872 F.2d 626 (5th Cir. 1989), 88-2331, United States v. Vontsteen

Docket Nº:88-2331.
Citation:872 F.2d 626
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. Gerald VONTSTEEN, Defendant-Appellant.
Case Date:April 28, 1989
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 626

872 F.2d 626 (5th Cir. 1989)

UNITED STATES of America, Plaintiff-Appellee,


Gerald VONTSTEEN, Defendant-Appellant.

No. 88-2331.

United States Court of Appeals, Fifth Circuit

April 28, 1989

Page 627

H. Michael Sokolow, Asst. Federal Public Defender, Roland E. Dahlin, Fed. Public Defender, Houston, Tex., for defendant-appellant.

Paula M. Offenhauser, Asst. U.S. Atty., Henry Oncken, U.S. Atty., Houston, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before GARWOOD, JONES, and SMITH, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

In this case, we must determine whether invoices mailed by defrauded sellers to the perpetrator of a fraud can constitute a sufficient jurisdictional basis for a federal mail fraud prosecution without additional, specific proof of how the invoices advanced, or were integral to, the scheme to defraud. Concluding that under the specific facts of this case there is no such jurisdictional basis, we reverse defendant's conviction for mail fraud but affirm his conviction for interstate transportation of stolen property.

I. Facts.

Defendant Gerald Vontsteen was convicted on twenty-one counts of aiding and abetting mail fraud in violation of 18 U.S.C. Secs. 1341 and 2 and on one count of transporting stolen property in interstate commerce in violation of 18 U.S.C. Sec. 2314. This criminal conduct occurred over several months (late fall 1982 through summer 1983), during which Vontsteen ran operations buying and selling oilfield pipe for AMRO, Inc. ("AMRO"), a company owned by Leslie Ross Malden. 1 The scheme operated

Page 628

by means of AMRO's buying pipe on credit during a down period in the market, short-selling it, presumably pocketing the profits, and then refusing to pay the suppliers. The jurisdictional basis for the mail fraud convictions was the mailing of invoices to AMRO by the defrauded pipe suppliers. None of the invoices so charged in the indictment was ever paid.

On appeal, as to the mail fraud convictions, defendant maintains that these mailings were not in furtherance of the fraud as is required as a matter of law; that the evidence was insufficient to convict; that he was denied his sixth amendment right to confront a hostile witness; and that the jury charge impermissibly amended the indictment. As to the conviction for interstate transportation of stolen property, he argues the same confrontation clause point as well as the insufficiency of the evidence. He also asserts that the trial judge considered improper information in sentencing him. We now reverse the mail fraud conviction, affirm the stolen property conviction, and remand for resentencing based upon our reversal of 21 of the 22 counts. Because we base our reversal of the mail fraud convictions upon our conclusion that the invoices did not constitute an adequate jurisdictional basis, we do not address the other issues raised by defendant with respect to these convictions.

II. Mail Fraud.

In order to convict for mail fraud under 18 U.S.C. Sec. 1341, the government must prove, inter alia, that the mails were used in furtherance of the scheme to defraud. That is, the United States must establish that the mailing was " 'for the purpose' of executing the scheme." United States v. McClelland, 868 F.2d 704, 707 (5th Cir.1989). This element of mail fraud is the basis for federal criminal jurisdiction. 2 In the instant case, defendant was convicted on twenty-two counts of aiding or abetting mail fraud based upon his taking or receiving, or causing to be taken or received, from the mail the invoices for the fraudulently-obtained pipe. He argues that, as a matter of law, the mailing of these invoices did not advance any scheme to defraud, were not "integral" to any such scheme, and consequently could not support his mail fraud convictions. We agree with this analysis; accordingly, we reverse the convictions on the mail fraud counts.

In Parr v. United States, 363 U.S. 370, 392-93, 80 S.Ct. 1171, 1184-85, 4 L.Ed.2d 1277 (1960), the Supreme Court held that the scheme to defraud underlying school board officials' personal use of the school district's credit card came to fruition upon the officials' receipt of the individual goods and services purchased with this credit. The subsequent billing of the school district via the mail occurred after the scheme was completed and was immaterial to the fraud.

Similarly, in United States v. Maze, 414 U.S. 395, 402-05, 94 S.Ct. 645, 649-51, 38 L.Ed.2d 603 (1974), the Court held that the fraudulent use of a stolen credit card to pay a hotel bill ended when the defendant checked out. Therefore, the subsequent mailings of invoices by the hotel owners and the credit card company could not support a mail fraud prosecution. 3

Page 629

Although the facts of the instant case do not fall squarely under Parr or Maze because of the existence of a broader scheme to defraud, we nevertheless conclude that they cannot be meaningfully distinguished to the extent of justifying a different result. Here, as in those cases, the defendant used credit to obtain goods or services fraudulently. The mailing of invoices to AMRO by defrauded sellers of pipe in each case occurred after the pipe was already shipped and the credit and payment terms were fixed. The details of the scheme would have been exactly the same even without the mailings. It may be true that the extensions of credit were integral to the scheme, but the credit terms were finalized independent of, and prior to, the mailing of the invoices.


To continue reading