CHARLES J. MCNALLY, PETITIONER V. UNITED STATES OF AMERICA

   JAMES E. GRAY, PETITIONER V. UNITED STATES OF AMERICA

   No. 86-234 and 86-286

   In the Supreme Court of the United States

   October Term, 1986

   On Writ of Certiorari to the United States Court of Appeals for the
Sixth Circuit

   Brief for the United States

            TABLE OF CONTENTS
   Questions presented
   Opinion below
   Jurisdiction
   Statutes involved
   Statement
   Summary of argument
   Argument:
      I. Petitioners were properly convicted of
          violating the mail fraud statute
          A. The intangible rights issue upon which
              certiorari was granted need not be reached,
              since the mail fraud conviction must be
              affirmed however that issue is resolved
          B. Even if the mail fraud conviction depends
              upon proof of a scheme to defraud the state
              and its citizens of their right to the honest
              performance of public business, it must be
              affirmed
              1. The mail fraud statute reaches schemes
                  to defraud, whether the legal rights invaded
                  by the scheme concern identifiable property
                  or are intangible in nature
              2. Petitioners' conduct here was properly
                  punishable under the mail fraud statute
                  on the ground that they devised a scheme
                  to defraud the state and its citizens of
                  their right to have the public's business
                  conducted in an honest manner
     II. Petitioners Were Properly Convicted Of
          Conspiracy
   Conclusion

   The opinion of the court of appeals (Pet. App. 1a-18a) is reported
at 790 F.2d 1290.  /1/

                             JURISDICTION

   The judgment of the court of appeals (Pet. App. 19a) was entered on
May 12, 1986, and a petition for rehearing was denied on June 27, 1986
(Pet. App. 20a).  The petition for a writ of certiorari in No. 86-234
was filed on August 13, 1986, and the petition for a writ of
certiorari in No. 86-286 was filed on August 22, 1986.  The petitions
for a writ of certiorari were granted on December 8, 1986, limited to
two questions, and the cases were consolidated.  The jurisdiction of
this Court is invoked under 28 U.S.C. 1254(1).

                           STATUTES INVOLVED

   18 U.S.C. 371 provides, in pertinent part:

         If two or more persons conspire either to commit any offense
      against the United States, or to defraud the United States, or
      any agency thereof in any manner or for any purpose, and one or
      more of such persons do any act to effect the object of the
      conspiracy, each shall be fined not more than $10,000 or
      imprisoned not more than five years, or both.

                      * * * * *

   18 U.S.C. 1341 provides:

         Whoever, having devised or intending to devise any scheme or
      artifice to defraud, or for obtaining money or property by means
      of false or fraudulent pretenses, representations, or promises,
      or to sell, dispose of, loan, exchange, alter, give away,
      distribute, supply, or furnish or procure for unlawful use any
      counterfeit or spurious coin, obligation, security, or other
      article, or anything represented to be or intimated, or held out
      to be such counterfeit or spurious article, for the purposes of
      executing such scheme or artifice or attempting so to do, places
      in any post office or authorized depository for mail matter, any
      matter or thing whatever to be sent or delivered by the Postal
      Service, or takes or receives therefrom, any such matter or
      thing, or knowingly causes to 0e delivered by mail according to
      the direction thereon, or at the place at which it is directed
      to be delivered by the person to whom it is addressed, any such
      matter or thing, shall be fined not more than $1,000 or
      imprisoned not more than five years, or both.

                          QUESTIONS PRESENTED

   1. Whether petitioners were properly convicted of violating the
federal mail fraud statute, 18 U.S.C. 1341, where the jury was
instructed that it could only convict if it found that petitioners had
devised a scheme for the dual purposes of (1) defrauding the state and
citizens of Kentucky of their right to have the government's business
conducted honestly, and (2) obtaining money and property by means of
false representations, and the evidence was sufficient to sustain
convictions with regard to each purpose independently.

   2. Whether the court of appeals properly affirmed petitioners'
convictions for violating the federal conspiracy statute, 18 U.S.C.
371, after finding that the evidence showed that petitioners conspired
to attain at least one of the two objectives of the conspiracy alleged
in the indictment.

                               STATEMENT

   Following a jury trial in the United States District Court for the
Eastern District of Kentucky, petitioners Gray and McNally were each
convicted on one count of mail fraud, in violation of 18 U.S.C. 1341,
and on one count of conspiracy to commit mail fraud and to defraud the
United States by impeding the Internal Revenue Service's collection of
taxes, in violation of 18 U.S.C. 371.  Petitioners were sentenced
under 18 U.S.C. 4205(c) for a study prescribed in Section 4205(d).
The Section 4205(d) studies were postponed pending appeal, and
petitioners are currently free on bond.

   1. After Democrat Julian Carroll was elected Governor of Kentucky
in 1974, Howard P. "Sonny" Hunt was chosen to be chairman of the state
Democratic Party (Pet. App. 2a).  Among the duties that the Governor
assigned to Hunt was the selection of insurance agents from whom the
state's insurance contracts would be purchased, a matter normally the
responsibility of the state insurance commissioner.  Governor Carroll
told the insurance commissioner that Hunt would make those decisions,
and the commissioner followed Hunt's instructions.  2 C.A. App.
323-330.  /2/

   In the Spring of 1975, Hunt agreed with representatives of the
Wombwell Insurance Agency that, in return for $50,000 per year,
Wombwell would continue to be the general agent for the state's
workmen's compensation insurance policy.  Hunt thus decided that
Wombwell would serve as general agent for the fiscal year starting
July 1, 1975, and subsequently for each of the next three years as
well.  1 C.A. App. 222-223;  2 C.A. App. 529-532;  3 C.A. App.
563-565.  Wombwell contracted each year with either the United States
Fire Insurance Company or the Hartford Insurance Company to write the
state's workmen's compensation insurance policy, and initially
received a commission of approximately five percent of the premiums
that the state paid for workmen's compensation insurance.  3 C.A. App.
563-565.  Pursuant to its agreement with Hunt, however, after it
received the commissions Wombwell paid to insurance agencies
designated by Hunt the commissions in excess of $50,000 per year.
During the four-year period, Wombwell distributed $851,000 in excess
commissions in this manner.  Pet. App. 3a.

   Petitioner James E. Gray served as Kentucky's Secretary of Public
Protection and Regulation from January 1976 to May 1978, and also was
Secretary of the Governor's Cabinet from January 1977 to August 1979
(Pet. App. 4a).  Hunt and Gray devised a scheme utilizing a shell
corporation posing as an insurance agency to obtain for their own use
some of the excess commissions distributed by Wombwell at Hunt's
direction.  In 1975, they arranged for the incorporation of Seton
Investments, Inc., which had no office, no telephone, and no
employees, and engaged in no business activity (4 C.A. App. 934-935).
Between 1975 and 1979, Hunt directed Wombwell to distribute $200,000
to Seton, which was used:  (1) to purchase a condominium in Lexington,
Kentucky, that was used primarily by Gray and his girlfriend;  (2) to
purchase a condominium in Juno Beach, Florida, that was used primarily
by Hunt and his girlfriend;  (3) to purchase a station wagon that was
used primarily by Hunt and his girlfriend;  and (4) to provide $38,500
to Hunt's son.  Pet. App. 3a-4a.

   As part of the scheme, Hunt and Gray kept secret and took steps to
conceal their ownership of Seton and the fact that it was not a bona
fide insurance agency.  Had Wombwell known that it was splitting
commissions with Gray and Hunt, it would have been violating the
state's bribery and kickback statutes.  Ky. Rev. Stat. Ann. Sections
521.020(b) and 45.990(5) (Michie/Bobbs-Merrill 1985 & 1986).
Moreover, Kentucky law authorizes the splitting of commissions only
among bona fide insurance agencies.  Ky. Rev. Stat. Ann. Sections
304.9-100, 304.9-420 (Michie/Bobbs Merrill 1981).

   Petitioner Charles J. McNally, a businessman and a supporter of
Governor Carroll, aided Hunt and Gray in their scheme by serving as
the nominal owner of Seton.  Hunt directed Wombwell to distribute
$77,500 in excess commissions to the Snodgrass Insurance Agency, which
in turn passed the money on to McNally.  Pet. App. 3a-4a.  /3/

   Hunt pleaded guilty to one count of mail fraud and one count of tax
fraud for his part in the scheme, and was sentenced to three years'
imprisonment.  United States v. Hunt, Cr. No. 81-8-S (E.D. Ky.).  /4/
Petitioners were charged with one count of conspiracy and seven counts
of mail fraud, six of which were dismissed before trial.  /5/ The
single remaining mail fraud count involved an excess commission check
mailed by Hartford to Wombwell (1 C.A. App. 64-65), and alleged that
the defendants had devised a scheme (1) to defraud the citizens of
Kentucky of their right to honest government and (2) to obtain money
and property by fraud.  /6/ The conspiracy count alleged that the
defendants had conspired to violate the mail fraud statute by the
scheme set forth in the substantive mail fraud count, and that they
had also conspired to defraud the United States by impeding the
Internal Revenue Service in the collection of taxes (id. at 33-35).

   2. The primary issue at trial was whether Gray and Hunt had devised
a scheme in order to obtain money and property for themselves.  In
connection with that issue, much attention was focused on whether
McNally was the real owner of Seton, as the defendants contended, or
whether he was a front man for the real owners, Gray and Hunt, as the
government contended.  The government also presented evidence that
Seton was not a fuctioning corporation.  4 C.A. App. 934-935.  While
the government agreed that McNally became president of Seton in 1978,
there was extensive testimony that Gray and Hunt, and not McNally,
arranged for the purchase of both of the condominiums Seton purchased
(see, e.g., 3 C.A. App. 674-679;  5 C.A. App. 1113-1114) and that Gray
and Hunt, and not McNally, used those condominiums (see, e.g., 2 C.A.
App. 373;  5 C.A. App. 1116, 1173-1174).  Also, the ink used by
McNally to sign a number of Seton's corporate documents, which were
purportedly signed in 1975 and 1976, was not commercially available
until 1978 (4 C.A. App. 1025-1030).

   The government also contended that Seton was unlawfully used by
Gray and Hunt to avoid taxes.  Seton paid taxes on the $200,000 in
"commissions" at corporate rates of between 20 and 22 percent, while
Gray and Hunt would have paid taxes on the money paid to Seton at
rates of between 40 and 55 percent.  An Internal Revenue Service agent
also testified that Seton improperly deducted the $38,500 payment to
Hunt's son as a business expense.  4 C.A. App. 934-941.

   3. The court instructed the jury that the government had alleged
that the defendants had conspired with each other and with Hunt to
violate the mail fraud statute and to defraud the United States of tax
revenues.  The court told the jurors that "you must all agree
unanimously on which of the object or objects charged was an agreed
purpose of the conspiracy.  You may find that the conspirators agreed
to achieve both objects, only one of the objects, or neither of the
objects, but you must agree unanimously on this finding in order to
return a verdict" (5 C.A. App. 1336).  The court further instructed
that, in order to convict, it had to conclude that the government
proved the existence of the alleged conspiracy, that the defendants
willfully joined the conspiracy, that they committed at least one
overt act charged in the indictment, and that the overt act was
committed to conceal some objective of the conspiracy (id. at 1338).
/7/

   As to the mail fraud count, the court instructed the jury that, in
order to convict, it had to conclude that the defendants devised the
scheme, as alleged in the indictment, to defraud the citizens of
Kentucky of their right to have the Commonwealth's business and
affairs conducted honestly and to obtain money and other things of
value by false and fraudulent pretenses, and that they caused the
mails to be used for the purpose of executing the scheme (5 C.A. App.
1341-1342).  /8/ At no time did the court instruct, nor did the
government argue (see 5 C.A. App. 1241-1313), that the government
could prove its case by establishing only one of the two alleged
purposes of the scheme to violate the mail fraud statute -- i.e., to
defraud the citizens of their right to honest government or to obtain
money or property by false pretenses.  /9/

   The jury convicted on both counts.

   4. The court of appeals affirmed on both counts (Pet. App. 1a-16a).
 Dealing first with the mail fraud charge, the court did not focus on
the fact that the jury had been instructed to convict on that count
only if it found that petitioners had devised a scheme both to defraud
the citizens of their right to honest government and to obtain money
or property by fraudulent means.  It instead analyzed the case as
though the fraudulent denial of intangible rights was the only theory
upon which the mail fraud convictions could be upheld.

   Noting the long line of authority upholding mail fraud convictions
involving "schemes to defraud the citizens of the intangible rights to
honest and impartial government" (Pet. App. 7a), the court of appeals
stated that "the 'intangible rights' theory is anchored upon the
defendant's misuse of his public office for personal profit" (Pet.
App. 8a).  It found it established beyond a reasonable doubt that the
awarding of the state's workmen's compensation insurance policy was
within Gray's supervisory authority as Secretary of Public Protection
and Regulation or as Secretary to the Governor's Cabinet, and that
McNally aided and abetted Gray in perpetrating this fraud (Pet. App.
9a).  It also found that the evidence clearly showed that Hunt, in his
position as Democratic Party Chairman, "exercised significant, if not
exclusive, control over awarding the workmen's compensation insurance
contract to Wombwell and the payment of monetary kickbacks to Seton"
and, accordingly, that he was "a de facto public official who assumed
a fiduciary duty to the citizens of Kentucky" (id. at 10a-11a).

   Having found the evidence sufficient to establish that the
defendants had violated the mail fraud statute and had conspired to
violate the mail fraud statute, the court of appeals declined to
consider whether the evidence was also sufficient to establish that
petitioners had conspired to impair the government's ability to
collect taxes.  The court reasoned that it did not have to do so
because the evidence relating to the mail fraud aspect of the
conspiracy was sufficient standing alone to support the conspiracy
conviction.  Pet. App. 11a n.2.

                          SUMMARY OF ARGUMENT

   Petitioners were convicted on one count of violating the federal
mail fraud statute, 18 U.S.C. 1341, and on one count of conspiracy to
commit mail fraud and tax fraud in violation of 18 U.S.C. 371.  The
evidence at trial established a scheme utilizing the mails and a
complex subterfuge involving a shell corporation, to convert public
money to petitioners' use.  It also demonstrated that petitioner Gray
was a state governmental official and that co-conspirator Hunt, as
state party chairman, had been delegated by the Governor control over
the awarding of the state's insurance business and over the
disposition of excess commissions which that business generated.  Upon
instructions from Hunt, the insurance agency handling the state's
workmen's compensation business sent money derived from premium
payments by the state to Seton Investments, which conducted no
business, 0ut received and disseminated money for the benefit of the
co-conspirators.

   I. The jury was instructed that in order to convict on the mail
fraud count the government had to prove a scheme with the dual purpose
(1) to defraud the state and citizens of Kentucky of their right to
the honest performance of the public's business, and (2) to obtain
money and property by means of false pretenses.  In convicting, the
jury therefore necessarily found, and the evidence amply supported, a
mail fraud scheme with both objectives.

   Petitioners' convictions would have plainly been proper had the
government charged and the jury returned a guilty verdict on a scheme
directed only at the obtaining of money and property by false
pretenses.  Because the jury necessarily found such a scheme, the mail
fraud conviction must be upheld whether or not petitioners could
properly have been convicted solely on the theory that they conspired
to deprive the state and its citizens of their right to the honest
conduct of public business.  Given that posture of the case, the Court
need not reach the intangible rights issue upon which certiorari was
granted.

   In any event, the government could also properly have charged and
proven its case solely on the theory of a scheme to defraud the public
of its intangible right to honest government.  Nothing in the ordinary
or historical meaning of the statute's language, or in its legislative
history, suggests that the deprivation of rights toward which a
prohibited scheme is directed must involve money or tangible property.
 While the statute is plainly limited to schemes involving fraud --
meaning deception or trickery -- the narrowing construction suggested
by petitioners is wholly inconsistent with Congress's intended broad
prohibition.  That is demonstrated by this Court's constructions of
the mail fraud statute, its consistent reading of the words "to
defraud the United States" as they appear in the conspiracy statute,
18 U.S.C. 371, and by the consistent and repeated decisions of the
courts of appeals upholding mail fraud convictions based on schemes to
deny intangible rights.

   While there may be uncertainty about the nature of the intangible
rights that are sufficient to support a mail fraud conviction, the
public's right to be free from criminal self-dealing in the exercise
of governmental power is clearly in that category.  Here, the evidence
showed a criminal mail fraud by petitioners in obtaining property by
false pretenses.  The utilization of governmental power to facilitate
the commission of such a crime amounts to a second wrong beyond the
fraudulent misappropriation of property, and can be described as the
fraudulent misappropriation of governmental authority to pursue
illegal, personal ends.

   Petitioners' arguments that the government has failed to prove a
breach of duty by a public official are demonstrably wrong on the
facts of the case.  For reasons apparent from the trial court's jury
instructions, the jury necessarily found that petitioner Gray, an
actual state official, participated in a fraud against the state, so
that the state was denied its right to his honest services.  Even
assuming that the jury's verdict necessarily rested on Hunt's
utilization of governmental power to control the state's insurance
business, which authority was given him by the Governor on account of
his position as party chairman, his abuse of that authority likewise
offended the right of the citizenry to honest public administration.
There is no reason to suppose that the duty not to criminally misuse
governmental authority is any less for one who derives that power by
an informal delegation and without pay, than for one who also draws a
salary check.

   Petitioners' assertion that federalism concerns militate against
federal prosecution based on the intangible right to be free from
criminal self-dealing by persons exercising state governmental powers
is without merit.  Such prosecutions have contributed substantially to
the honest and effective functioning of government and have not
invaded areas of state policy where reasonable people can differ.

   II. Petitioners' convictions on the conspiracy charge should also
be affirmed.  The jury was instructed that it could convict on that
charge if it found a conspiracy either to commit mail fraud or to
commit tax fraud.  For two reasons, the court of appeals did not err
in affirming based only on its finding of sufficient evidence of a
conspiracy to commit mail fraud, without considering the evidence of
tax fraud.

   First, it is clear from the facts of the case -- most obviously
from the jury's conviction on the substantive mail fraud charge --
that it must have found a conspiracy to commit mail fraud.  Given the
nature of the evidence and the charges, it is impossible to imagine a
way in which both petitioners could be guilty of the substantive mail
fraud without also conspiring to commit that offense.  This case
differs from decisions of this Court which have reversed convictions
due to a legal defect in one of multiple alternative theories on which
a criminal charge was based.  Yates v. United States, 354 U.S. 298
(1957);  Stromberg v. California, 283 U.S. 359 (1931).  Here, there is
no legal defect in either the mail fraud or the tax fraud theory of
the conspiracy, and, unlike those cases, it is plain that the jury
must have found a conspiracy on the theory the court of appeals found
sufficient.

   Second, even if it were not apparent that the jury in fact found a
conspiracy to commit mail fraud, the conviction could be upheld solely
on the sufficiency of the evidence to support that theory.  The issue
for a reviewing court is whether a reasonable jury could have
convicted on the evidence before it, and the general rule is that
sufficient evidence on one of several alternative means of violating a
statute justifies affirmance of the conviction.

                               ARGUMENT

 I. PETITIONERS WERE PROPERLY CONVICTED OF VIOLATING THE MAIL FRAUD
STATUTE

   The evidence at trial clearly showed a scheme to convert public
funds to the benefit of Hunt, Gray, and McNally, by a complex
subterfuge involving a shell corporation and misfeasance by Gray,
performing in an undisputedly governmental position, and by Hunt, who,
as party chairman, had the power to determine who would receive the
state's insurance business.  The indictment charged, the government
undertook to prove, and the court instructed that in order to convict
the jury must find that petitioners devised a scheme to defraud aimed
both at depriving the state and citizens of their intangible right to
honest service by those carrying governmental responsibilities and at
obtaining money or other things of value.  The jury's guilty verdict
on the mail fraud chage indicates its unequivocal conclusion that a
scheme pursuing both of these objectives was in fact proven.  Since
the government need only have alleged and proven a single legally
sufficient objective of the scheme, the mail fraud conviction must be
upheld if either the denial of intangible rights or the obtaining of
money or property objective offers a sound predicate for a mail fraud
violation and was proven by sufficient evidence.  /10/

 A. The Intangible Rights Issue Upon Which Certiorari Was Granted Need
Not Be Reached, Since The Mail Fraud Conviction Must Be Affirmed
However That Issue Is Resolved

   The primary elements of the mail fraud statute, as presently
constituted, were enacted by separate acts of Congress.  The first
clause, which prohibits "any scheme or artifice to defraud," derives
from the original mail fraud statute enacted in 1872.  Act of June 8,
1872, ch. 335, Section 301, 17 Stat. 323.  The third clause, which
prohibits schemes to use the mails to distribute counterfeit money,
was added in 1889.  Act of Mar. 2, 1889, ch. 393, Section 1, 25 Stat.
873.  The second clause, which prohibits "any scheme * * * for
obtaining money or property by means of false or fraudulent pretenses,
representations, or promises," was added in 1909.  Act of Mar. 4,
1909, ch. 321, Section 215, 35 Stat. 1130.  See Rakoff, The Federal
Mail Fraud Statute (Part I), 18 Duq. L. Rev. 771, 779-821 (1980).
/11/

   In addition to the fact that each clause was added to the statute
at a different time, they are separated by the disinjuntive "or." This
Court has stated, reflecting common English usage, that "(c)anons of
construction ordinarily suggest that terms connected by a disjunctive
be given separate meanings." Reiter v. Sonotone, 442 U.S. 330, 339
(1979).  This Court concluded under a predecessor statute that an
indictment that charged a scheme to sell counterfeit money, a
violation of what is now the third clause, did not have to include a
charge that the defendant devised a scheme "to defraud," a violation
of the first clause, because the statutory prohibitions were listed
separately and applied to different conduct.  Streep v. United States,
160 U.S. 128, 132-133 (1895).  It is thus plainly sufficient to allege
and prove acts falling under any one of the three clauses, and it is
not necessary to show that particular conduct comes within all three
clauses.  /12/ No court has held otherwise.

   Notwithstanding that it need not have done so in order to convict,
the government alleged and proved that the defendants violated both
the first and the second clauses of the statute -- that they devised a
scheme (1) to defraud the citizens of Kentucky of their intangible
right to honest government, in violation of the first clause, and (2)
to obtain money and property by fraud, in violation of the second
clause.  Pet. App. 5a.  More importantly, the jury was instructed
that, to find the defendants guilty, it had to find beyond a
reasonable doubt that a scheme was devised to pursue both objectives.
Note 8, supra.

   Petitioners do not acknowledge that they were charged and convicted
under two separate clauses of the mail fraud statute.  They instead
attack only the allegation that they violated the intangible rights of
the citizens of Kentucky.  /13/ In fact, however, the jury was also
instructed that it must find a scheme for obtaining money by false or
fraudulent pretenses in order to convict and the evidence of a scheme
for that purpose -- quite apart from the fraudulent denial of
intangible rights -- is overwhelming.  The mail fraud conviction must
therefore be affirmed, whether or not it could be sustained if the
only allegation were a denial of intangible rights.

   Indeed, it is clear that the primary objective of the scheme was to
obtain money and other property for petitioners and Hunt by deceit and
trickery.  McNally received $77,500 which was channelled to him
through the Snodgrass Insurance Agency.  Pet. App. 4a.  While Gray
disputed at trial that he obtained any property through the scheme,
contending that it was McNally who owned Seton, the evidence clearly
showed that it was Hunt and Gray, not McNally, who controlled Seton
and received the beneficial use of the condominiums in Lexington,
Kentucky, and Juno Beach, Florida, and the 1976 Ford Country Squire
station wagon, all purchased with excess commissions received by Seton
from Wombwell.  Ibid.  /14/

   This money and property was received "by means of false or
fraudulent pretenses, representations, or promises." The creation of
Seton by Hunt and Gray in 1975, its use as a shell corporation posing
as a bona fide insurance agency, solely for the purpose of receiving
excess commissions directed to it by Hunt, and the involvement of
McNally as a front man to direct attention away from Gray and Hunt,
makes this clear.  /15/ Kentucky law provided at that time that "(n)o
agent or solicitor shall directly or indirectly share his commission *
* * with any person not also licensed as agent or solicitor" (Ky. Rev.
Stat. Ann. Section 304.9-420 ((Michie/Bobbs-Merrill 1981) (repealed
1984)), /16/ and further that licenses are not properly issued solely
for the purpose of receiving "a rebate or premium in the form of
'commission'" (id. Section 304.9-100).  Neither Gray nor Hunt were
licensed insurance agents, and Seton transacted no insurance business.
 /17/

   It is no objection to the affirmance of the mail fraud convictions
as a scheme for obtaining money or property by false pretenses that
there must be a corresponding proof of loss to a victim of the scheme
(see 86-286 Br. 15-17).  Presumably such a loss necessarily is
realized by someone when, as here, money is redirected by deception to
persons who are not entitled to it.  More importantly, however, Gray's
contention, which is offered as an objection to the conviction based
on deprivation of intangible rights, rests on his view that Congress
intended that the phrase "scheme * * * to defraud" be interpreted in
light of the common law meaning of the word "fraud" and that at common
law proof of loss was required to establish fraud.  While we contend
that Gray's construction is wrong and that the first clause of Section
1341 prohibits the deprivation of intangible as well as tangible
rights (pages 22-28, infra), it is even more clearly inapplicable in
the context of the second clause of the statute.  That clause requires
proof that the defendants devised a scheme to obtain money or property
by false pretenses, but it does not require proof of loss.  If
Congress had intended to require proof of a loss, it could have so
stated.

   There is no other legal objection to affirmance of petitioners'
mail fraud convictions on the ground that the jury necessarily and, on
the face of the record, properly found a scheme for obtaining money or
property by false pretenses.  Since the convictions must, in any
event, be affirmed on that basis, the question whether they could
independently be affirmed solely on a theory of a scheme to defraud
involving intangible rights is not presented in a way that can
possibly control the outcome of the case.

 B. Even If The Mail Fraud Conviction Depends Upon Proof Of A Scheme
To Defraud The State And Its Citizens Of Their Right To The Honest
Performance Of Public Business, It Must Be Affirmed

   Should the Court find it appropriate to reach the intangible rights
issue, it should find that the mail fraud conviction could properly
have been based on that theory alone.  As relevant to the issue of
intangible rights, the indictment alleged that petitioners devised a
scheme or artifice to "defraud the citizens of the Commonwealth of
Kentucky and its governmental departments, agencies, officials and
employees of their right to have the Commonwealth's business and its
affairs conducted honestly, impartially, free from corruption, bias,
dishonesty, deceit, official misconduct, and fraud." It further set
forth at length specific allegations as to defendants' conduct in this
case.  1 C.A. App. 33-56.  This allegation invokes the first clause of
Section 1341, which prohibits the use of the mails in furtherance of
"any scheme or artifice to defraud." The issue posed is thus whether
the mail fraud statute prohibits schemes to defraud persons of
intangible rights or rather prohibits only schemes to obtain money or
other concrete items of value.  If the mail fraud statute reaches
fraudulent schemes to deprive persons of intangible rights, then it
must be determined whether sufficient proof of such a scheme was
presented here.

 1. The mail fraud statute reaches schemes to defraud, whether the
legal rights invaded by the scheme concern identifiable property or
are intangible in nature

   In enacting the mail fraud statute, Congress expressed itself
through the most inclusive language.  It prohibited "any scheme or
artifice to defraud." By outlawing any scheme to defraud, Congress
demonstrated its intent to broadly prohibit fraud in connection with
the mails.  See Russello v. United States, 464 U.S. 16, 23 (1983);
Affiliated Ute Citizens v. United States, 406 U.S. 128, 151 (1972).
While it did impose a requirement of fraudulent conduct, meaning
deceit or trickery, and thus did not intend to reach takings by threat
or force (Fasulo v. United States, 272 U.S. 620, 629 (1926);
Hammerschmidt v. United States, 265 U.S. 182, 188 (1924)), there is no
reason to suppose that the statute was intended only to reach schemes
affecting property and other tangible rights.  On its face and in
light of common usage, it appears to prohibit use of the mails in
connection with any scheme "to cheat or trick" or "(t)o deprive a
person of property or any interest, estate, or right by fraud, deceit,
or artifice." Black's Law Dictionary 381 (5th ed. 1979).

   This conclusion is consonant with our best understanding of common
language usage closer to the time that the first clause of the statute
was enacted.  Law dictionaries of the times defined broadly the types
of interests subject to deprivation by fraudulent action.  One
dictionary explained that "(t)o defraud is to withhold from another
that which is justly due to him, or to deprive him of a right by
deception or artifice." 1 Bouvier's Law Dictionary 530 (1897).  The
same dictionary defined fraud as involving deceitful practices
"endeavoring to defraud another of his known right, * * * contrary to
the plain rules of common honesty" (id. at 845).  Another dictionary
agreed, defining "defraud" as "(t)o cheat;  to deceive;  to deprive of
a right by an act of fraud(;) (t)o withhold from another what is
justly due him, or to deprive him of a right, by deception or
artifice." W. Anderson, A Dictionary Of Law 474 (1893).  /18/

   Nothing in the legislative history of the mail fraud statute
suggests that it was somehow intended to be limited to schemes
affecting tangible interests in money or property.  The only
legislative history concerning the 1872 enactment of Section 1341's
predecessor consists of an 1870 Post Office report suggesting the need
to prevent "lottery swindlers" from using the mails (Report of the
Postal Committee, Mar. 30, 1870) and a statement by a congressman,
also made in 1870, that the statute was aimed at "rapscallions"
engaged in "deceiving and fleecing the innocent people in the country"
(Cong. Globe, 41st Cong., 3d Sess. 35 (1870) (remarks of Rep.
Farnsworth)).  In enacting the statute two years later, however,
Congress did not enact a narrowly phrased statute, but instead enacted
the sweeping prohibition that is presently the statute's first clause.
 (Rakoff, supra, 18 Duq. L. Rev. at 780).

   The question quickly arose as to what types of schemes the statute
covered.  While some courts gave it a narrow construction, limiting
its scope to "common schemes" dependent upon the use of the mails (see
United States v. Owens, 17 F. 72, 74 (E.D. Mo. 1883)), others read it
broadly.  For example, in United States v. Jones, 10 F. 469 (C.C.
S.D.N.Y. 1882), the court held that the "green article" scheme -- the
use of the mails to send counterfeit money -- violated the statute,
even though neither the receiver nor the sender of the "green article"
was deceived in any way.  Congress amended the statute in 1889, adding
what is now the third clause of the statute, to make clear that it was
to be construed to cover all sorts of schemes involving counterfeit
money.  Gray contends that "(t)his amendment on its face suggests that
the original prohibition against 'any scheme or artifice to defraud'
was not expansive in scope" (86-286 Br. 19).  We submit that this
action by Congress is better understood as evidencing an intention to
assure that the statute be construed broadly.  It amended the statute
to make clear that the courts that had construed the statute broadly
had interpreted it correctly.  Rakoff, supra, 18 Duq. L. Rev. at
809-810.

   The 1909 amendment of the statute further confirms Congress's
intent that the mail fraud statute be read as effecting a broad
prohibition on fraudulent conduct relying on the mails.  The
defendants in Durland v. United States, 161 U.S. 306 (1896), had
argued that the meaning of "defraud" must be limited to
misrepresentations of "existing fact," excluding those as to future
facts or events.  The Court rejected that contention (id. at 313-314),
holding that "(i)t was with the purpose of protecting the public
against all such intentional efforts to despoil, and to prevent the
post office from being used to carry them into effect, that this
statute was passed;  and it would strip it of value to confine it to
such cases as disclose an actual misrepresentation as to some existing
fact" (id. at 314).  Congress codified that result in 1909, as Gray
States (86-286 Br. 21) and McNally agrees (86-234 Br. 11-12), and also
deleted much of the language requiring a connection between the scheme
in question and the use of the mails, evidencing its intent that the
statute should be construed to prohibit frauds of all kinds that
involve the mails.  Rakoff, supra, 18 Duq. L. Rev. at 816-817.

   Moreover, interpretation of the federal conspiracy statute -- which
since 1867 has criminalized conspiracies to "defraud the United
States" -- reflect a concern for intangible interests, apart from any
identifiable actual financial or property gain or deprivation.  See
generally Goldstein, Conspiracy to Defraud the United States, 68 Yale
L.J. 405, 417-420 (1959).  In Haas v. Henkel, 216 U.S. 462, 479-480
(1910), the Court found that "any conspiracy which is calculated to
obstruct and impair (the Department of Agriculture's) efficiency and
destroy the value of its operations and reports as fair, impartial and
reasonably accurate, would be to defraud the United States * * *.
(I)tis not essential to charge or prove an actual financial or
property loss to make a case under the statute." In Hammerschmidt v.
United States, 265 U.S. 182, 188 (1924), the Court noted that while
"(t)o conspire to defraud the United States means primarily to cheat
the Government out of property or money, * * * it also means to
interfere with or obstruct one of its lawful government functions by
deceit." See also United States v. Keitel, 211 U.S. 370, 393-394
(1908);  Hyde v. Shine, 199 U.S. 62, 82 (1905);  Curley v. United
States, 130 F. 1, 3 (1st Cir. 1904) (concluding that the prohibition
of conspiracies to defraud the United States was broadly designed "for
the protection of intangible rights, privileges, and functions of
government").  While this interpretation -- which was carried forward
under 18 U.S.C. 371 (see United States v. Johnson, 383 U.S. 169, 172
(1966) (citation omitted) (statute encompasses "any conspiracy for the
purpose of impairing, obstructing or defeating the lawful function of
any department of Government")) -- is not dispositive of what Congress
meant when it enacted the relevant section of the mail fraud statute
in 1872, it does suggest that Congress might have at some time
entertained an amendment had it been dissatisfied with the broad
reading that its words could be expected to receive.

   While this Court has yet to confront the issue of intangible rights
under the mail fraud statute, it is hardly surprising that no court of
appeals has limited Section 1341 to fraudulent schemes having as their
object the deprivation of tangible rights.  In general, the courts of
appeals have given the phrase "scheme * * * to defraud" a broad but
common-sense meaning consistent with Congress's intention in enacting
the statute.  As the court noted in United States v. States, 488 F.2d
761, 764 (8th Cir. 1973), cert. denied, 417 U.S. 909 (1974), it was
long ago decided that "any kind or species of scheme or artifice to
defraud is punishable in the national courts, if and whenever for the
purpose of executing that scheme the postal establishment is used"
(quoting Gouled v. United States, 273 F. 506, 508 (2d Cir. 1921)).
The courts have necessarily given "defraud" a broad meaning in
construing the first clause of Section 1341 since fraud "is as old as
falsehood and as versable as human ingenuity" (Weiss v. United States,
122 F.2d 675, 681 (5th Cir.), cert. denied, 314 U.S. 687 (1941)).
Defining the term too strictly would permit schemers to devise methods
of depriving others of their rights by methods calculated to comply
with letter of the law.

   It follows that at least where a scheme to defraud is directed to
the deprivation of an established legal right, the mail fraud statute
may properly be invoked.  The question of what does, in fact,
constitute a legal right is in some instances a difficult one, and
poses a limit on the applicability of the statute.  But no such
marginal case is presented where the rights of the state government
and its citizens to be free from venal self-dealing in the performance
of the state's business is concerned.  As other courts of appeals have
found, some in less clear cases than this one, the right of the state
and its citizens to the honest performance of the government's
business may, in proper cases, be protected by the sanction of the
mail fraud statute.  See, e.g., United States v. Silvano, No. 86-1460
(1st Cir. Mar. 4, 1987), slip op. 9-12;  United States v. Lovett, No.
85-2967 (7th Cir. Jan. 26, 1987), slip op. 8-13;  United States v.
Mandel, 591 F.2d 1347, 1357-1364, aff'd in relevant part, 602 F.2d 653
(4th Cir. 1979) (en banc), cert. denied, 445 U.S. 961 (1980);  United
States v. Isaacs, 493 F.2d 1124, 1149 (7th Cir.), cert. denied, 417
U.S. 976 (1974);  United States v. States, 488 F.2d 761, 763-767 (8th
Cir. 1973), cert. denied, 417 U.S. 909 (1974);  United States v.
Edwards, 458 F.2d 875, 880-881 (5th Cir.), cert. denied, 409 U.S. 891
(1972);  Bradford v. United States, 129 F.2d 274, 276 (5th Cir.),
cert. denied, 317 U.S. 683 (1942);  Shusan v. United States, 117 F.2d
110 (5th Cir.), cert. denied, 313 U.S. 574 (1941).  /19/

   In Shusan, the Fifth Circuit held that "(a) scheme to get a public
contract on more favorable terms than would likely be got otherwise by
bribing a public official would not only be a plan to commit the crime
of bribery, but would also be a scheme to defraud the public.  * * *
No trustee has more sacred duties than a public official and any
scheme to obtain an (unfair) advantage by corrupting such an one must
in the federal law be considered a scheme to defraud" (117 F.2d at
115).  Indeed, the Fourth Circuit stated eight years ago that "(a)t
this late date, there can be no real contention that many schemes to
defraud a state and its citizens of intangible rights, e.g., honest
and faithful government, may not fall within the purview of the mail
fraud statute." Mandel, supra, 591 F.2d at 1362.

 2. Petitioners' conduct here was properly punishable under the mail
fraud statute on the ground that they devised a scheme to defraud the
State and its citizens of their right to have the public's business
conducted in an honest manner

   There can be no serious argument that the scheme devised and
carried out by petitioners in this case was calculated to and did in
fact utilize trickery and deception to deny the Commonwealth of
Kentucky and its citizens of a basic legal right to have its business
conducted in an honest manner.  While it may not always be obvious
whether the object to be denied by a scheme is fairly termed a legal
right, /20/ surely a state and its citizens have such a right to
demand that those carrying out public responsibilities not use the
power entrusted to them to line their pockets with public funds.  As
demonstrated in Part A, leaving aside the issues of precisely what was
charged in this case, the government clearly proved that petitioners
engaged in a scheme to obtain money by false pretenses.  When coupled
with a mailing in furtherance of the scheme, such conduct is plainly a
federal crime, quite apart from any reliance on an intangible right to
honest government.  The utilization of governmental authority and
power to facilitate the commission of such a crime amounts to a second
wrong beyond the fradulent misappropriation of property and may be
described as the fraudulent misappropriation of governmental authority
to pursue illegal ends.

   Petitioners offer several arguments contesting this conclusion in
categorical terms.  Petitioner Gray first asserts (86-286 Br. 15-17)
that the term "defraud" must be construed to require proof of
financial loss to a victim, on the ground that such a loss is required
under the common law meaning of the term.  Gray is quite vague about
the supposed common law basis for this claimed interpretation, and we
submit that the best authority points in a distinctly different
direction.  See pages 23-24, supra.  Moreover, this Court has
indicated that it is doubtful whether "defraud" conveys "a common-law
meaning, and that that meaning would be impelled if the word stood
alone in the statute." Keitel, 211 U.S. at 393.  In any event, since
the Court in Durland rejected a narrowing construction of the mail
fraud statute based on an asserted common law meaning of the term
"fraud" (161 U.S. at 313-314;  Mandel, 591 F.2d at 1361;  Rakoff,
supra, 18 Duq. L. Rev. at 811-812), arguments of this sort have
carried little weight in the context of this statute.  /21/

   Gray also argues (86-286 Br. 25-28) that the rule of lenity
requires that the statute not be interpreted to prohibit violations of
intangible rights.  However, while "ambiguity concerning the ambit of
criminal statutes should be resolved in favor of lenity" (United
States v. Culbert, 435 U.S. 371, 379 (1978) (citation omitted);  Rewis
v. United States, 401 U.S. 808, 812 (1971)), that rule "comes into
operation at the end of the process of construing what Congress has
expressed, not at the beginning as an overriding consideration of
being lenient to wrongdoers." Callahan v. United States, 364 U.S. 587,
596 (1961).  Where no ambiguity exists, lenity is not relevant.
Culbert, 435 U.S. at 379.  The rule of lenity has no operation here.
Congress has spoken in broad terms which the courts of appeals have
uniformly and reasonably found to prosecribe schemes to defraud having
as their objective the deprivation of both tangible and intangible
rights.

   Nor is there any merit to petitioners' contentions that they were
not properly convicted because Hunt did not hold public office but was
instead a de facto public official as defined in United States v.
Margiotta, 688 F.2d 108, 121-126 (2d Cir. 1982), cert. denied, 461
U.S. 913 (1983).  First, on the record from the trial court, the
question whether a person who does not hold public office can be
convicted under the mail fraud statute as a de facto public official
without proof that he schemed with an actual public official is not
presented here.  No one disputes that "(o)nly one member of the
conspiracy need be a public fiduciary to support an intangible rights
mail fraud indictment against all members of the conspiracy" (Pet.
App. 8a).  It is also settled that Gray was a public official with
fiduciary duties to the citizens of Kentucky and that the awarding of
the state's "workmen's compensation insurance policy was within Gray's
supervisory authority as Secretary of Public Protection and Regulation
or as Secretary to the Governor's Cabinet" (id. at 9a).  And the jury
was instructed that it could convict the defendants on the mail fraud
count if it found that Gray had violated the intangible rights of the
citizens of Kentucky by concealing his interest in Seton and the
elements of the offense were otherwise established.

   Gray argues (86-286 Br. 13 n.8), however, that the jury was
alternatively instructed that it could also convict the defendants if,
instead, it found that Hunt "had such power over the responsible
officials of the Commonwealth of Kentucky that he was able to control
the awarding of the Commonwealth of Kentucky's Workmen's Compensation
Contract to Wombwell Insurance Company for the years 1975 through
1979" and "directed commissions from the Commonwealth of Kentucky's
Workmen's Compensation Contract to Seton Investments, Inc." (5 C.A.
App. 1343).  Because the jury may have based its verdict on that
alternative basis looking to Hunt's role as a de facto public official
(which was amply supported by the facts), Gray argues that both
theories must be legally sufficient in order for the conviction to be
upheld and that the fact that he was a public official is irrelevant
(86-286 Br. 13 & n.8).

   The flaw in this argument is that the alternative instruction
looking to Hunt's role as a de facto state official also provided
that, in order to convict either defendant, the jury must conclude
that he aided and abetted Hunt in that scheme (5 C.A. App. 1343).
/22/ Gray, of course, was convicted, and if one supposes that it was
under this alternative instruction, it necessarily follows that the
jury found that Gray, a public official, aided and abetted Hunt in
carrying out the scheme.  /23/ In doing so Gray clearly breached his
fiduciary duty to the state and its citizens, owed on account of his
public office.  Thus, under either alternative of the intangible
rights theory presented to the jury, it necessarily found a breach of
duty by Gray, an actual public official.  There is therefore no
occasion to reach the question whether the convictions could have been
based on an intangible rights theory looking to Hunt's status as a de
facto public official.

   Second, even if the jury had not necessarily found that Gray
breached a duty arising from his status as an actual public official,
the convictions should nevertheless be affirmed based on the actions
of Hunt.  There are plainly instances where persons not on the public
payroll are entrusted with governmental authority and given power to
carry on the state's business.  In such a situation, it is at least
clear that those individuals have a duty not to use that governmental
power to criminally profit themselves or their friends.  /24/ While
close cases no doubt can be hypothesized, this is not one of them.  As
the Second Circuit recognized in Margiotta, courts in mail fraud
prosecutions must not threaten to criminalize lobbying or political
party activities (688 F.2d at 122), but instead must be sensitive to
First Amendment considerations (id. at 128-129).  However, as that
court also concluded, courts ought not be deterred in cases where
"(t)he First Amendment concerns raised * * * are a chimera" (id. at
129).

   McNally's argument that "Hunt was not a de facto public official"
(86-234 Br. 19) is totally without merit.  He repeatedly misstates the
facts to support that contention, stating that Hunt merely "exercised
some influence over some decisions of a state official" (id. at 16)
and "suggest(ed) that Insurance Commissioner McGuffey award the
workmen's compensation policy to Wombwell" (id. at 20).  However, the
jury was not instructed that it could convict if it concluded that
Hunt had "some influence" over the awarding of the state's insurance
policies and made "suggestions" on that matter to McGuffey.  It was
instructed that it had to conclude that Hunt "was able to control" the
award of the state's workmen's compensation policy and that he
"directed commissions" from Wombwell to Seton (5 C.A. App. 1343).  The
evidence clearly showed that he did.  /25/ The governor gave Hunt the
authority to decide to whom the state's insurance contracts should be
awarded and Hunt exercised that authority in place of the insurance
commissioner.  (Pet. App. 11a;  2 C.A. App. 323-330).  There is no
reason why his misuse of that delegated public trust should be viewed
differently under the mail fraud statute than would similar conduct
engaged in by the Insurance Commissioner.  /26/

   Finally, Gray's contention (86-286 Br. 28-29, 34-37) that
federalism concerns weigh against continued recognition of the
intangible rights theory under the mail fraud statute is also
unpersuasive.  At least where, as here, the intangible right asserted
concerns freedom from unlawful self-dealing by persons in the exercise
of governmental powers, federal prosecution of schemes to defraud does
not conflict with state interests but instead advances those
interests.  Concurrent criminal jurisdiction over schemes to deprive
citizens of the states of their intangible rights sometimes provides a
process with which to address frauds that otherwise might not be
prosecuted locally.  Where the unlawful conduct constitutes or is
intimately tied to local corruption, federal authority may be the most
effective -- or even the only -- means by which the illegality will be
investigated and prosecuted.  Indeed, federal law enforcement has at
times played a signal role in identifying and rooting out entrenched
patterns of local corruption.  See, e.g., United States v. Silvano,
No. 86-1460 (1st Cir. Mar. 4, 1987) (acting Boston budget director);
United States v. LeFevour, 798 F.2d 977 (7th Cir. 1986) (chief judge
of Cook County traffic court);  United States v. Matthews, 773 F.2d 48
(3d Cir. 1985) (Atlantic City Mayor, City Commissioner, and Director
of Revenue and Finance);  United States v. Gorny, 732 F.2d 597 (7th
Cir. 1984) (Deputy Commissioner of Cook County Board of (Tax)
Appeals);  United States v. Blanton, 719 F.2d 815 (6th Cir. 1983),
cert. denied, 465 U.S. 1099 (1984) (state governor, special
consultant, and special assistant).  Moreover, most states, like
Kentucky, prohibit bribery and kickback schemes and most other acts
that are prosecuted under the intangible rights theory.  /27/ A
reading of Section 1341 that authorizes federal prosecutions of public
officials for scheming to defraud the public of its right to the
honest performance of governmental functions neither intrudes into an
area of conduct which a state might wish to legalize, nor denies a
state's jurisdiction to define and prosecute intangible frauds, any
more than the statute intrudes on a state's ability to prosecute
frauds against tangible interests.

         II. PETITIONERS WERE PROPERLY CONVICTED OF CONSPIRACY

   Petitioners and Hunt were charged with conspiracy, in violation of
18 U.S.C. 371, (1) to violate the mail fraud statute by defrauding the
citizens of Kentucky of their intangible rights and by obtaining money
and property through false representations, and (2) to defraud the
United States of tax revenues.  Note 7, supra.  The district court
instructed the jury that to convict on the conspiracy count it must
unanimously find that petitioners agreed to achieve at least one of
the two objectives of the conspiracy.  5 C.A. App. 1336.  Therefore,
in convicting petitioners on the conspiracy count, the jury
necessarily unanimously concluded that petitioners conspired to
violate the mail fraud statute, or to defraud the United States of tax
revenues, or both.  The court of appeals affirmed the conspiracy
convictions on the basis that the evidence clearly showed a conspiracy
to violate the mail fraud statute, but did not consider whether it was
also sufficient to support the conclusion that they conspired to
defraud the United States of tax revenues.  Pet. App. 11a n.2.

   Gray contends (86-286 Br. 37-43) that the court of appeals erred by
not considering the sufficiency of the evidence of conspiracy to
defraud the United States of tax revenues, and seeks a remand to the
court of appeals for determination of that issue.  If the court of
appeals determines that the evidence does not support the tax fraud
conspiracy, Gray contends that petitioners' conviction on the
conspiracy count must be vacated, because under the instructions as
given the jury may conceivably have based its verdict on that theory.
/28/

   A. Although unlikely, it is theoretically possible that the jury
concluded that petitioners conspired to defraud the government of tax
revenues and also concluded that they did not conspire to violate the
mail fraud statute (or did not reach the issue), even though it
convicted them on the substantive mail fraud count.  There is,
however, no reason to waste judicial resources as Gray proposes, since
it is clear that the jury found a conspiracy to commit mail fraud
because the substantive mail fraud count on which it convicted
petitioners was substantially identical to the mail fraud aspect of
the conspiracy count.  The only differences between the counts are
that the government had to establish that the mails were actually used
under the substantive count, while under the conspiracy count it had
to prove that the defendants entered into an agreement (compare note
7, supra, with note 8, supra).  There is no serious issue as to
whether petitioners and Hunt acted in concert and pursuant to a common
understanding in their dealings concerning Seton and the payment of
excess commissions, and they do not argue that question before this
Court.  Indeed, it is impossible to imagine how, on the evidence, the
jury could logically have found both petitioners guilty of mail fraud
without also concluding that they engaged in a conspiracy to commit
that offense.  /29/ The jury may also have concluded that petitioners
conspired to commit tax fraud.  /30/ However, it makes no difference
whether the jury concluded that petitioners conspired to commit both
mail fraud and tax fraud since petitioners were convicted on only one
conspiracy count.

   In United States v. Dixon, 536 F.2d 1388 (2d Cir. 1976), the
defendant was charged with conspiring (1) to violate the securities
laws, and (2) to violate the mail fraud statute.  The defendant was
also charged with committing a number of substantive offenses in
violation of the securities laws and the mail fraud statute.  The jury
convicted on all counts.  The court of appeals affirmed the
convictions on the securities law counts, reversed on the mail fraud
counts, but nonetheless affirmed on the conspiracy charge.  The court
referred to the opinion of Judge Learned Hand in United States v.
Mack, 112 F.2d 290 (2d Cir. 1940), which let stand a conspiracy
conviction where a conspiracy to engage in three offenses was alleged
but only one was proved (536 F.2d at 1401).  Noting that some courts
had questioned the applicability of such reasoning where "a reviewing
court cannot tell what offense or offenses alleged in a conspiracy
indictment were found by the jury," the Dixon court found those cases
distinguishable because "here we know from the conviction on (a
substantive securities fraud count) that the jury found that Dixon had
committed the offense validly charged in the conspiracy count" (id. at
1402).  The court thus found "no basis for questioning the conviction
on the conspiracy count" (ibid.).  The same precise reasoning governs
here, given the jury's conviction on the substantive mail fraud count.

   No decision of this Court holds that an appellate court must
determine whether the evidence was sufficient to support the
conclusion that defendants conspired to achieve each objective of a
conspiracy with multiple objectives, where it is clear that the jury
concluded that the defendants conspired to achieve a particular
objective that was supported by the evidence.  In arguing that the
court of appeals erred by not reviewing the sufficiency of the
evidence relating to the tax conspiracy, Gray relies primarily on this
Court's decision in Yates v. United States, 354 U.S. 298 (1957).  In
Yates the defendants were charged with conspiring (1) to advocate the
overthrow of the government of the United States by force and
violence, and (2) to organize the Communist Party.  As in this case,
the jury returned a general verdict of guilty.  The Court concluded
that the conviction could not stand on the basis that the defendants
had conspired to organize the Communist Party.  /31/ The Court then
reversed the conspiracy conviction, concluding that a verdict must "be
set aside in cases where the verdict is supportable on one ground, but
not on another, and it is impossible to tell which ground the jury
selected" (354 U.S. at 312 (emphasis added)).  Yates is clearly
inapplicable because, as we have shown, it is readily apparent that
the jury found at least a conspiracy to commit mail fraud.  /32/

   Gray also relies on United States v. Dansker, 537 F.2d 40 (3d Cir.
1976), cert. denied, 429 U.S. 1038 (1977), in support of his
contention that in these circumstances it is necessary to remand for
further proceedings in the court of appeals.  In Dansker, the jury
convicted the defendants on two counts of bribery -- of a mayor and a
minor official -- and on a conspiracy count that charged an agreement
to bribe either or both of them.  The court of appeals upheld the
conviction for bribery of the mayor, but reversed the conviction for
bribery of the minor official because it concluded that the minor
official had not been given money in exchange for any official act.
It then reversed the conspiracy conviction, stating that "the
possibility * * * remains, albeit slim, that the jury found that the
defendants engaged in a conspiracy to bribe (the minor official) alone
in spite of its guilty verdict (on the count alleging bribery of the
mayor)" (537 F.2d at 51 (emphasis added)).  We believe that Dansker
was wrongly decided.  When there is but a "slim" chance that the jury
based its verdict on one theory, and the evidence unquestionably
supports its verdict on the other theory, it is reasonable to assume,
as the Second Circuit did in Dixon, that the verdict was in fact based
on the theory that is clearly supported by the evidence.  To do
otherwise is to mandate a presumption that juries behave irrationally.
 /33/

   B. Even if it were not clear that the jury concluded that
petitioners conspired to violate the mail fraud statute, the
conspiracy conviction should be upheld solely on the basis of the
substantial evidence indicating a conspiracy to commit mail fraud.
/34/ This Court has held that a guilty verdit must be reversed where
the jury was instructed that it could convict on alternative theories,
one of the theories is legally defective, and it is not clear on which
theory the jury convicted.  Yates, 354 U.S. at 312;  Stromberg v.
California, 283 U.S. 359, 367-368 (1931).  /35/ But where none of the
alternative theories is legally defective, and the defendant merely
claims that the evidence was insufficient to support one of the
alternative theories, it is reasonable to assume that the jury
convicted on the alternative theory (if there is one) that was
supported by the evidence and not on the alternative theory that was
not supported by the evidence.  To do otherwise requires an assumption
that the jury acted irrationally.  In that respect, the case is far
different than one like Stromberg, where the jury could quite
rationally have relied on the impermissible theory, not knowing of its
legal defect.

   This conclusion follows from this Court's reasoning in Turner v.
United States, 396 U.S. 398 (1970), where a conviction on a charge of
purchasing, possessing, dispensing, and distributing heroin without
revenue stamps attached, in violation of 26 U.S.C. (1964 ed.) 4704(a),
was affirmed on evidence showing only possession.  "Since the only
evidence of a violation involving heroin was Turner's possession of
the drug, the jury to convict must have believed this evidence.  * * *
The general rule is that when a jury returns a guilty verdict on an
indictment charging several acts in conjunctive, * * * the verdict
stands if the evidence is sufficient with respect to any one of the
acts charged" (396 U.S. at 420).

   Nor does it offend due process to assume that a jury based its
verdict on an alternative that was supported by the evidence rather
than on an alternative that was not supported by the evidence.  Due
process requires that criminal convictions be supported by proof
beyond a reasonable doubt of every fact necessary to establish the
offense charged.  In re Winship, 397 U.S. 358, 364 (1970).  Thus, a
reviewing court must satisfy itself that the defendant was not
convicted of an offense for which inadequate evidence was adduced.  In
order not to impinge unduly on the jury's role, however, it must view
the evidence in the light most favorable to the government and draw
all reasonable inferences in favor of the jury's verdict.  Jackson v.
Virginia, 443 U.S. 307, 319 (1979);  Glass v. United States, 315 U.S.
60, 80 (1942).  Following that approach, this Court has stated that
"(s)ufficiency-of-the-evidence review involves assessment by the
courts of whether the evidence adduced at trial could support any
rational determination of guilt beyond a reasonable doubt.  * * * The
Government must convince the jury with its proof, and must also
satisfy the courts that given this proof the jury could rationally
have reached a verdict of guilt beyond a reasonable doubt." United
States v. Powell, 469 U.S. 57, 67 (1984) (emphasis added).

   Translating these principles to the situation presented here, a
defendant is entitled to a determination whether the evidence supports
his conspiracy conviction.  If the evidence supports the conclusion
that the defendant conspired to achieve one objective of the
conspiracy, then the evidence supports the conviction.  The defendant
is not entitled, however, to a determination that rules out all
possibility of mistake by the jury.  Accordingly, once an appellate
court determines that the jury could rationally have concluded that
the defendants conspired unlawfully as charged, it need not further
determine whether the jury could have also reached that conclusion by
taking a route not supported by the evidence.  The court of appeals
thus acted properly in affirming without considering the sufficiency
of the evidence of a conspiracy to commit tax fraud.  /36/

                              CONCLUSION

   The decision of the court of appeals should be affirmed.

   Respectfully submitted.

   CHARLES FRIED

      Solicitor General

   WILLIAM F. WELD

      Assistant Attorney General

   DONALD B. AYER

      Deputy Solicitor General

   CHRISTOPHER J. WRIGHT

      Assistant to the Solicitor General

   SARA CRISCITELLI

      Attorney

   MARCH 1987

   /1/ "Pet. App." references are to the appendix to the petition for
a writ of certiorari in No. 86-286.

   /2/ "C.A. App." references are to the joint appendix in the court
of appeals.

   /3/ It appears that Hunt initially gave McNally a share of the
excess commissions simply to reward him for his support of Governor
Carroll.  It was unlawful for McNally to share the commissions because
he was not a bona fide insurance agent.  Ky. Rev. Stat. Ann. Sections
304.9-100, 304.9-420 (Michie/Bobbs-Merrill 1981).  After the Federal
Bureau of Investigation began an inquiry into Hunt's activities in
April 1978, however, Hunt and Gray had McNally sign back-dated
documents to make it appear that he had always been Seton's owner.

   /4/ Hunt also served 12 months' imprisonment for civil contempt
when he refused to testify before a grand jury after a grant of
immunity.

   /5/ The six counts dismissed alleged Seton's tax returns as
mailings in furtherance of the scheme (Pet. App. 6a).  The court of
appeals affirmed on the ground that mailings required by law to be
made can only be viewed as in furtherance of a scheme prohibited by 18
U.S.C. 1341 where the mailed documents are themselves false or
fraudulent, and no such allegation was made in the indictment
concerning the tax returns (Pet. App. 15a-16a).  The government did
not file a cross-petition challenging that decision.

   /6/ The indictment as returned by the grand jury alleged an
additional purpose of the mail fraud scheme to defraud the citizens
and government of Kentucky of their right to pertinent information in
connection with the state's arrangement of workmen's compensation
insurance coverage.  The district court did not instruct on this
purpose, on the ground that it was subsumed within the purpose to deny
the right to honest government.

   /7/ The conspiracy instruction provided (5 C.A. App. 1332-1335):

      Count 1 of the Indictment charges the defendants with conspiring
      to violate the Mail Fraud Act and to defraud the United States
      Treasury by impeding and impairing the Internal Revenue Service
      in its lawful functions.  In order to convict either defendant
      on this Count, the United States must prove beyond a reasonable
      doubt, that the defendants willfully and knowingly devised and
      intended to devise a scheme or artifice to defraud.  If you do
      not find that the defendants devised and intended to devise a
      scheme to defraud, then you must find the defendants not guilty
      on Count 1.

         Count 1 of the Indictment charges in part that the defendants
      devised a scheme and artifice to:

         (a)(1) defraud the citizens of the Commonwealth of Kentucky
      and its governmental departments, agencies, officials, and
      employees of their right to have the Commonwealth's business and
      its affairs conducted honestly, impartially, free from
      corruption, bias, dishonesty, deceit, official misconduct, and
      fraud;  and,

         (2) obtain (directly and indirectly) money and other things
      of value, by means of false and fraudulent pretenses,
      representations, and promises, and the concealment of facts.

         And for the purpose of executing the aforesaid conspiracy,
      the defendants, James E. Gray and Charles J. McNally, and Howard
      P. "Sonny" Hunt, Jr., and others, did place and cause to be
      placed in a post office or authorized depository for mail
      matter, matters and things to be sent and delivered by the
      Postal Service, and did take and receive therefrom such matters
      and things and did knowingly cause to be delivered by mail
      according to the direction thereon and at the place at which it
      was directed to be delivered by the person to whom it was
      addressed, matters and things.

         (b) Defraud the United States by impeding, impairing, and
      obstructing and defeating the lawful governmental functions of
      the Internal Revenue Service of the Treasury Department of the
      United States of America in the ascertainment, computation,
      assessment, and collection of federal taxes.

   The essence of this claimed scheme is alleged to be that Howard P.
"Sonny" Hunt, Jr., as Chairman of the Central Executive Committee of
the Kentucky Democratic Party, though not a state official, had such
power over the responsible state officers of the Commonwealth of
Kentucky that he was able to control the selection of the insurance
agent to write the workmen's compensation policy for the Commonwealth
of Kentucky for the years 1975-1979.  It is further claimed that
because of such power, Mr. Hunt owed a duty to the citizens of the
Commonwealth of Kentucky to disclose his agreement with Wombwell
Insurance Agency to share its agent's commissions with persons
designated by Mr. Hunt to the extent those commissions exceeded
$50,000.00 per year, and that this agreement was not disclosed to or
known by appropriate state officials.

   The defendants herein, Gray and McNally, are further charged with
entering into a secret agreement with Mr. Hunt and others to generate,
control, and distribute to themselves and others a portion of those
commissions, and to accomplish this, in part, by setting up the
corporation, Seton Investments, Inc., for the purpose of concealing
and disguising the receipt of those commissions by Hunt and Gray.

   /8/ The mail fraud instruction provided (5 C.A. App. 1341-1344);

      Count 4 of the Indictment states that the defendants and each of
      them acted in violation of the Mail Fraud statute.  In order to
      convict either defendant on this count, the United States must
      prove by the evidence, beyond a reasonable doubt, that the
      defendants devised and intended to devise a scheme or artifice
      to defraud.  If you do not find that the defendants devised and
      intended to devise a scheme to defraud then you must find the
      defendants not guilty on Count 4.

         Count 4 of the Indictment charges in part that the defendants
      devised a scheme or artifice to:

         (a)(1) defraud the citizens of the Commonwealth of Kentucky
      and its governmental departments, agencies, officials and
      employees of their right to have the Commonwealth's business and
      its affairs conducted honestly, impartially, free from
      corruption, bias, dishonesty, deceit, official misconduct, and
      fraud;  and,

         (2) obtain (directly and indirectly) money and other things
      of value, by means of false and fraudulent pretenses,
      representations, and promises, and the concealment of facts.

         And for the purpose of executing the aforesaid scheme, the
      defendants, James E. Gray and Charles J. McNally, and Howard P.
      "Sonny" Hunt, Jr., and others, did place and cause to be placed
      in a post office or authorized deposit for mail matter, matters
      and things to be sent and delivered by the Postal Service, and
      did take and receive and cause to be taken and received
      therefrom such matters and things and did knowingly cause to be
      delivered thereon and at the place at which it was directed to
      be delivered by the person wo whom it was addressed, matters and
      things.

         (b) Defraud the United States by impeding, impairing, and
      obstructing and defeating the lawful governmental functions of
      the Internal Revenue Service of the Treasury Department of the
      United States of America in the ascertainment, computation,
      assessment and collection of federal taxes.

   To find that the defendants or either of them devised such a scheme
you must find beyond a reasonable doubt one of the following:

      (1) That Howard P. "Sonny" Hunt, Jr., as Chairman of the Central
      Executive Committee of the Kentucky Democratic Party, though not
      a state official, had such power over the responsible officials
      of the Commonwealth of Kentucky that he was able to control the
      awarding of the Commonwealth of Kentucky's Workmen's
      Compensation Contract to the Wombwell Insurance Company for the
      years 1975 through 1979 and that Howard P. Hunt, Jr., directed
      commissions from the Commonwealth of Kentucky's Workmen's
      Compensation Contract to Seton Investments, Inc., an entity in
      which he had an ownership interest without disclosing that
      interest to persons in State government whose actions or
      deliberations could have been affected by the disclosure.  You
      must further find, beyond a reasonable doubt, that the
      defendants or either of them aided and abetted Mr. Hunt in that
      scheme;  or

         (2) That the Commonwealth of Kentucky's Workmen's
      Compensation Insurance was a matter under the supervisory
      authority of the defendant Gray as Secretary of Public
      Protection and Regulation or Secretary of the Governor's Cabinet
      at the time that Seton Investments, Inc., received commissions
      from that insurance policy.  You must further find beyond a
      reasonable doubt that defendant Gray had an ownership interest
      in Seton Investments and that he failed to disclose that
      interest to persons in State Government whose actions or
      deliberations could have been affected by such disclosure.  To
      find the defendant McNally guilty under this instruction, you
      must find that he aided and abetted the defendant Gray.

         What must be proved, beyond a reasonable doubt, is that the
      defendants knowingly and willfully devised or intended to devise
      a scheme to defraud as described in Instruction No. 11;  and
      that the use of the United States mails was closely related to
      the scheme and an integral part of the scheme in that the
      defendants either mailed something or caused it to be mailed in
      an attempt to execute or carry out the scheme.  To "cause" the
      mails to be used is to do an act with knowledge either that the
      use of the mails will follow in the ordinary course of business
      or to reasonably foresee that the use of the mails will follow
      in the ordinary course of business.

         In this case, unless you find that the defendants caused the
      mailing of an envelope containing a commission check No.
      1089512, from The Hartford to Wombwell Insurance Agency on or
      about May 8, 1979, beyond a reasonable doubt, you shall find the
      defendants not guilty on Count 4.

   /9/ The court also erroneously instructed the jury that, in order
to convict the defendants on the mail fraud count, it had to conclude
that they had defrauded the United States by impeding the Internal
Revenue Service in the collection of federal taxes, as Gray notes
(86-286 Br. 7 n.7).  The court of appeals rejected petitioners'
contention that they were somehow prejudiced by this instruction,
which added to the government's burden, stating that the inclusion of
an extra requirement in the instructions to the jury did not
impermissibly amend the indictment (Pet. App. 14a).

   /10/ No question is presented concerning whether the government
established the requisite connection with the use of the mails here,
an issue that the Court considered in United States v. Maze, 414 U.S.
395 (1974), and Parr v. United States, 363 U.S. 370 (1960).

   /11/ The language of the statute as it existed in 1872 is reprinted
in Rakoff's article at 783;  the language of the statute following the
1889 amendment is reprinted in the article at 809;  and the language
of the statute following the 1909 amendment is reprinted in the
article at 816 n.206.

   /12/ See United States v. Margiotta, 688 F.2d 108, 121 (2d Cir.
1982), cert. denied, 461 U.S. 913 (1983);  United States v. States,
488 F.2d 761, 764 (8th Cir. 1973), cert. denied, 417 U.S. 909 (1974).

   /13/ Citing the jury instructions, Gray states that "(t)he sole
basis for petitioners' prosecution under the mail fraud statute is the
mere allegation that the petitioners 'defrauded' the citizens of
Kentucky of 'their right to have the Commonwealth's business and its
affairs conducted honestly, impartially, free from corruption, bias,
dishonesty, official misconduct, and fraud * * * C.A. App. 1341.'"
(86-286 Br. 30).

   /14/ Notwithstanding Gray's repeated contention before this Court
that he "received nothing of value as a result of the splitting of
insurance commissions" (86-286 Br. 16 n.13), the evidence clearly
showed that Gray's girlfriend lived in the condominium in Kentucky at
a rent far below its market value and that Gray had a key to that
condominium and visited her there two or three times a week.  It also
showed that Gray and his girlfriend visited the Florida condominium on
occasion.  2 C.A. App. 373;  5 C.A. App. 1116, 1173-1174.

   /15/ Even if petitioners' conduct is characterized as concealment
of Seton's true nature rather than false representations as to Seton's
purposes and ownership, petitioners are equally liable under the
second clause of the mail fraud statute, since the courts have
concluded without exception that concealment of relevant facts
violates the statute.  See, e.g., United States v. O'Malley, 707 F.2d
1240, 1247 (11th Cir. 1983);  United States v. Allen, 554 F.2d 398,
410-411 (10th Cir.), cert. denied, 434 U.S. 836 (1977);  United States
v. Bush, 522 F.2d 641, 651 (7th Cir. 1975), cert. denied, 424 U.S. 977
(1976).

   /16/ Although Section 304.9-420 was repealed in 1984, it was
replaced by Ky. Rev. Stat. Ann. Section 304.9-421 Michie/Bobbs-Merrill
Supp. 1986, entitled "(s)haring of commissions prohibited," which, as
its title suggests, continues the prohibition against the sharing of
commissions with persons who are not bona fide insurance agents.

   Gray states (86-286 Br. 14 n.9) that Insurance Commissioner
McGuffey advised Wombwell that "it was legal to share insurance
commissions with a licensed officer of an unlicensed agency." That
misstates the facts.  McGuffey's one-sentence letter stated in full:
"It is legal to share commissions with an insurance corporation in
which the officers are licensed insurance agents." 6 C.A. App. 1393.
Nothing in that sentence supports any contention that it is
permissible to establish a sham insurance agency to share commissions.
 Nor does the letter's reference to "licensed insurance agents" mean,
as Gray suggests, contrary to Ky. Rev. Stat. Ann. Section 304.9-100
Michie/Bobbs-Merrill 1981, that the officers of a corporation may
obtain insurance licenses in order to share commissions even though
they are not actually involved in the insurance business.

   /17/ Hunt testified that Wombell's vice-president repeatedly asked
for assurance that Hunt was directing it to split commissions only
with other insurance agencies.  1 C.A. App. 232.  Hunt never informed
him that Seton was not a bona fide agency, notwithstanding that it did
no business.  Instead, he provided Wombwell with the number of an
insurance license issued to McNally (7 Tr. 43-46), a license McNally
obtained solely for the purpose of receiving excess commissions (2
C.A. App. 298).  Hunt and Gray also concealed their ownership of
Seton.  Wombwell would have violated the state's bribery and kickback
statutes had it directed excess commissions to Seton knowing that it
was a front for Hunt and Gray.  Ky. Rev. Stat. Ann. Sections
521.010(1)(b), 521.020(a), 521.020(b) (Michie/Bobbs-Merrill 1985).

   /18/ Those dictionaries also defined "right" broadly.  Anderson
defined it (at 904) as "an enforceable claim or title to any subject
matter whatever:  either to possess and enjoy a tangible thing, or to
do some act, pursue a course, enjoy a means of happiness, or to be
exempt from any cause of annoyance," and acknowledged the existence of
"political rights" as well (at 905).  Bouvier defined "right" (at 927)
simply as "a well-founded claim."

   /19/ See also United States v. Bruno, 809 F.2d 1097, 1104-1105 (5th
Cir. 1987), in which the court held that the federal wire fraud
statute, 18 U.S.C. 1343, prohibits schemes to deprive citizens of the
intangible right to honest government.  ("Of course, no one contests
that the citizens of Orleans Parish possess the right to honest
services of its public officials." (id. at 1105).)

   The courts of appeals have also held that non-governmental
employees may defraud their employers of intangible rights to honest
and loyal service in violation of Section 1341 by failing to disclose
material information to the employer in breach of fiduciary duties
owed the employer.  See, e.g., United States v. Alexander, 741 F.2d
962 (7th Cir. 1984);  United States v. von Barta, 635 F.2d 999,
1005-1006 (2d Cir. 1980), cert. denied, 450 U.S. 998 (1981).

   /20/ It appears reasonable, however, that a scheme formed with the
specific intent to deny the proper performance of an enforceable
fiduciary duty would meet such a test.  See United States v. Barta,
635 F.2d 999, 1005-1006 (2d Cir. 1980).

   /21/ Gray also contends (86-286 Br. 16) that the first clause of
the statute should be construed to require proof of financial loss to
a victim because the second clause of the statute makes reference to
"obtaining money or property." We submit that the clauses should be
read separately (see pages 17-18, supra), and, in any event, the
second clause plainly does not itself require a proof of loss to a
victim.

   /22/ See note 8, supra.

   /23/ Furthermore, any doubt that Gray was part of the conspiracy is
laid to rest by the fact that the jury convicted him on a conspiracy
count as well as on a mail fraud count.

   /24/ Kentucky law contemplates such a conclusion.  The state
bribery statute defines "(p)ublic servant" to include not only "(a)ny
public officer or employee of the state" (Ky. Rev. Stat. Ann. Section
521.010(1)(a) (Michie/Bobbs-Merrill 1985)), but also "(a)ny person
exercising the functions of any such public officer or employee" (id.
Section 521.010(1)(b)).

   /25/ McNally contends (86-234 Br. 22) that McGuffey "did not always
follow Hunt's suggestions," citing 2 Tr. 15, 16.  McNally thus refers
to McGuffey's answer, concerning policies other than the workmen's
compensation insurance policy (as to which he testified that he always
followed Hunt's instructions), to the question whether he had ever not
followed Hunt's instructions.  He replied:  "On one situation he did
not want to renew a certain policy with an agency and I did not, but
later on I gave him some" (2 Tr. 16, reprinted at 2 C.A. App. 330).
That inconclusive comment hardly undercuts the jury's conclusion,
which the court of appeals found was supported by the evidence (Pet.
App. 10a-11a), that Hunt controlled the awarding of the state's
insurance policies.

   /26/ Contrary to petitioner's claims, if Hunt had merely exercised
that authority to reward insurance agents who had supported the
governor, they never would have been indicted, since the government
has never claimed that directing Wombwell to split excess commmissions
with valid insurance agencies not controlled by Hunt and Gray violated
any law.  Gray was indicted and convicted only because he and Hunt
abused their authority by devising a scheme to divert excess
commissions into their own pockets.  McNally was indicted and
convicted only because he aided and abetted that scheme in return for
payments.

   /27/ Of course, the fact that a fraudulent scheme violates state
laws does not exclude it from the proscriptions of the federal mail
fraud statute.  Badders v. United States, 240 U.S. 391, 393 (1916).
The federal interest in protecting the postal system from misuse
justifies Congress in prohibiting the use of the mails to defraud
persons of legal rights, whether tangible or intangible in nature.

   For that reason, Gray's reliance on United States v. Bass, 404 U.S.
336 (1971) (86-286 Br. 28-29), is particularly misplaced.  The Court
in Bass held that "(a)bsent proof of some interstate commerce nexus in
each case, (18 U.S.C.) Section 1202(a) (App.) dramatically intrudes
upon traditional state criminal jurisdiction" (id. at 350).  Here, in
contrast, the basis for federal jurisdiction is spelled out in the
statute's requirement of the use of federal mails in furtherance of
the scheme, and that is clearly a sufficient basis for federal
jurisdiction.

   In general, Gray's argument is contradictory.  He (incorrectly)
argues, on the one hand, that it is inappropriate "to extend the
application of the mail fraud statute where there was not even
arguably a violation of state criminal or civil law" (86-286 Br. 33),
while, on the other hand, contending that it is inappropriate to
extend the mail fraud statute to apply to cases also involving
breaches of state law (id. at 28-29).  Both of Gray's arguments are
wrong.  The federal mail fraud statute prohibits all acts within the
meaning of the words of the statute, fairly construed, whether or not
state law also prohibits such acts.

   /28/ In making this argument, Gray assumes arguendo that
petitioners were properly convicted on the mail fraud count.  Gray
notes (86-286 Br. 39 n.47) that, if the Court reverses petitioners'
convictions on the mail fraud count, it follows that the Court should
reverse the conspiracy convictions as well.  That is correct.  Since
the jury almost certainly concluded that petitioners conspired to
violate the mail fraud statute, petitioners' conspiracy convictions
cannot stand if the allegation that their acts violated the mail fraud
statute is legally defective.  Stromberg v. California, 283 U.S. 359,
367-368 (1931).

   /29/ Petitioners argued at trial that they did not violate the mail
fraud statute because McNally, rather than Hunt and Gray, owned Seton.
 But the jury rejected that argument and the court of appeals affirmed
its conclusion that Hunt and Gray controlled Seton (Pet. App. 4a).
Accordingly, there is no question that, contrary to petitioners'
arguments, Hunt and Gray established Seton, purchased and used the two
condominiums, and concealed their ownership by persuading McNally to
serve as Seton's front man.  In addition, the jury necessarily found
either that petitioners aided and abetted Hunt or that McNally aided
and abetted Gray (see pages 30-32, supra), and the court of appeals
concluded that both findings were supported by the evidence (Pet. App.
9a-11a).  Given those conclusions, it is clear beyond question that
petitioners entered into an agreement, even though Gray describes our
contention that the jury obviously concluded that petitioners
conspired to violate the mail fraud statute as "conjecture" (86-286
Br. 38 n.46).

   /30/ The evidence showed that Seton did no business at all, but
that it paid taxes at lower rates than Hunt and Gray (4 C.A. App.
934-941).  That supported petitioners' convictions for tax fraud
conspiracy under United States v. Klein, 247 F.2d 908 (2d Cir. 1957),
since it showed that taxes were paid by a shell corporation at a rate
lower than the persons who should have paid the taxes.  Seton also
took a business deduction for the payment of $38,500 to Hunt's son
that was improper because it did no business.  McNally could of course
conspire to commit tax fraud, even though fraud in connection with his
own taxes was not an object of the conspiracy.

   /31/ The government contended that "organize" as used in 18 U.S.C.
2385 referred to a continuing process of running an organization.  The
Court rejected that contention, holding that "the word refers only to
acts entering into the creation of a new organization" (354 U.S. at
310).  Since it was undisputed that the defendants had not been
involved in the creation of the Communist Party, it followed that they
had not conspired to "organize" it within the meaning of the statute.

   /32/ Gray also relies on Cramer v. United States, 325 U.S. 1
(1945).  The defendant in Cramer was charged with treason, and the
Treason Clause of the Constitution (Art. III, Section 3) requires, in
the absence of a confession, that two witnesses testify to the same
overt act committed as part of the offense to establish treason.
Three overt acts were submitted to the jury, but the Court concluded
that two of the overt acts did not support a guilty verdict because
they did not show that the defendant intended to give aid and comfort
to the enemy (325 U.S. at 48).  It accordingly reversed the
conviction.  The Court noted, before concluding that two of the overt
acts were defective, that "(s)ince it is not possible to identify the
grounds on which Cramer was convicted, the verdict must be set aside
if any of the separable acts submitted was insufficient" (id. at 36
n.45 (emphasis added)).  That dictum is not relevant here because it
is possible to identify the ground on which petitioners were
convicted.

   This Court's decision in Stromberg v. California, 283 U.S. 359
(1931), is not relevant for the same reason.  The defendant there was
charged with violating three alternative clauses of a state statute.
The Court concluded that the first clause of the statute was
unconstitutional, and reversed the conviction, stating:  "(I)t cannot
be determined upon this record that the appellant was not convicted
under that clause.  It may be added that this is far from being a
merely academic proposition, as it appears, upon an examination of the
original record filed with this Court, that the State's attorney upon
the trial emphatically urged upon the jury that they could convict the
appellant under the first clause alone, without regard to the other
clauses." 283 U.S. at 368 (emphasis added).

   The Third Circuit's decision in United States v. Tarnopol, 561 F.2d
466 (1977), is also not relevant for the same reason.  The court there
stated that "it is impossible to determine whether or not the jury
based its verdict upon less than all three of (the alleged objectives
of the conspiracy) and, if so, upon which ones the verdict was
founded" (id. at 474 (emphasis added)).

   /33/ Moreover, this case is distinguishable from Dansker since the
jury here did not return any guilty verdict relating to a substantive
tax fraud violation, while the jury in Dansker returned a guilty
verdict on the count alleging that the defendants had conspired to
bribe the minor official.

   /34/ It would be possible to tell what route the jury took if
conspiracy charges were made in separate counts or the jury returned a
special verdict.  However, it follows from this Court's decision in
Braverman v. United States, 317 U.S. 49, 54 (1942), that a single
conspiracy to achieve multiple objectives is properly charged in one
count.  Special verdicts are not always a possible alternative, since
defendants in criminal cases sometimes oppose their use and obtain
reversal on the ground that special verdicts tend to lead juries to
convict.  See United States v. Spock, 416 F.2d 165, 180-183 (1st Cir.
1969).

   /35/ There is also disagreement in the lower courts as to whether a
conspiracy conviction should be upheld where the jury could properly
have concluded that the defendants conspired to achieve one objective
of the conspiracy but could not properly have concluded that the
defendants conspired to achieve another objective, and it is not clear
what route the jury took in reaching its verdict.  See Dixon, 536 F.2d
at 1401.

   /36/ Gray is way off the mark in arguing (86-286 Br. 43 n.51) that
the rule we propose will permit the government to "charge a defendant
with multiple objects of a conspiracy, deliberately decline to present
any evidence concerning any object except for one and nevertheless
insist that the jury be instructed concerning all objects listed in
the indictment." If the government fails to introduce evidence
supporting the conclusion that the defendants conspired to achieve an
objective charged in the indictment, the court should not instruct the
jury on that objective, but should instead strike the part of the
indictment not supported by any proof.  See United States v. Miller,
471 U.S. 130, 132-134 (1985);  Fed. R. Crim. P. 29(a).