Opinion ID: 78015
Heading Depth: 2
Heading Rank: 1

Heading: Intent to Defraud the United States

Text: Mendez first argues that we must reverse his § 371 conviction because the record does not support the district court's finding that he intended to defraud the U.S. Department of Transportation (DOT). He concedes that he defrauded the Florida DMV, but he asserts that there is no evidence that he even knew of any connection between a Florida CDL and the federal government. Under 18 U.S.C. § 371, it is a crime to conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner of for any purpose. . . . The proof required to support a § 371 conviction is different, however, depending on whether the defendant is charged with conspiracy to commit any offense against the United States or conspiracy to defraud the United States. In United States v. Harmas, 974 F.2d 1262 (11th Cir.1992), we explained that under the defraud clause of § 371, which is at issue here, the government must prove that the United States was the ultimate target of the conspiracy, whereas under § 371's any offense clause, the government is not required to allege that the United States was the intended victim of the conspiracy. Id. at 1268. In so holding, we adhered to the Supreme Court's declaration in Tanner v. United States, 483 U.S. 107, 107 S.Ct. 2739, 97 L.Ed.2d 90 (1987), that [t]he conspiracies criminalized by [the defraud clause of] § 371 are defined. . . most importantly . . . by the target of the conspiracy. Id. at 130, 107 S.Ct. at 2752. It is clear that under Tanner, we must reverse Mendez's § 371 conviction. The Tanner defendants conspired to defraud Seminole Electric Cooperative, Inc., a private company. In order to complete a construction project, Seminole obtained a bank loan that was guaranteed by the federal Rural Electrification Administration (REA). Id. at 110, 107 S.Ct. at 2742. The defendants' § 371 conviction was based on their interference with the REA's operation of its guaranteed loan program. Id. at 128-29, 107 S.Ct. at 2752. The defendants argued that a conspiracy to defraud a private corporation that received financial assistance from the federal government does not constitute a conspiracy to defraud the United States. Id. at 129, 107 S.Ct. at 2752. In response, the government argued that a conspiracy to defraud the United States under § 371 may be effected by the use of third parties and that Seminole may itself be treated as the United States for purposes of § 371 because it received federal financial assistance and supervision. Id. The Tanner Court rejected the government's argument, reasoning that a conspiracy to defraud a third party is not itself a conspiracy to defraud the United States simply because the third party receives financial assistance from and is supervised by the United States. Id. at 130-32, 107 S.Ct. at 2752-54. The Court then held that the defendants' convictions could only stand if the evidence was sufficient to establish that they conspired to cause Seminole to make misrepresentations to the REA. Id. at 132, 107 S.Ct. at 2754. Here, the district court found that by fraudulently obtaining the CDL, Mendez intended to defraud both the State of Florida, which issued the CDL, and the DOT, which promulgated the minimum rules and regulations for obtaining a CDL. The district court thus concluded that, beyond a reasonable doubt, Mendez had the requisite intent to defraud the United States under § 371. We disagree. Mendez's § 371 conviction is precisely what the Tanner Court meant to prevent. The facts to which the parties stipulated do not show that Mendez even knew the federal government was in involved in the issuance of Florida CDLs, let alone that the United States was the ultimate intended target of Mendez's conduct. Accordingly, under Tanner, there was no basis for the district court to find that Mendez was guilty beyond a reasonable doubt of defrauding the United States under 18 U.S.C. § 371. The government argues that Mendez's payment for and use of the DA-348E form to obtain the CDL was enough to satisfy § 371's intent requirement. [1] In support of its argument, the government points to the first sentence of the introduction section in the Florida CDL handbook, which describes the federal requirement that each state have minimum standards for the licensing of commercial drivers. Additionally, the government cites the Florida DMV website, which advises CDL applicants of federal guidelines. Given those facts, the government contends, it is reasonable to infer that Mendez knew of the federal involvement in the issuance of Florida CDLs. Those facts, however, were not included in the trial stipulation, and therefore are not part of the record. Even if we were to accept such facts as circumstantial evidence, they would not be strong enough to support Mendez's § 371 conviction because the stipulation indicates that Mendez had difficulty reading English. Accordingly, we conclude that it would be mere speculation, rather than a reasonable inference, to conclude that Mendez intended to defraud the DOT based on the references to the federal government in the CDL handbook and Florida DMV website. The Ninth Circuit faced similar facts and reached a similar conclusion in United States v. Licciardi, 30 F.3d 1127 (9th Cir. 1994). The defendant in Licciardi was a grape broker who defrauded a wine producer and was charged under the defraud clause of § 371 because of the regulatory involvement of a federal agency, the Bureau of Alcohol, Tobacco, and Firearms (ATF), in the wine industry. Id. at 1128-29. The Court held that the basis suggested in Tanner for upholding a defendants' § 371 conviction was lacking because the government failed to show anything beyond the defendants' incidental impairment of ATF functions. [2] Id. at 1132. It might have been easy, the Court explained, for the government to establish that Licciardi was familiar with the federal regulations on the labelling of wine and that it was a necessary part of his plan of deceit that [the defrauded wine producer] provide information to the government that would frustrate these regulations, but the government did not do so. Id. The government's case is weaker here than it was in Licciardi. Given the stipulated facts, it would require much greater speculation for us to infer that Mendez knew of the DOT's involvement in the issuance of Florida CDLs than the speculation that would have been required for the Ninth Circuit to infer that Licciardi, himself a grape broker, did not foresee the effect of his fraudulent activity on the ATF. Finally, the government argues that knowledge that the United States is to be defrauded is not a necessary element of a § 371 offense. In support of its argument, the government cites United States v. Sorrow, 732 F.2d 176, 177-79 (11th Cir. 1984), in which we held that the defraud clause of § 371 does not require proof of anti-federal intent. The government also relied on Sorrow in Licciardi, but the Ninth Circuit commented, [i]t is doubtful that Sorrow survives Tanner. Licciardi, 30 F.3d at 1132. We concede that Sorrow is superceded by the Supreme Court's holding in Tanner, and we hereby expressly overrule Sorrow. [3]