Earl Warren: Number 69, United States, Appellant, versus Ralph L. Sampson, et al. Mr. Willens.
Howard P. Willens: Mr. Chief Justice, may it please the Court. In view of the hour remaining, counsel for the appellees and I have agreed to divide the time remaining until 2:30.
Earl Warren: Very well.
Howard P. Willens: This case comes before the Court on direct appeal from the District Court for the Northern District of Georgia under the provisions of the Criminal Appeal Acts and involves the construction of the federal mail fraud statute. Prosecution under the mail fraud statute requires proof of two elements; first, a scheme and artifice to defraud and second, use of the mails for the purpose of executing the fraudulent scheme. This case involves an issue dealing with the second statutory requirement. The specific question raised is whether the mails were used for the purpose of executing the particular scheme set forth in this indictment, in view of the fact, that the mails were used after the moneys had been obtained by the defendants from their so-called victims. The 44-count of indictments set forth in the record charges 23 individual defendants and the defendant, Lenders Service Corporation, the violations of the mail fraud and conspiracy statutes. Count one of the indictment described in some detail the alleged scheme and artifice to defraud. In brief, the count describes the plan of the defendants to defraud small businessmen for entering and securing loans or in selling their businesses. Defendants would represent to take or provide valuable services to assist these businessmen in return for a fee, a portion of which was to be paid in advance. The indictment specified that in fact the defendants did not intend to perform the services contracted for and in fact did not intend to perform any services designed to be valuable in assisting these businessmen in obtaining their objectives. In order to affect their scheme, the indictment states that the defendants organized three corporations including the defendant, Lenders Service Corporation, and commenced the program of hiring and training salesmen. The indictment indicates that these salesmen were trained by the defendants in the use of evasions, half-truths and innuendos. The plan called for the contacting by these salesmen of prospects who had expressed an interest in the services of the defendants. The salesmen would then engage in a personal interview of these prospects. Throughout this personal interview, the indictment alleges that the salesmen engaged in a number of substantial false and fraudulent representations. Among other things, the salesmen misrepresented they’re on training and competence to evaluate the business needs of the prospects. The salesmen also misrepresented the facilities available to the defendants to assists these small businessmen and would also represent on occasion the interest rates and other terms at which loans might be made available through the assistance of the defendants. The thrust of all these misrepresentations of course according to the indictment was to secure the signature of the prospect on a -- of a document, on a document called a financial service agreement. This document in effect was an application for the services to be provided by the defendants and called for the payment of a fee by the applicant. According to the indictment, the next step involved the acceptance by the defendants of these applications. According to the indictment, the defendants accepted these applications indiscriminately so long as the fee was paid in cash and so -- or so long as they had been paid by cashier’s check which could be transformed into cash. The indictment charges that this defendant accepted the application had made no effort to evaluate such things as the qualifications of the prospect or the facilities which the defendant might in fact be able to develop in order to assist the prospect in obtaining the desired goal. According to the indictment, the defendants would then mail a copy of the accepted contract in a form letter to the applicant. According to the indictment as set forth at page 8 of the record, the defendants mailed a copy of the accepted contract and a form letter, “For the purpose of lulling said victims by representing that their applications had been accepted and that the defendants would therefore perform for said victims the valuable services which the defendants had falsely and fraudulently represented that they would perform. That a further purpose thereof was to inform said victims that they could not obtain a refund of their fees and that the contract was not cancellable and that the said victim was bound thereby and had no recourse for retrieving his money.”
Earl Warren: Mr. Willens, was that -- were those checks in final -- suppose to be in the final payment of everything that they owed to these people or was there -- was there more to come when the transaction was completed?
Howard P. Willens: Mr. Chief Justice, the contracts varied in that respect and I’ll be addressing myself to that point in a minute.
Earl Warren: It’s alright.
Howard P. Willens: According to the indictment after the mailing of this accepted contract and form letter, the scheme entailed a continued relationship between the defendants on the one hand and their victims on the other. According to the indictment, the defendants after securing certain financial information for their -- from various sources would prepare what they call a business and financial report for submission to lending institutions. Prior to the submission of these reports to lending institutions, the indictment states that the defendants would mail a proofed copy of this report to the applicants for their approval. The indictment state that in fact these business and financial reports were mailed, but again with no effort to correlate the type or extent of loan requested with the nature, type or lending practices of any particular lending institution in the relevant geographical area. The indictment and its description of the fraudulent scheme by alleging that on those occasions when complaints were made by the victims the defendants would pretend to investigate when complaints were made -- were made regarding misrepresentations of the salesmen, for example, the indictment alleges that the defendants would contact the salesmen and encourage the particular salesman to deny that any misrepresentations had been made. At that point, the defendants according to the indictment would contact the victim, inform him of the salesmen denial and tell him that for that reason no portion of the advance fee could be refunded. At this point and throughout, the scheme set forth in this indictment, the defendants would continue to assure their victims that valuables services had been performed and would continue to be performed by the defendants on the applicant’s behalf. After setting forth this scheme and artifice to defraud, the first 43-counts of the indictment charge specific mailings which were said to be for the purpose of executing the scheme. The last count of the indictment charges a conspiracy to use the mail to defraud in violation of Section 371 of Title 18. In the District Court, the defendants made four separate motions to dismiss. In response to these motions, the government filed what was called a supplemental brief which is printed in the record beginning at page 37. This supplemental brief was subsequently treated as a bill of particulars by the District Court to the extent it described the mailings involved. In fact, the supplemental brief did describe in some detail the 43 mailings relied upon as the basis for the 43 substantive mail fraud counts. In this supplemental brief, the Government indicates that two of the 43 counts were based upon the mailings of newspaper advertisements which the defendant caused to be mailed in its effort to secure the services of salesmen for its enterprise. Seven of the mailings dealt with the mailings of brochures. A sample brochure was attached to the supplemental brief and is printed at pages 52 and 53. This brochure was mailed by the defendants to two prospects prior to the visit of any salesmen. The brochure, a sample of which is in the record is called when our salesmen -- when our representative calls and it describes various commercial financing alternatives available to small businessmen and described certain specific banks as correspondent bank of the defendant. The 34 remaining mailings and the one at issue before this Court involved the mailings of the copies of the accepted contracts in the accompanied form letters by the defendants to their victims after the advance pay had been secured by the defendant. A sample of contract and form letter are set forth in the record at pages 50 and 51. As the Court will note from the examination of the contract set forth at page 51 --
Speaker: What did you mean by advance fee, the payment of the fee in advance or payment on account or (Inaudible) --
Howard P. Willens: The payment of the fee in advance Mr. Justice Harlan.
Speaker: Oh, the total fee in advance?
Howard P. Willens: In many instances, yes, but as the Court will note from this financial service agreement in the record there is a space left on this contract in which the salesmen will fill out a particular fee payment schedule pertinent to each transaction. The form provides a space where the total fee is to be stated and whether arrangements made regarding installment payments. So for example, in this contract in the record, a total fee of $900 is requested. That was to be paid as follows, $200 on this date which was the June 11th, 1958, the date of the interview between the salesman and the prospect. Then it’s provided in this particular case for a payment of $250 on or before June 20 of 1958, nine days later and the remaining $450 was to be paid when the loan is made. Now --
Speaker: Well, what page is that on?
Howard P. Willens: That’s on page 51 of the record sir.
Speaker: 51.
Howard P. Willens: Now --
Tom C. Clark: [Inaudible]
Howard P. Willens: Excuse me sir?
Tom C. Clark: This one [Inaudible]
Howard P. Willens: Yes, sir. This is the mailing upon which count three of the indictment is based.
Tom C. Clark: [Inaudible]
Howard P. Willens: Fifth --
Tom C. Clark: [Inaudible]
Howard P. Willens: These vary from transaction to transaction. For example, the vast majority of being the contracts upon which these 34 counts are based did not provide for a three-payment installment as does the sample in the record rather they provided for either payment of a single installment totaling in advance or for the payment of two installments, a portion in advance at the time of the interview and the remainder when the loan was made, as was the case with the third payment in this transaction printed in the record.
Tom C. Clark: You're not -- you don’t draw any suggestion [Inaudible]
Howard P. Willens: No, Mr. Justice Clark. As to all 34 contracts, the Government conceded in the District Court, in its supplemental brief that once the defendant secured the payment in advance from their prospect or applicant, they did not have any intention to recover further moneys from the applicants for their services. But the pertinent language in this respect is set forth at page 38 of the record which is a part of a supplemental brief. In the last paragraph on that page, the Government is speaking of all these 34 counts and what it described as split-fee contract. As to these, the Government stated in the District Court and I quote, “True it is that the defendants allegedly had no intention of obtaining the loans sought by their victims and might be said therefore to have had no intention of obtaining more money in the form of the other half of the split fee”.
Earl Warren: Well, on this transaction on page 51, then did the victim write a check for the entire $900 or checks aggregating that?
Howard P. Willens: Oh, no Mr. Chief Justice. At that date he paid $200 either in a cashier’s check or by cash.
Earl Warren: But why do you --
Howard P. Willens: That --
Earl Warren: Why do you concede then that they expected no more money from him if this document said that he was to pay $900 on toll?
Howard P. Willens: According to the scheme alleging the indictment it’s the Government’s position that the defendants had no intention of performing any bona fide services in obtaining loans for their applicants. So to that extent, they had no intention of completing the transaction on obtaining more moneys from their applicant.
Byron R. White: A matter of fact [Inaudible] --
Howard P. Willens: As a matter of fact according to this record they did not and we concede that as to all 34 counts the defendant did not have intention to obtain further money.
Earl Warren: Did the defense stipulate that they -- there was no intention of performing any service or completing any transaction, was that the basis for these stipulation?
Howard P. Willens: There was -- I do not believe any stipulation of fact of that sort in the District Court. The defendants have recognized in their brief, of course, that the supplemental brief so far as it described the mailings was treated as a bill of particulars by the District Court and the Government recognizes that the description of the mailings in this supplemental brief is therefore binding upon the Government. In the District Court, the Court denied three of the four motions to dismiss. However, the Court granted in part that motion made by the defendant to dismiss each and every count of this indictment on the ground that it failed to state an offense under the federal criminal laws. As to the nine counts based upon the mailings of the advertisements and the brochures sent prior to any visit of a salesman and to obtain of any money, the Court held that these did state an offense under the federal laws. As to these the Court said that it could not as a matter of law hold that they might not be for the purpose of executing the scheme within the meaning of the statute since they took place prior to the obtaining of any moneys. After the 34 counts at issue here however, the Court held differently. The Court in reliance on this Court’s decision in the Kann and the Parr cases held that the moneys had been obtained and that therefore as a matter of law these mailings of the accepted contracts and form letters could not be said to be for the purpose of executing the scheme. The relevant portion of the District Court’s opinion is on page 60 of the record where speaking of these 34 counts, the District Court stated, “it appears that the mailings involved in the remaining counts of the indictment relate to transactions where money had already been obtained from the victims prior to such mailings. This subsequent use of the mails under the holdings in the Parr and Kann cases supra and the case of Getzer v. United States were not for the purpose of executing the scheme.
Speaker: Did the District Court also dismiss the conspiracy count?
Howard P. Willens: Yes, Mr. Justice Harlan. The District Court also dismissed the conspiracy count without any particular discussion as to its rationale (Voice Overlap) --
Speaker: That on top of the 34 counts you’re talking about?
Howard P. Willens: That’s correct, sir.
Speaker: So, there are 35 counts that were dismissed in total?
Howard P. Willens: That’s correct, sir.
Speaker: I see.
Arthur J. Goldberg: But did the conspiracy count also include the allegations with reference to subsequent mailings, was it not?
Howard P. Willens: Yes, sir. They have the conspiracy count adjudged a violation of Section 371 and in violating the mail fraud statute in the various ways set forth in the 43 substantive counts which in --
Arthur J. Goldberg: In other words, this -- assuming that the theory of the District Court if he acted in that way, not because of the conspiracy count on the various [Inaudible] but because it included matters in the count which you felt they had to be considered, is that correct?
Howard P. Willens: Oh, that may have been the rationale Mr. Justice Goldberg. Of course, the Government contends that that was not the proper disposition --
Arthur J. Goldberg: Not of the --
Howard P. Willens: -- of the conspiracy count, but we assume that that is why he acted as he did.
Speaker: Well, is that all together clear because he also -- the conspiracy count also included substantive offenses which the District Court held were sufficient.
Howard P. Willens: Yes, Mr. Justice Harlan.
Speaker: So the rationale doesn’t necessarily follow, does it?
Howard P. Willens: No, it doesn’t sir and there's no discussion. In the District Court opinion as setting forth precisely his reason for dismissing the conspiracy count. The Government suggests that an analysis of this Court’s prior decisions interpreting the mail fraud statute indicate that this particular question of statutory construction has typically been resolved on a case by case basis. We suggest that decisions of this Court have -- require first an examination of the particular fraudulent scheme set forth in the indictment, construed in light of the defrauder’s intent and purpose. And secondly, an examination of the specific mailing alleged to be for the purpose of executing the scheme. If the mailing serves in some material and substantial way to advance the fraudulent scheme then it is the suggestion of the government that that mailing under the decisions of this Court is for the purpose of executing the scheme within the meaning of the statute. We do not believe that the decisions of this Court in Kann and Parr suggest any contrary analysis nor do they suggest a mechanical rule based upon the passage of money which provide the substitute for a close and particularized analysis. In the Kann case, the fraudulent scheme involved the efforts of the defendant to defraud a corporation called Triumph Explosives Inc. of which they were officers and directors. To this end, they organized a second corporation called Elk Mills. The plan called for the diversion of illegal profits through the payment from Elk Mills to the defendants of salaries, bonuses, and dividends. As the Kann case reached this Court, two specific mailings were at issue. Both mailings involved the mailings of checks steming from two different transactions. One transaction involved the payment of a check to the defendants from a contractor in payment for timber which the defendants had falsely represented belonged to them. The check was taken by the defendants and cashed at a local bank. The second transaction involved the payment of a bonus payment from Elk Mills to one of the defendants. Again, the check was taken and deposited to the credits of one of the defendants at a local bank. The Court held that these mailings of two checks from bank to bank were subsequent banking transactions and were incidental and collateral to the main scheme and therefore not for the purpose of executing the fraudulent scheme within the meaning of the mail fraud statute. Since this Court’s opinion in Kann has been relied upon by both parties to this proceeding and an analysis of the language of the opinion is significant to a determination of this issue, it might be useful to quote that portion of the Kann case which the Government believes is most useful in analyzing this case. The Court stated there, “The scheme in each case have reached fruition” --
Speaker: What page --
Howard P. Willens: Pages 94 and 95 of Volume 323. The scheme in each case had reached fruition, the persons intended to receive the money had received it irrevocably. It was immaterial to them or to any consummation of the scheme, how the bank which paid or credited the check would collect from the drawee bank. It cannot be said that the mailings in question were for the purpose of executing the scheme as the statute requires. The case is to be distinguished from those where the mails are used prior to and as one step forward, the receipt of the first of the fraud such as United States v. Kenofskey. Also to be distinguished are cases where the use of the mails as a means of concealment so that further fraud which are part of the scheme may be perpetrated. Indeed, the mailing has ordinarily had a much closer relation to further fraudulent conduct that has the mere clearing of a check although, it is conceivable that this alone in some settings would be enough. The federal mail fraud statute does not purport to reach all frauds but only those limited instances in which the use of the mails as a part of the execution of the fraud leaving all other cases to be dealt with by appropriate state law. The decision of this Court in the Parr case to the extent that it is relevant here is very similar. As this Court knows the scheme in the Parr case involved the takeover by the defendants of a Texas School District and the misappropriation of a portion of the revenues collected by that School District. In the Parr case, there were three specific mailings which are pertinent to the issue now before this Court. These mailings related to transactions in Parr between oil companies and the defendants whereby the defendants secured goods and services from the oil companies through the illegal use of the School District’s credit card. The three mailings involved, the mailing of two invoices from oil companies to the school district after the goods and services had been obtained. The third mailing involved the mailing of a check from the School District to an oil company in payment of such an invoice. But this Court held that those three mailings between the oil companies and the School District were not for the purpose of executing the total fraudulent scheme as required by the statute. IN so holding this Court relied on the language I have quoted from Kann and emphasized that the mailings there were incidental and collateral to the main fraudulent scheme. The Government believes that there are some substantial distinctions between the Kann and the Parr cases on the one hand and this case on the other which supports the Government’s position that the mailings set forth in this indictment were for the purpose of executing this particular fraudulent scheme. In part, the Government wishes to emphasize the functions which these mailings served in relation to the individual victims or the recipients of the accepted contract and the form letters. Secondly, the Government wishes to emphasize the role that these mailings played in the total single scheme set forth in this indictment. With reference to the (Inaudible) --
Speaker: Can I ask you a question? In judging this case do we -- are we limited to the allegations of the indictment or can we also take into account these exhibits?
Howard P. Willens: I hope -- the Government believes Mr. Justice Harlan that the Bill of Particulars and these attachments are relevant --
Speaker: Are these --
Howard P. Willens: -- and part of the record.
Speaker: -- the bill of particular, they’re not exhibits in the [Inaudible]?
Howard P. Willens: Focusing on the individual defendants the Government believes that the copy of the accepted contract served the very material purpose of discouraging the applicant from attempting to recover his advance fee and therefore served in a very meaningful way to enable the defendants to retain their ill gotten gains.
Earl Warren: Mr. Willens, when you speak of it -- to carry out this particular scheme, you don’t limit that to each individual transactions. Do you mean the general scheme to defraud the public by these various transactions, is that what you mean by this particular scheme?
Howard P. Willens: Yes, Mr. Chief Justice.
Earl Warren: But not limited to each transaction as one scheme, are we?
Howard P. Willens: No, that -- that’s correct Mr. Chief Justice. But the Government believes that even with reference to the individual victims the mailings here serves some --
Earl Warren: Yes.
Howard P. Willens: -- substantial ways which serve to distinguish them --
Earl Warren: Yes.
Howard P. Willens: -- on the mailings involved in Kann and Parr.
Earl Warren: Yes, yes.
Howard P. Willens: We’d like to emphasize that the mailing of this particular document was planned from the very outset of the scheme. It can be seen from the sample contract set forth in the record, page 51 that it provides as follows. This agreement shall become effective when accepted at any regional office of Lenders Service Corporation. Notification of acceptance shall be made by returning to applicant a copy of this agreement executed by duly authorized personnel. In the event, this agreement is not accepted by LSC, the entire fee will be refunded. Now, the Government is not here stressing the legal rights which might be the applicant’s if in fact he chose to go to court to exercise such legal rights. Rather we are emphasizing the practicalities of the situation as viewed from the perspective of the gullible victim who already paid his fee and a few days later receives rather formidable legal document. We’re suggesting that it’s not unreasonable to assume that such an applicant would be discouraged by the receipt of this document which informed him that his advanced fee could not be refunded. We think also though that this single document served a simultaneous purpose of a slightly different character. The document as I’ve noted specifies in rather general terms, certain services which the defendants indicate they will perform on the applicant’s behalf during the continued relationship between the defendants and the applicant. To this extent the document serves the important purpose of assuring the applicant that in fact he has not made an unsound bargain and that perhaps benefits will renowned resolving from the services to be rendered on his behalf by the defendant. This impact of the form -- of the accepted contract is of course corroborated by the simultaneous mailing of the cover letter, a sample of which is again, in the record. This form letter ties the applicant for his competence in the services of the defendant and then proceeds to request the applicant to take certain measures which are designed to be useful to the defendants in the further services to be performed.
Earl Warren: Where is that? It is in the record (Voice Overlap) --
Howard P. Willens: Yes. Example of the form letter is in the record at page 50 and as the Court will note the form letter which makes reference to five enclosures. In this letter, the defendants request the applicant to send for of the enclosures to an accountant, a bank, and to suppliers. Presumably, these authorization cards will then be used as a means of collecting financial information from these sources regarding the applicants of financial situation. Now, the fifth enclosure referred to in this letter is a personal history form which the applicant has requested to complete and return immediately so that the defendants can perform their services throughout the continued life of the scheme. You will note that the form letter makes reference to this business and financial report which is to be compiled by the defendant and that reference is made there as in the indictment to ascending to the applicant of a proofed copy. We suggest that these two mailings standout in sharp contrast to the mailings involved in the Kann case. In Kann, we have mailings between third parties, two banks, but were not a party directly to the fraudulent scheme. In this case, of course, the importance of these mailings is highlighted by the fact that the mailings took place directly from the defendant to the victims. Moreover, in light of the substantial and material way in which these mailings served to at once discouraged and assure the applicant, we think they served a vital function in the context of this particular fraudulent scheme, whereas, the mailings in the Kann case were properly described as incidental and collateral to the scheme there. Throughout this Court’s opinion in Kann it was stressed that what was involved was routine bank collection mailings and that there was only at stake there, the question is to whether or not the mere clearing of a check which is typified commercial practice was sufficient to invoke the federal mail fraud statute.
William J. Brennan, Jr.: May I ask Mr. Willens, is your argument double barreled that the mailings were a part and parcel of the scheme to avoid a particular victim and also part and parcel of the broader scheme to defraud victims generally?
Howard P. Willens: Yes, that’s correct Mr. Justice Brennan and that would deal as the second important distinction between this case on the one hand and Kann and Parr on the other which supports the Government’s position. Because it is clear that the scheme alleged in this indictment was a single, elaborate scheme structured so as to permit the defendants to defraud a multitude of small businessmen who might be attracted to its representations. The scheme -- the indictment makes it clear that the defendants here constructed the scheme to operate on a national basis and to reap the total profits which could only be gained by reaching as many individual victims as possible. Now we submit that these mailings served an important purpose in developing and enhancing the fraudulent scheme. These mailing served to prevent the development of complaints from individual victims which might conceivably be brought to the attention of newspapers. The Courts or law enforcement officials, the end result of these complaints from these victims might bring a speedy end to the fraudulent scheme constructed by the defendants.
Potter Stewart: You say this was a single fraudulent scheme?
Howard P. Willens: It is the contention of the Government that the scheme described in this indictment is a single scheme and artifice to defraud.
Potter Stewart: Well then wouldn’t it be arguable that there couldn’t be more than one count of the indictment?
Howard P. Willens: I'm afraid I don’t understand --
Potter Stewart: How many counts were there in the original indictment?
Howard P. Willens: We have 44 counts in the entire indictment, 43 counts charged substantive mail fraud offenses. Each count incorporates the description of the scheme and artifice to defraud which is set forth in detail in the first count and then on each of the 43 substantive mail fraud counts charge a specific mailing (Voice Overlap) --
Potter Stewart: So these people are convicted on all of the counts if these counts are restored could conceivably be sentenced to what, 440 years in the penitentiary?
Howard P. Willens: It is the -- the law under the mail fraud statute that each offense constitutes the mailing -- of a mailing for the purpose of executing the fraudulent scheme and that as such the mailing is an individual offense, that’s correct sir.
Potter Stewart: I was thinking -- maybe I -- this isn’t part of this case is it, in its present posture here, but don’t you think there might arise questions in this case, under cases like [Inaudible] --
Howard P. Willens: Mr. Justice Stewart, the contention is frequently raised in mail fraud cases by the defendants that in fact the -- of the offense of the mail fraud statute is a single scheme and artifice to defraud rather than the affect in mailings. However, to date the courts have held without exception that this statute as interpreted makes the mailing as they say the gist of the offense.
Potter Stewart: Even when there is admittedly about a single scheme to defraud?
Howard P. Willens: That is correct.
Potter Stewart: Each mailing is a separate offense. You say that settled?
Howard P. Willens: Yes, sir.
Tom C. Clark: Thus far what you mean is that [Inaudible] the Parr case [Inaudible] --
Howard P. Willens: Yes, Mr. Justice Clark. It was conceded by counsel in the Parr case who represented the defendants that their clients were guilty of constructing a scheme and artifice to defraud. That was conceded in Parr and the only issue was whether or not the second element of the mail fraud, a statute was borne out that is the use of the mails for the purpose of executing a fraudulent scheme.
Tom C. Clark: Do you [Inaudible] this is significant in the Parr case [Inaudible] where they said the application in [Inaudible] as your financial service agreement. You put in [Inaudible] -- take the significance in there?
Howard P. Willens: No, Mr. Justice Clark we don’t believe that necessarily adds anything to the mailing of the contract itself which bears on its face the signatures of the defendants and which constitutes an acceptance of this document.
Earl Warren: But why -- why isn’t that a part of that -- detriment part of the transaction, if they agreed beforehand, if they agreed beforehand that for payment of so much money, if accepted by the defendants that it would be a deal? And here, they write a letter and they say, “This is your acceptance and it is a deal.” Why isn’t that as much of a part of the transaction as sending the money itself?
Howard P. Willens: Well, it is the Government’s contention, Mr. Chief Justice, and in fact it was, an integral part of the transaction even with reference --
Earl Warren: Yes.
Howard P. Willens: -- to the individual victim.
Earl Warren: Well -- well I misunderstood your answer to Mr. Justice Clark.
Howard P. Willens: No, I was addressing myself to the -- any additional support that might be gained from the second paragraph of the form letter which accompanied the accepted --
Earl Warren: Yes.
Howard P. Willens: -- copy of the contract.
Earl Warren: Yes.
Tom C. Clark: On determent is that required for the enclosure of those?
Howard P. Willens: Yes, Mr. Justice Clark.
Tom C. Clark: There’s number 51 -- page 51.
Howard P. Willens: Yes, 51. The financial service agreement is set forth at page 51 was an enclosure to the form letter --
Tom C. Clark: Let me get back --
Howard P. Willens: -- as set forth at 50.
Tom C. Clark: -- back straight. This number 51 would be signed by the applicant and by who else?
Howard P. Willens: Signed by the applicant and then it was signed by authorized personnel at the regional office of the defendants. In this case, the regional office was in Atlanta.
Tom C. Clark: By the time the money was given, the check was only signed by the Florida Automobile Brake Corporation, is that right?
Howard P. Willens: Yes, Mr. Justice Clark. That's correct.
Tom C. Clark: Then you take the check to the regional office and then they would sign the acceptance and then they would mail it back?
Howard P. Willens: Yes, that was the procedure. Typically, the -- a portion of the money was paid in cash or else it was paid in check through the salesman. The indictment indicates that the salesman was equipped with a rubber stamp and could quickly stamp the check as appropriate for certification so he could get a cashier’s check as quickly as possible.
William J. Brennan, Jr.: Now, as I understood --
Arthur J. Goldberg: Mr. Willens --
William J. Brennan, Jr.: Excuse me, go ahead. As I understand it, the only payment that the scheme contemplated according to the indictment was that which was made when the application was signed, is that it?
Howard P. Willens: Yes. That is correct. As in -- as the indictment had been construed in light of the bill of particulars, the Government believes that the defendants only intended to recover that advance paid to the salesman and did not intend to recover any further money (Voice Overlap) --
William J. Brennan, Jr.: But independently of anything else, the acceptance as such and return by mail of the executed -- of the contract executed in Atlanta, the Government says was a part of the fraudulent scheme, so that the mailing was part of it and if you prevail on that you don’t have to go beyond that, is that your position?
Howard P. Willens: We so contend and that you do not have to go further to consider the impact of this particular mailing with reference to the total scheme set forth in the indictment. It has to be emphasized that these prospects were told of course as the Court recognizes that the moneys would be refunded in the event the contract was not accepted. And so, if the contract indicated an acceptance had not been mailed, there certainly is reason to assume that there would’ve been the complaints from the individual victims which the Government believes might well have a brought an end to this fraudulent scheme with reference to other victims. We suggest that the Court in the Kann case did have in mind precisely this type of mailing. The Court in Kann accepted from it’s ruling those cases where the mails were used “as a means of concealment so that further frauds which are part of the scheme can be perpetrated. ”Now, it’s clear that the scheme in Kann involved only a single victim whereas the scheme here involves a large number of victims, but there is nothing in the language of this Court or certainly in the underlying rationale which would so limit this theory to only those schemes involving single victims. To so interpret the language or interpret the statute in the Government’s view were to be unrealistic or unrealistically fragmentized the single scheme alleging the indictment into a multitude of individual schemes with reference to individual victims.
Arthur J. Goldberg: The fraud means [Inaudible]
Howard P. Willens: I think that the Government has -- chooses to state the offenses under the statute only in terms of individual mailings. It could have limited its indictment to 5, 10 or 15 mailings, in fact we had alleged 43 mailings in violation of the statute.
Arthur J. Goldberg: [Inaudible]
Howard P. Willens: I don’t feel that there’s anything to prevent the Government from so charging in its indictment. Now, we suggest the Government’s analysis of the statutes is consistent with this Court’s opinion -- opinions in Kann and Parr and in addition we believe that the analysis is supported by a large number of Courts of Appeals’ decision which are cited in the Government’s brief. Many of these decisions have involved fraudulent schemes much more analogous to the scheme here at bar than the schemes in the Kann and the Parr cases. And in such cases the Courts of Appeals have applied the statute in a way so as to support the Government’s position. One such case which might be useful in illustration is a case called Clark v. United States decided by the Court of Appeals for the District of Columbia Circuit and cited at page 14 of the Government’s brief. In this case, the defendant took money from the victim and represented that he would invest this moneys on the victim’s behalf. In fact, they did not invest them on the victim’s behalf, but appropriated the moneys. Subsequently he wrote letters to the victims in which he continued the representation that the moneys had been invested on the victim’s behalf and it was these mailings which were at issue in the Clark case. And Judge Prettyman in Clark rejected the contention that this Court’s opinion in Kann requires that once money had passed hands the scheme terminated and then a subsequent mailing could not be for the purpose of executing the scheme. In rejecting that argument, Judge Prettyman stated, the fallacy of this argument is that the taking described in the indictment was not the bare taking of the money and its conversion to appellant’s use. The scheme also included a representation that the money would be invested in Mr. Dixon’s behalf with the insurance company. Such a scheme obviously included an understanding at some return by way of interests or dividends would be forthcoming. It encompassed an intention not only to convert the money but also to keep it. So, as to any action on the part of appellant which represented efforts on his part to continue the representation that the money was invested and efforts by him to keep the money constituted activities for the purpose of executing such scheme or artifice or attempting so to do. We think that other decisions also demonstrate the facts which are relevant in interpreting the statute as applied to this particular type of comprehensive fraudulent scheme. In any event, we stress that the mailings here contrary to Kann and Parr were between the defendant and the victims. They were planned from the outset as an essential ingredient of the scheme to discourage the victim from recovering their money. They continued the representation that valuable services would be performed and they enabled the defendants to perpetrate further frauds during the course of their continued and elaborate scheme. We think the District Court erred in ignoring these factors and stressing only the point at which money changed hands and then judgment should therefore be reversed.
Earl Warren: Mr. Thrower.
Randolph W. Thrower: Mr. Chief Justice, may it please the Court.
Earl Warren: Is it Thrower or Thrawer?
Randolph W. Thrower: Thrower.
Earl Warren: Thrower?
Randolph W. Thrower: Yes. We would like initially to call to the Court’s attention that our brief raises three major issues with respect to this appeal but only one of which was touched by the argument of Mr. Willens. I will undertake to cover the argument which he covered; the portion of the issues covered by him and then proceed to the other two issues. There is of course here no question on our part but that the indictment if true and it is denied by the defendants, but if the indictment is true, charges a fraud, charges wrongful conduct by which we would not undertake to defend. That is not the issue here. The issue here is whether the indictment charges a federal offense. I call your attention to the fact that counsel, Mr. Willens correctly states the statutory test which requires that the mailing be for the purpose of executing the scheme or artifice to defraud or obtain money by false pretenses or attempting so to do. But in his brief, the Government quickly departs from this statutory test and the statutory language which is language of limitations and restrictions and goes to the broadest kind of language such as mailings which advanced the plan or advanced the plot, mailings as part of a long range preparations and the like. And by substituting here, this broader language for the narrower restrictive language of a statute perhaps in 1872, we feel that the Government here seeks to extend this coverage of statute in both directions to extend it in one direction, to cover mailings which are purely preliminary and to extend it in the other direction or to cover mailings which follow the execution of the offense. We believe that the issue is squarely covered by the decisions at the issue as to the subsequent mailing just squarely covered by the decision of this Court in Kann versus United States, a position that was reaffirmed and reasserted only for a couple of years ago in Parr versus the United States. I think that Mr. Willens have given a best statement of the facts of this case as alleged. We take -- we’d wish to comment only about the lack of clarity with respect to the fact that all of the money which was expected to be received by the defendants was received before the mailings involved in the first issue which we are discussing.
Earl Warren: Did that end the transaction?
Randolph W. Thrower: That Your Honor executed the offensive fraud and as this Court stated within it’s holding within the very holding in Kann -- in the Kann case that executed the scheme or artifice to obtain money by false pretenses.
Earl Warren: But I -- I notice here on this exhibit that’s on page 51 of the transcript, the agreement that the victim -- so-called victim signed and which the defendant promised to sign if it was agreeable to him said this. “This agreement shall become effective and that has to do with the payment of the moneys when accepted by any regional office of Lender Service Corporation. Notification of acceptance shall be made by returning to applicant a copy of this agreement executed by duly authorized personnel. In the event the agreement is not accepted by LSC, the entire fee would be returned.”
Randolph W. Thrower: Your Honor --
Earl Warren: Now, isn’t that a -- isn’t that vital part of the transaction and isn’t it just the other side of the coin so far as these parties are concerned?
Randolph W. Thrower: We would think not, Your Honor.
Earl Warren: What?
Randolph W. Thrower: I think that the -- our position would be that the underlying offense of fraud has been committed, the state offense, the crime of fraud has been committed and when the proceeds when the fruits had been received and that the fraud has been executed.
William J. Brennan, Jr.: This is on the premise of the allegation that was never contemplated by the alleged defrauders that any more money be -- would be accepted, all the rest was a facade around the central purpose of getting that money and once they got it, as far as they were concerned the fraud was --
Randolph W. Thrower: According to the allegations, yes. I might review --
Byron R. White: Your position is that it makes no difference once the money is received that it was clearly contemplated that there would be further mailing.
Randolph W. Thrower: Oh, we do not --
Byron R. White: But (Voice Overlap) --
Randolph W. Thrower: -- we take the issue with the fact that it was contemplated that there would be further mailing.
Byron R. White: In connection with all of the accounts that were dismissed you concede that these mailings were within the contemplation of the scheme.
Randolph W. Thrower: We would concede that, yes. There would be no --
William J. Brennan, Jr.: Mr. Thrower, may I ask was it -- I gather some of this material, particularly that at 52 and 53, that was -- this is material mailed before the money was paid or what?
Randolph W. Thrower: Yes, if I may come to that subject -- yes, that would --
William J. Brennan, Jr.: Well, can I just ask you, when you [Inaudible] --
Randolph W. Thrower: [Inaudible]
William J. Brennan, Jr.: -- discussing it, are there any counts that relate to the -- that mailing is based on --
Randolph W. Thrower: Seven of the accounts --
William J. Brennan, Jr.: Yes.
Randolph W. Thrower: -- not dismissed by the District Court --
William J. Brennan, Jr.: Right.
Randolph W. Thrower: -- related to that mailing and it was because of that that the Court did not dismiss it. We will argue that the Court erred in that.
William J. Brennan, Jr.: Yes.
Randolph W. Thrower: But with respect to the subsequent mailings our position is that the reference to the scheme or artifice to obtain money by false pretenses stated within the statute refers to the offense of fraud or obtaining money by false pretenses that that offense is committed finally and irrevocably when the wrong doer receives all of the money which he is seeking and which he expects to get. And that therefore, the fraud is executed and that the scheme or artifice as discussed -- as stated in this statute is also executed.
Byron R. White: Are these the ones clear even though all of these other mailings were contemplated by the scheme in advance?
Randolph W. Thrower: They may be related. We don’t take issue with the fact that they maybe related. Our point is that the offense of fraud was executed when the proceeds of the fraud were received. We believed it was precisely that.
Byron R. White: Well, did you base on Parr and Kann?
Randolph W. Thrower: On Parr and Kann and I would like to discuss those cases to the extent of pointing out that that was a clear holding of each of those cases. I may say incidentally when you referred to Paul, we’re referring to the action of the Court on counts 17, 18 and 19. They are not to the counts involving the legally compelled mailings. In the Kann case, as counsel has pointed out there were two mailings of checks. One check was received by a subsidiary of the victim corporation. It was endorsed and deposited for credit. The other check was received from an innocent contractor. He was an innocent intermediary who gave a check to the defendants for $12,000 and was then to bill the ultimate victim for that amount of $12,000 and this other check clearly, it was most important to the defendants that there be a smooth clearance of that check because there then followed a subsequent activity which was the billing of the $12,000 to the ultimate victim whereupon the defendants would use their offices within the corporation to see that the check was paid without disturbance. It cannot be said here that subsequent mailings were not within their contemplation. It cannot be said here that subsequent mailings were not extremely important to the security of the defendants. In fact, it would appear that the subsequent mailings there were of much greater concern to the security of the defendants than were the subsequent mailings here. The dissent in that case as I understand was based upon the fact that those mailings were somewhat tentative because the burden did not fall back upon the victim until the checks had cleared. In the case of the check from the intermediary, the contract -- it’s not -- and he indicated that the ultimate victim had in any way had sent it to the transaction and that the billing was yet to be made to the ultimate victim. What the Court pointed out in that case? Well first, an issue was raised as to whether the defendants had received irrevocably the fruits of the fraud because of the tentative nature which I pointed to. The majority held however, that once those checks were deposited and a credit was received or cash was received that the payment could not be stopped and that the fruits of the fraud had been irrevocably received. And therefore, subsequent mailings were incidental, irrelevant really to the fact that a crime of fraud had been committed and the Court in its very holding pointed out, we hold therefore that one element of the offense defined by this statute namely that the mailing must be for the purpose of executing the fraud is lacking in the present case. And we think that squarely covers this case. It was alleged as is indicated in the argument set in – digested proceeding the opinion that the Government argued that this was a continuing scheme, there wasn’t any question about that. There was a very elaborate continuing scheme intended apparently to go on indefinitely where the officers, certain officers and others in a corporation were to defraud a corporation which they control by diverting -- diverting a portion of its earnings and profits to a subsidiary and then draining money out of this subsidiary in one way or another. There’s no question, but that a detection, a discovery with respect to one transaction would have blown up the whole deal.
Arthur J. Goldberg: Mr. Thrower, [Inaudible]
Randolph W. Thrower: That is our position exactly with respect to the mailings here. Now, the Parr case is probably --
Earl Warren: Well, under the law of conspiracy if they join together for the purposes of doing that isn’t that a -- doesn’t that make it a continuing conspiracy?
Randolph W. Thrower: Mr. Chief Justice, to bring a conspiracy within the coverage of this statute, it must be shown that they conspired to use the mails to defraud. I think that the Government would acknowledge that unless a use of the mails to defraud is shown in some substantive count that they have not alleged and intend to use the mails to defraud so that the conspiracy count would fall. The mere fact that in conjunction with the broad range conspiracy of one of the overt acts may contemplate the use of the mails would not bring that within the mail fraud statute unless that use of the mails were in execution of defraud or in attempting so to do. So that if (Voice Overlap) --
Earl Warren: [Inaudible] --
Randolph W. Thrower: I beg --
Earl Warren: If it was to keep the scheme alive and operative in the community as against all of these people that they named that says that it been -- beginning prior to March 9th, 1956 and continuing until June 1, 1959, the defendants, a corporation devised and intended to devise a scheme and artifice to defraud then naming about 40 people and numerous and diverse other persons throughout the United States were owners of businesses and so forth. Well now, wouldn’t any if they were doing it to -- having these transactions at different times and that keeping of all scheme alive by sending mails -- mail through -- and letters through the mail and documents through the mail saying, “We’re servicing your loan and we’re going to do so and so for you, and this is our acceptance,” and as it says at page 50 there, we agreed to do certain other things, isn’t that keeping the -- isn’t that keeping the thing alive and isn’t that using the mails to do so?
Randolph W. Thrower: Well, that depends upon what statute intends to refer to when it uses the ten -- the term scheme or artifice. I think when it uses the term scheme that could possibly be construed to be broad or narrow. When it uses the term artifice however, I think it is indicating as the Court held in Kann that it is talking about a particular transaction of fraud and not a long range of plan of operations which may contemplate fraud. The very argument that you suggest Mr. Chief Justice was made to the Court in the Kann case and the Court replied to that that it must look at the matter in transaction by transaction, that is fraud by fraud and artifice by artifice and the question was as to whether in the execution of any fraud to obtain money by false pretenses, the crime, the offense rather, the underlying wrong and offense of obtaining the money by false pretenses, there was a use of the mails that the scheme or artifice as referred to does not extend to a long range plan of operations. We recognize that that is the Government’s position here. We think it is squarely contrary to Kann and is -- I only wish to say squarely contrary to Parr. We -- of course, it is unnecessary to call to the Court’s attention the fact that this is a criminal statute, that it should be strictly construed even if there were some ambiguity within the statute on that, it should be decided in favor of the accused. And this point, we say, has been decided by this Court on two occasions in the Kann case and again in the Parr case. The Parr case perhaps is even clearer, even more conclusive if that were possible on this particular point. There it was charged in count 17, 18 and 19 that the accused using wrongfully a charge account of the School District of the particular District in Texas had obtained gas and oil and services from a gas station. Subsequent to their obtaining the gas and oil of course, the gas station billed the School District which the defendants controlled and by reason of their control they had the School District pay those checks. Now, of course what happened subsequent to their getting the gas and all was of great moment so far as the security of the accused, the defendants were concerned. That was the critical thing. The smooth clearance of the bills through the School District and the sending of checks back, but the Court held there relying again on the Kann case that the fraud was executed. The offense of fraud was committed irrevocably. There was no point thereafter of --
William J. Brennan, Jr.: At what point was it executed?
Randolph W. Thrower: It was executed when they wrongfully obtained and converted to their possession the gas and the oil and the services even though it remained later for the burden to fall, through their efforts and according with -- to their plans upon the School District.
William J. Brennan, Jr.: And those subsequent events involved the mailings I gather of the -- by the gas station of the bill and the return by mail of the check.
Randolph W. Thrower: And this Court held that that was controlled by the Kann case and that those mailings was not a part of the execution of the fraud. It seems to us to cover the matter very clearly. Now, they [Inaudible] --
Hugo L. Black: Was there any argument in that case that they were made for the purpose of those things related on for the purpose of concealing the fraud?
Randolph W. Thrower: Well, I think it was -- I think it was very -- I think Your Honor that it was apparent from the face of the transaction that the sending of the bill and the return of the check was essential to the concealment of the transaction because it had to be cleared through the books and the payment office of the School District as a normal and routine business expense of the School District. I have reviewed the --
Hugo L. Black: That was not a part of the scheme by which the money was obtained, was it, that they would do this to conceal it?
Randolph W. Thrower: Well, it was essential that it be concealed that the School District would not -- could not pay their personal gas and oil expenses. It had to be concealed in the running of it through the books as a business expense of the School District.
Byron R. White: Well, who did the mailings?
Randolph W. Thrower: The mailing was done by the -- first by the gas company and then it was done by the School District which was controlled by the defendants.
Byron R. White: Well, the defendants could have [Inaudible]?
Randolph W. Thrower: I beg your pardon?
Byron R. White: The defendants themselves did the [Inaudible]?
Randolph W. Thrower: They -- alright, to the extent that they controlled the School District, they did the mailing --
Hugo L. Black: Who did the mailing --
Randolph W. Thrower: -- to the extent --
Hugo L. Black: -- in the Kann case?
Randolph W. Thrower: The bank did the mailing.
Hugo L. Black: The bank in Kann did the -- after the money had been received by the people who had defrauded the others to get it?
Randolph W. Thrower: Yes. Now, let me point --
Hugo L. Black: What did you do with this [Inaudible] in Kann in reference to your answers to the Chief Justice? The case is to be distinguished on those by the mail used prior to -- is one step towards to receive the fruits of the fraud and so forth also do we distinguish our cases where the use of the mails as a mean -- means of concealment so that further fraud which is part of the scheme may be perpetrated?
Randolph W. Thrower: I think Your Honor that what is referred to there are mailings subsequent to one fraud which a part of the execution and contribute to the execution of a further fraud. For example, in the cases that are cited under that point that are referred to in our brief where there is a continuing fraud against a single victim --
Hugo L. Black: Does it have to --
Randolph W. Thrower: -- a mailing --
Hugo L. Black: -- [Inaudible]?
Randolph W. Thrower: A mailing may lull that victim so as to persuade in to invest more money in the enterprise.
Hugo L. Black: Does there have to be a single victim? Suppose it’s a scheme --
Randolph W. Thrower: Where there have been cases --
Hugo L. Black: -– to bring these numbers of people.
Randolph W. Thrower: Yes. There have been cases, Your Honor, where one victim is used in order to effect a fraud upon a second victim, but the argument that the Government makes here and I think it is important to see the distinction. The argument that the Government makes here in effect is that these mailings prevented the defendants from being arrested and therefore, left them that liberty to affect other frauds upon other people. That argument was not what was accepted in Kann and that is not the exception that was made in Kann because clearly there, if the earlier transaction of fraud upon the ultimate victim, the Triumph Corporation had been revealed, the whole thing would’ve blown up and there would’ve been no fraud. Likewise in the Parr case, if one transaction were revealed, of course it would have blown up and there would have been no more. What the Court is referring to is where one mailing contributes to the execution of a later fraud. Another example of that, cited -- which is given involved in one of the cases cited by the Solicitor here is where a loan had been made from a bank putting up securities. There was a mailing subsequent to the date of that loan, but the Court, this was Corbett versus United States, the Court made it very clear that that contributed to the inducing of the bank to make further loans upon -- for its bonds and that it was part of the effort to get further loans. But it would not cover a situation where the concealment merely prevents arrest, arrest and leaves the defendant free to commit other frauds. There is no allegation in this indictment that the performance in one case had anything, any relation whatsoever to a sale in another situation. And in fact, a reading of the full indictment would indicate that these were separate, independent and unrelated transactions. Again, I would say not nearly so closely related as in Kann and Parr where a failure to conceal one transaction would of course had terminated as to other. If I may proceed, I think it is interesting to note that Congress has on many occasions passed statutes with -- which deal with the matter of concealment after the execution of a crime. This Court has also on several occasions as we note in our brief concerned itself with the claim that concealment after the commission of a crime is a part of the crime itself. And it has consistently held and indicated in dicta that concealment is not a part of the execution of the offense itself.
Earl Warren: Well, aren’t there other things besides concealment involved here Mr. Thrower? Assuming that a general conspiracy to do with these men alleged to have done does lie as it has been charged in this first count of the indictment and that over a period of three years from March 9th, 1956 to June 1, 1959, these defendants were in a conspiracy to defraud all of these 40 people or 40 or so people and divert – numerous and diverse other persons and they made those 40 transactions, had those 40 transactions and that part of that transaction in each case was to pay over the money, and then to have these receipts going back saying we have accepted it and so forth, in each case that that happens over a period of three years. Do you tell us that that is not a continuing conspiracy and that these things are keeping the conspiracy going in the community or in the country or whatever if the -- whatever the jurisdiction is?
Randolph W. Thrower: May it please Your Honor, I would answer that by saying that there is no federal statute which makes it a federal offense to conspire to defraud nor is there a federal statute which makes it an offense to mail letters that are related to such a conspiracy. The only federal statute is one that makes it a federal offense to use the mails in the execution of the offense of fraud --
Earl Warren: Yes.
Randolph W. Thrower: And this Court held in the Kann case and the execution of fraud.
Byron R. White: Yes, but the execution of the scheme?
Earl Warren: The scheme?
Randolph W. Thrower: Well this Court, there was a scheme in Kann and in Parr which was a continuing scheme and this Court held that the terms scheme or artifice as referred to in Kann and Parr met the particular transaction. If it referred, if Your Honor, it refers to a single scheme, I think then that the comment of -- comments of Mr. Justice Goldberg I believe and Mr. Justice Brennan would be pertinent that there could be simply -- there could be one offense. We do not acknowledge that there could be indictments for multiple mailings for one offense. The cases which have held --
Byron R. White: But you -- do you say that they're not quite [Inaudible], that there were -- the Government alleged 44 schemes --
Randolph W. Thrower: Within the meaning of the statute?
Byron R. White: [Inaudible]
Randolph W. Thrower: Yes, yes.
Byron R. White: But then you deny it -- you do not [Inaudible] one ongoing scheme.
Randolph W. Thrower: We concede -- the question is, what is the statute referring to, words or scheme or artifice to obtain money by false pretenses? This Court held in Kann that that is a reference to a single transaction of fraud.
Byron R. White: Are you going to argue the [Inaudible]?
Randolph W. Thrower: Well, I hope to Your Honor and I have an intermediate point which I will have to --
William J. Brennan, Jr.: I -- I don’t want to take too much of your time --
Randolph W. Thrower: Yes.
William J. Brennan, Jr.: -- but may I just on this first point. You see no distinction between the facts that here the subsequent mailings, that is after the payment of the money whereby the defendants themselves charged with the fraud whereas in Kann and then Parr the subsequent mailings involved whereby other than the defendants themselves, don’t they?
Randolph W. Thrower: We see no distinction. The Courts have held many, many, many times that the statute refers to mailings done or mailings caused and there would be no question but if there were a routine clearance of a check preliminary to the receipt of the money that that would be covered. The Courts have held that many times, the question here is solely whether this comes after the execution of the fraud and we say here as to a criminal statute that if this statute is opened up under the vague terminology that had been suggested in the brief that there is no ending of the extension --
William J. Brennan, Jr.: Well, --
Randolph W. Thrower: Excuse me (Voice Overlap) --
William J. Brennan, Jr.: -- as to the facts to what you answered me before that the real objective of the fraud was to get this money and once they had it the fraud was executed.
Randolph W. Thrower: Now, let me refer to the preliminary mailings. I think if I may simply say this. The statute refers to for the purpose of executing the fraud or attempting to do so. This statute has historically been known and treated as the mail fraud statute. The use of the mails to commit a fraud or the use of the mails in an attempt to commit a fraud and mailings which are purely preliminary and have not reached the level of an attempt we think are not covered by the statute. We note that Mr. Miller, head of the Criminal Division in the Department of Justice, Assistant Attorney General Miller in testimony before the Senate Judiciary Committee was asked whether he wanted the 1961 anti -- antiracketeering statutes extended to include fraud. If fraud had been included then there would be no question but that any mailing in the course of unlawful -- in the course of a business having as its objective fraud would be covered. But he expressly declined that and I think Mr. Chief Justice that he declined there to accept the jurisdiction which your question would tend to give it here. That is any mailing in the course of an unlawful business in the mailing of fraud -- in the mailing in the course or any transportation across state lines in the course of an unlawful business would have been covered and these preliminary mailings would have been covered, the subsequent mailings would unquestionably have been covered if he had accepted the jurisdiction which one of the Senators suggested might be given by including fraud within the antiracketeering statute of 1961. He said that this would be a major expansion or a jurisdiction which would burden both on the prosecuting and on investigative staffs and we feel that the Government is seeking here through this indictment and under a restrictive statute which this Court has held to be limited and restricted is seeking to get the jurisdiction of that it declined there. Now, if I may move quickly and in closing to the point involving the conspiracy. This third point does not arise of course unless the Court finds and we would regret if it did so, unless the Court found -- finds that these so-called substantive counts charged a federal offense. We argued in support of a motion before the District Court that every count, every so-called substantive count in the indictment actually was a conspiracy no matter what it was called and that therefore, each of the substantive counts was duplicative of each of the others and that the conspiracy count was duplicative of them all. We believe that it was in response to that that the District Court dismissed the conspiracy count. We believe that that is the least that it could have done, that it might proffer or have required the Government to stand on one count and to dismiss all of the others.
Potter Stewart: What the District Court says about its dismissal?
Randolph W. Thrower: It paid no --
Potter Stewart: Didn’t say anything --
Randolph W. Thrower: -- comment about it. It --
Potter Stewart: I was looking but I couldn’t --
Randolph W. Thrower: Left it to us to --
Potter Stewart: Didn’t say a word about -- about its reason?
Randolph W. Thrower: Except for the dismissal it said nothing further, it did not explain. However, the motion was made to dismiss it on the ground that it was duplicative of the substantive counts.
William J. Brennan, Jr.: That was the only basis on which -- the only basis stated in the motion?
Randolph W. Thrower: There was the further basis that the -- a further argument, that not of the substantive counts alleged federal expense but presumably, it did not move on that basis because it upheld some of the --
Potter Stewart: Because he didn’t throw all the counts out.
Randolph W. Thrower: So, we have assumed that it was on that basis. I think that is their assumption. Let me call your attention to the length of the indictment here. It indicates the charge of a conspiracy or as the Chief Justice has indicated it extended over a period of more than three years involving three corporations and three individuals and – 23 individuals. Some of them were employed the principals who were employed all of the time and some of them were employed a part of the time. It was a conspiracy alleged to defraud 46 named persons and as the indictment says a numerous and diverse other persons throughout the United States. The use of the mails -- the intent to use the mails was alleged to be a part of the plan and of the conspiracy. The indictment does not charge that one defendant mailed or any particular defendants mailed and that other defendants aided and abetted. The indictment charges that all defendants mailed. All of these facts are charged as a part of each one of the substantive counts and all of these defendants are named in each of these substantive counts. We believe that it is apparent from a reading of the entire indictment, this total charge encompassing all of the defendants as a group in each substantive count that in reality there is in each substantive count, the charge of a conspiracy. There is not the slightest indication within any substantive count that any individual is included by reason of his direct activity in doing something or by -- or under the principle statute as aiding, abetting, counseling, commanding or procuring.
Arthur J. Goldberg: [Inaudible]
Randolph W. Thrower: Well, I think that reference to the salesmen best illustrates the scope of this charge because it’s indicated that the salesmen had a limited function. He went out to make a sale or actually the -- it alleged that the major moving misrepresentations inducing the payment of money was in a personal interview. He worked in an area. He was an employee, he was in the conspiracy, we grant it, no question about that, but he was an employee at a low level within the conspiracy. It would appear that he did not participate in the overall planning because others are alleged to be the principle directors of the alleged conspiracy.
Earl Warren: Well, I thought he hired out to do these things and was trained to do them, specifically trained in the school to perform these kind of acts?
Randolph W. Thrower: Well -- well, that is true. I said Your Honor that he was not at the decision or level. It is alleged that --
Earl Warren: Yes, I -- that’s --
Randolph W. Thrower: Yes, yes.
Earl Warren: (Inaudible)
Randolph W. Thrower: There was no -- and Your Honor, we recognize that each of the salesmen maybe indicted as a part of this total conspiracy.
Earl Warren: Yes.
Randolph W. Thrower: We are questioning whether each salesman can be included within each substantive offense. We take the position for example that a salesman in Miami no more committed a substantive offense of fraud under the law of the State of California when there was a sale in California and no more committed a substantive offense of a mailing in connection with that fraud in California than a truck driver who might be employed to drive all untaxed whiskey in Chicago being employed by a national syndicate is guilty of the substantive offense of hauling untaxed whiskey in New York or in Miami.
Potter Stewart: Now, wouldn’t that be a matter of proof at the trial?
Randolph W. Thrower: Well, we think this is apparent on the face of the indictment, Your Honor. And we think that a tremendous -- we think this is a very dangerous tactical weapon which is given to the prosecutor if it is permitted to stand here. We point out in our brief that the possibility of an individual defense is completely, that is by an individual at a lower level is completely stomped out if the principle of vicarious responsibility for substantive offenses is carried this far. We believe the effect of the case probably reaches to the outer limits and define the outer limits of vicarious liability for a substantive offense. But that case as we understand it would not approach this situation. There, as the Court pointed out the particular individual making the appeal was at a decisional level. He was truly a partner in the crime. He shared in the planning of the total conspiracy and presumably also in the benefits if --
Earl Warren: But here as I understand it, he did play a part because he had -- it was the salesman who went to the -- to Chester J. French in this case and told him what the transaction was to be and gave him this Lender Service Corporation contract which includes the statement, this agreement shall become effective when accepted at any regional office and so forth that notifications shall be made, he got the man’s signature on that and then took it to his principles with the understanding by all parties concerned, the salesman included that that was to be returned as a part of the transaction.
Randolph W. Thrower: True, Your Honor. But if the salesman in Miami have a part in the substantive offense that might be committed in the State of California or in Chicago or New York or Kentucky?
Earl Warren: Well, they all didn’t --
Randolph W. Thrower: Then, that gives the question --
Earl Warren: They all had their own transactions. That’s true.
Randolph W. Thrower: They -- well, we would acknowledge too that the salesman could be indicted to participate for the participation in the substantive offense where he made the sale. We do not question here what the nature, the dragnet as this Court has often mentioned, the dragnet in this indictment is that everybody, all salesmen are indicted with respect to every substantive offense.
Arthur J. Goldberg: So, assuming if your argument [Inaudible] would not be dismissed?
Randolph W. Thrower: Well --
Arthur J. Goldberg: [Inaudible]
Randolph W. Thrower: Well, my argument would indicate that each of the substantive counts is in reality a conspiracy count drawn as such encompassing everyone in every substantive offense so that the so-called substantive offense is really -- there were 43 conspiracies, each naming a particular overt act and --
Arthur J. Goldberg: [Inaudible]?
Randolph W. Thrower: We would recognize that one of those counts is a good count if any one of them faced a conspiracy to use the mails and -- for the purpose of executing. But we think that the District Court had a certain discretion in the treatment of this particular issue. We think the District Court should have dismissed all counts but one. But certainly at the least, it should -- it’s discretion in dismissing -- its action in dismissing the conspiracy count should not be distinct -- disturbed because it concluded that the conspiracy count was merely duplicative of the other count.
Byron R. White: You -- you apparently agree with the District Court’s dismissal?
Randolph W. Thrower: Oh, yes. We --
Byron R. White: And the – [Inaudible] I assume the -- your position must be include that the individual counts are conspiracy [Inaudible] and all of whom connected with the conspiracy [Inaudible] evidence?
Randolph W. Thrower: Well, we think that would be the result. Yes, Your Honor. We would see that if this Court went into the matter fully it might well direct the District Court to do what we asked it to do to dismiss all of these counts but one. But at the least, we think this Court should leave in fairness and proper administration of criminal trials in the federal courts that at the least this Court should leave the District Court’s dismissal of the conspiracy count undisturbed. We would like -- very much the courts to go further into the issue.
William J. Brennan, Jr.: But that must be on the premise as Mr. Justice White has said that what's -- are already pending without the conspiracy count are themselves, conspiracy count scheme.
Randolph W. Thrower: Yes. This point would not be raised unless we have been unsuccessful on either the first or the second issue that we raise and I do not want to indicate by my show of concern about this issue because though, I am not experienced in the criminal law by any means, it does seem to me that this goes beyond any point involving the carrier’s liability for substantive offenses which has ever been brought before this Court.
Byron R. White: Your authority for this [Inaudible] or do you have some other [Inaudible]?
Randolph W. Thrower: I think that this -- there is -- I find no precedent for this kind of an indictment coming before this Court. I find little precedent and little treatment of the issue in any lower court. I think it is to a considerable extent, a case of first impression certainly before this Court. Thank you Your Honors.
Earl Warren: Thank you Mr. Thrower. Mr. Willens.
Howard P. Willens: Mr. Chief Justice, I just like to take a moment to correct a misunderstanding that I may have caused in response to a question from Mr. Justice Goldberg. You asked whether or not the mailings might be linked together in a single count in the Government’s indictment. And under the present state of the law which is that these mailings constitutes an offense such adjoining of more than one individual mailing would be the [Inaudible]. Under the present law it would be a closer question perhaps if more than one letter were mailed at the same time and in some way could be identified with each other under the present state of the law. The Government did not address itself to the conspiracy count dismissal for several reasons and I’d like to just mention now to the Court that the arguments raised by the appellees here may not really be appropriately before this Court under the jurisdiction of Criminal Appeals Act. In effect the District Court’s dismissal of the conspiracy count could not have been based upon the District Court’s rationale that every count in this indictment was in fact a conspiracy count because as counsel for appellees has indicated said, precisely such a motion was made below in the District Court and it was denied by the District Court. And it’s clear under the criminal appeals act that an appeal by the Government is strictly limited and does not open up the entire case. In any event we believe there’s no merit to this contention because the Pereira and Pinkerton cases stand for the clear proposition that a conspiracy can be linked with substantive counts.
Byron R. White: Well, does your (Inaudible) -- is it your contention that the substantive counts for themselves conspiracies, or do you deny that?
Howard P. Willens: We really grant that there's a similarity in substantive mail fraud counts with conspiracy counts but we don’t think that the similarity is particularly relevant to the issue now before this Court.
Byron R. White: Well, it’s -- you mean, it isn’t relevant at all as to whether or not you can have an additional conspiracy count?
Howard P. Willens: No, we think the conspiracy count was improperly been dismissed. We think the Pereira case was clear on this point, a conspiracy to use the mails to defraud was a link with a substantive mail fraud count and in the count sustained such adjoining over the objections similar to those being raised here today. So, we think it’s clear that you -- the Government can join a conspiracy to use the mails to defraud for substantive counts under the mail fraud statute. And as to any prejudice which may have result to the salesman or any participants in a scheme or artifice we think these are matters for -- of proof and can -- any problems of prejudice can be certainly fairly resolved by the District Court in the exercise of his sound discretion. I would like to mention also that the appellees have stressed continually the offense of fraud. The mail fraud statute is not so drafted, it’s a scheme or artifice to defraud and this Court for many years has emphasized that the statute is not to be limited by particular state definitions of the criminal offense of the fraud or false pretenses. As long ago as 1896 in the Durland case, this Court rejected precisely such a contention to the effect that the mail fraud statute encompassed only the common law offense of false pretenses. This Court held to the contrary instead the mail fraud statute was passed to prevent all intentional efforts to despoil and the use of the post office in affecting that offense. We believe that therefore the offense stated here is within the statute and that the mails were used for executing the fraudulent scheme.