United States v. Ronald Morelli

Citations: 643 F.2d 402; 1981 U.S. App. LEXIS 19791Docket: 79-5031

Court: Court of Appeals for the Sixth Circuit; February 27, 1981; Federal Appellate Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Ronald Morelli was convicted by a jury in the U.S. District Court for the Eastern District of Michigan for engaging in racketeering activities and collecting unlawful debts under the Racketeer Influenced and Corrupt Organizations Act (RICO), as well as for conspiracy and wire fraud. Prior to the jury's deliberation, the trial court acquitted him on six counts, including additional wire fraud and extortion charges, due to insufficient evidence linking him to those specific acts. Judge Ralph M. Freeman determined that while substantial evidence indicated the existence of a criminal enterprise, the evidence connecting Morelli to the dismissed charges was inadequate. The judge also ruled that even if the indictment was interpreted broadly, attempting to collect a debt did not constitute a violation of RICO.

The enterprise involved orchestrating scams targeting vulnerable victims, with Morelli playing a significant role as the business manager and de facto leader, although his direct contact with victims was limited. The scams were specifically designed to exploit individual weaknesses, such as gambling or the desire for easy profits. Morelli was primarily implicated in the Hutton scam, which underpinned his wire fraud convictions, and was coordinated by him in collaboration with other enterprise members, with Peter Luca serving as the main government witness.

Luca, a seasoned criminal with a history of offenses including counterfeiting, extortion, and illegal gambling, had spent over twenty years profiting from running gambling operations and facilitating prostitution. His expertise lay in gambling, where he employed deceptive tactics to manipulate games and ensure profitability. His decision to testify as a government witness stemmed from a desire to reduce a ten-year prison sentence for extortion, rather than a genuine intent to change his ways. Defense counsel argued that his credibility was compromised due to his criminal past and his motivation to testify for personal gain, yet the jury largely accepted his testimony, supported by corroborating witnesses.

The trial focused on five scams targeting various victims, including Ed Vervane, Jr., who was lured into a rigged game of 'liars poker' orchestrated by Luca and co-defendant Robert LaPuma. Vervane, misled about the stakes, ended up significantly in debt, which was exacerbated by intimidation tactics involving threats against his father. The operation culminated in Luca receiving $600 for his role in the scam. Another victim, Charles Wicks, was similarly ensnared in a gambling scheme involving a card game called 'stacks,' facilitated by Luca and other co-defendants.

Wicks was the victim of a rigged gambling scheme orchestrated by LaPuma and other conspirators, who used marked cards and hand signals to ensure LaPuma's victory, resulting in Wicks losing $10,000. Wicks only had $500 on him initially and took six to eight months to pay off the debt, partly through a property deed, cash, and checks. Despite his losses, Wicks was lured into another game at a race track where he lost an additional $1,200. Morelli, concerned about the slow collection of Wicks' debt, urged his associates to take Wicks to Las Vegas to access his casino credit card for repayment. Payments collected from Wicks were shared among the conspirators, although Morelli was cleared of extortion charges due to insufficient evidence linking him to the debt collection efforts.

In late 1971 or early 1972, Morelli devised a plan involving jockey Kenneth Pichette in a rigged game, anticipating that Pichette would be coerced into fixing a race after losing $3,000. However, the loss was deemed insufficient to achieve this goal, leading Morelli to instruct his associates to collect the debt, which Pichette eventually partially repaid.

Gordon Glaser, lured by Luca's girlfriend Lynn Offerdahl, fell victim to a series of rigged games at Luca's home, losing between $10,000 and $14,000 over a year. Glaser could only pay a fraction of his losses upfront, with subsequent payments collected and shared among Morelli and the others, although Morelli did not actively participate in the games.

The scheme reached a peak with James Hutton, a wealthy contractor. Despite attempts to engage Hutton in gambling, he remained uninterested. Nonetheless, Luca, Morelli, and LaPuma aimed to exploit Hutton's wealth through various fraudulent schemes, leveraging their past dealings with him, including selling him adult films and providing women for his business.

Luca convinced Hutton, influenced by Morelli, that he and LaPuma could acquire a trailer of stolen J. B Scotch whiskey, which could be sold to the Mafia for $100,000 to $200,000, requiring a $20,000 investment. Hutton subsequently invested $8,000 to $9,000, believing the remainder would come from Misko, LaPuma, and Luca. The funds were given to Morelli, who distributed them among the conspirators, resulting in Hutton losing his investment.

Between 1972 and 1974, Hutton, eager to recover losses, fell victim to schemes involving stolen goods, including grain, snowmobiles, and narcotics, totaling about $200,000. Each failed scheme was attributed to police interference, and a staged fake arrest of LaPuma was orchestrated to maintain Hutton's belief in the operations. Hutton was manipulated into providing additional funds for various fabricated situations, such as bail money and operational expenses, all of which were funneled to Morelli.

In late 1972, after repeated financial losses, Hutton demanded to meet Morelli to seek answers and ensure the return of his investments. His frustration culminated in a desire for a guarantee regarding his funds, reflecting his disillusionment with the ongoing scams.

Mr. Hutton was informed by others that Mr. Morelli was a key figure in dealings with the Giacalones and that he held significant authority. Upon learning that Hutton might become a problem due to potential legal action or refusal to continue financial contributions, Morelli decided to meet with him. Morelli instructed his associates to bring Hutton to him and proposed a plan to extract a large sum of cash from Hutton, suggesting that if successful, they would eliminate him from their dealings.

During the meeting, Morelli proposed a narcotics venture that involved sending Luca and LaPuma to Mexico to procure drugs, which would allow Hutton to recover his financial losses and earn a profit of $100,000. Hutton was asked to invest $35,000 to $50,000, with Morelli matching that amount. Hutton, realizing the gravity of the situation, opted to consider the proposal before responding.

Subsequently, Morelli and his associates were planning a trip to Florida, which they indicated was linked to the drug deal. Morelli called for another meeting with Hutton to press for a decision. Hutton expressed uncertainty about securing the necessary funds, but Morelli urged him to act quickly, indicating the opportunity would soon expire.

Hutton's testimony supported that of Luca, revealing his awareness of his own involvement in questionable activities. During cross-examination, he acknowledged that he was lured into further financial commitments by promises of recovering his losses, despite recognizing that the transactions were related to stolen goods. He admitted to continuing his participation in hopes of recouping his investment, stating he met with Morelli four times regarding his financial situation, with the drug deal suggestion arising during the last meeting.

During a meeting, Mr. Morelli informed the witness that they needed to secure $30,000 for a drug deal, which was implied to involve narcotics, though not explicitly stated. The witness expressed inability to provide the funds, leading to Morelli's irritation with his associates for arranging the meeting. Morelli suggested that the witness could obtain the money by mortgaging his home, inquiring about the timeline for this process, which the witness estimated to take about a month, prompting Morelli to storm out in frustration.

Following this, the witness discussed plans with Morelli to invite Mr. Hutton to join them in Florida for a vacation, intending to influence him to secure the funds for the drug deal. During a phone call, the witness conveyed to Hutton that they were at the Newport and urged him to come down, emphasizing the presence of influential people; Hutton declined but agreed to speak with Morelli. Morelli then pressured Hutton to come down quickly, warning him about missing out on recovering his money.

Subsequently, the witness confirmed receiving a small amount of money, approximately a couple hundred dollars, from Hutton while in Miami in February 1973, coinciding with the phone conversation between Morelli and Hutton. This sequence of events is part of the background for the four counts against Morelli, including wire fraud and RICO violations.

Mr. Morelli advised Mr. Luca to contact Mr. Hutton for financial support after Hutton declined to provide a previously discussed sum. Luca fabricated a story to persuade Hutton to send money for expenses, ultimately receiving a wire transfer of a few hundred dollars from Hutton, with two transfers occurring approximately one to two weeks apart. The second transfer also involved a fabricated story, although Luca could not recall the details. Hutton confirmed sending $200 after initially hesitating, prompted by Luca's call and reassurance from Morelli that the situation was under control. Hutton acknowledged talking to both Luca and Morelli during the same conversation, which led to the decision to send the money. The transfer was documented with a money order receipt. In an appeal, Morelli argues that the request for expense money and Hutton's response via a money order do not sufficiently relate to any fraudulent scheme to fall under the wire fraud statute, nor do they demonstrate a pattern of racketeering as defined in federal law.

Defendant Morelli cannot be convicted on RICO charges because the government did not prove the necessary elements for the two predicate wire fraud counts, and the counts involving a request and response do not establish a pattern of racketeering under 18 U.S.C. § 1961(5). Detailed descriptions of Morelli's involvement in a fraudulent enterprise indicate his guilt concerning the wire fraud counts, particularly highlighting the connection between a telephone conversation and the subsequent act of wiring money. Testimonies revealed discrepancies regarding the number of phone calls, with one witness recalling two calls and another only one. Despite these inconsistencies, the jury had sufficient evidence to conclude that the telephone conversation and money transfer occurred as part of an ongoing scheme to defraud Hutton. The limited results of the scheme or the defendant's lack of direct involvement in sending the money do not negate his culpability. Moreover, Morelli argues that the RICO statute is unconstitutionally vague as applied to him, though his counsel acknowledges that the statute has withstood prior vagueness challenges in various cases.

Morelli's counsel argues that Morelli's role was primarily as a figurehead, suggesting that he did not actively participate in the alleged criminal enterprise, relying on Luca's testimony. They assert that Morelli's name was only used to leverage influence and secure funds due to his supposed Mafia connections. Despite this claim, Morelli was convicted of two counts of wire fraud, which were part of a broader racketeering pattern. Judge Freeman dismissed substantive extortion counts against Morelli for lack of evidence showing his knowledge of coercive practices, but the conspiracy count remained intact, allowing the admission of co-conspirators' testimony regarding illegal debt collection.

Morelli's argument for a violation of due process due to delayed RICO charges is deemed unsubstantiated. Citing United States v. Lovasco, the court notes that he failed to demonstrate actual prejudice or improper motives for the delay, suggesting that the government's timing was influenced by the complexity of the case. 

Additionally, Morelli's assertion of cruel and unusual punishment under the Eighth Amendment, stemming from a fifteen-year sentence for related offenses, is rejected. The court affirms Congress's authority to impose harsher penalties for repeated offenses within a specific enterprise, as noted in precedents. Morelli faced potential ten-year sentences for wire fraud alone, and thus the concurrent sentences for his broader fraudulent activities are deemed appropriate and not excessive.

The government argues that RICO applies in this case despite the appellant not raising the issue, referencing concerns about the lack of a legitimate enterprise, which stemmed from a prior panel decision in United States v. Sutton. However, that decision has been vacated by an en banc ruling that clarifies no requirement exists under RICO for the enterprise to be legitimate. Judge Freeman carefully considered the defendant's motion to dismiss each count of the indictment, which included co-defendants in RICO and conspiracy counts. Morelli was initially tried with others but faced a mistrial due to his counsel's emergency surgery, leading to a separate trial where he was convicted and sentenced to 15 years for RICO and conspiracy, alongside five years for two predicate crimes, all to run concurrently, plus a $10,000 fine. The term "scam," while not formally defined, has been frequently used in the case to denote unlawful schemes. Appeals from co-defendants Groff and Turbyfill are being addressed separately. The indictment contained minor inconsistencies regarding dates of alleged activities, which were not raised by Morelli on appeal. The court determined these discrepancies were not materially defective, as the indictment's phrasing allowed for approximate dates unless the statute mandated specificity or the defendant was prejudiced by the lack of exact dates.