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163.

Sample Response to Defense Motion re Mailing

Modified, from a Ninth Circuit brief, March 1996.

THERE WAS SUFFICIENT EVIDENCE FOR THE JURY TO CONCLUDE THAT ______ AND ___ KNEW THAT THE MAILS WOULD BE USED

At trial, the government's proof showed an agreement that encompassed the two elements of a violation of the mail fraud statute: "(1) existence of a scheme to defraud, and (2) 'using or causing the use of the mails in furtherance of the scheme.'" United States v. Stein, 37 F.3d 1407, 1408-09 (9th Cir. 1994) (quoting United States v. Lothian, 976 F.2d 1257, 1262 (9th Cir. 1992)), cert. denied, 115 S. Ct. 1170 (1995). XXXXXXX contends that there was insufficient evidence that he and XXXX agreed to enter a scheme to defraud involving the mails. XXXXXXX Brief at 13-17.

Nevertheless, as demonstrated above, Argument Section I, an agreement satisfying the first element was shown. There was ample evidence for the jury to conclude that XXXXXXX and XXXX agreed to a scheme to defraud prospective used car purchasers such as ACS by misrepresenting the actual mileage and value of vehicles. Accordingly, the first element, a scheme to defraud, exists. See United States v. Shryock, 537 F.2d 207, 209 (5th Cir. 1976), cert. denied, 429 U.S. 1100 (1977) (evidence in mail fraud prosecution sufficient to conclude that manager of car dealership was engaged in scheme to deceive prospective purchasers as to actual mileage of previously leased cars).

To establish an agreement on the second element, that the mails were used as part of the execution of the fraud, the government need only establish that the mailing was "incident to an essential part of the scheme . . . or a step in the plot." Schmuck v. United States, 489 U.S. 705, 710-11 (1989) (quotations omitted). The government need not establish that the defendant himself actually made the mailing. See id., 489 U.S. at 712; Stein, 37 F.3d at 1409. Instead, the government satisfies its burden if it shows that the defendant caused mailings for the purpose of executing the scheme. Pereira v. United States, 347 U.S. 1, 8 (1954).

. . .

Both XXXXXXX and XXXX contend that the government failed to show that any foreseeable mailing furthered the conspiracy. XXXX argues that mailings of new titles by Arizona's DOT to ACS did not further the scheme, because they did not affect payment for the cars. XXXX Brief at 19-20. XXXXXXX argues that nothing was mailed, XXXXXXX Brief at 16 and 17, and that the defendants did not know that any mailing would occur, XXXXXXX Brief at 13. However, these arguments must fail.

1. There was sufficient evidence for the jury to conclude that it was reasonably foreseeable that the mails would be used.

A defendant causes the mails to be used when he "does 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, even though not actually intended . . . ." United States v. Bernhardt, 840 F.2d 1441, 1447 (9th Cir.) (quoting Pereira, 347 U.S. at 8-9), cert. denied, 488 U.S. 954 (1988). "It is well settled . . . that so long as one participant in a fraudulent scheme causes a use of the mails in execution of the fraud, all other knowing participants in the scheme are legally liable for that use of the mails.'" United States v. Dadanian, 818 F.2d 1443, 1446 (9th Cir. 1987), opinion modified on other grounds, 856 F.2d 1391 (9th Cir. 1988) (quoting United States v. Toney, 598 F.2d 1349, 1355 (5th Cir. 1979), cert. denied, 444 U.S. 1033 (1980)).

XXXXXXX was an experienced player in the used car industry. He had worked in that industry for at least the five years that Valley Motors' O'Neill had done business with him, and since he acquired the "Discount" name in 1987 (GX 1/GER 168-76). During this time he purchased and sold hundreds of cars (pp. 7-8, supra). Discount sold at least 70 cars to ACS during the period that XXXX negotiated sales with ACS (p. 14, supra). Further, the court took judicial notice of XXXXXXX's June 1990 guilty plea to odometer tampering related charges, showing he had been in the business before that time. (RT 662-63/GER 151-52).

XXXXXXX and XXXX were in the used car business and intimately familiar with paperwork generated by used car purchases and sales. Both of them filled in title paperwork and reassigned ownership to vehicles (pp. 9-10, supra). The government introduced a wealth of certificates of title, reassignments, and applications for duplicate titles pertaining to the indictment cars. XXXXXXX and XXXX completed such documents for each car to obtain new, clean titles to carry out their scheme. Some of those documents made it clear that DMVs would mail titles.[FN1] The government also introduced copies of the Arizona certificates of title which call for the "mailing address" of the owner (e.g., GX 206/GER 227), and which XXX testified Arizona had mailed to him (RT 203/GER 75).

FN1. For example, GX 104/GER 206, a California Application for Original Registration, asks for a "Mailing Address" and requires certification that the "mailing address" is a "valid" and "accurate mailing address". In addition, GX 504, 804, and 904/GER 248, 291, 309, Texas Applications for a Certified Copy of a Texas Certificate of Title, require different fees if a title is to be "mailed" or picked up, and note that "If the title is to be mailed, please indicate a "CURRENT" mailing address" (emphasis in original).
XXXXXXX and XXXX not only worked in the used car industry, but they knew which states (California and Texas) would provide titles that did not show mileage. Given their experience in the industry, and their intimate familiarity with its paperwork, a reasonable jury could conclude that XXXXXXX and XXXX knew that a DMV mailing would routinely occur as a result of their scheme when a consumer (here, ACS) titled the car in its home state.

Several cases have held that the foreseeability requirement was satisfied under circumstances remarkably similar to those here. Shryock, 537 F.2d at 209 (defendant in mail fraud prosecution stemming from odometer rollback claimed that he did not mail anything and that "he did not know that" state DMV would mail anything -- defense unavailing because defendant had been in the business for years and could reasonably foresee that mails would be used at some point in title transfer process); United States v. Locklear, 829 F.2d 1314, 1318 (4th Cir. 1987) (evidence that defendant was veteran of used car business and well-acquainted with paperwork generated by automobile sales made it reasonably foreseeable to him that DMV would mail titles to downstream purchaser of vehicle with rolled odometer, so defendant caused mailing as required for mail fraud conviction); United States v. Galloway, 664 F.2d 161, 163-65 and n.6 (7th Cir. 1981) (reasonably foreseeable to used car wholesaler in odometer rollback scheme that mail would be used to obtain new titles after he sold cars with altered odometers, so title-related mailings satisfied mail fraud element), cert. denied, 456 U.S. 1006 (1982). The Supreme Court cited all three of these cases with approval in Schmuck, 489 U.S. at 712 (holding that mailing by defendant's customer of title application to DMV in odometer fraud scheme satisfied the mailing requirement). See also United States v. Waldrop, 786 F. Supp. 1194, 1202 (M.D. Pa. 1991) (jury could find title mailings were foreseeable to defendants who were experienced in selling used cars), aff'd 983 F.2d 1054 (3d Cir. 1992), cert. denied, 113 S. Ct. 2440 (1993).[FN2]

FN2. XXXXXXX relies upon United States v. Smith, 934 F.2d 270, 273 (11th Cir. 1991), where the mailing was not foreseeable because the company's practice of mailing copies of its accounting drafts was "not common knowledge." But in reaching this conclusion, the court considered a host of factors quite different from those in this and other odometer-fraud cases. Smith relied on testimony from the insurance agent who did not tell the defendant that any kind of information would be sent through the mails, the fact that the defendant was not familiar with the operating procedures of insurance companies, trial testimony showing that the defendant could not read, and the fact that the government never contended that the defendant had any part in coordinating the scheme. Id. at 272-73. Unlike the defendant in Smith, the defendants here were familiar with the used car industry and the paperwork associated with transferring vehicles.
Nonetheless, XXXXXXX and XXXX contend that a mailing was not foreseeable, claiming that mailings were not feasible in their business because the mail was too slow. They point to testimony that dealers selling vehicles used express services so that titles would change hands quickly, which was a prerequisite to being paid for a car. However, neither defendant points to a shred of evidence that any state DMV routinely sent documents via private courier. Thus, this evidence has no bearing on whether or not they could have foreseen that a consumer would obtain title via the mail, or that Arizona would mail titles to ACS.

While the defendants wanted to get titles to cars they purchased immediately so that they could resell the vehicles and pass title to the buyer and get paid, ACS had no similar motivation to pay the cost of express shipments. Thus it was foreseeable that ACS would do what it did, which is apply for Arizona titles and simply wait for the new titles to arrive in the mail. Shryock, 537 F.2d at 209; Locklear, 829 F.2d at 1318 Galloway, 664 F.2d at 165, n.6.

XXXXXXX argues that "the government did not introduce evidence of even one mailed document." XXXXXXX Brief at 14. The government introduced evidence of not one, but at least ten mailed documents. XXX, who ran ACS, testified that he received certificates of title from Arizona in the mail. (RT 202-03/GER 74-75). The government also introduced the ten Arizona certificates of title XXX received. Each of these exhibits (GX 107, 206, 306, 406, 506, 606, 706, 806, 906, 1006/GER 221, 227, 234, 241, 258, 267, 283, 302, 319, 326) states: "MAILING ADDRESS" followed by the mailing address for Arizona Checker Leasing Corporation. Use of the mails is properly established by such proof of mailing. See United States v. Brackenridge, 590 F.2d 810, 811 (9th Cir.), cert. denied, 440 U.S. 985 (1979); Bolen v. United States, 303 F.2d 870, 875 (9th Cir. 1962); United States v. Metallo, 908 F.2d 795, 798 (11th Cir. 1990), cert. denied, 503 U.S. 940 (1992).[FN3]

FN3. Defendants mix apples and oranges in dealing with the issue of proof of mailing through testimony of customary mailings. XXXX cites United States v. Waymer, 55 F.3d 564, 571 (11th Cir. 1995), petition for cert. filed, 64 U.S.L.W. 3428 (U.S. Dec. 5, 1995), which quotes United States v. Moody, 903 F.2d 321, 332 (5th Cir. 1990), (XXXX Brief at 21; compare XXXXXXX Brief at 15) for the proposition that proof of mailing by reference to a "usual business practice" can be cast into doubt by testimony that the usual business practice includes frequent use of private couriers. This is apples in a discussion of oranges, because XXX was unequivocal in saying that Arizona mailed him titles, and the Arizona certificates of title themselves indicate that they were mailed. The fact that other private entities use Federal Express has nothing to do with the usual practice of the State of Arizona.
2. The mailings which the government relied upon are sufficiently related to XXXXXXX's and XXXX's scheme
Arizona mailed titles with low mileage to XXX. XXXX argues that these mailings were not "incident to an essential part of the scheme." XXXX Brief at 20. According to XXXX, the "scheme was complete upon [XXXXXXX's] receipt of the payment for the delivered cars, and XXXXXXX's receipt of the titles by Federal Express." Id. XXXX's argument is unavailing.

The controlling case law runs squarely against XXXX's contention. Time and again the Supreme Court and the Ninth Circuit have rejected the proposition that the chronology of the mailings vis-a-vis the receipt of money is the determinative factor as to whether a mailing was in furtherance of a scheme to defraud. See, e.g., United States v. Lane, 474 U.S. 438, 451-52 (1986); United States v. Sampson, 371 U.S. 75, 83 (1962); Stein, 37 F.3d at 1408-09; United States v. Feldman, 853 F.2d 648, 655 (9th Cir. 1988), cert. denied, 489 U.S. 1030 (1989); United States v. Brutzman, 731 F.2d 1449, 1454 (9th Cir. 1984); United States v. Miller, 676 F.2d 359, 362 (9th Cir.), cert. denied, 459 U.S. 856 (1982); United States v. Price, 623 F.2d 587, 593 (9th Cir.), cert. denied, 449 U.S. 1016 (1980); United States v. Love, 535 F.2d 1152, 1159 (9th Cir.), cert. denied, 429 U.S. 847 (1976). As the Ninth Circuit observed in Love:

'[I]t is a well established principle of mail fraud law that use of the mails after the money is obtained may nevertheless be for the purpose of executing the fraud . . . .' There is no rule that money must change hands after the mailing.
535 F.2d at 1159-60 (quoting United States v. Ashdown, 509 F.2d 793, 799 (5th Cir. 1975)) (internal quotation omitted).

Rather than looking to the mere chronology of when money changed hands, the courts instead have focused upon the relationship of the mailings to a defendant's scheme. This approach is proper, for there is little question that mailings occurring subsequent to a defendant's receipt of money can be as integral to the success of the defendant's fraudulent scheme as those that occur prior to the receipt of money. See Sampson, 371 U.S. at 76; Feldman, 853 F.2d at 655; Brutzman, 731 F.2d at 1454. Indeed, mailings occurring after the receipt of goods or money may be especially pernicious due to their potential "to lull the victims into a false sense of security, postpone their ultimate complaint to the authorities, and therefore make the apprehension of the defendants less likely than if no mailings had taken place." Lane, 474 U.S. at 451-52 (quoting United States v. Maze, 414 U.S. 395, 403 (1974)); *; United States v. Jones, 712 F.2d 1316, 1320-21 (9th Cir.), cert. denied, 464 U.S. 986 (1983) (routine bank mailings made long after execution of fraudulent transactions satisfied mailing element because they are designed to "reassure[] the victim that all is well, discouraging him from investigating and uncovering the fraud.").

In determining whether the mailings in question are "for the purpose of executing the scheme," the Court examines the relationship of the mailings to the defendant's scheme. See Schmuck, 489 U.S. at 711-12 ("[t]he relevant question at all times is whether the mailing is part of the execution of the scheme as conceived by the perpetrator at the time"). So long as those mailings can be considered to be at all related to the success of the defendant's scheme, then the mailing is a proper predicate for a charge of mail fraud. See Maze, 414 U.S. 401-02.Despite XXXX's arguments to the contrary, Schmuck is controlling here. In Schmuck, the defendant was charged with executing an odometer-fraud scheme to cheat Wisconsin retail automobile customers who, in part, based decisions to purchase vehicles on false low-mileage readings on odometers. Id. at 711. Schmuck sold these false, low-mileage cars to several dealers on a consistent basis over a number of years. Id. Because Schmuck had an on-going fraudulent venture, the Court found that a rational jury could have concluded that the success of Schmuck's venture depended upon his continued good reputation and relations with the dealers. Id. at 711-12. This harmony would have been broken if titles to the vehicles were not successfully passed because it was discovered that the titles contained false information:

[W]e believe that a rational jury could have found that the title-registration mailings were part of the execution of the fraudulent scheme, a scheme which did not reach fruition until the retail dealers resold the cars and effected the transfers of title. Schmuck's scheme would have come to an abrupt halt if the dealers either had lost faith in Schmuck or had not been able to resell the cars obtained from him. These resales and Schmuck's relationships with the retail dealers naturally depended on the successful passage of title among the various parties. Thus, although the registration-form mailings may not have contributed directly to the duping of either the retail dealers or the customers, they were necessary to the passage of title, which in turn was essential to the perpetuation of Schmuck's scheme.
Id. at 712.

The facts in Schmuck are similar to those in the instant case. XXX testified that the mileage on cars and the titles to the cars were important to his business (RT 205-07/GER 76-78). He conducted numerous transactions with Discount, acquiring over 70 vehicles from XXXXXXX and XXXX. (RT 251-52/GER 111-12). The harmonious relationship XXXXXXX and XXXX had with XXX would have ended quickly if the latter knew about the fraudulent title registration mailings. See also Galloway, 664 F.2d at 164-65; Shryock, 537 F.2d at 209.

XXXX attempts to distinguish Schmuck, as here ACS used the vehicles for cabs rather than resale. This distinction is not controlling. When XXX purchased the cars from XXXXXXX and XXXX, he did not know that the odometers had been altered, that they contained false low mileage, or that the titles contained false information. He was the end-user, the unsuspecting consumer. If he had known that the cars he was purchasing from XXXXXXX and XXXX had altered odometers and that the titles reflected false, low mileages, the relationship would have come to an abrupt halt. Just as the dealers in Schmuck, XXX would have lost faith in XXXXXXX and XXXX, and would have looked elsewhere to purchase vehicles.

As the Supreme Court held in Schmuck, the mailings of the title registration forms were essential to the continuation of the scheme. Here, the mailings from Arizona DOT to XXX were essential to the scheme. The titles were not useless pieces of paper, but represented ACS's ownership of vehicles. These mailings were sufficiently related to XXXXXXX's and XXXX's scheme.

[cited in USAM 4-8.310]