U.S. v. Chandler

• Decision Date: 19 October 2004
• Docket Number: No. 03-10725.,03-10725.
• Citation: 388 F.3d 796
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. George CHANDLER, Jerome Pearl, Kevin J. Whitfield, John Henderson, Defendants-Appellants,
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 796

388 F.3d 796

UNITED STATES of America, Plaintiff-Appellee, v. George CHANDLER, Jerome Pearl, Kevin J. Whitfield, John Henderson, Defendants-Appellants,

No. 03-10725.

United States Court of Appeals, Eleventh Circuit.

October 19, 2004.

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Curtis Fallgatter, Jacksonville, FL, Joseph S. Paglino, N. Miami Beach, FL, Alexander L. Zipperer, III, Zipperer & Lorberbaum, P.C., Savannah, GA, Martin D. Hastings, Law Offices of Martin D. Hastings, Las Vegas, NV, for Defendants-Appellants.

Susan H. Raab, Jacksonville, FL, Tamra Phipps, Tampa, FL, for Plaintiff-Appellee.

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

ON PETITION FOR REHEARING

Before DUBINA and HILL, Circuit Judges, and OWENS^*, District Judge.

HILL, Circuit Judge:

The government filed a limited Petition for Rehearing, in which it concedes that the convictions of the appellants should be vacated and, upon remand, judgments of acquittal are to be entered. The limited relief sought is that the court rescind that part of the opinion (Part II.A.2) that holds that violation of the rules of a privately promoted game, without more, could not, under the facts of this case, amount to mail fraud.

Inasmuch as the government seeks no modification of the judgment, and, as the section of the opinion to which the government's motion is directed is an alternative holding rendered unnecessary by this concession, and without further consideration of the merits vel non of the motion, the panel grants rehearing and substitutes the following opinion:

The government charged defendants in the Middle District of Florida with conspiring to commit mail fraud, in violation of 18 U.S.C. § 371. Defendants herein proceeded to trial and were found guilty. Each filed a motion for a judgment of acquittal, which the district court denied. Each appeals that denial.

I.

This trial clearly demonstrates the inherent danger in a multi-defendant conspiracy prosecution—that individuals who are not actually members of the group will be swept into the conspiratorial net. Because the government is permitted broad prosecutorial discretion to prove the conspiracy, the likelihood exists that those who associate with conspirators will be found guilty of a crime that they have not intended to commit, and part of a group that they never joined. See Dennis v. United States, 384 U.S. 855, 860, 86 S.Ct. 1840, 16 L.Ed.2d 973 (1966).

This danger is compounded when the grand jury indicts on one theory of the illegal conduct, but the government prosecutes the case on an entirely different theory. This roaming theory of the prosecution can produce trial error of constitutional proportions. See Russell v. United States, 369 U.S. 749, 768, 82 S.Ct. 1038, 8 L.Ed.2d 240 (1962) (ill-defined charges leave "the prosecution free to roam at large—to shift its theory of criminality so as to take advantage of each passing vicissitude of the trial and appeal").

We have seen such conspiracy prosecutions before. In United States v. Adkinson, 135 F.3d 1363 (11th Cir.1998), we reversed convictions obtained by the government upon an indictment that alleged conduct not a crime under the prevailing law. In that case, the district court was persuaded to permit the government to proceed upon the assumption that the controlling law of mail fraud would change prior to the end of trial. Id. at 1369. At the close of the government's case, with the law unchanged, the court attempted to cure the defect by redacting the indictment of the allegations not stating a crime, and instructing the jury as to the correct law. Id. at 1376. But the damage had been done. The jury had listened to months of testimony from numerous witnesses whose testimony, as it turned out, was both irrelevant and highly prejudicial. Id. at 1372. Under these circumstances, we held that fundamental due process was denied the defendants and vacated their convictions. Id. at 1374.

Unfortunately, the government in this case once more engaged in this regrettable and unconstitutional series of events.

A. Indictment and Pre-Trial Proceedings

On December 6, 2001, a grand jury empaneled by the United States District Court for the Middle District of Florida, Jacksonville Division, returned a 62 page indictment charging 43 defendants with conspiracy to commit mail fraud, in violation of 18 U.S.C. § 371.¹ The defendants were alleged to have used the United States mails in furtherance of a scheme and artifice to defraud McDonald's Corporation (McDonald's). During the relevant time period, McDonald's conducted "Monopoly" style and "Hatch, Match and Win" promotional games to attract customers to McDonald's restaurants. Over twenty different games were played during this time. The games were played by visiting the restaurant, purchasing food, and collecting the game stamps that were attached to the various food products sold by McDonald's.² Certain game stamps were "winners," worth substantial sums of money. McDonald's employed Simon Marketing, Inc. ("Simon") to develop, manage, and advertise the games. Jerome Jacobson was the Director of Security for Simon, with responsibility for disseminating the high-value game stamps.

The indictment alleged that Jacobson would embezzle these game stamps and conspire with friends, relatives, and others to act as "recruiters," who would in turn solicit other friends and relatives to submit the stolen winning game stamps to McDonald's and collect the prize money. Appellants George Chandler, John Henderson, Jerome Pearl and Kevin J. Whitfield were alleged to have recruited winners or redeemed stolen game stamps. Prize money, it was alleged, was shared by Jacobson and the other conspirators. The scope of the alleged conspiracy was substantial, as evidenced by both the number of defendants and the fact that game stamps were distributed nation-wide and so the "winners" were located across the country.³

Very early in the pre-trial proceedings,⁴ the defendants focused on whether the allegations of the indictment were sufficient to state a crime.⁵ Under federal conspiracy law, the government must allege and prove that the defendants knowingly entered into an agreement to commit an unlawful act. United States v. Parker, 839 F.2d 1473 (11th Cir.1988). The indictment did allege an unlawful act in the embezzlement of the game stamps. Nowhere, however, did the indictment allege that any of these defendants knew that the game stamps they redeemed had been stolen. The defendants moved to dismiss the indictment, alleging that it was fatally defective in its failure to allege an essential element of the crime of conspiracy—knowing agreement to commit the illegal act.

The government responded by conceding that the defendants did not know of Jacobson or the underlying theft, but maintained that such knowledge was irrelevant to the defendants' culpability. Articulating its theory of the case, to which it adhered until the final moments of trial, the government asserted that the fraud in this case was the defendants' representation of themselves to McDonald's as "legitimate winners." Since the indictment repeatedly alleges that the defendants "knew" they were not "legitimate" winners of the McDonald's game stamps, the government argued that the indictment was not defective, concluding:

Therefore, as the fraud in this case was when the "winner" stated that they obtained the game piece legitimately, it is absolutely irrelevant whether the fraudulent "winner" knew that the game piece(s) was embezzled from McDonald's/Simon. (emphasis added)

In fact, the government represented to the court that it would not make a difference to its case if the defendants had found their winning game stamps on the street.⁶ So counseled, the court denied the motions to dismiss.

Defendants then filed a motion for a bill of particulars, asking the government to define the terms "legitimate" and "illegitimate" winner as used in the indictment. The defendants asserted that nowhere in the indictment was this term defined so that they had notice why their claims to be legitimate winners were fraudulent.

The government responded that its indictment "clearly and unambiguously" used the terms "legitimate" and "illegitimate" in the context of the McDonald's game rules. These game rules, an example of which was attached to the response as an exhibit, required a winner to state that he had "obtained my potential winning game stamp(s) through authorized, legitimate channels" (emphasis added).

In the government's view, there were only three ways to obtain a game stamp through "authorized, legitimate channels"—by purchasing a food item with a winning game stamp attached, by writing to McDonald's and requesting a game stamp, or by cutting a game stamp out of a magazine or newspaper. Although conceding that no rule specifically prohibited the transfer of a game stamp from one person to another, the government contended that the acquisition of a game in this way would not be through an "authorized, legitimate channel," and, therefore any subsequent claim to be a "legitimate" winner would be criminally fraudulent.⁷

The defendants responded by arguing that this theory of the fraud on McDonald's was flawed in two respects. First, it was based upon a problematic interpretation of the McDonald's game rules, since those rules do not prohibit someone from receiving a game stamp from another person prior to application to McDonald's for the prize. Second, the government's position that defendants' claims to be legitimate winners constituted the underlying fraud in this case appeared to charge the defendants with a non-crime —violating the rules of McDonald's games.

The defendants filed motions in limine arguing that since the indictment charged a scheme to embezzle and then fraudulently redeem the game stamps, the government was required to prove that the defendants knew about the underlying embezzlement. They asked the...