Court Opinion

ID: 9485858
Source: CourtListenerOpinion
Date Created: 2023-08-05 11:32:12.761653+00
Date Added: 2024-06-11T17:51:24.417085
License: Public Domain

BRIGHT, Senior Circuit Judge,
concurring in part and dissenting in part.
I respectfully dissent from the majority’s affirmance of Civella’s conviction on the charges of wire fraud, transportation of stolen goods, etc., and conspiracy to commit the substantive offenses of mail fraud, wire fraud, and transportation of stolen goods, etc. There simply does not exist sufficient evidence from which a reasonable jury could base the verdicts.
This fraud case presents an unusual scenario. Here, a diversion operation existed whereby prescription medications were purchased from drug companies at minimal prices, designated by the drug companies’ “own use” clauses for distribution to institutional settings only, and diverted by defendants for resale at a profit. This action by the defendants violated the “own use” clauses, constituting a breach of each of the individual contracts. The evidence pertaining to Civella’s involvement in the venture does not, however, demonstrate the requisite intent to defraud as required to sustain a conviction under each of the statutes. As conceded by the majority, “the evidence is less clear regarding Civella’s intent.” Maj. op. at 665.
A challenge to the sufficiency of the evidence requires that we view the evidence in the light most favorable to the Government. The verdict will be sustained if supported by substantial evidence. United States v. Widgery, 636 F.2d 200, 202 (8th Cir.1980).
To sustain a conviction of wire fraud, in violation of 18 U.S.C. § 1343, the government must prove (1) the existence of scheme to defraud, and (2) use of the wires for the purpose of executing the scheme. Defendant’s intent to defraud is an essential element that must be established. United States v. Earles, 955 F.2d 1175, 1179 (8th Cir.1992). The telephone conversations surreptitiously recorded in this case, rather than demonstrating Civella’s fraudulent intent, merely evinced his participation in the management of the pharmacies.
A conviction under 18 U.S.C. § 2314, transportation of stolen goods, etc., requires inter alia proof of “ ‘knowledge on the part of the defendant that the property was taken by fraud.’ ” Earles, 955 F.2d at 1178 (quoting United States v. Miller, 725 F.2d 462, 468 (8th Cir.1984)). Proof that defendant was aware of the “own use” clauses alone cannot support a conviction under § 2314.
The essence of conspiracy necessitates an agreement to commit an offense or to defraud, attended by an act of one or more of the conspirators to effect the object of the conspiracy. United States v. Andrade, 788 F.2d 521, 525 (8th Cir.), cert. denied, 479 U.S. 963, 107 S.Ct. 462, 93 L.Ed.2d 408 (1986). Where the substantive offense underlying the conspiracy requires specific knowledge, failure to establish that specific knowledge for the substantive offense precludes conviction on the conspiracy count. United States *669v. Tavoularis, 515 F.2d 1070, 1074 (2d Cir.1975). Such is the case here.
Evidence presented by the Government of Civella’s “knowledge of the scheme and intent to defraud” includes the following: (1) Civella received profits from the diversion operation in an amount at least equivalent to what the other participants received; (2) the diversion profits were not directly paid to Civella, but made out in the name of his daughter, both sons, and granddaughter; (3) Civella allegedly was the number one person running the operation, based on a hearsay statement; and (4) Civella’s knowledge of the “own use” restrictions. The Government also eluded to Civella’s purported reputation as a crime figure in Kansas City.
The fact Civella financed the pharmacies and assisted in then- operation is insufficient to establish an intent to defraud. Nor does Civella’s knowledge of the “own use” clauses provide the requisite proof of intent. The Government did not present any evidence that Civella, coupled with knowledge of the clauses, understood that the diversion program violated each of the “own use” clauses or that he participated in their violation with the intent to defraud the drug companies. Cf. United States v. West, 549 F.2d 545, 550 (8th Cir.) (evidence held sufficient to establish defendant not only wilfully breached the contract but engaged in intentional deception intended to induce another to part with property and achieved desired ends to support convictions of mail fraud, wire fraud, interstate transportation of fraudulently obtained goods, and conspiracy), cert. denied, 430 U.S. 956, 97 S.Ct. 1601, 51 L.Ed.2d 806 (1977).
Civella’s conviction, in light 'of the insufficiency of the evidence presented, would seem the result of guilt by association or purported reputation, an impermissible basis for sustaining the jury’s verdicts. The Government should have provided actual proof of Civella’s intent to defraud, which it did not do in this case. I would reject the conviction as resting on an impermissible basis. The Government simply failed to prove guilt beyond a reasonable doubt.