Opinion ID: 71235
Heading Depth: 4
Heading Rank: 1

Heading: Independent Duty

Text: The Paradies defendants argue that because the Paradies companies had no legal duty to anyone to prevent Jackson's scheme from succeeding, then they cannot be held liable for aiding and abetting him in that scheme. The defendants rely heavily on Dirks v. S.E.C., 463 U.S. 646, 103 S.Ct. 3255, 77 L.Ed.2d 911 (1983), and Chiarella v. United States, 445 U.S. 222, 100 S.Ct. 1108, 63 L.Ed.2d 348 (1980), wherein the Supreme Court found that a defendant cannot be convicted for securities fraud (Dirks ), or for aiding and abetting securities fraud (Chiarella ), unless he breached a legal duty. Because the Paradies companies claim that they merely made routine, lawful fee and dividend payments to Hartsfield Concessions and had no independent duty to disclose anything about their shareholder's fraudulent scheme, they cannot be convicted for helping Jackson in that scheme. They contend that without access to the opinion of the Ethics Board, the Paradies defendants were lulled into a false sense of security that there was nothing inherently improper about the relationship between Wilbourn and Jackson. The government readily admits that the Paradies defendants were not fiduciaries to the City. They claim, however, that this circuit does not require that an independent duty exist in order to be convicted of aiding and abetting in a mail fraud scheme. This court has addressed this issue in a recent case, United States v. Waymer, 55 F.3d 564, 568 (11th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 1350, 134 L.Ed.2d 519 (1996). In Waymer, the defendant was a member of the Atlanta Board of Education, and he used his status to award service contracts to certain companies in return for monetary benefits. Waymer was convicted of mail fraud, because he mailed payments to the contractors for the services they rendered. He contended that because the school system had a legal obligation to make those payments, the mailing of the checks to pay a legal debt could not provide a basis on which to satisfy the mailing requirement of § 1341. In upholding his conviction, this court relied on Schmuck v. United States, 489 U.S. 705, 710, 109 S.Ct. 1443, 1447, 103 L.Ed.2d 734 (1989), wherein the Supreme Court found that mailings that furthered the overall scheme to defraud would satisfy the mailing requirement of § 1341, even though the mailings may have been otherwise legal. The Waymer court found that it was presented with an even stronger case than in Schmuck, because the checks mailed to the contractor were the very source of the illegal payments to Waymer; if the contractors did not get paid, neither did Waymer.29 Waymer, 55 F.3d at 570. Although the Paradies companies routinely mailed out fee and dividend checks, the government showed that those payments were made in exchange for Jackson's political influence. Under the reasoning in Waymer, those mailings can serve as the basis for a conviction under § 1341. Additionally, the Paradies defendants do not cite to one mail fraud case to support their theory that an independent duty must exist between the defendant and the victim. This court stated in Waymer that [a] defendant's breach of a fiduciary duty may be a predicate for a violation of the mail fraud statute where the breach entails the violation of a duty to disclose material information. Id. at 571 (emphasis added). That predicate is inapplicable to the facts of this case, however, because the Paradies defendants were not charged with a failure to disclose a material fact; they were charged with aiding and abetting by actively participating in the crime. Jackson certainly had a fiduciary duty to the City. Using the mails to deliver dividend checks and fees, if intentionally designed as a payoff to Jackson, is clearly sufficient to convict the Paradies defendants for aiding and abetting the fraud under § 1346.