HERMAN E. MCMAHAN AND CHARLES D. PRICE, PETITIONERS V. UNITED
STATES OF AMERICA

   No. 86-632

   In the Supreme Court of the United States

   October Term, 1986

   On Petition for a Writ of Certiorari to the United States Court of
Appeals for the Fourth Circuit

   Brief for the United States

            TABLE OF CONTENTS
   Opinion below
   Jurisdiction
   Question presented
   Statement
   Discussion
   Conclusion

                             OPINION BELOW

   The opinion of the court of appeals (Pet. App. 19-34) is reported
at 788 F.2d 234.

                             JURISDICTION

   The judgment of the court of appeals was entered on April 14, 1986.
 Petitions for rehearing filed by petitioners and by the government
were denied on August 20, 1986.  The petition for a writ of certiorari
was filed on October 16, 1986.  The jurisdiction of this Court is
invoked under 28 U.S.C. 1254(1).

                          QUESTIONS PRESENTED

   1. Whether a conviction for mail fraud under 18 U.S.C. 1341
requires proof of economic harm to the victim of the fraud.

   2. Whether the court of appeals, having ruled that petitioenrs'
misuse of labor union application forms did not constitute
embezzlement within the meaning of 29 U.S.C. 501(c), should have
reversed petitioners' mail fraud convictions, which were based on
petitioners' abuse of their fiduciary duties as elected labor union
officials.

                               STATEMENT

   Following a jury trial in the United States District Court for the
District of South Carolina, petitioners were convicted on one count of
conspiracy to commit mail fraud, in violation of 18 U.S.C. 371, and on
several counts of mail fraud, in violation of 18 U.S.C. 1341, and
embezzlement of union property, in violation of 29 U.S.C. 501(c).
Petitioners were sentenced to concurrent terms of one year's
imprisonment on all counts.

   1. At trial, the government established that petitioners, in their
capacity as elected officials of local chapters of the International
Iron Workers' Union, exacted payments from applicants for union
membership in excess of the union membership fees and dues and kept
the excess monies they received (Pet. App. 21-23).  Applicants for
union membership would provide petitioner Price with blank money
orders for payment of the fees.  Price would then recommend the
applicants to petitioner McMahan for membership in McMahan's local
chapter (id. at 22).  McMahan would approve the applications and fill
in the money orders in amounts that exceeded the union's membership
fees and dues (ibid.).  Petitioners and their co-conspirators would
then retain the overpayments for their personal use (ibid.).
Petitioners also prepared or caused the preparation of membership
applications on union application forms, often including information
that was untrue.  Petitioners then caused the application forms to be
mailed to the union (id. at 23).  Petitioners' recruitment efforts
increased the membership of petitioner McMahan's local union chapter
and, as a result, had the incidental benefit of improving the
financial condition of the chapter (id. at 20).

   2. On appeal, the court of appeals rejected (Pet. App. 25-28)
petitioners' claim that their mail fraud convictions -- which were
based on the mailing of the application forms -- must be reversed
because the government had failed to prove a financial loss to the
union.  According to the court, the loss of intangible rights was a
sufficient basis for a mail fraud conviction.  It was enough, the
court observed, that "the union and its members were not receiving
what they were entitled to, that is the honest and faithful services
of their officials in the exercise of their official duties" (id. at
27-28).

   The court of appeals agreed, however, with petitioners that their
convictions on multiple counts of embezzling union property in
violation of 29 U.S.C. 501(c) -- based on their misuse of the union
applications forms -- should be reversed (Pet. App. 29-34).  The court
concluded that no union property had been embezzled because the
application forms had been used for their intended purpose, and
because the union had in each instance received the amount of
membership fees and union dues that it had requested (id. at 31-34).
/1/

                              DISCUSSION

   1. Petitioners raise (Pet. 13-17) the question whether the
convictions of union officials for mail fraud under 18 U.S.C. 1341
requires proof of economic harm or whether, as the court of appeals
held, the convictions may be based on the loss of "intangible rights"
-- in this case, the deprivation of petitioners' faithful and honest
services in their capacity as elected union officials.  This Court
recently granted certiorari in a case that raises an issue similar to
the one raised in this case.  See McNally v. United States, No. 86-234
(consolidated with Gray v. United States, No. 86-286).  The McNally
case arises from the prosecution of two individuals who participated
in a kickback scheme involving a public official and a political party
leader.  The fraud alleged in McNally, like the fraud alleged in this
case, was based on the deprivation of the victims' rights to the
defendants' performance of their fiduciary obligations.  Because the
Court's decision in the McNally case may bear on the issue presented
in this case, we submit that the Court should hold the petition in
this case pending its disposition of the McNally case.

   2. Petitioners also claim (Pet. 7-12) that this Court's decision in
Yates v. United States, 354 U.S. 298 (1957), requires reversal of
their mail fraud convictions.  Petitioners contend that the court of
appeals was correct in ruling that their conduct did not violate 29
U.S.C. 501(c), but that the flaw in the Section 501(c) counts tainted
the mail fraud counts because the jury may have relied on the
illegality of their conduct under Section 501(c) as a basis for
convicting them on the mail fraud counts.  Petitioners' reliance on
Yates is misplaced.  In Yates the Court could not determine whether
the jury had based its conspiracy conviction on conduct that was not
in fact illegal.  In this case, by contrast, there is no such
ambiguity.

   Unlike in Yates and the court of appeals' decisions on which
petitioners rely, the jury in this case did not have before it an
alternative theory of prosecution under which the jury's verdict would
have been invalid.  The embezzelement counts that the court of appeals
reversed depended on the misuse -- in effect, the theft -- of union
property.  The mail fraud counts were not based on a theft of property
theory, but were based on petitioners' failure to provide the union
their loyal, faithful and honest services in their capacities as
elected union officials.  The jury instructions made that distinction
clear to the jury.  Hence, there is no basis for concern that the jury
may have relied on an improper embezzlement theory in convicting
petitioners of mail fraud.  /2/

                              CONCLUSION

   The petition for a writ of certiorari should be held pending this
Court's disposition of McNally v. United States, No. 86-234, and Gray
v. United States, No. 86-286.

   Respectfully submitted.

   CHARLES FRIED

      Solicitor General

   WILLIAM F. WELD

      Assistant Attorney General

   GLORIA C. PHARES

      Attorney

   DECEMBER 1986

   /1/ The court of appeals' opinion states that "(a)s part a of the
membership process, the applicant filled out a * * * membership
application" (Pet. App. 30) and "(t)here was no evidence that the
forms were altered or falsified in any manner" (id. at 31).  In its
petition for rehearing, the government brought to the court of
appeals' attention the evidence before the jury that the applicants
had not completed their own forms, and that virtually all the forms
contained false information.  See Gov't Pet. for Reh'g 4-5.

   /2/ The district court charge to the jury regarding the mail fraud
counts provided, in pertinent part (Tr. 1609-1610):

         I'd like to explain to you the scheme that the government
      contends its involved in this matter.

         In many instances the scheme alleged in a criminal
      prosecution for mail fraud involves a scheme to defraud someone
      of property or money.  That, however, is not the case here.
      This scheme is not a scheme to defraud (the) union * * * or
      anybody else of money.  In addition to covering a scheme that
      would charge someone of defrauding someone of money or property,
      the mail fraud statute also prohibits schemes to defraud
      individuals of what we will refer to as intangible interests or
      rights, and the schemes charged in this indictment fall within
      that category.

         The intangible rights that the government in this case
      alleges, the scheme in question, involved, are the rights of
      (the union) to have the loyal, faithful and honest performance
      of services by its elected official, the defendant, Herman E.
      McMahan, its business agent and financial secretary.

         This is not a scheme, according to the allegations of the
      indictment, and that's the only crime charged, to take union
      money or to take union property.  The allegations of the
      indictment charge these defendants with mail fraud in devising
      and participating in, and using the mail in furtherance thereof,
      a scheme to deprive (the local union chapter) of the loyal,
      faithful and honest service of its elected business agent and
      financial secretary.