Court Opinion

ID: 9479152
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:09:52.741835+00
Date Added: 2024-06-11T17:46:51.524970
License: Public Domain

BOGGS, Circuit Judge,
dissenting.
Frank Runnels, a high union official, was indicted on charges of mail fraud and conspiracy to commit mail fraud. The indictment very specifically charged that the offense was participating in a “scheme or artifice to defraud ... intended ... (b) to obtain money by means of false and fraudulent pretenses and representations....” The indictment further charged specifically that the scheme involved the payment of $50,000 to Runnels to secure his services in touting to his members the services of the law firm that was paying the money. The indictment also recounts specific payments made to Runnels.
Subparagraph (a) of the section quoted above charged that the scheme or artifice was intended to defraud the members of their right to honest conduct of the union’s business. Thus, on the face of the indictment and the specific acts set forth, the government alleged both a deprivation of intangible rights and a specific obtaining of money by false and fraudulent pretenses.
The court’s opinion posits the question before the court as whether the Supreme Court’s decision in McNally requires us to reverse the mail fraud conviction. This dissent agrees that, given the trial as conducted and the instructions as given, McNally requires a reversal. However, the court’s opinion goes on to take the position that McNally means that no one who committed the actions Runnels did could be convicted on the indictment in this case. That extension, I believe, is unwarranted. The record shows that the indict*492ment as presented was legally sufficient, and that the basic facts put in evidence would, if properly argued and instructed upon, support a conviction. I therefore respectfully dissent from the court’s action requiring the dismissal of the indictment.1
I
The Supreme Court in McNally, as correctly cited by the court at pages 19-20, held that the mail fraud statute, in proscribing schemes “ ‘to defraud’ or ‘for obtaining money,’ ” only meant to include one type of charge: “ ‘wronging one in his property rights_’” 108 S.Ct. at 2880. Courts had earlier held that the statute could be read as banning schemes “to defraud” (including intangible rights) or “to obtain property” (tangible rights). See e.g., United States v. Clapps, 732 F.2d 1148, 1152 (3rd Cir.1984); United States v. States, 488 F.2d 761, 764 (8th Cir.1973). Thus far, the court is correct. This does not mean, however, that each and every indictment mentioning intangible rights must be construed to have meant intangible rights only, no matter what the indictment says. In fact, the Dynalectric case, cited by the court (page 489) as involving an adequate indictment, is specifically an indictment that alleges a defrauding of “(a) money; and (b) [the] right to free and open competition_” United States v. Dynalectric Co., 859 F.2d 1559, 1572 (11th Cir.1988). The indictment here is, in essence and in structure, of the same type. It alleges a scheme to defraud, intended (a) to defraud of intangible rights and (b) to obtain money by false and fraudulent pretenses. At page 19, the majority suggests that this “tangible rights theory” still rests on distinguishing between (a) schemes to defraud and (b) obtaining money by false pretenses. This is not so. What Runnels did was to have a scheme to defraud whereby he obtained money by false pretenses. By acting faithlessly in his fiduciary capacity, he did obtain money and did defraud his union members.2 Contrary to the court’s holding at page 490, this is not solely an intangible rights theory. A person may simultaneously deprive another of both honest services and money that belongs to another.
The court also argues that paragraph 1(b) is “only boiler plate” (but of course boiler plate pleading in the pleading of a crime in the terms of the statute is perfectly permissible) and that 1(b) is solely a description of the result intended by the defrauding of intangible rights. I do not think a sensible reading of the indictment will support that argument. First, under that theory it is unclear how Runnels’s obtaining money from the lawyers can be characterized as obtaining it “by means of false and fraudulent pretenses.” The lawyers and Runnels each knew exactly what they were doing. They were in collusion with each other, not committing fraud upon one another. Second, while the court apparently feels that the Dynalectric-type indictment would be sufficient, it is not clear why saying “money and intangible rights” is sufficient in Dynalectric while saying “intangible rights and money” is insufficient in this case.
It perhaps would have been clear enough even to satisfy the court had the indictment said that the scheme was intended “(a) to defraud of intangible rights or (b) to obtain money” (thus achieving sufficient disjunction). However, the government had no reason to say “or”, because it had evidence of both. Thus, looking strictly to the indictment, it is not a proper interpretation to read it as meaning simply that money *493would accrue to Runnels as a result of an intangible rights violation.
II
The court discusses extensively various activities during the pre-trial and trial proceedings in an attempt to look back and determine what the words of the indictment meant. However, these discussions relate more to the way the proceedings developed than to the legal force of the indictment as drafted.
The court’s own discussion of the first attack by Runnels on the indictment shows that both theories were alive at that point. As the opinion states (page 483): “[t]his first motion to dismiss did not address the ‘intangible rights’ theory but, rather, argued that if any money was taken it was not money belonging to the union members.” This certainly indicates that the tangible rights theory was alive at this point. The district court in its denial of the motion to dismiss properly noted that there were grounds for proceeding to trial on both a tangible and an intangible rights notion, as reported by the court (page 483), quoting the district court.
The court’s argument (pages 485-486) that there is something dispositive in the fact that the government and the trial judge responded to post-trial motions by focusing on the viability of the intangible rights theory is completely explained by the fact that defendant’s motions only attacked that theory. At page 487 of the majority opinion there is a discussion of what is, perhaps, the government’s most compelling admission. The government had rested its case-in-chief, in which it presented ample evidence of the taking of money. In the course of oral give-and-take on a motion for acquittal and responsive to defense counsel’s assertion that there was no loss to a member of the local, the government did say that even such a fact would not terminate the case because of the intangible rights theory and that a judgment of acquittal could not be granted unless that theory was negated. Defense counsel did not make any motion for a partial dismissal of the charges, or for an instruction that embodied this “concession.”
While the briefs and arguments in the motion practice before the judge before and after trial are not models of clarity, the government never in any efficacious way renounced or amended any of the charges of the indictment. The language cited by the majority simply indicates that as Runnels attacked the intangible rights theory, the government defended the intangible rights theory.
Whatever the result of this analysis, however, it should not distract from the focus on the indictment itself. It is true that the government, in the heat of responding to arguments attempting to obviate the responsibility of the defendants under the intangible rights theory, itself focused exclusively on that theory. This may explain our reversal of the conviction, because the defendant was not adequately put on notice that he could and should defend against a tangible rights deprivation. However, the government’s argument does not alter the language in the indictment or alter what could have been done with that language had the government’s strategy led it to seek proper instructions.
Having once determined that the language of the indictment would have been sufficient, there is no reason to support the court’s key holding (page 484) that the only theory on which the government indicted Runnels was the intangible rights theory. The opinion virtually concedes as much when it states (page 487) that “if the jury believed Runnels had taken money, there would be a conviction regardless of the theory under which the government was proceeding.” This could not possibly be the case unless the indictment adequately charged a defrauding of money actionable under the statute.
Ill
While the court does not specifically hold that Runnels could not be prosecuted for use of the mails in the course of a scheme appropriating a benefit that properly be*494longed to his union members, it skirts close to it. The court does note that several circuits have rejected such a theory, at least as it applies to public officials, who are fiduciaries for the entire population of large political units. See United States v. Shelton, 848 F.2d 1485 (10th Cir.1988); United States v. Ochs, 842 F.2d 515 (1st Cir.1988); United States v. Holzer, 840 F.2d 1343 (7th Cir.), cert. denied, — U.S. -, 108 S.Ct. 2022, 100 L.Ed.2d 608 (1988). While an expansive reading of McNally might lend support to such a result, the unanimous Supreme Court in Carpenter v. United States, 484 U.S. 19, 108 S.Ct. 316, 320-21, 98 L.Ed.2d 275 (1987), indicated its approval of the designation as “property” of a newspaper’s fleeting right of prepublication confidentiality. It is extremely difficult to see how the appropriation of money that properly belongs to a principal as a result of a fiduciary relationship is any less a form of property than that involved in Carpenter.
In the course of the trial, the government introduced, as the court’s opinion concedes, ample evidence that money was given to Runnels. If there was a deficiency in the evidence, it lay in the government’s not establishing or explicating Runnels’s fiduciary obligations and relationship to the union members. Even so, it is difficult to say that on proper instructions a jury could not have found that Runnels did receive money that belonged to the union members.
The government’s concession, of which so much was made at oral argument, was simply that no part of the money was intended to go to the union members. That is, Runnels did not divert money that the bribers in this case wanted to go to the union members. Rather, as in many conventional fraud cases, the giver of the money and the defrauder, together, took money that rightly belonged to another.
For a conviction in these circumstances, or for a conviction on retrial, it is not necessary to prove absolutely that the lawyers would have, or could have been in a position to, offer lower prices for their services. Even if the price of the services was absolutely fixed by law, the bribe to Runnels was itself money that belonged to the union members, because of the fiduciary position of Runnels. That money could have been, and should have been, directed to the benefit of the union members, whether by individual rebates, furnishing of additional union services, augmentation of union property or any other means. It is this theory that was available in the indictment, and was, among others, upheld by the district judge in pretrial proceedings, and which, had proper instructions been given, would have been supported by the evidence at trial. Otherwise, McNally will have stricken from the mail fraud statute not only the more nebulous public officials’ cases, but any use of the mail fraud statute to attack the obtaining of money by faithless fiduciaries.
This is completely inconsistent not only with McNally itself but even more with the Supreme Court’s decision in Carpenter, where the Supreme Court quite easily upheld the conviction of a faithless fiduciary whose connection to actual money of the principal was far more tenuous than here. In the Carpenter case the thing of value, of which the principal was deprived, was the possible monetary value of an item of information over a quite limited period of time. If the mail fraud statute addresses such deprivations, it is impossible to understand how, under proper instructions, it would not address the diverting of a specific sum of money to which the principal had a right.
The court’s final citation (page 490) from United States v. Conover, 845 F.2d 266, 271 (11th Cir.1988), further raises the disturbing implication that Runnels’s actions might not violate Federal law at all. The Conover citation speaks of releasing defendants whose actions “at the time they acted for their personal gain ... were clearly unlawful,” thus implying that such actions are no longer unlawful. As argued above, I do not believe that is the case here. Properly read, the indictment charged a scheme that both deprived others of intangible rights and defrauded others to obtain their money. In our view such an indictment is proper, and could be sustained *495by the evidence presented at trial.
Thus, we are left with the familiar situation where during the process of trial and instruction, error has been committed that makes the upholding of a conviction fundamentally unfair. In those circumstances, reversal for retrial is ordinarily the proper remedy, except under Burks v. United States, 437 U.S. 1, 98 S.Ct. 2141, 57 L.Ed. 2d 1 (1978), where evidence is wholly insufficient to support any theory of liability. As indicated above, that is certainly not the case here. The evidence was not only sufficient, it was overwhelming, that Runnels took money, and that he was acting in a fiduciary capacity for the union. As the Supreme Court stated in United States v. Hollywood Motor Car Co., 458 U.S. 263, 268, 102 S.Ct. 3081, 3084, 73 L.Ed.2d 754 (1982), even though a defendant has been put to the difficulty of an initial trial, “reversal of the conviction and, where the Double Jeopardy Clause does not dictate otherwise, the provision of a new trial free of prejudicial error normally are adequate means of vindicating the constitutional rights of the accused” (footnote omitted).
IV
I would hold in this case that the government’s initial indictment adequately pled a taking of money by false and fraudulent pretenses, that the district judge was correct in allowing a trial to go forward on that theory, and that a retrial, upon proper instructions, may be had under that indictment.

. I note that this decision may have little continuing impact because of amendments contained in the recently enacted Anti-Drug Abuse Act of 1988 reinstating the intangible rights theory. PL 100-690, § 7603. I also note that the court’s opinion does not declare that a reindictment and retrial is impossible, though there well may be both statute of limitations problems and arguments as to double jeopardy problems.

. 29 U.S.C. Sec. 501 states: "The officers, agents, shop stewards, and other representatives of a labor organization occupy positions of trust in relation to such organization and its members as a group ... to account to the organization for any profit received by him in whatever capacity in connection with transactions conducted by him or under his direction on behalf of the organization."