United States v. Owen, 72-3646.

Citation492 F.2d 1100
Decision Date28 May 1974
Docket NumberNo. 72-3646.,72-3646.
PartiesUNITED STATES of America, Plaintiff-Appellee, v. William E. OWEN, Jr., Frederick Morse Allen, Joseph G. Scata, and Julius Grossman, Defendants-Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Arthur W. Tifford, Miami, Fla. (Court-appointed), for William E. Owen, Jr.

Theodore J. Sakowitz, Asst. Federal Public Defender, Miami, Fla., for Frederick Morse Allen.

Milton E. Grusmark, Miami Beach, Fla., for Joseph G. Scata.

Edward N. Moore, Miami, Fla., for Julius Grossman.

Robert W. Rust, David Quinn, Sp. Atty., Dept. of Justice, Miami, Fla., John T. Spotila, Appellate Section-Crim. Div., Dept. of Justice, Washington, D. C., for plaintiff-appellee.

Before RIVES, WISDOM and MORGAN, Circuit Judges.

RIVES, Circuit Judge:

William E. Owen, Jr., Joseph G. Scata, Julius Grossman, Frederick Morse Allen and seven others were indicted for conspiracy, 18 U.S.C. § 371; substantive violations of the federal mail fraud statutes, 18 U.S.C. §§ 1341, 1342, 1343; and aiding and abetting, 18 U.S.C. § 2. After a jury trial, Owen, Scata, Grossman and Allen all were convicted on the conspiracy count.1 Also, Scata was convicted on six substantive counts; Owen on five substantive counts; and Grossman on two substantive counts.2 Scata was sentenced to concurrent four-year prison terms on the substantive counts and to a consecutive two-year term on the conspiracy count. Owen was sentenced to concurrent four-year terms on five counts and to a consecutive one-year term on one count. Grossman was placed on probation for three years and fined $5,000. Allen was placed on probation for four years and fined $3,000. All four convicted defendants appeal.

The government's theory in this case is that the appellants and others devised and implemented a scheme to defraud suppliers of merchandise, and used the mails and wire communications in furtherance of their scheme. On May 26, 1971, William Owen bought Porter Hardware, Inc., a small hardware store in Miami, for about $5,000. Between May 26 and August 6, 1971, Porter placed orders for substantial quantities of merchandise. The government introduced evidence showing that Porter personnel in placing these orders sometimes used fictitious names. Numerous sellers supplied goods to Porter, many of them relying upon the credit reputation developed by the former owner. Most of the goods delivered to Porter were dissipated, that is, given away, resold at less than cost, and stored for later distribution at various warehouses. Deliveries were not used to replenish or increase the store's stock of goods. Only about $20 was kept in the store's cash register and little business was done with walk-in customers inside the store. At least $35,000 worth of merchandise delivered to Porter on credit was never paid for. The government insists that the appellants never intended to pay for the merchandise ordered on credit.

I. Sufficiency of the Evidence to Show a Violation of 18 U.S.C. § 1341 or § 1343.

We first consider whether the acts proved by the government come within the scope of the mail fraud and wire communication fraud statutes. The most recent case in which the Supreme Court has considered the reach of 18 U.S.C. § 1341 is United States v. Maze, 1974, 414 U.S. 395, 94 S.Ct. 645, 38 L.Ed. 2d 603. The Court held that where an individual used a stolen credit card to obtain goods and services from motel operators, the sales slips were mailed by the motel operators to a bank, and the bank in turn mailed the slips to the true owner of the card, the mailings were not so closely related to the scheme as to bring the individual's conduct within the scope of 18 U.S.C. § 1341.

Count 8 of the indictment in this case charged that certain defendants, for the purpose of executing the scheme, knowingly caused a letter addressed to the Gulf Oil Corporation in Atlanta to be sent and delivered by the U. S. Post Office Department and Postal Service. According to the government's brief on appeal, this count was based upon the mailing of credit card hardbacks from a service station to Gulf after the use of a Porter Gulf credit card by a Porter employee acting at appellant Scata's direction. Under the holding in Maze, Scata's conviction under Count 8 must be reversed. We find nothing to distinguish the situation here from the situation in Maze.

Count 2 of the indictment charged that certain defendants caused the mailing of a letter to Colony Paints in Baltimore, Maryland. This count was based upon a purchase order signed by Owen and given to a Colony salesman. Count 5 alleged that certain defendants caused a letter to be sent to Delta Finance Corp. of Cincinnati, Ohio. Testimony at trial indicated that Porter ordered 100 cameras from Delta by mail. Count 7 alleged that certain defendants caused Atlas Tool and Manufacturing Co. to send a letter to Porter. This count rested upon a mailing to Porter of ten minibike manufacturer's certificates necessary to license the minibikes under Florida law. Count 12 alleged that certain defendants "transmitted and caused to be transmitted signs, signals, and sounds in interstate commerce by means of a wire communication, that is, a telephone conversation between Miami, Florida, and Brunswick, Georgia." (R. 14.) By this conversation, Porter ordered paint from Dixie-O'Brien Corporation.

The communications in Counts 2, 5, 7 and 12 are readily distinguishable from the situation in Maze, supra. In Maze, the mailings occurred after the defendant had perpetrated the fraud and obtained the goods or services which were the object of the scheme. By contrast, the communications in these counts were a necessary part of the commercial process which led to Porter's receipt of marketable goods on credit. The relation of these communications to the scheme sufficed to bring the conduct within the scope of 18 U.S.C. § 1341 and § 1343.

Count 4 of the indictment presents a closer question. Count 4 charged that certain defendants caused Moore-Handley Hardware of Birmingham, Alabama, to send a letter to Porter. This letter confirmed a phone order for a substantial quantity of garbage cans and a number of plastic coolers. It also stated that "Prices are fob Miami with delivery by the manufacturer's truck. Our terms are 2%-10th Prox, net 30 days." The letter further stated that "Enclosed is credit form which we ask that you fill out and return in the enclosed envelope." Unlike the communications involved in Counts 2, 5, 7 and 12, this letter was not, from Porter's point of view, necessary in order to receive marketable merchandise. This letter was, however, in accord with business practices associated with the sale of goods, and Moore-Handley obviously sent this letter as a part of the transaction which resulted in the shipment of merchandise to Porter. Under these circumstances, the jury could have found that the defendants "caused" the mails to be used, Pereira v. United States, 1954, 347 U.S. 1, 9, 74 S.Ct. 358, 98 L.Ed. 435, and that the mailing was sufficiently closely related to the scheme so as to bring the conduct within the statute. United States v. Maze, supra.

II. Sufficiency of the Evidence as to Individual Defendants.

Appellants do not contend that Porter Hardware was a legitimate business operation during the period from May 26 until August 6. As to Scata, Grossman and Allen, each claims that there was insufficient evidence to support his conviction for conspiracy and for the various substantive offenses.

A. Scata

Scata claims that the evidence discloses only that he was present at the Porter Hardware store from time to time. In support of this contention, Scata quotes the trial judge, who stated the following in denying a motion for judgment of acquittal on one of the substantive counts: "Now, let me say to you with respect to Scata that I recognize that virtually in no instance is there any specific documentary reference to him. But there is evidence to show his fairly regular presence." (Tr. 1629.) It is true that mere presence at the scene of a crime, or mere association with those involved in a criminal enterprise, is not sufficient to prove participation in a conspiracy. United States v. Falcone, 1940, 311 U.S. 205, 61 S.Ct. 204, 85 L.Ed. 128; United States v. Webb, 6 Cir. 1966, 359 F.2d 558. However, this is not such a case. The record shows that Scata received merchandise from Porter for his personal use. The items he received apparently included brushes and hoses, a machine for making threads on a screw, a battery, a boat hoist, paint for his home, two minibikes, some wood, and other boxes of unidentified goods. The receipt of these items during little more than a two month period, together with his frequent presence at the store, could have led the jury to believe that Scata knowingly encouraged the scheme by taking for his personal use some of the fruits of the fraud.

There was evidence that Scata helped arrange at least one sale of merchandise—a witness testified that he bought a minibike from Porter, and that Scata asked him to come by his house to pick it up. Also, on one occasion Scata told a woman who needed tires to come to Porter Hardware. When the woman came to the store, Scata was present. He took her car keys and gave them to a Porter employee who then used a Porter credit card to get new tires. The woman was never billed for the tires. Included in police informant Snider's testimony for the government is the following:

"Q. After you began working, Mr. Snider, at Porter Hardware, Inc., did you have occasion at any time to see or talk with the defendant Joe Scata at Porter Hardware, Inc., or elsewhere concerning Porter Hardware\'s business?
"A. Yes. Mr. Scata was in there frequently. I was introduced to him by Bill Owen when I started there. Their initial conversation there was basically Mr. Scata was interested in more than anything whether or not I could be trusted as
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