323 U.S. 88 (1944), 35, Kann v. United States

Docket Nº:No. 35
Citation:323 U.S. 88, 65 S.Ct. 148, 89 L.Ed. 88
Party Name:Kann v. United States
Case Date:December 04, 1944
Court:United States Supreme Court

Page 88

323 U.S. 88 (1944)

65 S.Ct. 148, 89 L.Ed. 88



United States

No. 35

United States Supreme Court

Dec. 4, 1944

Argued November 7, 1944




1. An essential element of the offense under § 215 of the Criminal Code is that the use of the mails be for the purpose of executing the fraudulent scheme. P. 95.

2. The fraudulent scheme alleged being one to obtain money, and participants having obtained the money by cashing checks at banks, which thereupon became holders in due course, the subsequent mailings of the checks by the banks to the drawees were not "for the purpose of executing such scheme" within the meaning of § 215 of the Criminal Code, and the conviction here cannot be sustained. P. 94.

140 F.2d 30 reversed.

Certiorari, 321 U.S. 761, to review the affirmance of a conviction of using the mails to defraud in violation of § 215 of the Criminal Code.

Page 89

ROBERTS, J., lead opinion

MR. JUSTICE ROBERTS delivered the opinion of the Court.

We took this case because it involves important questions arising under § 215 of the Criminal Code.1 The section provides that

Whoever, having devised . . . any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises . . . shall, for the purpose of executing such scheme or artifice or attempting so to do, place, or cause to be placed, any letter, . . . in any post office, or . . . cause to be delivered by mail according to the direction thereon, . . . any such letter, . . . shall be fined not more than $1,000, or imprisoned not more than five years, or both.

The petitioner and six others were indicted in three counts for using the mail in execution of a scheme to defraud. Petitioner's codefendants pleaded nolo contendere. He was tried and convicted on the second and third counts, and the Circuit Court of Appeals affirmed the conviction.2

The indictment alleged that Triumph Explosives, Inc., is a Maryland corporation engaged in the manufacture of munitions for the United States, a large amount of whose stock is held by the general public; that petitioner was President and a director, one of his codefendants was an officer and director, and five of them salaried executive and administrative employees, of the company. The indictment continued that the defendants devised a scheme to defraud Triumph and its stockholders and obtain money for themselves by diverting part of the profits of Triumph on its Government contracts to a corporation known as Elk Mills Loading Corporation and distributing such profits through [65 S.Ct. 149] salaries, dividends, and

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bonuses to be paid by Elk Mills to the defendants; that, in pursuance of the scheme, Elk Mills was organized, some defendants elected officers and directors, and others elected consultants at substantial salaries, and 49% of its stock distributed to five defendants, who were administrative employees of Triumph, without consideration; that Triumph, pursuant to the plan, subcontracted a Government contract to Elk Mills for 51% of the latter's stock, on a basis which would yield Elk Mills large profits, and would involve utilization of the employees and services of Triumph in the performance of the subcontract, and that the defendants, pursuant to the scheme, received from Elk Mills salaries and bonuses for which no substantial services were rendered, and dividends, to the detriment of Triumph. It was alleged that the fraudulent scheme was misrepresented upon the minutes of Triumph, and false reasons for the transaction given. Further, that, pursuant to the scheme, it was to be represented that some of the defendants would purchase with their own money, and convey to Elk Mills, certain lands for the issue to them of 49% of the stock of Elk Mills, whereas it was not intended that these defendants should use their own funds in purchasing the land to be transferred in payment of the stock, and that this plan was carried out. In summary, it was charged that the scheme was such that Triumph should be deprived of the profits rightfully belonging to it, and these profits should be distributed amongst the defendants through the instrumentality of Elk Mills; that bonuses were to be paid to each of the defendants out of the profits of Elk Mills, and such bonuses were paid.

In the first...

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