Source: https://law.justia.com/cases/federal/appellate-courts/F3/114/758/493488/
Timestamp: 2017-11-18 01:02:19
Document Index: 634595739

Matched Legal Cases: ['§ 1346', '§ 1346', '§ 1346', '§ 1346', '§ 1346', '§ 1341', '§ 1341', '§ 1011', '§ 1012', '§ 1346']

United States of America, Appellee, v. Arthur A. Blumeyer, Iii, Appellant.united States of America, Appellee, v. John W. Peckham, Jr., Appellant, 114 F.3d 758 (8th Cir. 1997) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Eighth Circuit › 1997 › United States of America, Appellee, v. Arthur A. Blumeyer, Iii, Appellant.united States of America,...
United States of America, Appellee, v. Arthur A. Blumeyer, Iii, Appellant.united States of America, Appellee, v. John W. Peckham, Jr., Appellant, 114 F.3d 758 (8th Cir. 1997)
US Court of Appeals for the Eighth Circuit - 114 F.3d 758 (8th Cir. 1997)
Submitted April 14, 1997. Decided June 2, 1997. Rehearing and Suggestion for Rehearing En Banc Denied inNo. 96-3003 July 8, 1997. Rehearing and Suggestion for Rehearing En Banc Denied inNo. 96-3102 July 30, 1997
Blumeyer and Peckham filed motions for a new trial, alleging juror misconduct. After a series of hearings, the District Court granted the motions and ordered a new trial. The government appealed, and we reversed, reinstated the verdicts, and remanded for sentencing. See United States v. Blumeyer, 62 F.3d 1013 (8th Cir. 1995), cert. denied, --- U.S. ----, 116 S. Ct. 1263, 134 L. Ed. 2d 212 (1996). On remand, the District Court sentenced Blumeyer to 262 months' imprisonment and Peckham to 37 months' imprisonment, to be followed by a two-year term of supervised release for each defendant. Both defendants now appeal their convictions and sentences.3 II.
Indictment at 5-6. Portions of the defendants' arguments incorporate challenges to the sufficiency of the evidence to support their convictions. Where the sufficiency of the evidence is implicated, we consider the evidence and all reasonable inferences therefrom in the light most favorable to the verdict, and we will reverse only if no reasonable jury could have found the defendants guilty beyond a reasonable doubt. See United States v. Stands, 105 F.3d 1565, 1570 (8th Cir. 1997).
The defendants rely on the Supreme Court's decision in McNally v. United States, 483 U.S. 350, 356, 107 S. Ct. 2875, 2879-80, 97 L. Ed. 2d 292 (1987), which held that the mail fraud statute4 was limited to the protection of property rights and did not extend to the protection of the intangible right to honest government. Congress responded to McNally in 1988 by enacting § 1346, which provides that "the term 'scheme or artifice to defraud' includes a scheme or artifice to deprive another of the intangible right of honest services." 18 U.S.C. § 1346 (1988). We have previously recognized that " [s]ection 1346 was enacted ... to overrule the Supreme Court's decision in McNally " and that it restored the "vitality" of our pre-McNally cases involving official corruption. United States v. Jain, 93 F.3d 436, 441-42 (8th Cir. 1996), petition for cert. filed, 65 U.S.L.W. 3531 (U.S. Jan. 17, 1997) (No. 96-1167). Accordingly, we decline the defendants' suggestion that we should adopt the reasoning of the Fifth Circuit in United States v. Brumley, 79 F.3d 1430, 1440 (5th Cir.), reh'g en banc granted, 91 F.3d 676 (5th Cir. 1996), which holds that § 1346 was ineffective to overturn the holding of McNally.5
The defendants also suggest that because the scheme alleged in this case includes activities undertaken before the effective date of § 1346 (November 18, 1988), their convictions are invalid. We have held in a similar case, however, that conducting a scheme to defraud is a continuing offense, and applying § 1346 to a scheme that spanned the date of enactment of that statute poses no ex post facto difficulty. See United States v. Garfinkel, 29 F.3d 1253, 1259 (8th Cir. 1994). In any event, the District Court's instructions limited the jury to considering events occurring after November 18, 1988.
Finally, the defendants argue that their convictions cannot stand even under our pre-McNally jurisprudence. We disagree. In United States v. McNeive, 536 F.2d 1245 (8th Cir. 1976), one of the cases on which the defendants rely, McNeive, a city plumbing inspector, accepted gratuities that a contractor sent to him with each permit application. The record revealed that McNeive's duty to approve permits was ministerial, not discretionary; the city received the full fee for each permit application; McNeive enforced the plumbing code effectively; and he did not solicit gratuities or attempt to conceal or misrepresent his acceptance of them. We concluded that McNeive had not engaged in a scheme to defraud the city of anything. See id. at 1252. The instant case is quite easily distinguishable: Crump's position as a state legislator involved significant discretion, and the jury reasonably could have concluded that the defendants schemed to deprive Missourians of his honest services by appropriating his discretion for the benefit of Bel-Aire, a company in which he concealed his interest.
It is irrelevant that many of Crump's legislative efforts on behalf of Bel-Aire were not enacted into law in the language proffered by him. The defendants cite United States v. Rabbitt, 583 F.2d 1014, 1024-26 (8th Cir. 1978), cert. denied, 439 U.S. 1116, 99 S. Ct. 1022, 59 L. Ed. 2d 75 (1979), in which we reversed several of Rabbitt's convictions because there was no evidence of a tangible or intangible loss to the public. But they ignore another portion of that opinion, in which we affirmed Rabbitt's mail-fraud conviction for accepting a bribe to help insure the passage of a bill, even though the bill was subsequently vetoed by the governor and did not become law. See id. at 1019-23. The reasoning is simple: the public's right to the honest services of a public officer is violated when the officer uses a public position to pursue dishonest ends, not merely when the officer achieves a dishonest goal.
The defendants also raise legal challenges to the other aspects of the fraud charges, namely those aspects of the scheme that involved defrauding policyholders and brokers and obtaining money and property by false and fraudulent pretenses. They argue first that this case is really all about licensing and that depriving the state of a Certificate of Authority does not constitute mail fraud, citing United States v. Granberry, 908 F.2d 278 (8th Cir. 1990), cert. denied, 500 U.S. 921, 111 S. Ct. 2024, 114 L. Ed. 2d 110 (1991). Granberry held that an allegation that a defendant obtained a governmental license or permit fraudulently, without more, did not state a mail-fraud offense. See id. at 280. Try as they might, however, the defendants cannot turn this case into Granberry. The indictment quite clearly states that the fraud involved here is fraud on policyholders and brokers, not fraud on the MDI. Naturally, the evidence focused on the fraudulent representations made by the defendants to the MDI, for without a certificate, the defendants could not have operated Bel-Aire in such a way as to defraud policyholders and brokers. (In fact, they could not have operated the company at all.) But Granberry does not mean that any scheme that involves the fraudulent procurement of a license as a means of defrauding some other person is beyond the reach of § 1341. We recognized as much in Granberry itself: while we affirmed the dismissal of allegations that Granberry defrauded the state when he fraudulently obtained a license to operate a school bus, we reinstated allegations that he defrauded a school district when he used the fraudulent license to obtain a job as a bus driver. See id. at 280-81. The same reasoning holds here. Obtaining a certificate from the MDI by means of fraud did not necessarily constitute mail fraud, but Blumeyer and Peckham came within the reach of the law when they operated their fraudulently certified business so as to defraud policyholders and brokers. See United States v. Brownlee, 890 F.2d 1036, 1037-38 (8th Cir. 1989) (affirming convictions for defrauding insurance companies and automobile owners where part of scheme involved obtaining fraudulent titles from state); United States v. Paccione, 949 F.2d 1183, 1193-94, 1197 (2d Cir. 1991) (affirming convictions for defrauding city of funds and waste producers of services where part of scheme involved obtaining fraudulent waste permits from city and state), cert. denied, 505 U.S. 1220, 112 S. Ct. 3029, 120 L. Ed. 2d 900 (1992).
The defendants also challenge the intent element of their convictions, arguing that the government never proved that they intended not to provide insurance to the policyholders of Bel-Aire and the other companies.6 Intent to defraud is an element of mail fraud and wire fraud. See United States v. Manzer, 69 F.3d 222, 226 (8th Cir. 1995). But, contrary to the defendants' suggestions, the government need not prove intent directly; the jury may infer intent to defraud from circumstantial evidence. See United States v. Behr, 33 F.3d 1033, 1035 (8th Cir. 1994); United States v. Clausen, 792 F.2d 102, 105 (8th Cir.), cert. denied, 479 U.S. 858, 107 S. Ct. 202, 93 L. Ed. 2d 133 (1986). We believe the jury quite reasonably could have concluded that the defendants, by marketing and selling insurance through companies that were organized and perpetuated fraudulently, intended to defraud the brokers and policyholders who came into contact with their companies. See, e.g., Behr, 33 F.3d at 1035-36 (upholding conviction of salesman who did not run company but continued to solicit investors when he knew company had stopped sending checks to earlier investors).
Finally, Blumeyer and Peckham take aim at the prong of the indictment relating to misrepresentations. They suggest that there is no proof that any policyholder or potential policyholder ever saw Bel-Aire's fraudulent financial statements. Whether a defendant may be convicted of mail fraud or wire fraud for making false representations only to persons other than the intended victims of the scheme is a difficult question, and one on which the case law does not admit of easy reconciliation. Compare United States v. Lew, 875 F.2d 219, 221 (9th Cir. 1989) (reversing conviction where only misrepresentations were to government and alleged victims were not deceived in any way); United States v. Evans, 844 F.2d 36, 39 (2d Cir. 1988) (suggesting that misrepresentations must be made to the party deceived) (dictum); McEvoy Travel Bureau, Inc. v. Heritage Travel, Inc., 904 F.2d 786, 794 (1st Cir.) (affirming dismissal of civil RICO action where only misrepresentations were to trade associations and plaintiff was not deceived), cert. denied, 498 U.S. 992, 111 S. Ct. 536, 112 L. Ed. 2d 546 (1990) with United States v. Cosentino, 869 F.2d 301, 307 (7th Cir.) (affirming convictions where defendants made false representations to state insurance officials to enable themselves to continue defrauding their insurance company and policyholders), cert. denied, 492 U.S. 908, 109 S. Ct. 3220, 106 L. Ed. 2d 570 (1989).7 We believe that the Seventh Circuit has the better argument: a defendant who makes false representations to a regulatory agency in order to forestall regulatory action that threatens to impede the defendant's scheme to obtain money or property from others is guilty of conducting a "scheme or artifice ... for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." 18 U.S.C. § 1341 (1988); see also United States v. Bailey, 859 F.2d 1265, 1277-78 & n. 3 (7th Cir. 1988), cert. denied, 488 U.S. 1010, 109 S. Ct. 796, 102 L. Ed. 2d 787 (1989).
Peckham suggests that this prosecution is barred by the McCarran-Ferguson Act, 15 U.S.C. § 1011-1015 (1988). We disagree. We note first that Peckham failed to raise this argument for more than three years after he was indicted. Peckham thus waived this argument, for the McCarran-Ferguson objection is not jurisdictional. See United States v. Cavin, 39 F.3d 1299, 1305 (5th Cir. 1994); Dexter v. Equitable Life Assurance Soc'y, 527 F.2d 233, 236-37 (2d Cir. 1975).
We will nevertheless consider the claim, albeit briefly, in order to demonstrate that it is incorrect. We have recently stated in dicta that " [o]bviously, the federal government may prosecute mail and wire fraud committed upon state insurance regulators, and other criminal exploitation of an insurance company." United States v. Riley, 78 F.3d 367, 371 n. 5 (8th Cir. 1996). Other circuits have so held explicitly. See Cavin, 39 F.3d at 1305; United States v. Sylvanus, 192 F.2d 96, 100 (7th Cir. 1951), cert. denied, 342 U.S. 943, 72 S. Ct. 555, 96 L. Ed. 701 (1952). The flaw in Peckham's argument is that a criminal prosecution of an insurance company officer for fraud does not "invalidate, impair, or supersede any law" enacted by the state. 15 U.S.C. § 1012(b) (1988).
Our recent decision in Doe v. Norwest Bank Minn., N.A., 107 F.3d 1297 (8th Cir. 1997), is not to the contrary. In Doe, we held that a civil RICO claim against an insurance company that was premised in part on allegations of mail fraud was barred by the McCarran-Ferguson Act. See id. at 1307-08. Our holding was based on the potential havoc that a civil RICO claim, with its severe remedies, could wreak on the state's carefully considered mechanism for regulating insurance companies. See id. In the instant case, the prosecution of Blumeyer and Peckham will not disturb the MDI's regulatory processes at all, especially considering that the MDI has barred the defendants from having anything more to do with Bel-Aire. And our particular concern in Doe--that wronged policyholders would turn to RICO suits instead of pursuing administrative channels of relief, see id. at 1306-07--is simply inapplicable here, for private parties are not empowered to bring criminal fraud charges. We conclude that Peckham's contention is meritless.
Blumeyer argues that because his money-laundering convictions are premised on the unlawful activities of mail fraud and wire fraud and because he is not guilty of fraud, his laundering convictions must be reversed. Having already rejected one of the premises of this argument, we must reject the conclusion as well.8 III.
Blumeyer and Peckham first complain that the three aspects of the scheme--defrauding policyholders and brokers, defrauding Missourians of Crump's honest services, and obtaining money and property by false pretenses--were given to the jury in the disjunctive, possibly enabling the jury to convict them without agreeing unanimously on a particular purpose for the scheme. We begin by noting that according to the plain language of the relevant statutes, any one of these three alternatives would support a conviction when combined with the requisite mail or wire transaction. See Clausen, 792 F.2d at 104 (recognizing that wire fraud statute outlaws schemes to defraud and schemes to obtain money or property by means of false pretenses); 18 U.S.C. § 1346 (1988) (defining "scheme to defraud" to include scheme to deprive others of intangible right of honest services). As the defendants concede, the government was required to indict them in the conjunctive in order to inform them fully of the charges against them. See United States v. McGinnis, 783 F.2d 755, 757 (8th Cir. 1986). But the government may properly revert to the disjunctive when the case is submitted to the jury, for proof of any one of the three goals of the scheme is sufficient to sustain a conviction. See id. We emphasize that the government consistently referred to the charges as involving a single scheme with several unlawful goals; we need not consider the complexities that may be involved in a prosecution alleging multiple schemes. See generally United States v. Gruenberg, 989 F.2d 971 (8th Cir.), cert. denied, 510 U.S. 873, 114 S. Ct. 204, 126 L. Ed. 2d 161 (1993).
Turning to the unanimity issue, we have serious doubts whether the jury was required to agree on the precise manner in which the scheme violated the law. See Schad v. Arizona, 501 U.S. 624, 631-32, 111 S. Ct. 2491, 2496-97, 115 L. Ed. 2d 555 (1991) (plurality opinion) (noting that jurors returning general verdicts are not required to agree on a single means of commission of a crime); id. at 649, 111 S. Ct. at 2506 (Scalia, J., concurring) (" [I]t has long been the general rule that when a single crime can be committed in various ways, jurors need not agree upon the mode of commission."); United States v. Bellrichard, 62 F.3d 1046, 1049-50 (8th Cir. 1995) (holding that, in prosecution for mailing threatening communications, jurors were not required to agree as to which precise portion of a letter was threatening), cert. denied, --- U.S. ----, 116 S. Ct. 1425, 134 L. Ed. 2d 549 (1996). Indeed, if we were to adopt the defendants' position faithfully, we would have to abolish general verdicts or require the submission of incredibly detailed unanimity instructions in fraud cases, for the jurors would be required to agree not only on the general thrust of the scheme, but also on many other issues, such as whether the defendants employed a "scheme" or an "artifice."
We also reject the defendants' contention that the jury could have found them guilty solely because they obtained a certificate from the MDI by means of fraud. As we have discussed above, Granberry holds that obtaining a license fraudulently does not constitute mail fraud, and the defendants argue that the jury could have concluded that the certificate was "property" that they obtained by false pretenses. The defendants ignore the specific language of the instruction, however, which explained that " [t]he defendants are charged with obtaining money in the form of insurance premiums on the basis of false statements, representations and promises as set forth in the mail fraud and wire fraud counts." Instruction No. 33. Accordingly, the instruction explained the charges with sufficient clarity to insure that the defendants were not convicted solely because they defrauded the MDI.
Both defendants also urge that the District Court erred in excluding certain evidence. Shortly before trial, the government filed, and the District Court granted, a motion in limine excluding the finding of Judge McHenry, the presiding judge in Bel-Aire's receivership proceedings, that Bel-Aire was not insolvent on certain dates. We review an order excluding evidence for abuse of discretion. See United States v. Shyres, 898 F.2d 647, 656 (8th Cir.), cert. denied, 498 U.S. 821, 111 S. Ct. 69, 112 L. Ed. 2d 43 (1990). The defendants' motions to supplement the record for purposes of this argument are granted.
We agree with the District Court and the government that Judge McHenry's findings in the receivership proceedings were irrelevant to the case at bar and were likely to confuse the jury. Whether Bel-Aire was or was not insolvent for purposes of the state insurance laws, especially on three particular dates, had little to do with the issues in this case. Cf. United States v. Southwest Bus Sales, Inc., 20 F.3d 1449, 1457 (8th Cir. 1994) (holding that civil settlement between defendant and victim seeming to show that victim did not think it had been defrauded "does not influence the determination of whether or not a crime was committed"); United States v. Seago, 930 F.2d 482, 494 (6th Cir. 1991) (concluding that financial condition of defendant's company was "not probative" on issue of scheme to defraud); United States v. Stull, 743 F.2d 439, 445 (6th Cir. 1984) (affirming exclusion of evidence regarding civil proceeding between defendant and Postal Service because of potential for jury confusion), cert. denied, 470 U.S. 1062, 105 S. Ct. 1779, 84 L. Ed. 2d 838 (1985). Judge McHenry's findings were not binding on the federal government, which was not a party to the state-court proceedings. The motion in limine did not exclude all evidence relating to solvency or insolvency; only Judge McHenry's judicial findings were excluded. Although both the District Court and the government insisted early in the trial that insolvency was entirely irrelevant, it soon became clear that evidence of insolvency formed a part of the government's theory of the case, and the defendants were permitted to cross-examine the government's witnesses on that subject. Nothing prohibited the defendants from producing evidence, other than Judge McHenry's findings, showing that Bel-Aire was solvent. We conclude that the District Court did not abuse its discretion in excluding the findings from the receivership proceedings.9
We deal briefly with the defendants' remaining arguments. Our earlier decision on the jury-misconduct issue is the law of the case. See United States v. Bartsh, 69 F.3d 864, 866-67 (8th Cir. 1995). Blumeyer's claim of ineffective assistance of counsel is not ripe for review on direct appeal because no record was made on the issue before the District Court. See United States v. Triplett, 104 F.3d 1074, 1083 (8th Cir. 1997), cert. denied, --- U.S. ----, 117 S. Ct. 2445, 138 L. Ed. 2d 204 (1997), and cert. denied, --- U.S. ----, 117 S. Ct. 1837, 137 L. Ed. 2d 1042 (1997). We have considered the defendants' other arguments and have concluded that they are meritless.10
Brumley, 79 F.3d at 1437. Congress, of course, overturns Supreme Court decisions in statutory cases with some frequency. See Landgraf v. USI Film Products, 511 U.S. 244, 250-51, 114 S. Ct. 1483, 1489-90, 128 L. Ed. 2d 229 (1994) (identifying eight Supreme Court decisions modified or overturned by Civil Rights Act of 1991); West Virginia Univ. Hosps., Inc. v. Casey, 499 U.S. 83, 113-15, 111 S. Ct. 1138, 1154-56, 113 L. Ed. 2d 68 (1991) (Stevens, J., dissenting) (listing several Supreme Court decisions, including McNally, subsequently overturned by Congress).
Courts also have upheld convictions in similar cases where this issue has not been addressed specifically. See Schmuck v. United States, 489 U.S. 705, 707, 109 S. Ct. 1443, 1446, 103 L. Ed. 2d 734 (1989) (affirming conviction of auto distributor who rolled back odometers and sold cars to dealers but had no contact with ultimate customers); United States v. Bishop, 825 F.2d 1278, 1279-80 (8th Cir. 1987) (affirming convictions of defendants who did not themselves misrepresent anything to defrauded secured creditors)
Blumeyer's reply brief contains a section with the implausible heading "The Prosecution Concedes That the Money Laundering Charges, Conviction and Sentencing Must Be Set Aside." Blumeyer Reply Br. at 13. Because this section of the brief contains numerous arguments not presented in Blumeyer's opening brief, as well as a highly questionable interpretation of the evidence, we grant the government's motion to strike. We further decline to consider the arguments in section IV of the same brief, which also were not presented in Blumeyer's opening brief. See United States v. Darden, 70 F.3d 1507, 1549 n. 18 (8th Cir. 1995) (noting that court of appeals ordinarily will not consider issues first raised in reply brief), cert. denied, --- U.S. ----, 116 S. Ct. 1449, 134 L. Ed. 2d 569 (1996) --- U.S. ----, 116 S. Ct. 2567, 135 L. Ed. 2d 1084 (1996)