Federal Circuits, 5th Cir. (May 28, 1974)
Docket number: 72-3646
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U.S. Code - Title 18: Crimes and Criminal Procedure - 18 USC 1341 - Sec. 1341. Frauds and swindles
U.S. Code - Title 18: Crimes and Criminal Procedure - 18 USC 2 - Sec. 2. Principals
U.S. Supreme Court - Brown v. Illinois, 422 U.S. 590 (1975)
U.S. Court of Appeals for the 5th Cir. - United States of America, Plaintiff-Appellee, v. Matthew Mcgruder, A/K/a Red Mcgruder, Artis Prestidge, and Matto Trevino, A/K/a Matt Trevino, Defendants-Appellants., 514 F.2d 1288 (5th Cir. 1975) Plaintiff-Appellee, v. Matthew Mcgruder, A/K/a Red Mcgruder, Artis Prestidge, and Matto Trevino, A/K/a Matt Trevino, Defendants-Appellants.
Arthur W. Tifford, Miami, Fla. (Court-appointed), for William E. owen, jr.
Theodore J. Sakowitz, Asst. Federal Public Defender, Miami, Fla., for Frederick Morse Allen.Milton E. Grusmark, Miami Beach, Fla., for Joseph G. Scata.Edward N. Moore, Miami, Fla., for Julius Grossman.Robert W. Rust, David Quinn, Sp. Atty., Dept. of Justice, Miami, Fla., John T. Spotila, Appellate Section-Crim. Div., Dept. of Justice, Washington, D.C., for plaintiff-appellee.Before RIVES, WISDOM and MORGAN, Circuit Judges.RIVES, Circuit Judge:William E. Owen, Jr., Joseph G. Scata, Julius Grossman, Frederick Morse Allen and seven others were indicted for conspiracy, 18 U.S.C. 371; substantive violations of the federal mail fraud statutes, 18 U.S.C. 1341, 1342, 1343; and aiding and abetting, 18 U.S.C. 2. After a jury trial, Owen, Scata, Grossman and Allen all were convicted on the conspiracy count.1 Also, Scata was convicted on six substantive counts; Owen on five substantive counts; and Grossman on two substantive counts.2 Scata was sentenced to concurrent four-year prison terms on the substantive counts and to a consecujktive two-year term on the conspiracy count. Owen was sentenced to concurrent four-year terms on five counts and to a consecutive one-year term on one count. Grossman was placed on probation for three years and fined $5,000. Allen was placed on probation for four years and fined $3,000. All four convicted defendants appeal.The government's theory in this case is that the appellants and others devised and implemented a scheme to defraud suppliers of merchandise, and used the mails and wire communications in furtherance of their scheme. On May 26, 1971, William Owen bought Porter Hardware, Inc., a small hardware store in Miami, for about $5,000. Between May 26 and August 6, 1971, Porter placed orders for substantial quantities of merchandise. The government introduced evidence showing that Porter personnel in placing these orders sometimes used fictitious names. Numerous sellers supplied goods to Porter, many of them relying upon the credit reputation developed by the former owner. Most of the goods delivered to Porter were dissipated, that is, given away, resold at less than cost, and stored for later distribution at various warehouses. Deliveries were not used to replenish or increase the store's stock of goods. Only about $20 was kept in the store's cash register and little business was done with walkin customers inside the store. At least $35,000 worth of merchandise delivered to Porter on credit was never paid for. The government insists that the appellants never intended to pay for the merchandise ordered on credit.I. Sufficiency of the Evidence to Show a Violation of 18 U.S.C. 1341 or 1343.We first consider whether the acts proved by the government come within the scope of the mail fraud and wire communication fraud statutes. The most recent case in which the Supreme Court has considered the reach of 18 U.S.C. 1341 is United States v. Maze, 1974, 414 U.S. 395, 94 S.Ct. 645, 38 L.Ed.2d 603. The Court held that where an individual used a stolen credit card to obtain goods and services from motel operators, the sales slips were mailed by the motel operators to a bank, and the bank in turn mailed the slips to the true owner of the card, the mailings were not so closely related to the scheme as to bring the individual's conduct within the scope of 18 U.S.C. 1341.Count 8 of the indictment in this case charged that certain defendants, for the purpose of executing the scheme, knowingly caused a letter addressed to the Gulf Oil Corporation in Atlanta to be sent and delivered by the U.S. Post Office Department and Postal Service. According to the government's brief on appeal, this count was based upon the mailing of credit card hardbacks from a service station to Gulf after the use of a Porter Gulf credit card by a Porter employee acting at appellant Scata's direction. Under the holding in Maze, Scata's conviction under Count 8 must be reversed. We find nothing to distinguish the situation here from the situation in Maze.Count 2 of the indictment charged that certain defendants caused the mailing of a letter to Colony Paints in Baltimore, Maryland. This count was based upon a purchase order signed by Owen and given to a Colony salesman. Count 5 alleged that certain defendants caused a letter to be sent to Delta Finance Corp. of Cincinnati, Ohio. Testimony at trial indicated that Porter ordered 100 cameras from Delta by mail. Count 7 alleged that certain defendants caused Atlas Tool and Manufacturing Co. to send a letter to Porter. This count rested upon a mailing to Porter of ten minibike manufacturer's certificates necessary to license the minibikes under Florida law. Count 12 alleged that certain defendants 'transmitted and cause(d) to be transmitted signs, signals, and sounds in interstate commerce by means of a wire communication, that is, a telephone conversation between Miami, Florida, and Brunswick, Georgia.' (R. 14.) By this conversation, Porter ordered paint from Dixie-O'Brien Corpooration.The communications in Counts 2, 5, 7 and 12 are readily distinguishable from the situation in Maze, supra. In Maze, the mailings occurred after the defendant had perpetrated the fraud and obtained the goods or services which were the object of the scheme. By contrast, the communications in these counts were a necessary part of the commercial process which led to Porter's receipt of marketable goods on credit. The relation of these communications to the scheme sufficed to bring the conduct within the scope of 18 U.S.C. 1341 and 1343.Count 4 of the indictment presents a closer question. Count 4 statute. United States v. Maze, supra. Moore-Handley Hardware of Birmingham, Alabama, to send a letter to Porter. This letter confirmed a phone order for a substantial quantity of garbage cans and a number of plastic coolers. It also stated that 'Prices are fob Miami with delivery by the manufacturer's truck. Our terms are 2%-10th Prox, net 30 days.' The letter further stated that 'Enclosed is credit form which we ask that you fill out and return in the enclosed envelope.' Unlike the communications involved in Counts 2, 5, 7 and 12, this letter was not, from Porter's point of view, necessary in order to receive marketable merchandise. This letter was, however, in accord with business practices associated with the sale of goods, and Moore-Handley obviously sent this letter as a part of the transaction which resulted in the shipment of merchandise to Porter. Under these circumstances, the jury could have found that the defendants 'caused' the mails to be used, Pereira v. United States, 1954, 347 U.S. 1, 9, 74 S.Ct. 358, 98 L.Ed. 435, and that the mailing was sufficiently closely related to the scheme so as to bring the conduct within the statute. United States v. Maxe, supra.II. Sufficiency of the Evidence as to Individual Defendants.Appellants do not contend that Porter Hardware was a legitimate business operation during the period from May 26 until August 6. As to Scata, Grossman and Allen, each claims that there was insufficient evidence to support his conviction for conspiracy and for the various substantive offenses.A. ScataScata claims that the evidence discloses only that he was present at the Porter Hardware store from time to time. In support of this contention, Scata quotes the trial judge, who stated the following in denying a motion for judgment of acquittal on one of the substantive counts: 'Now, let me say to you with respect to Scata that I recognize that virtually in no instance is there any specific documentary reference to him. But there is evidence to show his fairly regular presence.' (Tr. 1629.) It is true that mere presence at the scene of a crime, or moere association with those involved in a criminal enterprise, prise, is not sufficient to prove participation in a conspiracy. United States v. Falcone, 1940, 311 U.S. 205, 61 S.Ct. 204, 85 L.Ed. 128; United States v. Webb, 6 Cir. 1966, 359 F.2d 558. However, this is not such a case. The record shows that Scata received merchandise from Porter for his personal use. The items he received apparently included brushes and hoses, a machine for making threads on a screw, a battery, a boat hoist, paint for his home, two minibikes, some wood, and other boxes of unidentified goods. The receipt of these items during little more than a two month period, together with his frequent presence at the store, could have led the jury to believe that Scata knowingly encouraged the scheme by taking for his personal use some of the fruits of the fraud.There was evidence that Scata helped arrange at least one sale of merchandise-- a witness testified that he bought a minibike from Porter, and that Scata asked him to come by his house to pick it up. Also, on one occasion Scata told a woman who needed tires to come to Porter Hardware. When the woman came to the store, Scata was present. He took her car keys and gave them to a Porter employee who then used a Porter credit card to get new tires. The woman was never billed for the tires. Included in police informant Snider's testimony for the government is the following:'Q. After you began working, Mr. Snider, at Porter Hardware, Inc., did you have occasion at any time to see or talk with the defendant Joe Scata at Porter Hardware, Inc., or elsewhere concerning Porter Hardware's business?'A. Yes. Mr. Scata was in there frequently. I was introduced to him by Bill (Owen) when I started there. Their initial conversation there was basically Mr. Scata was interested in more than anything whether or not I could be trusted as an employee there.' (Tr. 1162-1163.)From these incidents, coupled with his frequent presence at the store, the jury might reasonably have inferred that Scata was more than merely a bystander at Porter Hardware; that, in fact, he was directly involved in the operation if not the management of the enterprise; and that he was aware of and aided in the conspiracy to defraud suppliers by the use of the mails and wire communication.Scata urges that the evidence shows no participation by him in the communications which form the basis of the substantive counts of the indictment. The government responds that Scata was an aider and abettor on each of the substantive counts, and that Scata received substantial portions of the merchandise ordered from the various suppliers.The jury could have inferred from the evidence that there was a conspiracy to defrauds suppliers of merchandise, and that Scata was a member of the conspiracy. It follows that the jury could find Scata liable as an aider and abettor in the various substantive offenses. The substantive offenses charged in the indictment result from transactions between Porter Hardware and various suppliers. The individual transactions were merely a part of the general plan. If Scata participated to the extent that he conspired with others in a scheme designed to defraud suppliers, then the jury could properly find that he expected and encouraged the individual communications which constitute the substantive offenses. This would be sufficient participation to make Scata an aider and abettor under substantive Counts 2, 4, 5, 7 and 12.This result is consistent with Pinkerton v. United States, 1946, 328 U.S. 640, 66 S.Ct. 1180, 90 L.Ed. 1489, where the Supreme Court states that a party to a continuing conspiracy may be responsible for substantive offenses committed by a coconspirator in furtherance of the conspiracy, even though he does not participate in the substantive offenses or have any knowledge of them.B. GrossmanGrossman urges that the evidence of record was insufficient to submit the question of his guilt to the jury. We disagree.Police informant Snider testified that Grossman was in the store 'some weeks every day. Other times he would be in three or four times a week.' (Tr. 1198.) He overheard Grossman talk with Owen about 'certain items that were to arrive at the store that day, and that he (Grossman) was to come back later in the afternoon to check them out, if he wanted to purchase them' (Tr. 1199), and about the fact 'that the items that Julie was waiting for had not come in yet' (Tr. 1200). Another witness testified that Grossman, when he came to the store, would sometimes ask: 'Well, did you get any new shipments in today, something that I may be interested in?' (Tr. 273.)Snider also testified concerning a conversation he had with Grossman. Grossman allegedly said that 'he liked my (Snider's) security because I kept watching for people to see if anybody would be following us' (Tr. 1204); that 'I (Grossman) do not want to be around Porter Hardware in the event or whenever police are called in or if they are called in' (Tr. 1206); and that 'he (Grossman) felt that it was getting very warm here' (Tr. 1206). Snider testified that on one particular trip he hauled a truckload of merchandise from the warehouse to Grossman's home, helped unload it, and received $400 from Grossman for Owen.Policeman Tucker testified that Grossman's vehicle was used on a regular basis at Porter Hardware. Tucker further testified that Grossman stated during an interview that he had been at Porter Hardware many times and had purchased power drills, tools, coolers, caulking compound, screwdrivers, and Polaroid cameras. Grossman also stated that he paid less than wholesale for the items he bought.The jury could have concluded that Grossman's comments to Snider about security and about the police revealed a guilty mind. These comments, plus Grossman's purchases from Porter, including purchases at below the wholesale price of the merchandise, are sufficient to support his conviction on the conspiracy charge. Grossman's purchases of garbage cans and Polaroid cameras, taken together with the other evidence against him, could have led the jury to infer that Grossman knowingly encouraged the mailings which led two suppliers to send merchandise to Porter Hardware. We therefore conclude that the evidence was sufficient to hold Grossman liable as an aider and abettor under substantive Counts 4 and 5 of the indictment.C. AllenAllen claims that there is not the slightest hint in the record of an agreement between him and any other person for the commission of a crime. We view the record differently.Informer Snider testified that Allen was present at Porter Hardware 'very often, two to three times, four times a week and sometimes more. He was there as a buyer of the products which came in.' (Tr. 1180.) Snider further stated that he delivered a truck full of plastic garbage cans to Allen, and that he helped Allen load battery cables, cutlery and other items into Allen's car for sale to customers. On one occasion Allen explained the Porter operation to Snider as follows: 'He told me that items were bought on credit and then sold for cash at half their wholesale price or whatever their billing price was; that this was the going figure.' (Tr. 1188.) According to Snider's testimony, Allen also suggested burning the insulation from copper wire to sell the copper for about $15,000 as scrap metal.Policeman Tucker testified that Allen told him that he was a salesman for Porter and had sold aerosol paints, garbage cans, garden hoses, Black and Decker tools, and barbecue (equipment).From this evidence, the jury could have inferred that Allen knew about the Porter Hardware operation, and that, through his efforts to resell the merchandise, he participated in the scheme to defraud suppliers.III. Owen's Claims.On August 6, 1971, police officers stopped the automobile which Owen was driving, and one officer searched through a paper bag on the front seat of the vehicle. He found a revolver. Owen was thereupon arrested and later charged with violation of 18 U.S.C. App. 1202(a), possession of a gun by a convicted felon. At the police statin, Postal Inspector Conner, who was investigating Porter Hardware, interviewed Owen and told him he was suspected of mail fraud. Conner invited Owen to come to his office at a later date to discuss the situation. Owen went to Conner's office on August 10 and on a number of later occasions.The government and Owen apparently agree that, at a hearing on the gun charge on August 12 before the United States Magistrate, government attorney Quinn advised Owen's counsel, Koste, that in return for Owen's cooperation and testimony in a mail fraud case, either Owen would not be indicted or, if Owen were indicted and convicted, the government would recommend probation. Koste recalled that Owen was to be 'an unindicted coconspirator or an indicted coconspirator.' (Tr. on Motions to Suppress, 429-430.) Owen now claims this indicates he was to be indicted, if at all, on only one count of conspiracy. The gun charge was later dismissed.Sometime between September 12 and October 9, 1972, Owen's new attorney, Tifford, spoke with Quinn. According to Tifford, Quinn on this occasion stated that the government would advise the court of Owen's cooperation, but would not recommend probation. Quinn, in a conference before the judge during the trial, could not recall whether he specifically mentioned a recommendation of probation in his conversation with Tifford. Quinn did make clear at trial, however, that so long as the trial continued, the government stood ready to recommend probation if Owen would cooperate and testify.A. Owen claims first that the agreement in question and certain evidence obtained pursuant to the agreement were 'tainted' by being the direct or indirect products of an illegal search, seizure and arrest, and should have been suppressed. The government replies that the search of Owen's car, the seizure of the revolver, and the subsequent arrest were legal. The government further responds that even if the arrest was illegal, Owen's cooperation with Conner was voluntary and with full awareness of his rights. We do not pass upon the legality of Owen's arrest on the gun charge, for it is clear to us from the facts of this case that, even assuming that the arrest was unlawful, any taint arising from the arrest had dissipated by the time Owen agreed to cooperate with the authorities in the mail fraud case.In Wong Sun v. United States, 1963, 371 U.S. 471, 83 S.Ct. 407, 9 L.Ed.2d 441, the Supreme Court held that the statements by one defendant, Toy, made in his bedroom at the time of an unlawful arrest, were the fruits of unlawful action, and should have been suppressed. The Court likewise held that the narcotics taken from another defendant on the basis of Toy's statements were fruits of illegality, and should not have been admitted. The Court in Wong Sun recognized, however, that the connection between an illegal arrest and a subsequent statement could "become so attenuated as to dissipate the taint.' Nardone v. United States, 308 U.S. 338, 341, 60 S.Ct. 266, 84 L.Ed. 307.' 371 U.S. at 491. On the evidence that one defendant had been released on his own recognizance after a lawful arraignment, and had returned voluntarily several days later to make a statement, the Court found that such a dissipation had occurred, and upheld a conviction based in part upon the statement. The Court emphasized that the test of admissibility was not whether the evidence would not have come to light 'but for' the illegal actions of the police; 'rather, the more apt question in such a case is 'whether, granting establishment of the primary illegality, the evidence to which instant objection is made has been come at by exploitation of that illegality or instead by means sufficiently distinguishable to be purged of the primary taint.' Maguire, Evidence of Guilt, 221 (1959).' 371 U.S. at 488.This Court has discussed Wong Sun on a number of occasions and has developed several guidelines to help determine when the taint of an illegal arrest is sufficiently dissipated that evidence secured after the arrest is admissible in a criminal trial. Rogers v. United States, 5 Cir. 1964, 330 F.2d 535; Thomas v. United States, 5 Cir. 1967, 377 F.2d 118; Phelper v. Decker, 5 Cir. 1968; 401 F.2d 232; Bretti v. Wainwright, 5 Cir. 1971,Try vLex for FREE for 3 days
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