Thursday, April 21, 2005
The Third Circuit issued an opinion in United States v. Urban (here) upholding the convictions of a number of former Philadelphia plumbing inspectors who were convicted of violating the Hobbs Act and RICO related to small cash payments (generally from $5 to $20) they received from plumbers to expedite inspections on construction jobs -- "grease" payments. The government's evidence to prove the effect on interstate commerce for the Hobbs Act convictions was the "diminution of assets theory" under which the government shows the victim has less money for other economic activity because of the bribe payments. Specifically, the defendants argued that the jury instruction, which only required the government to show a "potential" effect on interstate commerce from the diminution of assets, violates the Commerce Clause analysis of the Supreme Court in Lopez, Morrison, and Jones, which require a closer connection between the criminal conduct and an actual effect on interstate commerce. the Third Circuit rejected that argument, stating:
There thus appears to be little doubt that our precedent supports the District Court’s use of "potential" effect and its formulation of the depletion of assets theory in the jury instructions . . . But as we have repeatedly noted, the government need only prove that Hobbs Act extortion potentially affected commerce. Our “potential” effect reading of the Hobbs Act explains our continued adherence to the depletion of assets theory, because it is beyond cavil that the depletion of assets of a person engaged in interstate commerce has at least a “potential” effect on that person’s engagement in interstate commerce. Indeed, had the District Court instructed the jury that, notwithstanding proof of depletion of assets of plumbers engaged in interstate commerce, it could nonetheless acquit if it credited those plumbers’ conclusory testimony that their payments to Appellants did not affect their ability to purchase supplies made out-of-state, it would have misstated the law of this Circuit – extortion which depletes the assets of persons or businesses engaged in interstate commerce is, as a matter of law, a Hobbs Act violation.
The commerce element in the Hobbs Act is as broad as Congress's constitutional authority to regulate interstate commerce, and does not require proof of any interstate transportation, use of a means of interstate commerce, or the like. The challenges to this broad exercise of the Commerce Clause power in the Hobbs Act have usually come in robbery prosecutions in which the defendant engages in a series of petty robberies and is prosecuted under the "diminution of assets theory" because only money is taken. Commerce element challenges are less common in the corruption/"under color of official right" cases because the amounts are usually much greater, so that the effect on interstate commerce is easily identified. In Urban, the amounts were quite small -- pocket change really -- and spread among a number of plumbers and construction projects so that the effect on individual victims was much harder to demonstrate. Nevertheless, the "diminution of assets" theory -- which requires little proof beyond showing that money changed hands -- is alive and well in Third Circuit (and elsewhere). (ph)