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United States v. Inzunza

September 1, 2009

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
RALPH INZUNZA, DEFENDANT-APPELLANT.
UNITED STATES OF AMERICA, PLAINTIFF-APPELLANT,
v.
MICHAEL ZUCCHET, DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Southern District of California Jeffrey T. Miller, District Judge, Presiding D.C. No. CR-03-02434-JTM.

The opinion of the court was delivered by: Canby, Circuit Judge

FOR PUBLICATION

Argued June 3, 2008

Submitted August 26, 2009 -- Pasadena, California.

Before: William C. Canby, Jr., Jay S. Bybee and Milan D. Smith, Jr., Circuit Judges.

OPINION

Ralph Inzunza and Michael Zucchet, former members of the San Diego City Council, were indicted on numerous counts of honest services fraud, conspiracy to commit honest services fraud, and extortion. Both cases went to trial, and both defendants were convicted on various counts. The district court rejected Inzunza's motion for acquittal and a new trial. It granted Zucchet's motion for acquittal on several counts and his motion for a new trial on the remaining two. Inzunza has appealed his convictions, and the government has appealed the district court's rulings on Zucchet's motions. We affirm the holdings of the district court with respect to both Inzunza and Zucchet. We stay our mandate, however, to await the decision of the Supreme Court in United States v. Weyhrauch, 548 F.3d 1237 (9th Cir. 2009), cert. granted, 2009 WL 789239 (U.S. June 29, 2009).

FACTUAL BACKGROUND

In 2000, the San Diego City Council enacted an ordinance banning touching between exotic dancers and patrons: the so-called No-Touch ordinance. This ordinance replaced another provision banning only "lewd and lascivious" conduct at clubs. The bright line aspect of the No-Touch ordinance made for easier law enforcement and eliminated the need to spend public funds on lap dances for undercover police officers. It also put a damper on strip club profits.

Michael Galardi owned several strip clubs in Las Vegas and the all-nude "Cheetahs" club in San Diego. Unhappy with his business prospects under the No-Touch ordinance, he sought ways to get rid of it. He obtained the help of his friend Lance Malone, a former Las Vegas county commissioner, to work toward the ordinance's repeal.

In May 2001, Malone began his mission. He and another Galardi employee, John D'Intino, went to a fundraising event and met with Inzunza, giving him campaign contribution checks from Cheetahs associates totaling $1,750. Inzunza was a city councilman at the time, and he listened to their ideas. He indicated that the chances of getting the law repealed were not great, but that there was a way to change those odds. If a police officer were to come to the City Council and state that the ordinance was counterproductive, that "[t]his law was a bad idea" that "[i]t's not working . . . too much paperwork," then Inzunza would have an excuse to bring it before the Public Safety and Neighborhood Services Committee, which oversees the city's adult entertainment industry.

A month later, Malone and Inzunza had lunch. Malone delivered to Inzunza $8,650 in checks traceable to Galardi.

Inzunza was evidently impressed with the amount of money he received. Malone later told D'Intino that Inzunza had said, in reference to the No-Touch ordinance, "I'll make sure that we get that on [the] docket." Inzunza also told Malone that they would be able to repeal the law only with the help of other Council members and, in particular, Zucchet, who was running for a seat on the Council. According to Malone, Inzunza said, "We get him in, you support him, we'll get it off."

In July 2001, Inzunza called Malone and told him that they would have a private meeting with Zucchet at an upcoming fundraiser. Malone met privately with Zucchet for half an hour at the event and gave him $6,750 in checks, more than half the total raised for Zucchet at the fundraiser. Once Zucchet realized that the checks were traceable to adult entertainment, however, he decided that they were too much of a political liability and returned the money. He and Malone left open the possibility of future contributions.

The possibility became a reality early in 2002, when Inzunza called Malone and asked him to bring a few thousand dollars for Zucchet to an upcoming luncheon. Inzunza insisted that this time, the money not be traceable to the adult entertainment industry. Malone contacted Tony Montagna, a Galardi employee who ran a gym in San Diego (and who happened to be an FBI informant) to have his clients write $2,000 in checks. D'Intino delivered the checks to Inzunza for Zucchet at a fundraiser on February 28, 2002. During the election run-off that year, Malone delivered another $3,000 in checks to Zucchet. Zucchet won the November 2002 run-off.

Because Inzunza had already won his election outright, Inzunza and Malone had begun to strategize about repealing the No-Touch ordinance earlier that year, in March. Inzunza stated that he would put together a legislative proposal that appeared to tighten the overall restrictions on strip clubs but eliminated the No-Touch ordinance at the same time. Inzunza also asked if Malone knew any police officers; they would need a cop to provide cover for the plan, so that it appeared that the police were behind the legislative push. Malone contacted Detective Russ Bristol, a San Diego police officer (also an FBI informant) with whom he already had an ostensibly corrupt relationship, and scripted a phone call to take place between Detective Bristol and Inzunza. Inzunza was motivated to keep the plan secret, stating, "[I]f this gets out to the media, I'm gonna tell 'em I wanted to make the ordinance tougher." Before the call took place, Inzunza decided to have e-mails sent to all the council members about adult entertainment issues, giving Inzunza a pretext for his interest in the No-Touch ordinance. Malone obliged, having two such e-mails sent from imaginary citizens to the Council. Inzunza then contacted Detective Bristol, telling him that concerned citizens had raised questions about adult entertainment and were asking for legislative suggestions. During this time period, Malone repeatedly expressed confidence that Inzunza was willing to take action on his behalf.

With the November election out of the way, Zucchet was assigned to the Public Safety and Neighborhood Services Committee (hereinafter "the Committee"). On February 10, 2003, Zucchet, Inzunza, and Malone met for lunch and discussed the repeal of the No-Touch ordinance. Zucchet indicated some confusion about Malone's legislative objectives; he had assumed, on the basis of a "twenty-second preview" from Inzunza, that Malone wanted to legalize topless lap dances instead of clothed lap dances. Malone and Inzunza clarified their objectives and proposed various forms of cover to distract public attention from the repeal of the No-Touch ordinance, such as increasing the required distance between adult businesses or banning all-nude clubs. Zucchet doubted that they could obtain the support of the police, and said he was not "too optimistic" about repealing the No-Touch ordinance. Malone reported back to Galardi that both Zucchet and Inzunza were on board.

Things did not go as smoothly as Malone had hoped. Concerns lingered over Zucchet's commitment and, on February 28, 2003, Malone told Galardi that he would follow up with Inzunza to ensure that Zucchet would "come through" for them. When Malone tried to arrange a meeting between Zucchet and Detective Bristol, Zucchet instead set up a meeting with the head of the vice unit, Lt. Kanaski. According to statements by Malone, Zucchet insisted on keeping the appointment, and Malone urged him not to mention the No-Touch ordinance or Detective Bristol. Malone conferred with Inzunza about this mishap, asking Inzunza to follow up with Zucchet, and stating, "I'm there for you anything you ever need . . . I mean there's never a question."

When Zucchet met with Lt. Kanaski, he started off by talking about distance requirements between adult establishments. Lt. Kanaski turned the conversation to the No-Touch ordinance and made it clear that the police did not oppose it. Malone found out that the conversation had gone awry and became concerned about his relationship with Inzunza and Zucchet. Inzunza's staff assured him that they were still working on repeal of the ordinance. Galardi testified that in March 2003, he gave Malone $6,000 in cash to divide among Inzunza, Zucchet, and one other now-deceased councilman, Charles Lewis.

On the advice of one of Lewis's staffers, Malone formulated a new plan. A "concerned citizen" would appear before the Committee and ask it to tighten the distance requirements between adult businesses. Once the matter was referred to the Committee and voted on, Detective Bristol would come in to criticize the No-Touch ordinance and Inzunza would amend the distance provision to repeal it. Malone and Zucchet had breakfast on April 16, 2003, and Zucchet stated that he would "do the lifting at the committee level." Zucchet confirmed the plan with Inzunza. Galardi testified that the night before the breakfast, he gave Malone another $10,000 in cash to give the councilmen.

On April 30, 2003, the "concerned citizen" plan was executed, and Zucchet referred the matter for a report by the city attorney, which amounted to a referral to the Committee. Inzunza now decided that he would put the No-Touch ordinance before the Committee in addition to the distance provision. His staff worked on a memo with Malone, and Inzunza consulted the Committee chair about repealing the No-Touch ordinance. In May, 2003, Zucchet learned from the city attorney that the current distance restrictions on adult businesses could not be expanded, so he indicated that there was no need for a report to the Committee. On May 14, 2003, repeal plans ended when the government executed a series of search warrants, raiding City Hall.

The defendants were subsequently indicted on numerous counts of honest services wire fraud in violation of 18 U.S.C. §§ 1343 and 1346, one count of conspiracy to commit honest services wire fraud in violation of 18 U.S.C. § 371, and three counts of extortion in violation of the Hobbs Act, 18 U.S.C. §§ 1951-1952. The case was tried over a period of eleven weeks, and the jury returned a verdict. Inzunza was found guilty on the conspiracy count, on several of the honest services fraud counts, and on the Hobbs Act counts. Zucchet was found guilty on the conspiracy count, on a different set of honest services counts, and on the Hobbs Act counts.*fn1 Both defendants moved for judgments of acquittal and, alternatively, new trials. The district court denied Inzunza's motion and sentenced him to 21 months' imprisonment. The court granted Zucchet's motion for a judgment of acquittal on the Hobbs Act and four honest services counts; on the remaining counts - one honest services count and the conspiracy count - the court denied Zucchet's motion for acquittal but granted a new trial. Inzunza appeals his conviction; the government appeals the grant of Zucchet's motions.

DISCUSSION

Out of this extensive record, created through years of investigation and months of trial, the parties challenge the district court's rulings on a multitude of grounds. Although the charges against both defendants arise out of a common narrative, and the cases were consolidated for appeal, the defendants were not convicted on the same set of charges. Moreover, Inzunza is the appellant in his appeal, while Zucchet is the appellee in his. Therefore, we address each appeal separately.

Defendant Inzunza

A. Sufficiency of the Evidence

The standard of review for determining the sufficiency of the evidence "is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis in original). We review de novo the denial of a motion for acquittal. United States v. Tucker, 133 F.3d 1208, 1214 (9th Cir. 1998). We review for an abuse of discretion the district court's ruling on a defendant's motion for a new trial. See United States v. Mack, 362 F.3d 597, 600 (9th Cir. 2004).

[1] Under the Hobbs Act, political campaign contributions rise to the level of extortion if they are "made in return for an explicit promise or undertaking by the official to perform or not to perform an official act"-that is, a quid pro quo. McCormick v. United States, 500 U.S. 257, 273 (1991). Similarly, when the government seeks to prove honest services fraud in the form of bribery, it must prove a quid pro quo. United States v. Kincaid-Chauncey, 556 F.3d 923, 943 (9th Cir. 2009).

[2] Our court has elaborated on the type of evidence that will sustain a finding of quid pro quo:

[W]hat McCormick requires is that the quid pro quo be clear and unambiguous, leaving no uncertainty about the terms of the bargain . . . . [T]he explicitness requirement serves to distinguish between contributions that are given or received with the "anticipation" of official action and contributions that are given or received in exchange for a "promise" of official action. When a contributor and an official clearly understand the terms of a bargain to exchange official action for money, they have moved beyond "anticipation" and into an arrangement that the Hobbs Act forbids. This understanding need not be verbally explicit. The jury may consider both direct and circumstantial evidence, including the context in which a conversation took place, to determine if there was a meeting of the minds on a quid pro quo.

United States v. Carpenter, 961 F.2d 824, 827 (9th Cir. 1992) (internal citation omitted).

[3] We confess considerable uneasiness in applying this standard to the acceptance of campaign contributions because, in our flawed but nearly universal system of private campaign financing, large contributions are commonly given in expectation of favorable official action. The Supreme Court was sensitive to this issue in McCormick:

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 crime of federal 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."

McCormick, 500 U.S. at 272. How, then, in the potentially polluted atmosphere of campaign contributions, can we tell a criminal agreement from a large campaign contribution accepted from a contributor who expects favorable results? The Supreme Court's answer lies in the level of explicitness, which permits a line to be drawn legally if not according to ethical perfection.

The receipt of [campaign] contributions is . . . vulnerable under the Act as having been taken under color of official right, but only if the payments are made in return for an explicit promise or undertaking by the official to perform or not perform an official act. In such situations the official asserts that his official conduct will be controlled by the terms of the promise or undertaking.

Id. at 273. We note that this requirement of explicitness refers to the promise of official action, not the connection between the contribution and the promise. An official may be convicted without evidence equivalent to a statement such as: "Thank you for the $10,000 campaign contribution. In return for it, I promise to introduce your bill tomorrow." The connection between the explicit promise of official action and the contribution must be proved, but the ...


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