U.S. v. Laferriere, 75-4468

• Decision Date: 31 January 1977
• Docket Number: No. 75-4468,75-4468
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. J. Philippe LaFERRIERE and Frederic J. White, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 182

546 F.2d 182

UNITED STATES of America, Plaintiff-Appellee, v. J. Philippe LaFERRIERE and Frederic J. White, Defendants-Appellants.

No. 75-4468.

United States Court of Appeals, Fifth Circuit.

Jan. 31, 1977.

Bruce A. Campbell, Tampa, Fla. (Court-appointed), for LaFerriere.

Henry Gonzalez, James R. Yon, Tampa, Fla., for White.

John L. Briggs, U. S. Atty., Jacksonville, Fla., E. Thomas Sullivan, Morris Silverstein, Washington, D. C., for plaintiff-appellee.

Appeals from the United States District Court for the Middle District of Florida.

Before GEWIN, GEE and FAY, Circuit Judges.

GEWIN, Circuit Judge:

Appellants and five others were charged in a 25-count indictment with conspiracy, mail fraud, wire fraud, and interstate transportation of monies obtained by fraud. Both appellants pleaded not guilty and were tried in November, 1975. During the course of the proceedings the government dismissed numerous charges against each, and the jury returned verdicts of guilty against LaFerriere on one count of mail fraud and against White on seven counts of mail fraud. LaFerriere was sentenced to two years' imprisonment, and White received a two year suspended sentence and was placed on probation.

The facts in this case revolve around a complex scheme carried on from fall, 1970, to mid-April, 1971. Taking the view most favorable to the government, ¹ the record shows that one Michael Strauss, who ran a company called General Financial, Inc., ("GF") in Tampa, Florida, promoted the basic scheme. GF was to act as agent for a sham corporation, Anglo-Canadian Group, Ltd. ("A-C"), which was held out to be in the mortgage commitment business. During the time period involved, A-C issued between thirty and forty worthless commitments. Advertisements were placed in newspapers stating that mortgage money was available through A-C. Prospective borrowers were directed to contact GF in Tampa. Strauss and others at GF would begin negotiations. The agreements provided that the borrower would pay eight points, that is, eight percent of the amount to be borrowed, to obtain the commitment. One point was to be paid immediately, to be held in escrow until the issuance of a satisfactory commitment upon which the borrower could obtain interim financing. The escrow agreement provided that the company issuing the commitment would have at least $75 million in assets.

Two companies, United Title Company and American Guaranty Title Company, were used as escrow agents. Appellant White was listed as an officer of each title company. He received the funds to be held in escrow, and notwithstanding the agreement to defer disbursal, disbursed or caused to be disbursed monies to Strauss and other defendants soon after the funds were received.

Appellant LaFerriere was executive vice-president of A-C. The evidence tended to show that his role was to "put off" borrowers who were upset about the use of escrowed funds before issuance of a satisfactory commitment. To assist LaFerriere in allaying the borrowers' fears, two accounts in Philadelphia banks were opened by one Friedman of the stock brokerage firm of Royden and Company. Worthless debentures of A-C were deposited in these accounts, and upset borrowers were referred to the banks for confirmation of LaFerriere's assurances that assets for a satisfactory commitment were being set aside.

Both appellants testified. LaFerriere's defense was that he was innocent of any knowing wrongdoing and that he was merely a figurehead at A-C with no real operative role. The gist of his testimony was that Strauss was the moving force behind the scheme and all the activities associated with it. White also disclaimed any significant participation in the scheme and said he was unaware that the disbursals of funds from escrow were premature. He thought either that the borrowers had instructed him to disburse funds upon concluding that the commitments were satisfactory or that the commitments were in fact satisfactory.

Appellant White alleges three grounds for reversal of his conviction. He contends that the district court erred in admitting certain extrajudicial statements on the basis of the co-conspirator exception to the hearsay rule, in denying his motions for mistrial and severance, and in denying his motion for judgment of acquittal notwithstanding the verdict.

We find appellant White's contentions without merit and affirm. There was sufficient evidence of conspiracy or joint enterprise for the court to allow the jury to consider extrajudicial statements of appellant's confederates. Fed.R.Evid. 104(a), 801(d)(2)(E); United States v. Lawson,523 F.2d 804, 806 (5th Cir. 1975); United States v. Oliva, 497 F.2d 130, 132-33 (5th Cir. 1974). Appellant has not made the showing of compelling prejudice necessary to render the court's denials of motions to sever and for mistrial an abuse of discretion. See United States v. Perez, 489 F.2d 51, 65 (5th Cir. 1973), cert. denied, 417 U.S. 945, 94 S.Ct. 3067, 41 L.Ed.2d 664 (1974). Finally, the evidence that White did not operate the title companies separate and apart from A-C and GF, plus his disbursal of escrow monies in violation of the agreements, was sufficient for the jury reasonably to infer fraudulent intent and participation in the fraud.

Appellant LaFerriere raises a serious question concerning the scope of the mail fraud statute. During the proceedings below the government dismissed nine of the counts against him before the case was submitted to the jury. Of the remaining counts, the jury acquitted him on nine and convicted him on one Count One. His motions for judgment of acquittal and for judgment notwithstanding the verdict were denied. He contends that even assuming arguendo that he was a knowing participant in a scheme to defraud, the letter on which Count One was based was not mailed or received "for the purpose of executing such scheme or artifice" as required by 18 U.S.C. § 1341. ² We agree.

Count One, the count on which appellant LaFerriere stands convicted, charged him and others with devising a scheme to defraud and using the mails in furtherance of that scheme. The mailing which is the basis of that count is a letter sent by Harold Hammett, an attorney in Fort Worth, Texas, to the attention of Fred White at the Tampa address of American Guaranty Title Company. ³ Mr. Hammett wrote the letter on behalf of his client, Mr. Ed Baker, who as President of Baker Development Company, Inc., had deposited monies with American Guaranty, of which Mr. White was president, as escrow agent as an advance fee to obtain long term mortgage funding from A-C. Baker and his company were clearly victims of the fraud, as the promised mortgage commitment was never finalized and the $9,000 deposit was never returned.

The mail fraud statute in essence requires proof of a mailing caused by a defendant and proof that the mailing was for the purpose of executing the scheme. Appellant concedes that he can be held responsible for causing the letter from Mr. Hammett to be sent under Pereira v. United States, 347 U.S. 1, 8-9, 74 S.Ct. 358, 363, 98 L.Ed. 435, 444 (1954), where the Court held that one 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. . . ." However, we must also consider the Supreme Court's recent observation that "Congress could have drafted the mail fraud statute so as to require only that the mails be in fact used as a result of the fraudulent scheme. (footnote omitted). But it did not do this, instead, it required that the use of the mails be 'for the purpose of executing such scheme or artifice. . . .' " United States v. Maze, 414 U.S. 395, 404, 94 S.Ct. 645, 651, 38 L.Ed.2d 603, 611 (1974). ⁴

The government contends that lulling victims into a false sense of security was an essential part of the instant scheme and that since the Hammett letter was incidental to this essential aspect, the mailing was "in execution" of the scheme. In making this argument the government seizes upon isolated language in several cases, principally Pereira v. United States, supra ; United States v. Shepherd, 511 F.2d 119 (5th Cir. 1975); and United States v. Ashdown, 509 F.2d 793 (5th Cir.), cert. denied, 423 U.S. 829, 96 S.Ct. 48, 46 L.Ed.2d 47 (1975).

But the language in those opinions must be read in light of the facts presented in them. In Pereira one of the defendants had obtained a check from the victim in California and had endorsed it over to a bank in Texas for collection. After the check cleared the collection process, Pereira obtained a cashier's check from the Texas bank with himself named as payee, cashed it, and absconded with the funds. The Court held that the mailing in the collection process was in execution of the scheme because it was "incident to an essential part of the scheme." 347 U.S. at 8, 74 S.Ct. 358, 363, 98 L.Ed. at 444. There an essential part of the scheme was receipt of the funds. Use of the mails was incident to that part of the scheme in the sense that use of the mails was a foreseeable and necessary step in completion of the scheme. The Court's language does not mean, as the government seems to argue, that a mailing somehow related to an aspect of the scheme brings the scheme within the scope of the...