## Facts

- Four Chicago building inspection supervisors were charged with obtaining cash payments from building contractors while acting in their official capacities.
- A federal grand jury returned a 19-count indictment alleging: (1) conspiracy to commit extortion under the Hobbs Act; (2) multiple substantive Hobbs Act extortion counts “under color of official right”; and (3) tax offenses against three defendants for filing false returns by omitting income from the payments.
- The government’s proof described a pattern in which contractors paid to avoid inspection problems or to prevent delays and interference with construction projects.
- A key government witness, an employee involved in making cash payments on behalf of a lumber company, kept a contemporaneous diary recording the inspectors paid, amounts, dates, and locations of payments.
- Defendants objected to admission of the diary and challenged other testimonial and documentary evidence, including alleged co-conspirator statements.
- After a two-week joint jury trial in federal district court, the jury found each defendant guilty on all counts except that one defendant was acquitted on one substantive extortion count.
- The district court imposed custodial sentences, probation, and fines; defendants appealed, contesting evidentiary rulings, jury instructions, and the sufficiency of the evidence (including the interstate commerce element and the tax counts).

## Issues

1. Whether the evidence was sufficient to support convictions for Hobbs Act conspiracy and extortion under color of official right, including the required effect on interstate commerce.
2. Whether the evidence was sufficient to support convictions for filing false federal income tax returns by omitting income derived from the payments.
3. Whether the trial court erred in admitting the payoff diary under the Federal Rules of Evidence (including as a business record or recorded recollection) and in admitting other challenged evidence, including co-conspirator statements.
4. Whether the jury instructions and asserted trial errors warranted reversal.

## Decision

- The Seventh Circuit affirmed the judgments of conviction.
- The court held the evidence, viewed in the light most favorable to the government, permitted a rational jury to find Hobbs Act conspiracy and extortion under color of official right beyond a reasonable doubt.
- The court found the Hobbs Act commerce element satisfied under the statute’s broad “in any way or degree” standard based on the contractors’ and supplier’s involvement with materials moving in interstate commerce.
- The court upheld admission of the payoff diary, concluding the district court did not commit reversible error in treating it as admissible under recognized hearsay exceptions and in light of the witness’s testimony and cross-examination.
- The court rejected challenges to admission of co-conspirator statements, finding an adequate basis that the statements were made during and in furtherance of the conspiracy.
- The court concluded the jury instructions, read as a whole, correctly stated the governing law and did not deprive defendants of a fair trial.

## Legal Principles

- Extortion “under color of official right” under 18 U.S.C. § 1951 may be established where a public official uses the power of office to obtain payments connected to official action; explicit threats or force are not required.
- The Hobbs Act’s interstate commerce requirement is satisfied by a minimal effect on commerce; the statute reaches conduct that obstructs, delays, or affects commerce “in any way or degree.”
- A contemporaneously kept record of payments may be admissible, depending on foundation, as a business record (Fed. R. Evid. 803(6)) and/or as a recorded recollection (Fed. R. Evid. 803(5)), particularly where the author testifies and is subject to cross-examination.
- Co-conspirator statements are admissible as non-hearsay under Fed. R. Evid. 801(d)(2)(E) upon a showing, supported by independent evidence, of a conspiracy and that the statements were made during and in furtherance of it.
- A conviction under 26 U.S.C. § 7206(1) may be sustained by proof that the defendant willfully filed a return known to be materially false, including by omitting taxable income.

## Conclusion

The Seventh Circuit affirmed convictions of city building inspectors for Hobbs Act extortion and related tax offenses, holding the evidence sufficient as to extortion, interstate commerce, and willful tax falsity, and finding no reversible error in admitting a payoff diary and other contested evidence or in the jury instructions.


United States v. Hedman, 630 F.2d 1184 (7th Cir. 1980)