U.S. v. Dick, s. 83-1556

Decision Date06 July 1984
Docket Number83-1557,Nos. 83-1556,s. 83-1556
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Melvin DICK and Anthony Giacomino, Defendants-Appellants.
CourtU.S. Court of Appeals — Seventh Circuit

Sherman C. Magidson, Chicago, Ill., for defendants-appellants.

Vincent Connelly, Asst. U.S. Atty., Dan K. Webb, U.S. Atty., Chicago, Ill., for plaintiff-appellee.

Before WOOD and COFFEY, Circuit Judges, and HENLEY, Senior Circuit Judge. *

HARLINGTON WOOD, Jr., Circuit Judge.

Appellants Melvin S. Dick and Anthony Giacomino appeal their convictions on twenty counts of mail fraud and providing false statements to a federal agency. We reverse on several counts, but affirm on the remaining counts.

I.

Appellants were convicted in a bench trial for scheming to defraud two bonding companies, the United States, and the United States Small Business Administration (SBA) of money paid by the sureties on a defaulted construction contract performance bond, ninety percent of which was reimbursed by the SBA. Appellant Giacomino owned a construction company which the sureties hired to complete the work after the principal's default. Appellant Dick was outside counsel to the sureties who let the contract to Giacomino on their behalf.

Viewing the evidence in the light most favorable to the government, Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942), the facts may be distilled down to the following. Bergen Construction Corporation was the general contractor on construction of the Far North Police Station for the City of Chicago. Bergen solicited bids from subcontractors to perform the concrete work on the project, and awarded the concrete subcontract to Minority Builders, Inc., for $213,500. Minority secured the required performance bond from two sureties, Heritage Insurance Company of America, the lead carrier, and American Fidelity Fire Insurance Company, the secondary carrier. Both sureties participated in the SBA's surety bond guarantee program, 15 U.S.C. Secs. 694a-694c (1982). The program, enacted by Congress in 1970 to enable small contractors to obtain performance bonds, provides reimbursement for ninety percent of the losses incurred by participating sureties on performance bonds issued to qualified small contractors such as Minority.

Minority commenced work on the project in October 1976, and, after experiencing various difficulties, abandoned the project in early September 1977. At that time Minority estimated that the project was ninety percent complete and would cost some $40,000-$50,000 to finish; eighty-eight percent of Minority's progress payments had been approved, less a standard ten percent retained for repairs.

Appellant Dick, an attorney employed by Heritage since 1974 to handle its performance bonds, represented the sureties on the Minority performance bond. Dick thus was responsible for retaining a "completion contractor" to complete the work not finished by Minority and for minimizing the loss to the sureties. Bergen, the general contractor, informed Dick that with some qualifications it would finish Minority's contract work, but Dick replied that he would arrange for a completion contractor to finish the work. Dick hired appellant Giacomino's State Construction Company as the completion contractor at a cost of $196,000. Giacomino in turn subcontracted with Concrete Structures of the Midwest to perform most or all of State's contractual obligations on the project at a contract price of $88,650, which had been bargained up by Giacomino from Concrete Structures' initial estimate of $87,500. In the various transactions surrounding performance of the completion contract, the fact that Concrete Structures rather than State actually was performing the work was concealed from Bergen, the sureties, and the SBA.

Dick informed Heritage and the SBA that he had solicited bids for the completion work, although he was not required to do so. He mailed to Heritage and the SBA a letter reporting four telephone bids, for which there was no documentation in his files. State appeared as the low bidder. This letter did not mention any written bids, but Dick had in his files four written bids, including one from State, that pre-dated the reported telephone bids. The written bids were in the same amounts as the telephone bids, but the bids other than State's were on behalf of different companies. State again appeared as the low bidder. The district court found that all the bids except State's were false, and that Giacomino had participated in the preparation of one of the rigged bids. 1

Appellants were indicted for scheming to defraud Heritage and American Fidelity of money, the loyal services of their attorney, and the right to have completion contracts fairly awarded; for scheming to defraud the United States and the SBA of money and their right to have the bond guarantee program honestly conducted; and for making false material statements in a matter within the jurisdiction of a federal agency. Of the twenty-count indictment, counts 1-11 2 were under the mail fraud statute, 18 U.S.C. Sec. 1341 (1982), and counts 12-20 3 were under the false statements statute, 18 U.S.C. Sec. 1001 (1982). Both appellants were convicted on all twenty counts. 4

Appellants argue on appeal that, with regard to the mail fraud counts: (1) there was insufficient evidence to prove the participation of either appellant in a scheme to defraud; (2) no scheme to defraud could exist without proof of a bribe or kickback; and (3) certain of the mailings were not for the purpose of executing the scheme to defraud. On the false statements counts, appellants argue that: (1) there was insufficient evidence that the false statements were material; and (2) there was insufficient evidence that appellants knowingly made false statements and deliberately conveyed them to the SBA.

II.

Under the mail fraud statute, the government must prove a scheme to defraud and a mailing made for the purpose of executing such a scheme. Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 362, 98 L.Ed. 435 (1954). Appellant Giacomino challenges the finding that he participated in a scheme to defraud, essentially arguing that he did nothing wrong. Giacomino asserts a lack of evidence showing that the completion contract between State and Heritage was inflated. Without such evidence, he claims, we must assume the contracting parties dealt at arm's length; he maintains that the fact that the contract happened to benefit him hardly proves his participation in a scheme to defraud. 5

We may reject Giacomino's argument out of hand. Proof of pecuniary loss is not essential to a mail fraud conviction. United States v. Lea, 618 F.2d 426, 429 n. 3 (7th Cir.), cert. denied, 449 U.S. 823, 101 S.Ct. 82, 66 L.Ed.2d 25 (1980). This court has recognized that breach of a fiduciary duty to disclose information to an employer can support a mail fraud conviction where such information was material to the conduct of the employer's business and nondisclosure could or does result in harm to the employer. United States v. Feldman, 711 F.2d 758, 763 (7th Cir.), cert. denied, --- U.S. ----, 104 S.Ct. 352, 78 L.Ed.2d 317 (1983); accord United States v. Bronston, 658 F.2d 920, 926 (2d Cir.1981), cert. denied, 456 U.S. 915, 102 S.Ct. 1769, 72 L.Ed.2d 174 (1982). As counsel to the sureties in charge of the Minority performance bond, Dick owed them a fiduciary duty of honest, loyal, and faithful performance, which certainly would include proper management of the loss, full and accurate reporting of his activities, and above all protecting the sureties' interests. Instead, Dick concealed the method by which he selected State as the completion contractor and set the completion contract price, and concealed the fact that the bulk of the work was subcontracted out to Concrete Structures for a substantially lower amount. 6 Although Giacomino casts himself as the lucky beneficiary of a favorable bargain who did not lie to win the contract and owed no fiduciary duty to the sureties, his role as a coschemer in the breach of Dick's fiduciary duty was proven by his personal efforts to conceal the realities of his contract award.

Appellant Dick asserts that the evidence was insufficient to prove his knowing and intentional participation in the scheme to defraud. In his strongest argument on this point, Dick attempts to show that he unintentionally made certain false statements to the consultant he hired, Heritage, and the SBA concerning Minority's original bid on the concrete work. These allegedly innocent mistakes happened to provide support for a completion contract at nearly the full amount of the original concrete contract, and happened to augment Dick's assertion that Minority had substantially underbid the project. Dick's selective recall of the amount of Minority's original bid can be explained only by finding deliberate or at least reckless mishandling of information he was under a fiduciary duty to disclose accurately. Reckless disregard for truth or falsity is sufficient to sustain a conviction for mail fraud. See United States v. Farris, 614 F.2d 634, 638 (9th Cir.1979), cert. denied, 447 U.S. 926, 100 S.Ct. 3022, 65 L.Ed.2d 1120 (1980); United States v. Frick, 588 F.2d 531, 536 (5th Cir.), cert. denied, 441 U.S. 913, 99 S.Ct. 2013, 60 L.Ed.2d 385 (1979). Dick's claim of confusion or ignorance cannot be countenanced to excuse him from knowing participation in the scheme. Mistakes such as these, together with the discrepancies in the written and reported telephone bids and other of Dick's statements and activities, prove his knowing and intentional participation in the scheme to defraud.

Appellant Giacomino also argues that receipt of a bribe or kickback is an essential element in a scheme to defraud. Here, the evidence showed that a company owned by Giacomino had provided Dick with free landscaping materials and...

To continue reading

Request your trial
43 cases
  • U.S. v. Ross
    • United States
    • U.S. Court of Appeals — Seventh Circuit
    • February 2, 1996
    ...fact "[t]hat a statement was not required to be made to the agency does not make the statement any less material." United States v. Dick, 744 F.2d 546, 553 (7th Cir.1984). Secondly, Ross argues that the spreadsheet was not material because neither Special Agent Livengood nor the DOE actuall......
  • Marshall v. City of Atlanta
    • United States
    • U.S. District Court — Northern District of Georgia
    • March 29, 1996
    ...for a mailing whether or not he specifically agreed to or knew of its commission under a conspiracy theory. See United States v. Dick, 744 F.2d 546, 552 (7th Cir.1984). Likewise, under a conspiracy to commit mail fraud, only a specific intent to defraud must be alleged as opposed to an inte......
  • U.S. v. Briscoe
    • United States
    • U.S. Court of Appeals — Seventh Circuit
    • September 5, 1995
    ...which use of the mails was reasonably foreseeable and that an actual mailing occurred in furtherance of the scheme. United States v. Dick, 744 F.2d 546, 550 (7th Cir.1984). The government established at trial that Mr. Briscoe not only received money as a result of his creation of an "associ......
  • U.S. v. Koen
    • United States
    • U.S. Court of Appeals — Seventh Circuit
    • December 15, 1992
    ...because only likely effect of letter was to further detection or deter continuation of fraud); see generally United States v. Dick, 744 F.2d 546, 552 (7th Cir.1984).4 Similarly, in Pacheco-Ortiz, 889 F.2d at 305-06, a mailing from an insurance adjuster to the insurer, sent after the underly......
  • Request a trial to view additional results
1 books & journal articles
  • Is Vagueness Choking the White-collar Statute?
    • United States
    • University of Georgia School of Law Georgia Law Review (FC Access) No. 53-2, 2019
    • Invalid date
    ...not material to HUD's decision to pay."). 196. United States v. Turner, 551 F.3d 657, 663 (7th Cir. 2008) (quoting United States v. Dick, 744 F.2d 546, 553 (7th Cir. 1984)).197. Id. at 663 (quoting United States v. Ranum, 96 F.3d 1020, 1028 (7th Cir. 1996)).198. Restatement (Second) of Cont......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT