Schmuck v. United States, 489 U.S. 705 (1989)

Schmuck v. U.S.
489 U.S. 705, 109 S.Ct. 1443
U.S.Wis.,1989.

I 

FN1. Rule 31(c) provides in relevant part: “The defendant may be found guilty of an offense necessarily included in the offense charged.”

FN2. In 1986, Congress made odometer tampering a felony. Pub.L. 99-579, § 3(b), 100 Stat. 3311, 15 U.S.C. § 1990c

(a) (1982 ed., Supp. V).

 

FN3.

The District Court concluded that whether the mailings alleged in the indictment furthered the fraudulent scheme was a “matter to be determined at trial.” App. 12. The court concluded that Schmuck was not entitled to the lesser offense instruction because odometer tampering was not a necessarily included offense of mail fraud. Id., at 28. Schmuck raised these objections again in support of a motion for acquittal at the close of the Government’s case. Id., at 55-59. That motion was denied. Id., at 60.

 

The District Court instructed the jury that in order to find Schmuck guilty of mail fraud the jury had to find beyond a reasonable doubt that he knowingly devised a scheme to defraud, and that he caused matter to be sent in the mail for the purpose of executing that scheme. Tr. 189. The court also told the jury that it could find Schmuck guilty if the use of the mails was reasonably foreseeable. Id., at 191.

FN4. One judge, concurring in part and dissenting in part, agreed with the panel’s application of the inherent relationship test, but found no such relationship between mail fraud and odometer tampering. 776 F.2d, at 1373

The Court of Appeals vacated the panel decision and ordered the case to be reheard en banc. 784 F.2d 846 (CA7 1986). On rehearing, by a divided vote, 840 F.2d 384 (1988), the en banc court rejected the “inherent relationship” test for defining lesser included offenses, and adopted instead the “elements test” whereby one offense is necessarily included within another only when the elements of the lesser offense form a subset of the elements of the offense charged. Id., at 387. The Court of Appeals found that the elements test “is grounded in the terms and history of Rule 31(c), comports with the constitutional requirement of notice to defendant of the potential for conviction of an offense not separately charged, permits a greater degree of certainty in the application of Rule 31(c), and harmonizes the concept of ‘necessarily included’ under Rule 31(c) with that of a lesser included offense where the issue is double jeopardy.” Id., at 388. Applying the elements test, the Court of Appeals held that Schmuck was not entitled to a jury instruction on the offense of odometer tampering because he could have been convicted *710 of mail fraud without a showing that he actually altered the odometers, but could not have been convicted of odometer tampering absent such a showing. Since the elements of odometer tampering are not a subset of the elements of mail fraud, odometer tampering did not qualify as a lesser included offense of mail fraud and, accordingly, the District Court was not required under Rule 31(c) to instruct the jury on the odometer-tampering offense.

We granted certiorari, 486 U.S. 1004, 108 S.Ct. 1727, 100 L.Ed.2d 192 (1988), to define further the scope of the mail fraud statute and to resolve a conflict among the Circuits over which test to apply in determining what constitutes a lesser included offense for the purposes of Rule 31(c). ^FN5

FN5. Compare, e.g., United States v. Whitaker, 144 U.S.App.D.C. 344, 349, 447 F.2d 314, 319 (1971) (inherent relationship test), and United States v. Martin, 783 F.2d 1449, 1451 (CA9 1986) (same), with United States v. Campbell, 652 F.2d 760, 761-762 (CA8 1981) (elements test), and Government of Virgin Islands v. Joseph, 765 F.2d 394, 396 (CA3 1985)

II
[1] “The federal mail fraud statute does not purport to reach all frauds, but only those limited instances in which the use of the mails is a part of the execution of the fraud, leaving all other cases to be dealt with by appropriate state law.” Kann v. United States, 323 U.S. 88, 95, 65 S.Ct. 148, 151, 89 L.Ed. 88 (1944).^FN6 To be **1448 part of the execution of the fraud, however, the use of the mails need not be an essential element of the scheme. Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 362, 98 L.Ed. 435 (1954). It is sufficient for the *711 mailing to be “incident to an essential part of the scheme,” ibid., or “a step in [the] plot,” Badders v. United States, 240 U.S. 391, 394, 36 S.Ct. 367, 368, 60 L.Ed. 706 (1916).
FN6.

“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 … for the purpose of executing such scheme or artifice or attempting so to do … knowingly causes to be delivered by mail according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined not more than $1,000 or imprisoned not more than five years, or both.” 18 U.S.C. § 1341.

[2] Schmuck, relying principally on this Court’s decisions in Kann, supra, Parr v. United States, 363 U.S. 370, 80 S.Ct. 1171, 4 L.Ed.2d 1277 (1960), and United States v. Maze, 414 U.S. 395, 94 S.Ct. 645, 38 L.Ed.2d 603 (1974), argues that mail fraud can be predicated only on a mailing that affirmatively assists the perpetrator in carrying out his fraudulent scheme. The mailing element of the offense, he contends, cannot be satisfied by a mailing, such as those at issue here, that is routine and innocent in and of itself, and that, far from furthering the execution of the fraud, occurs after the fraud has come to fruition, is merely tangentially related to the fraud, and is counterproductive in that it creates a “paper trail” from which the fraud may be discovered. Brief for Petitioner 20-24. We disagree both with this characterization of the mailings in the present case and with this description of the applicable law.

We begin by considering the scope of Schmuck’s fraudulent scheme. Schmuck was charged with devising and executing a scheme to defraud Wisconsin retail automobile customers who based their decisions to purchase certain automobiles at least in part on the low-mileage readings provided by the tampered odometers. This was a fairly large-scale operation. Evidence at trial indicated that Schmuck had employed a man known only as “Fred” to turn back the odometers on about 150 different cars. Tr. 102-103. Schmuck then marketed these cars to a number of dealers, several of whom he dealt with on a consistent basis over a period of about 15 years. Id., at 33-34, 53. Indeed, of the 12 automobiles that are the subject of the counts of the indictment, 5 were sold to “P and A Sales,” and 4 to “Southside Auto.” App. 6-7. Thus, Schmuck’s was not a “one-shot” operation in which he sold a single car to an isolated dealer. His was an ongoing fraudulent venture. A rational jury could have concluded that the success of Schmuck’s venture depended*712 upon his continued harmonious relations with, and good reputation among, retail dealers, which in turn required the smooth flow of cars from the dealers to their Wisconsin customers.

Under these circumstances, we 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 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. As noted earlier, a mailing that is “incident to an essential part of the scheme,” Pereira, 347 U.S., at 8, 74 S.Ct., at 363, satisfies the mailing element of the mail fraud offense. The mailings here fit this description. See, e.g., United States v. Locklear, 829 F.2d 1314, 1318-1319 (CA4 1987) (retail customers obtaining title documents through the mail furthers execution of wholesaler’s odometer-tampering scheme); United States v. Galloway, 664 F.2d 161, 163-165 (CA7 1981) (same), cert. denied, **1449 456 U.S. 1006, 102 S.Ct. 2296, 73 L.Ed.2d 1300 (1982); cf. United States v. Shryock, 537 F.2d 207, 208-209 (CA5 1976) (local motor vehicle department’s mailing of title applications to state headquarters furthers retailer’s odometer-tampering scheme), cert. denied, 429 U.S. 1100, 97 S.Ct. 1123, 51 L.Ed.2d 549 (1977).

Once the full flavor of Schmuck’s scheme is appreciated, the critical distinctions between this case and the three cases in which this Court has delimited the reach of the mail fraud statute- Kann, Parr, and Maze-are readily apparent. The defendants in Kann were corporate officers and directors *713 accused of setting up a dummy corporation through which to divert profits into their own pockets. As part of this fraudulent scheme, the defendants caused the corporation to issue two checks payable to them. The defendants cashed these checks at local banks, which then mailed the checks to the drawee banks for collection. This Court held that the mailing of the cashed checks to the drawee banks could not supply the mailing element of the mail fraud charges. The defendants’ fraudulent scheme had reached fruition. “It was immaterial to them, or to any consummation of the scheme, how the bank which paid or credited the check would collect from the drawee bank.” 323 U.S., at 94, 65 S.Ct., at 151.

In Parr, several defendants were charged, inter alia, with having fraudulently obtained gasoline and a variety of other products and services through the unauthorized use of a credit card issued to the school district which employed them. The mailing element of the mail fraud charges in Parr was purportedly satisfied when the oil company which issued the credit card mailed invoices to the school district for payment, and when the district mailed payment in the form of a check. Relying on Kann, this Court held that these mailings were not in execution of the scheme as required by the statute because it was immaterial to the defendants how the oil company went about collecting its payment. 363 U.S., at 393, 80 S.Ct., at 1184.^FN7

FN7. Parr also involved a second fraudulent scheme through which the defendant school board members misappropriated school district tax revenues. The Government argued that the mailing element of the mail fraud charges was supplied by the mailing of tax statements, checks, and receipts. This Court held, however, that in the absence of any evidence that the tax levy was increased as part of the fraud, the mailing element of the offense could not be supplied by mailings “made or caused to be made under the imperative command of duty imposed by state law.” 363 U.S., at 391, 80 S.Ct., at 1184. No such legal duty is at issue here. Whereas the mailings of the tax documents in Parr were the direct product of the school district’s state constitutional duty to levy taxes, id., at 387, 80 S.Ct., at 1181, and would have been made regardless of the defendants’ fraudulent scheme, the mailings in the present case, though in compliance with Wisconsin’s car-registration procedure, were derivative of Schmuck’s scheme to sell “doctored” cars and would not have occurred but for that scheme.

The title-registration mailings at issue here served a function different from the mailings in Kann, Parr, and Maze. The intrabank mailings in Kann and the credit card invoice mailings in Parr and Maze involved little more than post-fraud accounting among the potential victims of the various schemes, and the long-term success of the fraud did not turn on which of the potential victims bore the ultimate loss. **1450 Here, in contrast, a jury rationally could have found that Schmuck by no means was indifferent to the fact of who bore the loss. The mailing of the title-registration forms was an essential step in the successful passage of title to the retail purchasers. Moreover, a failure of this passage of title would have jeopardized Schmuck’s relationship of trust and goodwill with the retail dealers upon whose unwitting cooperation his scheme depended. Schmuck’s reliance on our prior cases limiting the reach of the mail fraud statute is simply misplaced.

To the extent that Schmuck would draw from these previous cases a general rule that routine mailings that are innocent*715 in themselves cannot supply the mailing element of the mail fraud offense, he misapprehends this Court’s precedents. In Parr the Court specifically acknowledged that “innocent” mailings-ones that contain no false information-may supply the mailing element. 363 U.S., at 390, 80 S.Ct., at 1183. In other cases, the Court has found the elements of mail fraud to be satisfied where the mailings have been routine. See, e.g., Carpenter v. United States, 484 U.S. 19, 28, 108 S.Ct. 316, 322, 98 L.Ed.2d 275 (1987) (mailing newspapers).

We also reject Schmuck’s contention that mailings that someday may contribute to the uncovering of a fraudulent scheme cannot supply the mailing element of the mail fraud offense. The 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, regardless of whether the mailing later, through hindsight, may prove to have been counterproductive and return to haunt the perpetrator of the fraud. The mail fraud statute includes no guarantee that the use of the mails for the purpose of executing a fraudulent scheme will be risk free. Those who use the mails to defraud proceed at their peril.

For these reasons, we agree with the Court of Appeals that the mailings in this case satisfy the mailing element of the mail fraud offenses.

**1454 Justice SCALIA, with whom Justice BRENNAN, Justice MARSHALL, and Justice O’CONNOR join, dissenting.

The purpose of the mail fraud statute is “to prevent the post office from being used to carry [fraudulent schemes] into effect.” Durland v. United States, 161 U.S. 306, 314, 16 S.Ct. 508, 511, 40 L.Ed. 709 (1896); Parr v. United States, 363 U.S. 370, 389, 80 S.Ct. 1171, 1182, 4 L.Ed.2d 1277 (1960). The law does not establish a general federal remedy against fraudulent conduct, with use of the mails as the jurisdictional *723 hook, but reaches only “those limited instances in which the use of the mails is a part of the execution of the fraud, leaving all other cases to be dealt with by appropriate state law.” Kann v. United States, 323 U.S. 88, 95, 65 S.Ct. 148, 151, 89 L.Ed. 88 (1944) (emphasis added). In other words, it is mail fraud, not mail and fraud, that incurs liability. This federal statute is not violated by a fraudulent scheme in which, at some point, a mailing happens to occur-nor even by one in which a mailing predictably and necessarily occurs. The mailing must be in furtherance of the fraud.

In Kann v. United States, we concluded that even though defendants who cashed checks obtained as part of a fraudulent scheme knew that the bank cashing the checks would send them by mail to a drawee bank for collection, they did not thereby violate the mail fraud statute, because upon their receipt of the cash “[t]he scheme … had reached fruition,” and the mailing was “immaterial … to any consummation of the scheme.” Id., at 94, 65 S.Ct., at 151. We held to the same effect in United States v. Maze, 414 U.S. 395, 400-402, 94 S.Ct. 645, 648-649, 38 L.Ed.2d 603 (1974), declining to find that credit card fraud was converted into mail fraud by the certainty that, after the wrongdoer had fraudulently received his goods and services from the merchants, they would forward the credit charges by mail for payment. These cases are squarely in point here. For though the Government chose to charge a defrauding of retail customers (to whom the innocent dealers resold the cars), it is obvious that, regardless of who the ultimate victim of the fraud may have been, the fraud was complete with respect to each car when petitioner pocketed the dealer’s money. As far as each particular transaction was concerned, it was as inconsequential to him whether the dealer resold the car as it was inconsequential to the defendant in Maze whether the defrauded merchant ever forwarded the charges to the credit card company.

Nor can the force of our cases be avoided by combining all of the individual transactions into a single scheme, and saying,*724 as the Court does, that if the dealers’ mailings obtaining title for each retail purchaser had not occurred then the dealers would have stopped trusting petitioner for future transactions. (That conclusion seems to me a non sequitur, but I accept it for the sake of argument.) This establishes, at most, that the scheme could not technically have been consummated if the mechanical **1455 step of the mailings to obtain conveyance of title had not occurred. But we have held that the indispensability of such mechanical mailings, not strictly in furtherance of the fraud, is not enough to invoke the statute. For example, when officials of a school district embezzled tax funds over the course of several years, we held that no mail fraud had occurred even though the success of the scheme plainly depended on the officials’ causing tax bills to be sent by mail (and thus tax payments to be received) every year. Parr v. United States, 363 U.S., at 388-392, 80 S.Ct., at 1182-1184. Similarly, when those officials caused the school district to pay by mail credit card bills-a step plainly necessary to enable their continued fraudulent use of the credit card-we concluded that no mail fraud had occurred. Id., at 392-393, 80 S.Ct., at 1184-1185.

I find it impossible to escape these precedents in the present case. Assuming the Court to be correct in concluding that failure to pass title to the cars would have threatened the success of the scheme, the same could have been said of failure to collect taxes or to pay the credit card bills in Parr. And I think it particularly significant that in Kann the Government proposed a theory identical to that which the Court today uses. Since the scheme was ongoing, the Government urged, the fact that the mailing of the two checks had occurred after the defendants had pocketed the fraudulently obtained cash made no difference. “[T]he defendants expected to receive further bonuses and profits,” and therefore “the clearing of these checks in the ordinary course was essential to [the scheme’s] further prosecution.” 323 U.S., at 95, 65 S.Ct., at 151. The dissenters in Kann agreed. “[T]his,” they said, “was not the last step in the fraudulent scheme. It was a *725 continuing venture. Smooth clearances of the checks were essential lest these intermediate dividends be interrupted and the conspirators be called upon to disgorge.” Id., at 96, 65 S.Ct., at 151 (Douglas, J., dissenting). The Court rejected this argument, concluding that “the subsequent banking transactions between the banks concerned were merely incidental and collateral to the scheme and not a part of it.” Id., at 95, 65 S.Ct., at 151. I think the mailing of the title application forms equivalently incidental here.

What Justice Frankfurter observed almost three decades ago remains true: “The adequate degree of relationship between a mailing which occurs during the life of a scheme and the scheme is … not a matter susceptible of geometric determination.” Parr v. United States, supra, 363 U.S., at 397, 80 S.Ct., at 1187 (dissenting opinion). All the more reason to adhere as closely as possible to past cases. I think we have not done that today, and thus create problems for tomorrow.

U.S.Wis.,1989.
Schmuck v. U.S.