Petition for Writ of Certiorari — Ellington v. United States

Supreme Court U.S

FY ae I)

NOV 19 1985

YOSEP}' SPAN;

“ Oo

Cie RK 4 JR.

IN THE SUPREME COURT OF THE UNITED STATES ———

OCTOBER TERM, 1986

CHARLES ELLINGTON,

Petitioner,

vs.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI

To the United States Court of Appeals

For The Sixth Circuit

JAMES R. WILLIS, ESQ.

Attorney for Petitioner

Suite 610,Bond Court Bldg.

1300 East Ninth Street

Cleveland, Ohio 44114

(216) 523-1100

ANN MARIE TRACEY

Assistant U.S. Attorney

U.S. Post Office and

Courthouse Bldg.

Cincinnati, Ohio 45202

QUESTIONS PRESENTED

I

Whether evidence is insufficient to

support a conviction for mail or wire

fraud when it fails to establish both the

existence of a scheme to defraud and the

use of the mail or a "“wire" for the

purpose of executing such scheme.

Il

Whether the intent to defraud

instruction in this mail and wire fraud

prosecution was constitutionally

insufficient to properly place before the

jury the good faith defense raised by the

accused,

ty D> ac ms — ie

- ae iy

: a :

III

Whether in a mail and wire fraud

prosecution the given instruction must

make it clear that the existence of a

scheme to defraud must be established

apart from any false or § fraudulent

representations,

ii

TABLE OF CONTENTS

PAGE

QUESTIONS PRESENTED . : ‘ 1

TABLE OF AUTHORITIES , ‘ — |

OPINIONS OF THE COURTS BELOW . poe

JURISDICTIONAL STATEMENT . ‘ eee

STATUTORY PROVISIONS WHICH THE CASE

INVOLVES . ; ‘ : pace

STATEMENT OF THE CASE ‘ , fae

REASONS FOR GRANTING THE WRIT . ae

ARGUMENT NO, I:

Evidence is insufficient

to support a conviction

for mail or wire fraud

when it fails to

establish both the

iii

as

Ss

existence of a scheme to

defraud and the use of

the mail or a “wire” for

the purpose of executing

such scheme. . °

ARGUMENT NO. II:

The intent to defraud

instructions in this mail

and wire fraud

prosecution was

constitutionally

insufficient to properlv

place before the jury the

good faith defense raised

by the accused. .

ARGUMENT NO, III:

An instruction in a mail

and wire fraud

prosecution that fails to

iv

15

make it clear that the

existence of a scheme to

defraud apart from any

false or fraudulent

representations is

constitutionally flawed. . . 23

CONCLUSION . . ° . . 28

CERTIFICATE OF SERVICE . . . 30

APPENDIX:

Appendix "A" - Opinion of

the Court of

Appeals (Sixth

Circuit) . Al

Appendix “B" - Relevant

statutory

provisions. Al0

|

TABLE OF AUTHORITIES

PAGES

Blachly v. United States, 380 F.2d

S65, G71 (StH Cif. 1967) . ae

Coleman v. United States, 167 F.2d

837 (5th Cir. 1948) . , -> ae

Durland v. United States, 161 U.S.

306 (1896) . . . 7 ae

Epstein v. United States, 174 F.2d 754,

766 (6th Cir. 1949) . ° .

Harrison v. United €tates, 200 F.2d

662 (6th Cir. 1912) . . < ome

Hawley v. United States, 133 F.2d 966

(10th Cir. 1946) , : » a8

Horman v. United States, 116 F.2d 350

(6th Cir. 1902) . ‘ “ee x

Hurson, Limiting The Federal Mail

Statutes - A Legislative Approach,

20 Am. Crim. L. Rev. 423 (1983) 25

Scott v. United States, 263 F.2d 298,

402 (5th Cir. 1959) . . ae

Silverman v. United States, 213 F.2d

145 (5th Cir. 1954) . ‘ oa

vi

PAGES

Steiger v. United States, 373 F.2d

133 (10th Cir. 1967) ; ie

Strauss v. United States, 376 F.2d

416, 419 (5th Cir. 1967) . 93

United States v. Benjamin, 328 F.2d

854 (1964) : ° . ; 2&0

United States v. Blane, 375 F.2d 249,

252 (6th Cir. 1967) . . bk eo

United States v. Bronston, 653 F.2d

334 (8th Cir. 1981) . ; » 20

United States v. Condolon, 600 F.2d 7

(4th Cir. 1979) ; ‘ > 20

United States v. Elliot, 571 F.2d 880,

898 (5th Cir. 1978) . : oe

United States v. George, 477 F.2d 508

(7th Cir. 1973) : . aS

United States v. Goss, 650 F.2d 1336,

1341 (1981) . ° . » 6,9

United States v. Lemire, 720 F.2d

Soa? <<. CEE. 1983) ; ... 23

vii

.

.

r

~-

, ‘

‘

.

:

-

Pe ¥ 2

: : as oe

iy ri | ile aha Ne ae t jae ay re " 4 ncinadinale? sal

4 , ai rom: hh ites va =

7 ll nahi er ks He, ee? i; 7 wens ve

iin

PAGES

United States v. Phillips, 217 F.2d

435, 440 (7th Cir. 1954) . ae

United States v. Regent Office Supply,

421 F.2d 1174, 1180

(2d Cir. 1970) . ‘ ° 9,27

United States v. Reid, 533 F.2d 1255,

1264 (D.C. Cir. 1976) . —

United States v. Sherer, 653 F.2d 334

(8th Cir. 1981) ‘ : ~~ ae

Weiss v. United States, 122 F.2d 675,

at 681 (5th Cir. 1941) ‘ . 24

STATUTORY PROVISIONS

18 U.S.C. §1341 . . : . 2

18 U.S.C. §1343 . . . . 2

viii

NO.

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1986

CHARLES ELLINGTON,

Petitioner,

vs.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI

To The United States Court of Appeals

For The Sixth Circuit

To The Honorable, The Chief Justice And

Associate Justices Of The Supreme Court

Of The United States:

The Petitioner, Charles Ellington,

respectfully prays that a Writ of

Certiorari issue to review the judgment

of the United States Court of Appeals for

the Sixth Circuit, which judgment became

final on September 3, 1985.

OPINION BELOW

The Opinion of the Court of Appeals

(Appendix "A",-. infra, pp. Al1-A9) is

unreported.

JURISDICTION

The judament of the Court of Appeals

was entered on September 3, 1985. The

jurisdiction of this Court is’ invoked

under 28 U.S.C. 1254 (1).

STATUTORY PROVISIONS WHICH THE CASE

INVOLVES

The relevant statutory provisions

involved are 18 U.S.C., §1341 and 18

U.S.C., §1343. (Text set forth in

Appendix.)

STATEMENT OF THE CASE 2/

(I)

Following a jury trial in the

Southern District of Chio (presided over

17 References made to a page in the

transcript of proceedings in the trial

court will be designated (Tr. __).

iia diate

by Judge Rice) Charles Ellington was

es S

convicted and sentenced for various

| violations of the Mail Fraud Statutes, 18

/u.8.¢. §1341 and a violation of the Wire

Fraud Statute, 18 U.S.C. §1343.

On appeal from the verdicts and the

| judguent entered thereon, the Sixth

Circuit discounted and rejected

petitioner's contention that the trial

court erred when he not only failed to

give a separate and specific good faith

instruction, but refused to do so,

In a nutshell Charles Ellington, the

petitioner herein (variously referred to

as either the petitioner, the defendant

or Ellington), was charged and convicted

of violating the law by using the mails

and a wire communication to “deceive

others and to obtain by false _ and

fraudulent pretenses and representations

or promises, a substantive benefit ...

3

titel

“he

Aves

ge

i

6 “Tb jalan .

from the party so deceived" (Tr. 930).

The mail fraud counts, numbers 1-10, 12,

13 and 15, specifically charged Ellington

with having devised "a scheme = and

artifice to defraud" the various

individuals named in such counts of

certain monies. (Id., 931.) Count 11

made a similar wire fraud charge (id.,

938).

The facts were said by the

Government to be that the petitioner

operated a mortgage brokerage business

known as Unlimited Financing Inc. And,

it was said that he had _e falsely

represented to certain named individuals

that he had successfully obtained

“funding for other clients, and that upon

payment of a fee ... funding for their

projects would be forthcoming; ... [or]

that all or part of the fees paid would

be refunded should the loan not be

obtained" (id., 932). The Government

also contended that as a part of the

alleged scheme and artifice, which was

designed to defraud, resort was had to

the mail service (id., 933) and in one

instance (count 11) to a wire

communication facility (id., 938).

In defending the charges made above,

-counsel for the defense sought to show

that Ellington had not defrauded anyone

out of anything. Rather he had merely

failed to obtain various requested

unconventional loans. And, that while

Ellington was paid (in some instances)

for his efforts, he did not engage in the

criminal conduct charged in the

indictment.

II

On appeal the Court conceded that

the trial judge disallowed the request

made for a separate and specific

DE I AI RD oth.

instruction on the good faith issue

"because he believed the defense related

directly to the element of intent and

that the instruction that the government

must prove intent beyond a _ reasonable

doubt was adequate to meet defendant's

concerns" (Appendix "A", p. A5). Indeed

the Sixth Circuit credited itself with

having rejected the theorv exposed in

-United States v. Goss, 650 F.2d 1336,

1345 (1981) by the Fifth Circuit on this

issue.

Also, the Sixth Circuit further

conceded the given “instructions did not

~e. expressly inform the jury of the

defendant's theory" (ibid). The Court

then added that while the trial court

should have given the instruction, the

failure to do so was harmless error.

(Id., at Ao.)

REASONS FOR GRANTING THE WRIT

In this case the Government has

sought to criminalize conduct undertaken

in good faith by a business man. The

evidence that a "scheme" furthered by the

use of the mails and wire, was clearly

insufficient to support a finding of

guilty beyond a reasonable doubt on any

of the counts.

Indeed, the proof here shows this

petitioner at all times acted in "good

faith".

Ir

On the "good faith" defense issue,

it is specifically argued that the trial

judge improperly remitted the accused to

arguing a defense the Court viewed as

applicable without the benefit of an

instruction defining such defense for the

jury. This violated fundamental due

process.

Ii!

The Court's failure to make it clear

‘in its instructions that the "scheme"

‘referred to in the indictment was indeed

van entity of sorts and required proof

“that it existed apart from the alleged

i false and fraudulent representation

| supposedly made for the charged purposes

likewise violated due process.

ARGUMENT NO, I

Evidence Is_ Insufficient To

Support A Conviction For Mail

Or Wire Fraud When It Fails To

Establish Both The Existence

Of A Scheme To Defraud And The

Use Of The Mail Or A “Wire"

For The Purpose Of Executing

Such Scheme,

At the outset there can hardly be any

dispute that the crimes charged herein on

oer makes’ Bae.

aed ‘a rape stuns Nias arte

* y |

i » A ‘a ig : :

< re age) 3 ; ,

A Ce Re “a bee 2 iy TAs * 4

[we ot : a = :

A a Pale) Sa be Ae da 4) Te

' ; ¥ oay ts apres 1 ake SE eR 4

a " eS mn , 5 es ‘ ; et ' ce

i UDF. ; ry eee ei = : ; oe

a ‘ eet’ ‘re Rat ar] i a i

Renae | a PN Ay, 7 ol PO Bil 9 on tig .

tae tpams

v ’ < 4 :

a oe iJ a

eA =“ ita i = +4

=i

; 4 = Ea w as

| = 1 4 . 4 ee i5

: iC “A

7 a

ry

a

)

* | Pa ia

Poe ;

i=

re

q ~

the basis of 18 U.S.C. §1341 and §1343,

require for a conviction that the accused

so: i Meine, balla: dele Capt Mtg

© ag desig gg

must have acted as he did on the basis of

a specific intent to defraud, United

States v. Goss, 650 F.2d 1336, 1341 (5th

Cir. 1981). Also see, United States v.

Regent Office Supply, 421 F.2d 1174, 1180

(2d Cir. 1970).

It is here being contended that the

evidence in the first instance fails to

show the presence of any scheme to

defraud. This follows because in our

view, and hopefully in the Court's,

advertising for clients and offering

one's services to them as a financial

broker does not translate into a scheme

to defraud absent proof of an intent to

cause harm. So postured, any argument

that the efforts rendered by this

petitioner were “reasonably calculated to

deceive persons of ordinary prudence and

omprehension," Silverman Vv. United

tates, 213 F.2d 145 (Sth Cir. 1954),

Ysimply fails to survive any meaningful

scrutiny.

In making this contention we, of

course, credit the fact that none of the

people involved with Ellington were

inexperienced businessmen. Indeed they

were all shrewd businessmen who

apparently believed, as did the accused,

that he was performing a _ legitimate

service and that he could and did assist

them in getting the loans they sought.

This point becomes even more cogent when

it is realized that one cannot be held to

guilty knowledge of the falsity of his

statements simply because it is later

determined they were false or some

reasonable person would know they were

false. See, United States v. Benjamin,

: 328 F.2d 854 (1964).

10

Even this is not all. One must

factor into any meaningful evaluation of

the representations made by Ellington

that some sales “puffing” is always

permitted in business transactions,

particularly when the people deal at

arms length -- the situation here.

Indeed, there is surely a difference

g between mere “puffing” and the making of

"representations that can be sufficiently

“regarded as having been made in

_ furtherance of a scheme to defraud.

“ "Puffing," of course, cannot properly be

regarded as anything other than the

;

expression of an opinion, Scott v. United

-

States, 263 F.2d 398, 402 (5th Cir.

1959), and is hardly the type of

assertions of which frauds are made,

See comment, Mail Fraud - Fraudulent

_Misrepresentations Must Be Distinguished

From "Puffing" Or Sellers Talk _ In

P ll

i

:

;

4

x

5

4

'

®

Offenses under 18 U.S.C. §1341, 22 S.

Car. L. BR. 434 (1970).

The upshot of this point is that

‘since any exaggerated sales talk, or

‘pitch, on the basis of which Ellington

sold himself to potential clients was

not sufficient to deceive anybody with a

‘reasonable amount of business sense, it

“can hardly be viewed as sufficient to

-carry the day for the Government on any

element of the charged offense. -Indeed,

the absence here of any proof that the

loan procedure employed by the

petitioner had no potential for success

makes it clear that to designate the

effort itself a complete sham makes no

sense at all.

A. The evidence failed to

establish the existence of a

scheme or artifice to defraud

by means of false or

12

fraudulent pretenses and the

like,

Distilled, what is here being

‘contended (and clearly this point has

ybeen sorely missed by the jury and the

‘framers of the indictment in this case)

m

‘is that the making of false statements

“standing alone is insufficient to

4

‘establish, either, a mail fraud or wire

‘fraud violation. What is required, which

mr was not shown here, is proof of a

‘recognizable scheme that was formed with

‘the specific intent to defraud and the

use of the mails in furtherance thereof.

A fair description of the scheme to

defraud, charged in the indictment, is

that Ellington and certain financial

brokers to whom he variously referred

clients, or discussed with clients, as

being capable of funding their individual

and separate financial projects were

13

actually incapable of doing so. And,

they were in fact only interested in

bilking people out of their application

fees. Further, the charge was made that

Ellington's representations as to his

asserted proven ability to generate these

loans were as wilfully false as was his

representations as to the ability of

those to whom the loan applications and

other financial papers were ultimately

submitted to finance any of the projects.

(See Tr. 1019-1022).

B. The evidence failed to

establish that the mails and

the wires were used ir

furtherance of a scheme to

defraud.

When the question as to _ whether

there was sufficient evidence to support

a finding that the mail or the wires were

resorted to in furtherance of a

14

fraudulent scheme, the answer hardly

seems ciear enough. Simply put, we also

contend there is a patent lack of any

causal connection between the use of the

mails and the effectuation of any scheme.

In making this argument we are persuaded

that the essential elements of mail fraud

and wire fraud are almost the _ same,

United States v. Lemire, 720 F.2d 1327

m.¢. Cir. 1983), which makes’- the

arguments made herein applicable to all

counts.

ARGUMENT NO, II

The Intent To Defraud

Instruction In This Mail And

Wire Fraud Prosecution Was

Constitutionally Insufficient

To Properly Place Before The

Jury The Good Faith Defense

Raised By The Accused.

A critical aspect of the defense

con ts

made to these charges was that the

accused acted at all times in good faith.

The Court indeed recognized that "good

faith" was a complete defense to the

charges made in the indictment (Tr. 866)

-- as it surely is. See Durland v.

United States, 161 U.S. 306 (1896).

Indeed, although expressly refusing to

give the jury the good faith instruction

submitted by the defense (Tr. 886), the

trial court openly conceded "[T]here is

enough evidence in the record to allow"

the defense to “argue good faith" (ibid).

However, as the Court saw it, the

argument had to be made under’ the

specific intent element of the charges

made (ibid). All this we contend was

pure error.

Our contentions in this regard finds

formidable support in United States v.

Goss, 650 F.2d 1336 (5th Cir. 1984),

16

which is analogous to the case here. In

Goss, as in this case, the Court did

instruct the jury “that a finding of a

specific intent to defraud is required

for conviction" of mail fraud (id., at

1345). What makes Goss so compelling is

that it specifically rejected the

position openly expressed by our trial

Judge as the reason why the good faith

instruction should not be given. Here we

refer to Judge Rice's expressed view,

which was an adoption of the

prosecutor's argument, that "the issue

was covered under the specific intent,

the wilfulness aspect of the instruction"

(Tr. 883). As put by the Court, while

"[glood faith is a defense ... it, in

effect, casts reasonable doubt upon

essential elements" of the charges, and

for that reason “it raises evidence to

the level of an element" (ibid).

17

The bottom line, of course, is that

the Court refused to give a good faith

instruction because he was convinced it

was unnecessary (id., 886).

In our view, a complete confutation

of the trial court's position is provided

by the following express holding in Goss:

Charging the jury that a

finding of specific intent to

defraud is required for

conviction, while it may

generally constitute the

negative instruction, i ae

that, if the defendants acted

in good faith, they could not

have had the specific intent

to defraud required for

conviction, does not direct

the jury's attention to the

defense of good faith with

sufficient specificity to

avoid reversible error.

Id., at 1345. Accord, Steiger v. United

States, 373 F.2d 133 (10th Cir. 1967);

Coleman v. United States, 167 F.2d 837 .

(Sth Cir. 1948), and Hawley v. United

States, 133 F.2d 966 (10th Cir. 1946).

18

io pepe Gaga as Da NN STE

$

sd a des ie he ta Se os eee ie ai ai a ea

SE lye Shia lb No A sli aa Sets REIT Sit ERE TRAN eC

Since the trial court's attention

was specifically directed to the "good

faith" issue in this case, the Court's

obligation to give the instruction seems

clear enough. Stated another way, the

trial court under the facts here must

truly be deemed to have committed

reversible error by refusing to charge

the jury on the issue of good faith.

Goss, at 1344. Also see United States v.

Sherer, 653 F.2d 334 (8th Cir. 1981).

(Good faith is a complete defense to the

charge of mail fraud and a defendant is

entitled to such charge if there is

evidence to support the theory.)

The failure of the Court to give the

good faith charge is magnified by the

idea that had it been given the Court

would perforce have been required to

emphasize that the burden was on the

Government to prove beyond a reasonable

doubt the lack of good faith. Or, stated

another way, the Government would have

been charged wich disproving good faith.

See, United States v. Bronston, 658 F.2d

920 (2d Cir. 1981), where the Court

recognized that a basic ingredient of the

"good faith" defense is that the jury

should be instructed, not only that good

faith is a complete defense but "that the

burden was on the Government to prove

lack of good faith beyond a reasonable

doubt" (658 F.2d, at 930).

The cogency of petitioner's

arguments made above as to the prejudice

by which he was victimized, in the wake

of the Court's failure to specifically

instruct on good faith defense, is

further aggravated by still other

circumstances. Here reference is being

made to the Court's apparent thesis that

counsel having been licensed by him "to

argue" good faith "to a fair-thee-well"

(Tr. 886), somehow eliminated any need

for an instruction to which he _ was

entitled, and which trial counsel

expressly viewed as being absolutely

essential to the defense (Tr. 916-918).

For our part, it should go without

saying (since it is beyond dispute) that

it is always possible and proper for an

accused in closing arguments to

structure his analysis of the evidence in

such a way that those ’' instructions

favorable to him will be emphasized. It

is also beyond dispute that any argument

made to the jury on a legal issue

unsupported by an instruction to which

the defendant is entitled "...constitutes

an aggravation rather than a mitigation

of the harmful effects of the court's

refusal to instruct." United States v.

21

Phillips, 217 F.2d 435, 440 (7th Cir.

1954).

Stated another way, when viewed from

the standpoint of this petitioner, the

Court's failure to instruct the jury on

good faith also deprived him of the right

to have the imprimatur of the court put

upon his theory of the case. The point

here being, just as the indictment

summarized, in a sense, the factual

predicates upon which the prosecution

relies to establish guilt, the

defendant's theory of the case

instruction, in this instance the good

faith defense, rightly would have

directed the jury's attention to the

specific facts and issues upon which the

defense was based.

Given the further fact that

Ellington was also entitled absolutely to

have the jurv consider his good faith

22

theory of defense that found support in

the law and the evidence, Blane, 375

F.2d, at 252, then it surely follows that

the court's disinclination to do so had

the unavoidable effect of diluting the

petitioner's ability to prevail on the

basis of his defense. See, Strauss v.

United States, 376 F.2d 416, 419 (5th

Cir. 1967).

ARGUMENT NO. III

In A Mail And Wire Fraud

Prosecution The Given

Instruction Must Make It Clear

That The Existence Of A Scheme

To Defraud Must Be Established

Apart From Any False _ Or

Fraudulent Representations.

The term "scheme or artifice to

defraud," although originally coined by

Congress, was not defined by’ them.

Indeed, this point was specifically made

23

in Weiss v. United States, 122 F.2d 675,

at 681 (5th Cir. 1941) and in United

States v. Reid, 533 F.2d 1255, 1264 (D.C.

Cir. 1976). It is this failure that has

allowed the government to conjure up

expansive interpretations, such as_ we

have here. In this instance the effort

made is to force even a routine business

transaction under the mail and wire fraud

statutes, when if any crime at all was

involved, it should be handled on the

local level.

Still, and this case really makes

our point, a "scheme to defraud"

certainly must entail something more than

proof that a number of people spent, or

loss, money in an effort to benefit

themselves through business deals with

the same individual. While it is true

that a certain amount of trust was

certainly involved in each of these

24

transactions. and it may very well be

that an argument can be made that it was

breached, it is surely the law that not

every breach of trust results in a

criminal fraud. See, United States v.

George, 477 F.2d 508 (7th Cir. 1973).

Also see Epstein v. United States, 174

F.2d 754, 766 (6th Cir. 1949).

All this being so, the

criminalization of what happened here

under the fraud statutes involved hardly

seems defensible. See Hurson, Limiting

The Federal Mail Statutes - A Legislative

Approach, 20 Am. Crim. L. Rev. 423

(1983).

When what has been said above is

focused on the Court's charge as to the

requirements of a “scheme or artifice to

defraud," it must surely be that the

Court's charge failed in its purpose.

Here we centralize the following segments

25

sn eh Ce aaa tates I

of the charge given by the Court:

The words "scheme" and

"artifice", as used in the

mail and wire fraud statutes

include any plan or course of

action intended to deceive

others, and to obtain, by

false or fraudulent pretenses,

representations, or promises,

a substantive benefit, such as

money or property, from the

party so deceived,

(tr. 20%9.) In our view, the above

instruction failed to inform the jury of

what clearly appears to be the case --

that is, that a “scheme or artifice" must

clearly be identifiable and exist apart

from the acts supposedly committed in

furtherance thereof. Stated another way,

it is surely not the law that the mailing

of a letter can become an act done in

furtherance of a scheme if it develops

that any one or more of the statements

made in the course of an entire

relationship turns out to be false. If

this is a valid position then the

26

business practices utilized by our

petitioner cannot logically be regarded

as a scheme within the purview of the

statutory proscriptions here involved.

This is so for the further reason

that the various representations claimed

to be false and fraudulent were not

reasonably calculated to deceive even

people of ordinary prudence and

comprehension, Blachly v. United States,

380 F.2d 665, 671 (5th Cir. 1967).

The point here being contended for

was well made in United States v. Regent

Office Suppiy Co., 421 F.2d 1174 (2d Cir.

1970). Also see Horman v. United States,

116 F.2d 350 (6th Cir. 1902) and Harrison

v. United States, 200 F.2d 662 (6th Cir.

1912).

So postured, since "scheme to

defraud" within the contemplation of 18

U.S.C. §1341, can at least be likened to

27

a racketeering "enterprise" which has

been defined as an amoeba-like

infra-structure, United States Vv.

Elliott, 571 F.2d 880, 898 (5th Cir.

1978), it follows that the given

instructions on this element failed in

its intended purpose. The purpose being

referred to, of course, would have surely

included defining what at best can be

said to be a concept that is difficult to

define. Here we refer to the entity or

"scheme to defraud," which was said to be

furthered by the use of the mails and

wire. Compare United State v. Condolon,

600 F.2d 7 (4th Cir. 1979) which really

makes our point.

CONCLUSION

If what the accused did in this case

can be criminalized on the basis of the

mail and wire fraud statutes, then it has

to be that any business transaction in

28

which extravagant, or even the usual,

sales pitches are given can be deemed a

federal crime if for any reason it

develops that the party making’ the

representations cannot deliver on what he

thought were reasonable assurances.

Stated another way, can the routine sort

of puffing that goes on in business

transactions be converted by the mere use

of the mails, or the wires, into a

federal criminal offense.

Surely Congress never intended that

the Government should become involved to

the extent here shown in routine business

transactions. If what this petitioner

Gid was a crime, then his fate should

have been dealt with by the State of Ohio

in its courts rather than by the U.S.

29

Attorney in a Federal Court, where the

law has to be strained as much as it was

here,

Respectfully submitted,

JAMES R. WILLIS, ESQ.

Attorney for Petitioner

Suite 619, Bond Court Bldg

1300 East Ninth Street

(216) 523-1100

CERTIFICATE OF SERVICE

I hereby certify that a copy of the

foregoing Petition For Writ of Certiorari

was mailed to Charles Fried, Solicitor

General, United States Justice

Department, Washington, D.C. 20530 and to

Ann Marie Tracey, Assistant U.S.

Attorney, U.S. Post Office and Courthouse

Bldg., Cincinnati, Ohio 45202, this

day of November, 1985.

JAMES R. WILLIS, ESQ.

Attorney for Petitioner

30

APPENODI X

No. 84-3696

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

ON APPEAL

FROM THE

UNITED STATES

DISTRICT

COURT FOR THE

SOUTHERN

DISTRICT OF

OHIO

CHARLES LEONARD ELLINGTON

Defendant-Appellant,

BEFORE: JONES, Circuit Judge, EDWARDS,

Senior Circuit Judge; and SILER,

District Judge.*

PEFR CURIAM. Appellant, Charles

Ellington, appeals his conviction of

thirteen counts of mail fraud in

violation of 18 U.S.C. §1341, and one

count of wire fraud in violation of 18

U.S.C. §1343. Appellant argues that the

evidence was insufficient to support the

* The Honorable Eugene E. Siler, Jr.,

Chief Judge, United States District Court

for the Eastern District of Kentucky,

sitting by designation.

APPENDIX "A"

Al

'

’

r

‘

4

'

‘

'

‘

i

oe

.

+

'

'

‘ -

-

«Par ve ‘

ee ;

* : .

- ise 7 f ; ,

ad _ = ¥ tae i > : ; ;

4 eV aw x] a) d ‘ rn Tee A sR - - —e ce Be i 9 - rome

‘. « pi s © 4 a Pah _ f Z 0 ade a we J a aed ie ee, is : 4 us aoe

¢ os : *; a ee & bs , ? ; ’

a 47 ‘ 7 » Sn a) . e

conviction, and that the instructions

failed to put the theory of the defense

before the jury. We affirm the judgment

of the district court.

-.

Appellant first contends that the

evidence was insufficient to support the

conviction because there was no evidence

that he acted with intent to deceive or

defraud. Viewing the evidence in the

light most favorable tc the government,

United States v. Stone, 748 F.2d 361, 363

(6th Cir. 1984), it is clear that there

was sufficient evidence upon which to

base the conviction. The evidence showed

that appellant went into business for

himself and formed the company Unlimited

Financing. He represented to clients

that he had the ability to ok*ain large

loans through the use of § insurance

guarantees and that he represented or had

A2

special access to lenders who could fund

large business ventures or construction

projects. He also advised prospective

clients that he had successfully closed

numerous loans in the past. He assured

them that, based on his track record and

his analysis of their projects, he would

be able to obtain funding for’ them.

Appellant admitted at trial, however,

that he had never successfully closed a

loan using insurance guarantees.

Appellant contends that the evidence

is not inconsistent with his defense that

he acted in good faith. However, even if

Ellington honestly believed in the

ultimate success of his venture, that

belief is not a defense to mail fraud.

United States v. Stull, 743 F.2d 439, 446

[ean Gen. 276s), Cert. denied, 105 S. Ct.

1779 (1985). In Stull the Court upheld

mail fraud convictions where

A3

misrepresentations included both promises

to fund within short periods of time

(30-45 days) and promises that 96% of the

loan requests were funded, but where no

loans were funded. Id. at 443. "'([Njo

matter how firmly the defendant may

believe in the plan, his belief will not

justify baseless, false, oor reckless

representations or promises.'" 743 F.2d

at 446 (quoting Sparrow v. United States,

402 F.2d 826, 828 (10th Cir. 1968). in

sum, there is ample evidence from which

the jury could find that Ellington

intentionally devised a scheme to defraud

his clients and that he used the mails

and, in one instance, the wires to obtain

funds from his clients.

II

Appellant next contends that the

instruction regarding intent was

insufficient to place the good faith

A4

=

defense of the accused before the jury.

Appellant had requested the following

instruction:

If the evidence in the case

leaves you with a reasonable

doubt as to whether the

Defendant in good faith

believed his statements to be

true at the time he made them,

then you must find the

Defendant not guilty.

The district judge disallowed the

instruction because he believed the

defense related directly to the element

of intent and that the instruction that

the government must prove intent beyond a

reasonable doubt was adequate to meet

defendant's concern,

Appellant relies on United States v.

Goss, 650 F.2d 1336, 1345 (5th Cir.

1981), to argue that the failure to give

the good faith instruction was error.

The government correctly notes~ that

following the trial in this matter the

Sixth Circuit addressed this question in

AS

= (cain i

United Staets v. McGuire, 744 F.2d 1197,

1200-01 (6th Cir. 1984), cert. denied,

105 S. Ct. 1866 (1985), and rejected the

position set forth by the Fifth Circuit

in Goss. This Court held in McGuire that

although the better practice is to give a

good faith instruction, the failure to do

so was harmless given the fact that the

instructions with regard to _ specific

indent expressly informed the jury of the

defendant's theory of the case. and

properly placed the burden of proof of

intent on the government. Id. at

1201-02. The instructions in the instant

case advised the jury that the

defendant's actions must be knowingly and

intentionally done, without mistake,

accident or an innocent reason and with a

specific intent and bad purpose to

violate the law. The court also

instructed the jury that §$ fraudulent

A6

statements, if known to be untrue or made

with reckless indifference to the truth,

must be made with intent to deceive. The

court further instructed the jury that it

must find that the defendant acted with

intent to defraud, that is, “to act

knowingly and with the specific intent to

deceive, ordinarily for the purpose of

either causing some financial loss to

another or bringing about some financial

gain to oneself." The instructions did

not, however, expressly inform the jury

of the defendant's theory.

Nevertheless, we believe the error

was harmless given the strength of the

proof in this case regarding appellant's

intent to deceive. Appellant only argued

that his statements regarding his

dealings with other brokers and his

belief that he could obtain funding were

in good faith. He admitted at trial that

An bene

tee whe Sepak ee ——

neon tee = | es

se! Ee

aabeis! fas ‘ohoae ad

fois Shaver se sey, | seid sr Sct

‘Sut aegis Sikes

: . ~~ st

ac

>

i)

he had never been successful in closing a

loan using insurance guarantees and that

the only lender he represented was in

reality an agent of lenders.

Consequently, the statements made

regarding his past successes and his

relationships with lenders were blatantly

untrue and could not have been made in

geod faith. These representations were

made to induce payment of a fee and

constitute a sufficient basis by

themselves for sustaining the mail and

wire fraud convictions. Proof of any one

or more of the fraudulent

misrepresentations charged, made pursuant.

to the scheme to defraud, is adequate for

conviction of violating 18 U.S.C. 1341.

United States v. Toney, 598 F.2d 1349

(Sth Cir. cert. denied, 444 U.S. 1033

(1979); Usited States v. Halbert, 640

F.2d 1000 (9th Cir. 1981). In sum, the

A8&

court should have civen the instruction,

but the failure to do so without the

benefit of Mcguire was harmless error.

Appellant also claims that’ the

instructions failed to make it clear to

the jury that the existence of a scheme

to defraud must exist apart from the acts

allegedly committed in furtherance of the

alleged scheme. We decline to address

this issue because of appellant's failure

to preserve the issue by objecting to the

instruction,

Accordingiy, the judgment of the

district court is AFFIRMED,

ISSUED AS MANDATE: September 25, 1985

COSTS: None

AY

RELEVANT STATUTORY PROVISIONS

§1341. Frauds and swindles

Whoever, having devised or intending

to devise any scheme or artifice to

defraud, oor for obtain _ng money or

property by means of false or fraudulent

pretenses, representations, or promises,

or to sell, dispose of, loan, exchange,

alter, give away, distribute, supply or

furnish or procure for unlawful use any

counterfeit or spurious coin, obligation,

security, or other article, ... 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 thereon, or at the place

at which it is directed to be delivered

by the person to whom it is addressed,

APPENDIX "'B"

A10

eee “

a

, ant 4

> .

— —

Kes.

. x ‘ a ied i

>? o> Vs ; Xm ~ .

_

es

any such matter or thing, shall be fined

not more than $1,000 or imprisoned not

more than five years, or both.

* * *

§1343. Fraud by wire, radio, or

television.

Whoever, having devised or intending

to devise any scheme or artifice to

defraud, oor for obtaining money or

property by means of false or fraudulent

pretenses, representations, or promises,

transmits or causes to be transmitted by

means of wire, radio, or television

communication in interstate or foreign

commerce, any writings, signs, signals,

pictures, or sounds for the purpose of

executing such scheme or artifice, shall

be fined not more than $1,000 or

imprisoned not more than five years, or

both.

All