737 F.2d 853 (10th Cir. 1984), 82-1151, United States v. Gamble

Docket Nº:82-1151.
Citation:737 F.2d 853
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. John GAMBLE, Defendant-Appellant.
Case Date:June 20, 1984
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 853

737 F.2d 853 (10th Cir. 1984)

UNITED STATES of America, Plaintiff-Appellee,

v.

John GAMBLE, Defendant-Appellant.

No. 82-1151.

United States Court of Appeals, Tenth Circuit

June 20, 1984

Michael Lerner of Barnett & Lerner, Overland Park, Kan., for defendant-appellant.

Amanda S. Meers, Asst. U.S. Atty., Kansas City, Kan. (Jim J. Marquez, U.S. Atty., Topeka, Kan., with her on the brief), for plaintiff-appellee.

Before HOLLOWAY, BREITENSTEIN and LOGAN, Circuit Judges.

LOGAN, Circuit Judge.

Defendant, John Gamble, a physician practicing in Kansas City, Kansas, was convicted on four counts of mail fraud, 18 U.S.C. Sec. 1341. The charges against defendant

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resulted from an elaborate undercover investigation by United States postal inspectors. On appeal, defendant contends that his conviction on all four counts should be overturned because (1) the government failed to prove beyond a reasonable doubt that he committed the crime of mail fraud, and (2) even if he did commit mail fraud, the government's conduct violated his right to due process of law. We also consider whether the government's conduct in this case was so outrageous that defendant's conviction must be overturned under our supervisory power over the administration of criminal justice.

United States postal inspectors concocted two schemes that ultimately involved defendant. In each scheme United States postal inspectors used fictitious names to obtain Missouri driver's licenses. The inspectors then registered automobiles they did not own and obtained insurance for the automobiles under those names. In cooperation with the Kansas City, Missouri, Police Department, the postal inspectors obtained accident reports for collisions that never occurred. The police officer who filled out the fictitious accident reports testified at trial that normally he would face severe sanctions for filling out false reports.

In each of the schemes the police issued a ticket to one of the inspectors and described the accidents in such a way that the inspector cited would be liable for any damages. After receiving the citations, the inspectors appeared in Municipal Court in Kansas City, Missouri, and pleaded guilty before prosecutors and judges who were unaware that the tickets were shams.

The first fictitious accident report, which was filed on May 6, 1980, described a one-car accident in which the driver of the vehicle, in an attempt to miss a stopped vehicle, swerved and struck a post. Postal Inspectors Armstrong and Gillis posed as passengers in the vehicle. Following this fictitious accident the inspectors visited defendant's office, asking him to help them perpetrate a fraud on the insurance company.

Posing as husband and wife, Armstrong and Gillis visited defendant's office seven times. On their first visit the inspectors' temperatures, weights, and blood pressures were checked. They filled out medical information forms, writing "traffic accident" in the blank for type of injury. When Inspector Armstrong met defendant, he told defendant that he had broken his glasses but had suffered no injuries and that he wanted to obtain some funds from the insurance company. Defendant described the procedure for filing claims with the insurance company and then conducted a routine physical examination of each inspector. On each subsequent visit the inspectors' weights, blood pressures, and temperatures apparently were checked. During the second visit defendant asked if he needed to do anything. Inspector Armstrong said no and stated that he had not yet contacted the insurance company. Subsequently, Inspector Armstrong told Jim Amen, an adjuster for State Farm Insurance Company, about injuries in his back and neck.

On the fourth visit the inspectors informed defendant that they had contacted State Farm Insurance Company. Later, Inspector Armstrong spoke with defendant's assistant, who prepared an insurance form and asked several questions. Armstrong told the assistant to write down that he had been unable to work for almost two months. When Inspectors Armstrong and Gillis visited defendant for the last time, they brought a draft from State Farm Insurance Company for $180, the total medical expense reported to the insurer. Defendant calculated that since they had already paid him $104, they owed him $66. (Correctly subtracted the figure was $76. Defendant had previously made the inspectors pay $10 or $12 apiece at each office visit when they saw defendant.) The inspectors gave defendant a $66 money order and kept the draft.

The second undercover operation began with a false accident report filed on July 9, 1980, which described a rear-end collision. Postal Inspectors Robert Bush and Donjette

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Gilmore posed as husband and wife and claimed to have been in the car that was hit. They visited defendant's office five times. Apparently at each visit the inspectors were given routine tests. When the inspectors first saw defendant, he asked what was wrong. Bush indicated that nothing was wrong but that the person who was responsible was insured and that there was a chance to make some money. Bush affirmed the doctor's stated assumption that they wanted to take advantage of the situation. Defendant then said, "You'll just have to play it up. You can't go out there tell that man ah, I wasn't hurt." Defendant also said, "You gotta have a back injury and you gotta have a neck injury or something.... We have to write it up to that effect and you'll make some money out of the deal." Defendant suggested neck and back injuries would be best because they are hard to prove and told them to come back in a few weeks to fill out the insurance papers.

Several weeks later the inspectors informed defendant that they had contacted the insurance company, and they discussed with defendant the insurer's method of handling claims. At a later visit defendant filled out a handwritten bill and put it in an envelope provided by the inspectors that was addressed to Farmers Insurance Group. Defendant handed the envelope back to Inspector Bush and asked him to take care of it. On December 11, 1980, the inspectors brought a draft for $160 from Farmers Insurance Group to defendant's office. A secretary reimbursed them for the $50 they had paid during previous office visits, and the inspectors signed the draft over to defendant.

I

Defendant contends that his conviction on the four counts of mail fraud should be reversed because he did not devise the scheme to defraud insurance companies and because the mailings alleged in each count of the indictment were tangential to the scheme to defraud.

In Pereira v. United States, 347 U.S. 1, 8-9, 74 S.Ct. 358, 362-363, 98 L.Ed. 435 (1954), the Supreme Court held that mail fraud under 18 U.S.C. Sec. 1341 requires proof of (1) a scheme to defraud, and (2) the mailing or causing the mailing of a letter or other item for the purpose of executing the scheme. Under Kann v. United States, 323 U.S. 88, 65 S.Ct. 148, 89 L.Ed. 88 (1944), the federal mail fraud statute does not reach all frauds, but only those "in which the use of the mails is a part of the execution of the fraud." Id. at 95, 65 S.Ct. at 151. The mailing must be for the purpose of executing the scheme or some essential part of the scheme, but it is "not necessary that the scheme contemplate the use of the mails as an essential element." Pereira, 347 U.S. at 8, 74 S.Ct. at 362.

The evidence in this case supports a finding that the mail was used in furtherance of the scheme. Pereira held that one causes the mails to be used when one "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." 347 U.S. at 8-9, 74 S.Ct. at 362-363. See also United States v. Maze, 414 U.S. 395, 399, 94 S.Ct. 645, 648, 38 L.Ed.2d 603 (1974); United States v. Curtis, 537 F.2d 1091 (10th Cir.), cert. denied, 429 U.S. 962, 97 S.Ct. 389, 50 L.Ed.2d 330 (1976). In another case involving a scheme to defraud insurance companies for "staged accidents," the Fifth Circuit rejected a defendant's argument that the mailings did not violate the mail fraud statute. The court held:

"The evidence in this case shows that the mails were used to obtain approval of the defendant's applications for insurance payments and to send checks from the insurance companies' main offices in Iowa to local agents in Florida who transmitted the checks to the defendants. Such use of the mails by adjusters, local agents, and insurance companies as part of the usual business practice in settling and paying claims was reasonably foreseeable

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by the defendants and was an essential step in the process by which they obtained the fruits of their plot."

Glenn v. United States, 303 F.2d 536, 541 (5th Cir.1962), cert. denied, 372 U.S. 920, 83 S.Ct. 734, 9 L.Ed.2d 725 (1963). In the instant case Jim Amen, a senior claims adjuster for State Farm Insurance Company, testified at trial that he routinely sends a request for a medical report through the mails and that he also uses the mails to send out settlement drafts. Another adjuster gave similar testimony. Defendant admitted in tape recorded meetings with the inspectors that he knew the mails would be used to execute the scheme.

Defendant also raises the question whether the scheme in this case meets the requirements of Sec. 1341 because it was concocted by government agents. "Mail fraud is established by proof that the defendant schemed to obtain money by false representations and that the mails were used in furtherance of the scheme." United States v. Themy, 624 F.2d 963, 964-65 (10th Cir.1980). The scheme requirement is met even if defendant joined a scheme devised by someone else. See United States v. Toney, 598 F.2d 1349, 1356 (5th Cir.1979), cert. denied, 444 U.S. 1033, 100 S.Ct. 706, 62 L.Ed.2d 670 (1980). A defendant is...

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