Court: Court of Appeals for the Seventh Circuit; March 14, 1995; Federal Appellate Court
Reuben Sturman was convicted of conspiracy to commit extortion, attempted extortion, and interstate travel for extortion under 18 U.S.C. §§ 1951, 1952. Sturman appealed, claiming errors during his trial and seeking a reversal of his conviction or a vacating of parts of his sentence, but the court found his arguments unconvincing and affirmed the conviction.
Sturman, who operated a nationwide adult entertainment business from California for over thirty years, had significant influence in the industry, controlling the distribution of adult materials and serving numerous small operators across the U.S. His contentious relationships with operators, particularly in Phoenix, Cleveland, and Chicago, led to the case against him.
Tamara Green took over the Book Cellar adult bookstores in Phoenix after her husband's death, discovering that he had been overpaying Sturman on a lease. Following her instructions to suspend payments until they could resume at the correct rate, Sturman threatened her, stating he would "send her a message." Subsequently, Sturman's employee solicited vandalism against Green's store, resulting in significant property damage. After this incident, Green resumed payments at the higher rate, which Sturman acknowledged as a result of his "message."
Additionally, Mel Kamins, a long-time associate of Sturman, had a financial agreement with him that involved substantial monthly payments. When the IRS levied Kamins' payments to Sturman due to Sturman's tax delinquencies, Sturman attempted to persuade Kamins to ignore the levy and continue payments directly to him, or to pay him in cash by skimming profits, but Kamins refused to comply.
Sturman hired James Long to assess security at Kamins's stores, claiming Kamins owed him money. During a visit to the store, Sturman threatened Kamins with a note stating, "You are going to get a message," though no actions were ultimately taken against him. Sturman also considered hiring additional help from Kevin Beechum's associates. Meanwhile, Roy and Paula May operated adult entertainment businesses in Chicago, giving Sturman a percentage of their peep show profits, typically cash payments between $60,000 and $100,000 every few weeks, which were unreported to the IRS. Sturman demanded half of the Mays' real estate holdings, which they refused.
Following Paula May's indictment for tax evasion in 1987, Roy May stopped payments but was coerced by Sturman into a consulting arrangement to avoid financial ruin. Despite receiving no real benefit, May resumed payments at a reduced rate. In 1988, May declined to renew the consulting contract but, fearing Sturman, agreed to pay $3.7 million for rights to show adult films from Sturman's new company, Wild Man Films Inc., despite their true value being only $200,000. May never used the films.
When the IRS began tax levies against Sturman's debtors, he urged May to cancel their contract to avoid IRS payments, but later pressured him to resume payments, suggesting a payment route through a company named Video Views to obscure the transactions. May refused, wary of violating the IRS levy. In spring 1992, Sturman's associate Feinberg hired Brisette and others to plant remote-controlled bombs at May's stores in Chicago. After successfully planting one bomb, an explosion occurred in their vehicle, resulting in the death of Mares and prompting the group to abort their mission and return to Los Angeles, leading to further complications in their plans.
Brisette, after a traumatic incident in Chicago, began cooperating with the FBI and engaged in a recorded conversation with Feinberg. The FBI subsequently approached Feinberg for cooperation against Sturman, which he declined. Feinberg later met with Hampshire and revealed that Sturman had hired him to damage stores in Chicago, resulting in a death. Feinberg requested Hampshire to assure Sturman of his non-cooperation with law enforcement in exchange for legal fee assistance, to which Sturman agreed by transferring $25,000 to Feinberg's attorney.
Sturman and Feinberg were indicted but tried separately. Sturman was convicted on three counts: conspiracy to commit extortion regarding Green, Kamins, and the Mays (Count One); attempting extortion related to threats against the Mays (Count Seven); and causing interstate travel for extortion purposes (Count Eight). Sturman was acquitted of the other charges and sentenced to 235 months in prison, followed by two years of supervised release. He appealed both his conviction and sentence.
In his appeal, Sturman challenged the sufficiency of the evidence supporting his conspiracy conviction. The standard for review requires that, even when viewing evidence favorably for the government, no rational trier of fact could find the crime's essential elements beyond a reasonable doubt. The elements of conspiracy include an illegal agreement and the defendant's participation, which must be substantiated by substantial evidence of the defendant's own words and actions.
Sturman argued that there was no evidence of a criminal agreement or his involvement, claiming that the only link to the actions of others was Hampshire's testimony regarding his conversation with Feinberg, which he deemed inadmissible double hearsay. The court found that Sturman's out-of-court statements were admissible as party-opponent statements, and Feinberg's relaying of Sturman's instructions to Hampshire was admissible as a co-conspirator statement, countering Sturman's hearsay challenge.
Sturman contends that the evidence does not demonstrate he entered into an agreement with Feinberg, arguing that the coconspirator provision of Rule 801(d) is inapplicable. However, accepting Sturman's assertion would dismiss significant portions of the government's evidence. Sturman had financial disputes with three victims named in the indictment and made threats against each. Following these threats, two victims' businesses were vandalized, and there was testimony suggesting a planned attack on a third victim, Mel Kamins, which Sturman was implicated in.
The jury also heard Sturman's admissions regarding his involvement in the vandalism against victims Green and May. Sturman's secretary testified that he indicated to her he had sent Green a threatening message. Although Sturman claims the evidence merely suggests he exploited an unrelated situation, it ultimately supports an inference of an agreement when viewed favorably towards the government.
Additionally, Sturman's ex-wife testified about his violent threats against Roy May and mentioned a conversation where Sturman claimed that Feinberg had hired men to damage May's stores, asserting that the plan failed and one man died. Sturman assured her that the crimes could not be traced back to him and that Feinberg would take the fall if Sturman paid his legal fees.
Overall, the evidence presented supports the conclusion that Sturman entered into an illegal agreement with Feinberg, allowing the jury to base his conviction on any of the three extortion instances. Each case included threats made by Sturman to obtain payments, with evidence linking the vandalism to Sturman’s disputes with the victims. The jury could reasonably infer that Sturman's agreement to cover Feinberg's legal fees indicated an attempt to conceal his involvement as part of the conspiracy. Thus, the admission of Feinberg's out-of-court statements through Hampshire's testimony was deemed appropriate.
Sturman contends that Hampshire's testimony, even if admissible, should not alone support a conspiracy conviction, referencing the unresolved issue of coconspirator testimony's sufficiency in such cases. However, the court finds that Sturman's assertion is incorrect, as evidence beyond Hampshire's testimony adequately supports his conspiracy conviction. Sturman also seeks to reverse his two remaining convictions related to attempted extortion and interstate travel for extortion. His first argument, claiming the extortion convictions relied on inadmissible coconspirator testimony, is countered by the court's earlier ruling on the admissibility of Hampshire's testimony. His second argument hinges on the government’s failure to prove that Roy May acted out of fear, as required for extortion under 18 U.S.C. § 1951. The court clarifies that fear of economic harm is a valid basis for extortion and finds Sturman's interpretation of the evidence biased. Despite May's initial resistance, his financial dealings with Sturman, which lacked rational justification for the payments, corroborate his fear of financial ruin due to Sturman's threats. Additionally, Sturman’s request to poll the jury on each extortion scheme after the verdict was denied by the court, which he claims is reversible error. However, polling is at the trial judge's discretion, and the court will review for any abuse of that discretion.
Sturman argues for the right to poll the jury regarding specific acts that support their verdict, linking this right to the established rights of jury polling and specific unanimity instructions. A specific unanimity instruction informs jurors that they must unanimously agree on which act led to a conviction when multiple acts are charged. He asserts that the right to poll should extend to each individual scheme involved in the charges. However, the right to poll the jury, while significant, is not constitutional, serving primarily to ensure juror accountability rather than to delve into the factual basis for their verdict. The court instructed the jury that unanimous agreement was required not only on the verdict but also on the underlying findings. There is no evidence suggesting juror confusion about this instruction, and the jury's unanimous finding of guilt on conspiracy charges implied agreement on Sturman's participation in the conspiracy.
Regarding sentencing, Sturman disputes several provisions of the United States Sentencing Guidelines that increased his sentencing level, particularly those related to committing a felony while on bond and the size of extortion demands. He was on release for previous charges when convicted in this case and was informed that committing a felony while on bond could lead to a prison term increase. The Guidelines' amendments established a minimum term for such offenses, which in Sturman's case resulted in a minimum sentence of sixty-seven months. Other challenges he raised were not discussed and were affirmed without further comment.
Sturman does not dispute the court's interpretation of the relevant legal provisions but argues that the court violated 21 U.S.C. Sec. 3142(h)(2)(A) by failing to inform him of the penalties for violating conditions of release, which he claims invalidates the application of increased penalties in his case. He asserts that changes to 18 U.S.C. Sec. 3147 and the Guidelines resulted in significantly harsher penalties, necessitating that the releasing courts notify him of these changes. Citing United States v. DiCaro and United States v. Onick, Sturman contends that inadequate notice precludes enhancements. However, the court distinguishes his case, noting that he was explicitly warned that a felony conviction while on bond could lead to a sentence increase of two to ten years. This warning remained accurate despite subsequent amendments that limited judicial discretion, which the releasing courts could not precisely anticipate.
Additionally, Sturman challenges the district court's calculation of extortion amounts for sentencing on conspiracy counts. The court determined the extortionate demands from victims Green, Kamins, and May to be $191,000, $5.7 million, and $3.75 million, respectively. These figures were derived by averaging previously made payments over specific time frames, reflecting that the extortion began after Sturman threatened the victims to resume payments. Sturman disputes both the court's findings and its calculation methodology.
Sturman argues against the adjustment for loss made during his sentencing, asserting that the victims' debts were legitimate. However, the court clarifies that in extortion cases, the legitimacy of the debts is irrelevant, as one can be guilty of extortion even if obtaining their own property. Following Sturman's conviction for conspiring to commit extortion, the court justifiably increased his sentence based on the extent of the extortionate demand.
Sturman also challenges the methodology used to calculate this demand, claiming the average payment approach did not account for potential decreases in profits-based payments. According to Application Note 3 to section 2B1.1 of the Sentencing Guidelines, loss estimation does not require precision but must be reasonable based on available information, which can include average losses per victim and the offense's scope and duration. The guidelines permit courts to use estimates, as seen in drug-related cases.
The court found no evidence indicating that the payments from victims would decrease below the average calculated. Although unforeseen events that might lower payments are possible, without evidence of such occurrences, the court deemed it inappropriate to factor them into the calculations. The district court's approach to estimating the extortionate demand based on prior practices was therefore deemed acceptable.
Ultimately, the court affirms the jury's verdict and the district court's sentencing decision, with no reason found to overturn either. The case confirms that Sturman's conviction and sentence are upheld.
Evidence of financial obligations involving Green, Kamins, and May primarily stemmed from disputes with Sturman, leading the jury to reasonably infer that actions taken were aimed at securing payments. This inference is further supported by Sturman's comments to Friedman and Delgado following incidents in Phoenix and Chicago. The jury could also interpret Sturman's agreement to cover Feinberg's legal fees as indicative of an attempted cover-up related to a broader conspiracy. The evidence of Sturman's collaboration with Feinberg was deemed substantial, justifying the admission of Feinberg's out-of-court statements through Hampshire's testimony.
Sturman contends that reliance on coconspirator statements alone should not suffice for a conspiracy conviction, referencing prior case law. However, the court found that Sturman's argument was flawed, as evidence beyond Hampshire's testimony was adequate to uphold the conspiracy conviction.
Sturman further challenges his convictions for attempted extortion and facilitating extortion under 18 U.S.C. Sec. 1951 and Sec. 1952, respectively. He claims that his extortion convictions hinge on inadmissible coconspirator testimony, which is countered by the court’s earlier conclusion regarding the admissibility of Hampshire's testimony. Sturman also argues the government failed to demonstrate that Roy May experienced "fear" necessary for extortion, asserting that evidence did not convincingly show May was intimidated.
However, the court noted that fear of economic harm is valid in extortion cases. Evidence indicated that May entered numerous agreements requiring substantial payments to Sturman, which lacked a reasonable connection to services rendered. May's limited resistance to Sturman's demands did not negate his financial obligations, which the court interpreted as consistent with extortionate behavior. The historical context of Sturman's financial demands substantiated May's testimony regarding his fear of financial ruin if he did not comply.
Sturman requested that the court poll the jury after their guilty verdict to confirm unanimity on each of the three extortion schemes charged in the conspiracy count; the court denied this request. Sturman claims this refusal constituted reversible error and argues that the right to poll the jury extends from the right to a specific unanimity instruction, which ensures that the jury must agree on the specific act underlying their verdict. However, while the right to poll a jury is significant, it is not a constitutional right, and the purpose of such polling is to verify juror accountability, not to delve into the specifics of the verdict's factual basis.
The court had already instructed the jury that they needed to be unanimous not only in their guilt conclusion but also in the underlying findings. There is a presumption that jurors follow their instructions, and Sturman's argument would imply a need for excessive polling whenever aspects of a case might confuse a defendant. Additionally, there was no evidence indicating jury confusion regarding the unanimity instruction, and evidence suggested the jury was unanimous in finding that the conspiracy against May was complete. The jury's determination of Sturman's guilt on specific counts required them to find that he had an agreement with Feinberg, as there was no evidence of his involvement with other conspirators.
Feinberg was the sole individual in contact with the men involved, leading to a unanimous jury finding of his participation in an extortion agreement against the Mays. Sturman contests several provisions of the United States Sentencing Guidelines that increased his sentencing level, focusing on two main enhancements: one for committing an offense while on bond for prior charges and another for the severity of the extortion demands. Sturman was on release for a tax evasion case in Cleveland and a RICO case in Las Vegas at the time of his conviction, and he had been informed that committing a felony while on bond could result in a prison term increase of two to ten years. After the adoption of the Guidelines and amendments to relevant statutes, his minimum sentence increased to sixty-seven months.
Sturman does not dispute the application of the Guidelines but argues that the court's failure to inform him of the increased penalties under 21 U.S.C. Sec. 3142(h)(2)A invalidates the enhancement. He cites the cases of United States v. DiCaro and United States v. Onick, which involved defendants not notified of potential enhancements prior to their convictions. However, Sturman's situation differs as he was explicitly informed of the possible sentencing increase. The amendment to the law did not render this information incorrect; it only limited the judge's discretion in sentencing. Thus, the courts were not required to predict how the discretion would be exercised post-amendment.
The notice given to Sturman was deemed legally adequate, providing a correct warning and accurate assessment of the potential maximum jail time for a future conviction. In extortion cases, the Sentencing Guidelines necessitate adjustments to the defendant's offense level based on the amount demanded, as outlined in U.S.S.G. Sec. 2B3.2. Sturman contested the district court's calculation of the extortion amounts for three victims: Green, Kamins, and May, which were determined to be $191,000, $5.7 million, and $3.75 million, respectively. The court calculated these amounts by averaging the victims' past payments and extrapolating over a defined time period, noting that extortion began when Sturman threatened the victims to resume payments after they had stopped.
Sturman argued against the need for an adjustment based on the claimed legitimacy of the victims' debts, which was rejected, as a defendant can be convicted of extortion even for obtaining their own property. The court’s decision to increase Sturman's sentence based on the extortion demands was thus justified. Additionally, Sturman disputed the calculation method, suggesting that averaging payments failed to consider potential decreases in those payments. However, the Guidelines allow for reasonable estimates of loss, and the absence of evidence indicating that payments would decline meant it was inappropriate for the judge to factor in such possibilities. The court's methodology was therefore upheld as reasonable based on the available information.
The district court's method of estimating the extortionate demand based on prior practices and Sturman's suggested time frame was deemed permissible. The jury's verdict and the district court's sentencing determination were upheld, and Sturman's conviction and sentence were affirmed. The court referenced 18 U.S.C. § 1951(b), defining extortion, and 18 U.S.C. § 1952, which prohibits interstate travel or commerce for the purpose of committing violence or unlawful activities. Offense levels in conspiracy cases are based on the substantive offense, here categorized as Extortion by Force or Threat of Injury. For conspiracy involving multiple substantive offenses, calculations are conducted as if there were separate conspiracy counts for each offense. Sturman's sentence under Count One was calculated individually for each of the three victims involved.
