Opinion ID: 714125
Heading Depth: 3
Heading Rank: 1

Heading: Mail and Wire Fraud (counts 1-6, 8-9)

Text: 45 In order to convict for mail fraud under 18 U.S.C. § 1341, or for wire fraud under 18 U.S.C. § 1343, the government must demonstrate: (1) the defendants' participation in a scheme to defraud; (2) the defendants' intent to defraud; and (3) the defendants' use of the mails or wires in furtherance of the fraudulent scheme. United States v. Walker, 9 F.3d 1245, 1249 (7th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 1863, 128 L.Ed.2d 485 (1994) (mail fraud); United States v. LeDonne, 21 F.3d 1418, 1429 (7th Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 584, 130 L.Ed.2d 498 (1994) (wire fraud); Lombardo v. United States, 865 F.2d 155, 157 (7th Cir.), cert. denied, 491 U.S. 905, 109 S.Ct. 3186, 105 L.Ed.2d 695 (1989) (same). 46 Ross offers two arguments that the government failed to prove the first element of mail and wire fraud, his participation in a scheme to defraud. First, Ross asserts that the mail and wire fraud statutes do not encompass prosecution of a scheme to defraud the United States itself. In practice, however, the mail and wire fraud statutes are routinely utilized to punish schemes to defraud the federal government of a property interest. See, e.g., United States v. Morris, 957 F.2d 1391 (7th Cir.), cert. denied, 506 U.S. 941, 113 S.Ct. 380, 121 L.Ed.2d 290 (1992); United States v. Jones, 938 F.2d 737 (7th Cir.1991); United States v. Johnson, 927 F.2d 999 (7th Cir.1991); United States v. Bucey, 876 F.2d 1297 (7th Cir.), cert. denied, 493 U.S. 1004, 110 S.Ct. 565, 107 L.Ed.2d 560 (1989). 47 Secondly, Ross argues that there was no evidence of a scheme to defraud because all the evidence adduced at trial had been developed through criminal investigations rather than through a federal civil audit. To support his assertion, Ross points to 20 U.S.C. § 1094, which specifies the procedures that the DOE must follow before suspending or revoking an institution's participation in a financial aid program. This court has explained that § 1094 mandates an audit and a hearing on the record whenever the DOE seeks to revoke program eligibility of an institution that has previously been deemed eligible in all other respects. Continental Training Services, Inc. v. Cavazos, 893 F.2d 877, 883 (7th Cir.1990). A criminal investigation is insufficient to satisfy the civil audit and hearing requirements of § 1094 because such investigations rarely involve notice and a hearing. See Tangipahoa Parish School Bd. v. United States Dep't of Educ., 821 F.2d 1022, 1029 (5th Cir.1987). However, § 1094 merely establishes the notice and hearing requirements that the DOE must satisfy prior to revoking program eligibility or imposing other civil penalties. These requirements are necessary, for without them the participating institutions would be denied their right to due process. Section 1094 does not apply to criminal actions because in that context it is unnecessary. In a criminal case, the due process requirements of notice and a hearing are accomplished by the indictment and the trial. Ross has been afforded every opportunity to cross-examine and refute the government's evidence, and it would be ludicrous to maintain that a criminal trial could not be brought with evidence from a criminal investigation. Ross's argument that he may be convicted only on evidence from a federal civil audit has no merit. 48 Collori puts forth two arguments that the prosecution did not prove his intent to defraud. First, he maintains that he did not benefit in the fruits of the crime. However, the government did, in fact, offer evidence that Collori had profited from the scheme. Evidence was introduced that during the period of fraudulent activity, Collori received more than $300,000 in the form of salary, consulting fees, and company payments of his child support obligations. The evidence demonstrated that many of these payments were made at times when Collori was not even working at the school. Collori argues that these payments were merely usual compensation for his employment and do not represent illicit profits. Yet, viewing the evidence in the light most favorable to the government and making all reasonable inferences in its favor, a rational trier of fact could have found that Collori was being compensated for his intentional participation in the fraudulent scheme. Even were that not the case, this circuit has held that a showing of personal benefit is not required to demonstrate intent to defraud. United States v. Cosentino, 869 F.2d 301, 308 (7th Cir.), cert. denied, 492 U.S. 908, 109 S.Ct. 3220, 106 L.Ed.2d 570 (1989). It is enough that the defendant intended to cause actual or potential loss to the victims of the fraud, whether to enrich himself, another, or no one. See United States v. Moede, 48 F.3d 238, 242 (7th Cir.1995). 49 Second, Collori argues that his actions do not manifest an intent to defraud because they fell within the normal performance of his duties as chief financial officer. An intent to defraud may be established by circumstantial evidence and by inferences from the facts and circumstances surrounding the scheme. LeDonne, 21 F.3d at 1429. At trial, the government introduced evidence that Collori deliberately falsified cash request forms, which resulted in excessive drawdowns of Pell Grant funds from the Treasury; that he directed vouchers to be backdated so as to create the appearance that the school disbursed more Pell Grants to students than it actually did; that he falsified cash transaction reports submitted to the DOE in order to overstate cash holdings; that he fraudulently recalculated refund amounts in anticipation of an AICS evaluation; that he lied to DOE auditor Robert Weaver; that he ordered the office manager to disarrange student files that were to be produced to an outside agency; that he received over $300,000 in compensation during the time period of the fraudulent scheme, some of it when he was not even working; and that he told Michael Shields: There are things that you don't need to know, Michael. Don't worry. I'm protecting you from this. I don't want you to be involved in it. Although Collori attempts to offer an explanation for how all these acts either did not occur or were legitimate, our review does not amount to a reweighing of the evidence. When the evidence presented at trial is viewed in the light most favorable to the government, clearly a rational jury could have found Collori's intent to defraud beyond a reasonable doubt. 50