U.S. v. Melton, s. 81-2165

• Decision Date: 22 September 1982
• Docket Number: Nos. 81-2165,81-2230,s. 81-2165
• Citation: 689 F.2d 679
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Cheryl MELTON, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Marion COMADOLL, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 679

689 F.2d 679

UNITED STATES of America, Plaintiff-Appellee, v. Cheryl MELTON, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Marion COMADOLL, Defendant-Appellant.

Nos. 81-2165, 81-2230.

United States Court of Appeals Seventh Circuit.

Argued May 24, 1982.

Decided Sept. 22, 1982.

Donald G. Weiland, Chicago, Ill., Michael A. Dvorak, South Bend, Ind., for defendants-appellants.

John S. Leonardo, Asst. U.S. Atty., South Bend, Ind., for plaintiff-appellee.

Before CUMMINGS, Chief Judge, PELL, Circuit Judge, and FOREMAN, ^* Chief District Judge.

FOREMAN, Chief District Judge.

This is a consolidated appeal taken from a final judgment in a criminal RICO and mail fraud prosecution in which the two appellants, Marion Comadoll and Cheryl Melton, were co-indicted with three others. Comadoll and Melton are the only appellants before the Court. For the reasons given below, we Affirm both convictions.

I.

Appellants were indicted by a federal grand jury in South Bend, Indiana, on March 13, 1981. Both Comadoll and Melton were charged in Count II with conspiring "to conduct and to participate directly and indirectly in the conduct of the affairs of an Enterprise, whose activities affected interstate commerce, through a pattern of racketeering activity in violation of Section 1962(c) and Section 2 of Title 18, of the United States Code ... (i)n violation of Title 18, United States Code, Section 1962(d)." ¹ The grand jury charged Comadoll with mail fraud under 18 U.S.C. § 1341 in Counts III and VI, and charged Melton with violating the same statute in Count V. ²

Appellants' trial commenced May 22, 1981. At the close of the government's case, the district judge upon motion dismissed Count V, Melton's mail fraud count, and Count VI, one of Comadoll's two mail fraud counts. On June 4, 1981, the jury returned guilty verdicts against Comadoll on Counts II and III, and against Melton on Count II. The district court gave Comadoll concurrent five year sentences on Counts II and III and gave Melton five years and a $25,000 fine on Count II. Both filed timely notices of appeal.

The "enterprise" named in the RICO count was a business known as Indiana Rentals or Indiana Construction Company, which was owned and operated by co-defendant Douglas Caton. The RICO count charged that Comadoll and Melton had participated in the affairs of the enterprise for the purpose of defrauding property insurance carriers through a pattern of racketeering consisting of acts of arson, mail fraud and extortion. The Count charged Comadoll with commission of two such acts and Melton with three.

Evidence revealed Caton employed both appellants at the enterprise during the time of the conspiracy. Appellants both lived in housing provided by Caton. Also, there was testimony that Melton enjoyed a close personal relationship with Caton.

With respect to Melton's part in the conspiracy, testimony revealed the following. Melton drove unindicted co-conspirator Thomas Schubert to a residence at 236 East Fox in South Bend, Indiana, so that Schubert could start an arson fire at the house. According to the testimony of Schubert (which Melton later denied) Melton turned off her headlights as they approached the house and asked Schubert to unscrew the dome light to prevent illumination when the car door opened. Schubert entered the house, started the fire, reentered the car, which Melton had driven around the block in the interim. Melton drove Schubert to Caton's house and stated her intention to tell Caton "it's been taken care of" and that Schubert should leave.

Melton and Schubert repeated the same scenario on another occasion for a residence at 829 North 34th Street in South Bend. In addition, Caton placed a residence owned by him at 1657 North Johnson, South Bend, in Melton's name and had Melton procure insurance for the house in her name, but with his money. Caton continued to pay on the mortgage. After asking Schubert to burn this house, Caton reconsidered and instructed Schubert to take gasoline to the vacant house and leave it in a closet. After the house burned a few days later, Caton gave Schubert an envelope containing money, with instructions to deliver it to indicted co-conspirator Boyd Howard for setting the fire. At Caton's instruction, Schubert handled the insurance claim. A claim was filed and a check delivered by the insurance company. Obviously, the mails were used to accomplish this. Caton used the money to settle the mortgage.

With respect to Comadoll's part, evidence revealed the following. Caton placed a residence at 530 E. Altgeld, South Bend, in Comadoll's name, planning to burn it and recover insurance proceeds. Several people testified that Comadoll told them before the house burned that it was to be set afire. Comadoll arranged to have her things out of the house when, at Caton's direction, Schubert set the fire. An insurance claim was filed and a claims adjustor was paid a kickback of $2,300 by Caton for handling the claim. Comadoll signed a form authorizing payment of insurance proceeds directly to Indiana Construction Company, which indicated satisfactory completion of repairs when in fact work had not begun. A property loss notice was sent in the mail by the agency to the carrier, and the latter issued a.$21,789 ³ check for structural damage. The check was negotiated by Douglas Caton, James Caton's brother and an indicted co-conspirator. Douglas Caton also negotiated a check for $12,158 for damages to house contents, even though it was made to the order of Comadoll. In five months, the mortgage was paid off.

Schubert burned yet another house at Caton's direction at 1106 Roosevelt, South Bend. Caton hoped to obtain the repair contract and to persuade the owner, John Dylewski, to give Caton the house in return for Caton's assumption of the mortgage. Two checks were issued by the carrier for this fire, one for the structure made out to Dylewski and Colonial Mortgage Company, and one for the contents to Dylewski alone. Both drafts fell into the hands of the claims adjustor, Loren Rosander. In the face of Dylewski's offer to complete repairs for $5,000, and an estimate obtained by Dylewski from a contractor for $6,430, Rosander insisted that Caton's business handle the repairs for $12,114, the amount of the check issued. Needless to say, Rosander received a kickback from Caton. Before giving Dylewski the check for his personal belongings, Rosander required Dylewski to endorse the structural damage check so that Caton could get the proceeds for his enterprise. The endorsement of the co-payee, Colonial Mortgage, was not made by anyone from that company, but by Comadoll.

II.

Comadoll makes three arguments on appeal, which the Court shall consider in turn. First, she argues that there existed insufficient evidence to sustain the RICO conviction under 18 U.S.C. § 1962(c), since the trial judge dismissed the charge in Count IV, one of Comadoll's two mail fraud counts. The argument is belied by the evidence and reflects appellant's misunderstanding of that which is required for a RICO conspiracy conviction. A series of cases from the Fifth Circuit, cited with approval by this Court, see United States v. Lee Stoller Enterprises, Inc., 652 F.2d 1313 (7th Cir. 1981), cert. denied, 454 U.S. 1082, 102 S.Ct. 636, 70 L.Ed.2d 615 (1982), have developed the point. "To be convicted of a conspiracy to violate RICO there must be proof that the individual, by his words or actions, objectively manifested an agreement to participate, directly or indirectly, in the affairs of the enterprise, through the commission of two or more of the predicate crimes." United States v. Bright, 630 F.2d 804, 834 (5th Cir. 1980). The predicate crimes include the arson, mail fraud and extortion of this case. 18 U.S.C. § 1961(1). And, when the evidence establishes that the defendants committed during a time period "several acts of racketeering in furtherance of the affairs of the enterprise, an inference of an agreement to do so may be drawn." United States v. Elliott, 571 F.2d 880, 903 (5th Cir.), cert. denied, 439 U.S. 953, 99 S.Ct. 349, 58 L.Ed.2d 344 (1978); Bright, supra, at 834; United States v. Welch, 656 F.2d 1039, 1956 n. 24 (5th Cir. 1981).

Although it is true, as appellant argues, that the district court dismissed one of her mail fraud counts, there is ample evidence that Comadoll committed the three predicate crimes to further the affairs of the enterprise. The evidence, construed in a light favorable to the government, shows that she allowed the 530 East Altgeld house to be placed in her name by Douglas Caton to shield the latter from suspicion when the house burned and generated insurance proceeds for Indiana Construction. Her complicity in the arson and mail fraud was evidenced by her obtaining insurance from Rosander's company at Douglas Caton's direction, her advance warning to friends that the house would burn, her removal of her belongings, her signing of a release and authorization of payment of the repair bill before repairs had begun, and her signing of a blank proof of loss statement for adjustor Rosander.

The evidence showed Comadoll's further involvement in mail fraud with respect to the house at 1101 Roosevelt. When the checks for property damage and structural damage were issued and Rosander withheld the property check until Dylewski endorsed the structural check, it was Comadoll who forged the endorsement of the structural check co-payee, Colonial Mortgage. Thus she aided and abetted the mail fraud scheme by protecting the inflated structural repair cost from discovery, and according to 18 U.S.C. § 2 is liable as a principal.

Nor is there any doubt that these predicate crimes were committed in furtherance of enterprise affairs. Rosander received kickbacks from Douglas Caton on both jobs, and Douglas Caton received the proceeds of both checks upon his endorsements. Within months, mortgages on both houses were...