U.S. v. Bentz, 93-3340

• Decision Date: 11 April 1994
• Docket Number: No. 93-3340,93-3340
• Citation: 21 F.3d 37
• Parties: UNITED STATES of America v. Robert C. BENTZ; Ronald T. Ross, Ronald T. Ross, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 37

21 F.3d 37

UNITED STATES of America v. Robert C. BENTZ; Ronald T. Ross Ronald T. Ross, Appellant.

No. 93-3340.

United States Court of Appeals Third Circuit.

Argued Jan. 27, 1994.

Decided April 11, 1994.

Thomas S. White (argued), Office of Federal Public Defender, Pittsburgh, PA, for appellant.

Paul J. Brysh, Michael L. Ivory (argued), Office of U.S. Atty., Pittsburgh, PA, for appellee.

Before: MANSMANN and NYGAARD, Circuit Judges and WEIS, Senior Circuit Judge.

OPINION OF THE COURT

NYGAARD, Circuit Judge.

Ronald T. Ross entered a conditional guilty plea to one count of wire fraud in violation of 18 U.S.C. Secs. 2 and 1343. In doing so, however, he preserved his challenge to the wire transmission element of Sec. 1343. The government argues that Ross waived this issue as it relates to causation. We conclude that Ross did not waive the issue and, moreover, that he did not cause use of the wire in violation of Sec. 1343. Therefore, we will reverse the judgment of conviction against Ross and remand the cause with instructions to dismiss the indictment.

The district court had jurisdiction under 18 U.S.C. Sec. 3231 and we exercise jurisdiction under 28 U.S.C. Sec. 1291. Whether Ross waived the use of the wire argument is determined by Ross's conditional plea agreement, because a defendant who enters a conditional plea can only appeal issues that have been preserved for review. See Fed.R.Crim.P. 11(a)(2); United States v. Markling, 7 F.3d 1309, 1313 (7th Cir.1993) (requiring that conditional plea "precisely identify which pretrial issues the defendant wishes to preserve for review"); United States v. Wiley, 997 F.2d 378, 385 (8th Cir.) (declining to address claim that defendant entering conditional plea had failed to preserve), cert. denied, --- U.S. ----, 114 S.Ct. 600, 126 L.Ed.2d 565 (1993). Since our inquiry into the terms of Ross's plea agreement raises questions of law, our review is plenary. See United States v. Moscahlaidis, 868 F.2d 1357, 1360 (3d Cir.1989) (applying plenary review over legal question of whether the government violated a plea agreement). Our standard for reviewing the statutory construction of 18 U.S.C. Sec. 1343 (the wire transmission element) is also plenary. United States v. Barel, 939 F.2d 26, 31 (3d Cir.1991).

I.

Ross was indicted for defrauding Vac Air Alloys Corporation, a scrap metals broker, by representing that the metal he sold to Vac Air was stainless steel when it was not. He charged Vac Air for stainless steel but actually delivered metal worth considerably less. Ross unloaded his deliveries at Vac Air's storage facility in Pennsylvania and he was paid by checks generated through Vac Air's mainframe computer in New York. The check amounts were based on information sent by computer from Pennsylvania to New York. Thus, Ross's actions were alleged to have caused a wire transmission in interstate commerce for the purpose of executing his scheme to defraud.

Ross entered a plea of not guilty and moved to dismiss the indictment. His written motion raised three arguments: (1) the prosecution was time-barred; (2) the wire transmissions were not for the purpose of executing a fraudulent scheme; and, (3) the indictment erroneously charged attempt which is not illegal under the wire fraud statute. The district court held a hearing on this motion and heard testimony from Ross, Robert Bentz, a co-defendant, and Amy Fleissner, a Vac Air employee. ¹

Following this testimony, Ross's attorney elaborated on his wire transmission argument:

Your Honor, we believe the evidence shows here that no real evidence, no real information was generated from New York to Pittsburgh, to authorize the payments of these checks. The law is that one causes the mail to be used when he acts with knowledge that the use of the wire will follow in the ordinary course of business, or where such use can reasonably be foreseen even though not actually intended.

As far as Mr. Ross is concerned, there is no evidence here that would indicate to him that any information was relayed from New York to Pittsburgh to authorize the payment of these checks. Therefore, the issue of whether the wire has been--whether the defendants have caused the issuance and use of the wire, I don't think has been anywhere nearly established.

As a matter of fact, I think it is established that they did not know that the wire information would be used in this case. Therefore, on that element, the law would say that they cannot be found guilty of this charge, where there is no information that either Mr. Ross or Mr. Bentz had any idea that this information was being relayed to New York and then relayed back to Pittsburgh.

The district court denied Ross's motion to dismiss on the ground that "[t]he preliminary evidence shows that the defendants used interstate wires in furtherance of the alleged fraudulent scheme sufficient to render this case within our jurisdiction."

The parties later agreed to a conditional plea, but the plea agreement letter prepared by the government stated that: "The only issues we have agreed you may reserve for appeal were those raised specifically in your written Motion to Dismiss." Nonetheless, the transcript of the change of plea hearing indicates that neither the district court nor Ross's attorney distinguished between the concepts of purpose and causation in relation to use of the wire:

MR. WHITE [Ross's attorney]: Your Honor, I just want to inform you that there--maybe nobody has informed you yet--that this is a conditional plea.

THE COURT: No, I have not been informed of that. Is the government willing to take this?

MR. HULL [government's attorney]: We have set forth our agreement in the letter, the terms of that agreement.

THE COURT: That is based on my ruling on the use of the wire?

MR. WHITE: That is correct, Your Honor.... [W]e would ask Your Honor to make findings of fact and conclusions of law on our motion....

THE COURT: You mean findings of fact and conclusions of the law with respect to the use of the wire?

MR. WHITE: That is right....

Ross's attorney later stated that: "We will accept responsibility for the scheme, and then we will challenge the wire part, whether or not the wire was used in the execution of the scheme." After pleading guilty, Ross moved for reconsideration of his motion to dismiss and once again raised the causation issue. During the sentencing hearing, the district court denied this motion and Ross's request for specific findings of fact and conclusions of law. The court effectively relied on the testimony developed during the hearing on Ross's motion to dismiss, stating that the transcript of this hearing "speaks for itself."

II.

The conditional plea agreement letter states that only the issues raised in Ross's written motion to dismiss are preserved. But, Ross's attorney clearly posited an expanded wire transmission argument during the hearing on the motion. Having made an agreement with Ross to obtain a guilty plea from him, the government now seeks to nullify that agreement by interpreting away the very issue that Ross placed in contention before the district court. Although he did not plead in the precise language of the law, Ross did not ambush anyone with the issue he now raises. Frankly, we are surprised that the government would seek to enforce such a crabbed interpretation of the conditional plea agreement. Moreover, if it purposefully crafted the agreement so that the defendant would unwittingly waive his causation argument, we expressly disapprove of such tactics. Since the district court ruled that Ross's use of the wire was sufficient to confer federal jurisdiction, and it is clear that Ross neither intended to nor waived his sole argument, we will not rest on procedural punctilios when the legitimacy of a criminal indictment is at stake. We hold that the arguments raised by Ross's attorney during the motion hearing were incorporated into his written motion and preserved for appeal. ²

III.

Ross pleaded guilty to violating 18 U.S.C. Sec. 1343, which provides in relevant part that:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined not more than $1,000 or imprisoned not more than five years, or both....

18 U.S.C.A. Sec. 1343 (West Supp.1993). Ross does not challenge the "scheme to defraud" element of Sec. 1343, and the government does not contend that he personally sent a wire transmission. Thus, the only issue before us is whether Ross knowingly caused someone to use the wire.

In Pereira v. United States, 347 U.S. 1, 74 S.Ct. 358, 98 L.Ed. 435 (1954), the Supreme Court defined the "use of the mails" requirement for mail fraud, stating that: "Where one does an act with knowledge that the use of the mails will follow in the ordinary course of business, or where such use can reasonably be foreseen, even though not actually intended, then he 'causes' the mails to be used." Id. at 8-9, 74 S.Ct. at 363 (citing United States v. Kenofskey, 243 U.S. 440, 37 S.Ct. 438, 61 L.Ed. 836 (1917)); see also United States v. Otto, 742 F.2d 104, 109 (3d Cir.1984) (reiterating Pereira causation standard), cert. denied, 469 U.S. 1196, 105 S.Ct. 978, 83 L.Ed.2d 980 (1985). Recognizing that "cases construing the mail fraud statute are applicable to the wire fraud statute as well," United States v. Giovengo, 637 F.2d 941, 944 (3d Cir.1980) (quoting United States v. Tarnopol, 561 F.2d 466, 475 (3d Cir.1977)), cert. denied, 450 U.S. 1032, 101 S.Ct. 1743, 68 L.Ed.2d 228 (1981), we turn to whether the record demonstrates that Ross knew that the wire would be used in the ordinary course of...