were the four extortionate          credit transactions he was convicted of aiding and abetting.           Shifman contends there was insufficient evidence from which to          find that he committed these racketeering acts.                      In order to convict Shifman of aiding and abetting          the making of extortionate extensions of credit, the government          had to prove Shifman aided and abetted "[a]ny extension of credit          with respect to which it is the understanding of the creditor and          the debtor at the time it is made that delay in making repayment          or failure to make repayment could result in the use of violence          or other criminal means to cause harm to the person, reputation,          or property of any person."  18 U.S.C.   891(6).                      A basic element of aiding and abetting is proof "that          the defendant consciously shared the principal's knowledge of the          underlying criminal act, and intended to help the principal."           United States v. Taylor, 54 F.3d 967, 975 (1st Cir. 1995).             _____________    ______                      The present record provided sufficient evidence for          the jury to find that Shifman aided and abetted the making of the          four extortionate extensions of credit.                        There was ample evidence that Yerardi's loans to          LaChance, Moore, Gasbarro, and Mahoney were extortionate.  The          jury could infer an understanding between Yerardi and the                                            ____________________            against the United States, is punishable as a principal.            18 U.S.C.   2.                                         -12-          borrowers that if a borrower delayed in repaying, violence would          be used to force repayment.  The rate of interest on the loans          far exceeded the legal rate; legal collection means were          unavailable.  LaChance, Moore, Gasbarro, and Mahoney all          testified to knowing that Yerardi was a loan shark.  LaChance and          Gasbarro were each told by Shifman that Yerardi was a hard money          lender, and that they should be aware of what type of person they          were dealing with.  Both understood this to mean that Yerardi was          a loan shark.  Moore was warned by Yerardi himself that violence          would ensue if he did not make his payments on time.  Mahoney          testified that he understood Yerardi's business, as Shifman          explained it, to be loan-sharking.  Mahoney also understood that          loan sharks would use force to collect payment.  From this          evidence the jury was entitled to find that there was an          understanding between Yerardi and the borrowers that violence          would be used if they failed to make their loan repayments.                        There was also sufficient evidence at trial for the          jury to find beyond a reasonable doubt that Shifman aided and          abetted the making of these extortionate loans.  Shifman knew          that the loans Yerardi would make to the borrowers Shifman          referred to him would be extortionate, having himself borrowed          from Yerardi at an illegal rate of interest and, when he fell          behind, having been threatened with violence by Yerardi's          henchmen.  Shifman informed the borrowers of the realities of          doing business with Yerardi, with its potential for violence.  It                                         -13-          could be inferred that Shifman referred the borrowers to Yerardi          fully expecting them to take out loans from him.  There was also          evidence, as explained above, that Shifman was actively helping          Yerardi find new borrowers in order to gain fees from the          borrowers or a reduction in the interest rate on his outstanding          debt to Yerardi.  Accordingly, the jury was warranted in          concluding that Shifman knowingly rendered tangible aid to          Yerardi's loan-sharking activities and was desirous, in the case          of the four borrowers, that those illegal activities succeed.           The jury's finding that Shifman was guilty of aiding and abetting          the extortionate extensions of credit involving these four men          was amply supported.                       b.   The RICO Conspiracy                           ___________________                           i.   Affecting Interstate Commerce                                _____________________________                      As noted, Shifman does not challenge the sufficiency          of the evidence offered to prove that Yerardi's enterprise          affected interstate commerce.                          ii.   Knowingly Joining the Conspiracy                                ________________________________                      The second element of the conspiracy charge requires          that the defendant "knowingly joined the conspiracy to          participate in the conduct of the affairs of the enterprise."           Aetna, 43 F.3d at 1561.  "All that is necessary to prove this          _____          element of the RICO conspiracy . . . is to prove that [the          defendant] agreed with one or more co-conspirators to participate          in the conspiracy."  Id. at 1562.  The evidence showed an                               ___                                         -14-          agreement between Yerardi and Shifman for the latter to refer          borrowers to Yerardi.  The evidence also supported a finding of          an understanding between Yerardi and Shifman that, at least in          some cases, if Shifman referred a borrower to Yerardi who          proceeded to take out a loan his own debt would be reduced.           There was clearly sufficient proof of an agreement between          Shifman and a co-conspirator for the former to have joined in the          conspiracy.                         iii.   Participation in the Conduct                                ____________________________                      This element is identical to the third element of the          substantive RICO violation.  As indicated in our discussion of          that element, supra, there is sufficient evidence to prove this                        _____          element of the RICO conspiracy count.                          iv.   Pattern of Racketeering Activity                                ________________________________                      The fourth element of the RICO conspiracy violation          is met if the defendant agrees to commit or actually commits two          or more acts of racketeering activity.  As discussed under the          substantive RICO violation section, there was sufficient evidence          for the jury to find that Shifman committed four of the charged          racketeering acts.  Accordingly, the fourth element is met.                   2.   Aiding and Abetting Extortionate Extensions of Credit                      _____________________________________________________                      Appellant contends that there was insufficient          evidence to convict him of the four substantive counts of aiding          and abetting the extortionate extensions of credit.  We have                                         -15-          already considered and rejected this argument in the course of          discussing the substantive RICO violations, supra.                                                      _____          B.     Miscellaneous Trial Issues                 __________________________                 1.   The Cooperation Evidence                      Appellant argues that the court erroneously excluded          certain evidence showing his cooperation with government          authorities; that the court unduly limited his counsel's opening          statement; and that the pretrial stipulation that the government          would not attempt to show that Shifman participated in Yerardi's          enterprise after he began cooperating with law enforcement          officials in June of 1991 should have been read to the jury.  All          these matters, Shifman argues, tended to show a "consciousness of          innocence" that he should have been able to place before the          jury.  We find no reversible error.                      Turning first to the cooperation evidence, the jury          was ultimately allowed to hear and to consider extensive evidence          of Shifman's cooperation with law enforcement officials.  It is          not clear to us that the court excluded any significant amount of          this evidence.  We see no abuse of discretion in the court's          handling of the cooperation evidence.                      As for the alleged restriction on defense counsel's          opening statement, we found no such restriction in the record.           The court merely stated:                      I'm not going to preclude [appellant's                      attorney] from saying what he wishes in                      light of what I have said previously,                      that of course I have instructed and will                                         -16-                      instruct the jury again that what counsel                      says in opening statement is not                      evidence, and if he makes any promises to                      offer in evidence something that I have                      not ruled on, he's doing it at his peril.          We see nothing improper in these remarks.                      Regarding the stipulation, appellant argues that it          should have been read to the jury after the government said in          its opening statement that Shifman told authorities "half the          story."  The government plausibly argues, however, that the "half          the story" remark had to do with Shifman's pre-June conduct,          unrelated to the stipulation.  Shifman, however, did not then          request that the stipulation be read at trial, so we review for          plain error.  Fed. R. Crim. P. 52(b).  Under the plain error          standard of review, appellant bears "the burden of persuasion" to          establish that there was an error, that the error was "clear" or          "obvious," and that the error "affect[ed] substantial rights."           United States v. Olano, 507 U.S. 725, 734 (1993).            _____________    _____                      We do not see how the district court's failure, on          its own initiative, and without request, to read the pretrial          stipulation to the jury amounted to an error of any kind.  Nor          has appellant met the burden of showing prejudice under Rule          52(b).3  In accordance with the stipulation, he was not          prosecuted for any offenses after his cooperation with law          enforcement officials began in June of 1991.  The government                                            ____________________            3.  Normally, "the defendant must make a specific showing of            prejudice to satisfy the 'affecting substantial rights' prong            of Rule 52(b).  Olano, 507 U.S. at 735.                            _____                                         -17-          presented evidence pertaining to Shifman's conversations with          police after June, but only to rebut Shifman's direct testimony          concerning these conversations and his state of mind during the          alleged offenses.  We find no prejudice to Shifman from the          district judge's failure to advise the jury of the stipulation.                    2.   The Response to the Jury Question                      _________________________________                      Appellant contends that the court erred when, with          his counsel's approval, it referred the jury to the written jury          instructions in response to a question about conducting or          participating in an enterprise's affairs.  The government          responds that Shifman waived any objection to the answer when his          attorney explicitly agreed to the district judge's response to          the jury question.  See United States v. Rojo-Alvarez, 944 F.2d                              ___ _____________    ____________          959, 971 (1st Cir. 1991) (holding that there was waiver when          defense counsel stated he was satisfied with the reworded          instruction); see also United States v. Lakich, 23 F.3d 1203 (7th                        ___ ____ _____________    ______          Cir. 1994) (holding that there was waiver when counsel explicitly          agreed to the court's instruction).  But see United States v.                                               _______ _____________          Marder, 48 F.3d 564, 571 (1st Cir. 1995) (waiver in these          ______          circumstances is an open question), cert. denied, 514 U.S. 1056                                              ____________          (1995).  Regardless whether an actual waiver took place, we see          nothing even remotely close to an error meeting the plain error          standard.                       Affirmed.                      ________                                         -18-
