Appeal from convictions under the Travel Act and wire fraud statute before a jury in the United States District Court for the Southern District of New York (Charles L. Brieant, Jr., Chief Judge). The government cross-appeals from the district court's entry of a judgment of acquittal on the Hobbs Act charges after a jury verdict of guilty. Convictions affirmed as to the Travel Act. Acquittal under the Hobbs Act reversed. Convictions of wire fraud reversed.
Cardamone, Winter and Miner, Circuit Judges.
Alfred Covino appeals from convictions after a jury trial before Chief Judge Brieant under the Travel Act and for wire fraud. The government cross-appeals from the district court's acquittal after the jury had found Covino guilty of extortion in violation of the Hobbs Act. We affirm the Travel Act conviction, reverse the Hobbs Act acquittal, and reverse the wire fraud conviction.
Counts One through Eight of the indictment accused Covino, a NYNEX employee, of extorting money and property from a NYNEX contractor in violation of the Hobbs Act, 18 U.S.C. § 1951 (1982). The jury convicted Covino on Counts One through Five and on Count Eight. The district judge, however, directed a judgment of acquittal because he concluded that there was insufficient evidence of a wrongful use of fear to establish a Hobbs Act violation. United States v. Covino, 652 F. Supp. 660, 667-68 (S.D.N.Y. 1987).
Counts Nine through Sixteen of the indictment charged Covino with traveling in interstate commerce to promote or facilitate "bribery and related offenses in violation of New York State Penal Law Article 180," in violation of the Travel Act, 18 U.S.C. § 1952 (1982 & Supp. IV 1986). The jury convicted Covino on Counts Nine through Thirteen and on Count Sixteen.
Counts Seventeen through Twenty of the indictment accused Covino of wire fraud in violation of 18 U.S.C. 1343 (1982). The jury convicted Covino on these four counts.
The evidence at trial disclosed the following. In December 1983, after a favorable history of employment with AT&T, Alfred Covino became Director of Network Services at NYNEX Mobile Communications Co. NYNEX provided mobile telephone services and was then involved in a race with a competitor to build "cell sites," small structures containing switching gear used to relay signals from cellular phones within specific geographic areas.
Great Northeastern Building and Management Corporation was a small, newly formed contracting firm that operated out of the house of its half-owner, Robert Brennan. Its regular employees consisted of Brennan as President and his partner Joseph Boyd as Vice President. Brennan's wife helped out as a bookkeeper. Great Northeastern had originally been hired by NYNEX to provide consulting services but later became the prime contractor for the construction of certain cell sites. NYNEX's business eventually accounted for roughly ninety percent of Great Northeastern's business. Great Northeastern was thus heavily dependent upon the favor of NYNEX.
As Director of Network Services, Covino had substantial, although not absolute, control over the selection, supervision and payment of contractors hired to build cell sites. Covino usually could not act for NYNEX without the formal approval of other NYNEX executives, but he could in practice allow or disallow claims for extra work, approve or disapprove invoices and materially aid Great Northeastern in obtaining cell site construction contracts.
At pertinent times, NYNEX had explicit written policies forbidding its employees from soliciting or receiving benefits from persons doing business with NYNEX. These policies did not deter Covino from taking advantage of his substantial power over Great Northeastern. In May 1984, he learned that a former employee of Great Northeastern had improperly billed $3,200 in telephone calls to a NYNEX credit card. Covino showed these bills to Brennan and warned that if Covino's superior found out about them "it wouldn't look good" for Great Northeastern. Brennan offered to pay the bills, but Covino refused the offer, saying that he would "take care of them" himself.
Not long thereafter, Covino approached Brennan for help in building a sun deck for Covino's home in New Jersey. After being told by Covino to "keep in mind the phone bill," Brennan agreed to build the sun deck at a cut-rate price. Based upon plans Covino obtained from an architect (also a NYNEX subcontractor) who employed Covino's wife, Brennan built, not a sun deck, but an entire "Florida room" addition costing in excess of $20,000. To make it appear that he had actually paid for the addition, Covino asked Brennan to take a $15,000 check and then return to him the same amount in cash. Brennan declined to participate in this cover-up but nevertheless did not ask for any payment for constructing the Florida room. Later in 1984, Covino induced Brennan to arrange and pay for additional work on Covino's house, including repairs to a sump pump, refacing of a fireplace, construction of a closet in the garage, addition of a porch on the rear of the house, and construction of a deck on the Florida room.
Its consulting contract with NYNEX having been terminated in the fall of 1984, Great Northeastern became almost totally dependent upon its construction contracts with NYNEX for its commercial survival. In June 1984, Great Northeastern had NYNEX contracts for $200,000 of work in the Boston area, and a month later the amount was increased to $500,000. This work was to be done in accordance with letters of authorization to be issued by Covino. In November 1984, Great Northeastern received another $500,000 contract for work in New York.
Because of Covino's power in selecting contractors, determining contract amounts, approving billing requests, and authorizing cost-plus-profit change order payments, Great Northeastern's commercial dependency on NYNEX was largely a dependency on Covino's favor. Brennan testified that he feared that if he refused to accede to Covino's demands, Covino would use his power to drive Great Northeastern out of business by ...