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United States v. Montoya

filed: September 20, 1991.


Appeal from the United States District Court for the Eastern District of California. D.C. No. CR-89-00199-MLS. Milton L. Schwartz, District Judge, Presiding.

Procter Hug, Jr., Robert R. Beezer and John T. Noonan, Jr., Circuit Judges. Opinion by Judge Hug.

Author: Hug

HUG, JR., Circuit Judge

Joseph B. Montoya, a former Senator for the State of California, appeals his convictions for racketeering, in violation of 18 U.S.C. § 1962(c) ("RICO") (Count I); extortion and attempted extortion under color of official right, in violation of 18 U.S.C. § 1951 ("Hobbs Act") (Counts II, VI, VII, VIII, and IX); and money laundering, in violation of 18 U.S.C. § 1956 (Count IV). We conclude that, in light of the Supreme Court's recent decision in McCormick v. United States, 114 L. Ed. 2d 307, 111 S. Ct. 1807 (1991), the district court's instructions to the jury did not adequately define the elements of extortion under color of official right under the Hobbs Act as required by that case. We therefore reverse Montoya's Hobbs Act convictions. We affirm, however, Montoya's convictions for racketeering and money laundering.



On October 10, 1989, Montoya was charged, in a superseding indictment, with one count of racketeering, eight counts of extortion under color of official right, one count of money laundering, and two counts of bribery. The charges arose from a Federal Bureau of Investigation ("FBI") "sting" operation to uncover unlawful corruption by certain members of the California legislature and their staffs.

The jury trial commenced on December 4, 1989. On January 17, 1990, after the close of the Government's case-in-chief, the district court granted Montoya's Fed. R. Crim. P. 29 motion for judgment of acquittal as to the two bribery charges, Counts III and XII. On February 2, 1990, the jury returned verdicts of guilty on the racketeering, money laundering, and five of the extortion counts, and verdicts of not guilty on three remaining extortion charges, Counts V, X, and XI.

On May 8, 1990, Montoya was sentenced under the Federal Sentencing Guidelines to 78 months imprisonment on Counts I, II, and IV, and 78 months imprisonment on Counts VI, VII, and VIII, to be served concurrently. Montoya was also sentenced to a three-year term of supervised release, and, as to Count IX, a three-year term of probation to be served concurrently with the term of supervised release. Finally, Montoya was fined $32,000, and ordered to pay restitution in the amount of $8,000. Montoya appeals all of these convictions.



A. Hobbs Act Convictions (Counts II, VI, VII, VIII, IX)

We first consider Montoya's challenges to his five convictions under the Hobbs Act, 18 U.S.C. § 1951. Montoya argues that the standards for evaluating whether conduct is sufficient to meet the required "inducement" element of the offense of extortion under color of official right are ambiguous and, under the rule of lenity, should therefore be resolved in his favor. Montoya further contends that the district court's jury instructions were improper, and that there was insufficient evidence to sustain the conviction under Count II. Finally, Montoya contends that his conviction for attempted extortion under Count II is invalid because the Government failed to show the required effect on interstate commerce. We reverse Montoya's five extortion convictions on the ground that the jury was erroneously instructed on an essential element of a Hobbs Act extortion offense as subsequently interpreted by the Supreme Court in McCormick.

Although McCormick was decided after the jury verdict and thus was not available to the district judge when he instructed the jury, we must apply the McCormick standards on appeal. "[A] new rule for the conduct of criminal prosecutions is to be applied retroactively to all cases pending on direct appeal." United States v. Hilling, 891 F.2d 205, 207 (9th Cir. 1988) (citing Griffith v. Kentucky, 479 U.S. 314, 328, 107 S. Ct. 708, 716, 93 L. Ed. 2d 649, 661 (1987)).

1. The Jury Instructions

The Hobbs Act provides, in relevant part, that a person is guilty of a crime if he or she "in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by . . . extortion or attempts or conspires so to do . . . ." 18 U.S.C. § 1951(a) (1988). The term "extortion" is defined as "the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right." Id. § 1951(b)(2). In United States v. Aguon (Aguon II), 851 F.2d 1158 (9th Cir. 1988) (en banc), we held that in order to obtain a conviction under the Hobbs Act for extortion "under color of official right," the prosecution must prove the defendant induced the improper payment. Aguon II, 851 F.2d at 1160, 1166, 1172.

The Supreme Court recently enunciated an additional requirement for a Hobbs Act conviction of extortion "under color of official right" in McCormick v. United States. In that case, the defendant contended that the alleged extortionate payments were received as legitimate election campaign contributions. The Supreme Court held that, in order to establish the Hobbs Act violation, the prosecution had to prove that the payments were "made in return for an explicit promise or undertaking by the official to perform or not to perform an official act." McCormick, 111 S. Ct. at 1816. In other words, the prosecution had to prove an explicit " quid pro quo." Id.

In McCormick, the Court reversed a Hobbs Act conviction of a state legislator for extortion "under color of official right." The legislator had informed a lobbyist during a reelection campaign "that his campaign was expensive, that he had paid considerable sums out of his own pocket, and that he had not heard anything" from the constituents. After the lobbyist contacted the constituents, a number of cash payments were paid by the constituents to McCormick. McCormick neither listed any of these payments as campaign contributions nor reported the money as income on his federal tax return. It was undisputed that the payments were illegal under state law. McCormick then sponsored and advocated successfully for passage of the constituents' proposed legislation, and received an additional cash payment two weeks after the legislation was enacted.

The jury convicted McCormick on one of five charged Hobbs Act counts pursuant to instructions that informed them "that to establish a Hobbs Act violation the Government had to prove that McCormick induced a cash payment and that he did so knowingly and willfully by extortion." Id. at 1810. The district court further instructed the jury on the required proof with respect to the extortion charges, and defined "extortion" and other terms. Id. & n. 4.

In reversing the Fourth Circuit's affirmance of the conviction, the Court rejected the court of appeals' interpretation of the statute as not requiring proof of a " quid pro quo," defined as "a promise of official action or inaction in exchange for any payment or property received," in circumstances "where the parties never intended the payments to be 'legitimate' campaign contributions." Id. at 1813. Instead, the Court held that such a showing is required regardless of the underlying legality of the contribution. Id. at 1817. Thus, only payments that "are made in return for an explicit promise or undertaking by the official to perform or not to perform an official act," or in other words, where "the official asserts that his official conduct will be controlled by the terms of the promise or undertaking," will amount to a violation of the Hobbs Act. Id. at 1816.

In setting forth this requirement, the Court stated:

Serving constituents and supporting legislation that will benefit the district and individuals and groups therein is the everyday business of a legislator. It is also true that campaigns must be run and financed. Money is constantly being solicited on behalf of candidates, who run on platforms and who claim support on the basis of their views and what they intend to do or have done. Whatever ethical considerations and appearances may indicate, to hold that legislators commit the federal crime of extortion when they act for the benefit of constituents or support legislation furthering the interests of some of their constituents, shortly before or after campaign contributions are solicited and received from those beneficiaries, is an unrealistic assessment of what Congress could have meant by making it a crime to obtain property from another, with his consent, "under color of official right." To hold otherwise would open to prosecution not only conduct that has long been thought to be well within the law but also conduct that in a very real sense is unavoidable so long as election campaigns are financed by private contributions or expenditures, as they have been from the beginning of the Nation. It would require statutory language more explicit than the Hobbs Act contains to justify a contrary conclusion.

Id. (Citation omitted). Thus, the distinction between lawful campaign contributions and unlawful extortionate activity is discussed as the difference between "campaign contributions with anticipation of favorable future action, as opposed to campaign contributions in exchange for an explicit ...

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