Petition — Mandel v. United States
Supreme Court brief1980
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a ws Ao wns a
Supreme Court, i 5
FILED
——— a
DEC 32 1979
SEICHABL ROGAK, JR. CLERR
IN THE
Supreme Court of the United States
OCTOBER TERM, 1979
No. 79-1029
MARVIN MANDEL, W. DALE HESS, WILLIAM A. RODGERS
AND IRVIN KOVENS,
Petitioners,
Vv.
UNITED STATES OF AMERICA,
Respondent.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ARNOLD M. WEINER,
RICHARD V. FALCON,
36 South Charles Street,
Baltimore, Md. 21201,
Counsel for Marvin Mandel,
Univ. of North Carolina,
Chapel Hill, N. C. 27514,
Of Counsel for Petitioners.
M. ALBERT FIGINSKI,
Counsel for Marvin Mandel, Petitioner
WiLuiaM G. HUNDLEY,
Counsel for W. Dale Hess, Petitioner
MICHAEL E. Marr,
Counsel for William A. Rodgers,
Petitioner
NORMAN P. RAMSEY,
WILLIAM F. GATELY,
Counsel for Irvin Kovens, Petitioner
The Daily Record Co., Baltimore, Md. 21202 Se
TABLE OF CONTENTS
Ovaontins BELG 6 Se
RI ids Gia pedo shcscChaie dene ckonstecxsiedaranschosss
QUESTIONS PRESENTED o.5.6....ccéccicscoscissssccscésneoscessooes
CONSTITUTIONAL, STATUTORY AND RULE PRo-
WINNT TIVE IE ohio eins cesacscssnssisrcteiimiinsoes
STATEMENT OF THE CASE ...........cccocccescsccessoccossscnses
REASONS FOR GRANTING WRIT:
I.
Ill.
IV.
The decision below raises substantial
and recurring questions worthy of
review by this Court, and that review
ought not be hindered or destroyed by
the Fourth Circuit’s unreasoned action
in “affirming the convictions by an
equally divided Court.” ..........:.csccsccceceeeees
The trial court’s refusal to instruct as to
the Government’s alternative theories of
the alleged mail fraud has acquired
extraordinary significance as the issue
that caused the en banc court to divide
WUIRS, | hc ek sacecmin eipend Seetsivestnnce
The federal mail fraud statute has been
misapplied and overextended in this
case, thereby creating an unfair trial as ©
well as conflicts with other Circuits ....
Serious questions are present as to
whether Congress intended to apply the
“racketeering” provisions and sanctions.
of the Organized Crime Control Act to
the circumstances and the individuals
AO: TN ia ase ct wie ncdnarmcdsccces
The revival of “forfeiture of estate,” as
the mandatory punishment for violation
18
of Title IX of the Organized Crime _
‘:
Control Act, raises profound and long-
forgotten constitutional questions .........
VI. The decision below conflicts with the
decisions of other courts of appeals as to
the proper interpretation of 803(24) of
the Federal Rules of Evidence ...............
VII. The decision below conflicts with deci-
sions of other Circuits as to the propr-
iety of giving the Allen charge to a
CIOS FE ooo iis. vasnspnesnasancstncssnentnynns
COMOEAIBION wosscccecedsessssscsocccesnccicas MS Sia OR SRS SI
Appendix:
Judgment, dated November 1, 1979 ..............
Dissenting Opinions, dated November 1,
MOI iiss os canta nsacaids lavsevncsssmiscgeaniebocs tebitbasecoisuecs
Judgment, dated July 20, 1979 ............:csccee0
Order, dated July 20, 1979 ...........cccccccescssseeees
Dissenting Opinion, dated July 20, 1979 .....
Judgment, dated January 11, 1979 ...............
Panel Opinion, dated January 11, 1979 .......
Dissenting Opinion, dated January 11, 1979
TABLE OF AUTHORITIES
Cases
Allen v. United States, 164 U.S. 492 (1896) .......
Apel v. United States, 247 F.2d 277 (8th Cir.
NERS TAR” SERRE eon aT Te HOS
Barr v. MUU TAR, dee., 66 FRD. 109 (S. DN.Y.
NSE RIBS, © PEER TNESPRO am fe NOD SC
Blachly v. United State, 980 F.2a 665 (th Ci
! pA Dati SREB ps soe Re RR MR NC aii
Blane v. United States, 389 U.S. 835 (1967) Soa
Blockburger v. United States, 284 U.S. 299 (1932)
PAGE
37
SNR
“a PAGE
Calero-Toledo v. Pearson Yacht Leasing Co., 416
UR BR A i cscs acectibnins 34, 35
Cole v. Arkansas, 333 U.S. 196 (1948) ................. 26
Dutton v. Evan, 400 U.S. 74 (1970) ...............:0000. 40
Holy Trinity Church v. United States, 143 U.S.
AD CIRO i ee ee ensecgenet 31
Iannelli v. United States, 420 U.S. 770 (1975) .. 31,33
McKeehan v. United States, 438 F.2d 739 (6th
ORE, BT Bes isesnsgs Scchincachias gesdinncn ooeondaicnesddhddicesesoind 36
Neil v. Biggers, 409 U.S. 188 (1972) ................000 18
Parr v. United States, 363 U.S. 370 (1960) ........ 28
People v. Gainer, 139 Cal. Reptr. 861, 566 P.2d
DIE CEG Oss ilatecectncashasceicaihotoonos ila vaceiavepcbiusbuainics
Perez v. United States, 297 F.2d 12 (5th Cir. 1961)
Platt v. United States, 163 F.2d 165 (10th Cir.
DRT Sccssicnciicks 5 Sass ecicsisdac thes oaign tina comands
Simpson v. United States, 435 U.S. 6 (1978) .....
Stirone v. United States, 361 U.S. 212 (1960) ....
Tatum v. United States, 88 U.S. App. D.C. 386,
RED Fe UD CE acess acccinesenstdeatredessnvecicess
Trop v. Dulles, 356 U.S. 86 (1958) «0.0.0...
United States v. Bailey, 581 F.2d 341.(8rd Cir.
DEPTS) ccsnasncsasvic ehpsbespoccthorsnsbiorviosasincenel téibeupsanias tueden
CIO ee ee acids
United States v. Blair, 456 F.2d 514 (3d Cir. 1972)
United States v. Brown, 411 F.2d 930 (7th Cir.
ROY aiiicss. cscccecbnetta teas cacaddcmtpipasenecsasbotcbes scene
SOT siscsitesiapierevoenisostcspdiiienshcsaiesesinpiosesiipeboessneenssong
ROTOR sas staiisesnovaptedds spaioscashcbsvonibastenesoinbxbevensipbossenans
United States v. Caldwell, 544 F.2d 691 (4th Cir.
BUFO) cacincedcnicesaotcinabhiads pated cadss conuebcgdbadbbeescseivescoscnis
iv
United States v. Culbert, 435 U.S. 371 (1978) .. Pee
United States v. Dana, 457 ‘F.2d 205 (7th Cir,
PUFF kik ciagrcncnensneethssteian scien bla bacaciagsbeting viens 22
United States v. Davis, 571 F.2d 1354 (5th Cir
STE ds iiinbckscatin sitttaabccvitisi nes iSiteninttts sada saibigunaciossions 38
United States v. Dixon, 536 F.2d 1388 (2d Cir
RTD Cinsieiniisciccrnnssccicsicbsasihstszedsannenbaphivispeapesvalsisees 25
United States v. Fioravanti, 412 F.2d 407 (8rd
COP, TROD: <tistebintiadl in ccibnbisinncennnnnasa 41
United States 7. Gonzolez, 559 F.2d 1271 (5th Cir.
TORT sctehliiin nn disittes denis cintteaminidisiveies. 39
United States v. Isaacs, 493 F.2d 1124 (7th Cir
RVG sisisciticinitiveitinadinccisaicsinazanctiatbiswcinGitiiesen 25
United States v. Keane, 522 F.2d 534 (7th Cir
LTE Siisasssikssstctisbissitarsalcdviasstastitinstiaesitdiciardecciion 25
United States v. Leach, 427 F.2d 1107 (1st Cir
RUUD ehitiitissesiastidissiicnninceiniciaapteidiianiinmnnieaayee 22
United States v. Lyon, 567 F.2d 777 (8th Cir.
ROTTED inialisvtsikiksccmanins Sussissihiagiiccenessdekiapiainsiiurastis 38
United States v. Mandel, 408 F. Supp. 679 (D.
Md. 1976) ......... jcdbisntuntansimbicnnsaaiilaes paasdaserscubesees 34
United States v. Mandel, 415 Br Supp. 997 (D.
BN: SII ibssicedieiiccacncs ssid aidbusgeadcosesvialevseies 21, 25 -
United States v. Mathis, 559 F.2d 294 (5th Cir.
STF) scsksiscguntcasermnrssbcdsrissssbesuspeascansinee siviesosassibncsosse 39
United States v. Noah, 475 F.2d 688 (9th Cir.
BUT IEE Sachisi cohiaieekvis sins’ sisssinnies comdebeabianncaWaanadetiias
22
United States v. Oates, 560 F.2d 45 5 (2d Cir. 1977) 38
O’Connor, 237 F.2d 466 (2d Cir. 1956) ................ 23
United States v. One, 1974 Cadillac Eldorado,
407 F. Supp. 1115 (S.D.N.Y. 1975) ............... 36
United States v. Rabbit, 583 F.2d 1014 (8th Cir.
DOGB) ssserssssiivsdacessscsonipscksicsonscasescucvbensbbsesevecosoesbicibs 27
Vv
PAGE
United States v. Rubin, 559 F.2d 975 (5th Cir. ~
REE Sic vishivsiicditbins: crdéasignnmibeiadiaotiendeoiinnes 34
United States v. Ruffin, 575 F.2d 346 (2d Cir
POTD iiss sesescaahectaiheedcatiasauisteceshbldgcehavsdiaebentoassioed 38, 39
United States v. Sutton, 605 F.2d 260 (6th Cir
BPR io ics sai cigeas houdca cua Sacdoede faboeneCbbdinbnvioiensans 31
United States v. Swallow, 511 F.2d 415 (10th Cir
TNFR oi cachecicsndathcditickasds iscsi «vsctodenuaedssocsaghnasinnsasbts 22
United States v. Thomas, 449 F.2d 1177 (D.C.
ARMS SUITED: iasicissatbncacaccsecacesccudacsonebbaebnisetasiounssds 41
United Steelworkers of America v. Weber, 99 S.
oN 5 BEA Eg) Ree anette cp pitas oe Ore ales 31
Wallack v. VanRiswick, 92 U.S. 202 (1876) ....... 35
Constitutional Provisions,
Statutes and Rules
Constitution of the United States:
PPO TE, BOC OR Be viciccccccescsencasesececevocusane 3, 4, 35, 36
Bates A INOTINONG Hono ceccovcsecekssececsesescostsbonces 4,5, 36
RNIN: PASIAN oo cis ss. acdccccsesssarensrosencdacesiocs 39
Eighth’ Amendment ................cccccssssossscsscsssesceees 4,5, 36
18 US.C. ,
NS ie hia vec sdiccadti casein. 3, 5, 7, 16, 24, 25, 28, 29
TGS OE BO a iscciscciccsscncasnotmus 3, 5, 6, 7, 8, 29, 30, 31,
32, 33, 34, 35, 36, 37
SE TUNER. picscsncoialpasinpibteptakbeades thik; xoaucacatedbkacoscetvunbtzobecban 35
Sy | RRND BELO Nee. ASSES OD ho ea OAD CG AEC MIA RE 35
BES Te RD aaskic i sens cting cobsccdcsccadiciseemasiarees 2
Maryland Annotated Code, cum. supp. to Vol. 9A
LR PAP: Bes Ne sack sees bse cneclaonovisonans 29
Pact OE Pare SO Taio a ives essen ieee 34, 35, 36
vi
: PAGE
Texts and Others
American Bar Association, Project on Minimum
Standards for Criminal Justice: Trial by
Jury (Tentative Draft, May 1968) ................. 41
H. Rep. No. 911549, 91st Cong., 2d Sess. ........... 34
Holdsworth, History of English Law 68-71 (3d
NN A TR Si ccasicpiela Sitieciassiieadest aint ca cabncenpvowicaapel 35
Judicial Conference of the United States, Supple-
ment to Report of the Committee on the
Operatien of the Jury System (1969) ........... 4]
Note, The Allen Charge: Recurring Problems and
Recent Developments, 47 N.Y.U.L. Rev. 296
li sae ela onnsatincppnpestianvilanes 41
1 Pollack & Maitland, History of English Law
Se SORE I orice hadnt inteccndnncenradentoronns 35
Report of Governor’s Commission on Racing
Reform (December 11}, 1979) .........seccsserseeeees 12
Report of the [Maryland] Committee to Submit a
Code of Ethics (1969) ..........c..-ccrecconcerrcrsntocsscees 14
Ruff, Federal Prosecution of Local Convention,
PN, Rick. BOW CRUE ED oii assdineimaeinnnonntonnnenes 28
S. Rep. No. 91-617, 9ist Cong. ist aa TENS ii
5 Thompson, Real Property § 2514 (1957) ........... 35
4 Weinstein Evidence (1978 Supp.):
| SERED RROD ay aig are 4, 6, 7, 37, 38, 39, 40
MIE oicisnidteets Anse duthachct hemnibbioseninniienndiaace 32:
In THE
Supreme Court of the United States
OCTOBER TERM, 1979
No.
MARVIN MANDEL, W. DALE HESS, WILLIAM A. RODGERS
AND IRVIN KOVENS, :
Petitioners,
Vv.
UNITED STATES OF AMERICA,
Respondent.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
The Petitioners, Marvin Mandel, W. Dale Hess,
William A. Rodgers and Irvin Kovens respectfully pray
that a Writ of Certiorari issue to review the judgment of
the United States Court of Appeals for the Fourth
Circuit entered in this proceeding on July 20, 1979.
In light of the petition for writ of mandamus filed
with the Court this date by the Petitioners herein, it
would seem appropriate to defer action on the instant
certiorari petition pending disposition by this Court of |
the mandamus question. If mandamus issues, there
would plainly be no need for the Court to reach the
important legal questions raised herein.
OPINIONS BELOW
On January 11, 1979, after consideration by a three-
.judge panel, the Fourth Circuit issued an opinion and
judgment vacating the judgments of conviction herein
and remanding for a new trial. The majority and
dissenting opinions are reported at 591.F.2d 1347, and
2
they are reproduced at pages 17a through 88a of the
appendix hereto. On July 20, 1979, after rehearing en
banc, an equal division of the Fourth Circuit entered a
per curiam order stating that the judgments of
conviction “are affirmed by an equally divided court.”
The per curiam order, together with a dissenting
opinion, are reported at 602 F.2d 653, and they appear
at pages 7a through 15a of the appendix hereto. On
November 1, 1979, upon consideration of the Petitioners’
petition for a further rehearing en banc, an enlarged
Fourth Circuit, again by an equally divided vote,
ordered that the petition be denied. This order and two
dissenting opinions have not yet been reported, but they
appear at pages la through 5a of the appendix hereto.
JURISDICTION
The judgment of the Court of Appeals for the Fourth
Circuit vacating the convictions was entered on
January 11, 1979. A timely petition for rehearing en
banc was granted on April 16, 1979, and on July 20,
1979 the Court of Appeals entered an order affirming
the convictions “by an equally divided court.” A timely
petition for further rehearing en banc was denied on
November 1, 1979. On November 20, 1979, the Chief
Justice extended the time for filing this petition for
certiorari to and including December 31, 1979. The
jurisdiction of this Court is invoked under 28 U.S.C.
§ 1254(1).
QUESTIONS PRESENTED*
1. Whether, in a federal mail fraud prosecution based
on alternative theories of bribery and non-disclosure,
* In the event that this Court deems it appropriate to treat
the gyn hyp petition for writ of mandamus as a
tion for writ of certiorari, the three Questions Presented
the petition for writ of mandamus (page 5 thereof) are
in ted herein by reference as additional Questions Pre-
mani on this petition for writ of certiore,ri.
3
the defendants are entitled to specific instructions that
the jury must find, beyond a reasonable doubt, that
either bribery existed or that the defendants had actual
knowledge of the undisclosed facts before convicting
the defendants of the alleged mail fraud.
2. Whether the federal mail fraud statute, 18 U.S.C.
§ 1341, as construed or applied in this case, has been
extended impermissibly to allow a jury to find the
defendants guilty of participating in an alleged scheme
to deprive the citizens, the officials and the General
Assembly of the State of Maryland of the best services
of the Governor, where (a) the alleged scheme was
permitted to be based on non-disclosures of the business
relationships between the Governor and his co-
defendants, (b) the Government was not required to
establish that the Governor was bribed or that he
otherwise benefited from his friends’ business with the
State, and (c) the alleged non-disclosure scheme
involved no violation of any duty imposed on the
Governor or his co-defendants by pertinent State law or
regulation.
3. Whether Congress intended to apply the anti-
racketeering provisions of Title IX of the Organized
Crime Control Act of 1970 to an individual who
commits violations of the mail fraud statute but who is
in no way connected with organized crime operations in
the United States.
4. Whether Congress intended to impose multiple
punishments on businessmen who have been found to
have engaged in a series of mailings in furtherance of a
single scheme to defraud in violation of both the mail
fraud and the anti-racketeering provisions of Title IX of
the Organized Crime Control Act of 1970.
5. Whether the criminal forfeiture provisions of § 1963
of Title IX of the Organized Crime Control Act uf 1970
violate (a) Article ITI, Section 3 of the Cons ‘itution, (b)
4
the Due Process Clause of the Fifth Amendment, or (c)
the cruel and unusual punishment provisions of the
Eighth Amendment.
6. Whether, in a mail fraud prosecution of - Governor
of a State for having allegedly schemed to take official
positions with respect to pending legislation to benefit
his co-defendants, Rule 803(24) of the Federal Rules of
Evidence permits the Government to prove the alleged
scheme by use of hearsay testimony elicted from State
senators as to declarations of third persons where: (a)
the hearsay was admittedly based on rumor and gossip
arising out of the chaotic first day of a legislative
session; (b) the declarants were not identified by those
testifying; and (c) the Government did not give the
defendants the notice required by Rule 803(24) of the
declarants’ names and addresses.
7. Where a federal court jury is deadlocked after a
week of deliberations upon a retrial of mail fraud and
racketeering charges, may the trial judge direct that the
jurors continue their deliberations and reconsider their
views in light of the fact that “this case is an important
one and ite presentation to you has involved expense
and expenditure of time by both the Government and
the Defendants”?
CONSTITUTIONAL, STATUTORY AND RULE
PROVISIONS INVOLVED
Constitution of the United States, Article Ill, Section 3:
The shall have Power to declare the
Sak dk wake Cheatin a tens
wor or
a ee ee
attainted.
5
Constitution of the United States, Amendment V:
No person shall. . . be deprived of life, liberty, or
property, without due process of law; .. .
Constitution of the United States, Amendment VIII:
Excessive bail shall not be uired, nor exces-
sive fines imposed, nor cruel and unusual punish-
ments inflicted.
Federal mail fraud statute, 18 U.S.C. § 1341:
Whoever, having devised or intending to devise
any scheme or artifice to defraud, ... for the
purpose of executing such scheme or artifice or
attempting so to do, places in any post office or
authori depository for mail matter, any matter
or i oe to be sent or delivered the
Post ce Department, ... shall be fined not
more than $1,000 or imprisoned not more than five
years, or both.
Title IX, Organized Crime Control Act of 1970,
Racketeer Influenced and Corrupt Organizations,
18 U.S.C. §§ 1961, et seq.
§ 1961. Definitions.
As used in this chapter—
(1) “Racketeering activity” means ... (B)
—_
(5) “pattern of racketeering activity” re-
quires at least two acts of racketeering
activity, one of which occurred after the
effective date of this chapter and the last of
6
which occurred within ten years (excluding
any period of imprisonment) after the commis-
sion of a prior act of racketeering activity;
* * * x * *
§ 1962. Prohibited activities.
(b) It shall be unlawful for any person
through 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
ed in, or the activities which affect,
interstate or foreign commerce.
(c) It shall be unlawful for any person
employed by or associated with any enterprise
engaged in, or the activities of which affect,
interstate or foreign commerce, to conduct or
participate, directly or indirectly, in the con-
duct of sien eueearinn's affairs through ’
pattern of racketeering activity or collection o
unlawful debt.
* * * * * *
§ 1963. Criminal penalties,
_ (a) Whoever violates any provision of sec-
tion 1962 of this chapter shall be fined not
more than $25,000 or imprisoned not more
than twenty years, or both, ad shall forfeit to
the United States (1) any interest he has
acquired or maintained in violation: of section
1962, and (2) any interest in, security of, claim
against, or property or contractual right of any
kind affording a source of Infuenee over,
enterprise which he has established, operated,
controlled, conducted, or participated in the
conduct of, in violation of section 1962.
Federal Rules of Evidence, Rule 803 (24):
Rule 802. Hearsay Exceptions; Availabili of
Declarant Immaterial. is
The. following are not excluded by the hearsay rule,
even though the declarant is available as a witness:
* * * * * *
7
(24) Other exceptions. A statement not specifi-
cally covered by any of the foregoing exceptions
but having equivalent circumstantial guarantees of
trustworthiness, if the court determines that (A) the
statement is offered as evidence of a material fact;
(B) the statement is more probative on the point for
which it is offered than any other evidence which
the proponent can procure through reasonable
efforts; and (C) the general purposes of these rules
and the interests of justice will best be served by
admission of the statement into evidence. However,
a statement may not be admitted under this
exception unless the proponent of it makes known
to the adverse party sufficiently in advance of the
trial or hearing to provide the adverse party with a
fair opportunity to prepare to meet it, his intention
* to offer the statement and the particulars of it,
including the name and address of the declarant.
STATEMENT OF THE CASE
Petitioner Marvin Mandel was Governor of Maryland
from 1969 to 1979. Petitioners W. Dale Hess, Harry W.
Rodgers, William A. Rodgers and Irvin Kovens are four
Maryland businessmen. Petitioner Ernest N. Cory is a
Maryland attorney.
Petitioners were convicted in August, 1977, after a
jury trial, of mail fraud and racketeering charges under
18 U.S.C. § 1341 and 1961 et seq. respectively.1 Mandel
was sentenced to a four-year prison term; Hess, Kovens
and Harry Rodgers each received a four-year sentence
and a $40,000 fine; William Rodgers was sentenced to
twenty months and fined $40,000; and Cory received an
1 The six Petitioners were each convicted of 15 counts of
mail fraud and one count of racketeering. The mail fraud
counts all alleged a single scheme, and the separate counts
were founded on separate mailings allegedly in furtherance
of that scheme. One racketeering charge was dismissed
before trial; the jury acquitted the Petitioners of three mail
fraud counts; and the trial judge entered judgments of
acquittal as to two mail fraud counts and one racketeering
count (R. 397-402).
8
eighteen-month sentence. Additionally, pursuant to 18
U.S.C. § 1963(a), Hess, Kovens, the Rodgerses and Cory
were ordered to forfeit stock in Southern Maryland
Agricultural Association, Inc., the corporate owner of
Marlboro and Bowie racetracks, valued at more than
$1,000,000.
The “essence” of the mail fraud charges, as set forth
inthe indictment and as interpreted in the district court
prior to trial, was that the Petitioners had “devised a
theme to defraud the citizens and the State of
Maryland by bribing the Governor to assist legislation
[during the 1972 session of the Maryland legislature]
which would be financially beneficial to the owners of
Marlboro [racetrack], the identities of those owners
being deliberately concealed from the public, the
legislature and Racing Commission by all of the
defendants.” It was also charged that, as a part of the
scheme, the Governor had taken official actions
“without revealing to the public” his “own business
involvement” with some of the co-defendants, “includ-
ing those interests in [two real estate ventures] which
the Governor had allegedly “received from those
defendants as bribes” 415 F. Supp. 997, 1005 (D. Md.
1976) (R. 49-78, 275). The racketeering charges were
framed so that commission of any two of the alleged
acts of mail fraud would also establish the requisite
“pattern of racketeering activity” under the racketeer-
ing statute.”
As stated by Judges Widener and Russell in their
July 20th dissent (Appendix herein, p. 8 infra), the
prosecution of this “involved case” rested on “frag-
2 The acts alleged as the “pattern of racketeering activity”
were, alternately, the twenty alleged acts of mail fraud,
incorporated into the racketeering counts by reference, and
two acts of alleged bribery, the alleged briberies being the
same interests in the real estate ventures described in the
mail fraud counts (R. 79-86).
9
mented circumstances” with “many of the more
essential ones being no more than mere rumor and
legislative corridor gossip.” The “fragmented circum-
stances” concerned the sale of Marlboro racetrack in
December, 1971, certain legislative action during the
1972 session of the Maryland legislature and various
personal and business relationships between Mandel
and various of the other Petitioners. The same evidence
was offered in support of the mail fraud and racketeer-
ing counts.
The events began in February, 1971, prior to the sale
of Marlboro when another Maryland racetrack, Hagers-
town, contracted to transfer its racing days to Mar|boro
(Tr. 5702-03). The transfer of racing days required
legislative approval, and the legislature passed a bill
authorizing the transfer. On May 21, 1971, Governor
Mandel vetoed the bill because he was advised by his
Chief Legislative Officer that it was in unconstitutional
form (Tr. 5339-40, 7480-87; M. Ex. 38).
The Marlboro owners then attempted to sell thei:
stock. On December 31, 1979, the majority interest in
Marlboro was sold to a group consisting of Hess, the
Rodgerses and Irving T. Schwartz. The Government
contended that Schwartz, the purchaser of the largest
interest, was a nominee for Kovens, but Kovens and
Schwartz disputed the contention. Cory acted as
attorney for the purchasers in connection with the
acquisition (Tr. 4021-22, 9486-88, 9968-70).
Various steps were taken by the purchasers to keep
their identities confidential (Tr. 4321-24). These in-
cluded the designation of a third person, Eugene Casey,
as president of the racetrack; filings with the Racing
Commission in which Cory stated that he held the stock
“as attorney” for unnamed principals; and the naming
of nominees as shareholders of record (R. 890-96, 1721-
22: Tr. 6369-6475). A disputed issue of fact was whether
10
the identities of the new purchasers were kept from
Governor Mandel. The testimony of the witnesses for
both sides was that Governor Mandel, the same as all
other state officials, was not informed, but the prosecu-
tor contended that circumstantial evidence indicated
otherwise (Tr. 4456-58, 4520-25, 8302-05, 9495-98, 10004-
08). It was undisputed, however, that the Racing
Commission did not interest itself in the identities of
the beneficial owners of racetrack stock, and that, until
the passage of a strict disclosure statute in 1974, the use
of nominees for such stock was a common and accepted
practice in Maryland (R. 1342-50, 1616-17, 1858-64; Tr.
6200-10).
On January 12, 1972, when the legiglature convened
for its 1972 session, a number of Mandel’s vetoes,
including that of the bill for the transfer of the
Hagerstown days, were overridden.’ The direct evi-
dence, including the testimony of the legislators who
voted to override, was that Governor Mandel adhered to
his original position on the racing transfer veto and
that the override was contrary to his wishes.‘
3 Of nine vetoes of substance before the state Senate that
day, six were overridden (F. 1009-12, 1040, 1185; Tr. 4728-38,
4894-95, 5270, 5347, 5769, 5789-90). The Governor’s position
was defeated in each such instance by a resounding margin
(Tr. 4734-35).
4 Most of the legislators who testified at the trial, whether
for the Government or the defense, had voted repeatedly to
override the Governor’s vetoes on the g day of the 1972
session (Tr. 5268, 5341, 5690). Nine of the state Senators who
testified for the Government voted to override the veto of the
racing transfer bill, and seven who testified for the defense
voted similarly. Not one said that his vote to override was the
result of any effort by the Governor or his staff. All sixteen
explained that their votes were based entirely on the merits
of the bill, or on its local nature, or because of the atmosphere
of independence which surrounded the opening day of the
1972 session (R. 1029, 1173, 1241, 1254, 1260, 1378; Tr. 4772,
5265-72, 5342-47, 5630-36, 5691, 5793, 6340, 7354-55, 7696-97).
2 11
Against this substantial body of evidence, and as
support for the contrary contentioff that-Meadel must
have procured the racing transfer override, the prosecu-
tion was allowed to offer hearsay statements, arising
from casual conversations on the floor of the state
Senate, in which various state senators were said to ©
have speculated as to the Governor’s views on the
transfer bill. As the panel majority of the court of
appeals later observed, in most instances the state-
ments were attributed to “unidentified declarants;” the
“most damaging hearsay statements were repeated by.
long-time political enemies of the Governor;” the —
statements related to “general feelings or beliefs;” and
they “were made on and around the senate floor in the
heat of political battle, where rumor, opinion and gossip
abound” (Appendix hereto, pp. 50a-53a, infra). Finding
that the testimony did not qualify under any recognized
exception to the hearsay rule, the trial judge neverthe-
less admitted it under the residual exception of Rule
803(24), FRE, on the urging of the prosecution that the
hearsay was “central” and “important to the core of the
case.’’>
The second matter in which Governor Mandel was
claimed to have benefited his co-defendants was a
racing consolidation bill which was introduced later in
the 1972 session. This proposal failed, but had it been
enacted, all Maryland racing would have been consoli-
dated at the state’s most modern tracks, Laurel and
Pimlico (R. 1018; Tr. 4595-4603). The year before, during
the 1971 session, prior to the purchase of Marlboro, the
legislature with Mandel’s approval had enacted a
statute requiring the Racing Commission to propose
5 The trial judge, at first, declined to admit the hearsay,
remarking to the prosecutors that, “I am permitting you to
state conclusions about this matter, and why run the risk of
bringing hearsay, double hearsay evidence in a case of this
importance” (Tr. 4647). He later relented, admitting the
evidence “under whatever rule it is” (Tr. 6235).
12
consolidation during the next session (Tr. 4751, 5353,
7764-65, 8041-44). The 1972 consolidation bil), sponsored
by the Racing Commission, was the product of the
earlier enactment (Tr. 5353, 7596-76). Since 1960, as a
member of a study commission, and throughout his
tenure as governor, Mandel had consistently sponsored
and favored every consolidation proposal brought
before the legislature (Tr. 7405-15, 7906-08, 7951-53,
8276-80; M.Exs. 1, 5). Mandel supported the 1972
proposal the same as he had supported all similar
proposals for more than a decade.®
The two real estate ventures in which Mandel was
alleged to have received interests as bribes were Ray’s
Point, Inc. and Security Investment Company (R. 53-7).
There was no testimony that Mandel’s participation in
either venture was a bribe, and Kovens, allegedly the
purchaser of the largest interest in Marlboro, had
nothing to do with them. The Ray’s Point venture
involved a parcel of unimproved rural land. The
undisputed evidence was that Mandel and a third
person had located the property in the fall of 1971,
before Marlboro was purchased, and that they formed
an investment group. It was also shown that Hess and
the Rodgerses were among the participants; that the
property was acquired through a 100% mortgage; that
Mandel received a 15% interest for his efforts in forming
the group; and that, in March, 1973, when the property
was sold and the corporation was liquidated, the net
worth of Mandel’s 15% was $165 (Tr. 1743-59, 1798-1801,
2054-60, 2080-83, 8161-70).
The other venture, Security Investment Company,
owned a building leased to the Social Security Adminis-
6 A study commission appointed by the current Governor,
Harry Hughes, has just recently recommended consolidation
of all Maryland racing at two racetracks, Pimlico and either
Laurel or Bowie, See, Report of the Governor’s Commission on
Racing Reform (December 11, 1979), pp. 20-23.
13
tration. Hess held a 9% interest in Security Investment
as a member of a large investment group that included
the Rodgerses (R. 574-76, 1824-25). In May, 1972, after
the 1972 legislative session, Hess assigned 4% to
Mandel. Mandel had participated with Hess in various
real estate projects over the years, and the 4% in
Security Investment was in exchange for Mandel’s
interest in a motel venture.’ The assignment of the 4%
was a private business matter between Hess and
Mandel, and none of the other Petitioners was aware of
it (R. 580, 1756-58; Tr. 2344-45, 2492-93). In April, 1973,
in a further adjustment of their respective accounts,
Hess and Mandel cancelled the assignment.®
Under the law of Maryland, a private citizen has
never been required to reveal business relationships
with public officials, and, until 1974, public officials in
Maryland were not required to disclose personal
business relationships with private citizens (R. 7819).
By express constitutional fiat, moreover, the Governor
and the other constitutionally elected officers were
’ Before he was Governor, when he practiced law actively
in Baltimore, Mandel had represented Hess in matters
relating to Hess’ real estate ventures (Tr. 8499-8500, 9398-
9402). In 1968, in settlement of fees due, Hess granted Mandel
an option to participate in a motel venture known as the
Edwiness Venture (Tr. 8510-13, 8849, 9403-04; M. Ex. 256). In
1971, Mandel and Hess agreed that Mandel would not
exercise the Edwiness option and that an interest in some
other enterprise would be substituted for it. In 1972, after
Hess was admitted to the Security Investment ership,
he assigned the 4% to Mandel in exchange for the Edwiness
option (Tr. 8515-19, 8849, 9504-06).
* There was also evidence of miscellaneous gifts, loans and
entertainment which were furnished to Governor Mandel by
various of the other Petitioners, excluding Petitioner Cory.
None of these transactions and occurrences was set forth in
the indictment; they did not relate to any of the evidence
central to the case; and many of them had occurred years
before the purchase of Marlboro. See, e.g., R. 666-86, 707-18, 739-
48, 780-800, 817-18, 828-46, 1873-74).
14
exempted from the conflict-of-interest provisions of the
state Code of Ethics (R. 186). See also, Report of the
[Maryland] Committee to Submit a Code of Ethics
(1969), p. 4. Nevertheless, of the twenty-two Maryland
legislators who testified in this case, ten testified for the
Government that they would have considered the
Governor’s business relationships relevant to their
considerations of the veto override and the 1972
consolidation bill. In contrast, the twelve who testified
for the defense said that such information would have
been irrelevant, or, at most, relevant solely in terms of
its political ramifications.
At the urging of the Government, the trial judge
refused to give essential instructions relating to the
theory of the defense, and, as a result, the charges
submitted to the jury were significantly different from
those made in the indictment. The most fundamental
departure occurred with regard to the allegations of
bribery.'! The trial judge declined to instruct the jury, in
connection with the mail fraud counts, that, to conclude
that the Governor schemed to defraud the state of his
loyal and faithful services, it was necessary to fina that
he had been bribed (R. 106, 119-27, 143, 155-57, 253, 257-
60). Insofar as the mail fraud counts were based on
concealment of the co-defendants’ interests in Marlboro,
moreover, the trial judge refused to instruct the jury
that it was necessary to find that Mandel had actual
knowledge that some of the co-defendants had pur-
chased Marlboro and were owners of its stock (R. 253,
® Tr. 4606-4836, 4837-4895, 4996-5199, 5239-90, 5291-5399,
5399-5641, 5667-99, 5764-5829, 6307-63, .
Tr. 7310-46, 7346-7404, 7416-35, 7568-90, 7655-62, 7663-75,
7676-90, 7691-7726, 7744-7823, 7824-86, 7904-19, 8191-8205.
‘! Imploring the trial j to omit any requirement of
bribery in connection with the mail fraud counts, the chief
prosecutor said that, “We are concerned about the fact that
this jury should not be misled in believing that this is a
bribery case.”
15
259-60). In connection with the racketeering counts, the
jury was told that, upon a finding of two acts of mail
fraud, as defined by the court, the defendants could be
convicted of racketeering as well as mail fraud, all without
any need for finding bribery.'?
Under the instructions given, the jury was allowed to
find the Petitioners guilty of mail fraud and recketeer-
ing for failure of the Governor to adhere to a standard-
less notion of loyal and faithful services and for failure
of all of the defendants to comply with an undefined
concept of fair dealing (R. 177-79). Further aggravating
the problem, the jury was also instructed that, notwith-
standing the inapplicability of the state Code of Ethics
to the conduct of the Governor, the jurors could
nevertheless look to the Code “as a guide for determin-
ing the standard of conduct expected of public officials
by the State of Maryland” and as an aid in determining
the defendants’ intent (R. 186).
After deliberating for a week, the jury reported that
they were unable to come to “a unanimous decision as
to the existence of a scheme to defraud” or to “a
unanimous verdict on the guilt or innocence on any of
the charges on any of the Defendants in this case” (R.
309-10). The trial judge thereupon delivered a supple-
mentary instruction that the jurors should not hesitate
to re-examine their views and that the importance of
the case, as well as the time and expenditure involved
in the trial, were relevant factors for them to consider
'2 Consistent with this charge, the chief prosecutor, in his
summation, emphasized that the jury could find the defend-
ants guilty without making any determination that Mandel
had n bribed. “What I want to explain to you or
a anar to you,” he argued, “is that the whole concept of
bribery is relevant only in Counts 21 and 23 [the racketeering
counts] and that even as to those two counts you, in fact, can
convict and should under the law convict even if you don’t
find those two briberies, if you find any two of the 20 mail
fraud violations” (R. 1989-90).
16
(R. 310-13; Tr. 11739-46). Six days later, after two jurors
had fallen ill from the intense controversy that marked
their deliberations, one requiring hospitalization and
the other needing emergency medical care, the jury
rendered the verdicts on which the judgments of
conviction were entered.3
In their appeal to the Fourth Circuit, Petitioners
maintained that the mail fraud charges, as submitted to
the jury, were so lacking in definable standards as to
amount to an over-extension of the mail fraud statute.
If the indictment could be interpreted as allowing
conviction on the basis of the instructions given,
Petitioners contended, the charges should be dismissed
as beyond the reach of 18 U.S.C. §1341. The panel
majority held that the indictment was ot vague and
undefined but that error was committed by the trial
judge in submitting to the jury a different case than
that which was charged.
The panel majority concluded that the indictment
charged a scheme cognizable under the mail fraud
statute on either or both of two theories: (1) that the
Governor had “either been bribed” or that “attempts
had been made to bribe the Governor;” ot (2) that false
information as to the ownership of Marlboro was pre-
sented to the legislature or to the Racing Commnission to
induce them to take favorable action toward the
racetrack (Appendix hereto, p. 42a, infra). Since the jury
instructions had been seriously deficient as to both
theories, however, in not requiring a finding of bribery
or actual knowledge of the allegedly false information,
the panel majority held that the convictions were
improperly obtained (Appendix hereto, pp. 42a-45a,
infra). The error was compounded, the majority held, by
substituting for bribery and actual knowledge the
‘8 See: Motion of Marvin Mandel for New Trial, Exs. B, C;
Order rae et for Hearing Concerning Sick Juror,
August 18, 1977.
17
standards of a Code of Ethics which was admittedly
inapplicable to the conduct of the Governor (Appendix
hereto, pp. 45a-48a, infra).
Since it was necessary to remand the case for a new
trial, the panel majority also reviewed the Govern-
ment’s use of hearsay for “the central part of its case”
(Appendix hereto, p. 48a infra). Reviewing carefully the
volume and character of hearsay admitted, and
assessing its prejudicial impact and unreliable nature,
the majority held that it had been improperly admitted.
“Evidence based on rumors and general discussions is
the worst type of hearsay,” the majority wrote, adding
that, “Such testimony, especially from unidentified
declarants, does not possess the requisite guarantees of
trustworthiness to justify a new exception to the
hearsay rule” (Appendix hereto, p. 52a, infra). Other
errors in the admission of evidence were noted (Appen-
dix hereto, pp. 58a-55a, infra), but, inasmuch as the case
was being remanded for new trial, other substantial
issues were not reached (Appendix hereto, p. 61a, infra).
After rehearing en banc, three members of the six-
member court announced that, “The judgments of
conviction are affirmed by an equally divided court,”
and that, “A majority of the members of the en banc
court would affirm the judgments of conviction against
all of the contentions of the appellants except the claim
of error in the charge to the jury which was the point
upon which there was equal division” (Appendix hereto,
Pp. 7a, infra). Petitioners’ request for a further rehearing
en banc, to cure the problems created by the 3-3 tie vote,
was denied by a 4-4 tie vote.
18
REASONS FOR GRANTING THE WRIT
I. THE DECISION BELOW RAISES SUBSTANTIAL AND RE-
CURRING QUESTIONS WORTHY OF REVIEW BY THIS
COURT, AND THAT REVIEW OUGHT NOT BE HINDERED
OR DESTROYED BY THE FOURTH CIRCUIT’S UNREA-
SONED ACTION IN “AFFIRMING THE CONVICTIONS BY
AN EQUALLY DIVIDED COURT.”
This petition for certiorari is necessarily directed to
the order of the en banc Fourth Circuit dated July 20,
1979 (Appendix, p. 3a). That order is clear in one respect
only. It clearly purports to affirm the judgments of
conviction by an equally divided court, i.e., by a 3-3 vote
of the qualified active Circuit Judges then available.
The petition for mandamus filed simultaneously
herewith demonstrates the lack of judicial power in
such. an equal division to affirm the judgments of
conviction in these circumstances. It becomes the
function of this petition for certiorari to attempt to piece
together the eects questions properly raised by the
Petitioners in their appeals tothe Fourth Circuit which are
worthy of review by this Court.
Petitioners have no illusions about the difficulties
involved in attempting to reconstruct these questions
out of the procedural and decisional chaos created by
the action of equal division of the Fourth Circuit. It has
often been said that an affirmance by an equally
divided court settles nothing for the divided court. See,
Neil v. Biggers, 409 U.S. 188, 192 (1972). Here, even the
point upon which the court below divided equally is not
clearly stated, it being referred to merely as “the claim
’ of error in the charge to the jury.” Reliance must
perforce be had upon Judge Widener’s dissenting
opinion to discover which of the various claims of error
in the instructions was the one on which. the court
divided.
19
Moreover, the July 20th order further indicates that a
majority of the members of the six-judge en banc court
“would affirm the judgments of conviction against all
the contentions of the Appellants,” except upon the
point upon which there was equal division. Again, there
is no identification of these contentions. Are they the
other contentions raised in response to the limited
questions posed in the Government’s petition for
rehearing? Or, is this a 4-2 ruling rejecting the various
other issues raised by Petitioners on their original
appeals, including those which the three-judge panel
did not reach? All we have are the dissenting words of
Judges Widener and Russell. They first noted that
“there are a number of issues raised in this case which
are not dealt with in the majority en banc opinion,” and
that, “Discussion of these issues was unnecessary in
the majority panel opinion since a new trial was
required in all events.” See Appendix hereto, page 14a,
infra. This led Judges Widener and Russell to question
the “decision not to discuss any of the remaining issues
raised on appeal, some of which may present possible.
grounds for reversal” (14a-15a, infra).
Petitioners have no alternative but to go forward,
before this Court, with all questions that they believe
worthy of this Court’s consideration. They do so with
full knowledge that they are asking this Court to
perform appellate tasks that should have been per-
formed in the first instance by the Fourth Circuit. The
still viable and more fully articulated decision of the
Fourth Circuit, dated January 11, 1979, should be given
its proper effect through the requested mandamus. But
whatever the procedural means, Petitioners must renew
their request that their statutory right to a meaningful
appellate review not be destroyed by the ambiguous and
unenlightening en banc order of July 20, 1979.
By any definition, this is an important federal
prosecution, important both to the Government and to
20
the individuals whose liberty is at stake. As.a result of
this prosecution, Maryland’s elected governor was
unable to fulfill the functions of his office for most of
his second term. As Judge Murnaghan remarked in his
dissenting statement of November 1 (Appendix hereto, —
p. 3a, infra): “This was no ordinary case. Its conse-
quences on the entire political system of the State of
Maryland are enormous. It cries out for a proper
resolution, where such a resolution is possible.”
Before the Fourth Circuit, the Government argued for
a more definitive resolution of the issues, contending
that: ‘{TJhe importance of the legal issues is matched
by the importance of the case itself ... The case
involves serious allegations of wrongdoing by the
highest elected official of the State. The parties, the
scores of witnesses, and the state of Maryland itself
have endured nearly five years of turmoil and uncer-
tainty.” Government’s Pet. for Rehearing, p. 29. The
equal division below has done nothing to relieve that
turmoil and uncertainty.
Il. THE TRIAL COURT’S REFUSAL TO INSTRUCT AS TO THE
GOVERNMENT’S ALTERNATIVE THEORIES OF THE AL-
LEGED MAIL FRAUD HAS ACQUIRED EXTRAORDINARY
SIGNIFICANCE AS THE ISSUE THAT CAUSED THE EN
BANC COURT TO DIVIDE EQUALLY.
The en banc Fourth Circuit indicated in its July 20th
order that its equal division related to “the claim of
error in the charge to the jury.” In their dissent, Judges
Widener and Russell also stated that the equal division
“related to the denial by the trial judge of requested
instructions.” (Appendix hereto, pp. 7a, 8a, infra).
The dissent by Judges Widener and Russell elabo-
rated this point on which there was equal division. By
reference to the discussion in the panel opinion that
found reversible error in the denial of requested
instructions (Appendix hereto, p. 8a, infra), these
21
Judges pinpointed the instructions that had been
erroneously denied: (a) the refusal to give a bribery
instruction as to the mail fraud counts; and (b) the
failure to instruct as to Governor Mandel’s knowledge
of the financial interests of the co-defendants. The
panel gave importance to those two refusals to instruct
by relating them to the two alternative theories of the
mail fraud as advanced by the Government. On one
theory, the essence of the mail fraud counts was the
alleged bribery of Governor Mandel — thus the refusal
to instruct as te bribery under those counts was held
reversible error.'‘4 On the alternative theory, the
indictment could be construed as alleging that the
scheme was to obtain money and property by means of
false representations and concealment of material facts
— thus the refusal to instruct as to the need to find that
the Governor knew of his co-defendants’ concealed
financial interests was held reversible error.!5
The keystone in any evaluation of the importance of
the refusals to instruct as to bribery and knowledge is
found in the fact that the en banc court was deeply and
evenly divided on these matters. Three of the six
participating judges believed that the jury in this
4 The mail fraud counts alleged (see A. 52) that the
Maryland citizens and agencies had been deprived of the
faithful services of Governor Mandel “free on bribery,
corruption, partiality, willful omission, bias, dishonesty,
deceit, official misconduct and fraud.” Ju Murray, in
holding the indictment sufficient, found that the “essence” of
the scheme set forth in the indictment was “to defraud the
citizens and the State of Maryland by bribing the Governor
to assist legislation which would be financially beneficial to
the owners of Marlboro.” United States v. Mandel, 415 F.
Supp. 997, 1005 (D. Md. 1976).
'S The mail fraud counts also asserted (see A. 53) that the
alleged scheme ‘involved an effort to obtain money and
property “by means of false and fraudulent pretense, repre-
sentations, and promises, and the concealment of material
facts, relating to the Marlboro Race Track,” and other
enterprises and “matters.”
22
important prosecution could have been hopelessly
confused by the failure of the trial judge to define the
bribery portion of the mail fraud charges, and the
failure to deal with Governor Mandel’s lack of specific
knowledge of his co-defendants’ interests. The other
three judges flatly disagreed with that assessment.
Therein lies the reason and the need for the grant of
certiorari. At each level of this prosecution — the
indictment, the trial, and the appeal — additional
significance and controversy have been added to the
two refusals to instruct.
Moreover, the instruction issue that so deeply divided
the en banc court was one that the Government claimed
was important enough to warrant a rehearing en banc.
Under Appellant Rule 35(a), such a rehearing is limited
to those issues that have “exceptional importance,” as
well as those reflecting some internal conflict within
the Circuit. Obviously, any question possessing an
importance sufficient to justify the grant of an en banc
rehearing and then causes an equal division among the
en banc judges, cannot lose its “exceptional impor-
tance” when it comes before this Court for review.
As Judges Widener and Russell stated in their July 20th
dissent (p. 12a infra), the en banc court’s equally divided
approval of the trial court’s instructions in these regards
has created a conflict with the established rule in other
Circuits that a criminal defendant is entitled to an
instruction on any theory of defense for which there is a
foundation in the evidence. See, e.g., United States v.
Swallow, 511 F.2d 415, 523 (10th Cir. 1975), cert den., 423
U.S. 845; United States v. Noah, 475 F.2d 688, 697 (9th Cir.
1973), cert den., 414 U.S. 1095; United States v. Dana, 457
F.2d 205, 208 (7th Cir. 1972); United States v. Blair, 456
F.2d 514, 520 (3d Cir. 1972); United States v. Leach, 427
F.2d 1107, 1112 (1st Cir. 1970), cert. den., 400 U.S. 829;
Blane v. United States, 389 U.S.835(1967); Perez v. United
23
States, 297 F.2d 12, 15-16 (5th Cir. 1961); Apel v. United
States, 247 F.2d 277, 282 (8th Cir. 1957); United States v.
O’Connor, 237 F.2d 466, 474, n.8 (2d Cir. 1956); Tatum v.
United States, 88 U.S. App. D.C. 386, 190 F.2d 612, 617
(1951).
The Government’s adamant insistence that essential
instructions not be given with respect to the mail fraud
charges, and the trial court’s consequent failure to
grant them, amounts to a denial of the defendants’
right to a fair trial and an abuse of the prosecutorial
function. When the trial judge permitted the mail fraud
charges to be decided on a basis different from “the
essence” of the indictment, he deprived the Petitioners
of their “substantial right to be tried only on charges
presented in an indictment by a grand jury,” and, “The
right to have the grand jury make the charge on its own
judgment is a substantial right which cannot be taken
away with or without court amendment.” Stirone v.
United States, 361 U.S. 212; 217, 218-19 (1960). For a
detailed analysis of the change in the Government’s
allegations in the course of the trial, see the July 20th
dissent of Judges Widener and Russell, at pages 8a-12a
of the Appendix hereto, infra.
Ill. THE FEDERAL MAIL FRAUD STATUTE HAS BEEN MIS-
APPLIED AND OVEREXTENDED IN THIS CASE, THEREBY
CREATING AN UNFAIR TRIAL AS WELL AS CONFLICTS
WITH OTHER CIRCUITS.
The grant of certiorari is not only appropriate but
essential to determine if a grave injustice has been
accorded these Petitioners by the en banc court’s
approval of the judgments of conviction. Within those
judgments are embedded serious problems as to the
proper application of the federal mail fraud statute to a
scheme to defraud a sovereign State and its citizens of
the faithful services of their Governor. And _ those
judgments, untutored as they are by any definitive
appellate consideration, appear to be in conflict with
24
the rulings of other Circuits that have addressed these
important problems.
Since the racketeering counts are so totally dependent
upon the viability of the mail fraud counts, any
problems that may infect the judgments of conviction
relative to mail fraud necessarily implicate the judg-
ments of conviction under the racketeering counts.
Thus any defects in the application of the mail fraud
statute to the scheme here alleged bring into jeopardy
the totality of the judgments of conviction so summar-
ily affirmed by the en banc court. The due process and
fair trial implications of such a result need no elabora-
tion.
A. The bribery aspect of the scheme
As conceived by the indictment, the scheme was one
to defraud the State of Maryland and its citizens of
their right to the faithful and unbiased services of
Governor Mandel, acting in his official capacity. The
first problem in such public corruption prosecutions has
been to define this public right to honest and faithful
government for purposes of § 1341. Courts have gener-
ally found the § 1341 standard to be the equivalent of
private business standards of “moral uprightness.. .
fundamental honesty, fair play and right dealing in the
general business life. . . of society.” See, e.g., Blachly v.
United States, 380 F.2d 665, 671 (5th Cir. 1967). Public
officials, in other.words, may be convicted under § 1341
if their actions may be said to involve a scheme to
defraud state citizens of an intangible, federally created
right to “honest and faithful government.” United
States v. Brown, 540 F.2d 364, 374-(8th Cir. 1976).
But most Circuits have recognized that § 1341, as
applied to public officials, might well be unconstitu-
tional and overly intrusive upon traditional state
interests unless some more explicit standard of criminal
25
conduct is used to supplement the “moral uprightness”
standard. Thus virtually every prosecution and convic-
tion of public officials under § 1341 have identified the
violation of the “moral uprightness” standard in terms
of the official’s involvement in extortion, bribery,
kickbacks or violation of some other identifiable
criminal, civil or common law duty. See, e.g., United
States v. Isaacs, 493 F.2d 1124, 1170 (7th Cir. 1974), cert.
den., 417 U.S: 976; United States v. Barrett, 505 F.2d —
1091, 1104 (7th Cir. 1975); United States v. Keane, 522
F.2d 534, 547 (7th Cir. 1975); United States v. Bush, 522
F.2d 641, 646, 651 (7th Cir. 1975); United States v.
Dixon, 536 F.2d 1388, 1400 (2d Cir. 1976).
Indeed, the Fourth Circuit itself, in United States v.
Caldwell, 544 F.2d 691, 694-95 (4th Cir. 1976), has
accepted this general understanding that mail fraud
prosecutions of public officials should in some manner
reflect that the officials were bribed or that they
otherwise acted “in violation of state law” before the
conclusion can be drawn that the citizens of the state
were deprived of their right. to the officials’ “fair and
impartial execution of the [state} laws.” 544 F.2d at 697.
This judicial insistence that some identifiable viola-
tion of a criminal, civil or common law duty be at th_
heart of a § 1341 prosecution of a public official found
early expression in the instant prosecution. The
indictment plainly charged that the State of Maryland
and its citizens had been defrauded of their right to the
_ faithful services [“moral uprightness”} of Governor *
Mandel “free from bribery ...” A. 52. And the trial
court early on determined that the “essence” of the
§ 1341 charge was a scheme that involved “bribing the
Governor.” United States v. Mandel, 415 F. Supp. 997,
1005 (D. Md. 1976). Throughout the first trial and the
retrial, the Government consistently asserted that
bribery was indeed the heart of its case.
26
But at the end of the retrial, in recognition of the
paucity of its proof of bribery, the Government changed
its theory of the case. It persuaded the trial judge that,
since bribery is not a statutory element of a scheme to
defraud, it would be improper to include a bribery
instruction in the mail fraud charge to the jury. The
absence of a bribery instruction, however, gave the jury
no standard to assess the federally created right to
honest state government other than in terms of its own
conception of the “moral uprightness” and “right
dealing” of Governor Mandel’s official activities.
The opinion of Judges Widener and Russell in dissent
to the en banc affirmance of the judgments of
conviction (Appendix hereto, pp. 8a-12a infra) recounts
the Government’s “complete flip-flop” on the appeal
with respect to the absence of a bribery instruction. The
essential point remains that the jury was not instructed
that, to convict the petitioners of mail fraud, it must
find that bribery had in fact occurred. Only with such
an instruction could there be any assurance that the
jury had properly concluded that the State of Maryland
and its citizens had been deprived of the faithful
services of Governor Mandel “free from bribery.”
Without a bribery instruction, the jury was free to
make its assessment of the faithfulness of Governor
Mandel’s activities in light of its own views of “moral
uprightness, fundamental honesty, fair play and right
dealing.” Whatever Government counsel may now
say,!6 the judgments of conviction were drained of all
instructional assurance that they rest on something
more meaningful than an ad hoc application of the
amorphous “moral uprightness” rubric.
16 It is axiomatic that Petitioners are entitled to have their
convictions appraised not in terms of the prosecution's
appellate arguments but in terms of the case aa it was tried
and as the issues were determined in the trial court,” Cole v,
Arkansas, 333 U.S. 196, 202 (1948).
27
It follows that when the en banc Fourth Circuit
purports to affirm the judgments of conviction, it
purports to affirm judgments stripped of the one
element — bribery — that would assure that § 1341 has
been applied in this case in a manner consistent with
§ 1341 jurisprudence and with the due process demands
of fair notice. The en banc affirmance of such
judgments must be deemed in conflict with all the
Circuit decisions, cited above, that have insisted that a
§ 1341 prosecution of a public official involve some
discernible violation of a criminal, civil or common law
duty.
This Court has never had occasion to address this
problem of alleged mail fraud violations by public
officials, which are so often coupled with identical
allegations with respect to racketeering violations. This
is the time and the casein which to make a definitive
assessment of the application of §1341 to public
officials. Mail fraud prosecutions of such officials are
increasing in numbers. See, Ruff, Federal Prosecution
of Local Corruption, 65 Geo. L.J. 1171 (1977). But unless
such prosecutions are carefully confined within the
bounds of congressional intent and due process require-
ments, §1341 can soon become a vehicle for undue
federal intrusion into the affairs of state governments.
This very case carries with it the spectre of federal
judges, federal prosecutors and federal juries sitting in
unrestricted judgment of the ‘moral uprightness” of the
activities of elected state officials. That is essentially a
political judgment. And it is a judgment as to which the
state officials can expect no fair warning as to criminal
consequences,
28
B. The non-disclosure aspect of the scheme
As submitted to the jury at trial, the mail fraud
charge was that the State of Maryland and its citizens
had been additionally defrauded by virtue of the non-
disclosure of the business interests of Governor Mandel.
Non-disclosure, in other words, was deemed to give
alternative or additional content to the vague mail
fraud standard of “moral uprightness” in the conduct of
public office.
But it is uncontested in this case that none of the
specific acts of non-disclosure were rendered unlawful
by any Maryland statute, regulation or rule. That
absence of any state law violation places the non-
disclosures in a vacuum. They simply become an
unstructured element for the jury to assess as part of its
unstructured application of the vague “moral upright-
ness” standard under § 1341. Such a submission to the
jury exascerbates the problem of determining the extent
to which the “moral uprightness” concept written into
§ 1341 must be based on discernible violations of state
laws or common law duties.
Indeed, the en banc affirmance of the judgments of
convictions constitutes a direct conflict with the
interpretation of § 1341 adopted by the Eighth Circuit in
United States v. Rabbit, 583.F.2d 1014, 1026 (8th Cir.
1978). In Rabbit, the court reversed a § 1341 conviction
of a state legislator, based on non-disclosure of his
business relationship with private individuals, The
Eighth Circuit ruled that the legislator was under no
affirmative duty to disclose his interest because “the
government referred to no [state] standard of conduct
applicable to legislators which clearly required disclo-
sure of [the legislator'’s] interest in the [matter]. . .”
The en bane affirmance also conflicta in principle
with thie Court's dictum in Parr v. United States, 363
U.S. 370, 389 (1960), The Court there stated that
29
Congress enacted §1341 so as to forbid and make
criminal any use of the mails for the purpose of
executing a scheme to defraud, “leaving generally the
matter of what conduct may constitute such a scheme
for determination under other laws.” That dictum
suggests that, if non-disclosure allegedly constitutes a
part of the scheme, the non-disclosure must result from
a violation of some requirement of disclosure “under
other [state] laws.”
These problems of non-disclosure, like that of bribery,
warrant review and consideration by this Court.
IV. SERIOUS QUESTIONS ARE PRESENT AS TO WHETHER
CONGRESS INTENDED TO APPLY THE “RACKETEERING”
PROVISIONS AND SANCTIONS OF THE ORGANIZED
CRIME CONTROL ACT TO THE CIRCUMSTANCES AND
THE INDIVIDUALS HERE INVOLVED.
Substantial problems are generated by the affirmance
of the judgments of conviction under Counts 21 and 24
of the indictment. Those counts alleged violations of
Title IX of the Organized Crime Control Act of 1970, 18
U.S.C, §§ 1961-1968.'’ Title IX of that Act is entitled
“Racketeer Influenced and Corrupt Organizations”
(RICO), and is currently one of the most frequently used
federal weapons in the drive against white collar crime.
'’ Count 21 alleged that Governor Mande) alone had
violated § 1962(b) of RICO in that
| he had uired and
an in and control of Security
2 attorn” al plo the 20 si
ches in ta 1 20, aan
Maryland bribery statute, Ann,, Art, 27, § 28.
all the defendants rok than
Governor Mandel conducted the affairs of Marlboro Race
l'rack through a “pattern of racketeering activity,” in
violation of §1962(c) of RICO, The alleged “pattern”
consisted of the 20 mail fraud violations ch in tal
through 20, No claim was made that any violations of the
ee bene bribery statute constituted any part of this
30
The statutory problems that emerge in this case can
be appreciated only after tracking the statutory
provisions that lead to the labeling and punishing as
“racketeers” many white collar defendants (such as
these petitioners) who have no connection whatever
with the Congressional or RICO concept of “racket-
eers.”
RICO violations are clustered in §1962, which
essentially provides that “any person” who has
maintained or conducted the affairs of an interstate
enterprise through a “pattern of racketeering activity”
is punishable as a “racketeer.” A “pattern of racketeer-
ing activity” is defined in § 1961 as the commission of
two or more chargeable or indictable offenses under
state or federal law. In this case, the alleged “pattern”
consisted of the federal mail fraud violations charged in
the first twenty counts of the indictment. Thus, under
the structure of RICO, a jury determination that the
petitioners were guilty of two or more of the mail fraud
counts automatically established a “pattern of racket-
eering activity” for § 1962 purposes.
There are two major questions resulting from the
application of this statute to the petitioners:
(1) Dm CONGRESS INTENT TO APPLY THE RICO
““RACKETEER PROVISIONS TO MAIL FRAUD
VIOLATORS WHO ARE IN NO WAY CONNECTED WITH
ORGANIZED CRIME?
This Court has yet to give a definitive construction to
the RICO provisions in light of the legislative history
and purpose of the Organized Crime Control Act of
1970, of which RICO is an integral part. The rather
narrow and precise thrust of the Act would seem well
summarized in Section 1 of the’ Act (see Note to 18
U.S.C.A. § 1961), which states that the purpose of the
Act is «to deal with and eradicate “the unlawful
activities of those engaged in organized crime.” So
31
plain is this purpose that this Court, in dealing with
another provision of the Act in Jannelii v. United
States, 420 U.S. 770, 786 (1975), observed that the
content of the entire Organized Crime Control Act
“reflects the dedication with which the Legislature
pursued this purpose [of eradicating organized criminal
activities]’”.
As stated recently by the Sixth Circuit in United
States v. Sutton, 605 F.2d 260, 268 (6th Cir. 1979), the
“legislative history conclusively demonstrates that
RICO was enacted in response to the growing subver-
sion of our society’s legitimate institutions of business
and labor by organized crime, a relatively recent
development that Congress deemed a significantly
more dangerous threat to the na‘i-’s social and
economic stability than the age-old prublem of crime for
crime’s sake.” See also Barr v. WUI/TAS, Inc., 66 F.R.D.
109, 113 (S.D.N.Y. 1975).
This statutory issue becomes one of interpreting the
words “any person” — i.e., “any person” who violates
§ 1962 — in light of this legislative history and purpose.
Are those words to be read literally and without regard
to that history, so as to apply the RICO sanctions to
“any person” who commits two or more violations of
the mail fraud statute? Cf. United States v. Culbert, 435
U.S. 371 (1978), which held that the legislative history
of the Hobbs Act did not justify reading the broad
statutory language as applicable only to those engaged
in “racketeering.” Oz should those words “‘any person”
be subjected to the alternative and more familiar rule of
statutory construction, “that a thing may be within the
letter of the statute, and yet not within its spirit, nor
within the intention of its makers’? Holy Trinity
Church v. United States, 143 U.S. 457, 459 (1892). See
also United Steelworkers of America v. Weber, 99 S. Ct.
‘2721 (1979).
32
Only this Court can determine which rule is to be
applied in construing the “any person” language in
RICO. Are those words to be read literally, or in light of
the Congressional intent to deal only with those
persons who are members of organized crime syndi-
cates in America?
(2) Dm CONGRESS INTEND TO IMPOSE MULTIPLE
PUNISHMENTS FOR SIMULTANEOUS VIOLATIONS OF
THE FEDERAL MAIL FRAUD STATUTE AND THE RICO
ANTI-RACKETEERING STATUTE?
The fact that violations of RICO depend so heavily in
this case upon a “pattern” of mail fraud violations
raises an important and unresolved question whether
Congress intended to impose multiple punishments for
these two interrelated offenses. This question becomes
particularly acute if the “any person” language in
RICO is read literally so as to apply to any person who
commits a “pattern” of two or more mail fraud
violations, regardless of whether he is a member of an
organized crime group.
This problem can be answered by use of one or both
analyses that have been established by this Court.
Under the test enunciated in Blockburger v. United
States, 284 U.S. 299, 304 (1932), Congressional intent to
impose separate sanctions for multiple offenses arising
in the course of a single act or transaction depends on
“whether each [statutory] provision requires proof of a
fact which the other does not.” Under that test, it can
be argued that a RICO violation premised on a series of
mail fraud violations requires no proof of any essential
fact that need not be proved with respect to a mail fraud
violation.!®
18 The fact that a RICO violation must involve an
interstate enterprise does not distinguish the proof required
of a mail fraud violation, icularly where as here the
alleged scheme to defraud by mail involves interstate
enterprises. In any event, the interstate nature of the
yar a is generally inconsequential to proof of a RICO
violation.
33
The same result is possible under the more sophisti-
cated test applied in Jannelli and in Simpson v. United
States, 435 U.S. 6, 12-13 (1978). The test in those cases is
whether Congress exhibited an awareness of “signifi-
cant differences in characteristics and consequences of
the [two] kinds of offenses” that would reflect distinc-
tive federal interests and concerns. Under the Jannelli-
Simpson standard, it is difficult to perceive any discreet
differences in the federal interests and concerns as
between (a) punishing white collar businessmen, who
are. not members of “organized crime,” for using the
mails in execution of a single scheme to defraud, and (b)
punishing white collar businessmen, who are not
members of “organized crime,” for having engaged in a
“pattern of racketeering activity” in the form of two or
more uses of the mail in execution of a single scheme to
defraud.
The confluence of mail fraud and racketeering
charges, which is so frequent in RICO prosecutions,
makes it increasingly important that this problem of
— punishments be addressed and resolved by this
ourt. .
V. THE REVIVAL OF “FORFEITURE OF ESTATE,” AS MAN-
DATORY PUNISHMENT FOR VIOLATION OF TITLE IX OF
THE ORGANIZED CRIME CONTROL ACT, RAISES PRO-
FOUND AND LONG-FORGOTTEN CONSTITUTIONAL
QUESTIONS.
Pursuant to the mandate in § 1963 of RICO, Title IX
of the Organized Crime Control Act, the District Court
ordered that the five Petitioners found guilty of
violating Count 24 forfeit to the United States all their
interests in the Marlboro racetrack enterprise.!® Section
19’Count 24 alleged that the five defend
Governor Mandel had Soudlanhed aaa 007 tag Seen
conduct of the Marlboro Race Track through a “pattern of
racketeering activity.” The racetrack enterprise was not
alleged to be an illegal activity, nor was it alleged to be the
means for effectuating the “pattern” of t mail
fraud violations. R ene hn cath rain
34
1963, entitled “Criminal penalties,” condemns anyone
who has conducted an enterprise in violation of § 1962
to suffer triple punishment: (1) he shall be fined not
more than $25,000; and/or (2) he shall be imprisoned
not more than 20 years; and (3) he shall forfeit to the
United States any interest in any enterprise he has
conducted in violation of § 1962.
Precisely because § 1963 involves criminal forfeiture
of property, rather than the in rem forfeiture of
offending objects used in violation of some federal law,
the statute gives rise to “serious constitutional ques-
tions.” Calero-Toledo v. Pearson Yacht Leasing Co. 416
U.S. 663, 689 (1974). The legislative history of § 1963
confirms that forfeiture was here conceived of as the >
third of three possible punishments, the others being
fine and imprisonment, for the convicted individual.
See H. Rep. No. 911549, 91st Cong., 2d Sess.; S. Rep. No.
91-617, 91st Cong., Ist Sess.; 116 Cong. Rec. 35205,
35208. And see United States v. Rubin, 559 F.2d 975,
991 n.15 (5th Cir. 1977), which distinguishes a § 1963
forfeiture from an in rem forfeiture.
As the District Court below recognized, United States
v. Mandel, 408 F. Supp. 679, 682 (D. Md. 1976), the
forfeiture provisions of § 1963 “resurrected the device of
criminal forfeiture, which had been abolished along
with corruption of blood by the First Congress in 1790.” -
That is a reference to § 24 of the Act of April 30, 1790, 1
Stat. 112, 117, the first federal criminal code, which
stated:
Sec. 24. Provided always, and be it enacted, That
no conviction or judgment for any of the offenses
aforesaid, shall work corruption of blood, or any
forfeiture of estate.
That early outlawing of corruption of blood and
forfeiture of estate, as punishment for violation of any
federal criminal statute, remains a part of the federal
35
criminal code to this day. See 18 U.S.C. § 3563, derived
from Rev. Stat. § 5326 (1874).
The constitutional problems implicit in any criminal
forfeiture are a reflection of the historic common law
revulsion against this form of punishment. Beginning
with the Magna Carta, increasing restrictions were
placed on the use of forfeiture of estate in England.” By
the time of the adoption of the Constitution, criminal
forfeiture “was deemed repugnant to our ideas of justice
and was not included as part of the common law of this
— 5 Thompson, Real Property § 2514, p. 404
The common law outlawing of criminal forfeiture
undoubtedly accounts for the quick adoption by
Congress of the 1790 statute. And the adoption of the
statute, which was contemporaneous with the adoption
of the Constitution, reflected what the legislators
deemed to be the constitutional rule, forbidding such
forfeitures save in one limited instance. The Framers
had written into Article III, Section 3, a provision that
permitted forfeiture of estate in a limited situation only,
i.e., forfeiture of a convicted traitor’s life estate. All
other forms of forfeiture of estate resulting from a
conviction for treason thereby “has been constitution-
ally proscribed.” Calero-Toledo v. Pearson Yacht
Leasing Co., supra, 416 U.S. at 683. See also Wallack v.
VanRiswick, 92 U.S. 202 (1876).
The constitutional issues generated by § 1963, read
against this historical and constitutional background,
may be stated as follows:
(1) Does Article III, Section 3, which permits only the
forfeiture of life estates of convicted traitors, constitute
»” See 3 Holdsworth, History of English Law 68-71 (3d ed.
1927); 1 Pollack & Maitland, History of English Law 351 (2d
ed. 1909). A short summary of this common law development
is contained in the Calero-Toledo opinion, 416 U.S. at 682-683.
36
a constitutional prohibition of all other forms of
forfeiture of estate? It would seem incongruous that the
Framers would proscribe criminal forfeiture of other
than life estates of convicted traitors while permitting
criminal forfeiture of all kinds of estates of those
convicted of lesser federal offenses. And the contempo-
vaneous adoption of the 1790 statute would appear to be
an implementation of the broad outlawing of criminal
forfeiture implicit in Article III, Section 3.
(2) Does the Due Process Clause of the Fifth Amend-
ment proscribe criminal forfeiture of property that has
“not been actually used or involved in any criminal
activity? See Platt v. United States, 163 F.2d-165 (10th
Cir. 1947); United States v. One 1974 Cadillac Eldorado,
407 F. Supp. 1115 (S.D.N.Y. 1975). Forfeiture of such
property may be considered an undue penalty not only
for historic common law reasons but because other civil
and less drastic penal remedies are available, as § 1963
provides. See also McKeehan v. United States, 438 F.2d
739, 742-745 (6th Cir. 1971).
(3) Alternatively, does the historic common law
revulsion against forfeiture of estate, supplemented by
the forfeiture provisions in Article HI, Section 3, make
the criminal forfeiture of property here decreed a “cruel
and unusual punishment” within the meaning of the
Eighth Amendment? If the Eighth Amendment truly
draws its meaning “from the evolving standards of
decency that mark the progress of a maturing society,”
Trop v. Dulles, 356 U.S. 86, 101 (1958), forfeiture of
estate must be deemed “unusual” if not “cruel.”
(4) Is the singling out of those convicted of violating
§ 1962 of RICO for purposes of imposing the punish-
ment of criminal forfeiture consistent with the equal
protection concepts implicit in the Due Process Clause
of the Fifth Amendment?
37
These are constitutional questions of national impor-
tance. Definitive answers are necessary to determine if
the § 1963 forfeiture provisions may validly be applied
in this and in all future RICO prosecutions.
VI. THE DECISION BELOW CONFLICTS WITH THE DECISIONS
OF OTHER COURTS OF APPEALS AS TO THE PROPER
INTERPRETATION OF RULE 803(24) OF THE FEDERAL
RULES OF EVIDENCE.
The trial judge permitted the Government to establish
what the panel opinion describe as the “central part of
its case” (Appendix hereto, p. 48a) through hearsay.
Specifically, the Government alleged that Mandel
brought about the override of his own veto of a bill
which would have given Marlboro additional racing
days, and thereby greatly increased Marlboro’s profita-
bility. ;
As its proof of this contention, the Government
introduced testimony of several Maryland state sena-
tors who were present during the lobbying and voting
on this bill. The nature of the hearsay testimony was
_ described by the panel opinion of the Fourth Circuit as
consisting of statements “by unidentified declarants,
statements relating to the general discussierramong the --
senators, statements concerning discussions with other
senators and testimony by one senator relating the
feeling of other senators.” 591 F.2d at 1368. This
testimony was objected to as hearsay but was admitted
under Rule 803(24), Federal Rules of Evidence, even
though the Government never provided the Petitioners
with the names and addresses of most of the declarants
whose statements were testified to by the witnesses.
The panel majority held that this hearsay was
_inadmissable because of the lack of notice and because
the hearsay did not meet the criteria of Rule 803(24).
With respect to the notice requirement, the panel .
opinion stated that Rule 803(24) is “not to be construed
38
broadly . . . and. . . we see no reason to depart from its
plain requirements.” Thus when the judgments of
convictions were affirmed by an equally divided en
banc court, the Fourth Circuit held in effect that the
hearsay was admissible even without notice of the
hearsay and the identity of the declarants as required |
by Rule 803(24). |
Such a holding conflicts directly with that of the
Second Circuit in United States v. Oates, 560 F.2d 45, 73
n.30 (2d Cir. 1977) (“there is absolutely no doubt that
Congress intended the requirement of advance notice to
be rigidly enforced”). The holding that the notice may
be dispensed with also conflicts in principle with
decisions in the Fifth and Eighth Circuits. See e.g.,
United States v. Davis, 571 F.2d 1354, 1360, n.11 (5th
Cir. 1978) (“. . . government made no attempt to invoke
the . . . [803(24)] . . . exception by giving the defense
the required advance notice of the hearsay evidence to
be offered at trial”); United States v. Lyon, 567 F.2d
777, 784 (8th Cir. 1977), cert. denied, 435 U.S. 918 (1978)
(pretrial notice may be dispensed with when other
procedures, such as a continuance after notice gives
opportunity for accomplishing the Congressional pur- -
poses). See also, United States v. Ruffin, 575 F.2d 346,
358 (2d Cir. 1978) and United States v. Davis, 571 F.2d
1354 (5th Cir. 1978). There is no case, except this one, in
which a Circuit has approved dispensing with the
notice requirement altogether.
Aside from the conflict as to notice requirement, the
decision to affirm the convictions in efiect extends Rule
803(24) far beyond any of its previous applications. The
disputed testimony was characterized by the panel as
follows:
“First, the senators who testified all say that
someone else said that Governor Mandel did not
care whether his veto was overridden. No senator
seems to have testified that Governor Mandel told
39
him that the Governor did not care. Important also
is the whole setting from which this testimony is
drawn. We are dealing with a purely legislative
political scene. Some of the most damaging
hearsay statements were repeated by long-time
political enemies of the Governor. Further, the
statements were made on and around the senate
floor in the heat of political battle, where rumors,
opinion and gossip abound. We are not dealing
with an objectively observable factual event. We
are dealing with circumstantial proof of the
position a governor took on two pieces of legisla-
tion. Evidence based on rumors and general
discussions is the worst t of hearsay.”
mein ype ay.” App., pp.
Thus, the en banc decision which approved the use of
such hearsay demonstrated a liberality of interpreta-
tion of Rule 803(24) which is at odds with the
Congressional declaration that this exception “. . . be
used very rarely and only in exceptional circumstances
- and that it not be employed as a “broad license for
trial judges to admit hearsay” or as a means for
bringing about “major judicial revisions of the hearsay
rule.” Rule 803(24), Conference Report, 28 U.S.C.A.
Historical Note. i |
Other Circuits, sensitive to the limited role contem-
plated by Congress for Rule 803(24), and acutely
sensitive to the Sixth Amendment confrontation prob-
lems found by unduly expanding Rule 803(24) in
criminal cases, have refused to construe or apply it
broadly. E.g., United States v. Mathis, 559 F.2d 294, 299
(5th Cir. 1977) (“Yet tight reins must be held to ensure
that this provision does not emasculate our well-
developed body of law. . .”); See also, United States v.
Bailey, 581 F.2d 341, 349 (3rd Cir. 1978); United States
v. Ruffin, supra; United States v. Gonzolez, 559 F.2d
1271 (5th Cir. 1977). |
40
The decision below also raises important Sixth
Amendment questions about the scope to be given Rule
803(24) in criminal cases. Although they are not co-
extensive, the Confrontation Clause and the hearsay
rule “stem from the same roots,” Dutton v. Evan, 400
U.S. 74, 86 (1970). Despite the Confrontation Clause
inhibitions on freely permitting hearsay evidence in
criminal cases, some courts, and most particularly the
Fourth Circuit, have relied on the new Federal Rules of
Evidence to extend the permissible use of hearsay in
criminal cases “to new and unwarranted lengths,” 4
Weinstein Evidence, 4 804(b)(5), p. 143 (1978 Supp.).
The conflict among the Circuits as to the proper use
of Rule 803(24) in criminal cases is sure to recur until
resolved by this Court.
VII THE DECISION BELOW CONFLICTS WITH DECISIONS OF
OTHER CIRCUITS AS TO THE PROPRIETY OF GIVING THE
ALLEN CHARGE TO A DEADLOCKED JURY.
On the evening of the seventh day of deliberations,
the jurors reported that they were deadlocked on all the
charges. The following morning, the trial judge deli-
vered a modified version of the so-called Allen charge, a
supplemental instruction to the jury designed to break
that deadlock. He told the jyrors, in part, that:
“For the parties that are involved in this law
suit, the Government and the Defendants, this case
is an important one and its presentation to you has
involved expense and expenditure of time by both
the Government and the Defendants.
Now, Mister Foreman and members of the Jury,
please retire and further deliberate.”
41
Six days after the delivery of this charge, the j
rendered their verdicts of guilt. er
This Court has not addressed the propriety of the
Allen or “dynamite” charge since its birth in Allen v.
United States, 164 U.S. 492 (1896). The Circuits are in
total conflict over use of the Allen charge, with three
Circuits disapproving its use in any form. See, United
States v. Fioravanti, 412 F.2d 407, 414-420 (8rd Cir.
1969), cert. den. 396 U.S. 837 (1969); United States v.
Brown, 411 F.2d 930 (7th Cir. 1969); United States v.
Thomas, 449 F.2d 1177 (D.C. Cir. 1971).
Most commentators and at least twenty-three state
courts have disapproved the use of any form of the
Allen charge.”! Indeed, the Judicial Conference of the
United States has recommended that it no longer be
given in federal courts. See Supplement to Report of the
Committee on the Operation of the Jury System
Judicial Conference of the United States 2 (1969),
Whether the Allen charge be disapproved altogether
or whether it be retained in some form or other, the
conflicts among the Circuits demonstrate the need for
guidance from this Court.
21 California is the latest state to outlaw th
Allen charge in its criminal courts. Sea People “i Hane 30
Cal. Rptr. 861, 868-70, 566 P.2d 997, 1004-6 (1977). And see
A.B.A. Project on Minimum Standards for Criminal Justice:
coe Pacha eniative ae May 1968) § 5.4, pp. 145-56:
; Allen arge: ing Pro Recent
Developments, 47 N.Y.U.L. Rev. 296 agra. ee tis x
42
CONCLUSION
For these various reasons, a Writ of Certiorari should
issue to review the judgment and order of the Court of
Appeals for the Fourth Circuit affirming the judgments
of conviction by an equally divided vote.
Respectfully submitted,
ARNOLD M. WEINER,
RIcHARD V. FALCON,
36 South Charles Street,
Baltimore, Md. 21201,
Counsel for Marvin Mandel,
Petitioner, and of Counsel
for Petitioners
EUGENE GRESSMAN,
School of Law
Univ. of North Carolina,
Chapel Hill, N. C. 27514,
Of Counsel for Petitioners.
M. ALBERT FIGINSKI,
Counsel for Marvin Mandel, Petitioner
WruiuiaM G.. HUNDLEY,
Counsel for W. Dale Hess, Petitioner
MICHAEL E. MARR,
Counsel for William A. Rodgers,
Petitioner
NorMAN P. RAMSEY,
WiiuiaM F. GATELY,
Counsel for Irvin Kovens, Petitioner
APPENDIX
ORDER
(Filed November 1, 1979)
United States Court of Appeals
for the Fourth Circuit
Nos. 77-2487 thru 77-2492
United States of America,
Appellee,
UV
Marvin Mandel, et al.,
Appellants.
Upon consideration of the defendants’ petition for
another rehearing before the en banc court and the
response of the United States, each of the judges in
regular active service who is not disqualified having
been polled, and it appearing that fewer than a
majority of them have voted for it,
It Is Now ORDERED that the petition for another
rehearing en banc before the enlarged court be, and it
hereby is, denied.
For The Court:
CLEMENT F. HAYNSWORTH, JR.,
Chief Judge, Fourth Circuit.
October 30, 1979.
2a
STATEMENT WITH RESPECT TO DENIAL
OF FURTHER HEARING
- (Filed November 1, 1979)
United States Court of Appeals
for the Fourth Circuit
Nos. 77-2487 thru 77-2492
United States of America,
v.
~ Marvin Mandel, et al.,
Appellants.
MURNAGHAN, Circuit Judge:
This statement is not lightly made. It appears only
after reflection, and despite considerations which would
normally preclude its seeing the light of day. First, one
customarily does not announce a dissent from court
action which is taken by vote and without opinion.
Second, my past tangential contact with this case while
a practicing lawyer would, in ordinary circumstances,
dicate that I should recuse myself to, avoid, the
appearance of even slightest possible Third
ois gd adage egy sae et
short though it has been, has already thoroughly
ered os coc: ipeion th a doting. Ol
compassion and concern for the Court as an institution
of each of the members. The fact that four of my
colleagues disagree with me ie strong indication that
: et ane Those considerations have not
deterred me only because of a strange certainty,
transcending the ordinary confidence one has in cae’s
3a
convictions, that the Court’s failure to decide this case
constitutes a serious injustice.
It is nearly as important that cases be decided, and
the decisions be accorded finality, as it is that they be
disposed of absolutely correctly. Courts have, as a
consequence, adopted a rule of necessity that an evenly
divided appellate court, although it cannot render a
decision, affirms the judgment. The unsatisfactory
nature of such a decisionless result is reflected,
however, in the rule that judgments of equally divided
courts are not accorded precedential value. The rule of
necessity has, however, no scope for application here.
The even division which would normally bring the rule
into play is not present when the even division
coincides with an expansion of the court’s membership.
Judge Sprouse and I had joined the Court by the time it
considered and acted on the petition for further rehear-
ing.
So I regret the denial of that petition, the granting of
which would avoid a situation so frustrating to
defendants who have made arguments sufficient to
persuade three members of the Court (that is one-half of
those who participated in rehearing) that reversal and a
new trial are required, if justice is to be accomplished.
The defendants and the public generally, in whose
service the courts operate, are entitled to a decision of
this Court, whether it leads to reversal and a new trial,
or whether, through affirmance, it gives requisite
certainty and finality to the convictions. This was no
ordinary case. Its consequences on the entire political
system of the State of Maryland are enormous. It cries
out for a proper resolution, where such a resolution is
possible.
It would, of course, avail nothing, if yet another
rehearing were to result only in a new deadlock. Since
an even number of judges has been added to the Court,
the danger of a fresh deadlock seems at first a large
one, especially in light of the closeness of the issues, 2
closeness which is evidenced by the splits,in both the
4a
panel and the en banc court. As things are situated,
however, another even division could not occur because
any reargument of this case would be heard by an odd
number of judges.
Enabling a court to reach a decision is not sufficient
ean ee alone, for a judge to recuse himself or
herself. If it were, then, since all judges would be
equally subject to the duty to recuse, evenly divided
courts would effectively decide cases by lot, or some
other arbitrary process, as they selected one of their
members for recusal. Nor is preserving the decision
making ability of a court sufficient reason for judges to
fail to fulfill an otherwise clear obligation to disqualify
themselves. But when grounds for a judge’s recusal
exist, but are ones related to appearances rather than
actualities, impact on the court’s decision making
ability is a factor which the judge should take into
account in deciding whether or not to participate.
Another rule of necessity is then : —
appearance of justice suffers far greater damage from a
court’s gh at inability to reach a decision than it
does from the participation of a member of the court for
whom there are palpable but far-fetched possibilities of
bias. Since the reasons why I might recuse myself are of
_ guch a tenuous and speculative nature,' they would be
outweighed by the importance of the court’s being able
to reach a decision. The court would thus be assured
that, whether or not Judge Sprouse had to recuse
himself, an odd number of members would participate
in any rehearing of this case en banc. If he did not
recuse himself, I would. If he did recuse himself, I would
sit.
express my dissent from the decision not to hold
5a
permit that expression, I refrain from disqualifying
myself.
WIDENER, Circuit Judge, dissenting:
I respectfully dissent from the failure of the court to
grant further en banc consideration in this case for the
reasons expressed in my two opinions previously filed.
In addition, Judge Murnaghan’s conditional disquali-
fication now makes it certain that the case can be heard
by an uneven number of judges. We know that on one
important issue the court was divided 3 to 3, so a
rehearing would have to result in a majority vote, one
way or the other.
Especially in a criminal case in which people are
going to jail by the vote of an evenly divided court, I
have more reservations than I can overcome about
sending them there without the vote of a majority when
the means for getting a majority one way or the other is
readily available to the court. I think the court as an
institution suffers by our action, for I am not at all sure
that we serve properly the appearance of justice when it
is within our command so to do.
I am authorized to state that Judge Russell joins me
in this opinion.
6a
JUDGMENT
(Filed July 20, 1979)
United States Court of Appeals
for the Fourth Circuit
No. 77-2487 thru 77-2492
United States of America,
Appellee,
v.
Mervin Mandel,
ov Appellant.
Appeal from the United States District Court
for the District of Maryland
This cause came on to be heard on the record from the
United States District Court for the District of Mary-
land, and was argued by counsel.
In consideration whereof, It is now here ordered and
adjudged by this Court that the judgment of the said
District Court appealed from, in this cause, be, and the
same is hereby, affirmed.
WiiuiaM K. Sxiateze, II,
Clerk.
7a
ORDER
(Filed July 20, 1979)
United States Court of Appeals
for the Fourth Circuit
Nos. 77-2487 thru 77-2492
United States of America,
Appellee,
v.
Marvin Mandel, et al.,
Appellants.
PER CuRIAM:
The judgments of conviction are affirmed by an
equally divided court. -
A majority of the members of the en banc court would
affirm the judgments of conviction against all of the
contentions of the appellants except the claim of error
in the charge to the jury which was the point upon
which there was equal division.
Affirmed.
8a
DISSENTING OPINIONS
_ Wwener, Circuit Judge, dissenting:
I respectfully dissent for all of the reasons discussed
in the majority opinion of the panel. United States v.
Mandei, 591 F.2d 1347 (4th Cir. 1979), and would add
I
The point of difference on which the en banc court is
evenly divided relates to the denial by the trial judge of
requested instructions. As indicated in the panel
opinion, I would have reversed because of what I
consider error in failing to give a bribery instruction in
connection with the mail fraud counts of the indict-
ment, and also for failure to give an instruction
concerning Governor Mandel’s knowledge of other
defendants’ financial interests. Without deemphasizing
the latter, I think that affirming despite the lack of a
bribery instruction for the mail fraud counts is so far
from settled precedent that the reasoning should be
error.
The mail fraud counts of the indictment had for a
substantive basis a charge of bribery. However care-
9a
bribe or bribes. It is clear that such bribery was an
essential element of the crime stated in the mail fraud
counts of the indictment.
Such was the construction given the indictment at the
first hearing before Judge Murray, when one of the
issues was a construction of the charges in the
indictment. Judge Murray’s ruling on this point was
clear:
“While the factual allegations in the indictment
make the scheme appear to be a complex and
subtle one, the thrust of the charges is simple. In
essence, the indictment charges that the defend-
ants devised a scheme to defraud the citizens and
the state of Maryland by bribing the Governor to
assist legislation which would be financially
beneficial to the owners of Marlboro. . . .” United
States v. Mandel, 415 F. Supp. 997, 1005 (D. Md.
1976) (Emphasis added).
And that ruling accorded with the position taken by the
government itself at the hearing.
At the first trial, the government asserted that
bribery was at the heart of its mail fraud prosecution.
Thus, counsel for the government at that trial stated to
the jury:
“Ask yourselves the question, as the evidence
comes in, did the benefits that these men were
giving to Marvin Mandel really have nothing to do
with the benefits that they wanted to get out of the
State Government and that to a substantial extent
they were getting out of the State Government
because that is the question ultimately that you are
going to have to be deciding.” (Emphasis added)
And throughout and until the end of the second trial,
although the government may have begun to shift its
2 Paragraph 27 of count 1 of the indictment alleged that
“Marvin Mandel would and did . . . in return for financial
and other benefits ... act with intent to aid and assist
certain legislation and legislative matters financially benefi-
cial to the owners of Marlboro Race Track” (emphasis added).
I think this is an accusation of bribery, pure and simple.
10a
position with regard to bribery in connection with the
mail fraud counts of the indictment, it continued to
emphasize the importance of bribery in connection with
those counts by introducing a mass of evidence on the
alleged flow of benefits to Governor Mandel from the
other defendants in return for official preference,
without limiting such evidence to the racketeering
counts of the indictment. The pervasive influence of
bribery on the whole case is shown by the charge of the
trial court to the jury with respect to the mail fraud
counts, when, although it had just refused the bribery
instruction of the defendants with respect to the mail
fraud counts, in stating the charge against the
defendants, it related the charge that Governor Mandel
had not performed his office “free from bribery.” ‘The
government at that time did not disclaim the bribery
charge, as in fact it should have as a matter of common
fairness if indeed it had abandoned the charge. Rather,
it stayed silent when it had a duty to speak, and thus
had its cake and ate it too.
Despite all this background, the government strenu-
ously objected to any bribery instruction in connection
with the mail fraud counts, as requested by the
defendants at the conclusion of the testimony. Contrary
to the position taken by it essentially at all times prior,
the government argued that bribery was not an element
of the mail fraud charges and that it was improper to
include a bribery instruction in connection with the
mail fraud counts. The trial judge accepted this
argument and denied the requested instruction.
Even in argument to the jury, counsel for the
government argued that bribery was not relevant to the
mail fraud counts. They did this on the basis of the trial
judge’s ruling denying defendants’ requested instruc-
_ On this appeal, however, the government has made a
complete flip-flop. It now concedes — contrary to its
argument to the trial judge at trial, not to mention to
lla
the mail fraud counts. But, contrary to its position at
tr:al when it induced the trial judge to deny the
defendants’ request for a bribery instruction, it argues
on this appeal that there was no error in the denial of
an instruction on bribery under the mail fraud counts
because:
(a) The trial judge did define bribery in connec-
tion with the racketeering counts and this
was sufficient (1) to tell the jury what
bribery was and (2) to tell the jury that
bribery was included in the mail fraud
counts (even though the trial judge specifi-
cally refused to so instruct the jury at the
instance of the Government itself); and
(b) The trial judge did tell the jury, in summar-
izing the positions of the parties, that the
defendants denied bribery.
This argument was accepted by those of my brothers
who would affirm the judgment.
I cannot accept the argument. The government
cannot blow hot and cold at the same time. It cannot
argue that bribery is not involved in the mail fraud
counts at trial and secure a ruling to that effect from
the trial judge in connection with the jury instructions
and use that ruling as a basis for the argument to the
jury that the “whole concept of bribery is relevant only
in Counts 21 and 23” (the racketeering counts), and
then on appeal shift completely its position and contend
that an instruction on bribery was to be treated as
having been given, even though such an instruction
was not only not included in the instruction on the mail
fraud counts but had been specifically ruled to be
improper. I cannot agree to such sophistry in a case
where a defendant’s right to a fair trial is involved.
The government and the trial judge agreed that
bribery was an element in the crime charged in the
racketeering counts. For that reason, a bribery instruc-
tion was given in connection with those counts. Neither
the government nor the trial judge thought it sufficient
wai
12a
to omit such an instruction simply because the trial
judge had stated the conflicting positions of the parties.
But when the trial court gave its instructions on the
mail fraud counts, it purposely omitted any instruction
on bribery. Would not a jury be expected to notice the
contrast between the instructions on the mail fraud and
racketeering counts? Would it not be reasonable for the
jury to assume under these circumstances that bribery
was in no way related to the mail fraud counts? And
would not this be especially so in view of the argument
made by the government counsel, fresh in the minds of
the jury, that bribery was irrelevant to the mail fraud
counts?
This is an involved case. The prosecution rests on
fragmented circumstances, many of the more essential
ones being no more than mere rumor and legislative
corridor gossip. In such a case, is not a defendant
entitled to precise instructions? What was done here
was, however, more likely to confuse and mislead than
to provide clear guidance for the jury. And that should
entitle the defendants to a new trial. The error is not
insubstantial; it is fundamental.
I further note that it was not explicitly noted in the
panel opinion that a criminal defendant is entitled to
an instruction on any theory of defense for which there
is a foundation in the evidence, and that a refusal to so
instruct is reversible error. Because that principle is so
universally recognized and accepted, I should have
believed it required no mention or citation. However,
since the affirmance of the defendants’ convictions
must reject this time honored principle, I should point
out that every circuit, including this court, has
embraced the principle that a criminal defendant is
entitled to an instruction on any theory of defense for
which there is a foundation in the evidence. See, e.g.,
United States v. Swallow, 511 F.2d 415, 523 (10th Cir.
1975), cert. den., 423 U.S. 845; United States v. Mitchell,
495 F.2d 285, 287-88 (4th Cir. 1974); United States v.
Noah, 475 F.2d 688, 697 (th Cir. 1973), cert. den., 414
l3a
U.S. 1095; United States v. Dana, 457 F.2d 205, 208 (7th
Cir. 1972); United States v. Blair, 456 F.2d 514, 520 (3d
Cir. 1972); United States v. Leach, 427 F.2d 1107, 1112
(1st Cir. 1970), cert. den., 400 U.S. 829; United States v.
Blane, 375 F.2d 249, 252 (6th Cir. 1967), cert. den., 389
U.S. 835; Perez v. United States, 297 F.2d 12, 15-16 (5th
Cir. 1961); Apel v. United States, 247 F.2d 277, 282 (8th
Cir. 1957); United States v. O’Connor, 237 F.2d 466, 474,
n.8 (2d Cir. 1956); Tatum v. United States, 88 U.S. App.
D.C. 386, 190 F.2d 612, 617 (D.C. Cir. 1951). The district
court’s refusal to give the substance of defendants’
requested instructions on bribery and knowledge in ©
connection with the mail fraud counts of the indictment
clearly violated this principle.
The additional remarks I have made as to the
sufficiency of the jury instructions should be read in
light of the fact that the panel opinion carried the mail
fraud statute near its outer limits, and some cases may
arguably indicate beyond. See Hammerschmidt v.
United States, 265 U.S. 182 (1924). Especially in view of
that, it would have been far preferable for the district
court to have charged the jury on the only two theories
upon which a conviction could have been sustained,
concealment or misrepresentation of facts and bribery.
This, it did not do, and, assuming that is not reversible,
it went further and rather than charge the j jury with the
law as it applied to the case, it charged the jury as to
the contentions of the parties and even refused the
defendants’ proffered charges, as this dissent and the
panel opinion note.
Accordingly, I am unshaken in my belief that the jury
was inadequately and prejudicially charged in this
case.
II
With respect to the hearsay issue, I add only the
following quote from Kotteakos v. United States, 328
U.S. 750, 761 (1945):
l4a
“What may be technical for one is substantial for
another; what minor and unimportant in one
setting crucial in another.
“Moreover, lawyers know, if others do not, that
what may seem technical may embody a great
tradition of justice, Weiler v. United States, supra,
or a necessity for drawing lines somewhere
between great ateas of law; that, in other words,
one cannot always segregate the technique from
the substance or the form from the reality. It is of
course highly technical to confer full legal status
upon one who has just attained his majority, but
deny it to another a day, a week or a month
younger. Yet that narrow line, and many others
like it, must be drawn. The ‘hearsay’ rule is often
15a
appeal, some of which may present possible grounds for
reversal.
For the reasons stated above and in the panel
opinion, I respectfully dissent.
I am authorized by Judge Russell to state that he
joins in this opinion.
a peg eeamape esa sila
16a
JUDGMENT
(Filed January 11, 1979)
United States Court of Appeals
for the Fourth Circuit
No. 77-2487 thru 77-2492
United States of America,
: Appellee,
v
Marvin Mandel,
Aroellant.
Appeal From the United States District Court for the
District of Maryland.
This Cause came on to be heard on the record from .
the United States District Court for the District of
Maryland, and was argued by counsel.
On Consideration Whereof, It is now here ordered and
adjudged by this Court that the judgments of acquittal
on Count 23 of the indictment are affirmed. The
judgments of conviction on such other counts of the
indictment as to which the defendants were not
acquitted or which were not dismissed are vacated and
remanded for a new trial; the order of forfeiture is also
vacated and remanded consistent with the opinion of
WiuiaM K. Sxate, I
Clerk.
3
a
CF
17a
OPINION
(Filed January 11, 1979)
United States Court of Appeals
for the Fourth Circuit
Nos. 77-2487 thru 77-2492
United States of America,
Appellee,
v.
Marvin Mandel, et al.,
Appellant.
WIDENER, Circuit Judge:
Marvin Mandel, Governor of the State of Maryland,
W. Dale Hess, Harry W. Rodgers, William A. Rodgers
(brother of Harry Rodgers), Irvin Kovens, Maryland
businessman, and Ernest N. Cory, a Maryland attorney
(hereinafter “Appellants’”), appeal from their convic-
tions for mail fraud and racketeering violations under
18 U.S.C. §1341' and 18 U.S.C. §1961 et seq.? (The
1 18 U.S.C. § 1341 (mail fraud statute and § 1341) provides:
Whoever, having devised or intending to devise any
scheme or artifice to defraud, or for obtaining money or
property by means of false or fraudulent pretenses, repre-
sentations, 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 purpose of
executing such scheme or artifice or attempting so to do,
places in any post office or authorized depository 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 delivered by mail according to the direction
18a
anized Crime Control Act), respectively. Appellants
me each adjudged guilty of fifteen counts of mail
fraud under §1341 and one count of prohibited
racketeering activity under §1961 et seq.° Appellant
Mandel was sentenced to a four-year prison term;
Appellants Hess, Harry Rodgers, and Kovens were each
sentenced to four years’ imprisonment and fined
$40,000; Appellant William Rodgers was sentenced to 20
months’ imprisonment and fined $40,000; and Appel-
lant Cory was sentenced to 18 months’ imprisonment.
Additionally, pursuant to 18 U.S.C. §1963(a), Appel-
lants Hess, Harry Rodgers, William Rodgers, Kovens,
and Cury were ordered to forfeit their ownership
interests in the Southern Maryland Agricultural Associ-
ation, Inc., based upon their convictions under count 24
of the indictment.
thereon, or at the place at i directed ro
i by the person to whom it is ;
pate or thing, shall be fined not more than $1,000
or imprisoned not more than five years, or both.
2 18 U.S.C. § 1962, entitled Prohibited activities, provides in
pertinent part:
(b) It shall be unlawful for any person through a
pattern of racketeering activity or through collection of
an unlawful debt to acquire or Se ar ee mre dd
indirectly, interest in or con of any |
which is Pron Mir in, or the activities of Aer ng ery
interstate or foreign commerce.
iz (c) It shall be unlawful for any person employed by
or associated with any enterprise engaged in, or the
activities of which affect, interstate or foreign commerce,
to conduct or participate, directly or indirectly, in the
conduct of such enterprise’s affairs through a pattern of
racketeering activity or collection of unlawful debt.
* The indictment charged oy toy with 20 counts of
district court, vetutned verdicts of gu
lants on all but three of the mail fraud counts. The
19a
The gist of the mail fraud counts of the indictment
charged that beginning between January 7, 1969 and
the spring of 1971, and continuing thereafter to the date
of the filing of the indictment, Appellants devised and
intended to devise a scheme and artifice:
“(a) To defraud the citizens of the State of
Maryland, and its governmental depart-
ments, agencies, officials and employees,
both executive and legislative, of their right
to the conscientious, loyal, faithful, disinter-
ested and unbiased services, actions and
performance of officia) duties of MARVIN
MANDEL, in his official capacities as
Governor of the State of Maryland, free from
bribery, corruption, partiality, willful omis-
sion, bias, dishonesty, deceit, official mis-
conduct and fraud;
“(b) To defraud the citizens of the State of
Maryland, and its governmental depart-
ments, agencies, officials and employees,
both executive and legislative, of their right
to have the state’s business and its affairs
conducted honestly, impartially, free from
bribery, corruption, bias, dishonesty, deceit,
official misconduct and fraud, and in ac-
cordance with the laws and Code of
Ethics of the State of Maryland;
“(c) To defraud the citizens of the State of
Maryland, and its governmental depart-
Additionally, the indictment charged various combinations
of the Appellants with 4 counts of prohibited racketeering
activity. Governor Mandel was charged with engaging in a
pattern of racketeering activity in counts 21 and 22 of the
indictment. Appellants Hess, Harry Rodgers, and William
Rodgers were charged with engaging in a pattern of
racketeering activity in count 23 of the indictment. And,
Appellants Hess, Harry Rodgers, Williams Rodgers, Kovens,
and Cory were charged with engaging in a pattern of
racketeering activity in count 24 of the indictment. Count 22
was dismissed prior to trial. The jury returned verdicts of
guilty on counts 21, 23, and 24 of the indictment. The district
court entered a judgment of acquittal on count 23 of the
indictment, from which the government has appealed.
»
20a
ments, agencies, officials and employees,
both executive and legislative, of their right
to have available and to be made aware of
all relevant and pertinent facts and circum-
stances when: :
1) drafting, considering and deliberating
ad upon ain legislation for the State
of Maryland with respect to the Mary-
land horse racing industry and to other
matters;
(2) administering the laws of the State of
Maryland with respect to the Maryland
horse racing industry and to other
matters; and
(3) transacting business for and on behalf
of the State of Maryland;
“(d) To obtain, directly and indirectly, money,
property and other things of value, by
means of false and fraudulent pretenses,
representations, and promises, and the
concealment of material facts, relating to
the Marlboro Race Track, the Bowie Race
Track, the Security Investment Company,
Ray’s Point, Inc., and to other matters.
(from count 1, para. 13, of the indictment).
Paragraphs 14 through 32 of count 1 set forth the
specifics of the alleged scheme to defraud. These
specifics include allegations of bribery and the
misrepresentation and concealment of material infor-
mation on the part of the Appellants. Counts 2 to 20
incorporate by reference the allegations contained in
count 1 and charge Appellants with various particular
uses of the mails in the execution of the alleged scheme.
In the racketeering counts, the government charged
Governor Mandel in count 21 with acquiring and
maintaining an interest in and control of the Security
Investment Company through a pattern of racketeering
activity that in mail fraud and bribery. Count 23
charged Hess, Rodgers, and William Rodgers
with conducting and participating in the conduct of the
2la
affairs of the Security Investment Company through a
pattern of racketeering activity that included mail
fraud and bribery. Count 24 charged Hess, Harry
Rodgers, Williams Rodgers, Kovens, and Cory with
conducting and participating in the conduct of the
affairs of the Marlboro Race Track through a pattern of
racketeering activity that included mail fraud.
The evidence adduced at trial focused upon the
specific allegations contained in count 1 of the indict-
ment, i.e., the alleged bribery of Governor Mandel and
the alleged misrepresentation and concealment of
material information on the part of Appellants. The
facts developed at trial touching upon the alleged
bribery of the Governor and the alleged misrepre-
sentation and concealment of material information by
Appellants were essentially uncontroverted. The dis-
pute centered on the proper inferences that could be
drawn from these facts.
The evidence adduced at trial included the following:
In February 1971, the owners of Marlboro Race Track
(who at the time did not include any of the Appellants),
a small half-mile track located in Prince George’s
County, Maryland, contracted with the owners of
Hagerstown Race Track, a half-mile track located in
Washington County, Maryland, for the transfer to
Marlboro of the 18 racing dates allotted to Hagerstown.
Since the Maryland horse racing industry is regulated
by the State and the permanent transfer of racing days
requires the affirmative approval of the Maryland
General Assembly, a bill designated as House Bill 1128
was drafted by attorneys for Marlboro and Hagerstown
and submitted to the Maryland House of Delegates. The
bill, as initially drafted, provided for a straight-forward
approval of the transfer contract. However, prior to its
passage, the bill was amended to provide that Marlboro
would make its payments to the State of Maryland and
then the State would make payments to Hagerstown.
On May 28, 1971, Governor Mandel vetoed the bill in its
amended form because he was advised thot the
payment provision was unconstitutional.
22a
Subsequent to the veto, the owners of Marlboro
actively began to attempt to sell the racetrack. Cory,
acting on behalf of undisclosed clients, negotiated with
the owners of Marlboro for its purchase. On December
31, 1971, the controlling interest in Marlboro was sold
to the group represented by Cory. As of December 31,
1971, that group consisted of Appellants Hess, Harry
Rodgers, William Rodgers, and Irving Schwartz, a
longtime friend and business associate of Kovens.
Schwartz had previously purchased 17,000 shares of
Marlboro stock. At the time of settlement, the sellers of
Marlboro did not know the identity of the members of
the purchasing group except for Schwartz.
The purchase of Marlboro was in part financed by a
$1,825,000 loan from the Suburban Trust Company. The
balance of the purchase price was funded by Schwartz
and Harry Rodgers. The government contended that
Schwartz was merely a nominee for Kovens in the
purchase of Marlboro. It introduced evidence to show
that Kovens provided much of the funding for the
initial purchase payments and subsequent loan interest
payments made by Schwartz; that Kovens and
Schwartz altered check stubs and other documents
manifesting Kovens’ financial involvement in the
purchase of Marlboro; and that Kovens played a major
role in the management of Marlboro following its
purchase.
The Marlboro purchasing group did not want their
identities revealed. Thus, on January 1, 1972, Eugene
Casey, who had been chosen by the purchasers to act as
president of Marlboro, announced at a press conference
that he was the new purchaser of Marlboro. On
January 7, 1972, Casey and Cory prepared and sent a
letter to the Maryland General Assembly stating that
Casey had recently acquired ownership of Marlboro
and requested that Governor Mandel’s veto of House
Bill 1128 be overridden. A disputed issue of fact was
whether Governor Mandel knew the true identities of
the new purchasers of Marlboro.
23a
On January 12, 1972, the General Assembly overrode
the Governor’s veto of House Bill 1128. As a result of
the veto override, the racing days belonging to
Marlboro doubled from 18 to 36. The government
introduced the testimony of several Maryland state
senators who stated that Senator Staten, Governor
Mandel’s legislative ally, said shortly before the veto
override vote that the Governor would not mind if his
veto of House Bill 1128 were overridden. Additionally,
the government adduced testimony from some senators
that if they had known of the involvement in Marlboro
of the Appellants other than the Governor, and of their
business relationships with Governor Mandel, they
would have considered such information relevant in
their consideration of the veto override.
In mid-March 1972, a bill to consolidate Maryland
race tracks in a variety of ways (consolidation bill) was
introduced in the State Senate. The consolidation bill,
inter alia, provided for Marlboro’s racing days to be
increased from 36 to 94 and provided for Marlboro to
run its days at the State’s two one-mile tracks. The
government introduced evidence to show that Governor
Mandel engaged in a strenuous lobbying effort to secure
passage of the consolidation bill. It ulso introduced
evidence that Kovens lobbied hard behind the scenes
for the passage of the consolidation bill. At the time the
consolidation bill was pending before the General
Assembly, the true identities of the owners of Marlboro
were not known. The government introduced the
testimony of some members of the Maryland State
Senate who stated that in deciding how to vote on the
consolidation bill they would have considered it
relevant to have known that Hess, Kovens, Harry
Rodgers, and William Rodgers were in fact the owners
of Marlboro and had provided substantia! financial
benefits to Governor Mandel. Appellants introduced
evidence to the effect that consolidation of the racing
industry had long been a toyic of interest in Maryland,
and one in which Governor Mandel had long played a —
leading role. His support of such a measure antedated
24a
by years the various incidents appearing in this case
which involved Marlboro.
The consolidation bill had been embroiled in contro-
versy since its introduction. After being passed by the
Senate in amended form, it was passed by the House of
Delegates in its original form and returned to the
Senate for a final vote. The bill was never brought to a
vote in the Senate.
A plethora of evidence was introduced on Appellants’
alleged scheme to defraud by misrepresenting and
concealing the true identities of the owners of Marlboro.
In all the dealings between Marlboro and the Maryland
Racing Commission and the General Assembly between
1972 and 1974, the fact that Hess, Harry Rodgers,
William Rodgers, and allegedly Kovens, were the true
owners of Marlboro was never revealed. The govern-
ment contended that with a total lack of accurate
information, the Maryland Racing Commission granted
to Marlboro a series of administrative benefits that
caused substantial profit to accrue to Hess, Harry
Rodgers, William Rodgers, Kovens, and Cory. Appel-
lants countered the government’s evidence by maintain-
ing that prior to the passage of a strict disclosure law in
1974, the use of nominees rather than publicly revealing
the names of the beneficial owners of racetracks was a
common and legal practice.
As an example of the alleged fraudulent concealment
of the true identities of the owners of Marlboro, the
government pointed to the Marlboro-Bowie merger. On
December 28, 1972, Marlboro Race Track and Bowie
Race Track, a one-mile track, were merged. The stock of
Marlboro and the assets of Bowie were transferred to a
newly established corporation, Southern Maryland
Agricultural Association, Inc., with the former owners
of Marlboro being issued 30% of the stock in the new
company. Appellants’ share of Southern Maryland
Agricultural Association, Inc. stock was issued to
Marlboro Associates. On February 16, 1973, Hess,
Harry Rodgers, and William Rodgers transferred their
25a
interest in Marlboro Associates to Cory by way of an
agreement which included a non-recourse note. Under
the terms of the transfer, Cory was to have five years to
fund the purchase price ($630,000) himself or to. arrange
for the sale of the stock to a third person. If at the
expiration of the five-year period the purchase price was
not paid, the stock would revert to the original owners.
In a document furnished to the Racing Commission in
1973, Cory was listed as the owner of the portion of
Marlboro Associates formerly owned by Hess, Harry
Rodgers, and William Rodgers, as well as the portion
originally owned by him.
Evidence also was adduced on the flow of undisclosed
financial and other benefits to Governor Mandel from
some of the other Appellants. The main purpose of this
evidence, from the government’s standpoint, was to
show that Governor Mandei took positions favorable to
the owners of Marlboro on House Hill 1128 and the
consolidation bill in return for these benefits.
At trial, there was evidence which tended to show
that Governor Mandel, inter alia, received the follow-
ing: (1) in 1969, clothing purchased fiom Alper and
Myers, a Baltimore clothing store, paid for by checks
drawn on Charlestown Race Track, which was princi-
pally owned at the time by Kovens. Charlestown
recorded the checks as expenditures for guard uniforms;
(2) in 1970, a diamond bracelet for his wife, Barbara,
paid for by Hess and Harry Rodgers; (3) in April 1972,
clothing from Cuzzens, a Ft. Lauderdale, Florida, men’s
store, paid for by Harry Rodgers; (4) in September 1974,
clothing from Max Margolis, a Baltimore clothing store,
paid for by Kovens.
The government also placed special emphasis on
Governor Mandel’s involvement in Ray’s Point, Inc.
and Security Investment Company. Ray’s Point is a
parcel of land consisting of approximately 200 acres of
waterfront property located on the eastern shore of
Maryland. In December 1971, an investment group —
consisting of Appellants Hess, Harry Rodgers, and
26a
illiam Rodgers, and Nathan Cohen, and Thomas
Haus Lowe, Speaker of the Maryland House of
Delegates, purchased Ray’s Point, and, for tax pur-
poses, formed Ray’s Point, Inc. to hold the land.‘ Hess,
Harry Rodgers, and William Rodgers assigned a 15
t interest in Ray’s Point, Inc. to Governor
Mandel, with the 15 percent interest coming in equal
shares from their respective interests. Appellant Man-
del’s 15 percent interest consisted of 150 shares in Ray 8
Point, Inc.; he paid $1 per share, a comparable price to
that paid by the other shareholders. In order to finance
the purchase price of the land and incidental expenses
of development, Ray’s Point, Inc. borrowed $350,000 on
a mortgage given to the Equitable Trust Bank. The
mortgage was guaranteed by Hess, Harry Rodgers, and
William Rodgers, and Nathan Cohen, but not by
Governor Mandel or Thomas Hunter Lowe.
The first corporate minute book prepared on behalf of
Ray’s Point, Inc., listed the names of all the share-
holders. However, subsequently a new list was prepared
that omitted the names of Governor Mandel and
- Thomas Hunter Lowe. Governor Mandel’s and Thomas
Hunter Lowe’s interests in Ray’s Point, Inc., were
reflected by stock certificates held by nominees, with
Governor Mandel’s certificate being held by Hess.
In May 1972, Hess assigned to Governor Mandel a 4
percent interest in Security Investment Company.
Security Investment Company is a limited partnership
formed in 1967 by Harry and William Rodgers, and
some other persons, that, among other things, leases
two office buildings to the Federal Social Security
Administration in Baltimore. In March 1972, Hess was
admitted as a 9 percent partner in Security Investment
Company, effective retroactively to December 1971. On
May 15, 1972, retroactive to January l, 1972, Hess
assigned to Governor Mandel %ths of his interest in
. investors had a 20 perceni interest in Ray’s
Fag hagh yore is not now the Speaker of the Maryland
House.
27a
Security Investment Company. According to Hess and
Governor Mandel, the assignment represented legal
fees owed to Mandel for legal services rendered several
years earlier, although there was evidence that the
income from the Security interest was not correctly
reported on the Governor’s income tax return and that
Hess’ records with respect to the same had been altered.
Based upon the proximity between Governor Man-
del’s acquisition of interests in Ray’s Point, Inc. and
Security Investment Company, as well as his receipt of
other benefits, and the Maryland General Assembly’s
consideration of Governor Mandel’s veto of House Bill
1128 and the consolidation bill, the government argued
that Mandel took positions on House Bill 1128 and the
consolidation bill favorable to the owners of Marlboro
Race Track in return for those financial and other
benefits. Combined with the misrepresentations and
concealment of the true identities of the owners of
Marlboro and the financial relationships existing
between Mandel and the other Appellants, the govern-
ment contended that the Appellants’ conduct consti-
tuted a scheme to defraud the citizens and the State of
Maryland. Appellants contended that all aspects of
their conduct were legally innocent and the inferences
drawn by the government were unsupportable.
Appellants have raised a myriad of issues on appeal.
Because we reverse their convictions for trial error
committed in the court below, we do not find it
necessary to express an opinion on all of the issues pre-
sented in the briefs.
I
Appellants contend that their prosecution and convic-
tion under the mail fraud statute constitutes an
unwarranted overextension of that statute and an
impermissible federal intrusion into the political affairs
of the State of Maryland. They assert that their
prosecution and conviction under § 1341 in this case
constitutes an unwarranted overextension of that
statute in that “there was no evidence that any state or
28a
federal law was transgressed by any of the defendants
in the execution of any part of their so-called ‘corrupt
relationship,’ or scheme to defraud. At most, the alleged
scheme to defraud was but a non-criminal scheme of
non-disclosure.” Along the same line, Appellants
cryptically state, “No previous mail fraud prosecution
has permitted conviction of a public official to rest upon
the slim reed of a federal prosecutor’s untutored notion
of what the public or the state should expect by way of
an ethical and honest performance of a state official's
duties. In every previous case, the criminal law or
common law provided some guidance for assessing ‘the
loyal and honest services’ of the public official.” They
also assert that the use of the mail fraud statute in this
case constitutes an impermissible federal intrusion into
the political affairs of the State of Maryland in that the
government “cast the mail fraud counts of [the]
indictment ... as if the Federal Government were
parens patriae for ‘the citizens of the state of Maryland,
and its governmental departments, agencies, officials
and employees, both executive and legislative.’” In
Appellants’ view, “the thrust of the indictment and the
prosecution was . . . to impose mail fraud and racket-
eering sanctions on these defendants, including the .
Governor of the State, in order to insure that Maryland
will in the future have more adequate disclosure
requirements. [footnote omitted] In that way, presum-
ably, the citizens, the state legislature and the state
governmental agencies will have more information in
arriving at political and official judgments. And in that
way, the State of Maryland might in some way haye a
more republican and responsible form of government.”
Appellants maintain that use of § 1341 in such a way
violates the principles of federalism so central to our
form of government.
We are cognizant of the problem of the ever expand-
ing use of the mail fraud statute to reach activities that
heretofore were considered within the exclusive domain
of State regulation. See United States v. Caldwell, 544
F.2d 691, 697 (4th Cir. 1976) (concurring opinion). See
29a
also United States v. McNeive, 536 F.2d 1245, 1252 (8th
Cir. 1976); United States v. Edwards, 458 F.2d 875, 880
(5th Cir. 1972), cert. den., 409 U.S. 891. Additionally, we
note that statutes such as the mail fraud statute should
be carefully and strictly construed in order to avoid
extension beyond the limits intended by Congress. See
United States v. Kelem, 416 F.2d 346, 347 (9th Cir.
1969), cert. den., 397 U.S. 952 (1970). Nevertheless, we
think the indictment and prosecution in this case
constitute neither an unwarranted overextension of the
mail fraud statute, as that phrase is used by Appel-
lants, nor an impermissible federal intrusion into the
political affairs of the State of Maryland, but as will be
later noted we do not adopt the broad reading of the
statute sought by the United States.
A
As just stated, we think the claim that prosecution
under §1341 constitutes an impermissible federal
intrusion into the political affairs of the State of
Maryland and thus violates principles of federalism is
without merit. The purpose of the mail fraud statute
and the corresponding limits upon its appropriate use,
in the context of federalism problems, is clear. The
purpose of § 1341 and its predecessors is to prevent the
post office department from being used to carry our
fraudulent schemes. See Durland v. United States, 161
U.S. 306, 314 (1895) (interpreting a predecessor to
§ 1341). See also United States v. States, 488 F.2d 761,
767 (8th Cir. 1973), cert. den., 417 U.S. 909 (1974)
(purpose of § 1341 is to prevent the misuse of the Postal
Service). The constitutionality of the mail fraud statute
and the limits upon its use to effectuate its purpose were
stated by the Supreme Court in the following terms:
“The overt act of putting a letter into the post office
of the United States is a matter that Congress may
regulate. [citation omitted] Whatever the limits to
its power, it may forbid any such acts done in
furtherance of a scheme that it regards as contrary
to — policy, whether it can forbid the scheme
or not.”
30a
Badders v. United States, 240 U.S. 391, 393 (1916)
(interpreting a predecessor statute to § 1341). See also
Parr v. United States, 363 U.S. 370, 389 (1960).
The basic purpose and scope of the mail fraud statute
has been examined by numerous circuit courts as well.
This Court, in United States v. Brewer, 528 F.2d 492
(4th Cir. 1975), echoed the words of the Supreme Court
in Durland by stating, “{the mail fraud statute]
prevents the post office from being used as an
instrument of crime.” Id. at 498. We also followed
Badders by stating that “(t]he statute does not define a
scheme to defraud, and it contains no restrictive
language excluding any type of fraudulent conduct in
which use of the mails plays an essential rule. On the
contrary, the plain language of the statute condemns
any scheme to defraud in which the mails are
employed. .. .” [citation omitted] Id. at 494-95. The
Second Circuit has likewise recognized that the mail
fraud statute’s purpose and scope revolve around the
misuse of the mails in Gouled v. United States, 273 F
506, 508 (2d Cir. 1921), aff'd, 255 U.S. 298 (1921), and the
Eighth Circuit has stated the purpose and scope of the
mail fraud statute in almost the same language as that
used by the Second Circuit in Gouled. See United States
v. States, 488 F.2d 761, 764 (8th Cir. 1973), cert. den., 417
U.S. 909 (1974). The Tenth Circuit, in United States v.
Lynn, 461 F.2d 759, 763 (10th Cir. 1972), described the
reach of the mail fraud statute in the following terms:
“The federal mail fraud statute does not purport to
reach all frauds, but only those instances in which the
use of the mails is a part of the execution of the
fraudulent scheme. All other cases are to be dealt with
by appropriate state law.” (footnote omitted).
From the foregoing discussion, it is clear that the
regulation of the mail fraud statute is on the misuse of
the mai's, control of which lies with Congress, and not
on the substance of the scheme to defraud. Even if the -
' substance of the scheme to defraud involves matters
normally within the purview of state control or
gla
regulation, once the mails are utilized to effectuate the
scheme, the federal government has the right to
prosecute the schemer under the mail fraud statute.
In United States v. States, supra, an attack, similar to
the one made by Appellants in this case, was made on
the use of § 1341, i.e., that the application of the mail
fraud statute to matters traditionally left to the states
violated principles of federalism. In that case, the
federal government prosecuted two candidates for the
office of Committeeman in the City of St. Louis,
Missouri, for devising and carrying out a scheme to
defraud the voters and residents of two wards in the
City of St. Louis and the Board of Election Commis-
sions of the City of St. Louis by the use of fraudulent
voter registrations and applications for absentee
ballots. The court stated:
‘{A]ppellants argue that the application of the mail
fraud statute as to the facts of this case will result
in a ‘policing’ of state election procedure, and that
Congress has never explicitly authorized such
widespread intervention into state affairs. The
appellants’ argument misinterprets the purpose of
the mail fraud legislation. The focus of the statute
is upon the misuse of the Postal Service, not the
regulation of state affairs, and Congress clearly
has the authority to regulate such misuse of the
mails. ... The purpose of 18 U.S.C. § 1341 is to
prevent the Postal Service from being used to carry
out fraudulent schemes, regardless of what is the
exact nature of the scheme and regardless of
whether it happens to be forbidden by state law.”
Id. at 766-67.
A similar holding was United States v. Mirable, 503
F.2d 1065 (8th Cir. 1974), cert. den., 420 U.S. 973 (1975),
in which the scheme involved understatement of gross
sales in monthly sales/use tax returns. We fully agree
with the Eighth Circuit’s statement in United States v.
States concerning the proper scope of the mail fraud
statute in relation to principles of federalism and, thus,
reject Appellants’ contention that the use of the mail
32a
fraud statute in this case constitutes an impermissible
federal intrusion into the political affairs of the State
of Maryland. Appellants were indicted, prosecuted and
convicted for the alleged misuse of the mails and the
fact that the alleged scheme to defraud involved
matters traditionally of state concern is not a defense to
the prosecution.
B
We think Appellants’ contention that their convic-
tions were based on an unwarranted overextension of
the mail fraud statute is likewise without merit.5 The
essence of Appellants’ contention is that since the
government’s theory of the case did not depend upon
the violation of any state or federal law, including the
common lew, in the execution of the alleged scheme to
defraud, the indictment, prosecution and conviction
under § 1341 constitute an unwarranted overextension
of that statute. Our reading of the indictment and
survey of the evidence adduced by the government at
trial reveals that Appellants were indicted and
prosecuted for devising a scheme and artifice to defraud
the citizens of the State of Maryland and her govern-
mental departments, agencies, officials and employees,
both executive and ative, of the a to.conscien-
tious, loyal, faithful, interested and honest govern-
ment through bers and non-disclosure and conceal-
5 In this section of the opinion, we are dealing solely with
the issue of whether the government’s indictment and
prosecution of the Appellants constitute an unwarranted
rept paaened bri arte hap a aw pel ag
ethe properly instructed on w with regard
8 We ha reviewed the record, including evidence that we
oils deemmaiinel: st improperly admitted, in order to
determine the direction of the government's prosecution in
7 ot ont 5 ee: Ee “Marvin Mandel
would and . in return for certain financial and other
33a
ment of material information. As our discussion of the
relevant case law will show, a scheme to defraud that
involves bribery and non-disclosure and concealment of
material information may come within the purview of
the federal mail fraud statute even though no state or
federal statute or common law is transgressed in terms.
Congress first enacted the federal mail fraud statute
in 1872,° and, although it has since been amended five
times, the essential elements of an offense under the
statute have remained unchanged.? See Survey of the
Law of Mail Fraud, 1975 Il. L. F. 237, 239. Ever. though
the mail fraud statute has been in existence for over 100
years, Congress has never defined or established the
precise limits of the phrase “scheme or artifice to
defraud.” See United States v. McNeive, 536 F.2d 1245,
1248 (8th Cir. 1976). Perhaps it is because, as one court
has aptly pointed out, “The law does not define fraud; it
needs no definition; it is as old as falsehood and as
versable as human ingenuity.” Weiss v. United States,
122 F.2d 675, 681 (5th Cir. 1941), cert. den., 314 U.S. 687.
Nevertheless, since Congress has not attempted to
define the phrase “scheme or artifice to defraud,” the
burden to do so has fallen on the courts. In order to
Additionally, sub-paragraphs 13(a) and (b) specifically allege
that Appellants devised a scheme to defraud the citizens of
the State of Maryland of the loyal and faithful services of
their Governor and of their right to have the state’s business
and its affairs conducted honestly and impartially, free from,
inter alia, bribery. Appellants contend that the government
abandoned its claim that the alleged schemé involved
bribery: There can be no question that a large portion of the
government’s evidence focused on the alleged scheme to
defraud through bribery. The deficiency, if any, that exists
with regard to the alleged bribery element in this case relates
to the jury instructions, which will be discussed infra.
8 Act of June 8, 1872, ch. 335, §301, 17 Stat. 323.
® The essential elements of an offense under the statute
are: (1) a scheme to defraud; and, (2) the mailing of a letter,
etc., for the purpose of executing the scheme. See, e.g., United
States v. Brewer, 528 F.2d 492, 494 (4th Cir. 1975).
~~,
34a
determine the appropriate reach of the mail fraud
statute, it has been necessary for the courts to attempt
to define and establish the limits of the words “scheme
or artifice to defraud” as they are used in the mail fraud
statute. See United States v. McNeive, 536 F.2d 1245,
1248 (8th Cir. 1976).
In attempting to define and establish the meaning of
the words, scheme to defraud, the starting point for
most courts has been to discern the of the mail
fraud statute. As previously stated, the purpose of the
statute is to prohibit the misuse of the mails. See, e.g.,
Durland v. United States, supra; United States v.
States, supra. With this purpose in mind, numerous
courts have made general statements concerning the
approach courts should take in attempting .to define
and establish the limits of the words “scheme or artifice
to defraud.” For example, the Eighth Circuit has stated,
‘{Thhe definition of fraud in § 1341 is to be broadly and
liberally construed to further the purpose of the statute;
namely, to prohibit the misuse of the mails to further
fraudulent enterprises.” United States v. States, 488
F.2d at 764. See also United States v. Keane, 522 F.2d
534, 544 (7th Cir. 1975), cert. den., 424 U.S, 976 (1976);
United States v. Buckner, 108 F.2d 921, 926 (2d Cir.
1940), cert. den., 309 U.S. 669. |
For the. most part, courts have broadly construed the
words; “scheme. or artifice to defraud.” The result has
been ‘to ‘include .within that term’ many schemes
’ involving, deception which employ the mails in their
execution if they are contrary to public policy and fail
to measure up to accepted moral s and notions
of honesty and fair play. In Badders v. United States,
240 U.S. 391, 393 (1916), the Court stated, “Whatever
the limits to [Congress’] power, it may forbid any such
acts done in furtherance of a scheme that it regards as
contrary to public policy. . . .” See also Parr v, United
States, 363 U.S. 370, 389 (1960). This public policy
reference has been followed by some courts as setting
the outer limits to the term “scheme or artifice to
35a
defraud” as that term is used in the mail fraud statute,
i.e., any scheme contrary to public policy that involves
deception can be prosecuted under the mail fraud
statute if the mails are used in the execution of the
scheme. See, e.g., United States v. Edwards, 458 F.2d
875, 880 (5th Cir. 1972), cert. den., 409 U.S. 891. Other
cases have used accepted moral standards and notions
of honesty and fair play as setting the outer limits to
the term “scheme to defraud.” In Gregory v. United
States, 253 F.2d 104, 109 (5th Cir. 1958), the court
stated, “The aspect of the scheme to ‘defraud’ is
measured by nontechnical standard. It is a reflection of
moral uprightness, of fundamental honesty, fair play
and right dealing in the general and business life of
members of society.” To the same effect is Blachly v.
United States, 380 F.2d 665, 671 (5th Cir. 1967). See also
United States v. Keane, 522 F.2d 534, 545 (7th Cir.
1975), cert. den., 424 U.S. 976 (1976); United States v.
States, 488 F.2d 761, 764 (8th Cir. 1973), cert. den., 417
U.S. 909 (1974). The Blachly court concluded by stating
that this was indeed a broad definition of scheme to
defraud. 380 F.2d at 671.
Early in the history of the mail fraud statute,
attempts were made to severely limit the term, scheme
to defraud. In Durland v. United States, 161 U.S. 306,
313-14 (1895), the Supreme Court rejected the argument
that the term “scheme or artifice to defraud” as used in
the mail fraud statute was limited to common, law
concepts of fraud and false pretenses. See also United
States v. McNeive, 536 F.2d 1245, 1247 (8th Cir. 1976).
And the several courts that have been called upon to
decide the question are uniformly of opinion that the
fact that a scheme to defraud mayor may not violate
state law does not determine whether the scheme is
within the proscription of the mail fraud statute. See
United States v. McNeive, 536 F.2d 1245, 1247, n.2 (8th
Cir. 1976); United States v. Keane, 522 F.2d 534, 544
(7th Cir. 1975), cert. den., 424 U.S. 976 (1976); United
States v. States, 488 F.2d 761, 767 (8th Cir. 1973), cert.
36a
den., 417 U.S. 909 (1974); United States v. Edwards, 458
F.2d 875, 880 (5th Cir. 1972), cert. den., 409 U.S. 891. As
a result of the failure to limit the term “scheme or
artifice to defraud” to common law definitions of fraud
and false pretenses and schemes prohibited by State
law, the mail fraud statute generally has been available
to prosecute a scheme involving deception that employs
the mails in its execution that is contrary to public
policy and conflicts with accepted standards of moral
uprightness, fundamental honesty, fair play and right
dealing.
C
Without enumerating the various types of schemes
that have been held cognizable under the mail fraud
statute, it suffices to say that schemes involving bribery
and some schemes of non-disclosure and concealment of
material information come within the purview of the
mail fraud statute.” See, e.g., United States v. Brown,
10 In United States v. McNeive, 536 F.2d 1245, 1248-49 (8th
Cir. 1976), the court categorized the various schemes that
manera tegories. The court stated: _— ve
» files catennty: which comprises the of the mail
~ fraud , includes the many deceptive schemes which
are intended to defraud indi of | or other
tangible interests. There can be little te
tha eae ues one within the scope of § 1341 since:
they involve calculated efforts to uge misrepresentations
or other 4 es to induce the innocent or
.-unwary.to give up sofie tangible interest.” ©
*_* * &
“The second ca of §1341 deceptive schemes is
comprised of those operate to deprive individuals
of intangible rights or interests.”
Appellants’ alleged scheme to defraud falls within McNeive’s
second category in that they are charged with devising a
|
|
officials employees t to conscientious, loyal,
fw thow arn ona} * alte ernie 204 i.e., intangible
rights and interests.
37a
540 F.2d 364 (8th Cir. 1976); United States v. Bush, 522
F.2d 641 (7th Cir. 1975), cert. den., 424 U.S. 977 (1976);
United States v. Keane, 522 F.2d 534 (7th Cir. 1975),
cert. den., 424 U.S. 976 (1976); United States v. Issacs,
493 F.2d 1124 (7th Cir. 1974), cert. den., 417 U.S. 976;
United States v. Caldwell, 544 F.2d 691 (4th Cir. 1976).
At this late date, there can be no real contention that
many schemes to defraud a state and its citizens of
intangible rights, e.g., honest and faithful government,
may not fall within the purview of the mail fraud
statute. See United States v. Brown, 540 F.2d 364, 374
(8th Cir. 1976); United States v. States, 488 F.2d 761,
764 (8th Cir. 1973), cert. den., 417 U.S. 909 (1974).
Rather, the difficulty is whether the alleged scheme
satisfies the fraud element of the mail fraud statute. Cf.
United States v. Dixon, 536 F.2d 1388, 1400 (2d Cir.
1976) (reversal of a conviction under the mail fraud
statute because an effort to avoid disclosure, although a
breach of statutory obligation, was “hardly ‘a scheme
or artifice to defraud’ ”’).
As to whether a scheme involving the bribery of a
public official satisfies the fraud element of the mail
fraud statute, the question has long since been
answered in the affirmative. Although most mail frawd ~
prosecutions of public officials that allege bribery also _
allege that a state bribery law or law prohibiting the
taking-of additional fees has been violated, see, e.g.,
United States v. Caldwell, 544 F.2d 691, 694 (4th Cir.
1976); United States v. Barrett, 505 F.2d 1091, 1104, n.12
(7th Cir. 1974), cert. den., 421 U.S. 964 (1975), such an
allegation is not necessary to bring the alleged scheme
within the purview of the mail fraud statute, for, as the
court stated in Shushan v. United States, 117 F.2d 110,
115 (5th Cir. 1941), cert. den., 313 U.S. 574,
“A scheme to get a public contract on more
favorable terms than would likely be got otherwise
by bribing a public official would not only be a
plan to commit the crime of bribery, but would also
be a scheme to defraud the public. . . . No trustee
38a
cred duties than a public official and
a Sonia te obtain an advantage by corrupting
such as one must in the federal law be considered a
scheme to defraud.”
iona ted by
Shushan rationale has recently been resta :
ae Eighth Circuit in somewhat different ie ced
” been held in recent years that a publi
ctcial may be prosecuted under 18 U.S.C. § 1341 if
of his government of their right to his honest and
United States v. Brown, 540 F.2d 364, 374 (8th Cir.
1976).
It is clear from Shushan and its many following cases
that the fraud involved in the bribery of a public official
lies in the fact that the public official is on renee
is independent judgment in passing on
clin See, eig., United States v. Dixon, 536 F.2d 1388,
:
2
lic official has been paid to act in
is perpetrated upon the
fiduciary duties, e.g.,
disinterested service. When a
: : his duty
iD
i
Rede
Pe Ps
TGtE
ere
‘t f
i
rei
itt
4
:
:
” 1976) (bribery of public official constitiites
39a
Mandel, in return for certain financial and other
benefits, took certain positions on racetrack legislation
that was before the Maryland legislature. This is a
plain and simple bribery allegation; that Governor
Mandel did not exercise his independent judgment on
these legislative matters; rather he was paid by some or
all of the Appellants for the positions he took.
The question of whether non-disclosure or conceal-
ment, or both, of material information satisfies the
fraud element of the mail fraud statute and, thus, is
cognizable as a “scheme or artifice to defraud” under
§ 1341 is not as clear-cut as the bribery issue.
It should first be noted that a duty to disclose
material information need not necessarily be based
upon the existence of some statute or regulation
prescribing such a duty. Rather, the duty to disclose
may exist because of the relationship between the one
possessing the material information and another, for
example, employer-employee; public official-public
body. As the Seventh Circuit recently stated:
[Ajn ‘employee owes-his employer a duty of loyalty
which includes.a duty not to conceal facts known
to him which he has reason to believe are material
to the.employer’s conduct of its business and»
affairs. Thus, [a government official’s] duty to
disclose: need not be based upon- the existence of
some statute prescribing such a duty.—
United States v. Bush, 522 F.2d 641, 652 (7th Cir. 1975),
cert. den., 424 U.S. 977 (1976). See also United States v.
Brown, 540 F.2d 364, 375 (8th Cir. 1976). But Cf. United
States v. Rabbitt, 583 F.2d 1014, 1026 (8th Cir. 1978)
(stating that a state legislator was under no affirmative ’
duty to disclose his interest in a matter because “Tt]he
Government referfred] to no standard of conduct
applicable to legislators which clearly required disclo-
sure of [the legislator’s] interest in the [matter]... .”).
So far as relevant in this case, the Governor of the Sta
of Maryland is trustee for the citizens and the State of
Maryland and thus owes the normal fiduciary duties of
~
40a
a trustee, e.g., honesty and loyalty. See The Declaration
of Rights of the Maryland Constitution, Art. 6;
Kerpelman v. Board of Public Works, 261 Md. 436, 276
A.2d 56, 61 (1971), cert. den. 404 U.S. 858.
Although failure by a public official to disclose
material information would constitute a breach of
fiduciary duty, that breach, standing alone, could never
be cognizable under the mail fraud statute, see United
States v. Bush, 522 F.2d 641, 648 (7th Cir. 1975), cert.
den. 424 U.S. 977 (1976), for the mail fraud statute only
reaches schemes or artifices to defraud. Thus, the
breach of fiduciary duty must be linked with some
actionable fraud in order for the proscriptions of the
mail fraud statute to apply. Cf. United States v. Dixon,
536 F.2d 1388, 1400 (2d Cir. 1976) (effort to avoid
disclosure, although a breach of obligation was “hardly
‘a scheme or artifice to defraud’ ir the sense of the mail
fraud statute. . . .”)
There are two situations relevant to this case in
which non-disclosure or concealment, or both, of
material information may constitute actionable, fraud
~. under the mail fraud statute as-well.as a-bréach of .-
fiduciary duties.'' The first situation is where a public
official fails to disclose the existence of a direct interest
in a matter that he is passing on. Provided the requisite
intent is shown, the official’s failure to disclose the.
se
¢ existence of a direct interést in a matter that he is -
passing on defrauds the public and pertinent public
bodies of their intangible right to honest, loyal, faithful
and disinterested government. | |
In Shushan v. United States, 117 F.2d 110 (5th Cir.
1941), cert. den. 313 U.S. 574, the court upheld the
conviction under the mail fraud statute of one Wagues-
pack, a member of a Louisiana parish levee board and
before 1
fraud
canes he deed eoenete “ dba capo
proven. ,
us
i
“
4la
Chairman of the Finance Committee, for receiving
undisclosed fees from the underwriter of a plan to
refund outstanding bonds of the levee district. Wagues-
pack, in his official capacity, took part in the decision of
whether to adopt the refunding plan. And, in United
States v. Keane, 522 F.2d 534 (7th Cir. 1975), cert. den.
424 U.S. 976 (1976), the court upheld the conviction of
Thomas Keane, former Alderman of Chicago’s Thirty-
First Ward and Chairman of the City Council’s
Committee on Finance, for his participation in a
scheme to purchase, through an investment company,
tax delinquent property from county-sponsored sca-
venger sales. Keane voted on certain matters that
favorably affected property the investment company
had purchased without disclosing his interest to the
other aldermen. For other examples of courts deeming a
public official’s nondisclosure of a direct interest in
matters that he is passing on supportive of a violation
of the mail fraud statute, see, e.g., United States v.
Brown, 540 F.2d 364, 374-75 (8th Cir. 1976); United
States v. Bush, 522 F.2d 641, 648 (7th Cir: 1975), cert.
den. 424 U.S. 977 (1976). ~ '
The other situation applicable here in which we think
fraudulent non-disclosure or concealment of facts may
be evidence to support a conviction under the mail
fraud statute»is when there has been a fraudulent
statement of facts, or a deliberate concealment thereof,
to a public body, in order to receive a benefit by action
of the public body. The scheme to defraud can in such a
case be said to encompass not only the receipt of the
illicit benefit, but also the deprivation of the public of
the right to have its officials act on other than false
information.'? This is the type of fraud prosecuted in
United States v. Feinburg, 535 F.2d 1004 (7th Cir. 1976),
12 At this point, we note that in United States v. Caldwell,
supra, we implicitly held that we would not adopt the
construction of the mail fraud statute some contend is
required by Hammerschmidt v. United States, 265 U.S. 182
(1924), to the effect that pecuniary or property injury is
necessary. ‘
42a
cert. den. 429 U.S. 929, in which ye mails were used .
carry out a scheme to procure a lower tax assessmen
by falsely representing the demolition date of buildings
to the Office of Real Estate Board of Appeals of Cook
County, Hlinois. Similarly, in United States v. Flax-
mex, 42h F.2d 344 (7th Cir. 1974), cert. den. 419 US.
1031, a conviction was sustained for making a false
retaiicr’s occupation tax return to the State of Illinois,
the return being made by a Certified Putilic Accountant,
in connivance with the owner of a store; and in United
States v. Mirabile, 503 F.2d 1065 (8th Cir. 1974), cert.
den. 420 U.S. 973, the court sustained the conviction of
a restaurant owner who had understated gross retail
sales in a sales/use tax return mailed to the Missouri
Department of Revenue.
As these principles apply to the case at hand, it is
apparent that the mail fraud case could have been
submitted on either or both of two theories on the
indictment and record now before us, First, that
~ Governor Mandel had either been bribed as a part of a
scheme: to: defraud or that attempts had been made to
is edually as apparent that the case could not have been
seas on the theory that Governor Mandel had a
direct interest in the racetrack business, for no direct
connection on his part was either alleged or proven.
I
Appellants further contend that the district court
erred in rejecting certain of their proffered instructions
and in omitting certain instructions in its charge to the
a ae |
43a
give a bribery instruction in connection with the mail
fraud counts as well as the failure to give an instruction
relating to Governor Mandel’s knowledge of the
ownership of Marlboro.
We have previously set forth the law applicable to the
mail fraud counts of the indictment. Based upon the
indictment and record in this case, Appellants could
have been convicted of mail fraud only if one or more of
the following schemes to defraud were proven: a scheme
involving the bribery or attempted bribery of Governor
Mandel; or,.a scheme involving the fraudulent misrepre-
sentation of facts
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