PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA, 

Plaintiff-Appellee,

v.  No. 00-4498

PHOTOGRAMMETRIC DATA SERVICES,

INCORPORATED,

Defendant-Appellant. 

UNITED STATES OF AMERICA, 

Plaintiff-Appellee,

v.  No. 00-4499

DAVID G. WEBB,

Defendant-Appellant. 

Appeals from the United States District Court

for the Eastern District of Virginia, at Alexandria.

Leonie M. Brinkema, District Judge.

(CR-99-471)

Argued: March 2, 2001

Decided: July 30, 2001

Before WILKINS, WILLIAMS, and TRAXLER, Circuit Judges.

Affirmed by published opinion. Judge Traxler wrote the majority

opinion, in which Judge Wilkins joined. Judge Williams wrote an

opinion concurring in part and concurring in the judgment.
COUNSEL

ARGUED: Laurin Howard Mills, NIXON PEABODY, L.L.P.,

Washington, D.C., for Appellants. Jack I. Hanly, Assistant United

States Attorney, Alexandria, Virginia, for Appellee. ON BRIEF:

Laura Ariane Miller, NIXON PEABODY, L.L.P., Washington, D.C.,

for Appellant Webb; David F. Geneson, Lara S. Zick, HUNTON &

WILLIAMS, Washington, D.C., for Appellant Photogrammetric.

Helen F. Fahey, United States Attorney, Alexandria, Virginia, for

Appellee. 

OPINION

TRAXLER, Circuit Judge: 

Photogrammetric Data Services, Inc. ("PDS") and David G. Webb

("Webb") appeal their convictions and sentences for highway project

fraud, see 18 U.S.C.A. § 1020 (West 2000), and mail fraud, see 18

U.S.C.A. § 1341 (West 2000). We affirm. 

I. Facts

Appellant PDS is a Virginia corporation engaged in the business of

preparing topographic maps from aerial photography and ground surveys. Between 1994 and 1999, PDS performed subcontracting work

for firms having contracts with the Virginia Department of Transportation ("VDOT") to perform preliminary engineering work for highway construction. Appellant Webb was employed by PDS as the

photogrammetric manager during this time period. In December 1999,

the United States filed an indictment against PDS and Webb charging

highway project fraud, in violation of 18 U.S.C.A. § 1020, and mail

fraud, in violation of 18 U.S.C.A. § 1341. The charges stemmed from

allegations that PDS and Webb had engaged in a broad, long-term

practice of submitting inflated invoices to VDOT’s prime contractors,

who in turn passed the invoices on to VDOT for payment. 

According to the evidence, VDOT set initial limits on the amount

of money that its contractors could bill for a particular job awarded,

2 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
based upon estimates of hours submitted in advance by the contractors. The contractors were then paid according to the actual number

of hours worked, up to the preapproved limit, after which additional

approval was required. At PDS, employees and managers completed

time sheets showing the amount of hours worked on each particular

job, which were then used to prepare the PDS invoices for the VDOT

jobs. The actual hours worked by PDS employees, however, would

often fall short of the number of hours pre-approved by VDOT and,

if billed correctly, would have resulted in PDS leaving "money on the

table." Consequently Webb’s predecessor and Webb, who were

responsible for the PDS billings on the VDOT jobs, manipulated the

employee timesheets and the amount of hours allotted to PDS managers in order to ensure that PDS billed close to the dollar limits preapproved by VDOT. 

In late 1997, an employee of PDS approached law enforcement

officers with information concerning PDS’s long-standing practice of

inflating the VDOT invoices. With the assistance of this employee

acting as a government informant, including his recording of incriminating statements made by Webb at the workplace, FBI and state law

enforcement agents began investigating the alleged billing fraud and

eventually procured a warrant to search the PDS offices for documentation of the fraudulent scheme. 

On the morning of January 20, 1999, agents executed the search

warrant at the offices of PDS. At the beginning of the search PDS

employees were directed to a conference room, away from the areas

to be searched and, while the search was being conducted, some of

these employees were interviewed by other agents. That same morning, two agents traveled to Webb’s home, arriving before he left for

work, to interview him concerning the allegations of fraudulent billing practices. During the interview, Webb made several admissions,

including an admission that PDS had been "padding" the hours on the

VDOT jobs for five years, a responsibility that he had assumed from

the prior VDOT manager four years previously. By Webb’s estimation, PDS had increased the billed amounts on almost every VDOT

job by approximately ten to fifteen percent, resulting in overbilling of

approximately $100,000 to $200,000 per year for five years. Ultimately, documents seized during the search at PDS, as well as the

statements made by Webb to the agents that day, were introduced at

UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 3
trial. However, no statements made by the other PDS employees at

the time of the search at PDS were introduced as evidence. 

At the conclusion of the trial, PDS and Webb were convicted by

a jury of two counts of highway project fraud and three counts of mail

fraud. Webb was sentenced to 24 months in prison and two years of

supervised release, and was ordered to make restitution jointly with

PDS in the amount of $435,038.33. In addition to the order to make

joint restitution with Webb, PDS was placed on one year of probation

and fined $522,045.29. See United States v. Photogrammetric Data

Servs., Inc., 103 F. Supp. 2d 875 (E.D. Va. 2000). This appeal followed. 

II. Motions to Suppress

We begin with Appellants’ assertion that the district court erred in

denying their motion to suppress all fruits of the January 20, 1999

search at PDS, including various timesheets and handwritten notes

seized at that time, and in denying their motion to suppress the statements obtained from Appellant Webb during the interview at his

home that same day. In reviewing the district court’s denial of a

motion to suppress evidence, we review the district court’s factual

findings for clear error, and its legal conclusions de novo. See United

States v. Rusher, 966 F.2d 868, 873 (4th Cir. 1992). 

A.

Appellants contend that the district court erred in (1) failing to conduct an evidentiary hearing on the issue of whether the FBI agent procuring the warrant to search the PDS offices made material omissions

or misrepresentations to the magistrate judge in his affidavit to obtain

the search warrant, (2) failing to exclude all fruits of the search

because the law enforcement agents exceeded the permissible scope

of the search warrant by detaining and interviewing PDS employees

during the search, and (3) denying their motion to suppress without

conducting an evidentiary hearing on the issue of whether the law

enforcement agents exceeded the scope of the warrant by their

actions. We address these claims in turn. 

4 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
1.

In a detailed affidavit filed five days before the search at PDS, the

investigating FBI agent outlined the suspected fraudulent scheme by

PDS, the information obtained from the cooperating PDS employee

concerning PDS’s long-standing practice of overbilling VDOT contractors, the corroborating evidence that had been located by the FBI

at VDOT, and the corroborating information obtained from the

recorded conversations between the PDS employee-informant and

Webb. The magistrate judge determined that there was probable cause

to conduct the requested search at PDS and issued the search warrant.

Appellants now assert that the affidavit was faulty because it failed

to inform the magistrate judge that the government had issued a grand

jury subpoena to PDS for many of the same materials on the same

day, that the government intended instead to use the search warrant

as subterfuge to obtain statements from PDS employees in addition

to the requested documents, and that the government’s cooperating

employee witness had stolen documents from PDS, all of which

would allegedly have called into question the credibility of the government and its inside witness. 

An affidavit supporting an application for a search warrant is entitled to a strong presumption of validity. See Franks v. Delaware, 438

U.S. 154, 171 (1978). Consequently, in order to obtain an evidentiary

hearing on the integrity of an affidavit, a defendant must make "a substantial preliminary showing that a false statement knowingly and

intentionally, or with reckless disregard for the truth, was included by

the affiant in the warrant affidavit." Id. at 155-56. The "showing

‘must be more than conclusory’ and must be accompanied by a

detailed offer of proof." United States v. Colkley, 899 F.2d 297, 300

(4th Cir. 1990) (quoting Franks, 438 U.S. at 171)). "Mere negligence

in recording the facts relevant to a probable-cause determination is

not enough." Id. at 301 (internal quotation marks and alterations omitted). 

"[T]he false information must [also] be essential to the probable

cause determination: ‘if, when material that is the subject of the

alleged falsity or reckless disregard is set to one side, there remains

sufficient content in the warrant affidavit to support a finding of probUNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 5
able cause, no hearing is required.’" Id. at 300 (quoting Franks, 438

U.S. at 171-72). Thus, a Franks hearing "serves to prevent the admission of evidence obtained pursuant to warrants that were issued only

because the issuing magistrate was misled into believing that there

existed probable cause." United States v. Friedemann, 210 F.3d 227,

229 (4th Cir.), cert. denied, 121 S. Ct. 180 (2000). 

We are satisfied that the district court did not err in refusing to conduct a Franks hearing. Appellants failed to make a substantial preliminary showing that the FBI agent procuring the PDS search warrant

made any false statements knowingly and intentionally, or with reckless disregard for the truth, in the warrant affidavit. Nor do the alleged

omissions of which Appellants complain alter the probable cause

determination such that the warrant was issued by the magistrate

judge because he was misled into believing that probable cause

existed. First, the fact that a grand jury subpoena existed and that the

FBI intended to interview PDS employees at the time of the search

obviously had no effect upon whether probable cause existed to

search the PDS offices for documents which were properly included

within the warrant’s scope. Second, the alleged "stolen" documents

appear to consist of one document which the informant had reviewed

during the normal course of his employment, but which he actually

took from Appellant Webb’s locked desk drawer. When provided to

the FBI, the document was locked away and never used. Appellants

have made no claim that the documents relied upon in the warrant

affidavit were "stolen" or otherwise improperly obtained and no

showing that the document taken by the informant from the locked

desk drawer was ever relied upon by the government in any way.

And, Appellants have not demonstrated that this isolated act on the

part of the informant somehow operated to defeat the sufficiency of

the probable cause showing otherwise made or that it so seriously

undermined his credibility as to render the balance of the substantial

probable cause showing unreliable. 

Accordingly, we conclude that the district court did not err in refusing to hold a Franks hearing and in refusing to grant the motion to

suppress the evidence obtained as a consequence of the warrant executed at PDS. 

6 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
2.

Appellants next claim that the court should have suppressed all

fruits of the search at PDS because, by detaining and interviewing

PDS employees, the agents acted in "flagrant disregard" of the scope

of the search warrant, which authorized only the seizure of certain

documentary and computer records, rendering the otherwise legal

search violative of Appellants’ Fourth Amendment rights. See United

States v. Ruhe, 191 F.3d 376, 383 (4th Cir. 1999). We conclude that

the agents did not exceed the scope of the warrant by detaining and

interviewing the PDS employees and, in any event, that blanket suppression of all documentary evidence seized in accordance with the

warrant would not be required by the Fourth Amendment. 

As an initial premise, we find unpersuasive Appellant’s argument

that the agents unlawfully "seized" the PDS employees at the time of

the search. Because they were in possession of a valid warrant to

search the premises of PDS for evidence of the fraudulent billing

scheme, the agents at PDS necessarily had authority to secure the

premises and detain the employees temporarily in order to conduct the

search with minimal interference. Cf. Michigan v. Summers, 452 U.S.

692, 702-03 (1981) (noting that law enforcement officers searching

premises for contraband pursuant to a valid search warrant have the

authority to temporarily detain the occupants at the premises while the

search is being conducted); United States v. Smith, 704 F.2d 723, 725

(4th Cir. 1983) (same). In particular, the agents at PDS, suspecting a

widespread fraudulent billing practice within the company, had a

valid interest in assuring that the altered timesheets they expected to

find could be seized before any employee or manager had the opportunity to destroy them. Cf. Michigan, 452 U.S. at 702-03 (noting law

enforcement’s interest in detaining occupants in order to prevent

"frantic efforts to conceal or destroy evidence" which could pose a

risk of harm to both the police and the occupants). 

Even were we to conclude that the employees were improperly

detained and interviewed during the search, however, Appellants have

not made a showing that their Fourth Amendment rights were violated

by the agents’ actions in doing so. As a general rule, items properly

seized by agents executing a search warrant "may still be admitted

even when they are obtained at the same time as improperly seized

UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 7
items." Ruhe, 191 F.3d at 383; see also United States v. Squillacote,

221 F.3d 542, 556 (4th Cir. 2000), cert. denied, 121 S. Ct. 1601

(2001). Thus, "[w]hile all evidence which is not identified within a

search warrant may be excluded if the executing officer exceeds the

scope of the warrant, such exclusion does not extend to evidence actually named in the search warrant which is discovered during the

course of the search." United States v. Jones, 31 F.3d 1304, 1314 (4th

Cir. 1994). Properly seized evidence will be excluded only "[i]n

extreme circumstances . . . when the officers executing the warrant

exhibit a ‘flagrant disregard for its terms.’" Ruhe, 191 F.3d at 383

(quoting Jones, 31 F.3d at 1314). "The extraordinary remedy of blanket suppression of all evidence seized should be used only when the

violations of the warrant’s requirements are so extreme that the search

is essentially transformed into an impermissible general search,"

Squillacote, 221 F.3d at 556 (internal quotation marks omitted), such

as when officers have seized "large quantities of evidence clearly not

within the scope of the warrant," id.

In this case, of course, Appellants contend that the district court

erred in admitting the properly seized documents obtained at PDS

pursuant to the valid search warrant because the agents also interviewed employees while the search was being conducted. However,

there is no allegation that the agents ever exceeded the scope of the

search warrant in the seizure of the documents, and no statements

obtained from the employees were admitted as evidence during the

trial. Nor is there even an assertion that any documents ultimately

obtained or admitted into evidence were only able to be procured as

a result of statements made by the employees that day. Under the circumstances, we do not view the agents’ interviewing of employees

who had been detained during the execution of a search warrant as

acts taken in "flagrant disregard" of the terms of the search warrant.

Therefore, the extreme remedy of blanket suppression of the documentary evidence covered by the terms of the warrant was not

required and the district court properly denied Appellants’ motion to

suppress on this basis. 

3.

For similar reasons, we reject Appellants’ alternative contention

that the district court should have held an evidentiary hearing on the

8 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
motion to suppress because there was a factual dispute as to whether

the employees were forcibly detained and coercively questioned. Cf.

United States v. Taylor, 13 F.3d 786, 789 (4th Cir. 1994) (holding that

"[w]hen material facts that affect the resolution of a motion to suppress evidence seized during a warrantless search are in conflict, the

appropriate way to resolve the conflict is by holding an evidentiary

hearing after which the district court will be in a position to make

findings"). Appellants assert that they created a material factual dispute through the affidavits of several of the PDS employees who were

interviewed during the search. However, while there does appear to

be some discrepancy in the extent of the detention and questioning

employed by the agents, as well as in the perceptions of the employees concerning their rights at the time, we cannot say that the district

court erred in failing to conduct an evidentiary hearing. Even if we

were to accept the version of events as set forth in the employee affidavits, Appellants were not entitled to suppression of the timesheets

and other documents obtained in the search at PDS. Appellants

offered no support for their conclusory claim that the search warrant

was "mere subterfuge" to detain and interrogate the employees. And,

as noted previously, the documentary evidence obtained and sought

to be admitted was unquestionably within the scope of the search warrant, whereas the statements taken from the employees were not

admitted into evidence. 

B.

Webb next contends that the statements in which he admitted padding the invoices submitted to the prime contractors, given to law

enforcement agents during the January 20, 1999 interview at his

home, should have been suppressed because they were made during

a custodial interrogation without his having been advised of his right

not to incriminate himself. We disagree. 

It is, of course, well established that persons who are "‘taken into

custody or otherwise deprived of [their] freedom of action in any significant way’" must be given Miranda warnings before being questioned. Stansbury v. California, 511 U.S. 318, 322 (1994) (per

curiam) (quoting Miranda v. Arizona, 384 U.S. 436, 444 (1966)). In

Miranda, the Supreme Court afforded protection to the Fifth Amendment privilege against compelled self-incrimination "from the coerUNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 9
cive pressures that can be brought to bear upon a suspect in the

context of custodial interrogation." Berkemer v. McCarty, 468 U.S.

420, 428 (1984). To determine whether a statement is voluntary, we

look to see "whether the confession was extracted by any sort of

threats or violence, or obtained by any direct or implied promises,

however slight, or by the exertion of improper influence." Hutto v.

Ross, 429 U.S. 28, 30 (1976) (per curiam) (internal quotation marks

and alterations omitted). "[C]oercive police activity is a necessary

predicate to the finding that a confession is not voluntary." United

States v. Braxton, 112 F.3d 777, 780 (4th Cir. 1997) (internal quotation marks omitted). However, "[t]he mere existence of threats, violence, implied promises, improper influence, or other coercive police

activity . . . does not automatically render a confession involuntary.

The proper inquiry is whether the defendant’s will has been overborne

or his capacity for self-determination critically impaired." Id. at 780

(internal quotation marks omitted). "[C]ourts must consider the totality of the circumstances, including the characteristics of the defendant, the setting of the interview, and the details of the interrogation."

Id. at 781 (internal quotation marks omitted); see also United States

v. Howard, 115 F.3d 1151, 1154 (4th Cir. 1997) ("An individual is

‘in custody’ for Miranda purposes when, under the totality of the circumstances, the ‘suspect’s freedom of action is curtailed to a degree

associated with formal arrest.’" (quoting Berkemer, 468 U.S. at 440)).

When reviewing a motion to suppress admissions of a defendant on

the grounds that they were made during a custodial interrogation

without Miranda warnings, we must accept the district court’s findings of fact on the circumstances surrounding a confession unless

clearly erroneous, but must make an independent determination on the

issue of voluntariness. See Braxton, 112 F.3d at 781. 

On the morning of January 20th, two law enforcement agents traveled to Webb’s home and parked on the street to wait for him to leave

for work. Webb came out at approximately 7:00 a.m. and drove down

his driveway. The agents then pulled forward to block the driveway,

got out of their car, and asked to speak with Webb about his employment at PDS. Webb told the agents that he needed to take his son to

the bus stop at a local store first, but that they could follow him to

the store. The agents agreed. At the store, Webb dropped his son off

and entered the store alone. After returning with a cup of coffee,

Webb spoke briefly with the agents. The agents, however, told Webb

10 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
that they would prefer to return to Webb’s home for the interview,

and Webb agreed. After returning to Webb’s home, Webb and the

agents began to speak on Webb’s deck, but because of the January

weather, the agents asked to go inside. The men then entered Webb’s

home, where Webb closed his dog in another room before sitting

down for the interview. Webb also paused to make a telephone call

to his employer to let them know he would be late for work. The

interview lasted approximately one and one-half hours, during which

time Webb admitted padding the VDOT bills on PDS’s behalf. 

After receiving evidence concerning the events on that day, the district court found that the officers were not required to give Webb

Miranda warnings and that the statements made by Webb during the

interview in his home were voluntary. Considering the totality of the

circumstances, we agree. Prior to the interview at his home, Webb

was never placed under arrest, handcuffed, or otherwise restrained.

Webb was interviewed in familiar surroundings, in his own home, for

a reasonable period of time, where his movements were not restricted.

No threats or promises were made to obtain his cooperation, nor was

intimidation brought to bear upon him. Indeed, Webb testified that he

agreed to speak with the agents both at the store and on the deck of

his home. 

Nonetheless, Webb asserts on appeal that his admissions were not

made voluntarily because one agent got out of his car "brandishing"

a sidearm when Webb was first leaving his home, the agents insisted

on going inside instead of staying on the deck when they returned for

the interview, and he eventually asked for an attorney. We are unpersuaded. First, Webb’s own account of the events that morning do not

substantiate Appellants’ exaggerated claim that "[o]ne of the agents

got out of the car brandishing his sidearm." Appellants’ Brief at 17.

Webb testified, in response to a question as to whether he knew the

agent approaching his car was a law enforcement officer, that he "notice[d] that [the officer] was wearing a side arm," J.A. 337 (emphasis

added), but made no claim that a side arm was "brandished." Second,

like the district court, we cannot infer that the agents’ request that the

interview take place inside Webb’s home instead of on the deck

somehow turned the interview coercive as opposed to consensual in

nature, especially given the fact that it took place in the month of January. Third, and with regard to the only matter in direct dispute, we

UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 11
cannot say that the district court’s finding that the evidence was insufficient to find that Webb requested an attorney was clearly erroneous.

In sum, we are at best left with Webb’s after-the-fact assertion that

he felt he had little or no choice but to accede to the agents’ request

for an interview, which is entitled to limited consideration given the

totality of the circumstances before us. See Braxton, 112 F.3d at 781

("Subsequent testimony by an accused about his prior subjective mental impressions and reactions must be carefully scrutinized, as such

testimony is always influenced by his self-interest." (internal quotation marks and alterations omitted)). Webb failed to establish that the

law enforcement agents were so intimidating or overpowering as to

overcome his will to resist. Because this was not a custodial situation,

the district court did not err in concluding that Miranda warnings

were not required and, consequently, in refusing to suppress Webb’s

statements. 

C.

PDS separately challenges the district court’s admission of the

incriminating statements made by Webb to the law enforcement

agents on January 20, 1999, as well as Webb’s statements made to the

government informant and tape-recorded by the informant prior to

that time. Specifically, PDS asserts that because Webb did not testify

at trial, the admission of Webb’s statements against PDS violated

PDS’s Sixth Amendment right to confrontation. See Bruton v. United

States, 391 U.S. 123, 126 (1968). The district court ruled that the

statements were admissible under Rule 801(d)(2)(D) of the Federal

Rules of Evidence and that their admission into evidence did not violate PDS’s Sixth Amendment right to confrontation. 

"Because a corporation can act only through its employees, a statement by a corporate official . . . can certainly be considered an admission by a corporate defendant." United States v. Brothers Constr. Co.,

219 F.3d 300, 310-11 (4th Cir.), cert. denied, 121 S. Ct. 628 (2000).

And, under Rule 801(d)(2)(D), an out-of-court statement offered as

evidence at trial is not considered hearsay if "[t]he statement is

offered against a party and is . . . a statement by the party’s agent or

servant concerning a matter within the scope of the agency or

employment, made during the existence of the relationship." Fed. R.

12 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
Evid. 801(d)(2)(D). There is no dispute that the statements Webb

made to the government informant (a co-employee) and to the law

enforcement agents concerned Webb’s billing practices and procedures at PDS while he was employed as the manager of the photogram department. Thus, the statements concerned matters within the

scope of Webb’s employment with PDS, made during the existence

of the employment relationship, and were admissible against PDS

under Rule 801(d)(2)(D). See Brothers, 219 F.3d at 309-311 (holding

that grand jury testimony of officer and in-house counsel for corporate defendant was properly admitted as admission against the corporate defendant). Indeed, PDS seemingly agrees that Webb’s

statements would be admissible under the provisions of Rule

801(d)(2)(D), contending instead that the admission of Webb’s statements against PDS was improper because it nevertheless ran afoul of

PDS’s constitutional right of confrontation. We disagree that admission of the statement was error. 

The Confrontation Clause of the Sixth Amendment guarantees the

right of a criminal defendant "to be confronted with the witnesses

against him." U.S. Const. amend. VI. But while "the Confrontation

Clause reflects a preference for face-to-face confrontation at trial,"

Ohio v. Roberts, 448 U.S. 56, 63 (1980) (footnote omitted), it does

not foreclose the admission of all hearsay statements when the declarant is unavailable, see id. at 64. Rather, "[r]eflecting its underlying

purpose to augment accuracy in the factfinding process by ensuring

the defendant an effective means to test adverse evidence," the Confrontation Clause does not prohibit the introduction of hearsay statements of an unavailable declarant which are "marked with such

trustworthiness that there is no material departure from the reason of

the general rule." Id. at 65 (internal quotation marks omitted). "‘The

focus of the Court’s concern has been to insure that there are indicia

of reliability which have been widely viewed as determinative of

whether the statement may be placed before the jury though there is

no confrontation of the declarant, and to afford the trier of fact a satisfactory basis for evaluating the truth of the prior statement.’" Id.

(internal citation omitted) (quoting Mancusi v. Stubbs, 408 U.S. 204,

213 (1972)). From these principles, the Court has held that a hearsay

statement is admissible and does not violate the Confrontation Clause

where the witness is unavailable and the statement bears sufficient

"indicia of reliability" in that it falls within a "firmly rooted hearsay

UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 13
exception," or has "particularized guarantees of trustworthiness." Id.

at 65-66; see also Lilly v. Virginia, 527 U.S. 116, 124-25 (1999) (plurality). 

First, a hearsay exception is "firmly rooted" if it "rest[s] upon such

solid foundations that admission of virtually any evidence within [it]

comports with the ‘substance of constitutional protection.’" Roberts,

448 U.S. at 66. For example, in United States v. Saks, 964 F.2d 1514

(5th Cir. 1992), the Fifth Circuit identified several "firmly rooted"

exceptions to the hearsay prohibition that would serve as exceptions

to Bruton: the hearsay exception for co-conspirators in Rule

801(d)(2)(E), the "spontaneous declaration" exception in Rule 803(2),

and the "medical examination" exception in Rule 803(4) of the Federal Rules of Evidence. See id. at 1525; White v. Illinois, 502 U.S.

346, 356 (1992); see also Bourjaily v. United States, 483 U.S. 171,

183 (1987) (holding that "no independent inquiry into reliability is

required when the evidence falls within a firmly rooted hearsay

exception" like that for co-conspirators under Rule 801(d)(2)(E)

(internal quotation marks omitted)); United States v. Shores, 33 F.3d

438, 442 (4th Cir. 1994) (observing that Bruton does not apply if the

non-testifying co-defendant’s statement is admissible as a nonhearsay

statement under Fed. R. Civ. P. 801(d)(2)(E)); Folston v. Allsbrook,

691 F.2d 184, 187 (4th Cir. 1982) (same). 

Failing to see any meaningful distinction between Rule

801(d)(2)(E) and Rule 801(d)(2)(D) for purposes of Bruton, the Saks

court held that the agency exception set forth in Rule 801(d)(2)(D) "is

equally rooted in our jurisprudence," Saks, 964 F.2d at 1525, and,

therefore, "if statements meet the requirements of Rule 801(d)(2)(D)

. . . the Confrontation Clause is satisfied," id. at 1526; see also United

States v. Walker, 148 F.3d 518, 522 (5th Cir. 1998). Consequently,

the court ruled that the prior testimony of defendant’s business partner, offered in a prior civil suit pertaining to the alleged criminal acts,

was admissible against the defendant in his subsequent criminal suit.

See Saks, 964 F.2d at 1526. 

PDS asserts, however, that the Saks court overlooked the fact that

current Rule 801(d)(2)(D) broadened the traditional exception for

agents’ statements in our jurisprudence, which only allowed for the

admission of statements "made by the agent acting in the scope of his

14 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
employment," and not for all "statements related to a matter within

the scope of the agency or employment." Fed. R. Evid. 801(d)(2)(D)

advisory committee’s note; see also United States v. King, 134 F.3d

1173, 1174 n.1 (2d Cir. 1998) (noting that "[s]ection 801(d)(2)(D)

broaden[ed] the prior definition of admissible statements of agents,"

but finding it unnecessary to "decide whether this broadening renders

the current version not ‘firmly rooted’ as a hearsay exception, for purposes of the Confrontation Clause" (internal citation omitted)). Thus,

PDS contends that while statements made by Webb to his coemployee during the course of his employment might fall within the

historical exception to the hearsay rule, Webb’s statements to the law

enforcement agents during the interview at his home would not fall

within this traditional, or "firmly rooted," exception because he was

not acting within the scope of his employment at the time he made

the statements. 

Although PDS correctly notes that Rule 801(d)(2)(D) broadened

the original exception for the admissibility of hearsay statements

made by an agent against the agent’s employer, we need not decide

whether Webb’s statements to the law enforcement officials in his

home, which clearly fall within the current hearsay exception of Rule

801(d)(2)(D), would also fall within a "firmly rooted" exception to the

hearsay rule. Even were we to assume that they do not, the statements

contain "particularized guarantees of trustworthiness" such that they

need not be subjected to the adversarial testing normally required by

the Confrontation Clause. 

PDS disagrees, asserting that Webb’s statements cannot satisfy the

second prong of the Ohio v. Roberts test because the Court has firmly

held to the general rule that an accomplice’s confession that incriminates a defendant is presumptively unreliable. See Lee v. Illinois, 476

U.S. 530, 541 (1986). But while PDS’s recitation of the general rule

is an accurate one, it fails to recognize that the Court’s holding in this

regard was premised upon the "basic understanding that when one

person accuses another of a crime under circumstances in which the

declarant stands to gain by inculpating another, the accusation is presumptively suspect and must be subjected to the scrutiny of crossexamination." Id. In other words, when a defendant, in the hopes of

helping himself, has made a statement which shifts or spreads blame

to another defendant or accomplice, the Court has held that statement

UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 15
does not fall within a firmly rooted exception to the hearsay rule and

falls outside the realm of trustworthy hearsay statements in general.

See Lilly, 527 U.S. at 134. 

This presumption of unreliability, however, is just that — a presumption. It may be rebutted if the statement "is supported by a showing of particularized guarantees of trustworthiness." Lee, 476 U.S. at

543 (internal quotation marks omitted). And, consistent with the basis

upon which the presumption rests, the Supreme Court has also recognized that "the very fact that a statement is genuinely selfinculpatory" — rather than an attempt to shift blame or curry favor

— "is itself one of the ‘particularized guarantees of trustworthiness’

that makes a statement admissible under the Confrontation Clause."

Williamson v. United States, 512 U.S. 594, 605 (1994). 

We hold that the self-inculpatory statements of Webb contain such

"particularized guarantees of trustworthiness" and were properly

admitted as evidence against PDS. First, neither Lee nor Lilly

involved the question of the admissibility of an employee’s inculpatory statements against his corporate employer, or the question of the

criminal liability of the corporate employer based upon the agency

relationship with the declarant. Indeed, aside from the question of

whether Rule 801(d)(2)(D) is a firmly rooted hearsay exception, we

note that the commentary to the current version of the Rule itself recognizes "the reliability and reasonableness of admitting" inculpatory

statements made by an employee concerning the very tasks that "he

was hired to do." 30B Michael H. Graham, Federal Practice & Procedure § 7023 (2000). The inherent reliability and reasonableness of

admitting such statements as evidence against the employer is even

more compelling where, as here, the statement is inculpatory of the

employee and, thereby, his employer, but is not exculpatory of the

employee. Webb’s statements admitting that he inflated the VDOT

invoices were genuinely self-inculpatory and, while also inculpatory

of PDS, the statements in no way attempted to shift blame to another

or curry favor at the expense of others. Nor are we persuaded by

PDS’s argument that we should regard Webb’s self-inculpatory statements as unreliable because Webb made a reference to his predecessor at PDS engaging in similar actions. Webb’s reference to his

predecessor was fleeting at best and, instead of attempting to shift

blame, Webb implicated himself in criminal conduct from the

16 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
moment he became the photogram manager to the exclusion of all

others. 

For the same reasons, we reject PDS’s claim that because Webb’s

statements were procured either by law enforcement agents or by the

informant, the presumption of unreliability cannot be rebutted. This

argument is premised upon the plurality’s statement in Lilly that "[i]t

is highly unlikely that the presumptive unreliability that attaches to

accomplices’ confessions that shift or spread blame can be effectively

rebutted when . . . the government is involved in the statements’ production, and when the statements describe past events and have not

been subjected to adversarial testing." Lilly, 527 U.S. at 137 (emphasis added). Relying upon this statement, PDS argues that an accomplice’s hearsay statement cannot be admitted against a defendant

whenever the government has been involved in the production of the

statement. We do not read Lilly so broadly, nor are we inclined to

adopt such an all-encompassing rule of exclusion. Webb’s selfinculpatory statements, although made to law enforcement agents and

the agents’ informant, made no attempt to "shift or spread blame" to

another.

In summary, Webb’s statements are not analogous to those statements made by a defendant who seeks to shift blame to another for

conduct in which the two were involved, thereby calling the reliability

of the statements about his co-defendant into question.1 In such cases,

"[t]he danger against which the Confrontation Clause was erected —

the conviction of a defendant based, at least in part, on presumptively

unreliable evidence —" is present. Lee, 476 U.S. at 543. Here,

Webb’s statements are not fairly characterized as presumptively unreliable and bore sufficient "indicia of reliability" to be admissible

against his employer. Because Webb’s self-inculpatory admissions to

the agents are among those statements which carry "particularized

1PDS also claims that Webb made the statements in a setting that

Webb perceived to be coercive, possibly creating an incentive for Webb

to tell the agents what he may have thought they wanted to hear to get

them to leave. Webb and PDS, of course, failed to substantiate the claim

that Webb’s interview by the two agents in his home was "coercive" in

nature, and even Webb never claimed that he proceeded to make selfinculpatory statements just to get the agents to leave. 

UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 17
guarantees of trustworthiness," they were properly admissible under

the Confrontation Clause. Accordingly, the district court did not err

in admitting Webb’s statements against PDS under Rule

801(d)(2)(D), and did not violate PDS’s rights under the Confrontation Clause in doing so. 

III. Mail Fraud Convictions

A.

Appellants challenge their convictions for mail fraud under 18

U.S.C.A. § 1341, asserting (1) that Congress did not intend for the

mail fraud statute to apply to mailings placed with private or commercial interstate carriers for the purpose of executing a fraudulent

scheme if the mailing itself only actually travels intrastate, and (2)

that if the statute is interpreted otherwise, the statute exceeds Congress’s power under the Commerce Clause. 

The mail fraud statute provides in pertinent part that:

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, . . . for the purpose of executing such scheme or

artifice or attempting so to do, places in any post office or

authorized depositor for mail matter, any matter or thing

whatever to be sent or delivered by the Postal Service, or

deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial

interstate carrier, or takes or receives therefrom, any such

matter or thing, or knowingly causes to be delivered by mail

or such carrier 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 under this title or imprisoned not more than five years,

or both. 

18 U.S.C.A. § 1341 (emphasis added). 

18 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
In this case, the fraudulent invoices prepared by PDS on the VDOT

jobs were always mailed from PDS’s offices in Virginia to VDOT’s

prime contractors in Virginia through either the United States Postal

Service or the United Parcel Service ("UPS"). Although the government was unable to present evidence as to which carrier was used for

any particular invoice or that any particular invoice actually crossed

state lines in route from PDS to the prime contractor, it did successfully prove that one of these interstate carriers (the Postal Service or

UPS) was always used to execute the fraudulent overbilling scheme.2

The district court concluded that the jurisdictional requirement of the

mail fraud statute was satisfied because UPS was a commercial interstate carrier and that, although the government could not establish that

the invoices deposited for delivery with UPS actually traveled interstate, such was not required. We agree. 

1.

We first address Appellants’ assertion that Congress did not intend

for the "private or commercial interstate carrier" provision to extend

coverage of the mail fraud statute to the use of interstate carriers when

the item deposited for delivery to further the fraudulent scheme actually travels only intrastate. Specifically, they assert that the language

of § 1341 is ambiguous as to the question of whether it applies to

intrastate deliveries of matters or things deposited with a private or

commercial interstate carrier, or only to matters or things delivered

interstate, that the legislative history counsels that we adopt the more

narrow construction, and that as a last resort we should apply the rule

of lenity to overturn their convictions. 

Our first step in analyzing the meaning of the statute is to "determine whether the language at issue has a plain and unambiguous

meaning with regard to the particular dispute in the case." Robinson

2Relevant to this issue, the jury was instructed that to convict of mail

fraud, it must find "beyond a reasonable doubt that the use of the mails

or the interstate commercial carrier furthered or advanced or carried out

in some way the scheme or plan to defraud or to obtain money or property by means of fraudulent representations," and also that "an interstate

commercial carrier is a carrier . . . engaged in transporting persons or

property across state lines." J.A. 556-57. 

UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 19
v. Shell Oil Co., 519 U.S. 337, 340 (1997). "If the language is plain

and the statutory scheme is coherent and consistent, we need not

inquire further." Holland v. Big River Minerals Corp., 181 F.3d 597,

603 (4th Cir. 1999) (internal quotation marks omitted), cert. denied,

528 U.S. 1117 (2000). "The plainness or ambiguity of the statutory

language is determined by reference to the language itself, the specific context in which that language is used, and the broader context

of the statute as a whole." Robinson, 519 U.S. at 341. As a general

rule, only "[i]f the statutory language is ambiguous[ ] [do] we look

beyond the language of the statute to the legislative history for guidance." Holland, 181 F.3d at 603 (internal quotation marks omitted).

And, then, "[i]f congressional intent is not apparent from an examination of the legislative history, we apply the traditional tools of statutory construction." Id. (internal quotation marks omitted). 

Prior to 1994, the mail fraud statute criminalized the use of the

United States Postal Service to execute a fraudulent scheme, but had

no application to private or commercial interstate carriers. See United

States v. Lefkowitz, 125 F.3d 608, 617 (8th Cir. 1997). Then, as now,

the statute made no distinction between intrastate and interstate mailings, and it had been extended to both as a proper exercise of the

Postal Power. See United States v. Elliott, 89 F.3d 1360, 1364 (8th

Cir. 1996) (holding that "the jurisdictional basis of the mail fraud statute is grounded in the Postal Power and therefore necessarily encompasses all items passing through the United States mails, even if their

passage is purely intrastate"). 

In 1994, however, Congress broadened the application of the mail

fraud statute to also criminalize "deposit[ing] or caus[ing] to be

deposited any matter or thing whatever to be sent or delivered by any

private or commercial interstate carrier" for the purpose of carrying

out a scheme or artifice to defraud. Violent Crime Control and Law

Enforcement Act of 1994, Pub. L. No. 103-322, § 250006, 108 Stat.

1796, 2087 (1994) (emphasis added). Although the amendment was

added pursuant to the Commerce Clause power, and was obviously

intended to extend the mail fraud statute to reach those defendants

who use commercial interstate carriers such as UPS and Federal

Express in lieu of the United States Postal Service, Congress added

no distinction which would serve to exempt from the statute’s

20 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
intended reach intrastate mailings handled by such private or commercial interstate carriers. 

We believe that the unambiguous language of current § 1341 criminalizes all mailings in furtherance of a fraudulent scheme if the mailings are placed with either the United States Postal Service or with

other private or commercial mail delivery services which operate

interstate, regardless of whether any particular mailing actually

crosses state lines. Had Congress intended to criminalize only interstate deliveries by such interstate private or commercial carriers, and

thereby create a different jurisdictional requirement when such carriers are used in lieu of the United States Postal Service, it could easily

have done so. For example, the drafters need only have inserted the

words "interstate" or "across state lines" immediately after the phrase

"sent or delivered." Instead, Congress elected to use virtually identical

language as that dealing with the use of the United States mail; i.e.,

imposing criminal liability when one "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 deposits or causes to

be deposited any matter or thing whatever to be sent or delivered by

any private or commercial interstate carrier" for the purpose of executing the scheme to defraud. 18 U.S.C.A. § 1341. (emphasis added).

Consequently, we find no indication that Congress, in amending a

statute which criminalizes depositing things with the United States

Postal Service for delivery, interstate or intrastate, intended to limit

the extension to private and commercial interstate carriers for only

interstate deliveries. On the contrary, we think it obvious that Congress intended to prohibit the use of private and commercial interstate

carriers to further fraudulent activity in the same way such use of the

United States mail had long been prohibited. 

Although we discern no ambiguity in congressional intent to criminalize such conduct, we are also unpersuaded by Appellants’ assertion

that the legislative history of the 1994 amendment indicates that Congress did not intend to extend the reach of the mail fraud statute to

situations in which a private or commercial interstate carrier delivers

the particular mailing only intrastate. Courts are to "venture beyond

the plain meaning of a statute only in those rare instances in which

there is ‘a clearly expressed legislative intent to the contrary.’" Holland, 181 F.3d at 603 n.2 (quoting Russello v. United States, 464 U.S.

UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 21
16, 20 (1983)). Although Appellants argue that references were made

in the legislative history to increased interstate deliveries by facilities

other than the United States Postal Service as a reason to amend the

statute, they candidly acknowledge that the legislative history is silent

regarding whether the amendment was intended to be applicable only

to interstate deliveries by such private and commercial interstate carriers. 

For similar reasons, we reject Appellants’ argument that we should

apply the rule of lenity to overturn the mail fraud convictions. The

rule of lenity generally calls for courts to construe ambiguous criminal statutes against the government and in favor of the defendant. See

United States v. Hall, 972 F.2d 67, 69 (4th Cir. 1992) ("Under the rule

of lenity any criminal statute . . . must be construed in favor of the

accused and against the government if it is ambiguous"). However, "a

provision is [not] ‘ambiguous for purposes of lenity merely because

it [is] possible to articulate a construction more narrow than that

urged by the Government.’" See United States v. Ehsan, 163 F.3d

855, 857 (4th Cir. 1998) (alterations in original) (quoting Moskal v.

United States, 498 U.S. 103, 108 (1990). And, "[t]he simple existence

of some statutory ambiguity . . . is not sufficient to warrant application of th[e] rule, for most statutes are ambiguous to some degree."

Muscarello v. United States, 524 U.S. 125, 138 (1998). "Rather, there

must be a ‘grievous ambiguity or uncertainty in the language and

structure of the Act, such that even after a court has seize[d] everything from which aid can be derived, it is still left with an ambiguous

statute.’" Ehsan, 163 F.3d at 858 (alteration in original) (quoting

Chapman v. United States, 500 U.S. 453, 463 (1991). Because we

conclude that the meaning of § 1341 is unambiguous, the rule of lenity is inapplicable. The statute prohibits the act of depositing or causing to be deposited any matter or thing to be delivered by the Postal

Service or by any private or commercial interstate carrier for the purpose of executing a scheme or artifice to defraud, irrespective of

whether the matter or thing deposited for delivery is intended to or

acually does travel interstate or intrastate. 

2.

Having determined that the mail fraud statute applies to the use of

private and commercial interstate carriers to execute a fraudulent

22 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
scheme, regardless of whether the particular matter deposited for

delivery actually travels across state lines, we turn to the question of

whether the mail fraud statute, when applied to the use of a private

or commercial interstate carrier employed solely to deliver an item

intrastate, is a permissible exercise by Congress of its power under the

Commerce Clause. U.S. Const. art. I, § 8, cl. 3 ("Congress shall have

the Power . . . To regulate Commerce . . . among the several States.

. . ."). 

In United States v. Lopez, 514 U.S. 549 (1995), the Supreme Court

identified three broad categories of activity that Congress may regulate under its commerce power. "First, Congress may regulate the use

of the channels of interstate commerce. Second, Congress is empowered to regulate and protect the instrumentalities of interstate commerce, or persons or things in interstate commerce, even though the

threat may come only from intrastate activities. Finally, Congress’s

commerce authority includes the power to regulate those activities

having a substantial relation to interstate commerce, i.e., those activities that substantially affect interstate commerce." Id. at 558-59 (citations omitted). The district court concluded that the 1994 amendment

to the mail fraud statute to encompass private and commercial interstate carriers was a permissible exercise of Congress’s authority under

the second Lopez category, i.e., the authority to regulate instrumentalities of interstate commerce. We agree. 

Private and commercial interstate carriers are facilities or instrumentalities of interstate commerce, which Congress can regulate and

protect from harm, "even though the [particular] threat may come

only from [an] intrastate activit[y]." Lopez, 514 U.S. at 558; cf.

Shreveport Rate Cases, 234 U.S. 342, 351 (1914) (noting that Congress’s authority to protect and advance interstate commerce extends

to interstate carriers as instruments of interstate commerce: "the fact

that carriers are instruments of intrastate commerce, as well as interstate commerce, does not derogate from the complete and paramount

authority of Congress over the latter, or preclude the Federal power

from being exerted to prevent the intrastate operations of such carriers

from being made a means of injury to that which has been confided

to Federal care."); Southern Ry. Co. v. United States, 222 U.S. 20, 27

(1911) (noting that railroads "are highways of both interstate and

intrastate commerce" and that the Safety Appliance Act may be made

UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 23
applicable to all railway vehicles, even those used only in intrastate

commerce, under Congress’s plenary power to regulate interstate

commerce). Thus, when Congress acts to regulate or protect an instrumentality of interstate commerce under the second Lopez category,

"federal jurisdiction is supplied by the nature of the instrumentality or

facility used, not by separate proof of interstate movement," and "federal jurisdiction based on intra state use of inter state facilities is an

appropriate exercise of the commerce power." United States v. Marek,

238 F.3d 310, 317 (5th Cir. 2001) (footnotes omitted), petition for

cert. filed, 69 U.S.L.W. 3673 (U.S. Apr. 4, 2001) (No. 00-1526). 

In Marek, a defendant’s intrastate use of Western Union, an instrumentality of interstate commerce, to transfer payment to a hit man

was found to be sufficient to permit the court to exercise jurisdiction

under the federal murder-for-hire statute, 18 U.S.C.A. § 1958 (West

2000), even though the wire transfer was initiated in Houston, Texas

and received in Harlingen, Texas, and the government introduced no

evidence that the transmission ever actually crossed the Texas state

line en route between the two points. After determining that the language of the statute applied to such intrastate uses of interstate instrumentalities, the court concluded that the statute was also a permissible

exercise of Congress’s power under the Commerce Clause. As support, the court endorsed the similar conclusion reached by the district

court in this case with respect to the 1994 amendment to the mail

fraud statute:

[T]hrough passage of a 1994 amendment to the federal mail

fraud statute, Congress expanded 18 U.S.C. § 1341 to reach

private interstate commercial carriers, such as Emery, DHL,

and Federal Express, in addition to the U.S. Postal Service.

Although no circuit court has addressed whether that

amendment requires the crossing of state lines to establish

jurisdiction, one district court recently held that the

amended statute does cover "purely intrastate delivery of

mails by private or commercial carriers as long as those carriers engage in interstate deliveries. . . . While jurisdiction

lies only under the Commerce Clause for the use of private

or commercial carriers, Congress may still regulate their

intrastate activities because they are instrumentalities of

interstate commerce." Here again, the conclusion is appro24 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
priate because intrastate use of interstate facilities is properly regulated under Congress’s second-category Lopez

power. 

Marek, 238 F.3d at 318 (footnote omitted) (quoting Photogrammetric

Data Services, 103 F. Supp. 2d at 882). 

Other courts have reached similar conclusions, upholding convictions based upon criminal statutes which serve to protect instrumentalities of interstate commerce even though the specific conduct

involved arose from intrastate activities. For example, in United

States v. Baker, 82 F.3d 273 (8th Cir. 1996), the Eighth Circuit upheld

the conviction of a police officer under the Travel Act, see 18

U.S.C.A. § 1952(a) (West 2000), premised upon extortion activity in

which the officer escorted his victim, a man he had arrested, to an

automatic teller machine to withdraw money in return for being

released from custody. Because an interstate network of automatic

teller machines is a facility in interstate commerce, the court held, it

falls within the second prong of Lopez, subject to regulation even

though the withdrawal in question triggered an entirely intrastate electronic transfer. See id. at 275-76. Similarly, in United States v. Gilbert, 181 F.3d 152 (1st Cir. 1999), the court upheld a conviction

under 18 U.S.C.A. § 844(e) (West 2000), premised upon the use of

a telephone to make a bomb threat, even though there was no evidence that the threat was routed through an interstate system.

"[B]ecause a telephone is an instrumentality of interstate commerce,"

the court held, "this alone is a sufficient basis for jurisdiction based

on interstate commerce." Id. at 158; see also United States v. Heacock, 31 F.3d 249, 255 (5th Cir. 1994) (holding that "whenever a person uses the United States Post Office to deposit, to transport, and to

deliver parcels, money, or other material by means of the mail, that

person clearly and unmistakably has used a ‘facility in interstate commerce,’ irrespective of the intrastate destination of the item mailed,"

and that such intrastate use satisfies the jurisdictional requirement of

the Travel Act); United States v. Clayton, 108 F.3d 1114, 1117 (9th

Cir. 1997) (holding that because cellular telephones and cellphone ID

numbers are instrumentalities of interstate commerce, protectable

under the second category of Lopez, no further inquiry was necessary

to sustain conviction under 18 U.S.C.A. § 1029(a) (West 2000));

United States v. Kunzman, 54 F.3d 1522, 1527 (10th Cir. 1995) ("As

UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 25
long as the instrumentality used is itself an integral part of an interstate system, Congress may regulate intrastate activities involving the

use of the instrumentality. . . .")3

In its current form, the mail fraud statute prohibits one from "deposit[ing] or caus[ing] to be deposited any matter or thing whatever to

be sent or delivered by any private or commercial interstate carrier"

for the purpose of executing a scheme or artifice to defraud. 18

U.S.C.A. § 1341. As such, it too constitutes a permissible exercise of

Congress’s power to protect interstate facilities from being utilized to

accomplish fraudulent goals. 

3.

Because we find the language of the mail fraud statute to be unam3We pause briefly to address Appellants’ suggestion that Congress

intended the mail fraud statute, like the wire fraud statute, to be a regulation of the "use of channels of interstate commerce" under the first Lopez

category and, therefore, that we should look to the wire fraud statute,

which requires proof that a wiring actually crossed state lines, for guidance in interpreting the mail fraud statute. See e.g., United States v.

Darby, 37 F.3d 1059, 1067 (4th Cir. 1994) (holding that "while the Government was required to prove that [the defendant]’s phone call crossed

a state line . . ., the Government did not need to prove that [the defendant] knew of the interstate nexus."). 

In contrast to the mail fraud statute, the wire fraud statute criminalizes

a communication in interstate commerce, providing that it is a crime to

"transmit[ ] or cause[ ] to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings,

signs, signals, pictures, or sounds for the purpose of executing [a]

scheme or artifice" to defraud, 18 U.S.C.A. § 1343 (West 2000) (emphasis added), whereas the mail fraud statute criminalizes the act of depositing or causing to be deposited "any matter or thing whatever to be sent

or delivered by any private or commercial interstate carrier," 18 U.S.C.A.

§ 1341. In other words, the language of the wire fraud statute requires

that a communication actually travel "in interstate or foreign commerce,"

whereas the language of the mail fraud statute requires only that a mailing be deposited with an "interstate carrier." Given these significant textual differences, we do not find the wire fraud statute to be helpful to our

inquiry. 

26 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
biguous, and that Congress’s authority under the Commerce Clause

extends to protect the instrumentalities of interstate commerce from

being used to further fraudulent activity even if the use itself is purely

intrastate, the rule of constitutional doubt raised by Appellants is likewise inapplicable. As Appellants note, "where a statute is susceptible

of two constructions, by one of which grave and doubtful constitutional questions arise and by the other of which such questions are

avoided, our duty is to adopt the latter." Jones v. United States, 529

U.S. 848, 857 (2000) (internal quotation marks omitted). However,

we do not view the language of § 1341 as susceptible to the construction advanced by Appellants, at least not without considerable strain;

nor do we discern a "grave and doubtful constitutional question[ ]" to

arise from the construction we have settled on. Id.

We are similarly unpersuaded by Appellants’ suggestion that Congress’s decision to protect private and interstate commercial carriers,

in addition to the United States Postal Service, from being utilized to

further fraudulent schemes where the use itself is intrastate, runs afoul

of the respected federal-state balance. See e.g., id. at 858 (holding that

application of federal arson statute to a private home would federalize

a typically state crime and, thereby, "significantly change[ ] the

federal-state balance in the prosecution of crimes") (internal quotation

marks omitted); United States v. Bass, 404 U.S. 336, 349 (1971) (noting policy that "unless Congress conveys its purpose clearly, it will

not be deemed to have significantly changed the federal-state balance.

Congress has traditionally been reluctant to define as a federal crime

conduct readily denounced as criminal by the States."). The mail

fraud statute prohibits use of the United States Postal Service and

other private or commercial interstate carriers to further a fraudulent

scheme; it does not attempt to criminalize such injurious intrastate

use of a private or commercial intrastate carrier or delivery service.

4.

To conclude, we hold that the mail fraud statute criminalizes the

use of private and commercial interstate carriers to execute fraudulent

schemes to the same extent that the statute criminalizes such use of

the United States mail. The jurisdictional element of the mail fraud

statute is satisfied by defendant’s act of depositing the matter or thing

with a private or commercial interstate carrier, even though the delivUNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 27
ery may be only intrastate. We also hold that criminalizing such conduct is a permissible exercise of Congress’s power under the

Commerce Clause to protect private and commercial interstate carriers from the burdens of being used to execute fraudulent schemes. 

B.

Appellants also challenge their mail fraud convictions on the

grounds that the district court’s mail fraud instruction impermissibly

broadened the charges in the indictment. Specifically, Appellants

assert that the district court erred in failing to instruct the jury that it

must find that the four invoices specified in the indictment were

delivered by mail or interstate carrier and that they were false or

fraudulent. This failure, Appellants assert, broadened the possible

bases for conviction beyond the grounds alleged in the indictment,

thereby constructively amending the indictment and constituting error

per se. See e.g., United States v. Randall, 171 F.3d 195, 203 (4th Cir.

1999), cert. denied, 121 S. Ct. 248 (2000); United States v. Floresca,

38 F.3d 706, 710 (4th Cir. 1994) (en banc). We disagree. 

The indictment charged Appellants with four counts of mail fraud.

After describing the scheme to defraud, the indictment goes on to

identify four specific dates on which the Appellants deposited four

specific invoices for delivery by mail or interstate commerce carrier

"for the purpose of executing and attempting to" execute the scheme

to defraud. J.A. 47. The indictment did not charge that the four individual invoices sent by mail or interstate carrier were themselves false

or fraudulent, but rather only that the over-billing scheme was false

and fraudulent and that the mailings were in furtherance of the

scheme. Nor does the mail fraud statute require such a charge. 

It is well-settled that a conviction for mail fraud requires a showing

of (1) knowing participation in a scheme to defraud, and (2) a mailing

in furtherance of the scheme. See United States v. Dozie, 27 F.3d 95,

97 (4th Cir. 1994) (per curiam). The use of the mails, however, need

not be an essential element of the scheme to be part of the execution

of the fraud. Rather, it need only "be incident to an essential part of

the scheme or a step in the plot." Schmuck v. United States, 489 U.S.

705, 710-11 (1989) (internal citations and quotation marks omitted).

Accordingly, Appellants’ mail fraud convictions did not require the

28 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
government to prove that the four invoices referenced in the indictment were false or fraudulent, but only that they were placed in the

mails in furtherance of the fraudulent scheme. See id. at 715 (noting

that "‘innocent’ mailings — ones that contain no false information —

may supply the mailing element"). 

Also, while the district court’s standard mail fraud instruction did

not specifically refer to the invoices set forth in the indictment, the

indictment provided to the jury clearly referenced and described the

four invoices which served as the basis for the four separate mail

fraud counts and identified each as a separate count, and the jury was

instructed that it must consider each alleged offense or count separately. The court also instructed the jury that it must determine that

the Appellants used the mails or an interstate commercial carrier to

advance the scheme to defraud, and that the government must prove

that the mails or an interstate commercial carrier were used in some

manner to further, advance, or carry out the scheme to defraud. We

conclude that the district court’s instruction did not unconstitutionally

broaden the charges in the indictment.

IV. Highway Fraud Convictions

Appellants also assert that their convictions for highway fraud

under 18 U.S.C.A. § 1020 must be reversed because the government

failed to prove that they acted willfully, failed to establish that the relevant highway projects were approved by the Secretary of Transportation or a properly authorized delegee of the Secretary, and failed to

prove that the false invoices were made in connection with the construction of a highway project. We address each claim in turn. 

A.

We begin with Appellants’ contention that willfulness is an essential element of a § 1020 conviction which the government failed to

establish. The district court refused Appellants’ proffered charge to

this effect, instructing the jury instead that it must find that the Appellants made false statements knowingly. 

The highway fraud provision, 18 U.S.C.A. § 1020, provides in pertinent part that "[w]hoever . . . knowingly makes any false statement,

UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 29
false representation, false report, or false claim with respect to the . . .

cost of any work performed or to be performed . . . in connection with

the construction of any highway or related project approved by the

Secretary of Transportation . . . [s]hall be fined under this title or

imprisoned not more than five years, or both." Id. (emphasis added).

Thus, the language of the statute requires that a false statement be

made knowingly in order to convict, but includes no element of willfulness. Appellants acknowledge as much. However, they contend

that we should read an element of willfulness into the statute, primarily because the Federal Highway Administration ("FHWA"), in federal regulation 23 C.F.R. § 633, subpt. C, App. ¶ 5 (1999), has done

so. 

The FHWA is charged with authorizing federal-aid highway projects. Under Subpart C of the regulation, highway construction contracts under the direct supervision of the FHWA must incorporate a

form containing various labor standards provisions set forth in its

Appendix A. This form, in turn, includes a provision which reminds

contractors that they should "perform their functions as carefully,

thoroughly, and honestly as possible," and advises contractors that

"[w]illful falsification, distortion, or misrepresentation with respect to

any facts related to the project is a violation of Federal law." Id.

Based upon this, Appellants assert that we should defer to the

FHWA’s interpretation of § 1020 and also read into § 1020 an element of willfulness. We decline to do so. 

For reasons unknown to us, the FHWA requires that the language

in its direct construction contracts notify contractors that willfully

false statements are a violation of federal law. However, even were

we to determine that this reference in the Appendix fairly represents

an agency’s interpretation of the statute as requiring willfulness in

order to convict a contractor of highway project fraud (which we do

not), we would owe that interpretation no deference. The text of the

statute is unambiguous on this point and the FHWA is not charged

with nor granted the authority to interpret or implement § 1020. Consequently, the department’s regulation has no effect on how we must

interpret the statute. See e.g., Chevron U.S.A., Inc. v. Natural

Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984). In

summary, we decline to read an element of "willfulness" into the

30 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
plain and unambiguous text of § 1020.4

 The government was not

required to prove "willfulness" to convict Appellants under 18

U.S.C.A. § 1020 and, accordingly, the district court did not err in

refusing Appellants’ proposed instruction to the contrary. 

B.

We next turn to Appellants’ assertion that the government failed to

prove that the false claims were submitted in connection with a "highway or related project approved by the Secretary of Transportation,"

18 U.S.C.A. § 1020, or a properly-authorized delegee of the Secretary, see 49 U.S.C.A. § 322(b) (West 1997) (providing that the Secretary of Transportation "may delegate, and authorize successive

delegations of, duties and powers of the Secretary to an officer or

employee of the Department" and that an officer may in turn "delegate, and authorize successive delegations of, duties and powers of

the officer to another officer or employee of the Department"). 

Appellants assert that their convictions must be reversed because

there is no evidence that the Secretary delegated his duty to approve

the projects in this case to a natural person. See Halverson v. Slater,

129 F.3d 180, 185-86 (D.C. Cir. 1997) (holding that the Secretary

may only delegate the powers and duties of the office to a natural person, not to an "administration" or entity other than a natural person).

However, at trial, Mr. John Grounds testified that he had been

employed by the FHWA for 27 years and had been the financial manager with the FHWA office in Richmond, Virginia, for the past 10

4Appellants also rely upon a single district court case involving alleged

highway fraud under § 1020, in which the court posed the pertinent question for the jury as "whether the government has proved beyond a reasonable doubt that that particular defendant has . . . knowingly and

willfully by a false statement defrauded the government of the United

States with a specific intent and purpose of accomplishing a fraud against

the United States." United States v. Molin, 244 F. Supp. 1015, 1017 (D.

Mass. 1965) (emphasis added). The Molin case, however, is comprised

of nothing more than the court’s publication of its jury charge in a § 1020

case which also for unexplained reasons wrote a willfulness requirement

into the unambiguous text of § 1020. For the reasons stated, we find this

to be improper. 

UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 31
years. He testified that he was authorized on behalf of the Secretary

of Transportation to commit the federal funds to pay VDOT for highway projects. There was no evidence presented to dispute Grounds’

testimony that he was authorized to approve the relevant highway

projects for federal funding. And, Appellants did not challenge at trial

his testimony in this regard. Accordingly, we conclude that there was

sufficient evidence to support the jury’s determination that the false

claims submitted by Appellants were submitted in connection with

highway projects approved by an authorized delegee of the Secretary

of Transportation. 

C.

Finally, Appellants contend that we should reverse their highway

fraud convictions because the government failed to prove that the

false statements were made "in connection with the construction of

[a] highway or related project." 18 U.S.C.A. § 1020. We disagree. 

The highway fraud provision, in separate paragraphs, criminalizes

the making of false statements in connection with highway projects

"submitted for approval to the Secretary" and highway projects "approved by the Secretary":

Whoever . . . knowingly makes any false statement, false

representation, or false report as to the character, quality,

quantity, or cost of the material used or to be used, or the

quantity or quality of the work performed or to be performed, or the costs thereof in connection with the submission of plans, maps, specifications, contracts, or costs of

construction of any highway or related project submitted for

approval to the Secretary of Transportation; or 

Whoever knowingly makes any false statement, false representation, false report, or false claim with respect to the

character, quality, quantity, or cost of any work performed

or to be performed, or materials furnished or to be furnished,

in connection with the construction of any highway or

related project approved by the Secretary of Transportation;

32 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
18 U.S.C.A. § 1020 (emphasis added), is guilty of highway project

fraud. 

Appellants were indicted under the second paragraph of § 1020 for

their submission of false invoices in connection with the construction

of highway projects already approved by the Secretary’s delegee.

Appellants assert, however, that the second paragraph is only applicable to activities associated with actual construction of the highway,

and not to preliminary engineering contracts such as that performed

by PDS. In other words, Appellants assert that their convictions must

be reversed because the second paragraph does not apply to the preliminary engineering work they performed. 

We do not read the second paragraph of § 1020 so narrowly. The

first paragraph of § 1020 pertains to "false statement[s], false representation[s], or false report[s]" made "in connection with the submission of plans, maps, specifications, contracts, or costs of construction

of any highway or related project submitted for approval to the Secretary of Transportation," whereas the second paragraph of § 1020 pertains to "false statement[s], false representation[s], false report[s], or

false claim[s]" made "in connection with the construction of any

highway or related project approved by the Secretary of Transportation." Id. (emphasis added). Contrary to Appellants’ proffered interpretation, we do not read the two paragraphs as seeking to distinguish

between types of contracts (preliminary engineering contracts for a

construction project as opposed to contracts for "actual" construction),

but rather as seeking to distinguish between statements made in connection with a highway or related project submitted for approval and

statements (including "claims") made in connection with a highway

or related project already approved. Under Appellants’ strained reading, their services, although performed in connection with an

approved highway project, would fall within a gap between the two

paragraphs. No such gap exists. Although in the nature of preliminary

engineering work, the work of Appellants was furnished in connection with the construction of a highway project approved by the Secretary of Transportation through an authorized delegee. 

V. Sentencing

The district court sentenced PDS concurrently on each count of

conviction to one year of probation, a fine of $522,045.29, and restiUNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 33
tution of $435,038.33. Webb was sentenced concurrently on each

count to 24 months imprisonment, two years of supervised release,

and restitution of $435,038.33. The sentences were based upon a calculated loss of $435,038.33 to the victim VDOT as a result of the

overbilling scheme. This amount, which resulted in a nine-level

increase in the applicable offense level, see U.S. Sentencing Guidelines Manual § 2F1.1(b)(1)(J) (1998), was consistent with the admissions of Webb, who had estimated an inflation of ten to fifteen

percent per job, or $100,000 to $200,000 per year for five years, and

with PDS records reviewed by the investigating agent, which indicated that ten percent of the VDOT jobs for the years at issue totaled

just over $452,000. 

Appellants assert that the district court improperly based their sentences upon this calculated loss. They contend that the court should

have instead calculated their sentences based solely on the loss

reflected by the individual invoices listed in the indictment, which

they calculate at $19,008 and which would have resulted in only a

three-level increase in the applicable offense level. See U.S.S.G.

§ 2F1.1(b)(1)(D). By employing the loss calculation called for by the

guidelines, Appellants assert, the loss calculation became the "tail

which wags the dog of the substantive offense," in violation of their

due process rights as interpreted under McMillan v. Pennsylvania,

477 U.S. 79, 88 (1986). In the alternative, Appellants assert that the

amount of loss was an essential element of the offenses of conviction

not proven beyond a reasonable doubt, requiring that their sentences

be reversed in light of the Supreme Court’s decision in Apprendi v.

New Jersey, 530 U.S. 466 (2000). They seek a remand for resentencing based upon the amount of loss reflected by the invoices

listed in the indictment. Although the Supreme Court decision in

Apprendi was issued three days after sentencing in this case, the

Appellants raised the due process challenge as a McMillan issue

before the district court. Accordingly, we review the matter de novo.

The Due Process Clause of the Fifth Amendment "protects the

accused against conviction except upon proof beyond a reasonable

doubt of every fact necessary to constitute the crime with which he

is charged." In re Winship, 397 U.S. 358, 364 (1970). In McMillan,

the Supreme Court found constitutional a statute that imposed a mandatory minimum sentence for a defendant who is convicted of speci34 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
fied felonies when a judge finds by a preponderance of the evidence

that the defendant "‘visibly possessed a firearm.’" 477 U.S. at 81.

Because the statute "neither alter[ed] the maximum penalty for the

crime committed nor create[d] a separate offense calling for a separate penalty," id. at 87-88, the Court reasoned that the statute merely

"limit[ed] the sentencing court’s discretion in selecting a penalty

within the range already available to it without the special finding of

visible possession of a firearm," id. at 88. Thus, the statute merely

raised the minimum sentence that could be imposed within the permissible statutory range; it was not "tailored to permit the visible possession finding to be a tail which wags the dog of the substantive

offense." Id.

In Apprendi, however, the Court held that the imposition of a sentence in excess of a maximum statutory sentence allowable for an

offense, based upon a separate statute allowing for the increase if the

sentencing court determined by a preponderance of the evidence that

the offense was committed with a racially biased purpose, did violate

the defendant’s due process rights. Specifically, the Court held that

"[o]ther than the fact of a prior conviction, any fact that increases the

penalty for a crime beyond the prescribed statutory maximum must be

submitted to a jury, and proved beyond a reasonable doubt." Id. at 490

(emphasis added). But, contrary to Appellants’ assertion that

Apprendi effectively strips McMillan of any meaningful vitality and

counsels that we require all facts that expose a defendant to a sentencing range, whether by statute or by the guidelines, to be proven to a

jury beyond a reasonable doubt, the Apprendi Court expressly noted

that McMillan remains good law, albeit limited to cases "that do not

involve the imposition of a sentence more severe than the statutory

maximum for the offense established by the jury’s verdict—a limitation identified in the McMillan opinion itself." Apprendi, 530 U.S. at

487 n.13; see also id. at 495 ("When a judge’s finding based on a

mere preponderance of the evidence authorizes an increase in the

maximum punishment, it is appropriately characterized as "a tail

which wags the dog of the substantive offense." (quoting McMillan,

477 U.S. at 88)). 

In this case, it is undisputed that the fines and terms of imprisonment imposed upon the Appellants were within the statutory maximums allowed for the offenses for which Appellants were convicted.

UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 35
Consequently, we are not dealing with the imposition of a sentence

by a district court which exceeds the applicable statutory maximum.

Rather, we are presented with the question of whether facts that serve

to increase the defendant’s sentence within the maximum sentence

authorized by the statute, pursuant to application of the Sentencing

Guidelines, must be charged in the indictment and proven to the jury

beyond a reasonable doubt. We believe that Appellants’ argument in

this regard is foreclosed by the Court’s holding in McMillan, which

remains good law, and by our recent decision in United States v. Kinter, 235 F.3d 192, 201 (4th Cir. 2000), cert. denied, 121 S. Ct. 1393

(2001). In Kinter, we held that the "the relevant ‘maximum’ [sentence] under Apprendi is found on the face of the statute rather than

in the Sentencing Guidelines," id. at 201, and that where the sentences

imposed by the sentencing court pursuant to the guidelines are less

than the maximum permitted by the statute for the offense for which

the defendants were convicted, the factual determinations which

increased the defendants’ sentences under the applicable guidelines

do not run afoul of the due process concerns raised by Apprendi, see

Kinter, 235 F.3d at 198-202 (rejecting due process challenge to district court’s findings that increased the sentencing range from ten

months to 46 to 57 months). See also United States v. Obi, 239 F.3d

662, 667 (4th Cir. 2001), petition for cert. filed, ___ U.S.L.W. ___

(U.S. May 8, 2001) (No. 00-9843) (rejecting claim that sentencing

based upon drug quantity found by a preponderance of the evidence

under the guidelines offends the principles set forth in Apprendi). 

Nor do we view the sentencing factors based upon additional losses

associated with the submission of false invoices in the case before us

today as so great or disproportionate as to otherwise implicate due

process concerns reserved by McMillan; i.e., that sentencing factors,

including those that affect the sentencing range within the statutory

maximum, should not be permitted to be found by a preponderance

of the evidence in the extraordinary case where the factors can be said

to be the "tail which wags the dog of the substantive offense." McMillan, 477 U.S. at 88. In United States v. Watts, 519 U.S. 148 (1997),

the Supreme Court reiterated McMillan’s holding "that application of

the preponderance standard at sentencing generally satisfies due process," but recognized the "divergence of opinion among the Circuits

as to whether, in extreme circumstances, relevant conduct that would

dramatically increase a sentence must be based on clear and convinc36 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
ing evidence." Watts, 519 U.S. at 156. However, the Court held that

the guideline application, which resulted in an increase in the sentencing range from 15-21 months to 27-33 months, did not present an "exceptional circumstance[ ]" as contemplated by McMillan. Watts, 519

U.S. at 156-57. Nor does the case before us today. See e.g., United

States v. Fenner, 147 F.3d 360, 366 (4th Cir. 1998) (rejecting argument that increases from 42 years imprisonment to 55 years imprisonment for one defendant and from 115 months imprisonment to 210

months imprisonment were "so profound that it is sufficient to implicate due process concerns or to give the impression of having been

tailored to permit the application of [a] cross-reference to be a tail

which wags the dog of the substantive offense" (internal quotation

marks omitted)); United States v. Galloway, 976 F.2d 414, 425-26

(8th Cir. 1992) (holding that a potential increase in a guideline range

from 21-27 months to 63-78 months did not raise due process concerns); cf. United States v. Lombard, 72 F.3d 170, 186-87 (1st Cir.

1995) (holding that sentencing court may depart downward in an "extreme case" where the application of the § 2K2.1(c)(1)(B) crossreference to account for a murder charge, of which defendant was

acquitted in state court, raised the guideline range from 262-327

months to a mandatory life sentence, but distinguishing "cases involving even sizable sentence increases based on an uncharged quantity

of drugs . . . or any number of kindred sentence enhancements"). 

Because the sentences imposed upon the Appellants were within

the statutory maximum sentences for commission of the offenses of

conviction, and no other exceptional circumstances are apparent to

counsel a different result, we hold that Appellants’ constitutional

rights were not offended by the loss calculation employed by the district court to impose the sentences at issue. Accordingly, we affirm

the Appellants’ sentences as well as their convictions. 

VI. Conclusion

For the foregoing reasons, we affirm the Appellants’ convictions

and sentences.

AFFIRMED

UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 37
WILLIAMS, Circuit Judge, concurring in part and concurring in the

judgment: 

The majority concludes that the mail fraud statute, when applied to

the use of a private or commercial interstate carrier employed solely

to deliver an item intrastate, is a permissible exercise of Congress’s

Commerce Clause power under Lopez’s second category. Because I

believe that the constitutionality of the mail fraud statute more appropriately is sustained under Lopez’s third category, I decline to join

Section III A. 2-4 and write separately to explain my reasoning but

concur in the remainder of the majority’s opinion and in the judgment. 

I.

In United States v. Lopez, 514 U.S. 549 (1995), the Supreme Court

established three categories by which to evaluate Congress’s exercise

of its Commerce Clause power: Congress may (1) regulate the "use

of the channels of interstate commerce"; or (2) "regulate and protect

the instrumentalities of interstate commerce, or persons or things in

interstate commerce, even when the threat may come only from intrastate activities"; or (3) regulate "activities that substantially affect

interstate commerce." Id. at 558-59. 

Using Lopez’s second category, the majority concludes that the

mail fraud statute is a regulation that protects private mail carriers, as

instruments of interstate commerce, from harm. In so concluding, the

majority interprets Lopez’s second category in a manner that allows

Congress unbounded authority to legislate federal criminal laws that

only incidentally involve instrumentalities of interstate commerce,

which, in my opinion, leads to an untenable result. See Gibbs v. Babbitt, 214 F.3d 483, 490 (4th Cir. 2000) ("It is essential to our system

of government that the commerce power not extend to effects on

interstate commerce that are so remote that we would effectually

obliterate the distinction between what is national and what is local."

(internal quotation marks omitted)). Supreme Court precedent analyzing Lopez’s second category does not necessitate the majority’s broad

interpretation of the category. For example, in the Shreveport Rate

Cases, the seminal opinion involving Lopez’s second category, the

Supreme Court affirmed Congress’s power to regulate the instrumen38 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES
talities’ operations and the setting of varying rates and taxes by different states, noting the importance of direct regulation and protection

of the instrumentalities of interstate commerce. Houston, East & West

Texas Ry. Co. v. United States (Shreveport Rate Cases), 234 U.S. 342,

356-60 (1914). Congress’s ability to regulate and protect instrumentalities of interstate commerce stems from the underlying rationale

that harm to the instrumentalities necessarily results in harm to interstate commerce generally. See Southern Ry. Co. v. United States, 222

U.S. 20, 26-27 (1911) (upholding amendment to Safety Appliance

Act, 27 Stat. at L. 531, chap. 196, U. S. Comp. Stat. 1901, p. 3174,

32 Stat. at L. 943, chap. 976, U. S. Comp. Stat. Supp. 1909, p. 1143,

which provided for all locomotives, cars, and similar vehicles used on

any railway engaged in interstate commerce to be equipped with certain designated safety appliances, regardless of whether the vehicles

were used in moving intrastate or interstate traffic); Perez v. United

States, 402 U.S. 146, 155-156 (1971) ("[F]or example, the destruction

of an aircraft (18 U.S.C. § 32), or . . . thefts from interstate shipments

(18 U.S.C. § 659)"); see also United States v. Cobb, 144 F.3d 319,

321 & n.2 (4th Cir. 1998) (recognizing that the federal carjacking

statute fell within Lopez’s second category because the statute regulated harm to automobiles). This underlying purpose, however, is not

served where, as here, the legislation simply prohibits illegal or

immoral use of an instrumentality but does not directly or indirectly

regulate the instrumentality to protect it from harm resulting from the

improper use. 

Moreover, interpreting Lopez’s second category to include all

improper uses of an instrumentality conflates Lopez’s second category

with its first, which allows Congress to legislate to keep the channels

of interstate commerce free from immoral or injurious uses. Because

the mail fraud statute regulates the improper use of an instrumentality

but in no way regulates and protects the instrumentality itself, I would

hold that Lopez’s second category is inapplicable. Instead, I would

evaluate the mail fraud statute under Lopez’s third category to determine whether the statute, as applied to PDS and Webb’s intrastate

activities, has a substantial effect on interstate commerce. 

UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES 39
II.

To constitute a proper exercise of Congress’ power over an intrastate activity under Lopez’s third category, the regulated activity must

"arise out of or [be] connected with a commercial transaction, which

viewed in the aggregate, substantially affects interstate commerce."

Lopez, 514 U.S. at 561; see also United States v. Morrison, 529 U.S.

598, 611 (2000) ("Lopez’s review of Commerce Clause case law demonstrates that in those cases where we have sustained federal regulation of intrastate activity based upon the activity’s substantial effects

on interstate commerce, the activity in question has been some sort

of economic endeavor."). I have no difficulty concluding that the furtherance of schemes devised for the purpose of defrauding others can

be viewed as economic activity within the meaning of Lopez and

Morrison. See Gibbs v. Babbitt, 214 F.3d 483, 491 (4th Cir. 2000)

("[E]conomic activity must be understood in broad terms."). Further,

in the aggregate, the intrastate use of interstate carriers to further

fraudulent schemes has a substantial harmful effect on interstate commerce.* Thus, I would hold that the mail fraud statute, as applied to

PDS and Webb’s intrastate activities, is constitutional because the

fraudulent mailings have a substantial effect on interstate commerce.

III.

Because I believe that Congress did not intend the mail fraud statute to regulate and protect private and commercial interstate mail carriers as instrumentalities, I disagree with the majority’s holding in

Section III A. 2-4 that Lopez’s second category renders the mail fraud

statute constitutional under the Commerce Clause. Nevertheless,

because the regulated activity at issue has a substantial effect on interstate commerce and is, therefore, a permissible exercise of Congress’s

Commerce Clause power under Lopez’s third category, I concur in the

judgment. I also concur in the remainder of the opinion.

*This is illustrated by the fraudulent activity in this case, wherein PDS

and Webb used their commercial relationship with VDOT to defraud

prime contractors on VDOT projects, some of which involved federal

highways. 

40 UNITED STATES v. PHOTOGRAMMETRIC DATA SERVICES