Petition — Castor v. United States
Supreme Court brief1978
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IN THE
Supreme Court of the United States
OcToBER TERM, 1977
No. @7Z= 500 ‘
Henry Y. Dein, Petitioner,
vs.
UNITED StTaTEs OF AMERICA,
CHarLes G. Castor, WILLIAM T. ROBINETTE
AND JAMES A. JAMES, Respondents.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
BERNARD FENSTERWALD, JR.
FENSTERWALD & ASSOCIATES
Suite 203
2101 L Street, N.W.
Washington, D.C. 20037
Telephone: (202) 785-1636
Counsel of Record for Petitioner.
Passes or Brnon 8S. Apams Punting, Inc., Wasuineron, D. C.
Page
ee et te eda teaeeak cane 1
p ESE, A OE a OO eT Ee a 2
QuESTIONS PRESENTED .............. igicamheon ohinns 2
I i ee od ad eh ben enw 3
I og kdb k5 anne de 6akedtes bo dhe 3
Reasons For GRANTING THE WRIT ..............--00-: 7
eee undabaaes 18
APPENDIX:
NE Ge I ncn nc cc emenncnsectessees la
I BIS TIED on ccccccccccecsceviese 17a
Opinion of Court of Appeals ................... 26a
Judgment of Court of Appeals ................. 39a
Order Denying Rehearing ..................005: 40a
Order Granting Extension of Time ............. 4la
CITATIONS
Cases:
Bowtie v. Columbia, 378 U.S. 347 (1964) ....... 13, 15, 16, 17
ae ] M General Construction Co., 269 U.S. 385 :
i aac dl eal A i le nth a he on Oana 7
Douglas v. Buder, 4T2 U.S. 430 (1973) ............... 17
Gooding v. Wilson, 405 U.S. 518 (1972) .............. 18
Healy v. Ratta, 292 U.S. 263 (1934) ................. 7
Indiana Alcoholic Bev e Commission v. Baker, 153
Ind. App. 133 ; 286 N.E. 2d 174 (1972) ........... 5
Kann v. Unated States, 323 U.S. 88 (1944) ........... 8
Kline v. Burke Constr. Co., 260 U.S. 226, (1922) ...... 7
Laneetta v. New Jersey, 306 U.S. 451 (1939) .......... 17
ii Table of Citations Continued
Page
Lewis v. New Orleans, 415 U.S. 130 (1974) .........-- 18
Luros v. Hanson, 382 U.S. 956 (1965) ..........+..-- 11
Marks v. United States, —— U.S. ——, 97 8.Ct. 990
COREE cnccackocdobusebnsabadetareedseseccecccce 16
Memoirs v. Massachusetts, 383 U.S. 413 (1966) ....... 17
Miller v. California, 413 U.S. 15 (1973) ............-- 17
NAACP v. Button, 371 U.S. 415 (1963) .............. 18
Parr vy. United States, 363 U.S. 370 (1960) ........... 8
Pierce v. United States, 314 U.S. 306 (1941) .......... 14
Rabe v. Washington, 405 U.S. 313 (1972) ........... 14, 17
State of Indiana ex rel. Miller v. Indiana Alcoholic Bev-
erage Commission, (Cause No. 8772-231, Marion
Cty. Sup. Ct., August 25, 1972) ...............-- 6
United States v. Birrell, 242 F. Supp. 191 (S.D.N.Y.
DEE acccddaudeuachaaweis teh teks diehetees<s
United States v. Black, 201 F. Supp. 262 (S.D.N.Y.
GED 6-snccgccnnecse ches chbadelawenesentases <* 1
United States v. Castor, No. 76-2068 (7th Cir. 1977) ... 10
United States v. Crummer, 151 F.2d 958 (10th Cir.
DE cudceunetiseévandeneuiasdéeecas « 13
United States v. Feinberg, 322 U.S. 726 (1944) ....... 12
United States v. Harriss, 347 U.S. 612 (1954) ........ 14
United States v. Hedges, 458 F.2d 188 (10th Cir. 1972) 9
United States v. Kelem, 416 F.2d 346 (9th Cir. 1969) .. 8
United States v. Linetsky, 533 F.2d 192 (5th Cir. 1976) 9
United States v. Luros, 243 F. Supp. 160 (N.D. lowa
DEED oc beegceedescnecgandenehéanesedooeessose ¢ 10
United States v. Maze, 414 U.S. 395 (1974) .......... 7
United States v. Montana State Food Distributors As-
sociation, Inc., 271 F. Supp. 403 (D. Mont. 1967) .. 11
United States v. Raff, 161 F. Supp. 276 (M.D. Pa. 1958) 11
United States v. Sampson, 371 U.S. 75 (1962) ..9, 10, 11, 12
‘4 oo | States v. Winer, 323 F. Supp. 604 (E.D. Pa. .
7” cecns seceendt deen ¢énceueeeneindaiein 1
Whitfield v. United States, 401 F.2d 480 (9th Cir. 1968) 9
wee v. United States, 402 F.2d 47 (10th Cir.
on «shart iainen ine enianiaeniiasenies digs ibibiiidianal 9, 13
Table of Authorities Continued ili
Page
StTaTUTEs:
United States Code:
i an en dgecdadess beedesees oe 4
EE ei nni dian ei uedews eed eeouer Passim
EE ink cnn tains 5 nb eeenesedee bens 2
ConsTITUTIONAL Provisions:
United States Constitution:
ine tetuniadigh dbewebeseéens Passim
ET NET Passim
MISCELLANEOUS:
Hall, General Principles of Criminal Law (2d ed. 1960) 13
= Py
IN THE
Supreme Court of the United States
Octosper TzrM, 1977
No.
—_
Henry Y. Dein, Petitioner,
vs.
Untrep States or AMERICA,
CuarLes G. Castor, WiLiaAM T. RosINerTe
AND JAMES A. JAMEs, Respondents.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
Petitioner Henry Y. Dein prays that a writ of cer-
tiorari issue to review the judgment of the United
States Court of Appeals for the Seventh Circuit en-
tered in this case on July 8, 1977.
The opinions of the United States District Court for
the Southern District of Indiana and of the United
States Court of Appeals for the Seventh Circuit are
not yet reported. Copies of these opinions are included
as part of the Appendix, infra at pages 17a and 26a,
respectively.
2
JURISDICTION.
_ The judgment of the court of appeals (Appendix,
p. 39a) was entered on July 8, 1977. A timely petition
for rehearing was filed on July 22, 1977, and denied on
August 9, 1977. (Appendix, p. 40a.) Associate Justice
John Paul Stevens entered an order on August 26,
1977 extending the time to file a petition for writ of
certiorari to and including September 30, 1977. (Ap-
pendix, p. 41a.) The jurisdiction of this Court is in-
voked pursuant to 28 U.S.C. § 1254(1).
QUESTIONS PRESENTED.
1. Whether an indictment charging a scheme or
artifice to defraud in violation of 18 U.S.C, § 1341 is
sufficient where the alleged scheme or artifice neither
sought nor obtained money or property, where no al-
leged victim could or did suffer pecuniary harm, and
where no breach of public or private trust or any fi-
duciary relationship was involved?
2. Whether the court of appeals employed the proper
standard and scope of review in determining the pro-
priety of the district court’s dismissal of the indict-
ment ?
3. Whether 18 U.S.C. § 1341, as construed and ap-
plied to the indictment by the court of appeals, is im-
permissibly vague and overbroad so as to deny peti-
tioner rights guaranteed him by the First and Fifth
Amendments of the United States Constitution?
3
STATUTE INVOLVED.
This case involves the mail fraud statute, 18 U.S.C.
§ 1341, which reads as follows:
**§ 1341. Frauds and swindles
‘“Whoever, having devised or intending to de-
vise any scheme or artifice to defraud, or for ob-
taining money or property by means of false or
fraudulent pretenses, representations, or promises,
or to sell, dispose of, loan, exchange, alter, give
away, distribute, supply, or furnish or procure for
unlawful use any counterfeit or spurious coin, obli-
gation, security or other articles, or anything rep-
resented to be or intimated or held out to be such
counterfeit or spurious article, for the purpose of
executing such scheme or artifice or attempting
so to do, places in any post office or authorized de-
pository for mail matter, any matter or thing
whatever to be sent or delivered by the Postal
Service, or takes or receives therefrom, any such
matter or thing, or knowingly causes to be deliv-
ered by mail according to the direction thereon,
or at the place at which it is directed to be de-
livered by the person to whom it is addressed, any
such matter or thing, shall be fined not more than
ong or imprisoned not more than five years, or
STATEMENT OF THE CASE.
Petitioner Dein and respondents Castor and Rob-
inette are active and highly respected members of the
bar in Indianapolis, Indiana. They practice law for a
living, and they have specialized, inter alia, in assisting
clients thread their way through the intricacies of the
local and state liquor laws and regulations.
In January 1970, when Indianapolis ‘‘went metro’’,
it was expected that, based on increased population,
4
forty-five new liquor permits would become available.
On behalf of approximately a dozen clients, including
respondent James, lawyers Dein, Castor, and Robinette
filed applications for new permits but were refused by
the Indiana Alcoholic Beverage Commission. Suit was
then filed in state court to compei the processing of
applications for the issuance of additional licenses
based upon the increased population figures.
The lawyers prevailed in court and the liquor au-
chorities began processing applications. In recognition
of the plaintiff-applicants’ initiative, in having the
matter clarified in the local court, the liquor authorities
adopted an administrative policy of giving preference
to applications of plaintiff-applicants in the issuance
of permits.
Petitioner Dein and respondents Castor, Robinette,
and James were indicted in May 1976 for fourteen vio-
lations of the federal mail fraud statute, 18 U.S.C.
§ 1341, and for one count of conspiracy to commit mail
fraud in violation of 18 U.S.C. § 371. (Appendix, pp.
la-16a.) The defendants were charged with devising
a scheme to defraud the Indiana liquor authorities, as
well as certain Indianapolis citizens, in connection with
the issuance of newly-a‘ailable liquor permits.
Reduced to its essentials, the indictment charges
that in October 1971 and thereafter, the defendants
allegedly concealed their ‘‘economic interest’’ in twelve
applications for package store permits through the
use of ‘‘straw men.’’ These “‘straw men’”’ were awarded
permits and—after several transactions intended to
further conceal defendants’ interest—ultimately trans-
ferred the permits to defendant James.
4)
The indictment charges that the alleged fraud was
perpetrated by the filing of false or misleading docu-
ments with the state and local alcoholic beverage au-
thorities. Those documents were designed to induce
those authorities to issue permits and approve trans-
fers to defendant James. For the purpose of executing
the scheme, the indictment concludes, defendants al-
legedly caused the liquor authorities to mail fourteen
letters or notices.
The indictment does not charge corruption or brib-
ery of public officials, or that the publie has been de-
prived of the honest and faithful services of any official.
Nor does the indictment charge that any fiduciary had
used his position to obtain or attempt to obtain any
direct pecuniary gain. Instead, the indictment states
that the scheme was intended ‘‘to obtain from the Alco-
holie Beverage Commission a number of the newly
available package liquor store permits.’’ (Indictment
14, Appendix, p. 2a.)
During the oral argument on defendants’ motions to
dismiss the indictment before U.S. District Court
Judge William E. Steckler, the government conceded
that there was no Indiana law or administrative policy
forbidding one person to hold more than one package
permit.’ The government further conceded that the al-
leged ‘‘straw men”’ had been plaintiffs in litigation in-
tended to determine the availability of additional per-
mits and to make mandate the processing of permit
applications by the Alcoholic Beverage Commission ; *
‘In fact, a number of corporations and persons hold multiple
permits or licenses. Currently, the Hook Drug Co. holds 159 licenses
for the operation of retail package liquor stores.
? Indiana Alcoholic Beverage Commission v. Baker, 153 Ind. App.
6
and that the defendant James fully disclosed that he
would purchase and operate the package liquor stores
whose permits were to be transferred to him.’
The district court dismissed the indictment finding
it insufficient on its face; that it did not charge a
scheme or artifice within the scope of the mail fraud
statute, 18 U.S.C. § 1341, and that the mailings alleged
in the indictment were too remote from the alleged
scheme to support federal criminal jurisdiction.‘
Relying on decisions of this Court, the district court
held that the phrase ‘‘or for obtaining money or prop-
erty by means of false or fraudulent pretenses, repre-
sentations, or premises’’ was added to the mail fraud
statute in 1909 not to create an additional or separate
offense, but to clarify the preceding language, ‘‘any
scheme or artifice to defraud.’’ Since the package liquor
store permits in question are not ‘‘money or property’’,
the district court concluded that the scheme charged
was not within the scope of 18 U.S.C. § 1341 and that
‘‘the acts charged here do ‘not come up to the level of
criminality.’ ”’
133; 286 N.E. 2d 174 (1972); State of Indiana ex rel. Miller v.
Indiana Alcoholic Beverage Commission, (Cause No. 8772-231,
Marion Cty. Sup. Ct., August 25, 1972).
* The permits subject to the alleged fraud were issued in 1974.
To date neither the local board nor state commission has taken any
action whatsoever to revoke them, Each of the permits has been
reviewed and renewed annually, including at least once since the
indictments in this case were handed down.
*Though the issue is not raised here, petitioner Dein does not
concede that the district court erred in holding that the mailings
alleged in the indictment did not have the requisite nexus to the
scheme.
7
The government appealed the trial court’s dismissal
of the indictment and the court of appeals reversed
and remanded for further proceedings. A petition and
brief for rehearing with an in banc suggestion was
timely filed on July 22, 1977. By order of August 9,
1977, rehearing was denied by the circuit court.
REASONS FOR GRANTING THE WRIT.
Introduction
In recent years there have been increasing attempts
to extend the federal mail fraud statute to a variety of
schemes not traditionally considered within its ambit.
In particular, situations involving elected officials and
kiekbacks, bribery and concealed self-dealing have come
into play. Title 18, Section 1341 has been stretched in
an effort to attack a wide variety of frauds until more
appropriate and more specific criminal legislation is
enacted.’ However, the statute retains clearly defined
limits which the government, in this case, has sought
to expand by a quantum leap. This expansion of statu-
tory scope, as proposed by the indictment, would ignore
fundamental tenets of federal criminal and constitu-
tional law:
It is elementary that the jurisdiction of federal
courts is defined and limited by the Constitution
and congressional action; hence, statutes such as
section 1341 should be carefully and strictly con-
strued in order to avoid extension beyond the
limits intended by Congress. Healy v. Ratta, 292
U.S. 263, 270, 54 8. Ct. 700, 78 L. Ed. 1249 (1934) ;
Kline v. Burke Constr. Co., 260 U.S. 226, 233-234,
43 S. Ct. 79, 67 L. Ed. 226 (1922). Moreover, such
° United States v. Maze, 414 U.S. 395, 405-06 (1974) (Burger,
C.J., dissenting).
8
construction is especially appropriate where, as
here, the Government urges that we construe a
federal criminal statute so that it reaches conduct
which the states should appropriately control and
which they can control effectively. Indeed as the
Supreme Court has emphasized, § 1341 is not de-
signed to reach all frauds, ‘‘but only those limited
to 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, 151, 89 L. Ed. 88 (1944); see Parr v. United
States, 363 U.S. 370, 80 S. Ct. 1171, 4 L. Ed.2d
1277 (1960).
United States v. Kelem, 416 F.2d 346, 347 (9th Cir.
1969).
An Indictment Charging A Scheme or Artifice to Defraud in Vio-
lation of 18 U.S.C. § 1341 Is Insufficient Where The Alleged
Scheme or Artifice Neither Sought Nor Obtained Money or
Property, Where No Alleged Victim Could or Did Suffer
Pecuniary Harm, and Where No Breach of Public or Private
Trust or Any Fiduciary Relationship Was Involved.
Petitioner Dein’s co-defendants are simultaneously
seeking review of the Court.’ Their petition includes a
detailed discussion of this ‘‘money or property”’ issue.
To avoid needless duplication, that discussion is incor-
porated here by reference in its entirety. The Court is
respectfully urged to refer to the companion petition
at pages 8 thru 13.
*A petition for writ of certiorari in No. 77-337 was filed on
September 1, 1977 in behalf of Charles G. Castor, William T.
Robinette, and James A. James.
9
The Court of Appeals Employed An Improper Standard and Scope
of Review In Determining the Propriety of the District Court's
Dismissal of the Indictment.
In this case, the district court granted a motion to
dismiss the indictment. Such action is discretionary.
United States v. Hedges, 458 F.2d 188, 191 (10th Cir.
1972); and the United States v. Birrell, 242 F. Supp.
191, 205 (S.D.N.Y. 1965). The proper standard for the
review of an act within the discretion of the district
court is whether there has been an abuse of discretion.
United States v. Linetsky, 533 F.2d 192, 203 (5th Cir.
1976), and Whitfield v. United States, 401 F.2d 480,
482 (9th Cir.), cert. denied, 393 U.S. 1026 (1968). Ab-
sent a finding of abuse of discretion, acts taken within
the discretion of the trial judge will not be disturbed.
Williams v. United States, 402 F.2d 47 (10th Cir. 1967).
District Judge Steckler dismissed the indictment on
the grounds that it did not charge a scheme or artifice
to defraud within the scope of the mail fraud statute
and that the mailings alleged to be in furtherance of
the scheme were not sufficiently connected with the
scheme to support federal criminal jurisdiction. Upon
review, the circuit court panel faulted the approach
employed by the district court in testing the sufficiency
of the indictment:
We believe the district court asked the wrong
question in considering this aspect of the indict-
ment. The question is not whether the indictment
particularly alleges sufficient facts from which a
jury could find that the mailings charged were In
furtherance of the scheme, but rather whether the
Government conceivably could produce evidence
at trial showing that the designated mailings were
for the purposes of executing the scheme. United
States v. Sampson, 371 U.S. 75, 76 (1962). The
10
resolution of the question of whether the mailings
alleged were in furtherance of the scheme must
await trial....
United States v. Castor, et al., No. 76-2068 at 9 (7th
Cir. 1977).
Petitioner suggests that criticism of the trial court is
misplaced; it is the appellate decision which suffers
analytical shortcomings. Circuit Judge Bauer requires
that an indictment ‘‘should not be dismissed as insuffi-
cient on its face unless there is No CoNCEIVABLE Evt1-
DENCE that the Government could produce... .’’ Id.
(Emphasis supplied.) To support reversal of the dis-
trict court’s action, the opinion includes an enumera-
tion—count by count through all fourteen counts of
the indictment—of the evidence which ‘‘conceivably”’
could be produced by the government at the time of
trial to substantiate its charges.
The court of appeals’ test or standard of ‘‘no con-
ceivable evidence”’ is objectionable in several regards.
Most notably, such an approach is not in conformity
with the accepted rule:
A motion to dismiss the indictment is not a de-
vice for a summary trial of the evidence. It is
directed only to the question of the validity of the
indictment on its face, and its sole function is to
test the sufficiency of the indictment to charge an
offense, United States v. Sampson, 371 U.S. 75,
83 S. Ct. 173, 9 L. Ed.2d 136 (1962). The sufficiency
of the indictment must be determined from the
words of the indictment and the Court is not free
to consider evidence not appearing on the face of
the indictment ....
United States v. Winer, 323 F. Supp. 604, 605 (E.D.
Pa. 1971). See also, United States v. Luros, 243 F.
11
Supp. 160, 165 (N.D. Iowa 1965), Luros v. Hanson, 382
U.S. 956 (1965). On a motion to dismiss [the court] is
limited to the face of the indictment ... ."° United
States vy. Raff, 161 F. Supp. 276, 282 (M.D. Pa. 1958).
It has also been stated that in testing the sufficiency of
an indictment, projections as to what the evidence will
show may not be considered. United States v. Black,
291 F. Supp. 262, 264 (S.D.N.Y. 1968); and United
States v. Montana State Food Distributors Association,
Inc., 271 F. Supp. 403, 404-405 (D. Mont. 1967).
The operational result of applying the Seventh Cir-
cuit’s ‘‘any conceivable evidence’’ test is that an indict-
ment can never be dismissed; the government will al-
ways have a ‘‘econceivable’’ evidentiary basis for sup-
porting an indictment. The efficacy of a motion te dis-
miss in federal practice would be totally emasculated.
As authority for this unprecedented approach, the
court of appeals mistakenly relies upon United States
v. Sampson, 371 U.S. 75 (1962).
In Sampson, the defendants were indicted on charges
that they had used the mails ‘‘for the purpose of exe-
euting’’ a fraudulent scheme in violation of 18 U.S.C.
§ 1341. There were related charges of conspiracy as
well. The district court dismissed thirty-four of the
counts because of inadequate factual allegations on
the face of the indictment. On appeal, this Court stated
the issue for review:
The only question we must decide with reference
to the 34 substantive counts is whether the allega-
tions in the indictment were sufficient to permit a
jury to find that the mails were used ‘for the pur-
pose of executing’ the fraudulent scheme. Whether
the indictment sufficiently that the mails
were so used depends upon its allegations.
371 USS. at 76.
12
The court of arpeals, in the instant case, accused the
district court of asking the wrong question in consid-
ering the indictment. Yet, the question asked by Judge
Steckler—whether the indictment alleges sufficient facts
from which a jury could find that the mailings charged
were in furtherance of the scheme—was the precise
question posed by this Court in Sampson. Sampson
stands for the proposition that whether the indictment
sufficiently charges use of the mails in furtherance of
a scheme depends upon its facial allegations. The dis-
trict court nowhere departed from this formulation.
The Court in Sampson found that the charges in
the indictment, if supported by evidende, could be
found by a jury to be a mail fraud offense. The court
of appeals in this case found that the government could
conceivably produce evidence at trial to show that the
designated mailings were for the purpose of executing
the scheme. In Sampson, the focus of the inquiry was
upon the indictment itself. In this case, the court of
appeais examined the indictment and imaginary evi-
dence. The appellate court projected what evidence
the government might produce to support the charges
and incorporated its projection as part of the indict-
ment for the purpose of reviewing the dismissal. This
approach, under Sampson, was clearly incorrect.
Even the most deferential authority to the court of
appeals’ position does not, on close analysis, support
the conclusion that the district court was in error in dis-
missing the indictment with regard to the mailings.
United States v. Feinberg recognizes that when it ap-
pears from the face of the indictment that the mailings
charged cannot be in furtherance of the scheme to de-
fraud, the defendant is entitled to dismissal as a matter
of law. United States v. Feinberg, 50 F. Supp. 976, 977
13
(E.D. N.Y. 1973), aff’d, 140 F.2d 592 (2d Cir.), cert.
denied, 322 U.S. 726 (1944). In a similar vein is United
States v. Crummer, 151 F.2d 958 (10th Cir. 1945).
The court of appeals has utilized an incorrect stand-
ard for assessing the actions of the district court. In
the process it disregarded the applicable standard of
review. As the court of appeals did not find an abuse
of discretion, the decision of the district court regard-
ing the dismissal of the indictment must stand. Wil-
liams v. United States, 402 F.2d 47 (10th Cir. 1967).
The Co art Of Appeals Construction Of 18 U.S.C. § 1341 As Applied
To The Indictment Is Impermissibly Vague And Overbroad
So As To Deny Petitioner Rights Guaranteed Him By The
First And Fifth Amendments Of The United States Consti-
tution.
Indeed, ar. unforeseeable judicial enlargement of
a criminal statute, applied retroactively, operates
precisely like an ez post facto law, such as Art. T,
§ 10, of the Constitution forbids.
The fundamental principle that ‘‘the required
criminal law must have exercised when the con-
duct in issue oceurred,’’ Hall, General Principles
of Criminal Law (2d ed. 1960), at 58-59, must
apply to bar retroactive criminal prohibitions ema-
nating from courts as well as from legislatures. If
a judicial construction of a criminal statute is ‘‘un-
expected and indefensible by reference to the law
which had been expressed prior to the conduct in
— it must not be given retroactive effect. Id.,
at 61.
Bouie v. Columbia, 378 U.S. 347, 353-354 (1964).
The court of appeals’ construction of 18 U.S.C. § 1341
is impermissibly vague as applied to petitioner Dein.
14
As construed and retroactively applied, the statute
failed to provide him fair notice of criminal activity.
Prior to the affirmance of the indictment by the circuit
court, the petitioner could discern particular uses of
the mails which were prohibited and those uses which
were not. Unforeseeably, the court of appeals expanded
the reach of the mail fraud statute to encompass for-
merly innocent activities. This judicial action consti-
tutes a deprivation of due process. In support of this
contention, several representative cases are discussed.
In Pierce v. United States, 314 U.S. 306 (1941), the
defendant had been convicted under an indictment
charging violation of a federal statute prohibiting the
impersonation of a federal employee. There was proof
offered at trial that Pierce had held himself out as a
representative of the Tennessee Valley Authority.
The district court rejected a requested jury instruc-
tion noting that the T.V.A., although a governmental
instrumentality, was a corporate entity—as such, an
attempt to impersonate a T.V.A. employee was beyond
the scope of the statute. This Court held that refusal
to so instruct the jury was material error:
[J Judicial enlargement of a criminal act by inter-
pretation is at war with a fundamental concept of
the common law that crimes must be defined with
appropriate definiteness. .. . While the act should
be interpreted ‘so as . . . to give full effect to its
plain terms’... we should not depart from its
words and context... .
314 U.S. at 311-12. See also, United States v. Harriss,
347 U.S. 612, 617 (1954).
In Rabe v. Washington, 405 U.S. 313 (1972), the pe-
titioner was arrested for violation of the Washington
15
State's obscenity statute. He had exhibited an allegedly
obscene film at his drive-in threatre. The Supreme
Court of Washington did not find the displayed film
obscene when measured by obscenity tests derived from
Supreme Court decisions. Nevertheless, the Washing-
ton court subjected the film to an additional obscenity
hurdle: the make-up of the viewing audience. Thus.
the conviction was upheld on the theory that in the
context of its exhibition, the film was obscene.
The conviction was reversed on the ground that the
statute under which the petitioner had been convicted
was unconstitutionally vague as construed.
To avoid the constitutional v‘7e of vagueness, it is
necessary, at a minimum, that a statute give fair
notice that certain conduct is proscribed. The stat-
ute under which petitioner was prosecuted, how-
ever, made no mention that the ‘‘context’’ or loca-
tion of the exhibition was an element of the offense
somehow modifying the word ‘‘obscene.’’ Peti-
tioner’s conviction was thus affirmed under a stat-
ute with a meaning quite different from the one
he was charged with violating.
Td. at 315-16.
The appellants in Bouie v. City of Columbia, 378
U.S. 347 (1964)—two black college students—staged
a ‘‘sit-in’’ demonstration in a drug store. After they
were seated, an employee of the store put up a chain
with a ‘‘no trespassing’’ sign attached. The students
were convicted under a South Carolina criminal tres-
pass statute which prohibited entry upon another’s
premises after notice had been given prohibiting such
entry. The state Supreme Court affirmed the convic-
tions by relying upon earlier decisions which had con-
strued the statute as also prohibiting the act of remain-
16
ing on the premises of another after receiving notice to
leave.
The Court reversed the demonstrators’ convictions
finding the South Carolina Court’s construction of the
criminal trespass statute violative of due process. It is
noted that in the typical case uncertainty as to a stat-
ue’s prohibition results from vague or overbroad lan-
guage in the statute itself. In Bowie, however, the
statute is narrowly drawn to prevent ‘‘entry upon the
lands of another.’’ Typical vagueness resulting from
legislative imprecision and vagueness resulting from
judicial construction are distinguished—the latter rep-
resenting a potentially greater due process deprivation
in the Court’s view.
When a statute on its face is vague or overbroad, it
at least gives a potential defendant some notice,
by virtue of this very characteristic, that a ques-
tion may arise as to its coverage, and that it may
be held to cover his contemplated conduct. When
a statute on its face is narrow and precise, how-
ever, it lulls the potential defendant into a false
sense of security, giving him no reason even to
suspect that conduct clearly outside the scope of
the statute as written will be retroactively brought
within it by an act of judicial construction.
* + * *
There can be no doubt that a deprivation of the
right of fair warning can result not only from
vague statutory language but also from an unfore-
seeable and retroactive judicial expansion of nar-
row and precise statutory language.
378 U.S. at 351-54.
Most recently, the Court in Marks v. United States,
— US. —, 97 S Ct. 990 (1977), decided that a
17
defendant could not be tried on a federal obscenity
charge under the standards developed in Miller v.
California, 413 U.S. 15 (1973), when, at the time the
offense had been committed, the standard from Memoirs
v. Massachusetts, 383 U.S. 413 (1966), would have been
controlling. Relying on Bowie, in reaching this result,
Mr. Justice Powell affirmed that the due process clause
prohibits retroactive application of an unforeseeable
judicial enlargement of a criminal statute. 97 S. Ct. at
993. The holding in Rabe was repeated with approval:
[ W]e reversed a conviction under a state obscenity
law because it rested on an unforeseeable judicial
construction of the statute. We stressed that re-
versal was mandated because affected citizens
lacked fair notice that the statute would be thus
applied. Id. See also Douglas v. Buder, 412 U.S.
430, 432 (1973).
The vagueness of the court of appeals’ decision is a
due process violation. It is petitioner Dein’s position
that this objection is a fatal blow to the appellate con-
struction of the mail fraud statute in this case. How-
ever, brief mention will be made of an additional con-
stitutional shortcoming.
Vagueness is a due process vice which can be brought
into play with regard to any criminal statute.’ When
applicable to areas respecting expression, as in the in-
stant case, there is additional concern that protected
conduct will be deterred out of fear that the statute is
capable of application to it. Thus, petitioner’s vague-
ness challenge is coupled with the overbreadth doctrine
which focuses on the need for precision in drafting or
" E.g., Lanzetta v. New Jersey, 306, U.S. 451 (1939) ; Connally v.
General Construction Co., 269 U.S. 385 (1926).
18
interpreting a statute affecting First Amendment
rights. NAACP vy. Button; 371 U.S. 415 (1963).
An overbroad statute which sweeps under its cover-
age both protected and unprotected speech and con-
duct will normally be struck down as facially invalid;
as for an overbroad judicial construction of a statute,
the Court should void its application to protected con-
duct. Zwickler v. Koota, 389 U.S. 241 (1967) ; Gooding
v. Wilson, 405 U.S. 518 (1972).
With the demise of the ‘‘money or property’’ re-
quirement, discussed earlier in this petition, the poten-
tial sweep of the mail fraud statute is as large as the
imagination. First Amendment-protected activities are
now vulnerable to the criminal sanctions of 18 U.S.C.
§ 1341. On behalf of himself and other persons whose
expression is constitutionally protected, petitioner Dein
puts forward this challenge. Goeding v. Wilson, supra;
Lewis v. New Orleans, 415 U.S. 130, 133-34 (1974).
CONCLUSION.
The decision of the court of appeals represents an
unprecedented extension in the scope of the mail fraud
statute. For the first time, it has been held that the
object of a scheme or artifice is within the ambit of 18
U.S.C. § 1341 despite the fact that the scheme neither
sought nor obtained money or property, no alleged vic-
tim could or did suffer pecuniary harm, and no breach
of public or private trust or fiduciary relationship was
involved. To reach the conclusion that the district court
had mistakenly dismissed the indictment, the appellate
court employed a wholly inappropriate standard of
review for its inquiry. In sum, the circuit court’s broad-
ened construciion and manner of review are in conflict
19
with applicable decisions of this Court and raise serious
constitutional questions of vagueness and overbreadth.
For all of these reasons, petitioner Dein prays that a
writ of certiorari be issued.
Respectfully submitted,
BERNARD F'ENSTERWALD, JR.
FENSTERWALD & ASSOCIATES
Suite 203
2101 L Street, N.W.
Washington, D.C. 20037
Telephone: (202) 785-1636
Counsel of Record for Petitioner
APPENDIX
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}
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UNITED STATES DisTRICT COURT
Southern District of Indiana
Indianapolis Division
UNITED STATES OF AMERICA, .
No. 76 79 CR
VS. Vio.: Title 18, United
> States Code, Sec-
CHARLES G. Castor, HENRY Y. DEIN tions 1341, 371 and
WILLIAM T. RoBINETTE AND JAMES 2
A. JAMES. 7
The December 1974 Grand Jury charges:
1. During the time period covered by this indictment, the
Indiana Alcoholic Beverage Commission was composed of four
(4) commissioners appointed by the Governor of Indiana. This
commission was responsible for regulating various aspects of
the liquor business within the State of Indiana and was vested
with the discretionary authority to issue, deny, suspend, revoke
or to deny renewal of all liquor permits authorized by Title 7
of Burns Indiana Statutes. All applications for new permits or
for changes in ownership or location were filed with the Alco-
holic Beverage Commission and sent by that commission to the
appropriate local board for investigation.
2. During the time period covered by this indictment, the
Marion County Local Board was composed of four members
and was charged with investigating the fitness of those persons
applying for liquor permits within Marion County, Indiana and
the propriety of issuing the requested permit to the applicant
at the named premises. After conducting its investigation con-
cerning these matters, the Marion County Local Board would
forward its recommendation to the Alcoholic Beverage Commis-
sion, and that commission would grant or refuse the applica-
tion accordingly, as it deemed the public interest would best be
served.
2a
3. During 1972, forty-five (45) additional package liquor
store permits became available in Indianapolis, Indiana. During
late 1971 and 1972, approximately one hundred and twenty
(120) applications were filed with the Alcoholic Beverage
Commission by persons or businesses seeking to obtain one or
more of the newly available forty-five permits.
4. Beginning in or about October, 1971, and continuing
thereafter through the date of the return of this indictment, in
the Southern District of Indiana and elsewhere, Charles G.
Castor, Henry Y. Dein, William T. Robinette and James A.
James, defendants herein, devised and intended to devise a
scheme and artifice to defraud the Indiana Alcoholic Beverage
Commission, the Marion County Local Board, and those per-
sons, unassociated with the scheme, who applied for the newly
available liquor permits, and to obtain from the Alcoholic
Beverage Commission a number of the newly available pack-
age liquor store permits by means of false and fraudulent pre-
tenses, representations and promises, the defendants well know-
ing that the pretenses, representations and promises would be
and were false when made, and which scheme and artifice to
defraud was, in substance, as follows:
A. It was a part of the scheme and artifice to defraud that
the defendants, in order to gain control of a group of the new
package liquor store permits, and in order to conceal the de-
fendants’ economic interest in the applications from the Alco-
holic Beverage Commission, the Marion County Local Board
and the applicants unassociated with the scheme, would and
did, by means of documents containing false and fraudulent
pretenses, representations and promises, induce the Marion
County Local Board and the Alcoholic Beverage Commission
to issue package liquor store permits to persons who did not
intend to operate package liquor stores; and, upon the issuance
of the licenses, they would and did cause such persons to trans-
fer the liccnses to persons and entities of the defendants’ choos-
ing. In order to accomplish this object, the following actions
were taken:
, 3a
(1) The defendants caused the following - persons:
Peter Gordon Dandridge, Howard Kopp, Patricia Mc-
Queen, Lawrence Weaver, Charles Pechette, David Neal
Lasiter, Terry O. DeMilt, George Rowlas, Margaurite
Austin, R. Michael Kelley, Jean Smith and R. Travis
Miller, to sign applications requesting the issuance of pack-
age liquor store permits to the named applicants.
(2) The defendants caused the above-mentioned ap-
plications and other documents required by the Alcoholic
Beverage Commission to be filed with the Alcoholic Bev-
erage Commission. As the defendants then and there well
knew and intended, these applications and other docu-
ments, representations and promises:
(a) That the named applicant intended to run and
manage a package liquor store at the named premises.
(b) That the permit which the applicant sought
would be for his/her sole private use.
(c) That no other person, company or entity of
any kind would have any control or interest, directly
or indirectly in the package liquor store business
which was to be operated.
B. It was a further part of the scheme and artifice to de-
fraud that the defendant Charles Castor would and did enter
into an agreement with John Dillon and Donald Hardamon
whereby it was agreed that a permit which previously had been
applied for by Donald Hardamon on his own behalf, once issued
to him, would be held by him for later use by Charles Castor
and the other defendants. The application and other documents
filed by Hardamon were, at the time such application was con-
sidered by the Marion County Local Board and the Alcoholic
Beverage Commission, false in the same respects as alleged in
paragraphs 4.A(2)(a)-4.A(2)(c).
C. It was a further part of the scheme and artifice to defraud
that the defendants, while concealing their own economic inter-
4a
est in such permits, would and did, by the knowing use of appli-
cations and related documents containing false and fraudulent
pretenses, representations and promises, induce the Marion
County Local Board and the Alcoholic Beverage Commission
to approve of changes in the locations of such permits to loca-
tions preferred by the defendants. In order to accomplish this
object the defendants took the following actions:
(1) They caused documents to be filed with the Alco-
holic Beverage Commission which represented that the
following persons were applying for changes in the loca-
tion of the permits which previously had been issued to
them: John Daugherty, Patricia McQueen, Lawrence Wea-
ver, David Lasiter, Terry O. DeMilt, George Rowlas,
Margaurite Austin, R. Michael Kelley and Jean Smith. As
the defendants then and there well knew, such documents
contained the following false and fraudulent pretenses, rep-
resentations and promises:
(a) That the above named persons intended to
run and manage a package liquor store at the named
premises.
(b) That the above named persons had actually
and legally entered into a leasehold agreement for
the named premises.
(2) They prepared or caused to be prepared leases
which purported to represent agreements between the above
named persons as lessees and the named lessors, to rent
the named premises, when, in fact, such persons had not
entered into valid lease arrangements.
D. It was a further part of the scheme and artifice to de-
fraud the’, after the Alcoholic Beverage Commission had issued
package liquor store permits to those persons named in para-
graph 4.A(1), above, the defendants, for the purpose of con-
cealing their own economic interest in the permits and in order
to facilitate the further objectives of the scheme, would and
5a
did by means of documents containing false and fraudulent pre-
tenses, representations and promises, induce the Marion County
Local Board and the Alcoholic Beverage Commission to trans-
fer the ownership of eleven (11) of those permits to corpora-
tions which were under the control of the defendants. In order
to accomplish these objectives the defendants took the following
actions:
(1) They caused the formation of eleven separate
corporations, bearing the following names:
96th and Keystone Corp.
South Street and Virginia Corp.
Kentucky & Rybolt Corp.
Stop 11 & Madison Corp.
West 10th Corp.
10th and Mitthoeffer Corp.
71st & Indiana 37 Corp.
62nd & Allisonville Corp.
21st & Franklin Corp.
86th & Ditch Corp.
56th & Georgetown Corp.;
and they caused to be named as the president and director
of each of those corporations the original applicants or
their immediate transferees. The persons so named, except
for the person named as president of the 56th and George-
town Corp., had no real interest in the corporations and
acted solely in the interest of and at the direction of the
defendants.
(2) By means of applications and other related docu-
ments filed with the Alcoholic Beverage Commission, which
applications and related documents contained false and
fraudulent pretenses, representations and promises, they
induced the Alcoholic Beverage Commission and the
Marion County Local Board to approve of the transfer
to an intermediary and/or to the above named corpora-
tions of those permits which had previously been issued to
the following persons: Peter Gordon Dandridge, Howard
6a )
Kopp, Patricia McQueen, Lawrence Weaver, Charles Pech-
ette, David Neal Lasiter, Terry O. DeMilt, George Row-
las, Margaurite Austin, R. Michael Kelley and Jean Smith.
As the defendants then and there well knew and intended,
the above mentioned applications and related documents
contained the following false and fraudulent pretenses,
representations and promises:
(a) That John Daugherty had purchased a permit
and other property from Peter Gordon Dandridge.
(b) That the South Strezt and Virginia Corpora-
tion, Joseph Krauter, President, had purchased a per-
mit and other property from Howard Kopp.
(c) That the 62nd & Allisonville Corporation, R.
Travis Miller, President, had purchased a permit and
other property from Margaurite Austin.
(d) That the Stop 11 and Madison Corporation
had purchased a permit and other property from Law-
rence Weaver.
(e) That the West 10th Corporation had purchased
a permit and other property from David Neal Lasiter.
(f) That the 10th and Mitthoeffer Corporation
had purchased a permit and other property from Terry
O. DeMilt.
(g) That the 71st & Indiana 37 Corporation had
purchased a permit and other property from George
Rowlas.
(h) That the 21st & Franklin Corporation had
purchased a permit and other property from R.
Michael Kelley.
(i) That the 86th & Ditch Corporation had pur-
chased a permit and other property from Jean Smith.
(j) That the following named persons had paid
$1000 to the treasurer of the following corporations
for stock issued to those persons:
7a
John Daugherty—96th & Keystone Corp.
Joseph Krauter—South Street & Virginia Corp.
Patricia McQueen—Kentucky & Rybolt Corp.
Lawrence Weaver—Stop 11 & Madison Corp.
David Neal Lasiter—West 10th Corp.
Terry O. DeMilt—71st & Indiana 37 Corp.
R. Travis Miller-—62nd & Allisonville Corp.
R. Michael Kelley—21st & Franklin Corp.
Jean Smith—86th & Ditch Corp.
(k) That no person, company or entity of any
kind other than the incorporators and shareholders
would have any interest, directly or indirectly, in the
proposed package liquor store business.
E. It was a further part of the scheme and artifice to
defraud that, after the ownership of ten (10) of the permits
had been transferred to the corporations named in paragraph
4.D.(1) above, the defendants would and did cause to be filed,
with the Alcoholic Beverage Commission, applications for major
stock transfers, requesting that the stock of each of those
corporations be transferred to the defendant James A. James.
F. It was a further part of the scheme and artifice to
defraud that the defendants, by causing to be filed the applica-
tions referred to in paragraph E above, would and did represent
that the purchases of the stock issues by James A. James ere
“arms length” purchases and that they would and did thereby
conceal the existence of the scheme and artifice to defraud and
induce the Marion County Local Board and the Alcoholic
Beverage Commission to transfer the legal ownership of the
permits to defendant James A. James.
5. That on or about September 8, 1972, in the Southern
District of Indiana, the defendants, for the purpose of execut-
ing the aforesaid scheme and artifice to defraud, and attempting
so to do, did cause to be placed in an authorized depository
for mail matter a post card from the Indiana Alcoholic Bever-
8a
age Commission, Indianapolis, Indiana, addressed to George
Rowlas, 5839 North Washington Blvd., Indianapolis, Indiana,
containing the date of a proposed hearing to be held before the
Marion County Local Board, to be sent and delivered by the
Postal Service of the United States.
In violation of Title 18, United States Code, Sections
1341 and 2.
Count Il
1. That Grand Jury realleges all of the allegations con-
tained in paragraphs 1 through 4 of Count I of this indictment,
and further charges:
2. On or about December 6, 1972, in the Southern District
of Indiana, the defendants for the purpose of executing the
aforesaid scheme and artifice to defraud, and attempting so to
do, did cause to be placed in an authorized depository for mail
matter, a letter from the Alcoholic Beverage Commission,
Indianapolis, Indiana, addressed to George Rowlas, 5839 North
Washington, Blvd., Indianapolis, Indiana, containing notifica-
tion of the fact that the Indiana Alcoholic Beverage Commis-
sion had voted to issue a permit to Mr. Rowlas on November
20, 1972, to be sent and delivered by the Postal Service of
the United States.
In violation of Title 18, United States Code, Sections
1341 and 2.
Count Ill
1. The Grand Jury realleges all of the allegations contained
in paragraphs 1 through 4 of Count I of this indictment,
and further charges:
2. On or about December 6, 1972, in the Southern District
of Indiana, the defendants for the purpose of executing the
aforesaid scheme and artifice to defraud, and attempting so to
do, did cause to be placed in an authorized depository for
mail matter, a letter from the Alcoholic Beverage Commission,
9a
é
Indianapolis, Indiana, addressed to Mrs. Jean Smith, 711i Ter-
race Avenue, Indianapolis, Indiana, containing notification of
the fact that the Indiana Alcoholic Beverage Commission had
voted to issue a permit to Mrs. Smith on November 20, 1972,
to be sent and delivered by the Postal Service of the United
States.
In violation of Title 18, United States Code, Sections
1341 and 2.
Count 1V
1. The Grand Jury realleges all of the allegations contained
in paragraphs 1 through 4 of Count I of this indictment, and
further charges:
2. On or about December 6, 1972, in the Southern District
of Indiana, the defendants, for the purpose of executing the
aforesaid scheme and artifice to defraud, and attempting so to
do, did cause to be placed in an authorized depository for mail
matter, a letter from the Alcoholic Beverage Commission,
Indianapolis, Indiana, addressed to Terry O. DeMilt, 5932
Winthrop Avenue, Indianapolis, Indiana, containing notification
of the fact that the Indiana Alcoholic Beverage Commission
had voted to issue a permit to Mr. DeMilt on November 20,
1972, to be sent and delivered by the Postal Service of the
United States.
In violation of Title 18, United States Code, Sections
1341 and 2.
Count V
1. The Grand Jury realleges all of the allegations contained
in paragraphs 1 through 4 of Count I of this indictment,
and further charges:
2. On or about December 6, 1972, in the Southern District
of Indiana, the defendants, for the purpose of executing the
. aforesaid scheme and artifice to defraud, and attempting so to
do, did cause to be placed in an authorized depository for
10a
mail matter, a letter from the Alcoholic Beverage Commission,
Indianapolis, Indiana, addressed to Lawrence E. Weaver, 2639
N. Cumberland Road, Indianapolis, Indiana, containing noti-
fication of the fact that the Indiana Alcoholic Beverage Com-
mission had voted to issue a permit to Mr. Weaver on Novem-
ber 20, 1972, to be sent and delivered by the Postal Service
of the United States.
In violation of Title 18, United States Code, Sections
1341 and 2.
Count VI
1. The Grand Jury realleges all of the allegations contained
in paragraphs 1 through 4 of Count I of this indictment, and
further charges:
2. On or about December 5, 1972, in the Southern District
of Indiana, the defendants, for the purpose of executing the
aforesaid scheme and artifice to defraud, and attempting so to
do, did cause to be placed in an authorized depository for mail
matter, a letter from the Alcoholic Beverage Commission,
Indianapolis, Indiana, addressed to Patricia McQueen, 3244
Patton Drive, Indianapolis, Indiana, containing notification of
the fact that the Indiana Alcoholic Beverage Commission
had voted to issue a permit to Mrs. McQueen on November
20, 1972, to be sent and delivered by the Postal Service of
the United States.
In violation of Title 18, United States Code, Section 1341.
Count VII
1. The Grand Jury realleges all of the allegations con-
tained in paragraphs 1 through 4 of Count I of this indictment
and further charges:
2. On or about September 7, 1972, in the Southern District
of Indiana, the defendants, for the purpose of executing the
aforesaid scheme and artifice to defraud, and attempting so to
. lla
do, did knowingly cause to be delivered by the Postal Service
of the United States, according to directions thereon, a letter
from the Alcoholic Beverage Commission, Indianapolis, Indi-
ana, addressed to F. Pen Cosby, 735 Bankers Trust Building,
Indianapolis, Indiana, containing a list of the identities of those
persons whose applications were to be processed by the Alcc-
holic Beverage Commission and the Marion County Local
Board, to be sent and delivered by the Postal Service of the
United States.
In violation of Title 18, United States Code, Sections 1341
and 2.
Count VIIl
1. The Grand Jury realleges all of the allegations contained
in paragraphs 1 through 4 of Count I of this indictment and
further charges:
2. On or about December 8, 1972, in the Southern District
of Indiana, the defendants, for the purpose of executing the
aforesaid scheme and artifice to defraud, and attempting so to do,
did knowingly cause to be delivered by the Postal Service of the
United States, according to directions thereon, a letter from
the Alcoholic Beverage Commission, Indianapolis, Indiana, ad-
dressed to F. Pen Cosby, 735 Bankers Trust Building, Indianapo-
lis, Indiana, containing a statement of the identities of those
persons to whom the Alcoholic Beverage Commission had issued
package liquor store permits, to be sent and delivered by the
Postal Service of the United States.
In violation of Title 18, United States Code, Sections 1341
and 2.
Count 1X
1. The Grand Jury realleges all of the allegations contained
in paragraphs 1 through 4 of Count I of this indictment, and
‘further charges:
. 12a
2. On or about March 8, 1973, in the Southern District of
Indiana, the defendants, for the purpose of executing the afore-
said scheme and artifice to defraud, and attempting so to do,
did cause to be placed in an authorized depository for mail
matter, a letter from the Alcoholic Beverage Commission,
Indianapolis, Indiana, addressed to George Rowlas, 5839 North
Washington Blvd., Indianapolis, Indiana, containing a statement
that Rowlas’ application had not been completed because of
certain missing items, to be sent and delivered by the Postal
Service of the United States.
In violation of Title 18, United States Code, Sections 1341
and 2.
Count X
1. The Grand Jury realleges all of the allegations contained
in paragraphs 1 through 4 of Count I of this indictment and
further charges:
2. On or about June 7, 1973, in the Southern District of
Indiana, the defendants for the purpose of executing the afore-
said scheme and artifice to defraud, and attempting so to do, did
cause to be placed in an authorized depository for mail matter, a
letter from the Alcoholic Beverage Commission, Indianapolis,
Indiana, addressed to Joseph Krauter, Jr., 4444 Sharon Lane,
Indianapolis, Indiana, containing a statement that the application
of the South Street and Virginia Corporation had not been com-
pleted because of certain missing items, to be sent and delivered
by the Postal Service of the United States.
In violation of Title 18, United States Code, Sections 1341
and 2.
Count XI
1. The Grand Jury realleges all of the allegations contained
in paragraphs 1 through 4 of Count I of this indictment, and
further charges:
138
2. On or about June 7, 1973, in the Southern District of
Indiana, the defendants for the purpose of executing the afore-
said scheme and artifice to defraud, and attempting so to do, did
cause to be placed in an authorized depository for mail matter, a
letter from the Alcoholic Beverage Commission, Indianapolis,
Indiana, addressed to R. Travis Miller, 549 East 58th Street,
Indianapolis, Indiana, containing a statement that the application
of the 62nd and Allisonville Corporation had not been com-
pleted because of certain missing items, to be sent and delivered
by the Postal Service of the United States.
In violation of Title 18, United States Code, Sections 1341
and 2.
Count XII
1. The Grand Jury realleges all of the allegations contained
in paragraphs 1 through 4 of Count I of this indictment, and
further charges:
2. On or about September 18, 1972, in the Southern District
of Indiana, the defendants for the purpose of executing the afore-
said scheme and artifice to defraud, and attempting so to do, did
cause to be placed in an authorized depository for mail matter, a
letter from the Alcoholic Beverage Commission, Indianapolis,
Indiana, addressed to Mr. James Griffin, 2455 Martindale,
Indianapolis, Indiana, containing a letter from Mark Y. Brown,
Executive Secretary of the Alcoholic Beverage Commission, to
James Griffin concerning Mr. Griffin’s intention to lease certain
property to Peter Gordon Dandridge, to be sent and delivered by
the Postal Service of the United States.
In violation of Title 18, United States Code, Sections 1341
and 2.
Count XIII
1. The Grand Jury realleges all of the allegations contained
in paragraphs 1 through 4 of Count I of -his indictment, and
further charges:
14a;
2. On or about March 7, 1973, in the Southern District of
Indiana, the defendants for the purpose @f executing the afore-
said scheme and artifice to defraud, and attempting so to do, did
cause to be placed in an authorized depository for mail matter, a
letter from the Alcoholic Beverage Commission, Indianapolis,
Indiana, addressed to David N. Lasiter, 7610 Singleton Drive,
Indianapolis, Indiana, containing a statement that Lasiter’s appli-
cation had not been completed because of certain missing items,
to be sent and delivered by the Postal Service of the United
States.
In violation of Title 18, United States Code, Sections 1341
and 2,
Count XIV
1. The Grand Jury realleges all of the allegations contained
in paragraphs 1 through 4 of Count 1 of this indictment, and
further charges:
2. On or about October 17, 1973, in the Southern District of
Indiana, the defendants for the purpose of executing the afore-
said scheme and artifice to defraud, and attempting so to do, did
cause to be placed in an authorized depository for mail matter, a
letter from the Alcoholic Beverage Commission, Indianapolis,
Indiana, addressed to Charles Pechette, 8949 Wickham Road,
Indianapolis, Indiana, containing a statement that Pechette’s
application had not been completed because of certain missing
items, to be sent and delivered by the Postal Service of the
United States.
In violation of Title 18, United States Code, Sections 1341
and 2.
Count XV
1. From in or about October, 1971, and continuing there-
after through the date of the return of this indictment, in the
Southern District of Indiana and elsewhere, Charles G. Castor,
Henry Y. Dein, William Theodore Robinette, and James A.
James, defendants herein, did knowingly and wilfully combine,
. 15a
conspire and confederate and agree together and with each other
and with divers other persons whose names are unknown to the
Grand Jury, to commit an offense against the United States, that
is, Section 1341 of Title 18, United States Code, to knowingly
and wilfully cause the United States mails to be used in further-
ance of a scheme and artifice to defraud the Indiana Alcoholic
Beverage Commission, the Marion County, Indiana Local Board
and certain persons who applied for new package liquor store
permits in Marion County, Indiana, during 1971 and 1972.
2. This scheme and artifice is fully described in paragraphs 1
through 4 of Count I of this indictment and is incorporated
herein by reference as if set out in full; the objects of the con-
spiracy being violations of Title 18, United States Code, Section
1341.
3. In furtherance of the conspiracy and in order to effect the
objects thereof, the defendants did and caused to be done the acts
set forth in Counts I-XIV of this indictment on the dates and at
the places and in the manner set forth, all of which are alleged
herein as separate overt acts.
4. In addition to the foregoing, in furtherance of the con-
spiracy and in order to effect the objects thereof, the defendants
committed the following additional overt acts:
1. In or about the second week of October, 1972, the
defendant Charles G. Castor had a telephonic conversation
with John J. Dillon in which it was agreed that a package
liquor store permit for which Donald Hardamon had applied
would, once issued, be held by Hardamon for the benefit of
Castor and others.
2. On or about January 10, 1973, defendant William
Theodore Robinette gave a check drawn on the Bulen and
Castor office account in the amount of $455 to Donald
Hardamon, as reimbursement for money expended by
Hardamon in applying to the Alcoholic Beverage Commis-
sion for a package liquor store permit.
3. In or about December, 1972, defendants Charles G.
Castor and James A. James had a conversation in Indianap-
16a
olis, Indiana, at The Indiana National Bank with Lawrence
A. O'Connor, Jr., Harold Eugene Moon, and William F.
Fox, wherein Castor and James sought to obtain financing
for the operation of ten (10) package liquor stores in
Indianapolis, Indiana.
4. In or about February, 1972, defendant William
Theodore Robinette had a conversation with F. Pen Cosby
during which Robinette retained Cosby to represent a num-
ber of persons who were applying for package liquor store
permits in Marion County, Indiana.
5. On or about September 20, 1972, William Theodore
Robinette furnished a check to F. Pen Cosby in the amount
of $455, drawn on the Bulen and Castor office account, in
payment for the application fee of Peter Gordon Dandridge.
6. In or about May, 1973, defendant Henry Y. Dein
telephonically contacted Joseph Krauter, Jr. and requested
that Krauter assist him in transferring a package liquor
store permit.
7. In or about January, 1973, defendant Henry Y. Dein
caused Johr avid Daugherty to sign documents relating to
the tran. .« of a package liquor store permit from Peter
Gordon Dandridge to Daugherty.
8. In or about November, 1971, defendant James A.
James had a conversation with Jean Smith and George
Rowlas during which James asked Smith and Rowlas to
apply for package liquor store permits, with the understand-
ing that the permits would be for James’ use.
All in violation of Title 18, United States Code, Section 371.
A True BILL
/s/ LAWRENCE WAYNE CRISPEN
Foreman
/s/ JAMES B. YOUNG
United States Attorney
17a
UNITED STATES DisTRICT COURT
Southern District of Indiana
Indianapolis Division.
UNITED STATES OF AMERICA,
vs.
Cuares G. Castor, Henry Y. DEIN,
WILLIAM T. RoBINETTE, JAMES A. |
JAMES.
No. IP 76-79-CR.
MEMORANDUM OF DECISION
This matter came before the Court on motions by the
defendants, Charles G. Castor, Henry Y. Dein, William T.
Robinette, and James A. James, to dismiss the fifteen-count
indictment returned against them on May 27, 1976. The indict-
ment contains fourteen counts charging substantive violations
of the Mail Fraud Act, 18 U. S. C. § 1341,’ and one count
charging the defendants with conspiracy to violate the Mail
Fraud Act, 18 U. S. C. § 371.
means of false or fraudulent or
promises, or to sell. of, loan, exchange, alter, give away,
distribute, supply, or procure unlawful use any
18a
In essence, the indictment charges that the defendants’ em-
barked upon a scheme to obtain a number of newly available
package liquor permits under false or fraudulent pretenses.
The defendants are charged with having caused certain persons
to file applications and other documents with the Indiana
Alcoholic Beverage Commission (ABC) and the Marion
County Local Board (MCLB).* The indictment names twelve
persons whom the defendants allegedly caused to sign and file
with the ABC applications for permits as well as other docu-
ments which contained false and fraudulent pretenses, repre-
sentations, and promises.
Liquor permits were subsequently issued to the above-
mentioned twelve persons. The indictment charges that the —
defendants had economic interests in the twelve permits and
that after the issuance of the permits the defendants caused
certain papers to be filed with the ABC for the purpose of
effecting changes of location as to nine of the permits. It is
alleged that the transfer papers contained false and fraudulent
representations and promises. The indictment goes on to allege
that the defendants, using fraudulent methods and concealing
their alleged economic interests in the liquor permits, induced
the ABC to approve transfers of ownership of eleven of the
twelve permits to corporations under the control of the defend-
ants.
The indictment then alleges that after ownership of the
permits had been transferred to the corporations the defendants
sought and received ABC approval of a transfer of the stock
of the corporations to the defendant James.
2. Defendants Castor, Dein, and Robinette each are members
of ~ same Indianapolis Law firm. Defendant James was a client of
said firm.
3. The Indiana Alcoholic Beverage Commission regulates various
aspects of the liquor business in Indiana and can issue, deny, sus-
pend, revoke, renew, or deny renewal of all liquor permits in the
state. The Marion County Local Board is ch with the responsi-
bility of determining the fitness of Marion ty applicants and
recommending a specific disposition with respect to each application.
19a
The counts charging violations of the Mail Fraud Act, Counts
I-XIV, set forth fourteen separate mailings which allegedly
were in furtherance of the alleged scheme outlined above. Each
of the fourteen uses of the mails charged involves a letter from
the ABC addressed to a person other than one of the defend-
ants. Count I involves a letter to one George Rowlas giving
him notice of a hearing on his application for a liquor permit.
Count XII revolves around a letter to James Griffin concerning
his intention to lease certain property to Peter G. Dandridge,
one of the applicants for a new package liquor store permit.
No other reference is made to Griffin in Count XII nor does
Count XII make any reference to any connection between the
intention to lease property and Dandridge’s application for a
liquor permit.
The mailings alleged in Counts VII and VIII are letters from
the ABC to F. Pen Cosby. One of the letters contained a list
of the applicants for the newly avai‘able liquor permits, while
the other contained a list of the successful applicants.
Counts IX-XI and XIII-XIV concern mailings to applicants
for permits which noted that their applications were incomplete.
These notices were all mailed on or subsequent to March 7,
1973. The ABC voted to issue the permits here in question
on November 20, 1972.
The final category of mailings involves notices sent out by
the ABC on December 6, 1972, to five of the applicants notify-
ing them that the Commission had acted favorably on their
applications for package liquor permits. These mailings are
charged in Counts II-VI.
I. The Mailings.
The United States Court of Appeals for this Circuit in
United States v. Staszcuk, 502 F. 2d 875 (7th Cir. 1974),
held that,
“To support federal criminal jurisdiction, the mailing
must be, in the words of the statute, ‘for the purpose of
20a
executing such scheme or artifice.’ The connection between
the fraud and the use of the mails ‘must be real and
proximate, not merely abstract or remote.’” 502 F. 2d at
880, quoting from United States v. Brickey, 296 F. Supp.
742, 748 (E. D. Ark. 1969).
See also, United States v. Maze, 414 U. S. 395 (1974), and
Ohrynowicz v. United States, Cause No. 76-1247 (7th Cir.
October 12, 1976).
Subsequent to this Court’s announcement of its decision at
the October 1, 1976, oral argument, the Court of Appeals
handed down Ohrynowicz v. United States, supra. Ohrynowicz
arose from a “check kiting” scheme in which the defendants
conspired to defraud banks in which checking accounts were
opened by them under false names and addresses. The court
below granted Ohrynowicz’s 28 U. S. C. § 2255 motion as to
several of the counts, basing its decision on Maze, supra. The
district court, however, distinguished the mailed orders for
personalized checks, holding that they occurred both prior to
the completion of the scheme and “ ‘were in pursuance of that
scheme.’” Although appellant Ohrynowicz argued that the
personalized checks were not used in the scheme and would
have hindered rather than furthered the scheme, the Court
of Appeals affirmed the district court’s decision. However,
the Seventh Circuit’s decision was based on the fact that there
was “enough evidence to support an inference that the ordering
of personalized checks was a normal part of the transaction
which resulted from the opening of an account... .” and that
“[a] trial judge’s findings of fact ordinarily will not be disturbed
unless they are without support in the record.” In the instant
case the government in its brief in opposition to the motions
to dismiss and at oral argument on said motions asserted
that the indictment is sufficient since it alleges that each mailing
was “for the purpose of executing such scheme or artifice or
attempting so to do.” However, inasmuch as the mailings alleged
in the indictment are facially insufficient, as set forth below,
the indictment must be dismissed.
2la
Unlike Ohrynowicz none of the mailings alleged in the
indictment were even arguably necessary or in furtherance of
the alleged scheme or artifice. The letters notifying applicants
that permits had been awarded to them cannot be said to be
necessary for the success of the alleged scheme as the permits
had been previously granted on November 20, 1972. Whether
or not notification came by mail, the permits were granted and
the mailings could not be shown to be remotely connected to
the transfer of the permits to defendant James. Likewise, the
letters from the Alcoholic Beverage Commission to applicants
stating that their applications were not completed because of
‘the absence of certain items is not sufficiently connected with
the offenses charged within the indictment. For the same reason
the letters from the Alcoholic Beverage Commission to F.
Pen Cosby, listing the applicants and the successful applicants,
did not further the scheme. In addition there is no allegation
in the indictment showing any relation between F. Pen Cosby
and any of the defendants, or to any of the actions alleged to
have been taken by defendants or any alleged victim of the
alleged scheme. The postcard to George Rowlas, from the
Alcoholic Beverage Commission, announcing the date of the
proposed hearing on his application if anything was in hin-
drance of the alleged scheme. Therefore it cannot be seen as
bearing any real relationship to the scheme. The letters from
the Alcoholic Beverage Commission to James Griffin, an appli-
cant for a liquor permit, concerning Mr. Griffin’s intention
to lease certain property to Peter Gordon Dandridge is likewise
insufficiently related to the crimes charged within the indict-
ment. It is nowhere factually alleged in the indictment as to how
or in what manner the communication concerning Griffin's
“intention to lease certain property to Peter Gordon Dandridge”
had any connection whatsoever with Dandridge’s application
for a permit. Moreover, if the mailing is construed to involve
some question about the validity of a lease from Griffin to
Dandridge, it was in hindrance of the scheme, rather than
in furtherance of it.
22a
Thus, from the face of the indictment this Court concludes
that there is no real and proximate relationship or nexus between
the mailings and the scheme alleged in the indictment. To hold
otherwise would extend federal criminal jurisdiction far beyond
the meaning of the Mail Fraud Act.
II. The Scope of Section 1341.
The Mail Fraud Act, 18 U. S. C. § 1341, is addressed to
“scheme(s) or artifice(s) to defraud, or for obtaining money
or property by means of false or fraudulent pretenses, repre-
sentations or promises. . . .” One of the questions presented
by the motions under consideration is whether the acts charged
in the indictment are such as to fall within the statutory
proscription. The resolution of that question is dependent
upon an analysis of the meaning and placement of the words
“or for obtaining money or property . . .” in the statute.
The meaning of the phrase “or for obtaining money or
property . . .” becomes crucial to the question of the sufficiency
of the indictment because this Court has concluded that package
liquor store permits are not money or property. According to
the indictment, the object of the defendants’ scheme or artifice
was “to obtain from the Alcoholic Beverage Commission a
number of newly available package liquor store permits.” Inas-
much as such permits are clearly not “money,” they must be
considered to be “property” for the indictment to be sufficient
unless the Court were to accept the argument advanced by the
government that a scheme or artifice to defraud need not in-
volve money or property in order to constitute an offense under
18 U. S. C. § 1341.
The government's theory that neither money nor property
need be the object of a scheme or artifice to defraud under the
Mail Fraud Act relies upon United States V. States, 488 F. 2d
761 (8th Cir. 1973). States held that a scheme or artifice under
Section 1341 need not concern money or property. In so holding
23a
the Eighth Circuit reasoned that the phrase “or for money or
property . . .” in Section 1341 is to be viewed independently
of the phrase “to defraud.” 488 F. 2d at 764.
Contrary to the analysis in States, this Court believes that the
addition of the phrase “or for obtaining money or property”
to the Mail Fraud Act in 1909* was for the purpose of clarifying
the statute. That is, the phrase in question was intended to be
complementary or explanatory rather than independent. An
analysis of the cases decided before and after the 1909 amend-
ment to the Mail Fraud Act which added the phrase here in
question leads to the conclusion that the purpose of the 1909
amendment was to clarify the preceding language and not to
create a new offense. E.g., Streep v. United States, 160 U. S.
128 (1895); Durland v. United States, 161 U. S. 306 (1896);
Hammerschmidt v. United States, 265 U.S. 182 (1924); Fasulo
v. United States, 272 U. S. 620 (1926). An examination of
the legislative and case histories of statutes in pari materia with
the Mail Fraud Act buttresses the conclusion that the 1909
amendatory language was complementary rather than supple-
mentary in nature.®
The grammatical construction and the placement of the
phrase in question in the statute also lead to the conclusion
that the 1909 amendment did not alter the thrust of the Mail
Fraud Act—to combat schemes which contemplate definable
economic harm to the victims or targets of the scheme. Regent
Office Supply Co. v. United States, 421 F. 2d 1174, 1182 (2d
Cir. 1970). That the phrase in question was intended to be an
appositional relation of thought clarifying the meaning of the
preceding phrase is indicated by the use of the gerundive con-
struction (“for obtaining”) as opposed to the infinitive con-
struction used in the preceding and succeeding phrases (“to
4. 35 Stat. 1130-31, Ch. 321, § 215.
5. Sections 149 and 300 of the “act to revise, consolidate, and
amend the statutes relating to the Post Office Department,” 17
Stat. 302, Ch. 335 and 17 Stat. 322-23, Ch. 335, are two such
statutes.
24a
defraud,” “to sell”). See, 67 C. J. S. Or at 516 (noting that
“or” can be used to introduce an alternative or to introduce
a clarifier). The 1909 amendment was inserted into the statute
between the language of original enactment of 1872 and the
1889 amendment® which clearly added a new offense which
did not include “fraud” as an element. Streep v. United States,
160 U. S. 128 (1895). If Congress intended the 1909 amend-
ment to establish an independent offense, it would appear to be
more logical for Congress to have inserted the new offense after
the 1889 amendatory language.
The government also argues that the sufficiency of the indict-
ment is supported by the rationale of such cases as United States
Vv. Isaacs, 493 F. 2d 1124 (7th Cir.), cert. denied, 417 UV. S.
976 (1974); United States v. Keane, 522 F. 2d 534 (7th Cir.
1975); United States v. Barrett, 505 F. 2d 1091 (7th Cir.
1974); United States v. Bush, 522 F. 2d 641 (1975); United
S:ates v. George, 977 F. 2d 1091 (7th Cir. 1973), and United
States v. Bryza, 522 F. 2d 414 (7th Cir. 1975). Each of those
cases was based upon an employment relationship and a re-
sultant breach of fiduciary duty. The first four of the above-
noted cases involved public officials whose acts in some way
deprived the public of the honest and faithful services of its
officials; while the latter two cases involved corporate employees
who, through their actions, deprived their employers of the
honest and faithful services to which the employers were duc.
Such deprivations amount to the potential for definable eco-
nomic harm which the statute contemplates, whereas here such
potential does not exist. Furthermore, there is no allegation of
corruption on the part of ABC or MCLB officials.
It has long been the law in Indiana that permits to sell liquor
or the use or enjoyment thereof do not constitute “property.”
McKinney v. Town of Salem, 77 Ind. 213 (1881); State ex rel.
Zeller v. Montgomery Circuit Court, 233 Ind. 563, 62 N. E.
2d 152 (1945); Selle v. Short, 326 N. E. 2d 610 (Ind, Ct.
6. 25 Stat. 873, Ch. 393.
25a
App. 1975). A statute in effect at the time the events leading
to the indictment allegedly took place provided:
“No person shall be deemed to have any property right
in any beer wholesaler’s permit, beer retailer’s permit, beer
dealer’s permit, liquor wholesaler’s permit, liquor retailer’s
permit, liquor dealer’s permit, wine wholesaler’s permit,
wine retailer's permit or wine dealer’s permit, nor shall
said permit itself or the enjoyment thereof be considered
a property right.” Ind. Code § 7-2-1-14(a) (Burns 1972)."
For the above-stated reasons the Court concludes that the
permits here in question, the object of the alleged scheme, are
not “money or property” within the contemplation of Section
1341. This conclusion, coupled with the Court’s reading of the
1909 amendment to the Mail Fraud Act, causes the Court to
rule that the scheme alleged is not one within the scope of the
statute under which the indictment was brought. As the Court
stated in its ruling from the bench on October 1, 1976, the acts
charged here do “not come up to the level of criminality.” For
this reason the motions must be sustained and the indictment
must be dismissed. Inasmuch as the substantive counts of the
indictment (Counts I through XIV) are insufficient to charge
an offense, the conspiracy count (Count XV) based on the
substantive counts must also be dismissed.
This Court having considered the motions to dismiss the
indictment and the briefs and oral arguments in support thereof
and in opposition thereto, concludes that the motions should
be sustained. The indictment must therefore be and hereby is
DISMISSED.
It Is So ORDERED.
Dated this 27th day of October, 1976.
/s/ WILLIAM E., STECKLER
United States District Judge
7. Title 7 of the Indiana Code was by Acts 1973, Pub.
L. No. 55 and replaced by a new Title 7.1. One part of Title 7.1
provides that a “permittee shall have no right in a whole-
saler’s, retailer’s, or dealer’s permit any type.” Ind. Code
§ 7.1-3-1-2 (Burns Supp. 1976).
IN THE UNITED STATES COURT OF APPEALS
For the Seventh Circuit
No. 76-2068
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
vs.
CHARLES G. CASTOR, WILLIAM T. ROBINETTE,
HENRY Y. DEIN AND JAMES A. JAMES,
Defendants-A ppellees.
Appeal from the United States District Court for the
Southern District of Indiana, Indianapolis Division
No. IP 76-79 CR - William E. Steckler, Judge.
Argued February 24, 1977—Decided July 8, 1977
Before CASTLE, Senior Circuit Judge, SPRECHER and BAUER,
Circuit Judges.
BAuER, Circuit Judge. The Government appeals, pursuant to
18 U.S. C. § 3731, the district court’s dismissal of a mail fraud
indictment returned against the defendants. The issues for our
decision are whether the indictment alleges a fraudulent scheme
within the scope of the mail fraud statute, 18 U. S. C. § 1341,
and whether the indictment alleges mailings in furtherance of
the alleged scheme. We hold that the indictment charges both
elements of the offense and reverse the dismissal.
roo
I.
The indictment charges the defendant with fourteen sub-
stantive counts of mail fraud and one count of conspiracy to
commit mail fraud in connection with a fraudulent scheme to
procure a number of newly available permits to operate retail
package liquor stores.
The details of the alleged scheme are as follows: In 1972
forty-five new package liquor store permits becam. available
in Indianapolis, Indiana as a result of an Indiana Court of
Appeals ruling that, in applying the statutory limit of one permit
for each 5,000 persons or fraction thereof, the population of
the Consolidated City of Indianapoiis, which includes Indianap-
olis and several surrounding communities, rather than the popu-
lation residing within the old city limits, controls the number
of permits to be issued. Indiana Alcoholic Beverage Commis-
sion V. Baker, 153 Ind. App. 113, 286 N. E. 2d 174 (1972).
Approximately 120 applications were filed by persons seeking
the new permits. The defendants are charged with fraudulently
inducing the Indiana Alcoholic Beverage Commission (IABC)
and the Marion County Local Board (MCLB) to issue permits
to persons who did not intend to operate package liquor stores,
and who, upon the issuance of the permits, transferred them to
persons and entities of the defendants’ choosing.
The indictment names twelve persons whom the defendants
allegedly caused to sign and file with the IABC applications for
permits, as well as other documents which concealed the de-
fendants’ interest in se applications.’ Permits were issued to
the twelve.
The indictment further states that, after the permits were
issued, the defendants caused certain documents containing false
1. The ts who allegedly acted in the defendants’ interest
were plaintiffs in the suit establishing the availability of the new
pecan, and dun to Sonic perticigatcn In tho Iilgution, wees, por
portedly given preference in the granting of permits. Transcript of
oral argument on motion to dismiss 73-74 (October 1, 1976).
28a
representations to be filed with the IABC in order to reccive
permission to relocate nine of the approved stores. Included
were sham leases and papers stating that the named applicants
intended to operate liquor stores at the new premises.
The indictment goes on to allege that the defendants, using
fraudulent methods and concealing their economic interest in
the liquor store permits, induced the IABC to approve transfers
of eleven of the permits to corporations under the defendants’
control.
Finally, the indictment alleges that, after the transfer of the
permits to the defendants’ corporations, the defendants sought
and received IABC approval to transfer the stock of the corpo-
rations to defendant James.
Each of the fourteen mail fraud counts sets forth a separate
mailing that allegedly was in furtherance of the scheme, Count
I charges a mailing from the IABC to George Rowles, one of
the “fronts” who purportedly obtained permits for the defend-
ants, notifying Rowles that the MCLB would hold a hearing on
his application. -
Counts II through VI charge the mailing of notices by the
IABC to five of the “fronts” that the IABC had voted to issue
them liquor permits.
Count VII charges the mailing by the IABC to F. Pen Cosby,
an attorney retained by defendant Robinette to represent a
number of applicants for package liquor store permits, of a list
of persons whose permit applications were to be processed by
the IABC and the MCLB.
Count VIII charges a later mailing by the IABC to Cosby
of a list of persons who had been issued permits by the IABC.
Counts IX through XI, XIII, and XIV charge the mailing
by the IABC of notices to five of the “fronts” that their appli-
cations were incomplete.
Count XII charges a mailing by the IABC to James Griffin
regarding his intention to lease property to one of the “fronts.”
29a
The district court dismissed the indictment on the grounds
(1) that it did not allege a scheme or artifice to defraud within
the meaning of the mail fraud statute, and (2) that the mailings
alleged to be in furtherance of the scheme were not sufficiently
connected to the scheme to support federal criminal jurisdiction.
Il.
Scheme or Artifice to Defraud
The district court found that the scheme alleged in the indict-
ment did not satisfy the statutory requirement of being a
“scheme or artifice to defraud or for obtaining money or prop-
erty by means of false or fraudulent pretenses, representations,
or promises”. 18 U. S. C. § 1341. The court construed the
statute as requiring a fraudulent scheme to have as its object the
“obtaining of money or property.” It reasoned that the statu-
tory phrase “or for obtaining of money or property by means
of false or fraudulent pretenses, representations, or promises”
modifies and limits the preceding phrase “any scheme or artifice
to defraud”, and thus does not describe an independent type of
scheme cognizable as an offense.
Applying its construction, the district court found that, as
a matter of law, the scheme charged in the indictment could
2. 18 U.S. C. § 1341 reads in full:
depository
pene cigs eters gre nding woe enti red by the Postal
Service, or or receives therefrom, any such matter or
or i causes to be delivered by mail according
c> tho Gmetion: etwon, or ot Gio place ot which ir aeats
30a
not constitute a scheme under the mail fraud statute because
the liquor store permits that were the object of the alleged
scheme are clearly not money and are not considered property
under Indiana law.
The Government, arguing that the “or” between the two
phrases in 18 U. S. C. § 1341 should be read in its ordinary
disjunctive sense, contends that the district court’s construction
is erroneous. Under the Government’s construction, the two
phrases describe two different types of schemes that are cog-
nizable under the mail fraud statute, the first proscribing schemes
“to defraud” generally, and the second proscribing schemes
“for obtaining of money or property by means of false . . .
pretenses” particularly.
Alternatively, the Government contends that the fraudulent
scheme charged in the indictment constituted an offense even
under the district court’s construction of the mail fraud statute
because the permits obtained through the scheme constituted
“property” within the meaning of the statute.
We need not consider the Government’s alternative argument,
for the district court’s construction of 18 U. S. C. § 1341 has
been previously rejected by this Court in United States v. Isaacs,
493 F. 2d 1124, 1149-50 (7th Cir.), cert. denied, 417 U. S.
976 (1974), and United States v. Joyce, 499 F. 2d 9, 22 (7th
Cir.), cert. denied, 419 U. S. 1031 (1974). In both cases we
held that the mail fraud statute is not limited to fraudulent
schemes that contemplate the actual loss of money or property.
Accord, United States v. Brown, 540 F. 2d 364, 374 (8th Cir.
1976); United States v. States, 488 F. 2d 761 (8th Cir. 1973),
cert. denied, 417 U. S. 909 (1974).°
3. The defendants, particuiariy Robinette, presented extensive
arguments for their interpretation of the statute based upon previous
versions of the statute and older cases, most of which were decided
in the first quarter of this century. We find these arguments un-
persuasive for the reasons stated by Judge Murray in United States
v. Mandel, 415 F. Supp. 997, 1011-1012 (D. Md. 1976). In view
of Judge Murray’s comprehensive opinion repudiating the identical
SS eS SS a ee
arguments here.
3la
Moreover, this interpretation has been consistently followed
by this Circuit in a line of cases holding that a scheme to de-
fraud the government or a private party of an employee’s honest
and faithful services is proscribed by 18 U. S. C. § 1341. United
States v. Bush, 522 F. 2d 641 (7th Cir. 1975), cert. denied,
96 S. Ct. 1484 (1976); United States v. Keane, 522 F. 2d
534 (7th Cir. 1975), cert. denied, 96 S. Ct. 1481 (1975);
United States v. Bryza, 522 F. 2d 414 (7th Cir. 1975), cert.
denied, 96 S. Ct. 2237 (1976); United States v. Barrett, 505
F. 2d 1091 (7th Cir.), cert. denied, 421 U. S. 964 (1975);
United States v. George, 477 F. 2d 508 (7th Cir.), cert. denied,
414 U. S. 827 (1973). Although the opinions in these cases
do not concentrate on the language of 18 U. S. C. § 1341, the
cases hold that a mail fraud violation can be asserted “even
in the absence of an object susceptible to measurement in terms
of money or property”, Bryza, supra at 421.
The defendants attempt to distinguish the above cases by
arguing that the mail fraud schemes in those cases caused or
could have caused at least potential pecuniary loss to its victims
and that no such loss could have occurred here. Defendants
contend that, even absent a requirement that the scheme con-
template its victims actually lose money or property, there must
be at least a probability of pecuniary injury to the individuals
defrauded for the scheme to be cognizable under 18 U. S. C.
§ 1341. United States v. Dixon, 536 F. 2d 1388, 1399-1401
(2d Cir. 1976); United States v. Regent Office Supply Co.,
421 F. 2d 1174, 1182 (2d Cir. 1970).
We are not persuaded that the prior cases embody any such
requirement. Nevertheless, we may assume arguendo that such
a requirement exists, for we are convinced that, even if this
Court’s prior decisions contemplate that the alleged scheme
have the probable or potential effect of causing its victims to
lose money or property, the potential pecuniary loss resulting
from the scheme alleged here is no different in kind from the
potential effects attributable to schemes previously found cog-
nizable under the statute.
32a
In United States Vv. Bush, supra at 648, for example, in which
we reserved the question of whether the mail fraud statute
requires that the scheme’s victims suffer some form of pecuniary
injury, we found that the mere possibility of future pecuniary
injury would be sufficient to meet any pecuniary injury require-
ment read into the statute. Bush, a City of Chicago official, hid
his interest in an advertising firm and used his influence to
persuade other officials to award contracts to the firm. In affirm-
ing his conviction, we stated that, had the City known of Bush’s
interest in the firm, “it might have been able to obtain a better
contract.” Id.
In the case at hand, the alleged scheme involves no more
speculative pecuniary injury to its victims than the injury in
Bush. The indictment charges that the defendants’ scheme to
garner several package liquor store permits through the use of
“fronts” defrauded other persons who applied for the permits.
The fraud diminished the other applicants’ chances to obtain the
new permits, both because the Indiana authorities were not likely
to grant twelve permits to one individual, and because the
defendants’ “fronts” were purportedly given preference in the
granting of the new permits because they were plaintiffs in the
litigation that established the new permits’ availability. This
diminished opportunity to obtain permits reduced the other appli-
cants’ chances to make profits through the operation of package
liquor stores or through the sale of liquor store permits,* and
this type of potential pecuniary injury is, in our view, indistin-
guishable from the injury suffered by the City of Chicago in
Bush—the diminished opportunity to obtain a financially favor-
able contract.
Moreover, the diminishment of the other applicants’ oppor-
tunity to obtain permits alleged here is analogous to the injury
suffered by the victims of the mail fraud scheme found to consti-
4. The permits apparently can be sold for prices exceeding
$20,000, far above the cost of obtaining them. Transcript of oral
argument on motion to dismiss 118 (October 1, 1976).
33a
tute an offense in Gregory v. United States, 253 F. 2d 104 (Sth
Cir. 1958). In Gregory, a company sponsored a contest in which
the contestants were to predict the winning team in each of
twenty collegiate football games, the contest winner to receive a
Cadillac automobile. The defendant won the contest by submit-
ting predated entries after the games were played. The loss of
opportunity suffered by the other contestants, the victims in
Gregory, is almost identical to the loss suffered by the other
applicants in the instant case.
Inasmuch as we find that the scheme charged in the indictment
involves potential pecuniary injury to at least one category of
victims, the other applicants for licenses, we need not, in review-
ing the district court’s dismissal of the indictment, consider the
actual or potential harm to the other alleged victims, the LABC
and the MCLB.
Ii.
Mailings
To support federal jurisdiction in a mail fraud prosecution, 18
U. S. C. § 1341 requires the use of the mails “for the purposes
of executing [the] scheme or artifice [to defraud].”
The district court found, and the defendants argue to us, that
the indictment failed to charge this element of the offense because
it is not apparent on the face of the indictment that there is a
sufficient nexus between the mailings and the alleged scheme.
We believe the district court asked the wrong question in con-
sidering this aspect of the indictment. The question is not whether
the indictment particularly alleges sufficient facts from which a
jury could find that the mailings charged were in furtherance of
the scheme, but rather whether the Government conceivably
could produce evidence at trial showing that the designated mail-
ings were for the purposes of executing the scheme. United States
v. Sampson, 371 U. S. 75, 76 (1962). The resolution of the
question of whether the mailings alleged were in furtherance of
the scheme_must await trial
34a
“unless it so convincingly appears on the face of the indict-
ment that as a matter of law there need be no necessity for
such delay.” United States v. Feinberg, 50 F. Supp. 976,
977 (E. D.N. Y. 1973), affd, 140 F. 2d 592 (2d Cir.),
cert. denied, 322 U. S. 726 (1944).
The Government need not allege the subordinate evidentiary
facts by which it intends to prove the “in furtherance” element
of the crime charged, and an indictment, setting out the mailings
charged and alleging that they were in furtherance of the scheme
should not be dismissed as insufficient on its face unless there is
no conceivable evidence that the Government could produce at
trial to substantiate its “in furtherance” allegation.
Looking at the mailings charged in the indictment in light of
the above standard, we hold that the district court erred in find-
ing, at this stage of the proceedings, that the mailings were
insufficient to support federal jurisdiction.
Causation
It is well settled that a defendant “causes” a mailing for pur-
poses of 18 U. S. C. § 1341 either when he makes use of the
mails or when he causes someone else to do so. In Pereira v.
United States, 347 U.S. 1, 8-9 (1954), the Supreme Court held:
“Where one does an act with knowledge that the use of
the mails will follow in the ordinary course of business, or
where such use can seasonably be foreseen, even though not
actually intended, then he ‘causes’ the mails to be used.”
Inasmuch as all the mailings charged in the indictment were
letters from the Indiana Alcoholic Beverage Commissicn either
notifying persons connected with the scheme of matters related
to the granting of the permits or asking such persons for infor-
mation regarding the permit applications, we cannot say as a
matter of law that the mailing of such letters could not reason-
ably be foreseen by the defendants. Nothing in the indictment
indicates that the charged mailings were not part of the normal
processing of applications or were not sent in the ordinary course
of the Commission’s business.
35a
In Furtherance of the Scheme
Having determined that the indictment sufficiently alleges that
the defendants “caused” the charged mailings, we must determine
whether the charged mailings could have been made in further-
ance of the fraudulent scheme.
Under the statute, the mailings must be “for the purpose of
executing the scheme.” However, “[iJt is not necessary that the
scheme contemplate the use of the mails as an essential element.”
Pereira v. United States, supra at 8. Faced with these vague and
somewhat ambiguous statements, we reviewed the relevant cases
on the question in Unitcd States v. Rauhoff, 525 F. 2d 1170,
1176 (1975), and arrived at the following formulation:
“Mailings are in furtherance of a scheme if they are inci-
dental to an essential part of the scheme. Pereira v. United
States, 347 U.S. 1, 8-9 (1954). Under this definition, mail-
ings made after the scheme has reached its fruition are not
in furtherance of the scheme, United States v. Maze, 414
U.S. 395 (1974), nor are mailings which conflict with the
of the scheme and have little effect upon the
scheme, United States v. Staszcuk, 502 F.2d 875 (7th Cir.
1974). On the other hand, mailings made to promote the
scheme, United States v. Joyce, 499 F.2d 9 (7th Cir.), cert.
denied, 419 U.S. 1031 (1974), or which relate to the
acceptance of the proceeds of the scheme, United States v.
Isaacs, 493 F.2d 1124 (7th Cir.), cert. denied, 417 US.
976 (1974), or which facilitate concealment of the scheme,
United States v. Sampson, 371 U.S. 75 (1962) have been
found to have been in furtherance of the scheme under this
definition.”
Further, we held in the more recent case of Ohrynowicz v.
United States, 542 F. 2d 715 (7th Cir.), cert. denied, 97 S, Ct.
650 (1976), that a mailing which is a normal concomitant of a
transaction that is essential to the fraudulent scheme can be in
furtherance of the scheme.
In light of these precedents, we find that the mailings charged
in the indictment could be found by a jury to be “for the purposes
36a
of executing the fraudulent scheme” and thus can withstand a
motion to dismiss the indictment.
The mailing in Count I is a notice of a hearing on a permit
application sent to one of the “fronts” by the IABC. Defendants
argue that, like the hearing notice found to be insufficiently con-
nected with a mail fraud scheme in United States v. Staszcuk,
502 F. 2d 875, 880-881 (7th Cir. 1974), this mailing conflicted
with the scheme, rather than promoted it, because it provided an
opportunity for the public to scrutinize the “front’s” permit
application and thus might have led to revelation of the fraud.
We find Staszcuk distinguishable since that decision followed a
full trial of the mail fraud charges and was based on trial evi-
dence that showed that concealment of the fraudulent scheme
from the public was an essential aspect of the scheme charged in
the case. In the case at hand, we cannot determine without a
trial record whether a public hearing necessarily conflicted with
the scheme or whether, as the Government may show at trial, the
mailing of a hearing notice was a normal concomitant of the
permit-granting process, see Ohrynowicz, supra, or whether the
mailing was used to inform the defendants that the scheme was
proceeding as planned.
The mailings charged in Counts II through VI, notices to the
“fronts” that the IABC had voted to issue them permits, like the
notice of hearing in Count I, could have been normal concomi-
tants of the permit granting process or could have told the
defendants that the scheme was proceeding as planned. More-
over, these mailings are very similar to the mailing in Count
XIII in United States v. Isaacs, 493 F. 2d 1124, 1152 (7th Cir.),
cert. denied, 417 U. S. 976 (1974). That mailing, a letter from
the Illinois Racing Board to the defendants’ corporation, informed
the defendants that they had been granted racing dates. This
indicated to the defendants that they had succeeded in their
fraudulent scheme to obtain racing dates without disclosing their
interest in the corporation. The mailing was held to be in further-
ance of the scheme as a “necessary sequel tu the concealment of
the [defendants’] beneficial interest” in the corporation.
37a
Counts VII and VIII charge two mailings from the [ABC to
F. Pen Cosby listing the applicants for the liquor permits and the
persons who had been awarded permits. While the relationship
of these mailings to the scheme is not entirely clear from the face
of the indictment, the nature of the mailings is such that we
cannot say as a matter of law that the Government could not
produce evidence at trial to show that they were in furtherance
of the scheme. Perhaps it was essential to the planning of the
scheme that the defendants knew how many applicants there
were and where their stores were to be located. This latter knowl-
edge, in particular, could have been crucial in acquiring sites for
the later transference of the locations of the permits, inasmuch as
the Indiana authorities might have been reluctant to transfer the
permits to sites that were close to those where other stores were
scheduled to operate. This certainly constitutes a possible purpose
of this mailing that could be shown at trial.
The mailings in Counts IX through XI, XIII and XIV were
notices from the IABC to several of the “fronts” or their trans-
ferees that certain of their applications lacked essential informa-
tion. These mailings could have aided the defendants by inform-
ing them that the scheme was proceeding as planned. They might
even have been generated by deliberate omissions intended to
cause the IABC to send the notices so the defendants could
gauge the progress of the application process.
Finally, the letter in Count XII from the IABC to a lessor
of property listed as the site at which one of the “fronts”
wanted to operate his store could be in furtherance of the
scheme. Like the letters to the “fronts” asking about missing
items, this letter could have told the defendants that the scheme
was going as planned or could have told them some particular
fact about the permit-granting process. There is nothing in the
indictment indicating that, as a matter of law, this letter could
not have been in furtherance of the scheme.
As is clear from the foregoing discussion, we cannot say,
from the face of the indictment, that no evidence could be
38a
presented at trial to show that the charged mailings furthered
the alleged fraudulent scheme.
In summary, we hold that the indictment charges a scheme
or artifice to defraud within the meaning of 18 U. S. C. § 1341
and charges that the mails were used for the purpose of execut-
ing the charged scheme. Accordingly, we reverse the district
court’s dismissal of the indictment and remand the case for
further proceedings.°
REVERSED AND REMANDED.
A true Copy:
Teste:
Clerk of the United States Court of
Appeals for the Seventh Circuit.
5. Circuit Rule 18 shall be applied by the district court on
remand. :
39a °
UNITED STATES CourRT OF APPEALS
For the Seventh Circuit
Chicago, Illinois 60604
July 8, 1977
Before
Hon. LATHAM CASTLE, Senior Circuit Judge
HON. ROBERT A. SPRECHER, Circuit Judge
Hon. WILLIAM J. BAUER, Circuit Judge
) Appeal from the
United States Dis-
UNITED STATE ’ i
STATES OF AMERICA trict Court for the
Plaintiff-A ppellant, Southern District of
No. 76-2068 vs. Indiana, Indianap-
olis Division.
CHARLES G. Castor, HENRY Y. DEIN, commen
WILLIAM T. ROBINETTE, AND No. IP 76-79-Cr
JAMES A. JAMES,
Defendants-A ppellees.
William E. Steckler,
y Judge.
This cause came on to be heard on the transcript of the
record from the United States District Court for the Southern
District of Indiana, Indianapolis Division, and was argued by
counsel.
On consideration whereof, it is ordered and adjudged by this
court that the judgment of the said District Court in this cause
appealed from be, and the same is hereby, REVERSED and
- REMANDED, in accordance with the opinion of this court filed
this date.
‘ 40a1
UNITED STATES COURT OF APPEALS
For the Seventh Circuit
Chicago, Illinois 60604
August 9, 1977
Before
Hon. LATHAM CASTLE, Senior Circuit Judge
Hon. ROBERT A. SPRECHER, Circuit Judge
Hon. WILLIAM J. BAUER, Circuit Judge
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
No. 76-2068 VS.
CHARLES G. Castor, WILLIAM T.
ROBINETTE, HENRY Y. DEIN AND
JAMES A. JAMES,
Defendants-A ppellees.
ORDER
aff
in y
On Appeal from the
United States Dis-
trict Court for the
Southern District of
Indiana, Indianap-
olis Division.
No. IP 76-79 CR
William E. Steckler,
Judge.
On consideration of the petition for rehearing and suggestion
for rehearing en banc filed in the above entitled cause by the
Appellees, no judge in active service has requested a vote
thereon, and all of the judges on the original panel have voted
to deny a rehearing. Accordingly,
Ir Is ORDERED that the aforesaid petition for rehearing be,
and the same is hereby, DENIED.
4ia
SUPREME COURT OF THE UNITED STATES
No. A-176
Cuarues G. Castor, et Ax., Petitioners,
v.
Unitep States
Order Extending Time To File Petition For |
Writ Of Certiorari
Upon Consiperation of the application of counsel for pe-
titioner(s),
It Is Onperep that the time for filing a petition for writ
of certiorari in the above-entitled cause be, and the same is
hereby, extended to and including September 30, 1977.
/s/ John Paul Stevens
Associate Justice of the Supreme
Court of the United States
Dated this 26th day of August, 1977.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.