U.S. v. Kuecker, 83-1908

• Decision Date: 28 August 1984
• Docket Number: No. 83-1908,83-1908
• Parties: 15 Fed. R. Evid. Serv. 2050 UNITED STATES of America, Plaintiff-Appellee, v. Thomas R. KUECKER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 496

740 F.2d 496

15 Fed. R. Evid. Serv. 2050

UNITED STATES of America, Plaintiff-Appellee, v. Thomas R. KUECKER, Defendant-Appellant.

No. 83-1908.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 10, 1984.

Decided July 17, 1984.

Rehearing and Rehearing En Banc

Denied Aug. 28, 1984.

Thomas D. Sykes, Asst. U.S. Atty., John R. Byrnes, U.S. Atty., Madison, Wis., for plaintiff-appellee.

Robert H. Friebert, Friebert, Finerty & St. John, Milwaukee, Wis., for defendant-appellant.

Before PELL, CUDAHY and POSNER, Circuit Judges.

PELL, Circuit Judge.

The defendant-appellant, Thomas R. Kuecker, appeals from the judgment following a jury verdict finding him guilty of twelve counts of mail fraud and three counts of wire fraud, pursuant to 18 U.S.C. Secs. 1341, 1343. The defendant raises two issues on appeal. First, he appeals from the district court's adverse ruling upon his motion in limine to preclude the Government from introducing, for impeachment purposes, evidence of the defendant's prior mail fraud conviction. Second, he claims that the charge to the jury was defective in that the trial judge failed to instruct that an intent to defraud was a necessary element of the crimes upon which the jury found him guilty.

I. THE FACTS

The defendant does not appeal the sufficiency of the evidence adduced below. To the extent that there is any disagreement about the facts we must view the evidence in the light most favorable to the Government, the prevailing party below. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942).

The defendant and his wife operated a small business, United States Finance Association, Inc., (USFA), in Eagle River, Wisconsin. USFA presented itself as a loan placement company, matching borrowers and lenders who otherwise would have been unaware of each other's existence. USFA referred to the potential lenders as "brokers" and recruited brokers nationwide. The company sent to prospective brokers a number of brochures, representing itself to be a well-established, experienced, and successful firm in the loan placement business. The correspondence and telephone conversations between USFA and the brokers constitute the factual basis for most of the mail and wire fraud charges. The brokers paid initiation fees to USFA plus a weekly retainer to cover the costs of the advertisements designed to attract potential borrowers. At the brokers' urging, the borrowers would submit a loan application to USFA, together with an application fee. Supposedly, USFA would then match the borrower with a lender. USFA would remit part of the borrowers' fee to the broker if USFA successfully matched the referred borrower with a lender, and USFA would retain the balance. Of the 160 borrowers who submitted 161 loan applications, USFA succeeded in placing only one or two loans.

A grand jury indicted the defendant and his wife on twenty-four counts, among which were the mail and wire fraud counts now before us. At the end of the trial, the jury convicted the defendant on twelve counts of mail fraud and three counts of wire fraud and acquitted the defendant's wife on all counts.

II. THE ISSUES ON APPEAL

Prior to trial, the defendant made a motion in limine to prevent the Government from introducing evidence of the defendant's prior mail fraud conviction, which had led to a three-year jail sentence. He was released from jail in 1974. In the memorandum supporting his motion, the defendant asserted that the prejudice from the evidence outweighed its probative effect. Therefore, the defendant claimed, the Government should not be able to introduce the evidence of the prior conviction. Although relying principally upon rule 403 of the Federal Rules of Evidence for his assertion, the defendant also asserted that rules 404 and 609 supported his position, without differentiating between the rules or demonstrating how they interrelate.

The Government filed a memorandum in response to the defendant's motion in limine in which it asserted that the sole purpose for the introduction of the prior conviction was to impeach the defendant should he choose to testify. The Government maintained that the prior conviction was highly relevant to the issue of the defendant's credibility, and therefore the probative value of the evidence for the impeachment of the defendant as a witness would substantially outweigh the danger of prejudice. The Government asserted that rule 404 was inapplicable in any event, because it applies only to evidence introduced to prove character, not to impeach credibility.

The trial court then heard argument on the defendant's motion. At the hearing, each side asserted basically the same arguments raised in their written memoranda. The court then denied the motion, stating: "Under Rule 609 the Court determines that this conviction is within the ten-year period. Consequently, the Court does determine that it is going to be allowed for the purposes of determining credibility." (Emphasis added.) The court went on to note that its ruling applied only to the impeachment use of the evidence of the prior conviction. Furthermore, the court noted its willingness to reconsider its ruling under rule 403 once the defendant testified, if the defendant chose to do so. The defendant asserts that the ruling of the trial court was erroneous. ¹

The second issue on appeal concerns the jury instructions. Both sides submitted proposed instructions to the judge. The only issue raised on appeal is on "intent to defraud." The Government's proposed instruction, adopted by the district court, divided the crime of wire fraud into four essential elements and mail fraud into three essential elements. The first element of both charges was essentially the same: "that the defendant devised a scheme to defraud and to obtain money by means of fraudulent pretenses and representations." The jury instructions went on to define "scheme" as:

any plan or course of action intended to deceive others, and to obtain, by false or fraudulent pretenses, representations, or promises, money or property from persons so deceived.

A pretense or representation is "fraudulent" if it is known to be untrue ... and made or caused to be made with the intent to deceive.

A "fraudulent pretense or representation" may be made by statements of half truths or the concealment of material facts, as well as by affirmative statements or acts, if intent to defraud is present.

To do something to defraud another or, stated another way, with intent to defraud means to act with the intent to deceive or cheat .... It is not necessary, however, to prove that anyone was in fact defrauded so long as it is established that the defendant acted "with intent to defraud." An intent to defraud may be proved by the conduct of that defendant and by all the facts and circumstances surrounding the case.

The contents of the [letter or telephone conversation] itself need not disclose any intent to defraud, nor need it show on its face that it was [mailed or made] in furtherance of a scheme to defraud and obtain money by means of fraudulent pretenses and representations. But it is necessary that the evidence in this case establish beyond a reasonable doubt that the defendant in question knowingly caused the letter to be mailed with intent to carry out some significant part of the scheme to defraud and obtain money by means of fraudulent pretenses and representations.

The defendant's proposed jury instructions cited to the same provision of Devitt & Blackmar, Federal Jury Practice and Instructions Sec. 47.04 (3d ed. 1977), from which the Government derived its proposed instructions as to the definitions of "scheme," "fraudulent," and "fraudulent pretense or representation." The balance of the defendant's proposed charge on the issue of intent reads as follows:

Defraud--Defined. The word defraud is used in its ordinary sense. It means to injure or prejudice and damage in a pecuniary way. Fraud means to cheat someone; to obtain their property by trick, deceit or chicanery. There must be evidence from which it may be inferred that some actual injury to the victim, however slight, was a reasonably probable result of the trick, deceit or chicanery if it was successful. The question is, did the defendant intend to defraud?

Even though some individuals may have lost money by the transactions shown in evidence, it would not constitute a scheme to defraud unless it was designed and intended by the defendant that those persons should so lose money and should be so injured by the trick or plan which was carried into effect.

A fraudulent intent is necessary to sustain a charge of a scheme to defraud.

Additionally, the defendant filed a written objection to the Government's proposed wire fraud instructions, alleging that the proposal "fails to instruct the jury that it is not enough that the Government show that people lost money in order to prove a scheme to defraud or the intent to defraud, but rather that it must be proven beyond a reasonable doubt that the defendant acted with the intent to deceive or cheat another person." Interestingly, the defendant did not assert the same objection to the Government's proposed mail fraud instructions, which contained the identical "scheme to defraud" element to which the defendant objected.

The Government then filed objections to the defendant's proposed instructions, stating that the defendant's proposal

was not consistent with the definition of intent to defraud given in Devitt and Blackmar, Sec. 47.08, which is in large measure acceptable to the government. The [defendant's] instruction seems to require that the injury to the victim had to have been intended. That is not the law .... [A]n intent to bring about financial gain to one's self is enough. ²

During the course of trial, the parties discussed the instructions with the trial judge on two occasions. At neither time did the defendant object to the refusal of...