Petition — Greenblatt v. United States

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IN THE F

Supreme Court of the United States. os

er

October Term, 1978

No. 7e- @8- 794

MARVIN GREENBLATT,

Petitioner,

v.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT.

RONALD F. Kipp,

ANN B. STANKIEWICZ,

DvuANE, Morris & HECKSCHER,

1600 Land Title Building,

Philadelphia, PA 19110

Telephone: 215-854-6365

Attorneys for Petitioner.

November ]3, 1978

International Printing Co., 711 So. 50th St., Phila., Pa. 19143 — Tel. (215) 727-8711

INDEX.

Page

I crt an wad nnen we cose dae vusend eeean es l

i ca ctcuuows shiek ewinduechlumneibueeeakeen 2

RY WOUND ooo enw eccccoccnvenscscencctoces 2

nce ce gubiee ese eakiandnnadeuasanee ees 2

I WE GINO occ ck cee cecewasasowascdscecces 2

EE Sane Sadpatharveedunetectapedaccpaseawss Loans 4

The Evidence Presented at Trial Was Insufficient as a

Matter of Law to Establish That the Mailing Alleged

in Count Nine Was Utilized for the Purpose of Exe-

cuting an Artifice or Scheme to Defraud .......... 4

a wilis goss eendakwewkadnsaauanscccesen ad 15

APPENDIX:

District Court Judgment and Probation/Commitment

i ee iechid wang Wek eninge eahaek «eho s Al

ee Se ONE SUD ow. nnn ccc ncn ecccacce A3

Court of Appeals Judgment ...................0000ee A25

Court of Appeals Order Denying Rehearing ........... A27

CITATIONS.

Cases: Page

Kann v. United States, 323 U. S. 88 (1944) ...........000e, 12

Parr v. United States, 363 U. S. 370 (1960) ... ............ 12,13

Pereira v. United States, 347 U. S. 1 (1954) ............0.. 12

United States v. Brickey, 296 F. Supp. 742 (E. D. Ark. 1969) 13

United States v. Maze, 468 F. 2d 529 (6th Cir. 1972), aff'd 414

ee PEE aidiks ceandcosss toa 0uesacensaaees 12, 13, 14

United States v. Sampson, 371 U. S. 75 (1962) ............. 12

United States v. Staszcuk, 502 F. 2d 875 (7th Cir. 1974),

modified on other grounds, 517 F. 2d 53, cert. denied, 96

nn ee 14

United States v. Tarnopol, 561 F. 2d 466 (3rd Cir. 1977)

3, 11, 12, 13, 15

Statutes: Page

a I a a nas foe dk dnd 0. deb oie vie ee wea 2

ee ee EE Cua ast Wetese ed weds cteaeees-ecucces 2

IN THE

Supreme Court of the United States

October Term, 1978

No. 78-

MARVIN GREENBLATT,

Petitioner,

v.

UNITED STATES OF AMERICA,

Respondent. :

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT.

The Petitioner, Marvin Greenblatt, respectfully prays

that a Writ of Certiorari be issued to review the judgment

and opinion of the United States Court of Appeals for the

Third Circuit entered in this proceeding on August 14,

1978, and the Order Denying the Petition for Rehearing

entered by that Court on October 13, 1978.

OPINIONS BELOW.

The opinion of the Court of Appeals, and the Order

denying the Petition for Rehearing, not yet reported, both

appear in the Appendix hereto (App., pp. A3-A27).

2 Petition for Writ of Certiorari

JURISDICTION,

The judgment of the Court of Appeals for the Third

Circuit was entered on August 13, 1978. The Order deny-

ing the Petition for Rehearing was entered on October 13,

1978. This Petition was filed within 30 days of the latter

date. The Court’s jurisdiction is invoked under 28 U. S. C.

§ 1254(1).

QUESTION PRESENTED.

Did the Court err in holding that the evidence pre-

sented at trial was sufficient to establish that the mailing

alleged in Count Nine of the Indictment was utilized for

the purpose of executing an artifice or scheme to defraud?

STATUTE INVOLVED.

18 U.S.C. § 1341.

STATEMENT OF THE CASE,

This Writ arises from the opinion and judgment of the

United States Court of Appeals for the Third Circuit affirm-

ing the judgment of the United States District Court of the

Eastern District of Pennsylvania in favor of the Respond-

ent and against the Petitioner (Docket No. 77-100-2), and

from the subsequent Order entered denying the Petition

for Rehearing.

Petitioner was tried before the District Court and a

jury upon an indictment charging Collection of Extensions

of Credit by Extortionate Means in Counts One and Two,

Mail Fraud in Counts Three through Twelve, and Racket-

eer Influenced and Corrupt Organizations in Counts

Thirteen and Fourteen.

The trial resulted in the conviction of Petitioner on

Counts One, Two, Five, Six, Nine, Thirteen and Fourteen.

All other Counts were dismissed by the District Court.

Petition for Writ of Certiorari 3

Petitioner appealed to the United States Court of Ap-

peals for the Third Circuit, inter alia, that the Respondent

failed as a matter of law, and through insufficient evidence,

to establish that the mailings alleged in Counts Five, Six

and Nine were utilized for the purpose of executing a

scheme or artifice to defraud and further, if these convic-

tions on the mail fraud counts were reversed, Counts Thir-

teen and Fourteen charging Racketeer Influenced and

Corrupt Organizations must be reversed as a matter of law.

The Court held that there was insufficient evidence to es-

tablish that the mailings alleged in Counts Five and Six

were for the purpose of executing the scheme to defraud

(App., pp. Al3-A16) and reversed the judgment of con-

viction on these two counts. In light of this, it also re-

versed the judgment of conviction on Counts Thirteen and

Fourteen, the racketeering counts (App., pp. A22-A24).

However, regarding Count Nine, the Court held there was

sufficient evidence for the jury to have found “beyond a

reasonable doubt that the April 10 request for financing

was closely connected with the fraud so as to constitute

mail fraud”. ( App., p. A21), and further, that the mailings

were “for the purpose of executing the fraud”. (App.,

p. A21).

Subsequently, Petitioner filed a Petition for Rehear-

ing with the Court on its decision regarding Count Nine

for mail fraud, alleging that the Court misapprehended a

material fact upon which it placed substantial reliance in

its opinion regarding Count Nine and in light of this, the

Court’s analysis and application of United States v. Tarno-

pol, 561 F. 2d 466 (3d Cir. 1977) was improper and in-

correct. The Court denied Petitioner's Petition for Re-

hearing (App., p. A27).

It is from these rulings that this Petition ensues.

4 Petition for Writ of Certiorari

ARGUMENT.

The Evidence Presented at Trial Was Insufficient as a

Matter of Law to Establish That the Mailing Alleged

in Count Nine Was Utilized for the Purpose of Exe-

cuting an Artifice or Scheme to Defraud.

Petitioner, the former president of Chestnut Hill Lin-

coln Mercury was charged in Count Nine of the Indictment

with having used the mails for the purpose of executing a

scheme or artifice to defraud Ford Motor Credit Company,

a Ford subsidiary, which finances new and used cars for

dealers. It further charged that the Petitioner devised a

scheme to obtain new and used car inventory under Ford’s

“floor plan” financing, to sell the cars for cash, and to

abscond with the cash under the guise of a robbery. The

sales and alleged robbery occurred on April 16, 1975 which

resulted in a loss of $175,000. Ford was alleged to be the

victim of the scheme to defraud.

Ford Motor Credit Company extends lines of credit

to Lincoln Mercury dealers and buys acceptable install-

ment contracts from those dealers (N. T. 213). A line of

credit is called a floor plan (N. T. 213) because the Ford

Motor Credit Company, who pays Ford for each car or-

dered by a dealer has a security interest in each car fi-

nanced by the dealer (N. T. 214).

Used cars may also be floor planned, at 80 percent

of their wholesale value (N. T. 214). Chestnut Hill Lin-

coln Mercury had a used car credit line of $50,000 under

the floor plan (N. T. 214). With regard to the floor plan-

ning of used cars, as pertains to the case at bar, a dealer

with a line of credit could draw on the line by preparing a

Wholesale Security Agreement (N. T. 222). The dealer

would normally be extended 80 percent of the wholesale

value of the automobile. Generally, the dealer would be

Petition for Writ of Certiorari 5

advanced funds if the amount assigned was correct and the

dealer showed title to the car.

With respect to Chestnut Hil! Lincoln Mercury, the

Petitioner signed the agreements and they would be either

mailed to the Company’s King of Prussia office or picked

up at the dealership by a Ford Motor Credit Corapany

employee in the area.

Chestnut Hill Lincoln Mercury, for approximately the

year and a half preceding the robbery, applied for whole-

sale financing under the used car floor plan at least on the

average of once or twice per month. The testimony estab-

lished that applications were made periodically, and fre-

quently (N. T. 241). Indeed, when asked by Mr. Kidd,

defense counsel, whether the request for financing of

April 10, 1977 was unusual, Howard Stoneback, Branch

Manager for Ford Motor Credit Company responded that

they were not (N. T. 242).

The Wholesale Security Agreement, which was the

subject of the Count Nine mailing served as a regular credit

application for five automobiles, three of which were sold

on the day of the robbery (N. T. 243). On the day of the

robbery eight used cars of the twenty sold to Integrity

Autos were floor planned, the remaining five cars being

floor planned at various times from January, 1975 (N. T.

242, 243).

With respect to the form at issue in Count Nine, Mr.

Stoneback explained the working of the Wholesale Security

Agreement in response to Mr. Kidd’s questions, leaving

little doubt that the mailing at issue was of a routine

business form. At page 245, the following dialogue took

place:

“Mr. Stoneback: Okay. We, in the branch, re-

ceive a wholesale security agreement from the dealer.

We verify that the dealer owns the vehicle, and when

Petition for Writ of Certiorari

everything is in line we cut a check. Now the copies

of the check and media to support the payment—and

the media would be a copy of the Wholesale Security

Agreement—are attached to the daily cash report and

this goes with all of the checks that are cut from the

branch office that day, and it has to account for all of

the receipts in the branch office that day... That is

what triggers a trust receipt being printed from Dear-

born and mailed to each dealer, sir.

Mr. Kidd: Thank you, sir. It helps me under-

stand the transaction. But am I correct in character-

izing this as being a normal weekly transaction which

comes from Dearborn, Michigan? (Emphasis added.)

Mr. Stoneback: Yes, Sir.

Mr. Kidd: And the fact that the automotive

wholesale plan weekly transaction register dated

4/19/75 was not an unusual occurrence that that

weekly transaction report would be received by Chest-

nut Hill Lincoln Mercury? In fact it was a—let me

rephrase that to make it more simple, if possible.

Wasn't it routine for Chestnut Hill Lincoln Mercury

to receive the automotive wholesale plan dated

4/19/75?

Mr. Stoneback: Would you please rephrase the

question, please?

Mr. Kidd: All right. Wasn’t it in the normal

course of business that the weekly transaction register

was received by Chestnut Hill Lincoln Mercury, rou-

tinely, on or before April 19, 1975?

Mr. Stoneback: These would be sent to each and

every dealer every week and in this instance they

would h:.ve started sometime in July of 1970.

eee

Petition for Writ of Certiorari 7

Mr. Kidd: So that it is fair for me to state that

such a weekly transaction register was going to Chest-

nut Hill Lincoln Mercury for a period of approxi-

mately several years.

Mr. Stoneback: Yes, Sir.”

It is the mailing of documents identical to those in the

Count Nine mailing which initiated the routine explained

above.

The mailing at issue alleged in the Indictment, by the

Government, defense counsel, the trial court and the Court

of Appeals was not, in fact, the actual mailing which did

occur. All of the above parties have uniformly assumed

the Count Nine mailing was from Chestnut Hill Lincoln

Mercury to the Ford Motor Credit Company branch at

King of Prussia, initiating financing. However, as set forth

in the Petition for Rehearing, the evidence was that the

mailing was from Ford Credit to Chestnut Hill. The mail-

ing (Government Exhibit G-27(d)) was a “Request for

Wholesale Financing and Assignment of Interest.” The

only evidence adduced at trial of that mailing was by Stip-

ulation. The stipulation was that the Request for Whole-

sale Financing and Assignment of Interest was sent on or

about April 9, 1975 from Dearborn, Michigan to Chestnut

Hill Lincoln Mercury. Indeed, at Notes, page 575, the

stipulation is: “If called to testify, Raymond Seyferth of

the Ford Motor Credit Company, Dearborn, Michigan,

would testify that Government Exhibit 27(d) being a re-

quest for wholesale financing and assignment of interest

was mailed on or about April 9, 1975 from Dearborn,

Michigan to Chestnut Hill Lincoln Mercury, Inc., 7700

Germantown Avenue, Philadelphia, Pennsylvania through

the United States Postal Service.”

The Request for Wholesale Financing and Assignment

of Interest, regarding used cars, was routinely delivered to

8 Petition for Writ of Certiorari

the Ford Credit Branch at King of Prussia, Pennsylvania,

where a check to the dealer is drawn. The request is then

delivered to the main office of Ford Credit at Dearborn,

Michigan, where it is ultimately processed and mailed back

to the dealer (N. T. p. 244).

Consequently, the mailing alleged in Count Nine be-

ing from Dearborn to Chestnut Hill, was made after the

check had been drawn and was merely a confirmatory

memorandum. Even though the stipulation is that the

mailing occurred on April 9, 1975, an examination of the

document (Government Exhibit G-27(d)) would indicate

that the mailing was after April 10, 1975 because the docu-

ment discloses that the check was issued on April 10,

1975. Since this information was already on the docu-

ment, it could not have been mailed until after, at least,

April 10, 1975."

Counsel for Petitioner, counsel for the Government,

the trial court, indeed the Third Circuit Court, had all mis-

construed this absolutely critical fact. In Petitioner’s brief

in this case, indeed, throughout the entire history of argu-

ment regarding Count Nine, the Petitioner assumed that

the Count Nine mailing was from Chestnut Hill Lincoln

Mercury to the Ford Motor Company. For example, the

following statements were made by Petitioner in his brief

to the Third Circuit:

“The count [IX] charges the mail fraud arose from

an April 10, 1975 mailing of-a request for wholesale

financing to Ford Motor Credit Company to cover

financing of used vehicles in the inventory of Chest-

nut Hill Lincoln Mercury.” (Emphasis added.) (Pe-

titioner’s brief, p. 44.)

1. The record is silent regarding the basis of the stipulation.

Evidently, however, the date of the stipulation was obviously in-

correct and indeed the document could not Fave been mailed from

Dearborn until subsequent to April 9, 1975.

Petition for Writ of Certiorari 9

“The theory of the government’s prosecution was that

when he caused the request for wholesale financing to

be mailed, Mr. Greenblatt knew some of the cars cov-

ered by the form would be sold and the proceeds

diverted to him. The form was placed in the mail

on April 10, 1975 while the scheme reached fruition,

not earlier than April 16, 1975.” (Emphasis added. )

(Petitioner’s brief, p. 45.)

“Indeed, even if the scheme had begun, clearly the

manner in which the financing form was conveyed to

Ford was wholly irrelevant and immaterial. Had

Greenblatt handed the form to Ford’s representative,

there would be no prosecution for the robbery. Thus,

the instant prosecution turns on the entirely fortuitous

chance that the application made on April 9 happened

to have been mailed.” (Petitioner's brief, p. 53. )

The Government was similarly mistaken. At page 11

of its brief it stated: “Three of the cars had been placed

on the floor plan pursuant to a request for wholesale financ-

ing mailed from Chestnut Hill on April 10, 1975.” (N. T.

942-243). This mailing formed the basis for the offense

charged in Count Nine of the Indictment, the Govern-

ment’s theory being that the “robbery”, which was never

solved, never occurred and that the Petitioner had de-

frauded the Ford Motor Credit Company of the missing

eee The trial court was similarly mistaken. During its

charge (N. T. 175), the Court stated:

“Obviously, if the arrangements had been made be-

fore the Defendants concocted any scheme to commit

a false robbery, the mailing could not have been in

furtherance of the scheme. So you will have to de-

cide, members of the jury, leaving aside for the mo-

10 Petition for Writ of Certiorari

ment whether there was a scheme to commit a rob-

bery, assuming for the moment that there was a

scheme io commit a robbery—you wil! have to decide

whether that scheme had been concocted prior to

April 10, 1975, when the application for wholesale

financing of the used cars was mailed.” (Emphasis

added. )

The Indictment, itself, reflected this incorrect state-

ment of the evidence. Count Nine charged that:

“[O]n or about April 10, 1975 . . . Marvin Greenblatt

... for the purpose of executing the aforesaid scheme

and artifice [to defraud Ford Motor Company] and

attempting to do so did knowingly cause to be placed

in an authorized depository for mail a copy of Chest-

nut Hill Lincoln Mercury’s request for wholesale fi-

nancing from Ford Motor Credit Company to cover

financing of used vehicles Chestnut Hill Lincoln Mer-

cury was holding for re-sale, to be delivered by mail

to DPC-Ford Credit Company, P. O. Box 1785, Dear-

born, Michigan.” (Emphasis added. )

As a result of the critical oversight of all counsel and

the trial court, the Third Circuit also assumed a mailing

wholly unsupported, indeed, contrary to all evidence.

That Court stated: “The scheme charged in Count Nine

involved the request for wholesale financing on April 10,

1975 to Ford Motor Credit Company.” (App., p. A17).

Consequently, all persons concerned have assumed the

request was mailed from Chestnut Hill on April 10, 1975

and was to get money for cars listed thereon. However,

the only evidence of any mailing of that form was from

Ford (Dearborn) to Chestnut Hill. Therefore, the original

delivery of the request to Ford Credit at King of Prussia

ee

Petition for Writ of Certiorari 11

must have occurred by messenger on or about April 9 or

10, 1975.

In the Third Circuit Court’s opinion, the mailing of

the request to Ford (King of Prussia) would have consti-

tuted mail fraud so long as it occurred after the fraud

originated. However, there is absolutely no evidence of

record that the request was mailed, or indeed, whether it

was mailed at all, to Ford Credit at King of Prussia. Mr.

Stoneback’s testimony only indicated that the agreement

was “sent” not mailed (N. T. 245). The mailing in evi-

dence was of the processed request back to Chestnut Hill,

which occurred considerably subsequent to the issuance of

the check to Chestnut Hill, i.e., apparently after the check

was received and deposited to Chestnut Hill’s corporate

account. The Third Circuit conceded, if the scheme did

not begin until after the April 10 mailing, the mail fraud

conviction would have to be reversed (App., p. A17). More-

over, tle mailing was only in the nature of a confirmation

and had no part whatsoever in obtaining the money. Fi-

nally, in light of these new facts concerning the mailing,

it must be construed as a weekly, routine procedure always

followed by Ford Credit and hence falls squarely within

United States v. Tarnopol, 561 F. 2d 466 (3rd Cir. 1977).

Accordingly, the mailing from Ford Motor Credit

Company to Chestnut Hil! was only remotely related to

the scheme to defraud and, moreover, was contrary to

Count Nine of the Indictment. Thus, the Third Circuit

Court in its opinion, relied upon an erroneous material

fact not in evidence, to the effect that the Petitioner,

Greenblatt, mailed an application for wholesale financing

to Ford Motor Credit Company, when in fact the evidence

was to the contrary in that the mailing was from Ford

Motor Credit Company to Chestnut Hill.

If it is recognized that the Count Nine mailing was

from Dearborn to Chestnut Hill, the mailing clearly was

12 Petition for Writ of Certiorari

after the funds had been released and could not have been

for the purpose of executing the scheme.

However, even if the sequential considerations are

ignored, the mailing clearly falls within the “normal busi-

ness routine” mailings which have been excluded from

mail fraud prosecution, or at least the mailing would not

have been sufficiently closely related to the scheme to war-

rant Federal prosecution.

Prior to Tarnopol, supra, courts carefully avoided

Federal jurisdiction turning on the merely fortuitous event

of some routine mailing by requiring that the use of the

mails materially promote the scheme. Pereira v. United

States, 347 U.S. 1 (1954); Kann v. United States, 323 U. S.

88 (1944); Parr v. United States, 363 U. S. 370 (1960);

United States v. Sampson, 371 U. S. 75 (1962); United

States v. Maze, 468 F. 2d 529 (6th Cir. 1972), affd, 414

U. S. 395 (1974). The underlying requirement framed by

these cases is that the use of the mails plays a significant

part in the scheme and not merely serves as a technicality

upon which Federal jurisdiction may be asserted. Unlike

typical mail frauds wherein the mails are used for dis-

semination of false financial information to stockholders,

numerous applications for phony insurance coverage,

fraudulent land sales by mail or the like, where the de-

fendants used the mails as a vehicle for mass circulation

critical to the promotion of the scheme, the mailing in this

case was merely incidental to the scheme. Indeed, the

weekly transaction register “would be sent to each and

every dealer every week....” (N. T. p. 245).

In Parr v. United States, supra, the legally required

routine mailing of a standard business form, even if in-

volved in a scheme, was not sufficient to bring the act

within the mail fraud statute. In Parr, receipts from tax-

payers, in ordinary course, provided the flow that funded

Petition for Writ of Certiorari 13

the scheme, and the mailing of payments and routine tax

statements served as a basis of counts in the indictment.

The Court reversed the mail fraud counts holding that the

statute does not reach cases wherein the taxing authority

was legally required to assess and collect taxes, and the

authority used the mails for taxing purposes. The clear

sounding of the Parr holding was that where the use of the

mails was not “incident to an essential part of the scheme”,

such use does not fall within the statute. At p. 390. Tar-

nopol extended the reasoning in Parr to include standard

and routine, if not legally required mailings, and estab-

lished the standard to be the proximity of the mailing to

the scheme.

Prior to Tarnopol, supra, the Parr rationale was first

extended to routine business transactions in United States

v. Brickey, 296 F. Supp. 742 (E. D. Ark. 1969). In

Brickey, the chief executive officer of an insurance com-

pany engaged in an elaborate scheme to divert the com-

pany’s assets. All but two of the 28 counts in the Indict-

ment involved routine mailings to and from the insurance

company. The Court dismissed all counts involving such

mailings holding that there must be a sufficient connection

between the use of the mails and the scheme. The Court

stated at page 748:

“Regardless of the particular language that a parucu-

lar count may use in describing the necessary con-

nection between the fraud and the use of the mails,

it seems clear in the context of a criminal prosecution

that the connection must be real and proximate, not

merely abstract or remote.”

The Brickey decision preceded Maze, which in effect,

adopted its reasoning. Maze emphasized the requirement

that the mailing be “sufficiently closely related to the

14 Petition for Writ of Certiorari

scheme to bring [defendant's] conduct within the statute,

at p. 399. It is submitted that the Maze requirement is a

fundamental restriction to limit what would otherwise be a

fortuitous chance that the mails were involved, albeit re-

motely, in a scheme and hence prevent Federal jurisdiction

from turning on the mere chance of a mailing. The clear

sounding of Maze is that a Federal mail fraud prosecution

must involve the abuse of the mails, a sufficient abuse to

prompt Congressional concern. “Congress could have

drafted the mail fraud statute so as to require only that the

mails be in fact used as a result of the fraudulent scheme.

But it did not do this; instead, it required that the use of

the mails be for the purpose of executing such scheme or

artifice.” Maze, supra, at p. 405. [Footnotes omitted. ]

A decision handed down after Maze which concerned

mail fraud prosecution arising from routine mailings inci-

dentally relating to a scheme was United States v. Staszcuk,

5u2 F. 2d 875 (7th Cir. 1974), modified on other grounds,

517 F. 2d 53 cert. denied, 96 S. Ct. 65 (1975), wherein

form notices were caused to be mailed by the defendants

regarding zoning changes. The role of the notices was to

advise of public hearings, which had little effect on the

changes, or ou the scheme. The Court carefully consid-

ered the Maze decision as well as many of the same argu-

ments raised herein, It concluded that unless a mailing is

“a step forward in receipt of the fruits of the scheme . . .”

Federal prosecution will not lie... At p. 880. The Court in

Staszcuk carefully considered the part played by the mail-

ings in the scheme and although the mailings did con-

tribute somewhat, the requisite nexus was lacking. The

reasoning of that Court is applicable hereto, because the

return of the Request for Wholesale Financing was entirely

immaterial to the success of the scheme. Indeed, the man-

ner in which the processed financing form was conveyed to

Petition for Writ of Certiorari 15

Chestnut Hill from Ford was wholly irrelevant and im-

material. The instant prosecution turns on the entirely

inconsequential mailing of what is equivalent to a con-

firmatory memorandum,

Finally, this Third Circuit's recent decision in United

States v. Tarnopol, supra, regarding routine mailings is

clearly dispositive of this issue as set forth more fully in

detail above. Certainly, the mailing here, as shown by the

evidence, was “intrinsically legitimate” and, indeed, “nec-

essary” for Ford Motor Credit Company to do business

with its dealers. Even if, as the Court in Tarnopol noted,

the mailing of the application “facilitated” securing the

monies which were the object of the scheme to defraud

Ford (which it did not), it is clear that it was not suffi-

ciently closely related to the scheme to support a mail fraud

prosecution.

CONCLUSION.

For these reasons, a Writ of Certiorari should be is-

sued to review the Judgment and Opinion of the Third

Circuit.

Respectfully submitted,

RONALD F, Kipp,

ANN B, STANKIEWICZ,

Dvane, Morris & HECKSCHER

1600 Land Title Building

100 South Broad Street

Philadelphia, PA 19110

Telephone: 215-854-6365

Attorneys for Petitioners.

November 13, 1978

Appendix.

JUDGMENT AND PROBATION/COMMITMENT

ORDER.

UNITED STATES DISTRICT COURT

For THE EASTERN District OF PENNSYLVANIA

Docket No. 77-100-2

UNITED STATES OF AMERICA,

v.

MARVIN GREENBLATT,

Defendant.

In the presence of the attorney for the government

the defendant appeared in person with counsel Ronald

Kidd, Esq., on this date, July 29th, 1977.

There being a verdict of Gumtty.

Defendant has been convicted as charged of the ol-

fense(s) of collection of an extension of credit by extor-

tionate means, mail fraud and acts of racketeer influenced

and corrupt organization, as charged in Counts 1, 2, 5, 6,

9,13 and 14. The defendant is continued on bail pending

appeal.

The court asked whether defendant had anything to

say why judgment should not be pronounced. Because no

sufficient cause to the contrary was shown, or appeared to

the court, the court adjudged the defendant guilty as

charged and convicted and ordered that: The defendant

is hereby committed to the custody of the Attorney Gen-

(Al)

A2 District Court Judgment & Commitment

eral or his authorized representative for imprisonment for

a period of two (2) years, subject to the provisions of

Title 18 § 4205(b)(2), said sentence to run concurrently

as to each of Counts 1, 2, 5, 6, 9, 13 and 14.

In addition to the special conditions of probation im-

posed above, it is hereby ordered that the general condi-

tions of probation set out on the reverse side of this judg-

ment be imposed. The Court may change the conditions

of probation, reduce or extend the period of probation,

and at any tine during the probation period or within a

maximum probation period of five years permitted by

law, may issue a warrant and revoke probation for a vio-

lation occurring during the probation period.

The court orders commitment to the custody of the

Attorney General and recommends,

It is ordered that the Clerk deliver a certified copy of

this judgment and commitment to the U. S. Marshall or

other qualified officer.

/s/ ALFRED L. Luonco

Alfred L. Luongo

U. S. District Judge

Date July 29, 1977

Couri of Appeals Opinion A3

OPINION OF THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 77-2082

UNITED STATES OF AMERICA,

Appellee,

0.

BROWN, FRANCIS HARRY aka Harry Brown,

Appellant.

No. 77-2083

UNITED STATES OF AMERICA,

Appellee,

v.

GREENBLATT, MARVIN,

Appellant.

APPEAL FROM THE UNITED STATES District Court

FOR THE EASTERN DiIsTRICT OF PENNSYLVANIA

Crim. Nos. 77-100-1 and 77-100-2

Argued June 8, 1978

Before RosENN, HuNTER and HIGcINBOTHAM,

Circuit Judges

(Opinion filed August 14, 1978)

A4 Court of Appeals Opinion

Robert N. DeLuca

Joseph S. Davies, Jr.

Paul J. Brysh

Robert E. Madden

Attorneys for Appellees

Donald I. Bierman

Lawrence E. Besser

Bierman, Sonnett, Beiley

Shohat & Osman

Attorneys for Francis Harry Brown

Ann B. Stankiewicz

Ronald F. Kidd

Duane, Morris & Heckscher

Attorneys for Marvin Greenblatt

OPINION

Hunter, Circuit Judge:

Francis Harry Brown and Marvin Greenblatt appeal

their convictions for using extortionate means to collect

credit (Count 1); for conspiracy (Count 2); for mail fraud

(Counts 5, 6, and 9); for conducting the affairs of an enter-

prise affecting interstate commerce through a pattern of

racketeering activity (Count 13); and for conspiracy to

commit that offense (Count 14). While appellants have

raised several arguments, we find merit only in the con-

tention that the government failed to prove mail fraud

under Counts 5 and 6 of the indictment. Our disposition

of those counts also requires reversal of the interrelated

racketeering counts. We affirm as to remaining counts.

I

The charges against appellants arose from their man-

agement of the Chestnut Hill Lincoln-Mercury car dealer-

Court of Appeals Opinion A5

ship (Chestnut Hill) in Philadelphia between March 1972

and April 1975. During that time, Greenblatt was presi-

dent of Chestnut Hill, and Brown was the dealership’s

general manager. Counts 1 and 2 of the indictment in-

volved a charge that appellants extorted the repayment

of a loan from Russell Wilmerton. Counts 3 through 12

charged Greenblatt and Brown with various acts of mail

fraud. Counts 13 and 14 related to the operation of

Chestnut Hill through a pattern of racketeering activity.

Counts 15 and 16 charged appellant Brown only with

criminal violations arising from the alleged misuse of an

American Express credit card. Certain of the mail fraud

counts—3, 4, 7, 8, 10, 11 and 12—were dismissed by the

trial judge on defendants’ motion for acquittal before the

case went to the jury.’ Counts 15 and 16 were severed

before trial began and were dismissed with prejudice be-

fore this appeal was filed. The jury found both appellants

guilty on the remaining counts—1, 2, 5, 6, 9, 13 and 14.

Brown was sentenced to concurrent terms of three-years’

imprisonment, and Greenblatt to concurrent terms of two-

years’ imprisonment.”

We review the facts of the case as they appear from

the evidence in the light most favorable to the government.

See Glasser v. United States, 315 U.S. 60, 80 (1942).

1. Appellants’ co-defendant, Herbert Keller, was charged in

four of the mail fraud counts. All charges against Keller were dis-

missed by the district court.

2. Since we find that the defendants’ conviction under Counts

1, 2 and 9 should be affirmed, and since defendants were both sen-

tenced to concurrent prison terms on all counts, we note that we

have discretion not to review the remaining counts under the con-

current sentence doctrine. United States v. Lampley, 573 F. 2d

783, 790-91 (3d Cir. 1978). Nevertheless, we believe that resolu-

tion of the remaining issues in this case is appropriate. See United

States v. Maze, 414 U. S. 395, 397 n. 1 (1974); United States v.

Keller, 512 F. 2d 182, 185 n. 8 (3d Cir. 1975).

A6 Court of Appeals Opinion

Counts 1 and 2. Count 1 charged Brown and Green-

blatt with using extortion to collect a debt in violation of

18 U. S.C. § 894. Count 2 charged both defendants with

conspiracy in relation to this substantive offense, id. § 371.

Russell Wilmerton arranged to borrow $9000 from Brown

in November 1972. He had met Brown through a David

Martin in connection with a previous loan. The money

was given to Wilmerton in cash. No note was signed and

no collateral was given. Each week Wilmerton was to

pay $405 in interest, and the principal was to be repaid

in thirty days. The loan was extended once, and interest

payments were made until January 1973, when a receiver

was appointed for Wilmerton’s company. On January 29

and 30 several threats were leveled against Wilmerton be-

cause of his failure to repay the principal of the loan. One

threat was personally delivered by Greenblatt.‘ As a re-

sult of the threats, Wilmerton agreed to repay the loan.

3. 18 U. S. C. § 894(a) (1976) provides:

(a) Whoever knowingly participates in any way, or con-

spires to do so, in the use o any extortionate means

(1) to collect or attempt to collect any extension of

credit, or

(2) to punish any person for the nonrepayment

thereof,

shall be fined not more than $10,000 or imprisoned not more

than 20 years, or both.

4, The testimony of Wilmerton and Martin indicated that they

met with Brown and Greenblatt on January 29, 1973, at a shopping

center. Greenblatt explained “that he was tired of [Wilmerton’s]

excuses” and that if a $3,000 payment was not made by the next

evening Wilmerton would “get a visit from .. . some of the boys

down in Philadelphia.” (Testimony of Russell Wilmerton, Tr. at

850.) The next day Wilmerton told Greenblatt that he did not

have the money, Wilmerton received several mysterious calls that

evening. One caller stated, “O.K., Bud, get ready. We are going

to play taps for you tonight.” (JId., Tr. at 854). Later that eve-

ning, a funeral director appeared at Wilmerton’s doorstep and an-

a iw he had been told “to pick up the body of Mr. Wilmer-

ton.” :

Court of Appeals Opinion AT7

Count 5. Brown and Greenblatt were charged with

mail fraud in relation to a scheme to obtain money from

Herbert Bernstein by inducing him to invest in an illusory

interest in the Chestnut Hill dealership. Count 5 dealt

with a part of that scheme in which the two obtained the

use of $6,000 in proceeds from a loan made to Bernstein

by Allstate Finance Co. This transaction was in fact

a “double fraud;” Count 6 charged that Allstate was de-

frauded as well.

The scheme began in late summer of 1974. At that

time Brown convinced Bernstein to pay $20,000 towards

the purchase of a portion of Brown’s “interest” in Chest-

nut Hill. In early 1975, Bernstein gave Brown an addi-

tional $10,000 as a deposit on the purchase of Greenblatt’s

interest. In fact Brown never owned any interest in Chest-

nut Hill. Greenblatt did hold common stock, but could

not sell or otherwise transfer the shares without first offer-

ing them to Ford Motor Company by the provisions of

Ford’s dealership-development program. Greenbiatt did

not give Ford the required notice and never transferred

his shares.

The part of the scheme to defraud Bernstein charged

in Count 5 was as follows. In early February 1975 Bern-

stein asked Brown to finance the purchase of a motorcycle.

Brown suggested that instead of using the new motorcycle

as collateral, Bernstein should use his 1974 Lincoln. The

car’s title was already encumbered, but the two planned to

misrepresent to the finance company that the Lincoln was

being purchased from Chestnut Hill. Bernstein would

keep $4,500 of the $6,000 loan in order to buy the motor-

cycle and would lend the remaining portion to Brown.

The loan was completed through Allstate Finance Com-

pany. Allstate’s check was made payable to Chestnut Hill

Lincoln-Mercury or Herbert Bernstein and was delivered

A8 Court of Appeals Opinion

on February 10. Bernstein endorsed the check, but Brown

took the instrument into his possession and told Bernstein

he would turn over the $4,500 when the check cleared.

Brown later refused to turn over the money to Bern-

stein and suggested that he consider the $6,000 as an addi-

tional investment in Chestnut Hill. Bernstein, at least by

March 1, 1975, considered that the money would be treated

as an investment. On March 6 Allstate mailed a coupon

book to Bernstein for repayment of the loan. On April 8

Bernstein returned to Allstate two payment-due notices

and Allstate’s request to furnish title for the 1974 Lincoln.

Accompanying the return was a letter explaining that he

had not purchased the car and that Allstate should look

to Chestnut Hill for recovery of the money. After All-

state contacted Brown and Greenblatt, the two tele-

phoned Bernstein. Brown promised that Bernstein would

receive his $4,500. As a result, Bernstein telephoned All-

state and indicated that the letter disclaiming the loan was

the result of a misunderstanding and that he would make

payments on the loan.

In response to the phone call, Mr. J. A. McGrath at

Allstate wrote Bernstein a letter dated April 16, 1975. The

letter thanked Bernstein for his call and indicated that new

payment coupons would be forwarded.’ The mailing of

this letter formed the basis of the mail fraud charged in

Count 5.

Because of the failure of Bernstein or Chestnut Hill to

send the car’s title to Allstate and because of the apparent

5. The text of the letter was as follows:

Dear Mr. Bernstein: Thank you for your phone call. A

— set of coupons and self-addressed return envelopes

will be sent to you early next week. I have enclosed a sub-

stitute first coupon since the first payment was due on March

25. Please forward to my attention in the enclosed envelope.

Sincerely yours, J. A. McGrath, Consumer Finance Manager,

Allstate Enterprises (Tr. at 1024).

Court of Appeals Opinion AQ

demise of Chestnut Hil], Allstate on April 24, 1975 recov-

ered the $6,000 from an auto repair company which had

endorsed the check subsequent to Bernstein.

Count 6. Count 6 made reference to the same back-

ground facts supporting the mail fraud charged in Count

5. This count charged defendants with defrauding All-

state Finance Company in connection with the loan of

$6,000 to Bernstein. The mailing charged in this count

was Allstate’s sending Bernstein the repayment-coupon

book on March 6, 1975.

Count’9. The government charged in Count 9 that

Brown and Greenblatt defrauded Ford Motor Credit

Company, a Ford subsidiary which finances new and used

cars for dealers. The fraud involved a false report of a

“robbery” as a guise for the conversion of funds as to

which Ford Credit had a security interest. The mailing

which supported this count of mail fraud was a request for

wholesale financing sent by defendants on April 10, 1975.

In April 1975 Chestnut Hill was in financial difficul-

ties. On April 2 Ford Motor Credit Company informed

Greenblatt that as of April 30, 1975, it would no longer

provide wholesale financing of vehicles, called “floor plan”

financing. Chestnut Hill’s last request for wholesale fi-

nancing was mailed on April 10. On Tuesday, April 15,

Ford asked Greenblatt to resign as president. He said

that he would resign on the following Monday.

On April 16 Chestnut Hill sold thirty-eight automo-

biles. The company’s records show that roughly $175,000

in cash was taken in on that date.’ Between October 1974

and March 31, 1975, the greatest amount of cash taken in

during one day was approximately $18,300; only on three

6. There was evidence, however, that several buyers paid far

less for the cars than was reflected in the records. ;

Al0 Court of Appeals Opinion

days during that period was over $10,000 in cash received.

Three of the cars sold on April 16 had been placed on the

“floor-plan” under the April 10 request for financing. Ad-

ditionally, one buyer on April 16 paid for a car which had

been sold to him for cash two days prior to the April 10

mailing.

After the dealership closed for the evening, the Phila-

delphia Police received a report that the agency had been

robbed. Greenblatt and the dealership’s sales manager

told police that the robber had taken a large amount of

cash. The government alleged that the “robbery” had

never taken place and that defendants had taken the cash

and thereby defrauded Ford Motor Credit Company.

Counts 13 and 14. Count 13 charged appellants with

violation of the Racketeer Influenced and Corrupt Organi-

zations Act.’ The government alleged that they had con-

ducted the affairs of an enterprise affecting interstate com-

merce, Chestnut Hill Lincoln-Mercury, through a pattern

of racketeering activity, in violation of 18 U. S. C. § 1962

(b).° The racketeering activity alleged consisted of the

evidence underlying the substantive count of extortion and

the counts of mail fraud.’ Count 14 charged conspiracy

to commit the substantive racketeering offense, in viola-

tion of 18 U. S. C. § 1962(d).

7. 18 U.S. C. §§ 1961-1968 (1976).

8. That section provides:

It shall be unlawful for any person thiough a pattern of

racketeering activity or through collection of an unlawful debt

to acquire or maintain, directly or indirectly, any interest in or

control of any enterprise which is engaged in, or the activities

of which affect, interstate or foreign commerce.

9. See id. § 1961(1):

“Racketeering activity” means...

(B) any act which is indictable under any of the fol-

lowing provisions of title 18, United States Code: . . . sec-

tions §91-894 (relating to extortionate credit transactions ),

... Section 1341 (relating to mail fraud) ....

Court of Appeals Opinion All

II

Defendants contend that Counts 5, 6 and 9 of the in-

dictment failed to charge and the government failed to

prove the crime of mail fraud. The mail fraud statute,

18 U. S. C. § 1341, prohibits the use of the mails “for the

purpose of executing” a scheme to defraud or an attempt

to defraud.*® Not every scheme which is fraudulent un-

der state law is a mail fraud. Parr v. United States, 363

U. S. 370, 385 (1960); Kann v. United States, 323 U. S.

88, 95 (1944). “[T]he gist of the crime is the use of the

mails for the purpose of executing a scheme to defraud.”

United States v. Tarnopol, 561 F. 2d 466, 471 (3d Cir.

(1977). See United States v. Maze, 414 U. S. 395, 400

(1974).

In United States v. Tarnopol, supra, we surveyed the

guidelines for determining whether a mailing is to be

deemed “for the purpose of executing” a scheme to de-

fraud. We described the question presented to be

“whether or not the ‘mailings were sufficiently closely re-

lated to respondent's scheme to bring his conduct within

the statute.’ United States v. Maze, |supra, 414 U. S. at

10. Whoever, having devised or intending to devise any

scheme or artifice to defraud, or for obtaining money or prop-

erty 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, obligation, security, or

other article, or anything represented to be or intimated or

held out to be such counterfeit or spurious article, for the pur-

se of executing such scheme or artifice or attempting so to

0, places in any post office or authorized on pg | for mail

matter, any matter or thing whatever to be sent or delivered b

the Postal Service, or takes or receives therefrom, any suc

matter or thing, or knowingly causes to be delivered by mail

according to the direction thereon, or at the place at be Po it

is directed to be delivered by the person to whom it is ad-

dressed, any such matter or thing, shall be fined not more than

$1,000 or imprisoned not more five years, or both.

Id. § 1341.

Al2 Court of Appeals Opinion

399].” 561 F. 2d at 471-72. The completion of the scheme

must depend in some way on the mailings charged.

United States v. LaFerriere, 546 F. 2d 182, 187 (5th Cir.

1977). Mailings taking place after the “object” of the

scheme has been accomplished or before the scheme has

begun are not sufficiently related to the plan to support a

mail fraud conviction. 561 F. 2d at 472.

The “object” of a fraudulent scheme is not necessarily

accomplished when the perpetrators of the fraud receive

the fruits of their scheme. The success of some fraudulent

plans may depend, for example, on the victim’s continued

ignorance of the fraud after he had paid over money. In

some cases, “subsequent mailings . . . [are] designed to lull

the victims into a false sense of security, postpone their

ultimate complaint to authorities, and therefore make ap-

prehension of the defendants less likely than if no mailings

had taken place.” United States v. Maze, supra, 414 U. S.

at 403. See United States v. Sampson, 371 U. S. 75, 80

(1962); United States v. LaFerriere, supra, 546 F. 2d at

186-87. A letter to a victim may be used to aid a scheme

which contemplated a series of fraudulent acts. Kann v.

United States, supra, 323 U.S. at 94-95. In such a case, a

mailing may be used to give a fraudulent business the ap-

pearance of legitimacy or otherwise to postpone inquiry

and action by former victims so that the scheme may con-

tinue. See United States v. Sampson, supra, 371 U. S. at

80; United States v. Serlin, 538 F. 2d 737, 745 (7th Cir.

1976); United States v. Marando, 504 F. 2d 126, 129-30

(2d Cir.), cert. denied, 419 U. S. 1000 (1974); United

States v. Green, 494 F. 2d 820, 825-26 (5th Cir.), cert.

denied, 419 U. S. 1004 (1974).

Defendants argue that the mailings charged and

proven under the three mail fraud counts which were sub-

mitted to the jury were not “for the purpose of executing”

Court of Appeals Opinion Al3

the frauds alleged. We test defendants contentions not

only on the basis of the indictment, but also on our con-

sideration of the evidence adduced at trial and the in-

structions given to the jury. See Parr v. United States,

supra. See also United States v. Tarnopol, supra, 561

F. 2d at 470-73; United States v. Adamo, 534 F. 2d 31,

34-37 (3d Cir.), cert. denied, 429 U. S. 841 (1976);

United States v. Castor, 558 F. 2d 379 (7th Cir. 1977),

cert. denied, 46 U. S. L. W. 3436 (U. S. Jan. 9, 1978).

Count 5, Count 5 charged a scheme to defraud Bern-

stein by inducing him to invest in Chestnut Hill the $6,000

proceeds of a loan from Allstate. The indictment charged

that defendants Brown and Greenblatt caused J. L. Me-

Grath of Allstate Finance Company to mail a letter to

Bernstein on April 16, 1975."" As of March 1, 1975 de-

fendants had succeeded in convincing Bernstein that the

loan proceeds would be treated as an investment in Chest-

nut Hill. On April 8, however, Bernstein disavowed the

loan. Soon thereafter, Brown and Greenblatt convinced

Bernstein to pay the loan. Accordingly, Bernstein tele-

phoned Allstate and indicated that he would repay the

loan. The April 16 letter was All.tate’s acknowledgment

of the phone call. It indicated that a repayment-coupon

book would be forwarded.

The indictment stated merely the April 16 letter was

caused to be sent for the purpose of executing the fraud on

Bernstein. Appellants argue that the fraud was completed

when they received the $6,000 from Bernstein through All-

state. They conclude that mailings occurring after that

time were “after the object of the scheme has been ac-

complished” and thus were not “for the purpose of execut-

ing” the fraud. United States v. Tarnopol, supra, 561

11. Quoted at note 4 supra.

Al4 Court of Appeals Opinion

F, 2d at 472. They further contend that the letter had no

“lulling” function after the money had been received.

Initially we note that appellants’ contention that the

fraud ended on March 1 finds considerable support in the

evidence. By March | Brown and Greenblatt had suc-

ceeded in convincing their victim to invest additional funds

in an illusory interest in the dealership. Bernstein did not

become recalcitrant until over a month after the defendants

had received the money. See, e.g., United States v. Maze,

supra, 414 U. S. at 402 (fraud in use of credit card com-

pleted when illegitimate user receives services charged on

card); United States v. Britton, 500 F, 2d 1257, 1259 (8th

Cir. 1974) (fraud on insurance company reached fruition

when claim check was received). Cf. United States v.

Adamo, supra, (when merchants participate in credit fraud,

scheme continued until bank and credit card companies

mailed payment in response to billing).

We are not required to resolve that question in this

case. We will assume for purposes of this decision that the

government's contention is correct—that the jury could

find that the fraud continued past Bernstein’s change of

heart on April 8 until he was again convinced to allow the

money to remain as an investment. Even under that

assumption, we do not believe that the evidence supports

the conclusion that the mailing on April 16 from Allstate

to Bernstein was in furtherance of the fraudulent scheme.

The government's theory of the mail fraud charged in

Count 5 has been amorphous and difficult to follow

throughout this case. It argues that the letter was in some

way connected to a need to convince Bernstein to pay the

loan and stop demanding his money back from defendants.

We do not believe that the evidence supports the con-

clusion that the letter from Allstate had any such effect.

The letter was sent only after Bernstein had agreed for a

second time to pay back the loan. By the time of Bern-

Court of Appeals Opinion Al5

stein’s phone call, he was already convinced; Allstate’s

letter was only an innocent business confirmation following

the phone call. The letter had no relation at all to Bern-

stein’s decision to invest in the automobile dealership.

The government also seems to argue that the letter

from Allstate would help to eliminate the threat that All-

state would attempt to recover the money from defendants.

Admittedly, a letter which gives the victim of a fraud a

false sense of security, and thus induces him to delay recov-

ery of funds, may in some instances support a mail fraud

charge. See, e.g., United States v. Sampson, supra, 371

U. S. at 80-81; United States v. LaFerriere, supra, 546 F. 2d

at 187; United States v. Ashdown, 509 F. 2d 793, 799 (5th

Cir.), cert. denied, 423 U. S. 829 (1975). Count 5, how-

ever, charges a fraudulent scheme aimed at Bernstein,

rather than at Allstate. Even assuming that “lulling” All-

state could support the count, we see no evidence that the

confirmatory letter sent by Allstate to Bernstein could have

had the effect which the government claims. At the time

of the phone call, Bernstein had decided to repay the loan

and not to demand the $6,000 back from the defendants.

When Allstate received the call, the evidence shows that it

considered the loan to be reinstated. The letter merely

noted the phone call and indicated that a coupon book

would be sent. We do not believe that such a letter had

any significant relation to whether Allstate would postpone

any attempt to recover the loan proceeds from the de-

fendants.

In summary, we find no evidence that the letter from

Allstate to Bernstein was “for the purpose of executing”

the scheme to have Bernstein invest in an illusory interest

in Chestnut Hill. Since a sufficient relation between the

letter and the alleged crime was not shown by the govern-

ment, we hold that the convictions of both defendants

under Count 5 cannot stand.

Al6 Court of Appeals Oninion

Count 6. Count 6 alleges that defendants along with

Bernstein defrauded Allstate by making a false loan appli-

cation. Allstate approved the loan and the proceeds were

delivered to defendants on February 10, 1975. On March

6 Allstate mailed a repayment coupon book to Bernstein.

That mailing formed the basis of the mail fraud charged

in the indictment. Appellants argue that the mailing is too

remote from the scheme to support their convictions.

Count 6 charged that the defendants caused the cou-

pon book to be mailed for the purpose of executing the

scheme to defraud Allstate and “for the further purpose of

lulling Allstate into a false sense of security.” In its argu-

ment before the trial court and on appeal, the government

has contended that when Allstate mailed its coupon book,

it was “lulled” into delaying any attempt to recover the

loan proceeds.

We conclude that the evidence did not show a sufh-

ciently close connection between the mailing and the fraud

alleged to support a mail fraud conviction under Count 6.

When the check was delivered to defendants and Bernstein

on February 10, the perpetrators of the fraud had obtained

the fruits of their scheme. They had obtained the use of

Allstate’s funds under the false pretense that a car pur-

chase was being financed. Allstate’s clear purpose in send-

ing a re-payment coupon book was to set up the procedure

for repayment of the loan. This mailing had no relation

to whether Allstate would discover the actual circumstances

under which the money had been obtained and attempt im-

mediately to recover its money. We hold that the relation

between the mailing of the coupon book by Allstate and

the fraud is too attenuated to support the conviction for

mail fraud. See United States v. Tarnopol, supra, 561

F. 2d at 472-73 (routine business mailing too remote from

fraud ); United States v. Britzman, 547 F. 2d 380 (7th Cir.

1977).

Court of Appeals Opinion Al7

Count 9. The scheme charged in Count 9 involved

the mailing of a request for wholesale financing on April

10, 1975 to Ford Motor Credit Company. The count

charged that prior to the mailing, defendants had con-

cocted a scheme to obtain new and used car inventory

under Ford’s “floor plan” financing, to sell the cars for

cash, and to abscond with the cash under the guise of a

robbery. The sales and “theft” occurred on April 16.

Ford was alleged to be the victim of the scheme to

defraud.

Appellants argue that the evidence shows that the

scheme, if it ever existed, was not invented until after the

April 10 mailing. If that were the case, they correctly

conclude that the mail fraud conviction must be reversed.

United States v. Tarnopol, supra, 561 F. 2d at 472; United

States v. Buckner, 108 F. 2d 921, 925-26 (2d Cir. 1940),

cert. denied, 309 U. S. 669 (1941). The jury was explicitly

charged that they had to find that the scheme was de-

veloped prior to the April 10 mailing before they could

return a guilty verdict on Count 9. The evidence in the

case showed that defendants were informed on April 2

that Ford would terminate its financing at the end of the

month. On April 8 a car was sold to a customer for cash

which was paid on April 16, the day of the other cash sales

and of the “theft.” Further, three of the cars sold on April

16 were financed through the April 10 mailing. We find

that there is substantial evidence from which the jury

could have concluded that the defendants had developed

their scheme before they mailed the April 10 request for

financing.

Next appellants contend that our decision in Tarnopol

requires reversal of their convictions under Count 9. They

point to the broad language in the opinion dealing with

Al8 Court of Appeals Opinion

“routine business mailings.”'* Brown and Greenblatt

argue that the April 10 request for financing was an inno-

cent, routine business procedure of Chestnut Hill and thus

cannot support the mail fraud conviction.

We do not believe that Tarnopol created a per se ex-

ception for any mailing which can be regarded as a “rou-

tine business mailing.” The case merely applied the al-

ready established notion that mailings which are too

remote from a fraudulent scheme will not support a mail

fraud charge. See United States v. Britzman, supra;

United States v. Staszcuk, 502 F. 2d 875, 881 (7th Cir.

1974), modified on other grounds, 517 F. 2 53 (7th Cir. )

(en banc), cert. denied, 423 U. S. 837 (1975).

In Tarnopol the defendants were charged with a

scheme to defraud recording artists, writers, publishers

and others. Defendants operated two companies which

produced, marketed and sold phonograph records. The

scheme consisted of creating a fund from which bribes

were paid to radio station personnel so that they would

favor defendants’ products. The government alleged that

defendants used packing slips, mailed from the manu-

facturer of the records, to further the fraudulent scheme.

e717}, United States v. Tarnopol, 561 F. 2d 466, 472 (3d Cir.

We do not believe that there is a valid distinction to be

drawn between those routine mailings which are required by

law and those routine mailings, themselves intrinsically inno-

cent, which are regularly employed to carry out a necessary

or convenient procedure of a legitimate business enterprise.

In either case the mailings themselves are not sufficiently

closely related to the fraudulent scheme to support a mail

fraud a even though securing the funds received

through some of them is the object of the scheme to defraud,

as was true [Parr v, United States, 363 U. S. 370 (1960), and

United States v. Beall, 126 F. Supp. 363 (N. D. Cal. 1954) ],

See United States v. Brickey, 296 I’. Supp. 742, 748-49 (E. D.

Ark. 1969).

Court of Appeals Opinion Al9

In holding that the mailings charged would not sup-

port a mail fraud conviction, the court did not find the fact

that the packing slips were routine business mai!ings to be

dispositive. Instead, it ruled that the fraudulent scheme

had not commenced with respect to each packing slip until

the slip had already been received, and therefore that the

mailing was too remote from the fraud. Although the

packing slips were used to keep track of sales, including

the sales used to create the illegal fund, the court ruled

that this use of the slips was for a legitimate business pur-

pose unrelated to the fraud. Lastly, it was observed that

the mailing of the slips tended to threaten the success of

the fraud, rather than futher it. 561 F. 2d at 473.

Thus, Tarnopol determined on the particular facts

presented that the purpose of the mailings was not closely

connected to the fraudulent scheme. The case did not

hold that a “routine business mailing” which is closely

bound with the scheme cannot support a mail fraud

charge. Similarly, the cases relied upon by Senior Judge

Maris did not create a per se defense for business mailings,

but looked to whether a mailing was too remote from the

fraud. See, United States v. Brickey, 296 F. Supp. 742

(E. D. Ark. 1969) affd 426 F. 2d 680 (8th Cir.), cert.

denied, 400 U. S. 828 (1970); United States v. Beall, 126

F. Supp. 363 (N. D. Cal. 1954).

This interpretation of Tarnopol is further supported

by the several cases which have upheld mail fraud convic-

tions on the basis of a “routine” mailing which was found

to be closely connected with a fraudulent scheme. For

example, in United States v. Adamo, supra, this court held

that mailings between merchants and credit card com-

panies by which the merchant received payment for credit

card charges supported mail fraud counts where the mer-

chants were involved in a scheme for the use of stolen

cards. “Integral to [the merchants’] participation and thus

A20 Court of Appeals Opinion

to the execution of the fraudulent scheme as charged was

the continuation of the routine mailings.” 543 F. 2d at

35. In Pereira v. United States, 347 U. S. 1 (1954), the

Supreme Court affirmed a mail fraud conviction supported

by mailings sent by banks to collect payment under a

check. In United States v. Maze, supra, the Court ex-

plained that the mailings in Pereira “played a significant

part in enabling the defendant . . . to acquire dominion

over the $35,000, with which he ultimately absconded.”

414 U. S. at 401 (footnote omitted). Similarly, inter-bank

mailings were held sufficiently related to a “check-kiting”

scheme to constitute mail fraud in United States v. Foshee,

569 F. 2d 401 (5th Cir. 1978). Cf. United States v.

Marando, supra, (stock broker confirmations held suff-

cient).

We do not believe that under these decisions the mere

classification of a letter as a “routine business mailing” is

a defense to mail fraud. On one hand, evidence may show

that a mailing was for the purpose of fulfilling a business

or legal procedure unrelated to the fraud and that it was

not closely connected with the fraud. In such a case, the

mailing is too remote to convert a state law fraud into

federal mail fraud, even though the mailing has the inci-

dental effect of assisting the scheme. On the other hand, if

the mailing is a part of executing the fraud, or is closely

related to the scheme, a mail fraud charge will lie even

though the mailing was also related to a business purpose.

The relation of the mailing to the fraud is a question of

fact.

Turning to Count 9, we hold that there was sufficient

13. The jury was generally instructed that to convict defend-

ants of mail fraud, it must find that defendants perpetrated a

scheme in connection with the use of the mails and that they

caused the use of the mails in the execution of the scheme, Spe-

Court of Appeals Opinion A21

have found beyond a reasonable doubt that the April 10

request for financing was closely connected with the fraud

so as to constitute mail fraud. [n early April the dealership

was in financial trouble and was informed that Ford Credit

would no longer finance inventory after the end of the

month. Taking the interpretation of the evidence most

favorable to the government, the defendants’ scheme was

developed at least as of April 8, when a car was sold for

cash paid on the day of the robbery. Three of the cars fi-

nanced through the April 10 mailing were sold on the day

of the “robbery.” The jury could have concluded that by

the time of the April 10 financing request, defendants had

ceased to operate Chestnut Hill as a legitimate dealership

and were continuing the business in order to bilk Ford.

Under that factual conclusion, the April 10 mailing could

not even be characterized under Tarnopol as a routine mail-

ing of a legitimate business. Even assuming that Chestnut

Hill continued as a legitimate business on April 10, the jury

could have concluded that the request for financing, al-

though part of a business procedure, was closely connected

with the perpetuation of the fraudulent scheme rather than

merely incidental to it. Under either assumption, the jury

could find that the mailings were “for the purpose of exe-

cuting” the fraud. Accordingly, the defendants’ conviction

under Count 9 should be affirmed.

13. (Cont'd. )

cifically addressing Count 9, the court pointed out defendants’ con-

tention that the April 10 request for financing was merely a normal

business occurrence, rather than a part of the scheme intended to

defraud Ford. While Tarnopol, which was decided after the trial

in this case, might suggest a more specific instruction regardin

business mailings, no objection was raised to this part of the tria

judge’s charge and we do not find plain error. See F. R. Crim. P.

30; Government of the Virgin Islands v. Navarro, 513 F. 2d 11, 16

(3d Cir.), cert. denied, 422 U. S. 1045 (1975).

A22 Court of Appeals Opinion

III

Defendants challenge their conviction of extortion and

conspiracy under Counts 1 and 2 by arguing that the gov-

ernment’s main witness, Wilmerton, lacked believability.

Credibility findings are left to the jury as trier of fact and

will not be disturbed on appeal. United States v. Greenlee,

517 F. 2d 899, 903 (3d Cir.), cert. denied, 423 U. S. 985

(1975). The trial judge gave the jury a detailed charge

on evaluating the credibility of witnesses, including Wil-

merton. Furthermore, Wilmerton’s testimony in part was

corroborated by the testimony of David Martin.

Next, Brown and Greenblatt contend that if we find

that their motion for acquittal under the mail fraud counts

should have been granted, we should remand for a new

trial on Counts 1 and 2. They reason that the evidence of

mail fraud which went to the jury would have a prejudicial

impact on the deliberations on the extortion counts, While

in some cases such a disposition might be warranted, see,

e.g., United States v. De Cavalcante, 440 F, 2d 1264,

1275-76 (3d Cir. 1971), we are not presented with such a

case here. The evidence of extortion and of mail fraud was

sufficiently distinct to support the jury verdict on Counts 1

and 2 free from any taint by the mail fraud evidence.

Therefore, our disposition of Counts 5 or 6 does not re-

quire reversal of the extortion counts. See United States v,

Dansker, 537 F., 2d 40, 52 (3d Cir, 1976), cert. denied, 429

U.S. 1038 (1977).

IV

Defendants contend that if any of the mail fraud

counts are reversed, we are required as a matter of law to

reverse the racketeering Counts 13 and 14 as well, under

United States v. Dansker, supra. In Dansker, defendants

were charged in one count with a conspiracy having two

Court of Appeals Opinion A23

objectives. The jury was instructed that it could find de-

fendants guilty on that count if they found a conspiracy to

achieve either of the purposes. On appeal, this court con-

cluded that the evidence was insufficient to support a

conviction for one of the two objectives. Since it was im-

possible to determine upon which objective the jury had

relied in returning a guilty verdict under the conspiracy

count, that verdict was reversed. 537 F. 2d at 51-52,

Accord, United States v. Tarnopol, supra, 561 F. 2d at

474-75.

Count 13 of the indictment in this case charged de-

fendants with operating their business through a pattern of

racketeering activity, 18 U. S. C. § 1962(b). Count 14

charged a conspiracy to commit that offense. The statute

defines “pattern of racketeering activity” as requiring “at

least two acts of racketeering activity.” The district

court properly charged the jury that a finding of guilt

under any of the substantive counts—1, 5, 6, or 9—could

support a conviction under Counts 13 and 14, See 18

U. S. C. § 1961(1)(B). Defendants argue that it is im-

possible to determine upon which two counts the jury

relied in returning a guilty verdict under Counts 13 and 14,

They conclude that if we reverse any of the other sub-

stantive counts, reasoning analogous to that in Dansker

requires reversal of the racketeering counts. We agree

with this position, and note that the government has con-

ceded in its brief that the reasoning of Dansker must apply

to the charge under section 1962, The jury in this case

might have relied on either Counts 5 or 6, for which we

have found insufficient evidence in reaching its verdict

14, 18 U.S. C. § 1961(5) (1976):

“pattern of racketeering activity” requires at least two

acts of racketeering activity, one of which occurred after the

effective date of this chapter and the last of which occurred

within ten years (excluding any period of imprisonment) after

the commission of a prior act of racketeering activity... .

A24 Court of Appeals Opinion

of guilty under Counts 13 and 14. Accordingly, we must

reverse the convictions of both defendants under these

two counts,”®

The judgments of conviction of both defendants

under Counts 5, 6, 13 and 14 will be reversed. The de-

fendants’ convictions under Counts 1, 2, and 9 will be

affirmed, The case will be remanded to the district court

for further proceedings consistent with this opinion.

——-

15. Appellant Brown has also raised two issues with respect to

the admission of evidence of past criminal acts. He contends that

the district court should have granted a mistrial because a govern-

ment witness testified that Brown was on federal probation for the

commission of an unrelated offense. The trial court gave an appro-

priate instruction at the time the evidence was admitted. We Bind

that the error, if any, was harmless,

Brown also contends that the prosecutor impermissibly cross-

examined him regarding the details of a past felony when he took

the stand in his own defense. While cross-examination should be

limited to the essential facts of a prior crime, no contemporaneous

objection was raised to the portion of the examination which

Brown challenges on + T See United States v. Mitchell, 427

F, 2d 644, 647 (3d Cir. 1970), We find no plain error,

Court of Appeals Judgment A25

JUDGMENT OF THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 77-2082/77-2083

UNITED STATES OF AMERICA

v.

BROWN, FRANCIS HARRY

aka Harry Brown,

Appellant in No. 77-2082

(D. C. Crim. No. 77-100-1)

UNITED STATES OF AMERICA

v

GREENBLATT, MARVIN,

Appellant in No. 77-2083

(D. C. Crim. No. 77-100-2 )

(D. C. Crim. Nos. 77-100-1 and 2)

On APPEAL FROM THE UNITED STATES District Court

FOR THE EASTERN District OF PENNSYLVANIA

Present: RosENN, HuNTER and HIGGINBOTHAM,

Circuit Judges

A26 Court of Appeals Judgment

JUDGMENT,

This cause came on to be heard on the record from

the United States District Court for the Eastern District of

Pennsylvania and was argued by counsel on June 8, 1978.

On consideration whereof, it is now here ordered and

adjudged by this Court that the judgments of the said

District Court, filed August 2, 1977, be, and the same are

hereby affirmed with respect to the convictions of de-

fendants under Counts 1, 2, and 9; reversed with respect

to the convictions of defendants under Counts 5, 6, 13 and

14, and the cause is remanded to the district court for

further proceedings consistent with the opinion of this

Court.

August 14, 1978

Court of Appeals Order Denying Rehearing A27

ORDER OF THE

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 77-2082/3

UNITED STATES OF AMERICA,

Appellee,

v.

BROWN, FRANCIS HARRY,

aka HARRY BROWN

GREENBLATT, MARVIN,

Appellants

ORDER SUR PETITION FOR REHEARING.

Present: RosENN, HUNTER and HIGGINBOTHAM,

Circuit Judges

The petition for rehearing filed by Appellants in the

above entitled case having been submitted to the judges

who participated in the decision of this court, and no judge

who concurred in the decision having asked for rehearing,

the petition for rehearing is denied.

By THE COURT,

/s/ James Hunter, III

James Hunter, III,

Circuit Judge.

Dated: October 13, 1978