Opinion ID: 469177
Heading Depth: 2
Heading Rank: 2

Heading: Applicability of 18 U.S.C. Sec. 1341

Text: 32 The defendants argue that collusive bidding accomplished through the use of the mail is not a scheme or artifice to defraud under Sec. 1341. The defendants contend that the government was merely deprived of its intangible right to have its laws obeyed, in this case, the Federal-Aid Highway Act, 23 U.S.C. Secs. 101, 112(c), (d), which requires each contractor who submits a bid to file a noncollusion affidavit. According to the defendants, although bidrigging may constitute a distasteful business manipulation, 11 it is not mail fraud. We do not agree. 33 A scheme or artifice to defraud connotes a plan or pattern of conduct which is intended to or is reasonably calculated to deceive persons of ordinary prudence and comprehension. See United States v. Themy, 624 F.2d 963 (10th Cir.1980); Gusow v. United States, 347 F.2d 755 (10th Cir.), cert. denied, 382 U.S. 906, 86 S.Ct. 243, 15 L.Ed.2d 159 (1965). The scheme requirement is met even if defendants joined a scheme devised by someone else, as long as the requisite intent to defraud is present. United States v. Gamble, 737 F.2d 853 (10th Cir.1984). 34 We have held that Sec. 1341 encompasses fraudulent schemes which deprive citizens of their right to have allocations of public funds made fairly, honestly, and free of corruption. United States v. Gann, 718 F.2d 1502 (10th Cir.1983), cert. denied, --- U.S. ----, 105 S.Ct. 200, 83 L.Ed.2d 132 (1984) (county commissioner convicted of mail fraud in receiving illegal kickbacks from authorized equipment purchases); United States v. Primrose, 718 F.2d 1484 (10th Cir.1983), cert. denied, 466 U.S. 974, 104 S.Ct. 2352, 80 L.Ed.2d 825 (1984). 35 Moreover, several other courts have held that allegations of bidrigging on publicly funded projects may constitute a scheme or artifice to defraud within the purview of the mail fraud statute. See United States v. Azzarelli Construction Co., 612 F.2d 292 (7th Cir.1979), cert. denied, 447 U.S. 920, 100 S.Ct. 3010, 65 L.Ed.2d 1112 (1980); United States v. Rodgers, 624 F.2d 1303 (5th Cir.1980), cert. denied, 450 U.S. 917, 101 S.Ct. 1360, 67 L.Ed.2d 342 (1981); United States v. Climatemp, Inc., 482 F.Supp. 376 (N.D.Ill.1979), aff'd, United States v. Reliable Sheet Metal Works, Inc., 705 F.2d 461 (7th Cir.1983); United States v. Brighton Building & Maintenance Company, 435 F.Supp. 222 (N.D.Ill.1977). 36 In Azzarelli, the defendants argued that an antitrust conviction constituted the exclusive remedy for bidrigging and, therefore, their mail fraud convictions were invalid. The court disagreed. The court reasoned that the element of fraud, which is necessary to sustain a conviction under the mail fraud statute, was present in the anticompetitive conspiracy. The court held that the collusive bidding scheme plainly manifest[ed] a species of fraud or false misrepresentation because it was intended to defeat statutory procedures for competitive bidding which were instituted in the public's interest by the federal and state government in order to obtain for taxpayers the lowest possible costs for public works. Azzarelli, 612 F.2d at 298. The Azzarelli court noted that the conspirators were required to sign and did sign statements that no collusion had been practiced. Id. 37 We find the Azzarelli rationale persuasive and consistent with our opinions in Gann and Primrose. The indictment charged the defendants with devising and intending to devise a scheme and artifice to defraud the state of Oklahoma and the United States of [m]oney; ... their mandated right to open and free competition in the awarding of contracts for highway construction; and their right to have their programs for the development and improvement of highways conducted honestly, fairly, and free from [g]raft, trickery, deceit, corruption, dishonesty, and fraud. 38 The evidence adduced at trial indicated that the conspirators arranged to win highway contracts without submitting competitive bids. The scheme devised by the conspirators circumvented the state and federal competitive bidding procedures and allowed the contractors to virtually predetermine who would be awarded a contract. By arranging for complimentary bids to be submitted, the conspirators deceitfully created the illusion of competitive bidding and concealed their illegal collusion. Finally, to effect the deception, each of the conspirators falsely represented his bid as free of collusion. 39 We hold the defendants' collusive bidding practices, which deprived taxpayers of the monetary advantage of competitive bidding and deprived the state and federal governments of their rights to have highway construction projects awarded honestly, fairly, and on a competitive cost basis, constitutes a scheme or artifice to defraud. Accordingly, we hold the indictment correctly charged the defendants with violating 18 U.S.C. Sec. 1341.