In the Courts

U.S. Supreme Court Clarifies Requirements of Evidence of Enterprise in RICO Cases

The U.S. Supreme Court upheld the district court's jury instruction on the requirement for finding an “enterprise” for purposes of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). Boyle v. United States, No. 07-1309, slip op. at 12 (U.S. Jun. 8, 2009).

In Boyle, the petitioner had been a member of a group that participated in bank thefts in several states during the 1990s. The group included a core group that was supplemented periodically with others. Petitioner participated in thefts with the group over the course of five years. The group was loosely organized and had no particularly leadership structure.

The District Court instructed the jury that the government had to prove that: “1) there [was] an ongoing organization with some sort of framework, formal or informal, for carrying out its objectives; and 2) the various members and associates of the association function[ed] as a continuing unit to achieve a common purpose.” It also noted the jury could “find an enterprise where an association of individuals, without structural hierarchy, form[ed] solely for the purpose of carrying out a pattern of racketeering acts' and that '[c]ommon sense suggests that the existence of an association-in-fact is oftentimes more readily proven by what it does, rather than by abstract analysis of its structure.'”

The defendant was convicted of the charged RICO violations. The Second Circuit affirmed in a summary ruling.

Because there was not a formal organization, the question for the Supreme Court was the standard for establishing an enterprise under the “associated in fact” standard established in United States v. Turkette, 452 U.S. 576 (1981). The Court, in an opinion penned by Justice Alito, found that the government had to prove that there was a “structure” that had a purpose, relationships among the associated members, and sufficient longevity to achieve its goals. The Court noted that the existence of such an enterprise could be “inferred from the evidence showing that persons associated with the enterprise engaged in a pattern of racketeering activity.” It declined the petitioner's invitation to read additional requirements that the government establish some particular structural elements to establish an “enterprise.” It also found that the government did not need to prove that there was a particular “business-like” entity.

The Court dismissed the petitioner's claims that this interpretation would leave no light between RICO violations and the crime of conspiracy to commit RICO's predicate acts. Specifically, it found that the requirement of an “enterprise” provided the distinct element necessary to establish a RICO violation.

Justices Stevens and Breyer dissented. They found that the trial judge had improperly instructed the jury on the standard for proving an enterprise and should not have allowed the jury to find an enterprise based only on the evidence presented. According to the dissent, the law required the government to show some “business-like characteristics” to establish an enterprise under RICO. The dissent suggested that proving an “enterprise” should “generally require evidence of rules, routines, or processes through which the entity maintains its continuing operations and seeks to conceal its illegal acts.”

Alteration of Documents Under Grand Jury Subpoena Constitutes Obstruction of Justice

The Eleventh Circuit upheld the obstruction of justice conviction of Dr. Marsha Lynn Hoffman-Vaile based on her alteration of documents subject to grand jury subpoena. United States v. Hoffman-Vaile, 2009 WL 1458567, *9 (11th Cir. May 27, 2009).

Dr. Hoffman-Vaile, a Florida dermatologist, submitted regular claims for Medicare reimbursement to First Coast Service Options, a contractor administering the program. In 1999, First Coast conducted a review of Dr. Hoffman-Vaile's billing practices, specifically her use of a particular billing code. As a part of its review, First Coast requested certain records, photos, and other information. In 2000, First Coast conducted a more thorough review and asked for additional records. Although Dr. Hoffman-Vaile produced records in response to both requests, she did not produce photographs. At that point, First Coast opted to “educate” Dr. Hoffman-Vaile about the proper billing procedures rather than pursing potential claims against her. Another review in 2001 revealed additional unusual practices regarding the defendant's use of the same billing code at issue in the prior reviews.

In May 2002, the Department of Health and Human Services searched the defendant's office and seized all but 300 files relating to this particular billing code. Those files that contained photographs of the condition at issue were the basis of fraud and false claims charges. In early 2003 a grand jury issued a subpoena seeking the remaining 300 files. In response, the defendant produced 185 files, most of which lacked photographs.

The grand jury ultimately indicted Dr. Hoffman-Vaile on counts including fraud, false claims, and one count of obstruction of justice. At trial, employees testified that the defendant knew the files were to be produced with the photographs but had instructed employees to remove photographs from the subpoenaed files. The defendant was convicted on all counts and sentenced to 78 months of imprisonment, in addition to fines and disgorgement. On appeal, Dr. Hoffman-Vaile argued that, the obstruction of justice statute, 18 U.S.C. ' 1519, did not apply to a grand jury subpoena. Specifically, she claimed that the statutory language only applied to proceedings before “a department or agency of the United States.” Because a judicial proceeding was not a “department or agency,” she claimed, her conviction for obstruction of justice was invalid.

The Eleventh Circuit disagreed. It found that the statutory language “prohibited obstructive activity that is 'in relation to or contemplation of' any matter 'within the jurisdiction of the United States[.]'” Because the Department of Health and Human Services qualified as a “department or agency” and the grand jury subpoena was related to the HHS investigation, the statutory language Dr. Hoffman-Vaile's conduct clearly fell within the reach of the statute.

U.S. Supreme Court Clarifies Requirements of Evidence of Enterprise in RICO Cases

The U.S. Supreme Court upheld the district court's jury instruction on the requirement for finding an “enterprise” for purposes of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). Boyle v. United States, No. 07-1309, slip op. at 12 (U.S. Jun. 8, 2009).

In Boyle, the petitioner had been a member of a group that participated in bank thefts in several states during the 1990s. The group included a core group that was supplemented periodically with others. Petitioner participated in thefts with the group over the course of five years. The group was loosely organized and had no particularly leadership structure.

The District Court instructed the jury that the government had to prove that: “1) there [was] an ongoing organization with some sort of framework, formal or informal, for carrying out its objectives; and 2) the various members and associates of the association function[ed] as a continuing unit to achieve a common purpose.” It also noted the jury could “find an enterprise where an association of individuals, without structural hierarchy, form[ed] solely for the purpose of carrying out a pattern of racketeering acts' and that '[c]ommon sense suggests that the existence of an association-in-fact is oftentimes more readily proven by what it does, rather than by abstract analysis of its structure.'”

The defendant was convicted of the charged RICO violations. The Second Circuit affirmed in a summary ruling.

Because there was not a formal organization, the question for the Supreme Court was the standard for establishing an enterprise under the “associated in fact” standard established in United States v. Turkette , 452 U.S. 576 (1981). The Court, in an opinion penned by Justice Alito, found that the government had to prove that there was a “structure” that had a purpose, relationships among the associated members, and sufficient longevity to achieve its goals. The Court noted that the existence of such an enterprise could be “inferred from the evidence showing that persons associated with the enterprise engaged in a pattern of racketeering activity.” It declined the petitioner's invitation to read additional requirements that the government establish some particular structural elements to establish an “enterprise.” It also found that the government did not need to prove that there was a particular “business-like” entity.

The Court dismissed the petitioner's claims that this interpretation would leave no light between RICO violations and the crime of conspiracy to commit RICO's predicate acts. Specifically, it found that the requirement of an “enterprise” provided the distinct element necessary to establish a RICO violation.

Justices Stevens and Breyer dissented. They found that the trial judge had improperly instructed the jury on the standard for proving an enterprise and should not have allowed the jury to find an enterprise based only on the evidence presented. According to the dissent, the law required the government to show some “business-like characteristics” to establish an enterprise under RICO. The dissent suggested that proving an “enterprise” should “generally require evidence of rules, routines, or processes through which the entity maintains its continuing operations and seeks to conceal its illegal acts.”

Alteration of Documents Under Grand Jury Subpoena Constitutes Obstruction of Justice

The Eleventh Circuit upheld the obstruction of justice conviction of Dr. Marsha Lynn Hoffman-Vaile based on her alteration of documents subject to grand jury subpoena. United States v. Hoffman-Vaile, 2009 WL 1458567, *9 (11th Cir. May 27, 2009).

Dr. Hoffman-Vaile, a Florida dermatologist, submitted regular claims for Medicare reimbursement to First Coast Service Options, a contractor administering the program. In 1999, First Coast conducted a review of Dr. Hoffman-Vaile's billing practices, specifically her use of a particular billing code. As a part of its review, First Coast requested certain records, photos, and other information. In 2000, First Coast conducted a more thorough review and asked for additional records. Although Dr. Hoffman-Vaile produced records in response to both requests, she did not produce photographs. At that point, First Coast opted to “educate” Dr. Hoffman-Vaile about the proper billing procedures rather than pursing potential claims against her. Another review in 2001 revealed additional unusual practices regarding the defendant's use of the same billing code at issue in the prior reviews.

In May 2002, the Department of Health and Human Services searched the defendant's office and seized all but 300 files relating to this particular billing code. Those files that contained photographs of the condition at issue were the basis of fraud and false claims charges. In early 2003 a grand jury issued a subpoena seeking the remaining 300 files. In response, the defendant produced 185 files, most of which lacked photographs.

The grand jury ultimately indicted Dr. Hoffman-Vaile on counts including fraud, false claims, and one count of obstruction of justice. At trial, employees testified that the defendant knew the files were to be produced with the photographs but had instructed employees to remove photographs from the subpoenaed files. The defendant was convicted on all counts and sentenced to 78 months of imprisonment, in addition to fines and disgorgement. On appeal, Dr. Hoffman-Vaile argued that, the obstruction of justice statute, 18 U.S.C. ' 1519, did not apply to a grand jury subpoena. Specifically, she claimed that the statutory language only applied to proceedings before “a department or agency of the United States.” Because a judicial proceeding was not a “department or agency,” she claimed, her conviction for obstruction of justice was invalid.

The Eleventh Circuit disagreed. It found that the statutory language “prohibited obstructive activity that is 'in relation to or contemplation of' any matter 'within the jurisdiction of the United States[.]'” Because the Department of Health and Human Services qualified as a “department or agency” and the grand jury subpoena was related to the HHS investigation, the statutory language Dr. Hoffman-Vaile's conduct clearly fell within the reach of the statute.