U.S. v. Giovengo

• Decision Date: 26 January 1981
• Docket Number: No. 80-1793,80-1793
• Citation: 637 F.2d 941
• Parties: UNITED STATES of America v. Vince GIOVENGO, Samuel Paladino. Appeal of Samuel PALADINO.
• Court: U.S. Court of Appeals — Third Circuit

Page 941

637 F.2d 941

UNITED STATES of America v. Vince GIOVENGO, Samuel Paladino Appeal of Samuel PALADINO.

No. 80-1793.

United States Court of Appeals Third Circuit.

Argued Nov. 6, 1980.

Decided Dec. 31, 1980.

Rehearing and Rehearing In Banc Denied Jan. 26, 1981.

Harold Gondelman (argued), Gondelman, Baxter, Mansmann & McVerry, Pittsburgh, Pa., for appellant.

Robert Cindrich, U. S. Atty., W. D. Pa., Pittsburgh, Pa., William C. Bryson, Janis H. Kockritz (argued), Attys., Dept. of Justice, Washington, D. C., for appellee.

Before ADAMS and SLOVITER, Circuit Judges, and BROTMAN, District Judge. ^*

OPINION OF THE COURT

ADAMS, Circuit Judge.

In this case, Samuel Paladino appeals from convictions for transgressing the federal wire fraud statute, 18 U.S.C. § 1343 (1976), and for conspiring to commit wire fraud in violation of 18 U.S.C. § 371 (1976).

The facts, as they appear from the evidence viewed in the light most favorable to the government, ¹ indicate that Paladino and Vincent Giovengo devised and executed a scheme to defraud Trans World Airlines (TWA) of money paid by passengers who purchased one-way airline tickets with cash. TWA employed both Paladino and Giovengo as customer service agents at the Greater Pittsburgh Airport. Generally, Giovengo sold tickets, while Paladino assisted passengers boarding the TWA aircraft.

When a passenger approaches a TWA agent at an airport with a request to purchase a ticket, the agent enters ticket information into a TWA computer terminal. The terminal transfers a wire signal to interstate telephone circuits leased by TWA from the American Telephone and Telegraph Company (AT& T), and the signals are transmitted to the main TWA computer located in Kansas City, Missouri. The Kansas City computer then transmits a return signal over the telephone lines to the originating airport terminal, and the requested ticket is imprinted by a printing machine. The ticket itself contains several pages: a credit card charge form which is forwarded to a credit company if the passenger charges the ticket, but which is discarded if the sale is for cash; an auditor's coupon retained by TWA; several flight coupons; and the passenger's receipt.

Under the arrangement in question, when a customer purchased a one-way ticket with cash, Giovengo would present the customer with the flight coupon required in order to board the aircraft. Instead of handing the customer his passenger receipt, however, Giovengo would present the customer with the credit charge form which should have been discarded inasmuch as the transaction was for cash. Giovengo would keep the auditor's coupon, all extra flight coupons, and the passenger receipt. The passenger would then proceed to the boarding gate, where Paladino would collect the flight coupon and issue the traveller a boarding pass. After the flight departed, Giovengo and Paladino would reinsert the flight coupon into the pages of the ticket, thereby reassembling all the pages of the original ticket except for the charge card forms. The entire ticket would then be marked void and sent to TWA's accounting department. Since the ticket had been voided, the accounting office did not look for a corresponding cash amount. Giovengo and Paladino would divide between themselves the money that passengers had paid for the tickets.

This fraudulent scheme came under scrutiny when a TWA cashier noticed that some of the voided tickets did not contain all their original flight coupons. After the two men were indicted, Giovengo pleaded guilty to conspiracy to commit wire fraud and testified as a government witness at Paladino's trial. A jury convicted Paladino on six counts of wire fraud and one count of conspiracy to commit wire fraud.

The federal wire fraud statute, 18 U.S.C. § 1343 (1976), provides:

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, scheme or artifice, shall be fined not more than $1,000 or imprisoned not more than five years, or both.

Paladino maintains that § 1343 does not apply to all interstate wire communications, but only to those regulated by the Federal Communications Commission (FCC). He goes on to contend that since TWA is not a common carrier regulated by the FCC, transmissions over the interstate lines it leases are not within the jurisdiction of FCC regulation, and fraudulent use of those wires cannot constitute a violation of § 1343.

We find no merit in this argument. Nothing in the language of § 1343 suggests that its scope is limited to fraud committed by use of interstate wires subject to FCC regulation. ² Instead, the terms of the statute indicate that it applies to anyone who commits fraud "by means of wire, radio, or television communication in interstate or foreign commerce." The legislative history of § 1343 also fails to confirm Paladino's theory. Paladino correctly points out that § 1343 was originally enacted as part of the 1952 Amendments to the Communications Act of 1934, c. 652 tit. I, 48 Stat. 1064, codified at 47 U.S.C. § 151 et seq. Although the 1952 Amendments dealt largely with the regulatory powers of the FCC, it does not follow, as Paladino asserts, that § 1343 must be construed as restricted to communications subject to regulation by the Commission. On the contrary, the legislative history suggests that Congress wished to prohibit as much wire fraud as it could constitutionally make unlawful, ³ limited only by a desire to avoid "Federal intrusion upon the police power of the States." See H.R.Rep.No. 388, 82d Cong., 1st Sess. 3, U.S.Code Cong. & Admin.News, pp. --- (1951). It has been suggested, for example, that irrespective of any constitutional limitations that might stem from the interstate commerce clause, prosecution of a localized fraud is best left to local enforcement authorities. See id. at 8-9 (letter from Justin Miller). Concern for the integrity of local law enforcement is inapposite to the case before us, however. Paladino and Giovengo executed their fraudulent scheme at an international airport from which flights originate to all parts of the world; the tickets with which they tampered had provided travellers with transportation to places outside of Pennsylvania; the victim of their fraud was TWA, a large corporation doing business throughout the United States and the rest of the world; and during the course of their fraudulent activity, the two men made use of a communications network linking the TWA computer in Kansas City to terminals in Pittsburgh. These considerations persuade us that the scheme we are asked to assess does not fall within the category of localized fraud which the legislative history suggests that Congress intended to exclude from the scope of § 1343.

Even if federal regulation were a predicate for application of § 1343, the fraudulent scheme engaged in by Paladino and Giovengo would not for that reason fall outside the scope of the statute. The lines over which the two men transmitted messages from Pittsburgh to Kansas City were owned and maintained by AT&T, and were merely leased by TWA. AT&T is, of course, a common carrier of messages by wire, as defined by 47 U.S.C. § 153(h) (1976), and its interstate telephone lines are subject to the jurisdiction of the FCC and within the regulatory provisions of the Federal Communications Act, see Comtronics, Inc. v. Puerto Rico Telephone Co., 553 F.2d 701, 704 (1st Cir. 1974). ⁴

In order to resolve the present appeal, we must next ascertain whether Paladino and Giovengo used interstate wires "for the purpose of executing" their scheme to defraud. The language of § 1343, forbidding only those communications transmitted "for the purpose of executing" a fraudulent scheme, parallels that of the mail fraud statute, 18 U.S.C. § 1341 (1976). ⁵ In light of the similarity of the language employed in the two statutes, this Court has observed that "they are in this regard in pari materia and are, therefore, to be given similar construction.... Accordingly, the cases construing the mail fraud statute are applicable to the wire fraud statute as well." United States v. Tarnopol, 561 F.2d 466, 475 (3d Cir. 1977).

The Supreme Court has considered the scope of the mail fraud (and by implication, the wire fraud) statute on several occasions. In Kann v. United States, 323 U.S. 88, 95, 65 S.Ct. 148, 151, 89 L.Ed. 88 (1944), the Court stated:

The federal mail fraud statute does not purport to reach all frauds, but only those limited instances in which the use of the mail is a part of the execution of the fraud, leaving all other cases to be dealt with by appropriate state law.

See also Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 362, 98 L.Ed. 435 (1954) (a federal violation exists if the use of the mails is "incident to an essential part of the scheme"). The Supreme Court has most recently applied these principles in United States v. Maze, 414 U.S. 395, 94 S.Ct. 645, 38 L.Ed.2d 603 (1974). Maze had stolen his roommate's BankAmericard, and had used it to obtain food and lodging at motels in California, Florida, and Louisiana. Each of these establishments mailed to the bank that had issued the credit card invoices representing goods and services furnished to the defendant. The mail fraud count of the indictment charged that the defendant knew that each merchant would cause the sales slips for the purchases to be delivered by mail to the bank. The indictment also charged that the delay in this mailing would enable the defendant to continue to purchase goods with the stolen credit...