RESPONDENT: United States
LOCATION: U.S. District Court for the Eastern District of Louisiana
DOCKET NO.: 600
DECIDED BY: Burger Court (1970-1971)
LOWER COURT: United States Court of Appeals for the Second Circuit
CITATION: 402 US 146 (1971)
ARGUED: Mar 22, 1971
DECIDED: Apr 26, 1971
Facts of the case
Media for Perez v. United States
Audio Transcription for Oral Argument - March 22, 1971 in Perez v. United States
Warren E. Burger:
Number 600, Perez against the United States.
Mr. Krieger, you may proceed whenever you’re ready.
Albert J. Krieger:
Mr. Chief Justice, and may it please the Court.
In considering the constitutionality of Title II of the Consumer Credit Protection Act, what has been popularly called the Federal Anti-loan Sharking statute.
We respectfully submit that the real question posed is whether Congress may constitutionally enact a general extortion statute because in truth and in fact, the statute enacted by Congress does not reach in the true sense the crime of loan sharking.
Loan sharking, if we follow the definition of that crime as testified to at the hearings before Congress is a lending at a usurious rate of interest.
This statute does not include anywhere within it.
Those activities as a criminal offense.
That which it makes criminal is extortion and extortion of the broadest tribe covering the myriad extortionate activities to which criminals may resort in our varied society.
Even though, the statute continually refers to the term, the phrase, extension of credit, extension of credit as defined by the statute refers not only to a debt but to a claim, be that claim valid or invalid, acknowledged or not, disputed or not, however arising, so long as the satisfaction of that claim is deferred.
The hearings before Congress certainly disclosed and it may well be assumed that organized crime is intestate in character and that organized crime may have as one of its substantial sources of revenue, loan sharking, that is the lending of money at usurious rates of interest.
But there is nothing within the proceedings had before Congress which would warrant the broad and sweeping finding that extortion per se is a crime which belongs in a federal lexicon.
The types of extortion covered here may well include the incidental extortion to which a loan shark may resort in seeking collection of a debt, of a lending.
It may also include an irate wage earner going to his employer and demanding wages.
It may include an irate motorist after a collision saying to another driver, “You will pay me for this damage, one way or the other and by the end of the week.”
These are all included within what we contend as any reasonable reading of the definition extension of credit.
Certainly, and we concede, there are times when extortionate means are employed by loan sharks but what Congress has done here is because organized crime may be well involved in loan sharking and loan sharking at some time may involve extortion, then all extortion regardless of how it arises becomes a federal offense.
We respectfully submit that such a statute is a classic case of overkill.
Certainly, Congress may legislate against the crime of extortion.
Congress has done so in 1951, 1952, the Travel Act.
Congress may broaden what it includes as a federal offense in extortion, so long as that extortion may reasonably be connected with a federal interest.
The federal interest however, between extortion generally, extortion generally appears to be lacking.
The federal interest connection to extortion generally appears to be lacking.
Certainly, it did not appear within the hearings.
The hearings were directed at a specific definable class of activity. Congress, in seeking to legislate against an organized crime activity enacted the statute and Congress stated that the purpose of this statute is to strike at the second most lucrative source of revenue for organized crime loan sharking.
There is nothing within the proceedings before Congress which characterized extortion as a uniquely organized crime activity or that extortion per se is a lucrative source of funds for organized crime.
The federal pay for the general extortion statute is lacking.
There is no definable class of activity or activities whose very nature might compel the finding of the federal interest, all of the current gambling statute, where Congress instead of making all gambling illegal said gambling of a certain type has characteristics which compel the finding of the federal interest such as it must involve -- the gambling activity must involve five or more people deal in an amount in excess of $2,000.00 on a daily rate or be an activity which is continued for 30 days or more and that the gambling activity be the business of the individuals.
Here, any, if I may say occasional extortioner, finds himself fully within the purview of the statute even if his activity is totally unrelated to loan sharking, the vice which Congress was seeking to control.
It is our contention that the means that Congress has selected to control loan sharking, these means are far too broad, far too inclusive and exceeds the authority of Congress both under the Interstate Commerce clause and under the Bankruptcy clause.