No. 99-804
In the Supreme Court of the United States
CARL W. CLEVELAND, PETITIONER
v.
UNITED STATES OF AMERICA
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
BRIEF FOR THE UNITED STATES
SETH P. WAXMAN
Solicitor General
Counsel of Record
JAMES K. ROBINSON
Assistant Attorney General
MICHAEL R. DREEBEN
Deputy Solicitor General
BARBARA MCDOWELL
Assistant to the Solicitor
General
JOEL M. GERSHOWITZ
Attorney
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217
QUESTION PRESENTED
Whether the federal mail fraud statute, 18 U.S.C. 1341, reaches a scheme
to obtain a video poker license from the State of Louisiana by means of
false representations.
In the Supreme Court of the United States
No. 99-804
CARL W. CLEVELAND, PETITIONER
v.
UNITED STATES OF AMERICA
ON WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
BRIEF FOR THE UNITED STATES
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. 1a-44a) is reported at 182
F.3d 296. The opinion of the district court (Pet. App. 52a-86a) is reported
at 951 F. Supp. 1249.
JURISDICTION
The judgment of the court of appeals was entered on July 21, 1999. The petition
for rehearing was denied on September 2, 1999 (Pet. App. 45a-47a). The petition
for a writ of certiorari was filed on November 9, 1999, and was granted
on March 20, 2000, limited to the first question presented. The jurisdiction
of this Court rests on 28 U.S.C. 1254(1).
STATUTE INVOLVED
Section 1341 of Title 18 of the United States Code is set forth in Appendix
A to this brief.
STATEMENT
This case arises out of a scheme to obtain a lucrative video poker license
from the State of Louisiana by submitting false information to the State
about the prospective licensee's true owners. Petitioner challenges the
court of appeals' holding that such a scheme violates the federal mail fraud
statute, 18 U.S.C. 1341.
1. In 1992, Fred Goodson and his family formed Truck Stop Gaming, Ltd. (TSG,
Ltd.) and its corporate partner, Truck Stop Gaming, Inc. (TSG, Inc.), in
order to participate in the video poker business at their truck stop in
Slidell, Louisiana. Petitioner Carl Cleveland, a lawyer, assisted the Goodsons
in preparing applications for a video poker license for TSG, Ltd., and submitting
those applications to the State. The applications required a partnership
seeking a gaming license to identify its partners, to submit personal financial
statements for all partners, to affirm that the listed partners were the
sole beneficial owners of the business, and to affirm that no partner had
an arrangement to hold his interest as "an agent, nominee or otherwise,"
or a present intention to transfer any interest in the partnership at a
future time. Pet. App. 2a-3a.
The initial application submitted on behalf of TSG, Ltd., identified Maria
and Alex Goodson, Fred Goodson's adult children, as the limited partners
and TSG, Inc., as the general partner. The application listed no other persons
or entities as having any ownership interest in TSG, Ltd. In 1993, 1994,
and 1995, TSG, Ltd., submitted renewal applications that likewise listed
no additional ownership interests. In fact, the true owners of TSG, Ltd.,
at all times were petitioner and Fred Goodson, both of whom concealed their
ownership interests from state regulators to avoid an inquiry into their
suitability as owners of a licensee. Pet. App. 5a-6a; see La. Rev. Stat.
Ann. § 27:310(B) (West 1989 & Supp. 2000) (enumerating suitability
requirements for video poker licensees).1
2. In 1996, a federal grand jury in the Eastern District of Louisiana indicted
petitioner, Fred and Maria Goodson, and others on multiple counts of mail
fraud, racketeering, and various other offenses. The indictment alleged,
among other things, that the defendants committed mail fraud, in violation
of 18 U.S.C. 1341, by obtaining a video poker license for TSG, Ltd., in
1992 and renewing the license in 1993, 1994, and 1995, by fraudulently concealing
that petitioner and Fred Goodson were the true owners of TSG, Ltd. Pet.
App. 5a.
Before trial, petitioner moved to dismiss the mail fraud counts of the indictment
on the ground that state licenses to operate video poker machines do not
constitute "property" within the meaning of Section 1341, which
makes it a crime to use the mails in connection with "any scheme or
artifice to defraud, or for obtaining money or property by means of false
or fraudulent pretenses, representations, or promises." 18 U.S.C. 1341.
Petitioner claimed that a scheme to acquire a video poker license through
false representations does not implicate any property interest of the State,
arguing that such licenses have no value to the State and, consequently,
do not become property until they are issued by the State to a private party.
The district court rejected that contention. Pet. App. 73a-86a. The court
concluded that "licenses constitute property even before they are issued,"
agreeing with the position of the First Circuit and the Third Circuit on
that question. Id. at 79a; see also id. at 75a-77a (citing United States
v. Bucuvalas, 970 F.2d 937 (1st Cir. 1992), cert. denied, 507 U.S. 959 (1993),
and United States v. Martinez, 905 F.2d 709 (3d Cir.), cert. denied, 498
U.S. 1017 (1990)). The court distinguished cases involving other sorts of
licenses, such as taxi licenses, pilot's licenses, and arms export licenses,
in which a government was held to have only a regulatory interest, and not
a property interest. Id. at 83a. The court reasoned that the State of Louisiana
clearly has a property interest in video poker licenses because the State
"receives a significant percentage of revenue" from the licenses
and "continues to exercise a great deal of control" over them.
Id. at 83a.
After a jury trial, petitioner was convicted on two counts of mail fraud.
He was also convicted of conducting an enterprise through a pattern of racketeering
activity, in violation of 18 U.S.C. 1962(c); conspiring to commit that offense,
in violation of 18 U.S.C. 1962(d); money laundering, in violation of 18
U.S.C. 1956 (1994 & Supp. II 1996); tax conspiracy, in violation of
18 U.S.C. 371; and filing a false tax return, in violation of 26 U.S.C.
7206(2). He was sentenced to 121 months' imprisonment.
3. The Fifth Circuit affirmed petitioners' conviction and sentences. Pet.
App. 1a-44a.
The court of appeals rejected petitioner's contention that a video poker
license does not constitute property for purposes of the mail fraud statute.
Pet. App. 19a. The court relied on its earlier decision in United States
v. Salvatore, 110 F.3d 1131 (5th Cir.), cert. denied, 522 U.S. 981 (1997),
which held that Louisiana had a property interest in the video poker licenses
that it issues.
In Salvatore, the court of appeals explained that "property" is
defined as "a legal 'bundle of rights'" that one possesses in
connection with a particular object. 110 F.3d at 1140. The court reasoned
that, because the State has the right to control whether and to whom video
poker licenses are issued, the State has a property interest in the licenses.
Ibid. The court rejected the defendants' argument that a video poker license
has no value to the State, and thus cannot constitute property. It explained
that "(1) the State expects to collect an up-front fee (before issuance)
and a percentage of net revenues (in the future) from the putative licensee
and (2) the State values its rights to control the licenses and to choose
the parties to whom it issues the licenses." Id. at 1141. The court
also rejected the defendants' contention that the State's interest in the
video poker licenses is a regulatory interest, rather than a property interest,
noting the State's "direct and significant financial stake * * * as
issuer of the licenses" that continues throughout the term of the licenses.
Id. at 1142. The court thus concluded that "a video poker license does
not merely signify government approval of an individual's right to take
part in a particular industry," but "also evinces the State's
intent to participate in that industry." Id. at 1141.
SUMMARY OF THE ARGUMENT
The federal mail fraud statute, 18 U.S.C. 1341, reaches "any scheme
or artifice to defraud, or for obtaining money or property by means of false
or fraudulent pretenses, representations, or promises" that involves
the use of the mails. The court of appeals held in this case that petitioner
violated the mail fraud statute by engaging in a scheme to obtain and renew
a Louisiana video poker license by making false representations to the State
about the ownership of the licensee. Petitioner contends that the scheme
does not come within the scope of the mail fraud statute, arguing that the
video poker license was not "money or property" in the hands of
the State. Petitioner is mistaken for two independent reasons. First, because
the government proved that petitioner violated the second clause of the
mail fraud statute by engaging in a "scheme * * * for obtaining money
or property" by false or fraudulent means, the government did not also
have to prove that the scheme sought to deprive the State of money or property.
Second, whether or not the government was required under the mail fraud
statute to prove that petitioner deprived the State of money or property,
the State had a property interest in the video poker license at issue here.
1. The second clause of the mail fraud statute, which proscribes "any
scheme * * * for obtaining money or property by means of false or fraudulent
pretenses, representations, or promises," does not require that the
scheme be one for depriving a victim of money or property. Nothing in the
common understanding of the word "obtain" suggests that such a
deprivation is required. Although Congress could have narrowed the second
clause by including the words "from another" at the end of the
phrase "for obtaining money or property," Congress did not do
so. The second clause thus encompasses cases in which a defendant, through
false or fraudulent means, obtains something that might not be "money
or property" in the hands of the victim, but that becomes "money
or property" in the defendant's own hands.
In McNally v. United States, 483 U.S. 350 (1987), the Court construed the
first clause of the mail fraud statute to hold that a "scheme or artifice
to defraud" must be aimed at depriving a victim of a right to money
or property, as opposed to "intangible rights, such as the right to
have public officials perform their duties honestly." Id. at 358. The
Court rested that conclusion on the contemporaneous understanding of the
phase "to defraud" in the first clause. The Court's decision thus
did not turn on the "money or property" language of the second
clause. Indeed, the Court observed that, "because the two [clauses]
identifying the proscribed schemes appear in the disjunctive, it is arguable
that they are to be construed independently." Ibid.
The scheme in this case was indisputably one "for obtaining money or
property" under the second clause of the mail fraud statute. A video
poker license, whether or not property in the hands of the State, is property
in the hands of the licensee. Such a license enables the holder to engage
in a lucrative business, which would otherwise be illegal, and is protected
under state law against arbitrary suspension or revocation. This Court and
the lower federal courts have recognized, in a variety of contexts, that
a person has a property interest in a government-issued license that enables
him to engage in an occupation, a business, or another money-making activity.
See, e.g., Barry v. Barchi, 443 U.S. 55, 64 (1979); Mackey v. Montrym, 443
U.S. 1, 10 (1979); Bell v. Burson, 402 U.S. 535, 542 (1971).
2. In any event, the State of Louisiana has a property interest in the video
poker licenses that it issues. A video poker license is plainly "something
of value," McNally, 483 U.S. at 358, to the State. The State receives
a substantial up-front payment for each video poker license, an annual licensee
fee throughout the term of each license, and a percentage of the net proceeds
from each licensed video poker device. In addition, the State retains a
significant degree of control over each license, including over its renewal,
transfer, and revocation. As the court of appeals recognized in an earlier
case on this issue, "[o]ne of the main reasons for the * * * legalization
of video poker [in Louisiana] was that it was considered an ongoing source
of revenue for the State." United States v. Salvatore, 110 F.3d 1131,
1141 (5th Cir.), cert. denied, 522 U.S. 981 (1997). Indeed, since instituting
licensed video poker in 1991, the State has reaped hundreds of millions
of dollars in fees and payments from licensees.
Moreover, whether or not the State has a property interest in an unissued
video poker license, this case involves a scheme not only to obtain a license,
but also to renew that license, after its issuance, for three subsequent
periods. The State has a property interest in a video poker license after
it has been issued-and thus has become property in the hands of the licensee
-because the State retains the right to payments from the licensee and the
right to monitor and control the licensed activity. The State retains authority
over renewal, suspension, or revocation of a license, and the State prohibits
the transfer of a license to another person. One of the rights that is often
associated with the ownership or possession of property is the right to
control its alienation. See Loretto v. Teleprompter Manhattan CATV Corp.,
458 U.S. 419, 435 (1982).
Finally, petitioner contends that the State has merely a regulatory interest,
not a property interest in a video poker license, relying primarily on cases
involving other sorts of government licenses, such as driver's licenses,
medical licenses, and arms export licenses. But the Court need not decide
in this case whether a State has a property interest in all of the varieties
of licenses that it issues. The Court need conclude only that the State
has a property interest in the particular variety of license at issue here-a
license under which the State retains a substantial economic stake in the
licensed activity.
ARGUMENT
PETITIONER'S SCHEME TO OBTAIN A VIDEO POKER LICENSE BY PROVIDING FALSE INFORMATION
TO THE STATE THROUGH THE MAILS VIOLATED THE MAIL FRAUD STATUTE
The mail fraud statute prohibits (1) "any scheme or artifice to defraud"
and (2) "any scheme or artifice
* * * for obtaining money or property by means of false or fraudulent pretenses,
representations, or promises." A scheme to acquire a Louisiana video
poker license by false representations violates the second clause of the
statute, whether or not the license constitutes "property" in
the hands of the State. The object of the scheme is to "obtain[]"
the license, and the license indisputably constitutes "property"
in the hands of the licensee. The scheme also violates the first clause
of the statute. While the words "to defraud" refer to "wronging
one in his property rights by dishonest methods or schemes," McNally
v. United States, 483 U.S. 350, 358 (1987), the State's financial stake
in and control over video poker licenses qualify as a property right protected
by the mail fraud statute.
I. A SCHEME TO OBTAIN PROPERTY THROUGH FRAUDULENT MEANS VIOLATES THE MAIL
FRAUD STATUTE, WHETHER OR NOT THE SCHEME WAS ONE TO DEPRIVE A VICTIM OF
PROPERTY
A. The Second Clause Of 18 U.S.C. 1341 Does Not Require That A Victim Be
Deprived Of Money Or Property, So Long As The Defendant Obtained Money Or
Property
1. Congress enacted three prohibitions in the mail fraud statute, 18 U.S.C.
1341, and each clause of the statute proscribes a distinct sort of "scheme
or artifice." The first clause, which prohibits "any scheme or
artifice to defraud," derives from the original mail fraud statute
enacted in 1872. Act of June 8, 1872, ch. 335, § 301, 17 Stat. 323.
The second clause, which prohibits schemes "for obtaining money or
property by means of false or fraudulent pretenses, representations, or
promises," was added in 1909. Act of Mar. 4, 1909, ch. 321, §
215, 35 Stat. 1130. The third clause, which prohibits schemes to use the
mails to distribute counterfeit money, was enacted in 1889. Act of Mar.
2, 1889, ch. 393, § 1, 25 Stat. 873. See Jed S. Rakoff, The Federal
Mail Fraud Statute (Part I), 18 Duq. L. Rev. 771, 779-821 (1980) (Rakoff).
In McNally v. United States, 483 U.S. 350 (1987), this Court was concerned
with the first clause of Section 1341. McNally held that a "scheme
or artifice to defraud," within the meaning of the statute, must be
aimed at depriving a victim of a right to money or property, as opposed
to "intangible rights, such as the right to have public officials perform
their duties honestly." Id. at 358. The Court rested that conclusion
on the common understanding of the term "to defraud" at the time
that the original mail fraud statute was enacted. Id. at 358-359.2
McNally did not construe the second clause of Section 1341, which prohibits
schemes "for obtaining money or property" by false or fraudulent
means. The second clause does not contain the words "to defraud"
or any other textual limitation requiring the deprivation of a victim's
money or property. Nothing in the common understanding of the word "obtain,"
either today or when the second clause was enacted in 1909, suggests that
such a deprivation is required. See, e.g., Webster's New International Dictionary
1485 (1917) (defining "obtain" as "[t]o get hold of by effort;
to gain possession of; to procure; to acquire, in any way") (first
definition).3
Although Congress could easily have narrowed the second clause of Section
1341 by including the words "from another" at the end of the phrase
"for obtaining money or property," Congress did not do so. Congress
thereby departed from the otherwise similar wording of the original English
false pretenses statute, which made it a crime "by false pretence or
pretences, [to] obtain from any person * * * money, goods, wares, or merchandizes,
with intent to cheat or defraud any person." 30 Geo. II, ch. 24 (1757)
(emphasis added). Congress, like the English Parliament, knew how to restrict
such crimes to those in which money or property was obtained from a victim.
The second clause of Section 1341 thus encompasses those cases in which
the defendant, through false or fraudulent pretenses, representations, or
promises, obtains something that might not be "money or property"
in the hands of the victim, but that beomes "money or property"
in the defendant's own hands. As the Third Circuit has put it, the second
clause "is broad enough to cover a scheme to defraud a victim of something
that takes on value only in the hands of the acquirer." United States
v. Martinez, 905 F.2d 709, 713, cert. denied, 498 U.S. 1017 (1990); cf.
Whitson v. United States, 122 F.2d 1016, 1017 (9th Cir. 1941) (mail fraud
statute reached scheme to persuade charitable organizations to enter into
contract under which defendant would be their exclusive fund-raiser; court
explained that under the statute "the scheme need not be one to secure
moneys from others, but may be 'to defraud, or for obtaining money or property
by means of false or fraudulent pretenses'").
McNally did not address the argument (see U.S. Br. at 17-22 in McNally,
supra (No. 86-234)), that the second clause of the mail fraud statutes applies
to any scheme to "obtain" money or property, even when the scheme
does not seek to deprive a victim of money or property. Rather, the Court
declined to address the applicability of the second clause because the jury
instructions did not require a finding that the defendants obtained property
by fraudulent means. See McNally, 483 U.S. at 361.4 McNally thus leaves
open the proper construction of the second clause of Section 1341. In accordance
with its plain language, that clause encompasses any scheme "for obtaining
money or property by means of false or fraudulent pretenses, representations,
or promises," whether or not the scheme is one for depriving a victim
of money or property.
2. The conclusion that the second clause of Section 1341, unlike the first
clause at the time of McNally (see note 2, supra), is not limited to schemes
to deprive a victim of money or property finds support in the structure
of the statute. The two clauses were, as noted above, enacted at different
times. The clauses are separated, moreover, by the disjunctive "or."
This Court has stated, reflecting common English usage, that "[c]anons
of construction ordinarily suggest that terms connected by a disjunctive
be given separate meanings." Reiter v. Sonotone Corp., 442 U.S. 330,
339 (1979); accord Garcia v. United States, 469 U.S. 70, 73 (1984); FCC
v. Pacifica Found., 438 U.S. 726, 739-740 (1978). Accordingly, this Court,
construing an earlier version of the mail fraud statute, concluded that
an indictment that charged a scheme to sell counterfeit money, a violation
of what is now the third clause, did not have to include a charge that the
defendant devised a scheme "to defraud," a violation of the first
clause, because the statutory prohibitions were listed separately and applied
to different conduct. Streep v. United States, 160 U.S. 128, 132-133 (1895).
In McNally, this Court acknowledged that the first and second clauses of
Section 1341 may likewise have separate meanings. The Court observed that
"[b]ecause the two phrases identifying the proscribed schemes appear
in the disjunctive, it is arguable that they are to be construed independently."
McNally, 483 U.S. at 358. Thus, the Court did not rest its holding in McNally
that the first clause of Section 1341 requires a deprivation of money or
property, as opposed to "intangible rights," on the "money
or property" language of the second clause. Rather, the Court derived
that requirement from the common understanding of the words "to defraud"
in the first clause. See id. at 358.
The lower federal courts have recognized, both before and after McNally,
that the first and second clauses of Section 1341 have independent significance.
See, e.g., United States v. Martinez, 905 F.2d at 713 (second clause of
Section 1341, but not first clause, reaches schemes that do not involve
a deprivation of a victim's money or property); United States v. Cronic,
900 F.2d 1511, 1513-1514 (10th Cir. 1990) (first clause of Section 1341,
but not second clause, reaches schemes to defraud that do not involve false
pretenses, representations, or promises); United States v Clausen, 792 F.2d
102, 104-105 (8th Cir.) (same), cert. denied, 479 U.S. 858 (1986); United
States v. Halbert, 640 F.2d 1000, 1007 (9th Cir. 1981) (same).
3. The background of the mail fraud statute does not require a narrower
reading than its language suggests. It is well settled that "[o]nly
the most extraordinary showing of contrary intentions in the legislative
history will justify a departure" from the "plain and unambiguous
meaning of the statutory language." Salinas v. United States, 522 U.S.
52, 57 (1997) (internal quotation marks omitted). Nothing in the scant legislative
history of the second clause of Section 1341 suggests, let alone clearly
expresses, any intention that the clause be construed other than in accordance
with its plain language, which encompasses "any scheme or artifice
* * * for obtaining money or property" by the specified fraudulent
means, without limitation to those schemes involving a deprivation of a
victim's money or property.
In 1909, Congress enacted a comprehensive revision of the federal criminal
laws that included a number of changes in the mail fraud statute. One of
those changes was the insertion in the statute, after the phrase "[w]hoever,
having devised or intending to devise any scheme or artifice to defraud,"
of the phrase "or for obtaining money or property by means of false
or fraudulent pretenses, representations, or promises."5
The mail fraud amendments were enacted by the 61st Congress without any
committee report or floor debate. See Rakoff, 18 Duq. L. Rev. at 816 n.205
(noting that "there is virtually no direct legislative history"
of the 1909 amendments); see also McNally, 483 U.S. at 357-358 & n.7.
The only explanations of the mail fraud amendments, which reflect the earlier
views of their sponsor and of the commission that originally proposed them,
do not specifically address the provision at issue here.
In explaining the mail fraud amendments during the 60th Congress, Senator
Heyburn, the sponsor, dealt only with a change in the statute that involved
mailings made from outside the United States, noting that the other changes
were self-explanatory. See 42 Cong. Rec. 1026 (1908) (remarks of Sen. Heyburn)
("I do not think there is any other change, which is not obvious upon
the face of the bill, that needs any further explanation.") (cited
in McNally, 483 U.S. at 358 n.7). Senator Heyburn's remark suggests that
the second clause should be read in accordance with common usage, for otherwise
its meaning would not be self-explanatory.
The only other legislative history of the 1909 amendments is the Report
of the Commission to Revise and Codify the Criminal and Penal Laws of the
United States, which in 1901 proposed to the Attorney General and Congress
a number of changes in the federal criminal statutes, including the addition
of the language that became the second clause of the mail fraud statute.
See S. Doc. No. 68, 57th Cong., 1st Sess. Pt. 2 (1901) (S. Doc. 68) (cited
in McNally, 483 U.S. at 357-358 n.7). In the portion of the Report describing
the proposed changes in the mail fraud statute, the Commission did not mention
the language that became the second clause. See id. at xvii.6 In the portion
of the Report setting forth the text of the revised mail fraud statute,
the Commission cited, in the margin, five decisions of this Court, 29 decisions
of the lower federal courts, and two Attorney General opinions that had
construed the existing mail fraud statute. See id. at 63. The Commission
did not, however, explain the significance, if any, of those citations.7
The Court stated in McNally that the addition of the second clause in 1909
codified the holding in Durland v. United States, 161 U.S. 306, 313 (1896),
that the mail fraud statute encompasses not only false statements of existing
fact, but also false promises with respect to the future. See McNally, 483
U.S. at 357. The Court also stated that the language of the second clause
"is based on the statement in Durland that the statute reaches 'everything
designed to defraud by representations as to the past or present, or suggestions
and promises as to the future.'" McNally, 483 U.S. at 358 (quoting
Durland, 161 U.S. at 313). In fact, however, the language of the second
clause is virtually identical to language added to the federal lottery statute
six years before Durland.8 And the legislative history of the 1909 amendments
does not reveal an intent to codify Durland. No member of Congress, the
Executive Branch, or the Commission to Revise and Codify the Criminal and
Penal Laws described the second clause as a codification of Durland. The
only reference to Durland in the legislative history is in the string citation
of 36 mail fraud decisions and Attorney General opinions in the Commission's
Report. If Congress had intended merely to codify the holding in Durland,
its most natural course would have been to amend the first clause by inserting
the words "whether by false pretenses, representations or promises"
after the phrase "scheme or artifice to defraud." But Congress
did not choose that approach. Instead, Congress added a new clause employing
the disjunctive "or"-a strong indication that it intended to create
an independent way of violating the statute.
The absence of any legislative history of the 1909 amendments addressing
whether the second clause, like the first clause, contains a requirement
that a victim be deprived of money or property-a requirement that is not
evident on the face of the second clause-cannot constitute the requisite
"extraordinary showing" of congressional intent needed to depart
from the plain meaning of the statutory text. See Salinas, 522 U.S. at 57;
see also Standefer v. United States, 447 U.S. 10, 20 n.12 (1980) ("an
omission in the legislative history [cannot] nullify the plain meaning of
a statute"). Indeed, the 1909 amendments included other significant
changes in the mail fraud statute that likewise went unremarked upon by
Congress, including the elimination of the requirement that the defendant
intended the fraudulent scheme to be effected through use of the mails.
Compare 25 Stat. 873 with 35 Stat. 1130; see Rakoff, 18 Duq. L. Rev. at
816.
* * *
In sum, while the second clause of Section 1341 includes schemes to deprive
a victim of his money or property, the second clause is not limited to such
schemes. The plain language of the second clause authorizes convictions
where the defendant acted to "obtain[] money or property by means of
false or fraudulent premises, representations, or promises," whether
or not he also acted to deprive a victim of money or property.9
B. The Scheme In This Case Violated The Second Clause Of Section 1341 Because
Petitioner Sought To "Obtain[] Property" In The Form Of A State
Video Poker License
As explained above, in order to establish a violation of the second clause
of Section 1341, the government must prove, inter alia, that the defendant's
fraudulent scheme was one "for obtaining money or property." Here,
the government charged petitioner with engaging in a scheme to obtain a
video poker license for TSG, Ltd., a partnership in which petitioner had
an undisclosed interest. A state video poker license, which has significant
economic value to a licensee and which is protected against arbitrary suspension
or revocation under state law, clearly constitutes property to the licensee.
1. Section 1341 does not define the term "property." Nor has the
Court articulated any comprehensive definition of that term for purposes
of Section 1341. The Court has recognized in other contexts, however, that
the term "property" has "a naturally broad and inclusive
meaning" that, according to its dictionary definition and "common
usage," comprehends "anything of material value owned or possessed."
Reiter v. Sonotone Corp., 442 U.S. at 338. No reason exists to construe
the term "property" in Section 1341 any more restrictively. See
McNally, 483 U.S. at 358 (equating "property rights" with "something
of value") (quoting Hammerschmidt v. United States, 265 U.S. 182, 188
(1924)); see also Carpenter v. United States, 484 U.S. 19, 25 (1987) (holding
that the first clause of Section 1341 applies to schemes to defraud a victim
of both tangible and intangible property rights).
This Court and other courts have recognized, in a variety of contexts, that
a license that permits a person to engage in an occupation, a business,
or another money-making activity may constitute a form of property. For
example, the Court held that an individual had a "property interest"
in his state horse trainer's license that was "sufficient to invoke
the protection of the Due Process Clause." Barry v. Barchi, 443 U.S.
55, 64 (1979); see also, e.g., Mackey v. Montrym, 443 U.S. 1, 10 (1979)
(driver's license); Bell v. Burson, 402 U.S. 535, 542 (1971) (same); Beauchamp
v. De Abadia, 779 F.2d 773, 775 (1st Cir. 1985) (license to practice medicine);
Keney v. Derbyshire, 718 F.2d 352, 354 (10th Cir. 1983) (same). Those decisions
rest, in part, on the recognition that "[o]nce licenses are issued,
* * * their continued possession may become essential in the pursuit of
a livelihood." Bell, 402 U.S. at 539.
In addition, the courts have held that licenses to engage in a business
or profession have sufficient indicia of property so as to be subject to
a federal tax lien,10 that they qualify as property to which a security
interest may be attached under the Uniform Commercial Code,11 and that they
constitute property of a bankrupt's estate under the Bankruptcy Code, 11
U.S.C. 541.12 The dispositive factor in those cases was whether the license
"has pecuniary value to its holder." In re Terwilliger's Catering
Plus, Inc., 911 F.2d 1168, 1171 (6th Cir. 1990), cert. denied, 501 U.S.
1212 (1991); accord 21 W. Lancaster Corp. v. Main Line Restaurant, Inc.,
790 F.2d 354 (3d Cir. 1986). While courts have also considered whether the
license was transferrable for value, see, e.g., Terwilliger's Catering Plus,
911 F.2d at 1172, the inability to transfer a particular right does not
deprive it of the character of property. See Drye v. United States, 120
S. Ct. 474, 482-483 n.7 (1999) ("In recognizing that state-law rights
that have pecuniary value and are transferable fall within [the federal
tax lien statute], we do not mean to suggest that transferability is essential
to the existence of 'property' or 'rights to property' under that section.").
Even those courts that have held that an unissued license does not constitute
property for purposes of the mail fraud statute acknowledge that a license
may well be property in the hands of the licensee.13
2. A Louisiana video poker license, once obtained by the licensee, fits
comfortably within the common definition of property. It is clearly something
"of material value owned or possessed" by the licensee. Reiter
v. Sonotone, Inc., 442 U.S. at 338.
A license issued pursuant to the Louisiana Video Draw Poker Devices Control
Law, La. Rev. Stat. Ann. § 27:301 et seq. (West 1989 & Supp. 2000),14
permits the licensee to engage in the video poker business at its truck
stop, restaurant, hotel, or other authorized establishment. See id. §
27:301(B)(8)). The licensee may thereby enhance substantially its financial
return from the establishment. Indeed, because the operation of a licensed
video poker establishment is so lucrative, licensees are willing to incur
the thousands of dollars in application fees and annual license fees that
the State imposes upon them. See id. § 27:311(A)-(D) and (H).15 Although
a licensee cannot transfer a video poker license, see id. § 27:311(G),
a licensee that owns or operates a truck stop, as in this case, may lease
or sublease any restaurant, convenience store, or other business on the
premises, see id. § 27:306(A)(5)(b)). The location of licensed video
poker devices at the truck stop may increase the value of such leases or
subleases. Although the Video Gaming Division of the Louisiana State Police
may revoke or suspend a video poker license on enumerated grounds, see id.
§ 27:308(B) and (C), the licensee has the right to challenge the revocation
or suspension in a hearing before the Video Gaming Division and to judicial
review by a state court, see id. § 27:310(E).
In short, a video poker license, as created under Louisiana law, has economic
value for its holder and is protected against arbitrary suspension or revocation.
It therefore qualifies as property under the federal mail fraud statute.
See United States v. Salvatore, 110 F.3d 1131, 1141 (5th Cir.) (observing
that "[i]n the hands of the licensee, the [video poker] license is
'something of value,' for it allows the licensee to operate the video poker
machines and collect significant revenue from their use"), cert. denied,
522 U.S. 981 (1997).
No contrary conclusion is required by the provision of the Louisiana Video
Draw Poker Devices Control Law that states that a video poker license "is
not property or a protected interest under the constitutions of either the
United States or the state of Louisiana." La. Rev. Stat. Ann. §
27:301(D). The question whether rights arising under state law constitute
"money or property" within the meaning of Section 1341 is ultimately
one of federal law. This Court recently considered the similar question
of whether a taxpayer's right to a decedent's estate, which was not property
under state law, nonetheless was "property" or an "interest
in property" under the federal tax lien statute, 26 U.S.C. 6321. Drye
v. United States, 120 S. Ct. at 481-483. The Court concluded that "[t]he
question whether a state-law right constitutes 'property' or 'rights to
property' is a matter of federal law." Id. at 481. The Court explained
that "[w]e look initially to state law to determine what rights the
taxpayer has in the property the Government seeks to reach, then to federal
law to determine whether the taxpayer's state-delineated rights qualify
as 'property' or 'rights to property' within the compass of the federal
tax lien legislation." Ibid.; accord, e.g., In re Kimura, 969 F.2d
806, 810 (9th Cir. 1992) (a State cannot "defeat the federal tax lien
by declaring an interest not to be property, even though the beneficial
incidents of property belie its classification").
That is precisely the analysis that applies here. As explained above, a
video poker license, as created under Louisiana law, has substantial economic
value to the licensee. In addition, the licensee enjoys a degree of protection
under Louisiana law against the arbitrary suspension or revocation of the
license. The license therefore qualifies as property under the federal mail
fraud statute.
C. The Indictment Charged And The Jury Necessarily Found That Petitioner
Engaged In A Scheme To Obtain Property In Violation Of The Second Clause
Of Section 1341
The mail fraud counts in the indictment in this case charged petitioner
under both the first and second clauses of Section 1341-that is, with having
"willfully devised and intended to devise a scheme and artifice to
defraud, and to obtain property by means of false and fraudulent pretenses
and representations." Superseding Indictment 26 (emphasis added).16
The indictment then proceeded to describe the alleged scheme as one "to
defraud the State of Louisiana and its citizens by fraudulently obtaining
and renewing, through the submission of false and incomplete information,
state licenses to operate video poker sites for Truck Stop Gaming, Ltd."
Ibid. (emphasis added).
The district court's jury instructions referred the jury to the indictment's
description of the alleged scheme. Jury Instructions 27 (directing the jury
to pages 26-28 of the indictment). The court had already advised the jury
that a copy of the indictment would be available during its deliberations.
Id. at 16. The court paraphrased the indictment by stating that the defendants
were charged with having "knowingly devised a scheme to defraud the
State of Louisiana and its citizens by fraudulently obtaining and renewing,
through the submission of false and incomplete information, state licenses
to operate video poker sites for Truck Stop Gaming, Ltd." Id. at 27
(capitalization omitted). The court then instructed the jury that, in order
to find the defendants guilty of mail fraud, the jury must find, among other
things, that the defendants engaged in the scheme "as charged,"
i.e., in the scheme to obtain and renew video poker licenses fraudulently.
Ibid.
The district court went on to conflate the separate requirements of the
two clauses by instructing the jury that a "'scheme to defraud' includes
any scheme to deprive another of money or property by means of false or
fraudulent pretenses, representations, or promises." Jury Instructions
28. But that instruction does not alter the fact that the jury was required
to find all the elements of a violation of the second clause-that is, that
petitioner engaged in a fraudulent scheme to obtain property in the form
of the license.
Thus, given the district court's instructions, the jury necessarily found
that the petitioner engaged in a mail fraud scheme in violation of the second
clause of Section 1341. On the facts of this case, the jury could not have
convicted petitioner of scheming to deprive the State of the license in
violation of the first clause without concluding that he schemed to obtain
the license in violation of the second clause. The government's proof established
that petitioner deprived the State of the license by obtaining it for an
entity in which he had an undisclosed ownership interest.
II. PETITIONER VIOLATED THE MAIL FRAUD STATUTE BY ENGAGING IN A SCHEME TO
DEPRIVE THE STATE OF AN INTEREST IN PROPERTY
Even if, contrary to our argument in Part I above, the government were required
to prove that petitioner engaged in a scheme to deprive the State of Louisiana
of money or property, that requirement was satisfied in this case. The State
of Louisiana has a property interest in the video poker licenses that it
issues. The licenses indisputably constitute "something of value,"
McNally, 483 U.S. at 358, to the State. The State receives a substantial
sum of money in exchange for a video poker license, continues to receive
payments from the licensee for so long as the license remains in effect,
and retains a significant degree of control over the license, including
over the renewal, transfer, or revocation of the license. Accordingly, whether
or not a government has a property interest in the other sorts of licenses
that it issues (e.g., driver's licenses, medical licenses, export licenses),
Louisiana does have a property interest in the particular license at issue
here.
We will begin with a discussion of the relevant provisions of the Louisiana
Video Draw Poker Device Control Law. We will then explain why those provisions
are sufficient to create a property interest on the part of the State in
both unissued and issued video poker licenses.
A. The Louisiana Video Draw Poker Device Control Law Vests The State With
A Financial Stake In Video Poker Licenses And With Control Over How The
Licenses Are Used
Until the enactment of the Louisiana Video Draw Poker Device Control Law
in 1991, video poker was illegal in Louisiana, as it remains in many States
today. As the Fifth Circuit observed, "[o]ne of the main reasons for
the * * * legalization of video poker [in Louisiana] was that it was considered
an ongoing source of revenue for the State." Salvatore, 110 F.3d at
1141; accord Pet. App. 82a.
The State profits from the licensing of video poker in several ways. First,
an applicant for a video poker license must pay a sizable initial "processing
fee," which is $10,000 in the case of a truck stop owner; to renew
a license, the State charges an additional "processing fee," which
is $1,000 in the case of a truck stop owner. La. Rev. Stat. Ann. §
27:311(H)(2) and (4). In addition, the State charges each holder of a video
poker license an annual fee, the amount of which depends upon the type of
license held; for example, the holder of a manufacturer's license is assessed
an annual fee of $20,000, the holder of a device owner's license is assessed
an annual fee of $2,000, and the holder of an establishment license is assessed
an annual fee of $100. Id. § 27:311(A). The State also assesses an
annual video poker device operation fee, imposed on the owner of the device,
which amounts to $1,000 per device in the case of truck stops. Id. §
27:311(A)(5)(c) and (B). A truck stop may have as many as 50 video poker
devices, depending
on the amount of fuel sold at the truck stop. Id. § 27:306(A)(4)(b). In 1995, the year in which petitioner and his co-defendants
submitted the final license renewal application for TSG, Ltd., the State
received a total of $10.8 million from those various fees. See Louisiana
Legislative Fiscal Office, State Gaming Revenue-Sources and Uses 1 (Dec.
20, 1999) (State Gaming Revenue).
The State's chief source of revenue from video poker, however, is the quarterly
"franchise payment," which consists of a percentage of the net
revenue from each licensed video poker device operated in the State. La.
Rev. Stat. Ann. § 27:311(D). During the period at issue in this case
(1992-1995), the State received between 22.5% and 27.8% of the net revenue
from each video poker device. State Gaming Revenue 1. Under current law,
the State receives as much as 32.5% of the net revenue from video poker
devices at truck stops and as much as 26% of the net revenue from video
poker devices at restaurants, hotels, bars, and other such establishments.
La. Rev. Stat. Ann. § 27:311(D). In 1995, the State received a total
of $141.5 million in such franchise payments; by 1999, the State's annual
receipts from franchise payments had grown to $188.6 million. State Gaming
Revenue 1. While some of the State's video poker revenue is allocated to
gaming enforcement and related activity, the vast majority goes to the State
General Fund ($109.6 million in 1995; $142.1 million in 1999) and to local
government ($30.3 million in 1995; $43.4 million in 1999). Ibid.; see La.
Rev. Stat. Ann. § 27:312 (specifying division of funds received by
the State from video poker).17
The State, through the Video Gaming Division of the Louisiana State Police,
exercises significant control over virtually every aspect of the video poker industry. The State
regulates, for example, how the game of video poker is played (La. Rev.
Stat. Ann.
§ 27:302(A)(5)(a)-(g)); the amount of money that may be played and
the value of prizes (id. § 27:304); the expected payback (id. §
27:305(A)); the specifications of video poker devices (id. § 27:302(A)(1)-(4)
and (5)(h)-(o)); the sorts of establishments that may be licensed for video
poker (id. § 27:306(A)(2)-(4)); the physical placement and number of
devices permitted within a licensed establishment (id. §§ 27:302(D),
27:306(A)(2) and (4)(a)); and physical security at licensed establishments
(id. § 27:308(E)(5)).
The licensing requirements that the State has imposed on those who seek
to participate in the video poker industry in Louisiana are specifically
designed to protect the economic viability of the industry. The section
of the Louisiana Video Draw Poker Device Control Law dealing with license
qualifications recognizes "the importance of a controlled gaming industry
to the development of the economy of the state of Louisiana." La. Rev.
Stat. Ann. § 27:306(A)(1). It further recognizes that "the success
and growth of gaming are dependent upon public confidence and trust that
* * * video draw poker gaming activities are conducted honestly and are
free from criminal and corruptive elements." Ibid. Accordingly, the
central requirement of the video poker licensing scheme is that applicants
demonstrate their "suitability"-that is, that the applicant is
a person of "good character, honesty, and integrity"; that the
applicant's "prior activities, arrest or criminal record if any, reputation,
habits, and associations do not pose a threat to the public interest of
[Louisiana] or to the effective regulation of video draw poker"; that
the applicant is likely to conduct the video gaming business "in complete
compliance" with state law; and that the applicant is not delinquent
in tax or other financial obligations to the State or a local government.
Id. § 27:310(B).
The State retains a significant degree of control over video poker licenses
after they have been issued. The State may revoke or suspend the license
of any person who violates a provision of the Louisiana Video Draw Poker
Device Control Law or the regulations promulgated by the Video Gaming Division.
La. Rev. Stat. Ann. § 27:308(B). The State also may revoke or suspend
the license of any person who "did not meet, at the time of application,
or does not continue to meet the suitability or other requirements"
for a license. Id.
§ 27:308(C). The State prohibits the transfer of a video gaming license
to another person except in limited circumstances with the approval of the
State. Id.
§ 27:311(G); cf. id. § 27:306(D)(2) (permitting transfer of license
from one truck stop to another in limited circumstances).
B. The State Has A Property Interest In Video Poker Licenses
A video poker license has economic value to the State. As explained above,
a video poker license represents the State's right, under the Louisiana
Video Draw Poker Device Control Law, to a stream of payments from the licensee.
Those payments consist of the initial fees payable at the time of the application
for the license, the annual license fees, and, where the licensee is the
owner of video poker devices, quarterly franchise payments based on a percentage
of the net proceeds from each device. See La. Rev. Stat. Ann.
§ 27:311(A)-(D). The State controls who receives a video poker license,
whether the license may be renewed, whether the license may be transferred,
and, if a violation of state law is suspected, whether the license is suspended
or revoked. See id. §§ 27:306, 27:308(B) and (C), 27:311(G)
1. The State has a property interest in a video poker license even before
the license has been issued because, as the court of appeals put it, "the
State expects to collect an up-front fee (before issuance) and a percentage
of net revenues (in the future) from the putative licensee." Salvatore,
110 F.3d at 1141. Indeed, the State receives the first installment of revenue-the
application fee and the initial annual license fee-at the time that the
application for the license is filed.18 The license continues to generate
revenue for the State until the license expires or until the State suspends
or revokes the license for cause. The State projects its anticipated revenue
from video poker licenses into the future, see, e.g., State Gaming Revenue
1, and thus is in a position to plan its future spending based on those
projections.
When the State issues a video poker license, it is effectively "selling"
the license to the applicant, in return for the payments that the State
has already received and the right to additional payments over the term
of the license. The State is thus receiving "money or property"
in exchange for the license. And the applicant is receiving something that,
as explained above (see pp. 20-25, supra), indisputably constitutes property
as to him. It would be curious to conclude that, although the transaction
involves an exchange by the applicant of one form of property (i.e., money)
for another form of property (i.e., the license), the transaction does not
also involve an exchange of property for property by the State. See United
States v. Frost, 125 F.3d 346, 367 (6th Cir. 1997) (holding that a state
university has a property interest in an unissued degree because, inter
alia, "in return for tuition money and scholarly effort, [the university]
agrees to provide an education and a degree"), cert. denied, 525 U.S.
810 (1998); cf. United States v. Novod, 923 F.2d 970, 974 (2d Cir.) (dicta)
(two judges suggest that the license award process "is tantamount to
a contractual transaction where a buyer and seller agree on a mutually satisfactory
exchange of consideration"), cert. denied, 500 U.S. 919 (1991).
The State's interest in a video poker license that it has not yet issued
also resembles, in certain respects, a patent holder's interest in a patent
that it has not yet licensed. It is well established that patents are a
"species of property." Florida Prepaid Postsecondary Educ. Expense
Bd. v. College Sav. Bank, 527 U.S. 627, 642 (1999); see Consolidated Fruit
Jar Co. v. Wright, 94 U.S. 92, 96 (1877) ("A patent for an invention
is as much property as a patent for land."). "'A patent,' said
Mr. Justice Holmes, 'is property carried to the highest degree of abstraction-a
right in rem to exclude, without a physical object or content.'" Mercoid
Corp. v. Mid-Continent Inv. Co., 320 U.S. 661, 678 (1944) (Jackson, J.,
dissenting) (quoting 1 Holmes-Pollock Letters 53); accord Transparent-Wrap
Mach. Corp. v. Stokes & Smith Co., 329 U.S. 637, 643 (1947) (describing
a patent as "the exclusive right to make, use, and vend the invention
or discovery for a limited period") (internal quotation marks omitted);
see also Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979) (the right
of exclusion is among "the most essential sticks in the bundle of rights
that are commonly characterized as property"). Similarly, the State's
rights with respect to video poker in Louisiana include the right to exclude
others from that business. The State has an exclusive right (subject to
any previously issued licenses) to operate the video poker business itself;
the State also has the right to prohibit all other persons within the State
from engaging in that business, or to condition participation on compliance
with whatever requirements the State imposes. See pp. 37-39, infra. And,
just as one of the most important attributes of a patent is the ability
to exploit it for commercial gain through licensing, one of the most important
attributes of Louisiana's authority over video poker is the ability to exploit
it financially through licensing. In both cases, the power to license others
to participate in a particular economic activity, which they could not engage
in absent the license, furthers economic interests that qualify as property.
2. In any event, the indictment in this case charged that petitioner and
his co-defendants committed mail fraud by engaging in a scheme not only
to obtain the video poker license for TSG, Ltd., initially in 1992, but
also to obtain renewals of the license in 1993, 1994, and 1995. Superseding
Indictment 26-28. The jury was instructed accordingly. Jury Instructions
27. Whether or not the State had a property interest in the license before
its issuance, the State did have a property interest in the license once
it had been issued, and thus became property as to the licensee.
The State has an ongoing economic stake in a video poker license issued
under the Louisiana Video Draw Poker Device Control Law. As explained above,
the State is entitled to an annual license fee from each video poker licensee,
which ranges from $20,000 to $100 depending on the category of license,
and to quarterly franchise payments based on a percentage of the net revenues
from each licensed video poker device. See La. Rev. Stat. Ann. § 27:311(A)
and (D). The State is thus essentially in business with the licensee so
long as the license remains in effect. The State protects its interest in
the business through extensive regulation and monitoring of the licensed
activity, including, for example, requiring that all licensed video poker
devices be linked to a central state computer so that a record can be maintained
of all money taken in and paid out in winnings. See id. § 27:302(A)(5)(o).
Moreover, the State, not the licensee, controls the alienation of a video
poker license. See La. Rev. Stat. Ann. § 27:311(G) (a video poker license
"shall be personal to the licensee to whom it was issued and shall
not be transferable").19 The State also may suspend or revoke a license
at any time, if the State determines that the licensee has violated the
statute or failed to satisfy the suitability requirements. Id. § 27:308(B)
and (C). It is well settled that a right often associated with the ownership
of property is the right to control its alienation. See Loretto v. Teleprompter
Manhattan CATV Corp., 458 U.S. 419, 435 (1982) (describing "property
rights" as including the right to "dispose of" property);
accord Salvatore, 110 F.3d at 1140; cf. Carpenter, 484 U.S. at 26 (concluding
that the Wall Street Journal had a property right in controlling the dissemination
of its confidential business information).
In United States v. Bucuvalas, 970 F.2d 937, 945 (1st Cir. 1992), cert.
denied, 507 U.S. 959 (1993), the court of appeals held that, once the City
of Boston issued liquor and entertainment licenses to the defendants, the
City had a property interest in those licenses for purposes of the mail
fraud statute, because the licenses had to be renewed annually, could be
revoked by the City based on the occurrence of prescribed contingencies,
and could be transferred only with the City's approval. "[A]t the very
least," the court explained, "defendants repeatedly deprived the
City of Boston of its reversionary interest in the fraudulently obtained
licenses by renewing and transferring the licenses in the names of straw
owners." Ibid. Similarly, here, even if the video poker license did
not become property until the State issued the license to TSG, Ltd., the
State thereafter possessed a property interest in the license, because the
State, not TSG, Ltd., retained control over whether, and in what circumstances,
the license could be retained, revoked, transferred, or renewed. Petitioner
and his co-defendants, by submitting license renewal applications that concealed
the true owners of TSG, Ltd., deprived the State of that right.
3. A video poker license, as created under Louisiana law, may also be viewed
as a franchise-that is, a right held exclusively by the government to engage
in a particular business activity, which the government may exercise directly
or delegate to private parties "acting under such conditions and regulations
as the government may impose." California v. Central Pac. R.R., 127
U.S. 1, 40-41 (1888); see id. at 40 (reciting traditional definition of
a "franchise" as "a royal privilege, or branch of the king's
prerogative, subsisting in the hands of a subject") (quoting 2 W. Blackstone,
Commentaries 37).20 As the Court has explained, a franchise "belong[s]
to the State," which "could carry on the business itself or select
one or several agents to do so." New Orleans Gas Co. v. Louisiana Light
Co., 115 U.S. 650, 660 (1885). A franchise, "when conferred upon the
citizen," thus remains "[a] right which belongs to the government."
Borre v. United States, 940 F.2d 215, 220 (7th Cir. 1991); accord Maestri
v. Board of Assessors, 34 So. 658, 661 (La. 1903) ("a franchise is
defined to be a royal privilege in the hands of a subject").21 The
Court has recognized, albeit in addressing the rights of franchisees, that
franchises "have elements of property." Tennessee Elec. Power
Co. v. TVA, 306 U.S. 118, 139 (1939); accord Frost v. Corporation Comm'n,
278 U.S. 515, 521 (1929).
In Borre, the court of appeals held that a municipality had a property interest
in a cable television franchise, which the court described as "a delegation
of a governmental function to private entities to be performed in the furtherance
of the public welfare." 940 F.2d at 220 (quoting 1 D. Ferris et al.,
Cable Television Law
§ 13.13, at 13-68.11 (1990)). The court noted that the municipality
could have chosen to operate the cable television franchise itself rather
than award it to a private party. Id. at 220-221; see also United States
v. Italiano, 894 F.2d 1280, 1285 n.6 (11th Cir. 1990) ("Clearly the
cable television franchise held by the County of Hillsborough for the people
of that county to be awarded to some commercial entity is 'property,' and
the attempt by appellant to secure the cable television franchise by bribery
is a scheme to deprive the county and its people of that property.").
The right to engage in the video poker business, like the right to engage
in the cable television business, is a "right which belongs to the
government," to be exercised by the government alone or "conferred
on a citizen." Borre, 940 F.2d at 220. The State of Louisiana could,
of course, have chosen to operate the video poker business itself. It is
not unusual for States to conduct their own gaming operations-such as lotteries,
keno games,22 and sports wagering23-as a means of raising public revenues.
Indeed, in Oregon, video poker is run by the State, which owns the video
poker devices and licenses them to proprietors in return for a share of
the profits. See Or. Rev. Stat. § 461.215 (1997). By contrast, Louisiana
chose to confer the authority to operate video poker devices on suitable
private parties. In return, the State receives valuable consideration, in
the forms of initial and annual license fees and a continuing share in the
revenue generated by video poker within the State, and retains a significant
degree of control over the video poker industry. Indeed, by characterizing
the State's share of the net proceeds from a licensed video poker device
as a "franchise payment," see La. Rev. Stat. Ann. § 27:311(D),
the State has indicated that it views video poker as a government franchise.
4. Petitioner contends (Br. 17-22) that the State of Louisiana has merely
a regulatory interest, not a property interest, in a video poker license.
He relies primarily on cases involving other sorts of government licenses,
such as driver's licenses, medical licenses, and export licenses. But the
Court need not decide in this case whether a State has a property interest
in all of the varieties of licenses that it issues. The Court need conclude
only that the State of Louisiana has an interest in the particular variety
of license at issue here -a license under which the State retains a substantial
economic stake in the licensed activity. None of the cases on which petitioner
relies involved such a license. See United States v. Shotts, 145 F.3d 1289,
1294 (11th Cir. 1998) (concluding that "[a] particular license may
signify nothing more than an intent to regulate, while another type of license
may signify the state's intent to participate in that industry") (citing
Salvatore, 110 F.3d at 1141).
A video poker license does not constitute a mere "promise not to interfere"
with the licensee's conduct of a business, profession, or other activity,
as may the sorts of licenses that have been described as reflecting "a
regulatory rather than property interest" on the part of the government.
E.g., Toulabi v. United States, 875 F.2d 122, 125 (7th Cir. 1989). As the
court of appeals explained in Salvatore, "Louisiana has much more than
a regulatory interest in the video poker licenses; it has a direct and significant
financial stake in its role as issuer of the licenses." 110 F.3d at
1142. Indeed, the Seventh Circuit, after concluding in Toulabi that a municipality
did not have a property interest in a taxi driver's license, concluded that
a municipality did have a property interest in the cable television franchise,
which the court found to "represent[] far more than a mere 'promise
not to interfere' by the government." Borre, 940 F.2d at 219-221. As
explained above, a video poker license is analogous to a franchise: a privilege
conferred on a private party to operate a particular business in return
for valuable consideration.
5. Petitioner also argues (Br. 22-26) that the Court should construe the
mail fraud statute to exclude schemes to obtain a state license by fraudulent
means, invoking the Court's statement in United States v. Bass, 404 U.S.
336, 349 (1971), that "unless Congress conveys its purpose clearly,
it will not be deemed to have significantly changed the federal-state balance."
Congress has left no doubt, however, that Section 1341 "reach[es] any
scheme to deprive another of money or property by means of false or fraudulent
pretenses, representations, or promises." Carpenter, 484 U.S. at 27
(emphasis added); see also United States v. Gonzales, 520 U.S. 1, 5 (1997)
("Read naturally, 'any' has an expansive meaning."). In McNally,
the Court recognized that "[t]he mail fraud statute clearly protects
property rights," 483 U.S. at 356, and "is to be interpreted broadly
insofar as property rights are concerned," ibid. Accordingly, to the
extent that Louisiana has a property right in a video poker license, as
created under state law, Congress has clearly expressed its purpose to protect
that right under Section 1341. Cf. Salinas, 522 U.S. at 59-60.
Nothing in the text or history of the mail fraud statute provides any justification
for varying the scope of protected property rights depending on the identity
of the victim. Indeed, given that schemes to defraud a State of money or
property rights often involve powerful state officials (as the indictment
charged in this case), the State may not be well positioned to investigate
or prosecute the fraud itself. Section 1341 is particularly necessary in
such cases to protect against frauds involving the use of the U.S. mails,
which have historically been an area of particular federal concern. See,
e.g., In re Rapier, 143 U.S. 110, 134 (1892) ("It is not necessary
that Congress should have the power to deal with crime or immorality within
the States in order to maintain that it possesses the power to forbid the
use of the mails in aid of the perpetration of crime or immorality.");
see also Badders v. United States, 240 U.S. 391, 393 (1916); Ex parte Jackson,
96 U.S. 727 (1877).
C. Congress's Enactment Of 18 U.S.C. 1346 Has No Bearing On Any Issue Presented
In This Case
Petitioner finally contends (Br. 37) that the post-McNally enactment of
18 U.S.C. 1346-which expanded the definition of a "scheme or artifice
to defraud" under the mail, wire, and bank fraud statutes to include
"a scheme or artifice to deprive another of the intangible right of
honest services"-"demonstrates that [Congress] did not intend
the mail fraud statute to cover deceptions in state license applications."
But the intent of the Congress that enacted Section 1346 in 1988 is irrelevant
to any issue in this case. This case was not charged under Section 1346
as involving a scheme to deprive Louisiana or its citizens of an intangible
right. The case was instead charged as involving "a scheme and artifice
to defraud, and to obtain property by means of false and fraudulent pretenses
and representations" in violation of 18 U.S.C. 1341 and 18 U.S.C. 2.
Superseding Indictment 26, 28. The property at issue was specifically identified
in the indictment as "state licenses to operate video poker sites for
Truck Stop Gaming, Ltd." Id. at 26. The indictment nowhere mentioned
Section 1346 or "intangible rights."
Congress did not purport in the post-McNally legislation to restrict the
definition of property rights under the existing mail, wire, and bank fraud
statutes. Rather, Congress included an additional category of rights, which
the Court had held in McNally could not be the object of a "scheme
to defraud" as then understood, within the protection of those statutes.
See 134 Cong. Rec. 33,297 (1988) (statement of Rep. Conyers) (Section 1346
"is intended merely to overturn the McNally decision. No other change
in the law is intended.").24
Petitioner argues (Br. 37) that Congress would have included in Section
1346 an "intangible right * * * to run a licensing program based on
full and complete information" if Congress had intended that the mail
fraud statute reach schemes to obtain a government license by fraud. Petitioner
reads too much into Congress's silence. Congress may have anticipated that
most schemes involving fraud in license applications could be reached without
further statutory addition- either under the existing mail and wire fraud
statutes, at least to the extent that the scheme involved a license in which
the government had a property interest, or under the new "honest services"
provision, to the extent that the scheme involved the corruption of government
officials. See, e.g., United States v. Alkins, 925 F.2d 541, 549 (2d Cir.
1991 (affirming mail fraud conviction of state employees and others under
Section 1346 for engaging in a scheme to issue fraudulent vehicle registrations).
Or Congress may (if it even recognized that any question existed) simply
have chosen to address license procurement schemes at a later time, or to
leave the question to the courts in the first instance.
CONCLUSION
The judgment of the court of appeals should be affirmed.
Respectfully submitted.
SETH P. WAXMAN
Solicitor General
JAMES K. ROBINSON
Assistant Attorney General
MICHAEL R. DREEBEN
Deputy Solicitor General
BARBARA MCDOWELL
Assistant to the Solicitor
General
JOEL M. GERSHOWITZ
Attorney
AUGUST 2000
1 The evidence at trial indicated that petitioner and Fred Goodson had tax
and financial problems that could have interfered with or delayed approval
of the license if their interests in TSG, Ltd., had been disclosed. See
Gov't C.A. Br. 11.
2 In response to McNally, Congress enacted 18 U.S.C. 1346, which provides
that "the term 'scheme or artifice to defraud' includes a scheme or
artifice to deprive another of the intangible right of honest services."
Pub. L. No. 100-690, Title VII, § 7603(a), 102 Stat. 4508. As modified
by Section 1346, the first clause of Section 1341 now encompasses certain
schemes to deprive a victim of something other than money or property.
3 See also, e.g., American Heritage Dictionary 575 (3d ed. 1994) ("[t]o
succeed in gaining possession of; acquire"); Random House Dictionary
of the English Language 1338 (2d. ed. 1987) ("[t]o come into possession
of; get, acquire, or procure, as through an effort or by a request");
Black's Law Dictionary 972 (5th ed. 1979) ("[t]o get hold of by effort;
to get possession of; to procure; to acquire, in any way"); Webster's
New Collegiate Dictionary 793 (1977) ("[t]o gain or attain usu. by
planned action or effort"); VII James A.H. Murray, New English Dictionary
37 (1909) ("[t]o come into the possession or enjoyment of (something)
by one's own effort, or by request; to procure or gain, as the result of
purpose and effort; hence, generally, to acquire, get").
4 The jury charge in this case did not suffer from that deficiency. See
pp. 25-27, infra.
5 The 1909 amendments included other significant changes in the mail fraud
statute. Those changes included the elimination of language characterizing
the offense conduct as "misusing the post-office establishment,"
the elimination of the penalty provision by which courts were required to
"proportion the punishment especially to the degree in which the abuse
of the post-office establishment enters as an instrument into such fraudulent
scheme or device," and, most notably, the elimination of the requirement
that the defendant intended the fraudulent scheme to be effected through
use of the mails. Compare 25 Stat. 873 with 35 Stat. 1130; see Rakoff, 18
Duq. L. Rev. at 816.
6 The Commission appeared to allude to that provision, however, in the portion
of the Report discussing the lottery statute. The Commission stated that
certain words added to the lottery statute in 1890 that prohibited mailings
"concerning schemes devised for the purpose of obtaining money or property
under false pretenses" were being omitted "as they have respect
to an offense which is fully covered by another section, and are not essentially
germane here." S. Doc. 68, at xvii.
7 The Commission may simply have been identifying all of the reported mail
fraud decisions. Some of those decisions took inconsistent positions with
respect to the reach of the statute, which suggests that their mere citation
does not indicate an intent to codify them. See Rakoff, 18 Duq. L. Rev.
at 795-816 (contrasting the lower courts' "broad constructionist"
and "strict constructionist" approaches to the pre-1909 mail fraud
statute).
8 See Act of Sept. 19, 1890, ch. 908, §§ 1-3, 26 Stat. 465-466
(prohibiting the use of the mails in connection with, inter alia, "schemes
devised for the purpose of obtaining money or property under false pretenses";
authorizing the Postmaster General to direct the return of registered mail
involved in, inter alia, "any
* * * scheme or device for obtaining money or property of any kind through
the mails by means of false or fraudulent pretenses, representations, or
promises"; authorizing the Postmaster General to forbid the payment
of postal money orders in connection with, inter alia, "any * * * scheme
for obtaining money or property of any kind through the mails by means of
false or fraudulent pretenses, representations, or promises").
9 Although the first question presented by the petition focuses on whether
"a license that has not yet been issued constitutes 'property' of the
State," Pet. i, the Court has the authority to affirm the court of
appeals' judgment on the alternative ground that the second clause of Section
1341 requires a scheme "for obtaining money or property" for the
defendant (or another person), and does not require a scheme for depriving
a victim of money or property. See Dayton Bd. of Educ. v. Brinkman, 433
U.S. 406, 419 (1977) ("respondents * * * are entitled under our precedents
to urge any grounds which would lend support to the judgment below");
see also Northwest Airlines, Inc. v. County of Kent, 510 U.S. 355, 364 (1994)
(respondent may "defend a judgment on any ground properly raised below").
Although the government did not expressly raise that argument in the district
court, the government did direct the district court's attention to the Third
Circuit's decision in United States v. Martinez, 905 F.2d at 712-714, which
held, inter alia, that the second clause of Section 1341 "is broad
enough to cover a scheme to defraud a victim of something that takes on
value only in the hands of the acquirer," id. at 713. See Pet. App.
77a (noting the government's reliance on Martinez). The district court quoted
that language from Martinez with approval. Id. at 78a. And, on appeal, the
government had no need to rely on the second clause because the Fifth Circuit
had already held that Section 1341 reaches schemes to obtain a video poker
licenses from the State of Louisiana before the present case was briefed
and argued. See United States v. Salvatore, 110 F.3d 1131, cert. denied,
522 U.S. 981 (1997). In these circumstances, and particularly given that
the question is essentially one of pure statutory construction, the Court
may affirm the conviction based on the second clause of Section 1314.
10 See, e.g., In re Kimura, 969 F.2d 806, 811 (9th Cir. 1992); In re Terwilliger's
Catering Plus, Inc., 911 F.2d 1168, 1170-1172 (6th Cir. 1990), cert. denied,
501 U.S. 1212 (1991); 21 W. Lancaster Corp. v. Main Line Restaurant, Inc.,
790 F.2d 354, 356-358 (3d Cir. 1986).
11 See, e.g., In re O'Neill's Shannon Village, 750 F.2d 679, 682- 683 (8th
Cir. 1984); Bogus v. American Nat'l Bank of Cheyenne, 401 F.2d 458, 461
(10th Cir. 1968).
12 See, e.g., Terwilliger's Catering Plus, 911 F.2d at 1172; In re Rainbo
Express, 179 F.2d 1, 5 (7th Cir.), cert. denied, 339 U.S. 981 (1950); In
re Fugazy Express, Inc., 114 B.R. 865, 869-871 (Bankr. S.D.N.Y. 1990).
13 See, e.g., United States v. Granberry, 908 F.2d 278, 280 (8th Cir. 1990),
cert. denied, 500 U.S. 921 (1991); United States v. Kato, 878 F.2d 267,
269 (9th Cir. 1989); Toulabi v. United States, 875 F.2d 122, 125 (7th Cir.
1989); United States v. Murphy, 836 F.2d 248, 253-254 (6th Cir.), cert.
denied, 488 U.S. 924 (1988); United States v. Ferrara, 701 F. Supp. 39,
42 (E.D.N.Y.), aff'd without opinion, 868 F.2d 1268 (2d Cir. 1988). Petitioner
likewise acknowledges (Br. 10) that "a license may constitute property
to the licensee."
14 Since the events at issue, the Louisiana Video Draw Poker Devices Control
Law has been recodified. All citations are to the current codification (West
1989 & Supp. 2000).
15 For example, a new applicant for a video poker license for a truck stop
must pay a $10,000 "processing fee" to the State. See La. Rev.
Stat. Ann. § 27:311(H)(2). Once the license is obtained, the licensee
must pay an annual license fee to the state and, if the licensee is also
the owner of the video poker devices, a quarterly "franchise payment"
based on a percentage of the net proceeds from the devices. See id. §
27:311(A)-(D).
16 The relevant paragraphs of the indictment and jury instructions are set
forth in appendices to this brief.
17 On July 1, 1999, video poker was discontinued in 33 of Louisiana's 64
parishes, in accordance with the results of local referenda conducted in
1996. See Gambling: The Trouble Is, It Makes Money, The Economist, July
31, 1999. Immediately before the shutdown, there were 15,914 video poker
devices operating in Louisiana, 11,040 of which remained operating the next
day. As of January 30, 2000, the number of operating video poker devices
in Louisiana had risen to 11,792. Alan Sayre, Video Poker Edges Back In
La., The Charleston Gazette, Feb. 28, 2000.
18 See La. Admin. Code title 42, § 2405(A)(2) (2000) (application for
a video poker license "is not complete nor is it considered filed with
the division unless it is submitted with the appropriate fee"); id.
§ 2409(A)(1) and (2) (requiring applicants for video poker licenses
to pay, "[u]pon application, a nonrefundable annual [licensing] fee,"
as specified in La. Rev. Stat. Ann. § 27:311(A)).
19 See also, e.g., La. Rev. Stat. Ann. § 27:306(E) (if an establishment
licensed for video poker is sold, the purchaser must apply for a new license,
although the establishment may continue to offer video poker in the interim);
id. § 27:306(D)(2)(b) (authorizing truck stop operators that have lost
their leases to transfer video poker licenses to other establishments in
limited circumstances).
20 In Frost v. Corporation Commission, 278 U.S. 515, 520 (1929), the Court
offered various examples of franchises: "the right to supply gas or
water to a municipality and its inhabitants, the right to carry on the business
of a telephone system, to operate a railroad, a street railway, city water
works or gas works, to build a bridge, operate a ferry, and to collect tolls
therefor." The Court added that "these are but illustrations of
a more comprehensive list," ibid., which the Court held to include
the right to operate a cotton gin at issue in that case, id. at 520-521.
21 Thus, the government retains authority over whether a franchise may be
transferred. See Louisiana v. Morgan, 28 La. Ann. 482, 488 ("[T]he
franchises of a railroad corporation cannot be alienated without the consent
of the State which granted them. As all franchises belong exclusively to
the State, no one will be permitted to possess and administer any of them
without the consent of the State."), aff'd, 93 U.S. 217 (1876); accord
Branch v. Jesup, 106 U.S. 468, 478 (1883) (observing that franchises "are
generally inalienable" unless the government has provided otherwise).
22 See, e.g., Md. Regs. Code title 14, § 14.01.03.12 (2000); 77 Md.
Op. Att'y Gen. 82 (1992).
23 See, e.g., N.Y. Rac. Pari-Mut. Wag. & Breed. Law § 502 (McKinney
2000) (off-tracking betting); Or. Rev. Stat. §§ 461.213, 461.543
(1997) (sports wagering).
24 Section 1346 was adopted as part of the Anti-Drug Abuse Act of 1988,
Pub. L. No. 100-690, Title VII, Subtitle O, § 7603(a), 102 Stat. 4508.
The provision was not discussed in a committee report or debated on the
floor of either House. See Adam H. Kurland, The Guarantee Clause as a Basis
for Federal Prosecutions of State and Local Officials, 62 So. Cal. L. Rev.
367, 488-489 nn.450-452 (1989) (discussing legislative history of Section
1346). The first statement quoted in the text is from Representative Conyers,
the chairman of the Subcommittee on Criminal Justice of the House Judiciary
Committee, which had held hearings on the impact of McNally on federal criminal
prosecutions. See 134 Cong. Rec. at 33,296-33,297. Representative Conyers,
while supporting the provision that became Section 1346, voted against the
Anti-Drug Abuse Act. Id. at 33,318. No other member of Congress expressed
any disagreement with Representative Conyers' statement that Section 1346
was not intended to effect any change in the law other than the overturning
of McNally. See id. at 32,708 (statement of Senator Biden) (Section 1346
"overturns the decision in McNally").
APPENDIX A
Section 1341 of Title 18 of the United States Code 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, representations, or promises, or to sell, dispose of, loan, exchange,
alter, give away, distribute, supply, or furnish or procure for unlawful
use any counterfeit or spurious coin, obligation, security, or other article,
or anything represented to be or intimated or held out to be such counterfeit
or spurious article, for the 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 deposits or causes to be deposited any matter or
thing whatever to be sent or delivered by any private or commercial interstate
carrier, or takes or receives therefrom, any such matter or thing, or knowingly
causes to be delivered by mail or such carrier 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, any such matter or thing, shall be fined
under this title or imprisoned not more than five years, or both. If the
violation affects a financial institution, such person shall be fined not
more than $1,000,000 or imprisoned not more than 30 years, or both.
APPENDIX B
The mail fraud count of the superseding indictment alleged as follows:
COUNTS 3 THROUGH 6
(MAIL FRAUD)
A. THE SCHEME:
Beginning on an exact date unknown, but in or before February 1992, and
continuing until the date of this indictment, in the Eastern District of
Louisiana, and elsewhere, the listed defendants, and others, known and unknown
to the Grand Jury, knowingly and willfully devised and intended to devise
a scheme and artifice to defraud, and to obtain property by means of false
and fraudulent pretenses and representations; that is, to defraud the State
of Louisiana and its citizens by fraudulently obtaining and renewing, through
the submission of false and incomplete information, state licenses to operate
video poker sites for Truck Stop Gaming, Ltd.
It was part of the scheme and artifice to defraud, that, in connection with
attempts to obtain licenses and license renewals for Truck Stop Gaming,
Ltd., the defendants filed, and caused to be filed, with the Louisiana State
Police applications, affidavits, and other documents which concealed and
failed to disclose:
1. Understandings and agreements with unreported parties:
a. pledging and assigning interests in Truck Stop Gaming, Ltd;
b. agreeing to hold interests in Truck Stop Gaming, Ltd., as an "agent,
nominee or otherwise" on behalf of said unreported party; and
c. agreeing to transfer said interests, on some future date, to said unreported
party; and
2. other factors that could impact the ability of the true owners to obtain
licenses.
It was further part of the scheme and artifice to defraud that the defendants
filed income tax returns which listed the GOODSON children as owning, directly
and indirectly, 100% of Truck Stop Gaming, Ltd.
B. MAILINGS
On or about the dates listed below, in the Eastern District of Louisiana
and elsewhere, the listed defendants, for the purpose of executing the scheme
set forth above in Part A, and attempting to do so, did knowingly cause
to be delivered by the United States Postal Service according to the directions
thereon, and did take and receive, and cause to be taken and received from
an authorized depository for mail matter, the following items having been
mailed from the Department of Public Safety and Corrections, Office of Louisiana
State Police, Baton Rouge, Louisiana, to
Truck Stop Gaming, Ltd., P.O. Box 1361, Slidell, Louisiana, to wit:
COUNT DATE DEFENDANTS ITEM MAILED FROM/TO
3 05/18/92 CARL CLEVELAND FRED GOODSON MARIA GOODSON
License No.
5207600111, Office Tracking No.
000142, issued to Truck Stop Gaming, Ltd.
4 07/07/93 CARL CLEVELAND FRED GOODSON MARIA GOODSON JOE MORGAN
License No.
5207600111, Office
Tracking No.
013616, issued to
Truck Stop Gaming, Ltd.
5 06/02/94 CARL CLEVELAND FRED GOODSON MARIA GOODSON JOE MORGAN
License No.
5207600111, Office
Tracking No.
020606, issued to
Truck Stop Gam
ing, Ltd.
6 05/25/95 CARL CLEVELAND FRED GOODSON MARIA GOODSON JOE MORGAN
License No.
5207600111, Office
Tracking No.
014718, issued to
Truck Stop Gam
ing, Ltd.
All in violation of Title 18, United States Code, Sections 1341 and 2.
APPENDIX C
The district court's instructions to the jury on the mail fraud count stated
as follows:
MAIL FRAUD: COUNTS 3 THROUGH 6 AND
"RACKETEERING ACTS" 1a THROUGH 1d
TITLE 18, UNITED STATES CODE, SECTION 1341, MAKES IT A CRIME FOR ANYONE
TO USE THE UNITED STATES MAILS IN CARRYING OUT A SCHEME TO DEFRAUD. FOUR
OF THE SIX DEFENDANTS ARE CHARGED WITH MAIL FRAUD IN VIOLATION OF TITLE
18, UNITED STATES CODE, SECTION 1341. DEFENDANTS CARL CLEVELAND, FRED GOODSON,
AND MARIA GOODSON ARE EACH CHARGED WITH MAIL FRAUD IN COUNTS 3, 4, 5, AND
6 AND "RACKETEERING ACTS" 1(a), 1(b), 1(c), AND 1(d). JOE MORGAN
IS CHARGED WITH MAIL FRAUD IN COUNTS 5 AND 6 AND RICO PREDICATE ACTS 1(c)
AND 1(d). THE SUPERSEDING INDICTMENT CHARGES THAT THE LISTED DEFENDANTS
KNOWINGLY DEVISED A SCHEME TO DEFRAUD THE STATE OF LOUISIANA AND ITS CITIZENS
BY FRAUDULENTLY OBTAINING AND RENEWING, THROUGH THE SUBMISSION OF FALSE
AND INCOMPLETE INFORMATION, STATE LICENSES TO OPERATE VIDEO POKER SITES
FOR TRUCK STOP GAMING, LTD. THE MAIL FRAUD CHARGES ARE SET FORTH ON PAGES
26-28 OF THE SUPERSEDING INDICTMENT.
FOR YOU TO FIND A DEFENDANT GUILTY OF THE CRIME OF MAIL FRAUD, YOU MUST
BE CONVINCED THAT THE GOVERNMENT HAS PROVED EACH OF THE FOLLOWING ELEMENTS
BEYOND A REASONABLE DOUBT AS TO THAT DEFENDANT:
FIRST, THAT THE DEFENDANT UNDER CONSIDERATION KNOWINGLY CREATED A SCHEME
TO DEFRAUD, AS CHARGED IN THE INDICTMENT;
SECOND, THAT THE DEFENDANT UNDER CONSIDERATION ACTED WITH A SPECIFIC INTENT
TO COMMIT FRAUD;
THIRD, THAT THE DEFENDANT UNDER CONSIDERATION MAILED SOMETHING OR CAUSED
ANOTHER PERSON TO MAIL SOMETHING FOR THE PURPOSE OF CARRYING OUT THE SCHEME.
A "SCHEME TO DEFRAUD" INCLUDES ANY SCHEME TO DEPRIVE ANOTHER OF
MONEY OR PROPERTY BY MEANS OF FALSE OR FRAUDULENT PRETENSES, REPRESENTATIONS,
OR PROMISES. THE SCHEME MUST INVOLVE FALSE OR FRAUDULENT REPRESENTATIONS
OR OMISSIONS REASONABLY CALCULATED TO DECEIVE PERSONS OF ORDINARY PRUDENCE
AND COMPREHENSION.
FOR THE PURPOSES OF MAIL FRAUD, A REPRESENTATION MAY BE "FALSE"
WHEN IT CONSTITUTES A HALF TRUTH, OR EFFECTIVELY CONCEALS A MATERIAL FACT,
PROVIDED IT IS MADE WITH INTENT TO DEFRAUD.
IT IS NOT NECESSARY THAT THE GOVERNMENT PROVE ALL OF THE DETAILS ALLEGED
IN THE INDICTMENT CONCERNING THE PRECISE NATURE AND PURPOSE OF THE SCHEME,
OR THAT THE MATERIAL MAILED WAS ITSELF FALSE OR FRAUDULENT, OR THAT THE
ALLEGED SCHEME ACTUALLY SUCCEEDED IN DEFRAUDING ANYONE, OR THAT THE USE
OF THE MAIL WAS INTENDED AS THE SPECIFIC OR EXCLUSIVE MEANS OF ACCOMPLISHING
THE ALLEGED FRAUD.
WHAT MUST BE PROVED BEYOND A REASONABLE DOUBT IS THAT THE DEFENDANT KNOWINGLY
DEVISED OR INTENDED TO DEVISE A SCHEME TO DEFRAUD THAT WAS SUBSTANTIALLY
THE SAME AS THE ONE ALLEGED IN THE INDICTMENT AND THAT THE USE OF THE U.S.
MAILS WAS CLOSELY RELATED TO THE SCHEME, IN THAT THE DEFENDANT EITHER MAILED
SOMETHING OR CAUSED IT TO BE MAILED IN AN ATTEMPT TO EXECUTE OR CARRY OUT
THE SCHEME. TO "CAUSE" THE MAILS TO BE USED IS TO DO AN ACT WITH
KNOWLEDGE THAT THE USE OF THE MAILS WILL FOLLOW IN THE ORDINARY COURSE OF
BUSINESS OR WHERE SUCH USE CAN REASONABLY BE FORESEEN. EACH SEPARATE USE
OF THE MAILS IN FURTHERANCE OF A SCHEME TO DEFRAUD CONSTITUTES A SEPARATE
OFFENSE.