Messinger v. U.S., 88-1665

• Decision Date: 08 June 1989
• Docket Number: No. 88-1665,88-1665
• Citation: 872 F.2d 217
• Parties: Jay MESSINGER, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 217

872 F.2d 217

Jay MESSINGER, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.

No. 88-1665.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 16, 1989.

Decided April 18, 1989.

Rehearing and Rehearing En Banc Denied June 8, 1989.

Robert S. Bailey, Chicago, Ill., for petitioner-appellant.

Sheila Finnegan, Asst. U.S. Atty., Chicago, Ill., for respondent-appellee.

Before CUMMINGS and FLAUM, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

ESCHBACH, Senior Circuit Judge.

The petitioner-appellant, Jay Messinger, appeals from the district court's denial of his Sec. 2255 motion to vacate his conviction and sentence. A jury convicted the appellant of mail fraud in violation of 18 U.S.C. Sec. 1341. The trial court sentenced him to two years imprisonment and fined him one thousand dollars. A year after his conviction, the Supreme Court decided McNally v. United States, 483 U.S. 350, 359, 107 S.Ct. 2875, 2881, 97 L.Ed.2d 292 (1987), in which it held that the deprivation of intangible rights alone could not support a conviction for mail fraud. In light of McNally, Messinger filed a petition to have his conviction and sentence vacated and his fine remitted pursuant to 28 U.S.C. Sec. 2255. The district court denied his petition and ruled that the indictment and jury instructions properly alleged that Messinger had defrauded Cook County, the Circuit Court of Cook County, and the citizens of Cook County (collectively "Cook County") of a property right, notwithstanding the intangible rights language included in both the indictment and the jury instructions. On appeal, the appellant argues that his mail fraud conviction was premised solely on the loss of intangible rights by Cook County, and therefore, his conviction and sentence must be vacated. For the reasons set forth below, we affirm the district court's denial of the appellant's Sec. 2255 motion.

I

Because the appellant is seeking post-conviction relief, we review the evidence and draw all reasonable inferences from it in the light most favorable to the government. See United States v. Cosentino, 869 F.2d 301, 302 (7th Cir.1989); Moore v. United States, 865 F.2d 149, 151 (7th Cir.1989); United States v. Gimbel, 830 F.2d 621, 622 (7th Cir.1987). Messinger, an attorney, was charged in a one-count indictment with mail fraud in violation of 18 U.S.C. Sec. 1341. ¹ The indictment alleged that Messinger had devised and participated in a scheme with former Cook County Judge Wayne Olson to bribe Olson with respect to a case, People v. Orengo, in which Messinger was counsel for the defendant.

On the same day that a probable cause and suppression hearing was to be held in the Orengo case, Messinger met with Olson and worked out a deal. According to their scheme, Olson would make a favorable ruling for the defendant at the hearing--either by granting the defendant's motion to suppress the evidence found by the police or by finding that there was no probable cause to arrest the defendant--which would result in the dismissal of the case. After dismissing the case, Olson would have the cash bail bond that the defendant had posted with the court refunded by mail directly to Messinger. ² Messinger would then turn over the cash bond refund to Olson as his bribe. The indictment alleged that this scheme deprived Cook County of certain intangible rights, such as the honest service of its employee, and that the mailing of the cash bail bond refund to Messinger provided the mailing necessary for a violation of the mail fraud statute to occur. A jury found Messinger guilty of mail fraud, and the court sentenced him to two years imprisonment and fined him one thousand dollars.

One year after his mail fraud conviction, the Supreme Court decided McNally. In McNally, the Court held that the loss of intangible rights alone could not support a conviction for mail fraud. McNally, 483 U.S. at 359, 107 S.Ct. at 2881. In light of McNally, Messinger filed a Sec. 2255 motion in which he asked the district court to vacate his conviction and sentence and remit his fine on the grounds that he had not violated the mail fraud statute because his conviction was based solely on the loss of intangible rights by Cook County. Since Messinger had not objected to the government's use of an intangible rights theory as the basis of the mail fraud prosecution or appealed from his conviction on this ground, the district court applied a cause and actual prejudice analysis to his Sec. 2255 motion. See United States v. Frady, 456 U.S. 152, 167-68, 102 S.Ct. 1584, 1594, 71 L.Ed.2d 816 (1982) (noting that the proper standard of review of a Sec. 2255 motion seeking collateral relief based on alleged trial error to which no contemporaneous objection was made is the cause and actual prejudice test). The district court correctly ruled that Messinger had cause for not objecting to or appealing from his conviction for mail fraud on the grounds that it was predicated on an intangible rights theory because federal appellate and district courts had universally rejected this argument. The district court found, however, that Messinger suffered no actual prejudice because the indictment and jury instructions alleged a scheme to deprive Cook County of a property right. Therefore, the district court denied Messinger's Sec. 2255 motion. We affirm.

II

In McNally, the Supreme Court ruled that the deprivation of intangible rights alone, such as a state's loss of the honest services of its employees, could not form the basis of a mail fraud violation. The Court read the mail fraud statute "as limited in scope to the protection of property rights." McNally, 483 U.S. at 360, 107 S.Ct. at 2881 (emphasis added). The mail fraud statute, however, protects against the deprivation of all types of property, including intangible property. Carpenter v. United States, 484 U.S. 19, 21, 108 S.Ct. 316, 320, 98 L.Ed.2d 275 (1987); Cosentino, 869 F.2d at 306; United States v. Keane, 852 F.2d 199, 205 (7th Cir.1988) (petition for certiorari filed Jan. 14, 1989). Because the rule enunciated in McNally applies retroactively, United States v. Folak, 865 F.2d 110, 113 (7th Cir.1988); Magnuson v. United States, 861 F.2d 166, 167 (7th Cir.1988), our first task is to determine whether Messinger's bribery scheme defrauded Cook County of a property right. If the bribery scheme did not deprive Cook County of a property right, but only of intangible rights, then Messinger's conviction for mail fraud would not pass muster under McNally. See United States v. Holzer, 840 F.2d 1343, 1348 (7th Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 2022, 100 L.Ed.2d 608 (1988).

The essence of the scheme between Messinger and Olson was that Olson would make a favorable ruling for the defendant, resulting in the dismissal of the case, in exchange for the cash bail bond refund that would normally be returned to the defendant. Under Illinois law, the requirement that the defendant deposit a cash bail bond with the court serves two purposes: (1) to help ensure that the defendant will show up at trial; and (2) to provide security for the payment of fines and court costs in case the defendant is convicted. Ward v. United States, 845 F.2d 1459, 1461 (7th Cir.1988); People v. Dale, 112 Ill.2d 460, 98 Ill.Dec. 39, 41, 493 N.E.2d 1060, 1062 (1986); People v. Nicholls, 71 Ill.2d 166, 15 Ill.Dec. 759, 763, 374 N.E.2d 194, 198 (1978). "A security interest is a property right." Ward, 845 F.2d at 1462 (citing United States v. Security Indus. Bank, 459 U.S. 70, 75-76, 103 S.Ct. 407, 410-11, 74 L.Ed.2d 235 (1982)). Therefore, Cook County has a property right, albeit an intangible one, in its security interest represented by the cash bail bond. The issue then is whether Messinger's scheme defrauded Cook County of its intangible property right.

In Ward, our court faced a similar issue to the one that confronts us in this case. In that case, Ward, an attorney, was convicted for mail fraud. As part of his scheme, Ward paid a bribe to a Cook County judge so that his client, a defendant in a case before the judge, would receive a favorable ruling. The judge forgot about the bribe and sentenced the defendant to jail, without imposing any fines or court costs. After being reminded about the scheme, the judge ordered that the defendant be released from jail and that the defendant's cash bail bonds be returned directly to Ward. See id. at 1461. Our court held that because the judge had forgotten about the scheme and thus sentenced the defendant presumably in the same way that an honest judge would, Cook County was not defrauded of its security interest (intangible property right) because the cash bail bond refunds were returned in the ordinary course. When the court failed to impose any fine or court costs on the defendant, the government's security interest lapsed. See id. at 1462.

The Ward court, however, did note that "[i]f the scheme to defraud had involved acceleration of the refund of the cash bonds, then the government could complain about a taking of its security interest." Id. (emphasis added). This distinction that the Ward court drew is precisely the distinction between Ward and the case before us. As part of Messinger's scheme, Olson made a ruling in favor of Messinger's client that prematurely terminated the criminal prosecution of Messinger's client. This premature termination of the case resulted in an acceleration of the refund of the cash bail bond, and thus Cook County was defrauded of its security interest. Therefore, under the facts set forth above, Messinger's scheme defrauded Cook County of its property right.

Additionally, we note that this same scheme also defrauded Cook County of some intangible rights, such as the honest service of its employee (Olson). The same scheme may deprive a person or an entity of both a property right and an intangible right at the same time. See United States v. Doe, 867 F.2d 986, 988-89 (7th Cir.19...