Opinion ID: 474866
Heading Depth: 2
Heading Rank: 3

Heading: Expenditures of Corporate Funds for Personal Expenses

Text: 25 Defendant's next argument relates to the introduction of several FNCF checks. It was the government's theory that defendant used the FNCF checking account to write checks totaling over $17,000 for various personal expenditures. For example, the government introduced three checks payable to VerMeulen Furniture Company totaling $5,230.35. At trial, the credit manager of VerMeulen Furniture testified that defendant's purchase included two different sets of bedroom furniture, two sleepers, [and] a party set, which is a table and four chairs.... App. at 443. 26 On appeal defendant concedes that some of the items purchased with these checks were probably not used in the course of F.N.C.F. business. Defendant-Appellant's Brief on Appeal at 31-32. Nevertheless, defendant argues that the evidence was irrelevant and, alternatively, that the probative value was substantially outweighed by the danger of unfair prejudice. 27 Relevant evidence is defined in Rule 401 of the Federal Rules of Evidence as evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence. In United States v. Bibby, 752 F.2d 1116, 1125 (6th Cir.1985), cert. denied, --- U.S. ----, 106 S.Ct. 1183, 89 L.Ed.2d 800 (1986), we set out the elements of 18 U.S.C. Sec. 1341: In order to establish a violation of the mail fraud statute, 18 U.S.C. Sec. 1341, the government must prove both (1) a scheme to defraud, and (2) a mailing for the purpose of executing the scheme. 3 In United States v. Van Dyke, 605 F.2d 220, 225 (6th Cir.1979), we elaborated on the scheme to defraud element: 28 the scheme to defraud element required under Sec. 1341 is not defined according to a technical standard. The standard is a reflection of moral uprightness, of fundamental honesty, fair play and right dealing in the general and business life of members of society. United States v. Bruce, 488 F.2d 1224, 1229 (5th Cir.1973), quoting Gregory v. United States, 253 F.2d 104, 109 (5th Cir.1958). It is not necessary that the scheme be fraudulent on its face but the scheme must involve some sort of fraudulent misrepresentations or omissions reasonably calculated to deceive persons of ordinary prudence and comprehension. 29 Clearly, proof that defendant was using FNCF funds for personal expenses, rather than paying client accounts when they became due, is relevant on the scheme to defraud element. The purchases tend to show that rather than intending to use customer funds to purchase metals, defendant intended to use them for personal expenditures. Since the checks were relevant, we reject defendant's first argument. Accord United States v. Knight, 607 F.2d 1172, 1176 (5th Cir.1979) (in mail fraud prosecution, evidence of a substantial investment in real estate made by defendants held clearly relevant under Rule 401); cf. United States v. Pollack, 417 F.2d 240, 241 (5th Cir.1969) (per curiam) (in mail fraud and fraud in the sale of securities prosecution evidence concerning expenditures at a hotel held relevant to show disposition of funds received in fraudulent undertakings), cert. denied, 397 U.S. 917, 90 S.Ct. 924, 25 L.Ed.2d 98 (1970). 30 Defendant's alternative argument is that under Rule 403 of the Federal Rules of Evidence, the probative value of the evidence was substantially outweighed by the danger of unfair prejudice.  'Unfair prejudice' within [the] context [of Rule 403] means an undue tendency to suggest a decision on an improper basis, commonly, though not necessarily, an emotional one. Fed.R.Evid. 403 advisory committee note. 31 Defendant has not shown how he was unfairly prejudiced by the admission of this evidence. Accordingly, defendant's assignment of error is rejected. 32