U.S. v. DeFusco, 90-4119

• Citation: 930 F.2d 413
• Decision Date: 17 April 1991
• Docket Number: No. 90-4119,90-4119
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. David Allen DeFUSCO, a/k/a David Allen Hagen, Defendant-Appellant. Summary Calendar.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 413

930 F.2d 413

UNITED STATES of America, Plaintiff-Appellee, v. David Allen DeFUSCO, a/k/a David Allen Hagen, Defendant-Appellant.

No. 90-4119

Summary Calendar.

United States Court of Appeals, Fifth Circuit.

April 17, 1991.

Rehearing and Rehearing En Banc

Denied May 14, 1991.

David Allen DeFusco, Sheridan, Or., pro se.

Paul E. Naman, Asst. U.S. Atty., Bob Wortham, U.S. Atty., Beaumont, Tex., for U.S.

Appeal from the United States District Court for the Eastern District of Texas.

Before POLITZ, DAVIS and BARKSDALE, Circuit Judges.

POLITZ, Circuit Judge:

Convicted on guilty pleas of conspiracy to commit mail fraud and of mail fraud, 18 U.S.C. Secs. 371, 1341, David Allen DeFusco a/k/a David Allen Hagen appeals, claiming that his indictment was faulty, his plea invalid, and his counsel ineffective. Finding no error, we affirm.

Background

From the fall of 1987 until the summer of 1988 Freedom Financial Corporation, a Texas corporation which sold time-share properties in Texas and Missouri, mailed letters to millions of prospective customers, promising extraordinary prizes and "gifts" to recipients visiting the advertised properties. The mailings were of differing types; many were mailed from Washington, D.C., and bore official-looking, but fictitious, emblems and return addresses including the "Bureau of Adjustment, United States of America," from whom a "summons" issued to come forth and claim a prize. Other mailings were in the form of warrants of appearance, deeds of trust, notices of audit, collection notices, and certificates of disbursement. One series had an IRS Form 1099, Miscellaneous Income, precompleted as if the recipient were already the winner of $7,500. Another series, styled U.S. Express, stated that either the recipient or one other named person, Linda Powell, was the guaranteed winner of a prize. These letters were posted after notification to Ms. Powell that she had won. DeFusco conceded that the U.S. Express "contest" was fraudulent.

The promised prizes included automobiles, large sums of cash, gold bullion, televisions, and fur coats. The letters falsely stated that the recipient was the winner of one or more prizes; the "lucky" recipients discovered upon arrival at the time-share property that they had in fact won only the right to receive, for approximately $100 postage and handling expenses, a moderately-valued watch or home entertainment system.

DeFusco, ¹ who did business through several corporations, ² was the designer, publisher, and administrator of the mailing operation. The fine print on the mailings identified his various corporations as the marketing agents.

Indicted for one count of conspiracy and seven substantive counts, DeFusco entered into a plea agreement which provided that he would plead guilty to the conspiracy and one substantive count, and the other counts would be dismissed. He was sentenced to two concurrent 60-month periods of incarceration, 40 months of which are to be served consecutive to a sentence imposed by the Eastern District of Virginia for unrelated bankruptcy fraud and money laundering offenses. DeFusco timely appealed. ³

Analysis

On appeal, DeFusco first contends that his indictment failed to state the elements of an offense. Essentially he contends that he neither conspired to defraud nor defrauded any individual of money or property. He relies heavily on the Supreme Court's holding in McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987).

Mail fraud, proscribed by 18 U.S.C. Sec. 1341, has three essential elements: (1) a scheme to defraud, (2) involving a use of the mails, (3) for the purpose of executing the scheme. United States v. Gordon, 780 F.2d 1165 (5th Cir.1986). It is uncontested that the scheme met the Hammerschmidt v. United States, 265 U.S. 182, 188, 44 S.Ct. 511, 512, 68 L.Ed. 968, 970 (1924), requirement of a "trick, deceit, chicane or overreaching," and that the mails were heavily used. DeFusco argues, however, that there was no scheme to defraud as no victims were deprived of money or property. We do not agree.

In McNally the Court reversed the conviction of a former Kentucky official who received money through an extra-governmental enterprise in violation of what the trial court had found to be his fiduciary obligation to serve the public with integrity. The Court held:

The mail fraud statute clearly protects property rights, but does not refer to the intangible right of the citizenry to good government.... Insofar as the sparse legislative history reveals anything, it indicates that the original impetus behind the mail fraud statute was to protect the people from schemes to deprive them of their money or property.

483 U.S. at 356, 107 S.Ct. at 2879, 97 L.Ed.2d at 299-300. Taking a cue from the McNally defendants, DeFusco contends that he took no "money or property" from the recipients of the mailings. He conveniently overlooks critical facts. The persons who traveled to the advertised resorts believing that they were winners did not receive their quid pro quo. DeFusco lied. There were no prizes; the money spent for travel expenses was lost. Time was wasted. The participants were defrauded of property. The indictment validly charged the conspiracy...