Source: https://law.justia.com/cases/federal/appellate-courts/F2/743/439/364746/
Timestamp: 2019-05-24 20:02:51
Document Index: 49928663

Matched Legal Cases: ['§ 1341', '§ 1341', '§ 1341', '§ 1341', '§ 1341', '§ 1341']

United States of America, Plaintiff-appellee, v. Henry Daniel Stull, Sr., Henry Daniel Stull, Jr., Andpatricia Mooradian, Defendants-appellants, 743 F.2d 439 (6th Cir. 1984) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Sixth Circuit › 1984 › United States of America, Plaintiff-appellee, v. Henry Daniel Stull, Sr., Henry Daniel Stull, Jr., A...
United States of America, Plaintiff-appellee, v. Henry Daniel Stull, Sr., Henry Daniel Stull, Jr., Andpatricia Mooradian, Defendants-appellants, 743 F.2d 439 (6th Cir. 1984)
US Court of Appeals for the Sixth Circuit - 743 F.2d 439 (6th Cir. 1984)
Decided Sept. 17, 1984. Argued June 12, 1984
Defendant-appellants, Henry Daniel Stull, Sr. (Stull Sr. or Henry Stull), Henry Daniel Stull, Jr. (Stull Jr. or Daniel Stull), and Patricia Mooradian (Mooradian) were jointly indicted for mail fraud in violation of 18 U.S.C. § 1341. The twenty-count indictment charged the defendants with devising and executing a scheme to defraud through two interrelated vehicles--Mortgage or Financial Brokers Course and Skipper's Discount Company. The first nine counts referred to specific mailings in connection with the mortgage brokers program. The defendants were charged with inducing individuals to become mortgage brokers through false or fraudulent representations and with further causing the new brokers and their clients to submit advance fees to the Stull companies in reliance upon fraudulent representations. The remaining eleven counts referred to specific mailings in connection with Skipper's Discount Company. The defendants were charged with making false representations in order to obtain office equipment, office supplies, and other merchandise which enabled the defendants to carry out the mortgage brokers scheme. The indictment also alleged that Skipper's Discount Company had not paid for the merchandise, and had sent printed materials containing fraudulent statements to creditors in order to frustrate collection efforts.
The essential elements of mail fraud under 18 U.S.C. § 1341 are (1) a scheme to defraud and (2) the mailing of material for the purpose of executing the scheme. Pereira v. United States, 347 U.S. 1, 8, 74 S. Ct. 358, 362, 98 L. Ed. 435 (1954). In order to sustain a conviction, the government must also prove a defendant's intent to defraud. United States v. Sedovic, 679 F.2d 1233, 1238-39 (8th Cir. 1982); United States v. Pearlstein, 576 F.2d 531, 537 (3d Cir. 1978); United States v. Payne, 474 F.2d 603, 604 (9th Cir. 1973). Direct evidence of fraudulent intent is not necessary; where sufficient circumstantial evidence is presented, the jury may properly infer that the defendant was culpably involved from his conduct, statements, and role in the overall operation. United States v. Themy, 624 F.2d 963, 965 (10th Cir. 1980); United States v. Beecroft, 608 F.2d 753, 757 (9th Cir. 1979); Pearlstein, supra, 576 F.2d at 541-46.
When reviewing the sufficiency of the evidence, we must reverse only if the evidence is such that a reasonable mind could not find guilt beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 318-19, 99 S. Ct. 2781, 2788-2789, 61 L. Ed. 2d 560 (1979). In applying this standard, we must view the evidence in the light most favorable to the government giving full play to the jury's right to determine credibility, weigh the evidence, and draw reasonable inferences from basic facts to ultimate facts. Jackson, supra, 443 U.S. at 319, 99 S. Ct. at 2789; United States v. Stull, 521 F.2d 687, 689 (6th Cir. 1975), cert. denied, 423 U.S. 1059, 96 S. Ct. 794, 46 L. Ed. 2d 649 (1976).
Having reviewed the record in this case, we conclude that the evidence was sufficient to support the defendants' convictions on each count. The pattern of fraudulent statements and misrepresentations, and the close ties between the mortgage brokers program and Skipper's Discount Company warranted a finding of a general scheme to defraud. From the evidence the jury could also reasonably infer that each defendant intentionally participated in both aspects of the scheme. The government is not required to prove that each defendant was a mastermind of the scheme to defraud; proof of a defendant's willful participation in a scheme with knowledge of its fraudulent elements is sufficient. Sedovic, supra, 679 F.2d at 1238; United States v. Price, 623 F.2d 587, 591 (9th Cir.), cert. denied, 449 U.S. 1016, 101 S. Ct. 577, 66 L. Ed. 2d 475 (1980); Pearlstein, supra, 576 F.2d at 537. Nor is a defendant exonerated by the fact that he may have participated in the scheme to a lesser extent than others. Stull, supra, 521 F.2d at 689; Blue v. United States, 138 F.2d 351, 358 (6th Cir. 1943), cert. denied, 322 U.S. 736, 64 S. Ct. 1046, 88 L. Ed. 1570 (1944). In this case the direct and circumstantial evidence relative to each defendant's statements and activities warranted the conclusion that a scheme to defraud existed and that each defendant joined in both facets of the scheme with the requisite intent.
The defendants argue that under the terms of 18 U.S.C. § 1341, a single scheme to defraud constitutes a single violation of the statute regardless of the number of uses of the mail in furtherance of the scheme. Consequently, they contend that they could each be convicted and sentenced for only one offense because the Government sought to prove a single scheme to defraud in this case.
The defendants principally rely on cases that have interpreted different language in other statutes. See Bell v. United States, 349 U.S. 81, 75 S. Ct. 620, 99 L. Ed. 905 (1955) (Mann Act); United States v. Universal C.I.T. Credit Corp., 344 U.S. 218, 73 S. Ct. 227, 97 L. Ed. 260 (1952) (Fair Labor Standards Act). They acknowledge that they have found no case construing the mail fraud statute which has espoused their proposed interpretation. Indeed, courts for many years have consistently held that each mailing in furtherance of a scheme to defraud is a separate offense under 18 U.S.C. § 1341. See, e.g., United States v. Ledesma, 632 F.2d 670 (7th Cir.), cert. denied, 449 U.S. 998, 101 S. Ct. 539, 66 L. Ed. 2d 296 (1980); Hanrahan v. United States, 348 F.2d 363 (D.C. Cir. 1965), cert. denied, 389 U.S. 845, 88 S. Ct. 95, 19 L. Ed. 2d 111 (1967); Milan v. United States, 322 F.2d 104 (5th Cir. 1963), cert. denied, 377 U.S. 911, 84 S. Ct. 1174, 12 L. Ed. 2d 181 (1964). See also Badders v. United States, 240 U.S. 391, 36 S. Ct. 367, 60 L. Ed. 706 (1916); Stumbo v. United States, 90 F.2d 828 (6th Cir.), cert. denied, 302 U.S. 755, 58 S. Ct. 282, 82 L. Ed. 584 (1937). Use of the federal mails is not only a jurisdictional requirement, it is the gist of the crime of mail fraud. United States v. Weatherspoon, 581 F.2d 595, 601-02 (7th Cir. 1978); Atkinson v. United States, 344 F.2d 97 (8th Cir.), cert. denied, 382 U.S. 867, 86 S. Ct. 141, 15 L. Ed. 2d 106 (1965). Each use of the mails in furtherance of a scheme to defraud therefore may be separately and cumulatively punished. In this case, the defendants' convictions and sentences were within the terms of the statute.
Because the trial court's determinations of relevancy depend on the exercise of considerable judgment within the context of the entire trial, appellate courts will not lightly overrule the trial court's decision. Post v. United States, 407 F.2d 319 (D.C. Cir. 1968), cert. denied, 393 U.S. 1092, 89 S. Ct. 863, 21 L. Ed. 2d 784 (1969). Finding no abuse of discretion in this case, we uphold the district court's rulings. That the defendants negotiated with the postal service in order to preclude civil sanctions is, at best, only marginally probative of their good faith belief in the legitimacy of their business and their willingness to cooperate with authorities. In fact no consent agreement was ever reached, and the civil action was dismissed when the defendants sought to depose a postal inspector involved in the grand jury proceedings. Moreover, "the possibilities of confusion and false deductions from circumstances of nebulous significance are real dangers that cannot be casually ignored." Post, supra, 407 F.2d at 323. See also United States v. Wilkinson, 460 F.2d 725 (5th Cir. 1972). Here the potential confusion engendered by lengthy testimony about an administrative action (which the defendants knew did not preclude criminal penalties) was properly avoided. Finally, the essence of the desired testimony was introduced, eliminating the potential for harm from the exclusion. See United States v. Freeman, 619 F.2d 1112 (5th Cir. 1980), cert. denied, 450 U.S. 910, 101 S. Ct. 1348, 67 L. Ed. 2d 334 (1981); United States v. Habel, 613 F.2d 1321, 1325-26 (5th Cir.), cert. denied, 447 U.S. 925, 100 S. Ct. 3018, 65 L. Ed. 2d 1117 (1980). Mooradian testified that the defendants had worked with postal inspectors to clear up any areas that clients might misunderstand, and had removed certain statements from their materials. Stull Jr. also elicited testimony from witnesses regarding problems with suppliers and payments made by Skipper's Discount Company.
The defendants primarily object to the jury instructions on the defense of good faith6 and the definitions of "scheme to defraud" and false statements.7 They further contend that the district court erred in refusing to instruct the jury that good faith includes a defendant's belief or faith that a venture will eventually succeed no matter how impractical or visionary the venture may be. See Hawley v. United States, 133 F.2d 966 (10th Cir. 1943).
We find no error in the jury instructions. Since Hawley was decided, courts have consistently held that a defendant's honest belief in the ultimate success of a venture is not in itself a defense to a charge of mail fraud. Beecroft, supra, 608 F.2d at 757; United States v. Amrep Corp., 560 F.2d 539, 547 (2d Cir. 1977), cert. denied, 434 U.S. 1015, 98 S. Ct. 731, 54 L. Ed. 2d 759 (1978); United States v. Diamond, 430 F.2d 688 (5th Cir. 1970). Furthermore, the Tenth Circuit in discussing the Hawley instruction has made clear that "no matter how firmly the defendant may believe in the plan, his belief will not justify baseless, false, or reckless representations or promises." Sparrow v. United States, 402 F.2d 826, 828 (10th Cir. 1968). With respect to the challenged instruction on "scheme to defraud," we note that this court has previously approved the definition of this element as set forth by the district court. United States v. VanDyke, 605 F.2d 220, 225 (6th Cir.), cert. denied, 444 U.S. 994, 100 S. Ct. 529, 62 L. Ed. 2d 425 (1979). The defendants have given us no persuasive reason for overruling our earlier decision. Finally, the district court's definition of false statements likewise conformed to the prevailing legal standard. See United States v. Frick, 588 F.2d 531, 536 (5th Cir.), cert. denied, 441 U.S. 913, 99 S. Ct. 2013, 60 L. Ed. 2d 385 (1979); Amrep Corp., supra, 560 F.2d at 543; Irwin v. United States, 338 F.2d 770, 774 (9th Cir. 1964), cert. denied, 381 U.S. 911, 85 S. Ct. 1530, 14 L. Ed. 2d 433 (1965).
Several times during the trial each defendant moved for relief from prejudicial joinder of counts and of defendants pursuant to Fed. R. Crim. P. 14. They now argue that the district court's denial of their motions for severance of the defendants created substantial prejudice and constituted an abuse of discretion. They claim prejudice from the "spillover" effect of evidence against each codefendant and from the inability to compel exculpatory testimony from their codefendants. Mooradian and Stull Sr. also claim prejudice from Stull Jr.'s pro se representation at trial; Mooradian claims further prejudice as a result of her inability to introduce exculpatory sections of her grand jury testimony due to Bruton considerations. Bruton v. United States, 391 U.S. 123, 88 S. Ct. 1620, 20 L. Ed. 2d 476 (1968).
There is no question that the defendants were properly indicted together for twenty counts of mail fraud under Fed. R. Crim. P. 8. As a general rule, persons jointly indicted should be tried together.8 United States v. Licavoli, 725 F.2d 1040, 1051 (6th Cir.), cert. denied, --- U.S. ----, 104 S. Ct. 3535, 82 L. Ed. 2d 840 (1984); United States v. Dye, 508 F.2d 1226, 1236 (6th Cir. 1974), cert. denied, 420 U.S. 974, 95 S. Ct. 1395, 43 L. Ed. 2d 653 (1975). The district court may grant a severance if it appears that a defendant is prejudiced by the joinder. Fed. R. Crim. P. 14. The refusal to do so, however, will be overruled on appeal only if a clear abuse of discretion is demonstrated. Licavoli, supra, 725 F.2d at 1051; United States v. Hamilton, 689 F.2d 1262, 1275 (6th Cir. 1982), cert. denied, 459 U.S. 1117, 103 S. Ct. 753, 74 L. Ed. 2d 971 (1983). The defendants have the burden of showing compelling prejudice. Id.
Having reviewed the trial transcript, we conclude that the defendants have not met their burden. The charges against each of the defendants were proved by substantially the same witnesses and documents. There was proof of how the defendants worked together and of each defendant's role in both facets of the scheme. The jury was also properly instructed to give separate, personal consideration to the case of each individual defendant. See United States v. Reed, 647 F.2d 678, 689 (6th Cir.), cert. denied, 454 U.S. 837, 102 S. Ct. 142, 70 L. Ed. 2d 118 (1981); United States v. Lutz, 621 F.2d 940, 945 (9th Cir. 1980), cert. denied, 449 U.S. 859, 101 S. Ct. 160, 66 L. Ed. 2d 75 (1981).
Finally, we, sua sponte, urge the trial judge to give serious consideration, if a renewed motion under Fed. R. Crim. P. 35 is made, to a substantial reduction of the sentences given each defendant. There is something to be said about the inadvisability of consecutive maximum sentences on a multiple-count mail fraud prosecution. Moreover, the comparison of the sentences given these defendants with the average sentence in other mail fraud cases mitigates in favor of a reduction.10
It is axiomatic that the imposition of sentences within the statutory limits lies almost entirely within the discretion of the trial judge; however, we cannot refrain from observing that to us the sentences here imposed seem unduly harsh. See Wilson v. United States, 335 F.2d 982, 984 (D.C. Cir. 1963); Scarbeck v. United States, 317 F.2d 546, 569 (D.C. Cir. 1962), cert. denied, 374 U.S. 856, 83 S. Ct. 1897, 10 L. Ed. 2d 1077 (1963).
Stull Sr. and Stull Jr. filed separate pro se appeals from the district court's order denying their pretrial motions to dismiss the indictment on grounds of prosecutorial misconduct and governmental bad faith. Appeals Nos. 82-3478 and 82-3481. Because the defendants have also challenged the indictment in their direct appeals of the convictions, we need not decide whether the district court's order is appealable. See United States v. Griffin, 617 F.2d 1342 (9th Cir.), cert. denied, 449 U.S. 863, 101 S. Ct. 167, 66 L. Ed. 2d 80 (1980)
Having considered the defendants' contentions relating to prosecutorial misconduct and governmental bad faith, we reject them for the reasons stated by the district court. The defendants' additional arguments that the indictment was defective, improperly obtained, and improperly returned are equally without merit. The indictment set forth the elements of the crime, sufficiently informed the defendants of the charges against them, and was not duplicious. See, e.g., United States v. Wexler, 621 F.2d 1218, 1223 (2d Cir.), cert. denied, 449 U.S. 841, 101 S. Ct. 119, 66 L. Ed. 2d 48 (1980); United States v. London, 550 F.2d 206, 210-13 (5th Cir. 1977); United States v. Laverick, 348 F.2d 708, 714 (3d Cir.), cert. denied, 382 U.S. 940, 86 S. Ct. 391, 15 L. Ed. 2d 350 (1965).
Nor do we find support in the record for the defendants' factual speculation that the indictment was improperly returned. Cf. United States v. Daly, 535 F.2d 434, 440 (8th Cir. 1976). Furthermore, in the absence of a showing of good cause, the defendants' failure to object before trial to indictment defects, other than lack of jurisdiction and failure to charge an offense, constitutes a waiver. Fed. R. Crim. P. 12. See also United States v. Viserto, 596 F.2d 531, 538 (2d Cir.), cert. denied, 444 U.S. 841, 100 S. Ct. 80, 62 L. Ed. 2d 52 (1979); United States v. Easom, 569 F.2d 457, 459 n. 1 (8th Cir. 1978).
To the extent that the defendants base their challenge on the claim that the government failed to prove every allegation of a false statement contained in the indictment, they misapprehend what the government was required to prove. It is well established that proof of every allegation is not required in order to convict; the government need only prove that the scheme to defraud existed. See, e.g., United States v. Beecroft, 608 F.2d 753, 757 (9th Cir. 1979); United States v. Amrep Corp., 560 F.2d 539, 546 (2d Cir. 1977), cert. denied, 434 U.S. 1015, 98 S. Ct. 731, 54 L. Ed. 2d 759 (1978); United States v. Joyce, 499 F.2d 9, 22-23 (7th Cir.), cert. denied, 419 U.S. 1031, 95 S. Ct. 512, 42 L. Ed. 2d 306 (1974)
From July 1, 1981 to June 30, 1982, 895 defendants were convicted under 18 U.S.C. § 1341; 392 defendants (44%) were sentenced to imprisonment, 359 defendants (40%) were placed on probation, 127 defendants (14%) were given a split sentence (defined as a sentence of six months or less imprisonment to be followed by a term of probation), 15 defendants (2%) were fined only, and 2 defendants received other sentences (including sentence suspended, suspended fines, sentenced to time already served, etc.). For those defendants sentenced to imprisonment (not including those receiving a split sentence), the average prison sentence was 46 months and the mean prison sentence was 36 months. (The figures for prison sentences reflect the total sentence received, with no distinction made between those defendants convicted on multiple counts and those convicted on a single count.) Administrative Office of the United States Courts, United States District Courts Sentences Imposed Chart Twelve Month Period Ended June 30, 1982 (1982)
From July 1, 1980 to June 30, 1981, 857 defendants were convicted under 18 U.S.C. § 1341; 321 defendants (37%) were sentenced to imprisonment, 364 defendants (42%) were placed on probation, 145 defendants (17%) received a split sentence, 26 defendants (3%) were fined only, and one defendant received another sentence. For those defendants sentenced to imprisonment, the average prison sentence was 42 months and the mean prison sentence was 36 months. Administrative Office of the United States Courts, United States District Courts Sentences Imposed Chart Twelve Month Period Ended June 30, 1981 (1982).