U.S. v. Cotoia
| Citation | 785 F.2d 497 |
| Decision Date | 06 March 1986 |
| Docket Number | Nos. 85-5083,s. 85-5083 |
| Parties | UNITED STATES of America, Appellee, v. John COTOIA, Jr., Appellant. UNITED STATES of America, Appellee, v. Peter J. BAKER, Appellant. UNITED STATES of America, Appellee, v. Alfred "Fred" DeFUSCO, Appellant. UNITED STATES of America, Appellee, v. Norman CARDINALE, Appellant. UNITED STATES of America, Appellee, v. Richard L. DION, Appellant. UNITED STATES of America, Appellee, v. John R. IRONS, Diane M. Scardera (Irons), Appellants. UNITED STATES of America, Appellee, v. James LaCHANCE, Appellant. UNITED STATES of America, Appellee, v. Angelo F. MARSELLA, Appellant. UNITED STATES of America, Appellee, v. Edward G. REGINE, Appellant. UNITED STATES of America, Appellee, v. Ernest PERSICHINO, Appellant. to 85-5092. |
| Court | United States Courts of Appeals. United States Court of Appeals (4th Circuit) |
Anthony M. Traini (Leppo & Traini, Randolph, Mass., on brief), for appellants.
Douglas Cannon, Asst. U.S. Atty. (Kenneth W. McAllister, U.S. Atty., Greensboro, N.C., Becky M. Strickland, Paralegal Specialist, on brief) for appellee.
Before MURNAGHAN and WILKINSON, Circuit Judges, and MERHIGE, United States District Judge for the Eastern District of Virginia, sitting by designation.
In the United States District Court for the Middle District of North Carolina six prosecutions which have been consolidated for appeal involved charges of conspiracy and of the substantive offenses of interstate transportation of forged and altered or falsely made securities, namely motor vehicle title certificates. Defendants were Rhode Island wholesale automobile dealers engaged in retitling motor vehicles in North Carolina, in the process of which odometer readings were systematically and substantially reduced.
Trial by jury was waived by all defendants and the case proceeded on stipulations. Some convictions and some acquittals resulted. From the convictions, ten defendants have appealed. For one or more of each of them there have been convictions of a) conspiracy to transport in interstate commerce falsely made, forged and altered securities (18 U.S.C. Sec. 371), b) conspiracy to commit mail fraud and to transport in interstate commerce falsely made, forged and altered securities (18 U.S.C. Sec. 371), c) interstate transportation of forged and altered securities (18 U.S.C. Secs. 2314 and 2), and d) interstate transportation of falsely made securities (18 U.S.C. Secs. 2314 and 2). 1
Appellants raise a variety of objections about the propriety of the indictments and of the statute under which they were prosecuted, as well as the sufficiency of the evidence. One thing not contested on appeal, however, is the status of the certificates of title as securities within the meaning of 18 U.S.C. Sec. 2311.
In January of 1984, Darrell Hicks, the President of Seville Enterprises, a used car business in North Carolina, met with John Irons of Cranston, Rhode Island, and agreed to "wash" titles for Irons through the motor vehicle administration of the State of North Carolina. The scheme involved the buying of cars in Massachusetts, Rhode Island and New Jersey with high mileage recorded on the odometers as well as on the title certificates. The title certificates were sent to Irons' house, where his girlfriend, subsequently his wife, Diane Scardera, changed the mileage shown on the certificates, and approximately once a week bundled the certificates up and sent them by Federal Express to Hicks. Hicks, upon receiving them, notarized for each the title assignment section with a false notary's seal and sent them to the North Carolina Department of Motor Vehicles. On receipt of the newly issued North Carolina titles with the altered mileage entered on the face, Hicks sent them interstate by Federal Express to Irons' house.
The mileage rollbacks on the titles resulted in an average $500 to $1000 increase in value for each car on the wholesale used car market. Irons forwarded the North Carolina titles to the various members of the group, who then resold the cars and reaped substantial inflated profits.
Hicks first was paid $50.00 for each title washed under the scheme, and later the payment increased to $75.00 per title.
Defendants, Marsella, Regine and Persichino, were Rhode Island members of a car ring. Marsella owned Master Auto Sales, and bought many cars at Rhode Island wholesale auctions. Edward Regine was listed as Marsella's registered buyer at several of the auctions. Evidence connected Persichino as a buyer for Master Auto Sales as well. Persichino owned Eastern Auto Sales, later Greenville Auto Sales. Regine was listed as an authorized representative of Persichino's auto sales enterprise.
The three men ran the two businesses much as if they were one. One witness stopped by Eastern Auto Sales to buy a car and Marsella showed him Persichino's inventory. Nothing at Eastern suited the buyer, so Marsella took him to the nearby Master Auto Sales, where Marsella sold him two cars.
The records offered by the government established that cars with high mileage were purchased by Regine and Marsella, and that the titles were laundered through the Irons-Hicks connection and eventually returned to Marsella and Regine. The cars were then sold with rolled back odometers and with the corresponding reduced mileage on the North Carolina titles, to unsuspecting customers.
While the cars were not transported interstate, the certificates of title were.
The alterations made by Irons and Scardera on the Massachusetts, Rhode Island and New Jersey title certificates could not have uniformly been subtle or well-concealed. The North Carolina DMV refused to issue new titles for one set of New England title documents submitted by Hicks. Hicks sent them north to the Irons/Scardera residence that afternoon and that evening, Hicks was arrested.
Dion transported between Rhode Island and North Carolina title certificates to be washed and the newly issued North Carolina certificates of title bearing the falsified odometer readings.
The principal argument that appellants offer is that the mileage readings on the title certificates were not "material," that is, had no effect on the validity of the title certificates as a whole. Because the mileage shown, correct or incorrect, is immaterial to the validity of title, defendants have claimed that their alterations of the mileage were not a violation of 18 U.S.C. Sec. 2314, in the same way that forged countersignatures on checks are not "alterations" of the checks themselves. Appellants rely on United States v. Tyson, 690 F.2d 9 (1st Cir.1982), in which the First Circuit held that a valid check passed with a forged countersignature is not an "altered" security within the meaning of Sec. 2314. 2
We are aware of only one case which has specifically addressed the issue of alteration of mileage on certificates of title and its materiality under 18 U.S.C. Sec. 2314. United States v. Rudge, 474 F.Supp. 360 (S.D.Iowa 1979). In Rudge, the defendant was running a title washing operation much the same as the one at issue here. The indictment alleged that the defendant had transported "falsely made" titles (certificates issued by Iowa on the basis of altered certificates from other states). The court held that such title certificates were not "falsely made" within the meaning of the statute. Id. at 362. In passing, however, the court treated the issue of materiality at some length:
The certificate is a genuine certificate of title for the motor vehicle. The false information it contains concerning the mileage of the motor vehicle does not impair its genuineness as the certificate of title for the motor vehicle. The certificate will serve its primary legal purposes of proof of ownership of the motor vehicle ... and the means of transferring ownership of the motor vehicle....
To hold otherwise would be to add serious legal insult to the injury suffered by a good faith purchaser by depriving him of ownership of the vehicle, thus parlaying the odometer fraud into a title fraud. Such is not the intent of the statute.
It may be doubted that the argument deriving from Rudge has great applicability to the original Massachusetts, Rhode Island and New Jersey certificates, which were indubitably altered and transported in interstate commerce prior to their submission to North Carolina for replacement. That consideration would lead to the factoring out of the argument of a number of the indictments. Rudge dealt with the substituted Iowa certificates, not the original ones. As to them, no alteration of the certificates occurred, which is why the prosecution proceeded under the "falsely made" provision of the statute. Yet, it must be realized though that one of the counts charged Dion with "interstate transportation of falsely made securities," thereby tying him to a transaction in which North Carolina certificates were involved.
In any event, it does not appear to us to follow that, because a false mileage statement does not invalidate the certificate for purposes of establishing and transferring title, it may not be false for other material purposes. The reliance of the purchaser on the stated mileage makes the deliberate misstatement very material even though the certificate, regardless of the falsity, serves to pass title. There are states, North Carolina in particular, which do make the accuracy of the mileage material to the validity of the title. See N.C.Gen.Stat. Sec. 20-347 (1983) ().
In a similar situation, false items appearing on the face of the security that are not essential to the actual validity of the security for foal registration purposes have, nevertheless, been found to be material for the purposes of Sec. 2314. In United States v. Bowers, 739 F.2d 1050 (6th Cir.1984), cert. denied sub nom. Oakes v. United States, --- U.S. ----, 105 S.Ct. 195, 83 L.Ed.2d...
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