Court Opinion

ID: 9497808
Source: CourtListenerOpinion
Date Created: 2023-08-05 17:00:26.204463+00
Date Added: 2024-06-11T17:58:25.714577
License: Public Domain

GREGORY, Circuit Judge,
dissenting.
. It is .axiomatic that not all fraud is federal fraud. Rather, the federal mail fraud statute reaches only “those limited instances in which the use of the mails is a part of the execution of the fraud, leaving all other cases to be dealt with by appropriate state law.” Kann v. United States, 323 U.S. 88, 95, 65 S.Ct. 148, 89 L.Ed. 88 (1944) (emphasis added). Because I believe that this is such a case that should be left to state law, I respectfully dissent as to the sufficiency of the evidence on Pierce’s conviction. The majority’s attempt to fit the facts of this case into the federal mail fraud statute go.es beyond existing precedent and .demonstrates the dangers inherent in extending federal jurisdiction further than Congress intended to go.
I.
The majority affirms Pierce’s mail fraud conviction under 18 U.S.C. § 1341. A jury found that Pierce had defrauded Bristol by selling ’“off-the-books” instant bingo games during sessions in which they would also sell games for Bristol and then pocketing the profits. The scheme, which began perhaps as early as 1997 and ended in early 2001, entailed purchases of the “off-the-books” instant bingo games every few weeks and illegal sales .at bingo sessions each weekend. At the end of each session, Hoss II and Pierce would orally report to Linda Pierce how many bingo games they had sold for Bristol but they did not report to her their sales of the “off-the-books” *184instant bingo games.1 Linda Pierce, who was acquitted on all counts, sent weekly bingo summary reports to Bristol, which included the tallies of the bingo games sold, through the U.S. mail.
II.
Pierce’s conviction for mail fraud turns on whether the mailing of the weekly reports were used to conceal the scheme or rather whether the scheme had already come to fruition when the mailings occurred. Whether a mailing is deemed to be for the purpose of executing a scheme to defraud depends on “whether the mailings were sufficiently closely related to (the defendant’s) scheme to bring his conduct within the statute.” United States v. Maze, 414 U.S. 395, 399, 94 S.Ct. 645, 38 L.Ed.2d 603 (1974). The Supreme Court’s jurisprudence on the question of when a mailing acts in furtherance of fraud has evolved from a narrow to a broad reading. Yet, a review of the history of this jurisprudence demonstrates that Pierce’s conduct does not fit even within the Court’s more recent expansive reading of the statute.
In Kann v. United States,2 323 U.S. 88, 65 S.Ct. 148, 89 L.Ed. 88 (1944), and Parr v. United States, 363 U.S. 370, 80 S.Ct. 1171, 4 L.Ed.2d 1277 (1960),3 the Court read the mail fraud statute somewhat re-strietively overturning mail fraud convictions on the ground that the schemes had reached fruition before the mailings occurred. In doing so, it looked at the individual transactions in each case separately and found that once the proceeds for each transaction were received, the schemes ended. The subsequent mailings, it noted, were either merely incidental and collateral or immaterial to the schemes in question. See Parr, 363 U.S. at 393, 80 S.Ct. 1171; Kann, 323 U.S. at 95, 65 S.Ct. 148.
But in United States v. Sampson, 371 U.S. 75, 83 S.Ct. 173, 9 L.Ed.2d 136 (1962), the Court seemingly shifted to a more expansive analysis by upholding a mail fraud conviction in which the mailings were sent to the victims of the fraud after the defendants had received the victims’ money. Id. at 78, 83 S.Ct. 173. It distinguished its decisions in Kann and Parr stating that in those cases the schemes had come to fruition before the mails were used. Id. at 80, 83 S.Ct. 173. In contrast, in Sampson, the mailings were made for the purpose of lulling the victims into believing that the defendants would perform the promised services and were done as part of the “previously formulated plan.” Id. at 81, 83 S.Ct. 173.
*185The Court went further still in Schmuck v. United States, 489 U.S. 705, 109 S.Ct. 1443, 103 L.Ed.2d 734 (1989), holding that the defendant, who purchased used cars, rolled back their odometers, and then sold them to unwitting car dealers with artificially inflated prices, was properly convicted of mail fraud based upon the car dealers’ subsequent mailing of documents transferring title to their cústomers. Id. at 172. It found that these mailings satisfied the mail fraud statute reasoning that “a rational jury could have found that the title-registration mailings were part of the execution of the fraudulent scheme, a scheme which did not reach fruition until the retail dealers resold the cars and effected transfers of title.” Id.
The Court found it “sufficient for the mailing to be incident to an essential part of the scheme or a step in the plot.” Id. at 710-11, 109 S.Ct. 1443 (internal ■ citations and quotations omitted). It distinguished Kann and Parr noting that the mailings in those cases “involved little more than post-fraud accounting among the potential victims of the various schemes, and the long-term success of the fraud did not turn on which of the potential victims bore the ultimate loss.” Id. at 714, 109 S.Ct. 1443.4 Rather, it emphasized that “[t]he relevant question at all times is whether the mailing is part of the execution of the scheme as conceived by the perpetrator at the time.” Id. at 715, 109 S.Ct. 1443.
While this line of. cases suggests an ever-expanding view on' when a mailing is “for the purpose of executing such scheme,” we should be mindful that this latter element is not simply a jurisdictional hook.5 Not every mailing will have a sufficient relationship to the fraud in question to make the fraud a federal crime. . The Court’s holding in Schmuck helps to focus this analysis. By stating, as noted above, that the relevant question is whether the perpetrator conceived thé mailing as part of the scheme, the Court injected a subjective component into the inquiry. Thus, in determining how the mailing interacts with the fraud, we must focus on whether the scheme, as conceived by Pierce, had come to fruition when the mailing occurred or whether the mailing acted as part of the scheme by concealing it.6
*186III.
The majority concludes that these “falsified bingo reports lulled Bristol into a false sense of security and effectively concealed Pierce’s fraud.” Ante at 181. It reasons that Bristol would have discovered the fraud if the weekly reports that Linda Pierce mailed to Bristol showed both the revenue from the Bristol-purchased games and the revenue from the “off-the-books” games. While I agree that this argument has initial appeal, it fails to consider that the preparation and mailing of the weekly reports by Linda Pierce was a step once removed from the actual concealment of the fraud. •
The fraud was effectively concealed when Pierce and Hoss II made their oral reports to Linda Pierce each night but omitted their sales from the off-the-books games. The fact that Linda Pierce wrote the sales down and later mailed a report is unrelated to furthering the fraud because all that was necessary to further the fraud had already occurred. In this respect, the mailings did not further the fraud or conceal the fraud, the oral reports to Linda Pierce furthered and concealed the fraud. Put another way, these mailings were “not part of the execution of the scheme as conceived by the perpetrator at the time,” Schmuck, 489 U.S. at 715, 109 S.Ct. 1443, because Pierce’s scheme involved selling “off-the-books” games while only reporting to Linda the games he sold for Bristol. Once he had done those acts, he had succeeded in completing the current fraud as well as protecting the success of future fraud.
The majority’s emphasis on cases in which defendants “lulled” victims into a false sense of security is inapposite. In each of those cases, the “lulling” mailings were made after the defendant obtained the victim’s property but before the scheme had come to fruition. The mailings were thus a part of the scheme. At the point that the mailings were made in this ease, the scheme was already both concealed and complete. In addition, the mailings in this case were not “lulling” letters full of false promises to victims, they were reports which accurately stated the number of instant bingo games that Pierce sold on behalf of Bristol.7
For these reasons, I believe that the majority’s analysis goes beyond existing case law interpreting the scope of the mail fraud statute.8 To be sure, the mail fraud statute has been subject to an increasingly broad reading. But if the majority’s interpretation of the mailing in this case as one “for the purpose of executing such scheme,” 18 U.S.C. § 1341, is correct, then I do not see how this element functions as anything more than a jurisdictional requirement. As long as federal prosecutors can find some mailing that they can point a jury to, no matter how tangential that mailing is, then they will have at their disposal the ability to make all fraud with any sort of mailing connected to it, a federal case. If this is what Congress intended, then they would have written the statute to state as much, instead, they limited it to those cases in which the mailing’s purpose is for execution of the scheme.
*187I recognize that the mail fraud statute has come to be used as a “stopgap device to deal on a temporary basis with [a new fraud scheme], until particularized legislation can be developed and passed to deal directly with the evil.” Maze, 414 U.S. at 405-06, 94 S.Ct. 645 (Burger, C.J., dissenting). However, the confusion in the jurisprudence surrounding the mail fraud statute leaves the very real possibility that courts and federal prosecutors will enforce the statute in arbitrary and unforeseeable ways. Infusing even more uncertainty in the criminal justice system, as the majority’s opinion does, is not (or should not be) in keeping with our justice system. I thus respectfully dissent as to the sufficiency of the evidence on Pierce’s conviction for mail fraud.9

. No allegation was made that Pierce sold games purchased on Bristol's account and kept the proceeds as his own.

. In Kann, the defendants set up a dummy corporation through which they diverted funds from another corporation for their own use. 323 U.S. at 92-93, 65 S.Ct. 148. They deposited or cashed checks drawn on these diverted funds at various banks which mailed the checks to the drawee bank. Id. at 93, 65 S.Ct. 148. The Court set aside their convictions on the ground that the mailings occurred after their scheme had come to fruition because the defendants had already received the money they intended' to receive .and it was immaterial to them how the bank which paid or credited the check would collect from the drawee bank. Id. at 94, 65 S.Ct. 148.

.In Parr, the defendants made unauthorized gasoline purchases using their employer's credit card. 363 U.S. at 383. The oil company mailed invoices to the credit card holder, and in return, payment was sent through the mail. Id. The Court reversed the defendants’ mail fraud convictions finding the mailings were not sufficiently connected to the scheme because it was immaterial to defendants how the oil company received payment for its services. Id. at 393.

. Justice Scalia wrote a strong t dissent in which he found the majority's opinion to be "inconsistent” with the Court's' prior cases. Schmuck, 489 U.S. at 722, 109.S.Ct. 1443 (Scalia, J., dissenting).

. Prior amendments to the mail fraud statute support this reading. Congress amended the statute in 1909 to eliminate language requiring proof that the scheme would be "effected by either opening or intending to open correspondence or communication with any other person ... by means of the post-office establishment of the United States ....” See Peter J. Henning, Maybe It Should Just Be Called Federal Fraud: The Changing Nature of The Mail Fraud Statute, 36 B.C. L.Rev. 435, 447 (1995). It replaced it with the language at issue in this case, which requires that the mails be used "for the purpose of executing such scheme.” Id. at 448. Thus, this "amended mail fraud statute did not completely eliminate the required nexus between the scheme to defraud and the mailing element, nor did it explicitly reduce the use of the mails to a mere predicate for federal jurisdiction.” Id.

.As the Fifth Circuit has aptly concluded:
Synthesizing the Supreme Court’s holding in Schmuck with these other precedents— which the Court accepted — and in breaking down Schmuck’s rationale, it is clear that the Court’s statement that a mailing need merely be "incident to an essential part of the scheme” to satisfy the mail fraud statute is cabined by the materiality of the mailing, as well as its timing: A tangential mailing occurring after the success, of a fraud scheme is complete would never qualify, even if the mailing is "incidental” to a part of the scheme.
United States v. Strong, 371 F.3d 225, 229 (5th Cir.2004).

. By this statement, I am only noting that these mailings did not contain ''lulling” statements. Mailings that are innocent in and of themselves can be used to obtain a conviction under the federal mail fraud statute. Badders v. United States, 240 U.S. 391, 394, 36 S.Ct. 367, 60 L.Ed. 706 (1916).

. The conduct by Pierce in this case was egregious. He sold bingo games for his own profit while he was selling games for a charitable organization. Yet, the State of Virginia is fully capable of dealing with Pierce's crimes and punishing him accordingly.

. After we held oral arguments in this case, the Supreme Court rendered its decision in United States v. Booker, - U.S. -, 125 S.Ct. 738, 160 L.Ed.2d 621, 2005 WL 50108 (U.S. Jan. 12, 2005). Because the district court judge enhanced Pierce's sentence on facts not found by the jury,. I dissent from the majority’s failure to recognize the plain Booker error that occurred in this case. See United States v. Hughes, 396 F.3d 374, 2005 WL 147059 (4th Cir. Jan.24, 2005) (finding plain . error in imposition of sentence - qnhanced based on facts not found by a jury and remanding for resentencing consistent with Booker). Although Pierce did not directly raise this issue in briefing or oral argument, both of which took place pre-Booker, he did argue that the district court's finding on the amount of loss was not supported by the evidence before the jury at trial. I would thus sua sponte recognize the plain Booker error in this case.