Extortion

What laypeople call extortion, lawyers call a violation of the Hobbs Act. The Hobbs Act states:

Whoever in anyway or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined under this title or imprisoned not more than twenty years, or both.

As used in this section:

(1) The term “robbery” means the unlawful taking or obtaining of personal property from the person or in the presence of another, against his will, by means of actual or threatened force, or violence, or fear of injury, immediate or future, to his person or property, or property in his custody or possession, or the person or property of a relative or member of his family or of anyone in his company at the time of the taking or obtaining.

(2) The term “extortion” means 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.

(3) The term “commerce” means commerce within the District of Columbia, or any Territory or Possession of the United States, all commerce between any point in a State, Territory, Possession, or the District of Columbia and any point outside thereof, all commerce between points within the same State through any place outside such State and all commerce over which the United States has jurisdiction.

18 U.S.C. § 1951 (emphasis added). In essence, the Hobbs Act elevates all but the simplest acts of robbery and extortion to the level of federal crimes.

a.    The Obtaining of Property from Another And Threats of Physical Violence

As set forth above, the Hobbs Act defines “extortion” 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” (emphasis added). Traditionally, the courts have not spent much time discussing the “property” element of a Hobbs Act violation. A demand for property is an inherent aspect of the usual quid-pro-quo extortionistic threat, e.g.: “give me $1000 or I’m gonna break your legs.” The threat: “I’m gonna break your legs” by itself is simple assault. It is the defendant’s inclusion of a demand for property (i.e., $1000) that distinguishes extortion from assault. Since the demand for property was fundament to a claim of extortion, the demand was usually obvious and required little explanation from the courts.

As with so many other laws, however, creative plaintiffs’ attorneys turned to the Hobbs Act as a means to extend RICO to certain types of harmful behavior. In particular, in the late-1980s / early-1990s, abortion clinics started to predicate RICO claims on the allegedly extortionistic threats made against them by the pro-life political movement. The abortion clinics claimed that the pro-life protests were a form of extortion in that the protestors outside the clinics sought to drive away employees and patients, induce fear among neighbors, and essentially drive the clinics out of business. The protest activities definitely caused economic harm to the clinics, which afforded the clinics standing under section 1964(c), but in subsequent motion practice, the pro-life movement challenged whether their protests could constitute a violation of the Hobbs Act.

In Scheidler v. National Organization for Women, Inc., 537 U.S. 393 (2003), the Supreme Court dismissed the abortion clinic’s civil RICO claims against the pro-life protestors because, although the protestors caused harm to the clinics, the protestors did not “obtain any property” from the clinics, or attempt to do so. The Supreme Court stated:

There is no dispute in these cases that petitioners interfered with, disrupted, and in some instances completely deprived respondents of their ability to exercise their property rights. Likewise, petitioners’ counsel readily acknowledged at oral argument that aspects of his clients’ conduct were criminal. [Footnote omitted.] But even when their acts of interference and disruption achieved their ultimate goal of “shutting down” a clinic that performed abortions, such acts did not constitute extortion because petitioners did not “obtain” respondents’ property. Petitioners may have deprived or sought to deprive respondents of their alleged property right of exclusive control of their business assets, but they did not acquire any such property. Petitioners neither pursued nor received “something of value from” respondents that they could exercise, transfer, or sell. To conclude that such actions constituted extortion would effectively discard the statutory requirement that property must be obtained from another, replacing it instead with the notion that merely interfering with or depriving someone of property is sufficient to constitute extortion.

Id. at 404-05. Thus, although the clinics were injured “by reason of” the protestors activities and the clinics had standing under section 1964(c), the clinics could not establish a violation of the Hobbs Act, and thus failed to establish racketeering activity, because the protestors did not obtain or seek to obtain the clinics’ property. In the wake of Scheidler, there is no doubt that threatening conduct in the abstract is not actionable under RICO. Threatening conduct is actionable under RICO, and constitutes extortion, only if the defendant obtains or seeks to obtain the victim’s property.

On remand, the Seventh Circuit did not dismiss the RICO claims after the Supreme Court’s 2003 decision. Instead, the Seventh Circuit went back to the drawing broad and determined that even if defendants had not committed “robbery or extortion,” they had “committed or threatened physical violence” to the clinics and the doctors, and the “threats of physical violence” alone remained actionable under the Hobbs Act. Once again, the Supreme Court granted certiorari. The Supreme Court reversed the Seventh Circuit, holding that the Hobbs Act did not intend “to create a free standing physical violence offense in the Hobbs Act;” instead, Congress intended only “to forbid acts of physical violence in furtherance of a plan or purpose to engage in . . . robbery or extortion.” Scheidler v. National Organization for Women, Inc., 547 U.S. 9 (2006).

. . . [The Hobbs Act] makes clear, the statute prohibits violence only when that violence furthers a plan or purpose to affect commerce by robbery or extortion.

. . . [R]espondents’ Hobbs Act interpretation broadens the Act’s scope well beyond what case law has assumed. It would federalize much ordinary criminal behavior, ranging from simple assault to murder, behavior that typically is the subject of state, not federal, prosecution. Decisions of this Court have assumed that Congress did not intend the Hobbs Act to have so broad a reach.

547 U.S. at 19-20 (court’s emphasis). Thus, the Hobbs Act penalizes any one who engages in “robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section,” but the threats of physical violence must be in furtherance of a plan or purpose to commit robbery or extortion. Accordingly, since the defendant protestors had not attempted to obtain any property from the plaintiff clinics, they did not engage in extortion, and even though they threatened violence, those threats were likewise not actionable under RICO because the threats could not have been in furtherance of a plan or purpose to engage in extortion. In short, threats of violence, in the absence of a plan or purpose to engage in extortion or robbery, are not actionable under RICO.

Because a civil RICO plaintiff has standing only if it has been injured in its business or property “by reason of” the RICO violation, attempted extortion does not provide standing to a civil plaintiff. In other words, a civil plaintiff can seek damages only if the defendant’s threats actually caused the plaintiff to depart with its money or property. Civil “plaintiffs cannot press a RICO claim based on attempts at extortion that did not succeed in harming them.” Sanchez, 492 F.3d at 14.

b.    The Issue of Consent

The important distinction between robbery and extortion is that consent is not an aspect of the former. Robbery is just that – robbery: the perpetrator takes a club, hits the victim over the head, and runs away with the victim’s purse or semi-tractor full of cigarettes. Consent does not enter into the picture; rather, robbery involves the taking of property by force or threat of force, against the victim’s will.

By its very nature, however, extortion causes the victim to consent to the taking of property. Extortion does not necessarily involve the use of force or the threat of the use of force. For example, all of the following are examples of extortion: the victim storeowner “voluntarily” pays a Mafia enforcer $1000 per month because the Mafia enforcer said, “pay us $1000 per month of we’ll break your legs”; a male police officer stops a female driver and demands that she have sex with him or he will cause her license to be cancelled; an employee demands personal payments from customers of his employer or the customers will not receive product they need to stay in business or the customers will receive shoddy service. Only the Mafia enforcers use the threat of force to extort payments. The police officer uses the threat of license revocation. The employee uses the threat of order cancellation or shoddy service. Nonetheless all the acts described constitute extortion because the threat resulted (or was intended to result) in the victim’s consent to depart with valuable property or rights.

Because of the aspect of consent, victims of extortion often do not realize they are being extorted, or they may realize they are being extorted but fear reporting the crime to law enforcement because they have “participated” in the offense. For example, the store owner paying $1000 per month to the Mafia may fear that if he reports the payments to police, he will be indicted for aiding and abetting (i.e., financing) the Mafia’s illegitimate activities. The female driver who “consented” to sex with the police offer may not report the crime on the basis of a belief that there can be no rape if the woman consents. The customers may not report the extortion of the employee out of fear that the employer will look to the customers to pay damages to the employer’s reputation or profitability once the employee’s extortion scheme is brought to light.

Perpetrators will also commonly threaten the victim with false charges of bribery if the victim reports the extortion. For example, in the commercial context, an employee may demand personal payments in exchange for the service that the customer is already supposed to receive under its contract with the employer, but when the customer reports the extortion, the employee claims that the customer was bribing the employee to receive favorable treatment (beyond what the employer was obligated to provide the customer under contract), e.g., below market prices, or confidential information that would enable the customer to be more competitive. In highly specialized industries where untrained law enforcement officers may be unable to discern the nature of the benefits running between the business parties, it boils down to the employee’s word against the customer’s and the apparent credibility of each party. Although the customer may be the victim of extortion, the customer may be reluctant to report the crime out of fear that law enforcement will believe the perpetrator’s bribe story, rather than the true extortion story, and charge the victim with bribery.

These legitimate fears, however, are the very reason why extortion is such a serious crime. Robbery is a serious crime because of the use or threatened use of force. Extortion is a serious crime because it causes victims to believe they are perpetrators, and by exploiting that fear, the extortionist can repeatedly and openly engage in acts of extortion with little threat of being prosecuted. Victims of extortion must never forget, however, that extortion by its very nature involves the victim’s consent. The mere fact that a victim has consented to depart with property in response to threats of physical or economic injury does not legitimize the perpetrator’s actions. The element of consent is an essential element of extortion.

c.    Extortion under Color Of Official Right

Many people are confused by extortion “under color of official right.” Extortion under color of official right occurs when an agent of the government uses his or her legitimate governmental powers to obtain an illegitimate objective. For example, a police officer may have the authority to revoke a driver’s license but he cannot offer to forego the legitimate exercise of his power in exchange for sexual favors from the driver. Likewise, a city council member may have the authority to rezone an area of town and thereby effectively put a company out of business, but the council member cannot threaten rezoning unless the company contributes to his re-election campaign. As one court recently stated: “In order to prove Hobbs Act extortion ‘under color of official right,’ ‘the [plaintiff / prosecutor] need only show that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts.” United States v. Urban, 404 F.3d 754, 768 (3d Cir. 2005). In short, governmental agents have a great deal of discretion when deciding how to exercise the powers of the government. When a government agent engages in extortion “under color of official right,” he is essentially using the governmental powers with which he has been trusted to gain personal or illegitimate rewards.

In some cases alleging extortion under color of official right, “it can be difficult to separate above-board political contributions from the shady.” Roger Whitmore’s Auto, Service, Inc. v. Lake County, Illinois, 424 F.3d 659, 671 (7th Cir. 2005). In Roger Whitmore’s Auto, Service, Inc., the defendant county sheriff had authority to award the county’s towing contracts to towing companies. The sheriff was an elected official, who used uniform deputies to collect campaign contributions from various businesses who held contracts with the city. During one election, the plaintiff chose to support another candidate during the primary. When the challenger lost, the plaintiff began to contribute to the incumbent sheriff once again, but during the next territory review, the plaintiff’s towing territory was reduced. The plaintiff sued, claiming that the campaign contributions – solicited by officers in uniform – were actually acts of extortion under color of official right, in that towing companies who did not contribute to the incumbent sheriff were excluded from county towing business or were punished in other ways. The court of appeals held that the award of summary judgment in favor of the incumbent defendant sheriff was proper:

We do not believe a rational jury could find in [plaintiff’s] favor on the basis of this evidence. For one, it should hardly be surprising that towers made up a disproportionate percentage of [the sheriff’s] campaign contributions, given the manner in which the Lake County sheriff’s department has long used a list of approved towers. . . .

Likewise, [plaintiff’s] bald assertion that he and other towers had been intimidated does not carry the day. As noted, any fear that [plaintiff] or others may have felt must be reasonable. This is where [plaintiff’s] failure to present some objective evidence of extortion – for example, historical data tying the award to denial of towing to contributions made or not made – becomes a serious problem. If a plaintiff’s subjective discomfort with uniformed and armed law enforcement officers dropping by for contributions is enough to qualify as Hobbs Act extortion, it won’t be long before all police fund raisers (for political or other purposes) come to an end. There must be objective evidence to indicate that the plaintiff’s fears are reasonable and otherwise to allow a jury to find Hobbs Act extortion; we find none in this record to satisfy Roger’s burden of establishing a material issue of fact for trial.

Id. at 672. Obviously, if the deputies had make the threat: contribute to the sheriff’s campaign or you will be disqualified as an approved county tower, then there would have been objective evidence to support the plaintiff’s reasonable fear. Without an explicit threat, circumstantial evidence supporting the plaintiff’s allegations of reasonable fear is useful in all cases of extortion.

d.   Extortion vs. Legitimate Exercise of Government Power

Extortion “under color of official right” should not be confused with the legitimate exercise of government power. Governmental power, by its nature, is legalized extortion, e.g.,: unless you abide by the law, you’ll go to jail; unless you buy car insurance, your license will be revoked; unless you pay taxes, you’ll go to jail and be fined; unless you register your gun, your gun will be confiscated. But for the government’s authority to jail people and fine people and confiscate their property, how many of us would abide by the law? If we all naturally treated each other in a decent manner, there would be no need for government. From the first day that man emerged from the wilderness, however, most political philosophers and most of our experiences have taught us that if left to our own devices, people will rob from each other, abuse each other, and kill each other. Thus, pursuant to the basic social contract upon which all governments are based, people have consented to the government’s use of extortion to keep all of us in line and to make sure that we all abide by the prevailing standards of decency.

The government’s power to extort proper behavior from each of us is limited only by “due process,” i.e., the government can’t send someone to jail unless they first receive a fair trial, a law cannot be enforced unless it is properly approved by our elected officials and thereafter monitored by our courts, etc. A citizen cannot complain that he or she is being extorted by their government if the government is simply enforcing a law that complies with society’s sense of due process. It is difficult to imagine when an official act of government could constitute extortion. When considering official government action, the appropriateness of the government’s action is measured by the Constitution — not by the criminal law of extortion. If the government does not have the power to enforce a law against a citizen (i.e., if the government does not have the power to extort certain behavior from a citizen), the law is unconstitutional – not extortionistic.

In Wilkie v. Robbins, 551 U.S. 537 (2007), a private landowner claimed that agents of the Federal Bureau of Land Management engaged in lawful actions under their regulatory powers to extort a right-of-way from the landowner that would benefit the federal government. The landowner claimed that the agents were extorting the right-of-way because, although lawful, the agents’ enforcement actions were not motivated by a desire to carry out their regulatory duties, but were instead designed to obtain the landowners property (i.e., the right-of-way) by taking and threatening to take ongoing and expensive administrative actions against him. The United States Supreme Court rejected the landowners claim that the federal agents were engaged in extortion under the Hobbs Act: “the Hobbs Act does not apply when the National Government is the intended beneficiary of the allegedly extortionate acts. . . . The importance of the line between public and private beneficiaries for common law and Hobbs Act extortion is confirmed by our own case law, which is completely barren of an example of extortion under color of official right undertaken for the sole benefit of the Government.” Id. at 564-65. Thus, to the extent a plaintiff claims that extortion “under color of official right” resulted in a benefit to the government, rather than a personal benefit to the government agent, no extortion as occurred. Extortion under color of official right requires that the government agent receive personal benefit from his threats or actions.

e.    Other Predicate Acts Related to Extortion 

There are many other predicate acts listed in section 1961(1) that are mirror images of extortion. There are circumstances when obstruction of justice (18 U.S.C. §§ 1503, 1510, 1511, 1512 or 1513) will also constitute extortion, e.g., an employer engaged in illegal activity may threaten an employee: “testify to X when the police talk to you or you’ll be fired” or “you’ll be killed.” By this single threat, the employer may have violated both the Hobbs Act and an obstruction of justice statute. A RICO claim may also be predicated on the extortionate credit transactions (18 U.S.C. §§ 891-894). Such crimes usually arise in the loan-sharking context, where the loan-shark will demand a usurious interest rate and if that usurious rate is not paid, the loan-shark will assault the debtor, burn down the debtor’s business, or require the debtor to surrender his business to the loan-shark. Thus, violations of the loan-sharking statutes and the Hobbs Act are also frequently seen hand-in-hand.

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