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Is Hobbs Act Violated by Threat of Sham Litigation?
The Hobbs Act imposes criminal liability on those who “obstruct, delay, or affect commerce . . . by robbery or extortion.” 18 U.S.C. § 1951(a).
Under the statute, “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).
About This Article Briefly: A threat of litigation unless one pays money, when the person making the threat knows the claims involved in the threatened litigation are meritless, can be a violation of the Hobbs Act.
In some communities, people often say “do this or I’ll sue you” even though he or she lacks knowledge of what legal theory might apply. The threat of litigation, impliedly involving great legal fees, anxiety and risk, is the gist of the wrongful warning.
The United States Court of Appeal for the Ninth Circuit, located in Pasadena, has heard more than its share of cases involving threats of wrongful litigation on appeal.
The recent opinion published in United States v. Benjamin Koziol, AKA Benjamin Joseph Donovan, AKA Benjamin Joseph Koziol is a good, recent example of how the Hobbs Act can apply to such a threat. The ruling was published on April 13, 2021.
U.S. Ninth Circuit Court of AppealsThe underlying facts are sad, but perhaps rather common. On Christmas Day, 2015, the manager for a well-known and successful entertainer was reviewing advertisements for “an erotic massage” on Backpage.com, a website that has since been shutdown by federal authorities due to it being a frequent source of prostitution listings. The manager sent a text message to a number listed in one of the advertisements to make an appointment with a lady named Jordan Sweet.
Ms. Sweet was not immediately available, so the manager did not make the appointment with her for a later time.
About two weeks later on January 10, 2016, the same manager sent another text message requesting the “erotic massage” from Ms. Sweet. This time, Ms. Sweet was immediately available and Ms. Sweet directed the manager to her apartment.
After the manager arrived there and disrobed for the massage, he asked Ms. Sweet if there would be “mutual touching.” Ms. Sweet denied the advance and shortly thereafter demanded that the manager leave. The manager then sent Ms. Sweet a series of text messages wherein he expressed his displeasure with the experience.
A few days later, in 2016, Bobby Saadian, a young attorney who had been licensed to practice law in July 2007, left a voicemail on the manager’s cell phone. Mr. Saadian’s voicemail alleged that the well-known and successful entertainer had engaged in inappropriate behavior during a massage with his client, Ms. Sweet.
The manager called back Mr. Saadian and informed him that the well-known and successful entertainer was not involved, perhaps saddening Mr. Saadian’s hopes of a highly publicized, lawsuit followed by a large monetary settlement and enhancing Mr. Saadian’s notoriety. The manager explained that he was the one involved, not the entertainer.
Mr. Saadian then wrote a letter to the manager’s attorney alleging that the manager “physically and verbally assaulted and battered” Sweet and demanding $250,000 to settle Sweet’s claims against the manager. The letter from Mr. Saadian also said such a settlement would allow the manager “an opportunity to extricate himself from this matter without exposure,” implying adverse publicity. The letter gave the manager one day to respond by accepting or rejecting the demand.
About ten days later, the manager entered into a confidential settlement agreement with Sweet for $225,000. In the settlement agreement, Sweet also released the well-known entertainer from any claims.
About eight months later, Sweet’s husband, Benjamin Koziol, contacted the entertainer’s manager. The manager referred the call to his attorney, who called Koziol. Koziol claimed he was present in the apartment the night of the abbreviated massage the manager had with Sweet. Koziol claimed the manager, while leaving the apartment, verbally and physically assaulted him.
Then Koziol’s attorney, Sherwin Arzani, an attorney with twelve years’ experience, wrote a letter to the entertainer’s attorney and accused the entertainer of physically assaulting Ms. Sweet’s husband as he protected Ms. Sweet from the entertainer’s “unwanted physical advances” during the January 16, 2016 massage. Mr. Arzani warned of legal action if the entertainer failed to respond to the letter. A settlement was then demanded in the sum of $1 million.
The manager’s attorney responded to Mr. Arzani, stating that the entertainer was not involved in the incident at all and that the manager was the person of interest. Mr. Arzani thereafter apparently stopped representing Koziol, who began representing himself.
The manager’s attorney demanded evidentiary proof of Koziol’s claim that he had a photograph of the entertainer in the home. Koziol sent a photograph to the manager, which the manager had digitally evaluated and it showed the date of the photograph was a year after the alleged incident.
Koziol did not end his demands and the manager’s attorney then warned him about federal liability under various criminal statutes, including the Hobbs Act. Koziol did not cease and desist at that point.
On January 18, 2018, a federal grand jury in the Central District indicted Koziol for attempted extortion under the Hobbs Act. The case then went to trial and Koziol was convicted. He was then sentenced to 70 months in federal prison.
Koziol appealed the conviction, arguing that the threat of litigation, even when “frivolous, meritless or made in bad faith,” can never constitute wrongful conduct under the Hobbs Act.
The U.S. Ninth Circuit Court of Appeal denied Koziol’s appeal, holding that Koziol’s threats of sham litigation, which were made to obtain money to which he knew he had no lawful claim to, are “wrongful” under the Hobbs Act. The judgement and the sentence were therefore affirmed.
The citation for the U.S. Court of Appeals for the Ninth Circuit ruling discussed above is United States v. Benjamin Koziol (9th Cir., 2021) 993 F. 3d. 1160.
For more information about the Hobbs Act and extortion, please click on the following articles:
