## Facts

- Alfred Covino, NYNEX Mobile Communications’s Director of Network Services, controlled selection, supervision, and payment of contractors building cellular “cell sites.”
- Great Northeastern Building and Management Corp. (GNBM), co-owned by Robert Brennan, derived about 90% of its business from NYNEX.
- Covino learned a former GNBM employee had improperly billed about $3,200 to a NYNEX credit card and told Brennan it “would not be good” if Covino’s superior learned of it; Covino said he would “handle the bills himself.”
- Soon after, Covino asked Brennan to build a deck/sunroom and perform other work at Covino’s home; Covino repeatedly referenced the improper billing incident.
- Brennan agreed, testifying he feared Covino would use his NYNEX authority to cut off GNBM’s work and “destroy” the company if Brennan refused.
- The value of home improvements and related benefits obtained by Covino exceeded $20,000, with additional improvements and cash payments bringing the total to roughly $85,000.
- A jury convicted Covino of Hobbs Act extortion, Travel Act violations predicated on New York commercial bribery provisions, and wire fraud.
- The district court entered a post-verdict judgment of acquittal on the Hobbs Act counts for insufficient evidence of “wrongful use of fear”; Covino appealed the Travel Act and wire-fraud convictions, and the government cross-appealed the Hobbs Act acquittal.

## Issues

1. Whether Hobbs Act extortion by fear of economic loss requires proof of an explicit threat of future economic harm, and whether the evidence supported the jury’s verdict.
2. Whether the evidence supported Travel Act convictions predicated on New York commercial bribery and related offenses.
3. Whether the evidence established wire fraud, including a scheme to defraud NYNEX of money or property using interstate wires.

## Decision

- The court reversed the judgment of acquittal on the Hobbs Act counts and reinstated the jury’s guilty verdicts.
- The court affirmed the Travel Act convictions.
- The court reversed the wire-fraud convictions.

## Legal Principles

- Hobbs Act extortion may be proved by showing the defendant obtained property with the victim’s consent induced by the wrongful use of fear of economic loss.
- A direct or explicit threat of future harm is not required; fear may be inferred from circumstances, and extortion is established where the defendant knowingly exploits a reasonable, preexisting fear of economic harm.
- In assessing reasonableness of fear, relevant evidence includes the victim’s economic dependence and the defendant’s control over the victim’s continued access to business.
- Exploiting leverage (including reputational or employment-related vulnerability) for personal gain, rather than legitimate restitution or business purpose, supports a finding of “wrongful” use of fear under the Hobbs Act.
- Travel Act liability is supported where interstate travel or use of interstate facilities is undertaken with intent to carry on unlawful activity, including state-law commercial bribery offenses.
- Wire fraud requires proof of a scheme to defraud another of money or property and use of interstate wires to execute the scheme; conduct constituting extortion or bribery does not necessarily establish a property-directed fraud against the employer on the record presented.

## Conclusion

The Second Circuit held that Hobbs Act extortion by fear of economic loss does not require an express threat and may be shown where a defendant exploits a victim’s reasonable fear arising from economic dependence and the defendant’s control over work; it reinstated the extortion verdicts, affirmed Travel Act convictions based on state-law commercial bribery, and reversed wire-fraud convictions for insufficient proof of a qualifying scheme to defraud NYNEX of money or property.


United States v. Covino, 837 F.2d 65 (2d Cir. 1988)