Court Opinion

ID: 9481886
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:34:35.395308+00
Date Added: 2024-06-11T17:48:38.322495
License: Public Domain

EASTERBROOK, Circuit Judge,
concurring in part and dissenting in part.
Borre pleaded guilty to mail fraud and conspiracy to commit an offense against the United States. He was sentenced to concurrent terms of five years’ probation. The district court granted Borre’s petition under 28 U.S.C. § 2255, holding that McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), vitiates the prosecution’s theory of mail fraud and that the conspiracy charge is vague. I agree with the majority that the conspiracy conviction is valid. Having reinstated it, we should stop. Whether Borre also committed mail fraud no longer matters. It does not affect the length of his probation, which expired before the district judge set aside the convictions. The district judge did not impose a fine, or even a $50 special assessment, on account of mail fraud. Cf. Ray v. United States, 481 U.S. 736, 107 S.Ct. 2093, 95 L.Ed.2d 693 (1987). Resurrecting the mail fraud conviction adds nothing to Borre’s punishment.
Although felony convictions sometimes carry collateral consequences, the prosecutor does not argue that the mail fraud conviction yields a consequence that the conspiracy conviction does not. Carafas v. LaVallee, 391 U.S. 234, 88 S.Ct. 1556, 20 L.Ed.2d 554 (1968), and Sibron v. New York, 392 U.S. 40, 88 S.Ct. 1889, 20 L.Ed.2d 917 (1968), hold that collateral consequences of a conviction may prevent the expiration of custody from mooting a request for relief. Because no one identifies any actual, even any potential, consequence of the mail fraud conviction once the conspiracy conviction is reinstated, there is no remaining dispute between the parties, and our views are advisory. Lane v. Williams, 455 U.S. 624, 631-34, 102 S.Ct. 1322, 1326-28, 71 L.Ed.2d 508 (1982).
I believe that the majority’s resuscitation of the mail fraud conviction is incorrect as well as unnecessary. Borre was a nominee in a scheme to give Richard Hamm, the Mayor of Fox Lake, Illinois, 5% of a firm that wanted to operate a cable television system there. This is bribery, or perhaps extortion. The prosecution sought to transmute bribery into mail fraud by urging that Hamm (with Borre’s aid) deprived Fox Lake of the intangible right to good government. McNally rejects that theory of criminal liability.
Struggling to avoid an adverse precedent rendered after Borre’s conviction, the United States has recast its theory. It now says that Hamm, Borre, and the other participants in this venture defrauded Fox Lake of “property” — the cable television franchise. The franchise may be characterized as a contract or a license. Both *225contracts and licenses are property for some purposes. But names do not matter. In McNally itself the bad guys induced the government to let a contract. Indeed, with the change of a few details, Borre’s case is a replay of McNally’s. McNally, Gray, and Hunt influenced Kentucky to place its contracts for workers’ compensation through a particular broker; the agency paid these gentlemen for their efforts by ceding part of its commissions to firms Hunt designated. The Supreme Court could have said that this scheme defrauded the Commonwealth out of its property — the insurance contracts, or perhaps the money paid under the contracts. Instead it reversed the convictions, demanding that the prosecution show how the scheme deprived Kentucky of something of value.
What anyone called the contracts was irrelevant; the question was whether and how Kentucky felt the pinch. “It was not charged that in the absence of the alleged scheme the Commonwealth would have paid a lower premium or secured better insurance. Hunt and Gray received part of the commissions but those commissions were not the Commonwealth’s money.” McNally, 483 U.S. at 360, 107 S.Ct. at 2882. With a few substitutions, this reads directly on Borre’s case. The indictment did not charge that in the absence of the scheme Fox Lake would have received a higher franchise fee or secured better or cheaper cable television. Hamm got 5% of the profits, but the cable television supplier’s profits were not Fox Lake’s money. If the convictions in McNally were defective, how is Borre’s on sounder footing?
The majority’s maneuver of dubbing the CATV franchise “property”, and then disregarding the absence of loss to Fox Lake, rings changes on a theme we rejected in Toulabi v. United States, 875 F.2d 122 (7th Cir.1989). Toulabi orchestrated a scheme to issue taxi drivers’ licenses to persons who did not possess the qualifications set by law. The scheme improved the City’s finances — it received license fees it would not have collected had the law been enforced — but deprived it of the honest enforcement of the laws. We held that issuing the license did not itself divest the City of “property”. It did not deduct from the coffers. Anyway, we observed, a “license” is just a public announcement of permission to act. It indicates that the government will leave you alone if you do something.
Although the license may be property from the recipient’s perspective, from the government’s it is no different from an opinion by the Corporation Counsel that so-and-so meets the standards local law sets for doing such-and-such. Other courts of appeals agree with Toulabi, concluding that many different kinds of licenses and permissions are not the kind of property to which McNally refers. United States v. Schwartz, 924 F.2d 410, 416-18 (2d Cir.1991) (license to export arms); United States v. Murphy, 836 F.2d 248, 253-54 (6th Cir.1988) (bingo permit); United States v. Granberry, 908 F.2d 278 (8th Cir.1990) (permit to operate a school bus); United States v. Kato, 878 F.2d 267, 268-69 (9th Cir.1989) (aircraft pilot license). Contra, United States v. Allard, 864 F.2d 248 (1st Cir.1989) (medical license and internship); United States v. Martinez, 905 F.2d 709, 712-15 (3d Cir.1990) (medical license).
Underlying Toulabi and like cases is the recognition that licenses improperly issued do not diminish any of the government’s interests except that in the accurate enforcement of the law, reflect no loss other than the public’s entitlement to the honest services of its employees — and McNally held that such deprivations are not mail fraud. This recognition also appears in Ranke v. United States, 873 F.2d 1033 (7th Cir.1989), and United States v. Holzer, 840 F.2d 1343 (7th Cir.1988). Ranke pointedly refers to the possibility that the government lost money, that the price paid for services was inflated to cover the bribes, and that the cash had been passed on to Ranke. 873 F.2d at 1039-40. No money passed from Fox Lake to Borre; there is no claim that Fox Lake received lower fees than a bribery-free competition would have fetched.
Illinois law treats franchises and licenses as distinct. Franchises usually are exclusive, while licenses are not. But this difference is not pertinent to the legal analysis established by McNally. Whether a *226franchise is “property” for purposes of Illinois law is irrelevant: the contract in McNally likely was property for purposes of Kentucky law. Neither McNally nor Toulabi nor any of the cases in the other circuits asks how a state characterizes the document; these cases ask instead how the characteristics of the permission relate to the legal criteria established by the Supreme Court. Having the existence of a federal felony turn on language in musty state cases makes about as much sense as the holding in United States v. Arnold, Schwinn & Co., 388 U.S. 365, 87 S.Ct. 1856, 18 L.Ed.2d 1249 (1967), that the antitrust laws follow the ancient rule against restraints on alienation. Continental IV, Inc. v. GTE Sylvania Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977), overruled Schwinn after concluding that state property law is unrelated to the functions of federal antitrust law. So too with the state law of franchises and federal mail fraud prosecutions.
Suppose state law matters. It does not in the end aid my colleagues. Illinois defines as a “franchise” the exclusive delegation of a governmental power to a private person. How is cable television a “governmental” function? Cable television is speech, protected against (certain kinds of) governmental interference by the first amendment. Los Angeles v. Preferred Communications, Inc., 476 U.S. 488, 106 S.Ct. 2034, 90 L.Ed.2d 480 (1986); Leathers v. Medlock, — U.S. -, 111 S.Ct. 1438, 1442, 113 L.Ed.2d 494 (1991). Speech is not “property” of the government, lent or given away to speakers. The media of communication are about as far from “delegated governmental powers” as things get. Under the Constitution, the government needs a strong reason to interfere in the operation of a CATV system; the majority, by contrast, treats CATV as if it existed by sufferance of local authorities.
True, the cable operator may need access to the conduits under the streets, but the operator also could install cable on utility companies’ poles under the Pole Attachments Act, 47 U.S.C. § 224, see FCC v. Florida Power Corp., 480 U.S. 245, 107 S.Ct. 1107, 94 L.Ed.2d 282 (1987), and the local government could not do anything about this. An operator could install dishes to pick up satellite transmissions. Cable TV operators do not assume public functions; they do not need the government’s aid; they only need the government to stay out of their hair. Public promises not to interfere with private conduct, we held in Toulabi, are not “property” for purposes of the mail fraud statute.
Before McNally the Seventh Circuit was the mail fraud capital of America. We have a copious backlog of intangible rights cases. It is understandable that this institution sees McNally as a problem to be overcome rather than a rule to be implemented. Congress, too, is unent’nusiastic. It reinstated the intangible rights theory, 18 U.S.C. § 1346, added by § 7603(a) of Pub.L. 100-690, 102 Stat. 4508 (1988), for acts after November 1988. There is no way to avoid McNally and Toulabi in Borre’s case, however — and no reason why we should reinstate a redundant conviction even if there were.