Source: https://law.justia.com/cases/federal/appellate-courts/F2/536/1245/139499/
Timestamp: 2019-08-26 09:21:08
Document Index: 162176517

Matched Legal Cases: ['§ 1341', '§ 1341', '§ 1341', '§ 1341', '§ 301', '§ 1', '§ 215', '§ 1341', '§ 1341', '§ 1341', '§ 1341', '§ 1341', '§ 1341', '§ 1341', '§ 1341', '§ 1341', '§ 1341', '§ 1341', '§ 1341', '§ 558', '§ 1341', '§ 1341', '§ 1341', '§ 1341', '§ 1341', '§ 1341', '§ 59', '§ 1341', '§ 1341', '§ 1341']

United States of America, Appellee, v. James T. Mcneive, Appellant, 536 F.2d 1245 (8th Cir. 1976) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Eighth Circuit › 1976 › United States of America, Appellee, v. James T. Mcneive, Appellant
United States of America, Appellee, v. James T. Mcneive, Appellant, 536 F.2d 1245 (8th Cir. 1976)
US Court of Appeals for the Eighth Circuit - 536 F.2d 1245 (8th Cir. 1976)
Submitted March 10, 1976. Decided June 24, 1976
A plenary consideration of the relevant facts in this case is necessary for a full understanding of the appeal. In reciting the facts, we are cognizant that the evidence must be viewed in the light most favorable to the Government as the prevailing party. Glasser v. United States, 315 U.S. 60, 80, 62 S. Ct. 457, 86 L. Ed. 680 (1942).
For the Government to establish a violation of § 1341, it must prove "(1) a scheme to defraud, and (2) the mailing of a letter, etc., 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); see United States v. Nance, 502 F.2d 615, 618 (8th Cir. 1974), cert. denied, 420 U.S. 926, 95 S. Ct. 1123, 43 L. Ed. 2d 396 (1975). Since the term "scheme to defraud" connotes some degree of planning by the perpetrator, it is essential that the evidence show the defendant entertained an intent to defraud. United States v. Nance, supra, at 618. We do not think there was here involved any "scheme to defraud" as proscribed by § 1341.
Historically, § 1341 provides no foundation for the pervasive view the Government now accords it. The predecessor of the present § 1341 proscribed "any scheme or artifice to defraud" which was effected "by either opening or intending to open correspondence or communication with any person * * * by means of the post office establishment of the United States * * *." Act of June 8, 1872, ch. 335, § 301, 17 Stat. 323, as amended, Act of March 2, 1889, ch. 393, § 1, 25 Stat. 873. Interpreting this statute for the first time, the Supreme Court recognized that the definition of "scheme or artifice to defraud" is not to be limited to common law concepts of fraud and false pretenses. Durland v. United States, 161 U.S. 306, 312-13, 16 S. Ct. 508, 40 L. Ed. 709 (1896). The language is to be construed in light of the statute's manifest purpose to prohibit all attempts to defraud by any form of misrepresentation. 161 U.S. at 313, 16 S. Ct. 508.3
This 1872 enactment was modified in certain respects by Congress in 1909. Act of March 4, 1909, ch. 321, § 215, 35 Stat. 1130. The Supreme Court, in interpreting this 1909 statute, noted that congressional modifications in the wording of the statute broadened its scope by permitting a violation to be established by proving a scheme to defraud which has been executed or intended to be executed by placing a letter in any post office. United States v. Young, 232 U.S. 155, 161, 34 S. Ct. 303, 58 L. Ed. 548 (1914).
The wording of the present mail fraud statute is derived from the Act of June 25, 1948, ch. 645, § 1341, 62 Stat. 763.4 This 1948 enactment modified none of the operative provisions of the 1909 statute and merely deleted some superfluous language characterized as the "obsolete argot of the underworld." 18 U.S.C. § 1341 (1970), Reviser's Notes. Consequently, the somewhat liberalized proof requirements articulated in United States v. Young, supra, prevail under the present statute. See Pereira v. United States, supra, 347 U.S. at 8, 74 S. Ct. 358.
The second category of § 1341 deceptive schemes is comprised of those which operate to deprive individuals of intangible rights or interests. In United States v. States, 488 F.2d 761, 765 (8th Cir. 1973), cert. denied, 417 U.S. 909, 94 S. Ct. 2605, 41 L. Ed. 2d 212 (1974), this court ruled that a vote fraud scheme was a proper subject for a mail fraud prosecution since the scheme defrauded citizens of "certain intangible political and civil rights." This expansive interpretation was deemed justified since limiting § 1341 to deprivations of tangible interests alone would weaken the efficacy of the statute by excluding from its scope the multifarious schemes which deprive innocent victims of significant, often constitutionally protected, intangible rights.
An increasing number of courts have expanded the rationale of United States v. States, supra, and related cases beyond the arena of political and civil rights. These courts have held that a recreant employee can be prosecuted under § 1341 if he breaches his allegiance to his employer by accepting bribes or kickbacks in the course of his employment, since such conduct defrauds the employer of his right to the employee's honest and faithful services. United States v. Bryza, 522 F.2d 414 (7th Cir. 1975), cert. denied, --- U.S. ----, 96 S. Ct. 2237, 48 L. Ed. 2d 837, 44 U.S.L.W. 3685 (1976). Similar schemes devised by public officials have been viewed as defrauding state or municipal citizens of the same intangible right. United States v. Isaacs, 493 F.2d 1124 (7th Cir.), cert. denied, 417 U.S. 976, 94 S. Ct. 3184, 41 L. Ed. 2d 1146 (1974).
The Government relies upon this latter strain of cases in seeking to have McNeive's conduct characterized as a scheme to defraud the City of St. Louis of its right to the loyal and honest service of its public officials, and thus within the ambit of § 1341. In support of its position, the Government relies primarily upon the Seventh Circuit cases of United States v. Bush,522 F.2d 641 (7th Cir. 1975), cert. denied, --- U.S. ----, 96 S. Ct. 1484, 47 L. Ed. 2d 748, 44 U.S.L.W. 3532 (1976); United States v. Keane,522 F.2d 534 (7th Cir. 1975), cert. denied, --- U.S. ----, 96 S. Ct. 1481, 47 L. Ed. 2d 746, 44 U.S.L.W. 3532 (1976); United States v. Isaacs, supra ; and United States v. George, 477 F.2d 508 (7th Cir.), cert. denied, 414 U.S. 827, 94 S. Ct. 155, 38 L. Ed. 2d 61 (1973). In each of these cases, the court found that either an employee or public official had breached his duty to provide faithful and honest services and that this breach contributed to the court's finding of a § 1341 scheme to defraud. These opinions contain broad statements which the Government cites as supportive of its position in the present case. However, these general statements, standing alone, are not necessarily controlling and must be considered in the proper context of the opinion in which they appear. It is a general rule that expressions in an opinion are to be considered in the light of the factual context of the case. Cohens v. Virginia, 6 Wheat. 264, 398, 19 U.S. 120, 179, 5 L. Ed. 257 (1821). Our review of these cases convinces us that none is dispositive of the instant case.
477 F.2d at 512; see Post v. United States, 132 U.S.App.D.C. 189, 407 F.2d 319, 329 (1968), cert. denied, 393 U.S. 1092, 89 S. Ct. 863, 21 L. Ed. 2d 784 (1969); Epstein v. United States, 174 F.2d 754, 765 (6th Cir. 1949).11
The facts set forth above exemplify that this is indeed a unique case. No other § 1341 case has condemned conduct similar to McNeive's, nor made a federal case out of a situation which, at its worst, involved such a minor peculation, possibly a misdemeanor. The tipping practice in this case did not evidence any widespread municipal corruption or fraudulent enterprise; the tips only expressed Preston's gratitude to McNeive and there is nothing in the record to indicate that this asserted reason was a mere pretext for something more sinister. The practice of tipping others as an expression of appreciation for the performance of ministerial tasks and services is not alien to Western civilization, particularly the United States. While we sympathize with the zealous prosecutor's view in this case that tipping has no place in the administration and operation of a governmental agency, this does not transform the practice into a mail fraud violation, nor does it give the prosecutors a license to inject themselves into local affairs to attempt to rectify the problem. To permit the Government to do so in this case would effect a further extension of § 1341 so as to cover all actions which might offend the Government's sense of personal propriety. This we refuse to do, particularly since our acceptance of the Government's theory in this case would have far-reaching ramifications as to the reach of the already pervasive mail fraud statute. The Government here is attempting to criminalize cupidity and we do not believe that § 1341 can be extended to that extreme without a showing of additional facts which clearly bring the conduct within § 1341. Section 1341 is a penal statute with limitations as to its scope, which limitations were grossly exceeded in the present case.13 Although § 1341 may reach those activities which contravene public policy, Badders v. United States, 240 U.S. 391, 393, 36 S. Ct. 367, 60 L. Ed. 706 (1916), or violate contemporary standards of morality and fundamental honesty, Blachly v. United States, 380 F.2d 665, 671 (5th Cir. 1967), there must be, at a minimum, a cognizable scheme to defraud. While we do not place our imprimatur upon McNeive's avariciousness, we fail to find from the Government's proof that McNeive engaged in a scheme to defraud the City of St. Louis of any tangible or intangible right so as to fall within the broad reaches of the mail fraud statute. Therefore, we reverse and remand the case to the District Court with directions to enter an order of acquittal. United States v. Koonce, 485 F.2d 374, 381-82 (8th Cir. 1973).
The indictment alleges, and the Government stresses on appeal, that McNeive violated state and municipal law. Missouri law prohibits any official from unlawfully and willfully receiving any fee to perform his duty. Mo.Rev.Stat. § 558.140. Section 41.040 of the Revised Code of St. Louis proscribed the receipt of money for the official performance of duties. McNeive denies that his activities violated either of these enactments. For purposes of this case, we need not determine whether McNeive actually violated state or municipal law. "(T)he fact that a scheme may or may not violate State law does not determine whether it is within the proscriptions of (§ 1341)." United States v. Edwards, 458 F.2d 875, 880 (5th Cir.), cert. denied sub nom. Huie v. United States, 409 U.S. 891, 93 S. Ct. 118, 34 L. Ed. 2d 148 (1972)
The Durland case has engendered some difficult questions of statutory construction. This court, citing Durland, has stated that "the definition of fraud in § 1341 is to be broadly and liberally construed to further the purpose of the statute; namely, to prohibit the misuse of the mails to further fraudulent enterprises." United States v. States, 488 F.2d 761, 764 (8th Cir. 1973), cert. denied, 417 U.S. 909, 94 S. Ct. 2605, 41 L. Ed. 2d 212 (1974); accord, United States v. Mirabile, 503 F.2d 1065, 1066 (8th Cir. 1974), cert. denied, 420 U.S. 973, 95 S. Ct. 1395 (1975). Other courts have recognized that "section 1341 should be carefully and strictly construed in order to avoid extension beyond the limits intended by Congress." United States v. Kelem, 416 F.2d 346, 347 (9th Cir. 1969), cert. denied, 397 U.S. 952, 90 S. Ct. 977, 25 L. Ed. 2d 134 (1970); accord, United States v. Edwards, 458 F.2d 875, 880 (5th Cir.), cert. denied sub nom. Huie v. United States, 409 U.S. 891, 93 S. Ct. 118, 34 L. Ed. 2d 148 (1972). The "broad construction" language contained in some of this court's previous opinions is not, when placed in the proper context, necessarily irreconcilable with these latter decisions. As Durland recognized, the "definition of fraud" in the mail fraud statute was intended by Congress to be broader than the definition of fraud recognized at common law. This particular point was discussed in United States v. States, supra. However, courts should strictly construe § 1341 to assure that the statute is not extended beyond this congressional intent. The key inquiry is, therefore, to determine how far Congress intended to extend § 1341, and then to strictly construe the statute to guarantee that a defendant is not convicted for committing acts which Congress did not intend to be punishable by § 1341. "(B)efore one can be punished, it must be shown that his case is plainly within the statute." Fasulo v. United States, 272 U.S. 620, 629, 47 S. Ct. 200, 202, 71 L. Ed. 443 (1926) (construing the predecessor to § 1341). The analysis outlined above comports with the general rule that penal statutes are to be strictly construed to avoid extension beyond the intent of Congress. Smith v. United States, 360 U.S. 1, 9, 79 S. Ct. 991, 3 L. Ed. 2d 1041 (1959); 3 C. Sand, Sutherland Statutory Construction § 59.03 (4th ed. 1974)
It has been suggested that § 1341 was intended to be a "stopgap" device which would permit the prosecution of newly-conceived frauds until such time that Congress enacted particularized legislation to cope with the new frauds. United States v. Maze, 414 U.S. 395, 405-06, 94 S. Ct. 645, 38 L. Ed. 2d 603 (1974) (Burger, C. J., dissenting)
United States v. Kenofskey, 243 U.S. 440, 37 S. Ct. 438, 61 L. Ed. 836 (1917); United States v. Minkin, 504 F.2d 350 (8th Cir. 1974), cert. denied, 420 U.S. 926, 95 S. Ct. 1122, 43 L. Ed. 2d 396 (1975)
E. g., United States v. Green, 494 F.2d 820 (5th Cir.), cert. denied, 419 U.S. 1004, 95 S. Ct. 325, 42 L. Ed. 2d 280 (1974); Adams v. United States, 312 F.2d 137 (5th Cir. 1963). The Supreme Court has curtailed the prosecution of credit card swindles by ruling that mailings between the defrauded retailer and the credit card issuer, which necessarily occur after the defendant has fraudulently obtained the goods or services, are not in furtherance of the deceptive scheme. Therefore, the mailing requirement of § 1341 is not satisfied in those circumstances. United States v. Maze, 414 U.S. 395, 94 S. Ct. 645, 38 L. Ed. 2d 603 (1974)
E. g., Nickles v. United States, 381 F.2d 258 (10th Cir. 1967); Fabian v. United States, 358 F.2d 187 (8th Cir.), cert. denied, 385 U.S. 821, 87 S. Ct. 46, 17 L. Ed. 2d 58 (1966)
The types of fraudulent schemes falling within this classification are limited only by the ingenuity of the perpetrator. E. g., Pereira v. United States, 347 U.S. 1, 74 S. Ct. 358, 98 L. Ed. 435 (1954); United States v. Comyns, 248 U.S. 349, 39 S. Ct. 98, 63 L. Ed. 287 (1919); United States v. Cohen, 516 F.2d 1358 (8th Cir. 1975); Easter v. United States, 441 F.2d 425 (8th Cir.), cert. denied, 404 U.S. 833, 92 S. Ct. 83, 30 L. Ed. 2d 64 (1971). No misrepresentation of fact is required if the scheme is reasonably calculated to deceive persons of ordinary prudence. Silverman v. United States, 213 F.2d 405 (5th Cir.), cert. denied, 348 U.S. 828, 75 S. Ct. 46, 99 L. Ed. 653 (1954)
Two other kickback cases cited by the Government, United States v. Bryza, supra, and United States v. Barrett, 505 F.2d 1091 (7th Cir. 1974), cert. denied, 421 U.S. 964, 95 S. Ct. 1951, 44 L. Ed. 2d 450 (1975), are distinguishable for similar reasons
In United States v. Faser, 303 F. Supp. 380 (E.D. La. 1969), the court properly concluded that a bribery scheme violated § 1341. While we agree with the ultimate disposition in that case, we do not accept the broad language contained in the opinion which intimates that any time an agent secretly profits from his agency, he has defrauded the principal of a tangible benefit and a mail fraud violation has been established. See United States v. George, supra, 477 F.2d at 512; Epstein v. United States, 174 F.2d 754, 764-65 (6th Cir. 1949)