Magnuson v. U.S., s. 87-2802

• Decision Date: 08 November 1988
• Docket Number: Nos. 87-2802,s. 87-2802
• Citation: 861 F.2d 166
• Parties: Claude R. MAGNUSON, Fred W. Garver, Larry R. Mohr, Petitioners-Appellees, v. UNITED STATES of America, Respondent-Appellant. to 87-2804.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 166

861 F.2d 166

Claude R. MAGNUSON, Fred W. Garver, Larry R. Mohr Petitioners-Appellees, v. UNITED STATES of America, Respondent-Appellant.

Nos. 87-2802 to 87-2804.

United States Court of Appeals Seventh Circuit.

Argued June 3, 1988.

Decided Nov. 8, 1988.

David J. Ryan, Asst. U.S. Atty., Bradley L. Williams, Acting U.S. Atty., Indianapolis, Ind., for respondent-appellant.

James H. Voyles, Jr., Ober, Symmes, Cardwell, Voyles & Zahn, Don A. Tabbert, Tabbert & Ford, Indianapolis, Ind., for petitioners-appellees.

Before EASTERBROOK, MANION, Circuit Judges, and GORDON, Senior District Judge. ^*

MYRON L. GORDON, Senior District Judge.

On September 1, 1987, the district court granted the defendants' motion to vacate their sentences pursuant to 28 U.S.C. Sec. 2255 and ordered their release from custody. The ruling in McNally v. United States, --- U.S. ----, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), was the foundation for the district court's decision. This court has jurisdiction of the government's appeal pursuant to 28 U.S.C. Sec. 1291. We affirm.

The three defendants (two lawyers and a banker) were hired by the owners of very valuable properties located in Indianapolis to challenge what the owners perceived to be inflated tax assessments on their properties. The property owners' perceptions were quite accurate; the county assessors seemed to have purposely inflated the assessments in order to gain the attention of the property owners. In the course of obtaining significant reductions in the tax assessments (over twenty million dollars in reductions), the defendants caused tax bills to be mailed and also paid money to certain tax assessors in exchange for their promises not to object to or appeal any decisions lowering the tax assessments.

Following a seven week jury trial, each of the three defendants was convicted of conspiring to commit mail fraud and committing mail fraud in violation of 18 U.S.C. Secs. 371, 1341 and 2; each was also convicted of racketeering in violation of 18 U.S.C. Sec. 1952. Their convictions were affirmed by this court on January 16, 1987. United States v. Garver, 809 F.2d 1291 (7th Cir.1987).

After the United States Supreme Court decided McNally, the defendants filed their Sec. 2255 motions. They argued that their convictions, like the convictions of the McNally defendants, were improperly obtained because they were charged with and convicted of depriving the citizenry of purely intangible rights. In its order dated September 1, 1987, the district court held that the government had proceeded on the intangible rights theory and vacated the sentences.

The first issue presented is whether the rule in McNally may be invoked in a collateral attack on a conviction. Two courts of appeals have held that McNally applies retroactively. United States v. Shelton, 848 F.2d 1485, 1487 (10th Cir.1988); Ingber v. Enzor, 841 F.2d 450, 453-54 (2d Cir.1988). We agreed with those circuits in United States v. Keane, 852 F.2d 199, 205 (7th Cir.1988), and retroactive application is also implicit in Ward v. United States, 845 F.2d 1459, 1461 (7th Cir.1988). Today, we expressly hold that the rule announced in McNally is to be applied retroactively in a collateral attack on a conviction.

Since McNally applies retroactively, the second issue is whether the convictions were properly obtained in light of McNally. The mail fraud statute was intended to reach schemes which were designed to deprive others of their property rights. McNally, supra, 107 S.Ct. at 2878-80. A mail fraud conviction may not stand if the "jury was not required to find that the scheme resulted in the government being deprived of money or property." United States v. Gimbel, 830 F.2d 621, 627 (7th Cir.1987) (footnote omitted). "[Reviewing courts] must look to the substantive allegations of the indictment and the jury instructions to determine whether the conduct alleged and necessarily found to have occurred by the jury constituted an offense." United States v. Wellman, 830 F.2d 1453, 1462 (7th Cir.1987). The inquiry is limited to a review of the case as it was presented to the jury and not how it might have been presented. Ward v. United States, 845 F.2d 1459, 1463 (7th Cir.1988).

The indictment in the case at bar consisted of seven counts; each defendant was charged with one count of conspiracy to commit mail fraud and three counts of mail fraud. The mail fraud allegations served as the predicate acts necessary to sustain the racketeering charge. Defendants Garver and Mohr faced an additional mail fraud charge. Defendant Magnuson was charged with obstruction of justice but was acquitted on that count.

In light of McNally, it is clear that the indictment failed to allege a proper basis for a mail fraud conviction. In each count of mail fraud, the defendants were charged with having devised a scheme to accomplish the following:

a. to defraud the citizens of Marion County and Center Township of their right to the loyal, honest, and impartial services of [public officials] in the performance of acts related to their public employment; and

b. to defraud the citizens of Marion County and Center Township of their right to have the...