Belt v. U.S., 88-3293

• Decision Date: 28 March 1989
• Docket Number: No. 88-3293,88-3293
• Citation: 868 F.2d 1208
• Parties: Thomas A. BELT, Petitioner-Appellee, v. UNITED STATES of America, et al., Respondents-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1208

868 F.2d 1208

Thomas A. BELT, Petitioner-Appellee, v. UNITED STATES of America, et al., Respondents-Appellants.

No. 88-3293.

United States Court of Appeals, Eleventh Circuit.

March 28, 1989.

Leon Warren Weidman, U.S. Atty's Office, Los Angeles, Cal., for respondents-appellants.

William B. Plowman, Tampa, Fla., for petitioner-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before FAY and KRAVITCH, Circuit Judges, and LYNNE ^*, Senior District Judge.

FAY, Circuit Judge:

The United States challenges a district court order which vacated Thomas A. Belt's sentence and conviction for two counts of wire fraud under 18 U.S.C. Sec. 1343 (1982). 679 F.Supp. 1088. The indictment alleged that Belt released confidential bid information to companies competing in a subcontract bidding process. The dispositive issue presented is whether the indictment is sufficient to charge Belt with an offense under the wire fraud statute in light of the property restrictions imposed by McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). The district court found the indictment deficient because it did not allege that Belt's fraudulent scheme deprived the victim, his employer, of money or property. We find that the confidential bid information Belt exchanged for money bribes constituted property under the wire fraud statute. The allegation that Belt released confidential bid information to companies competing in the bidding process, thus, sufficiently alleges a deprivation of property under the wire fraud statute. Therefore, we reverse the district court's order and reinstate the conviction.

I. BACKGROUND

Fluor Engineers, Inc. (Fluor) hired Thomas A. Belt, petitioner, as a principal engineer of contracts in October of 1980. Fluor assigned Belt to work in Jubail, Saudi Arabia, on a project (PEL/SADAF Project) for which Fluor was the general contractor and overall contract manager. The project involved construction of a $5 billion petrochemical manufacturing plant and was the result of a joint venture between the Saudi Arabian government and a Saudi Arabian corporation known as PEL/SADAF. As a principal engineer, Belt's duties included overseeing the subcontractor bid lists, the bidding, the bid evaluation and the award of subcontracts for the PEL/SADAF Project.

The indictment charges that while Belt was an employee of Fluor, he devised a scheme to defraud the company of its right to honest business. The indictment alleges that Belt defrauded Fluor of "its right to have its business conducted honestly, impartially, free from deceit, corruption, fraud, dishonesty and conflict of interest and of its right to the conscientious, loyal, honest, faithful and disinterested services, decisions, actions and performance of duties by its employees."

More specifically, the indictment alleges that Belt carried out his fraudulent scheme from November of 1980 to about September 22, 1983 by soliciting "illegal bribes from companies seeking subcontracts for the PEL/SADAF Project." In return, Belt agreed to and did "place those companies on bid lists, supply the companies with secret bid information and otherwise improperly aid those companies in obtaining subcontracts on the PEL/SADAF Project." (emphasis added ). Additionally, the indictment alleges that after receiving the subcontracts, the companies would pay Belt bribes either in cash or through wire transfers to a bank account in his wife's name.

On May 30, 1986, Belt entered a guilty plea and was sentenced to four years in prison and three years probation. ¹ On June 24, 1987, the United States Supreme Court decided McNally. On September 22, 1987, Belt filed a petition for a writ of habeas corpus, pursuant to 28 U.S.C. Sec. 2255, or alternatively, a motion to vacate the conviction, on the grounds the indictment failed to allege an offense under the wire fraud statute according to McNally. The district court agreed and granted Belt relief. ² Because we find that Belt's employer was deprived of its intangible property right in the confidential bid information, we reverse.

II. McNally Claim

Generally, an indictment is sufficient if it: 1) sets forth the elements of the offense in a manner which fairly informs the defendant of the charge against which he must defend and 2) enables him to enter a plea which will bar future prosecution for the same offense. Hamling v. United States, 418 U.S. 87, 117, 94 S.Ct. 2887, 2907, 41 L.Ed.2d 590 (1974). If a general description of the offense is given then it is also necessary to allege facts and circumstances which will inform the defendant of the specific offense with which he is being charged. Id. The requirement that an indictment set forth the essential elements of an offense functions not only to give the defendant notice as guaranteed by the sixth amendment, but also to inform the court of the facts alleged to enable it to determine whether the facts are sufficient in law to support a conviction. United States v. Italiano, 837 F.2d 1480, 1486 (11th Cir.1988).

The elements of an offense under the wire fraud statute are 1) a scheme to defraud, and 2) the use of wire communications in furtherance of the scheme. Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 362, 98 L.Ed. 435 (1954); Lombardo v. United States, 865 F.2d 155, 157-58 (7th Cir.1989). The wire fraud statute tracks the language of the mail fraud statute, 18 U.S.C. Sec. 1341 (1982). The statutes are given a similar construction and are subject to the same substantive analysis. Carpenter v. United States, 484 U.S. 19, 108 S.Ct. 316, 320 n. 6, 98 L.Ed.2d 275 (1987); United States v. Connor, 752 F.2d 566, 573 n. 1 (11th Cir.), cert. denied, 474 U.S. 821, 106 S.Ct. 72, 88 L.Ed.2d 59 (1985).

In McNally, the Supreme Court interpreted the first element of the mail fraud statute Sec. 1341 as being limited to schemes which deprive victims of property rights. The Court rejected the theory that the statute protects against schemes which deprive citizens of their intangible right to honest government. ³ In McNally, a politician, Hunt, who was the state Democratic Party chairman, enjoyed de facto control over selecting the insurance agencies from which Kentucky would purchase its insurance policies. The scheme involved Hunt and the Wombell Insurance Company (Wombell). Wombell agreed with Hunt that in exchange for security in its position as Kentucky's insurance agent, it would share resulting commissions in excess of $50,000 with other insurance agencies designated by Hunt. Among the companies Hunt designated was a company controlled by Hunt, McNally and another. Ultimately, McNally was convicted of one count of mail fraud.

On appeal, the Supreme Court reviewed the legislative history of the mail fraud statute and determined that Congress intended the statute to be limited in scope to the protection of property rights. McNally, 483 U.S. at ----, 107 S.Ct. at 2881. In vacating McNally's conviction, the Supreme Court emphasized that no property loss had been suffered by Kentucky. The Court noted that the jury was not charged that in the absence of the scheme "the Commonwealth would have paid a lower premium or secured better insurance." Id. at ----, 107 S.Ct. at 2882. The petitioners merely had exercised control over commissions paid by Wombell to other insurance companies. Id. Finally, while the Court found that Congress intended the mail fraud statute to protect only property rights, it also emphasized that the phrase "any scheme or artifice to defraud" is to be "interpreted broadly insofar as property rights are concerned." Id. at ----, 107 S.Ct. at 2880 (quoting Durland v. United States, 161 U.S. 306, 16 S.Ct. 508, 40 L.Ed. 709 (1896)." ⁴

The Court further elaborated on the reach of the mail and wire fraud statutes in Carpenter v. United States, 484 U.S. 19, 108 S.Ct. 316, 98 L.Ed.2d 275 (1987). In Carpenter, Foster Winans, a reporter for the Wall Street Journal, and Kenneth Felis, a stockbroker, entered into a scheme in which Winans released the contents and timing of the financial column "Heard on the Street" to Felis and several other brokers prior to the publication of the columns. Id. at ----, 108 S.Ct. at 319. The brokers would then trade on the information, speculating on its probable impact on the market. Id. The resulting profits were shared. Both Winans and Felis were found guilty of several securities violations and of violating the federal mail and wire fraud statutes.

On appeal, the petitioners challenged their wire and mail fraud convictions on the grounds that their activities did not constitute a scheme to defraud the Journal of money or property as required by McNally. Id. at ----, 108 S.Ct. at 320. They argued that the Journal's prepublication interest in the confidentiality of the financial news column was an intangible interest outside the reach of the mail and wire fraud statutes. Id. The Supreme Court disagreed, finding that the Journal's interest in the confidentiality of the columns was a property right within the protection of Sec. 1341 and Sec. 1343.

In affirming the wire and mail fraud convictions, the Court stated that McNally did not "limit the scope of Sec. 1341 to tangible as distinguished from intangible property rights" and found that "confidential business information has long been recognized as property." Id. at ----, 108 S.Ct. at 320 (citations omitted). Further, the Court refused to require that a monetary loss result from the fraudulent scheme. Rather, the Court held that it was sufficient that the Journal had been deprived of "its right to exclusive use of the information." Id. at ----, 108 S.Ct. at 321. Hence, the deprivation of the Journal's property right in the confidentiality of the information in the columns, and in its exclusive use prior to publication was sufficient to sustain the mail and wire fraud convictions.

Although the Carpenter court characterized the...