U.S. v. Lack, 97-1467

• Decision Date: 04 November 1997
• Docket Number: No. 97-1467,97-1467
• Citation: 129 F.3d 403
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Darrell H. LACK, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 403

129 F.3d 403

UNITED STATES of America, Plaintiff-Appellee, v. Darrell H. LACK, Defendant-Appellant.

No. 97-1467.

United States Court of Appeals Seventh Circuit.

Argued Sept. 19, 1997.

Decided Nov. 4, 1997.

Cheryl B. Schacht (argued), Office of the U.S. Attorney, Madison, WI, for Plainitff-Appellee.

Ralph A. Kalal (argued), Kalal & Associates, Madison, WI, for Defendant-Appellant.

Before BAUER, RIPPLE and EVANS, Circuit Judges.

RIPPLE, Circuit Judge.

After a bench trial based on stipulated facts, the United States District Court for the Western District of Wisconsin found Darrell H. Lack guilty of one count of mail fraud and eleven counts of interstate transportation of stolen securities, in violation of 18 U.S.C. §§ 2, 1341 and 2314. Mr. Lack then appealed to this court. For the reasons set forth in the following opinion, we affirm the decision of the district court.

I BACKGROUND

A. Pre-trial Facts

On August 21, 1996, a federal grand jury sitting in the Western District of Wisconsin returned a twelve-count indictment against Mr. Lack. Count I of the indictment alleged that Mr. Lack committed and aided and abetted a mail fraud in violation of 18 U.S.C. §§ 1341 and 2. Specifically, Count I charged that, from on or about August 14, 1991 to June 16, 1995, Mr. Lack, "having devised a scheme to defraud and for the purpose of executing that scheme, knowingly caused mail matter to be placed in the mail and delivered by the United States Postal Service." R.2 at 1. Counts II through XII charged Mr. Lack with the interstate transportation of stolen securities in violation of 18 U.S.C. §§ 2314 and 2. Each of those counts alleged that Mr. Lack knowingly and intentionally caused to be transported from Wisconsin to Minnesota or Georgia a specified stolen check with a value exceeding $5,000.

Prior to trial, Mr. Lack, essentially raising the same arguments he raises before this court, moved to dismiss all counts of the indictment for failure to allege the particular statutory offense. The district court denied Mr. Lack's motion to dismiss; it found all counts of the indictment to be sufficient and valid. Mr. Lack then waived his right to a jury trial, and on December 10, 1996, the parties filed a stipulation of facts with the court to be used for a bench trial on December 11, 1996.

B. Stipulated Facts

Mr. Lack was employed as the materials manager by Dairyland Power Cooperative ("Dairyland"), a utility company located in LaCrosse, Wisconsin. In that capacity, he was responsible for the salvage and scrap operation of Dairyland which involved, among other things, the sale of various scrap or salvage items on behalf of Dairyland. Mr. Lack's job, therefore, was to sell items of equipment that his employer no longer needed. Sometime prior to August 1991, Mr. Lack became upset with Dairyland because several people had received advancements within the company and he had not. Due to his belief that he had been treated unfairly, Mr. Lack decided to take retaliatory action against the company. Specifically, he devised a scheme to steal money from Dairyland.

Mr. Lack launched his scheme on August 14, 1991 by opening a checking account at a bank in Madison, Wisconsin in the name of Darrell H. Lack, d/b/a Dairyland Power Conversion division of Midwest Computer. ¹ As a result of his opening this account, the bank mailed, on a monthly basis between August 1991 and May 1995, account statements to an address provided by Mr. Lack. These statements contained a complete record of the status of the account for the previous month, including account balances and an identification of all credits and withdrawals to the account. The bank mailed the statements via the U.S. mails.

Once this account was opened, Mr. Lack began his scheme: In his capacity as materials manager, he would sell an item to a buyer. The buyer would pay by check, and Mr. Lack would deposit the check in the aforementioned account rather than forwarding it to his employer. Mr. Lack then would transfer funds from the Madison account to another account in LaCrosse. Occasionally, Mr. Lack would request a bank check from this second account for a smaller amount made out to Dairyland with the original purchaser listed as the remitter. He would then mail or deliver this check to Dairyland.

C. Decision of the District Court

A bench trial based on these facts was held on December 11, 1996. After reviewing the stipulated facts and allowing for argument by counsel, the district court found Mr. Lack guilty of all twelve counts in the indictment. Announcing its decision in open court, the court first addressed Count I of the indictment which alleged that Mr. Lack violated the mail fraud statute, 18 U.S.C. § 1341. R.42 at 11. The court began its analysis of Count I by noting that § 1341 contains three elements: (1) participation in a scheme to defraud, (2) intent to defraud, and (3) use of the mails in furtherance of that scheme. Id.

The court then looked to the stipulated facts to determine if Mr. Lack had committed each of the elements of the offense. First, the district court found that Mr. Lack had participated in a scheme to defraud because he used "dishonest means or schemes" to deprive Dairyland of the proceeds of the salvage sales. Id. at 18-19. Second, the court determined that Mr. Lack's own admissions demonstrated an intent to defraud Dairyland. Id. at 19. Finally, the court held that the mailing of the bank statements furthered Mr. Lack's scheme by giving his scheme the appearance of legitimacy, thereby concealing the scheme and allowing it to continue. In addition, the district court noted that the bank statements themselves allowed Mr. Lack to "thoroughly monitor the results of his fraudulent scheme." Id. at 20. Thus, the court found Mr. Lack guilty of Count I of the indictment.

The district court next turned to Counts II through XII of the indictment which alleged that Mr. Lack caused stolen checks to be shipped across state lines on eleven separate occasions in violation of 18 U.S.C. §§ 2 and 2314. In light of the stipulated facts, the court determined that Mr. Lack, on each occasion alleged, deposited the stolen checks at his Wisconsin bank "knowing very well" that those checks would then be transported across state lines to the banks on which those checks were drawn. Id. at 20. Thus, the court found Mr. Lack guilty of Counts II through XII of the indictment.

II DISCUSSION

In this appeal, Mr. Lack submits that the district court erred in finding him guilty of Count I of the indictment because his conduct, as a matter of law, does not fall within the ambit of the mail fraud statute, 18 U.S.C. § 1341. In a similar vein, Mr. Lack also contends that the district court erred in finding him guilty of Counts II through XII of the indictment because his conduct does not constitute a violation of the statute prohibiting the interstate transportation of stolen checks, 18 U.S.C. § 2314. We shall address each of these arguments in turn.

A. Count I: Mail Fraud

We have held that the government, in order to show a violation of § 1341, must prove three elements beyond a reasonable doubt: (1) the defendant's participation in a scheme to defraud, with (2) the intent to defraud, while (3) using the United States mails or a private carrier to further that scheme. See United States v. Walker, 9 F.3d 1245, 1249 (7th Cir.1993), cert. denied, 511 U.S. 1096, 114 S.Ct. 1863, 128 L.Ed.2d 485 (1994). Mr. Lack argues that, under this test, his conduct does not constitute a violation of § 1341 because he did not participate in a "scheme to defraud"; moreover, even if he did engage in such a scheme, he argues that the mailing of the bank statements did not further his scheme.

Mr. Lack first argues that he did not violate § 1341 because he did not participate in a "scheme to defraud." Instead of showing a "scheme to defraud," Mr. Lack asserts, the stipulated facts merely describe a series of simple thefts. Mr. Lack contends that this series of thefts cannot be characterized as a "scheme to defraud" because there is no evidence that he engaged in any deception, misrepresentation, or act of trickery or chicanery by which Dairyland Power Cooperative was induced to part with its money. In other words, Mr. Lack says that he didn't trick Dairyland into giving him its money; he just took it.

Mr. Lack's argument on this point is without merit. Indeed, the Supreme Court has said that the words "to defraud" in the mail fraud statute "refer to wronging one in his property rights by dishonest methods or schemes, and usually signify the deprivation of something of value by trick, deceit, chicane or overreaching." McNally v. United States, 483 U.S. 350, 358, 107 S.Ct. 2875, 2881, 97 L.Ed.2d 292 (1987). Under that definition, there is no doubt that Mr. Lack was engaged in a "scheme to defraud" Dairyland. The stipulated facts lead to this inevitable conclusion: He misused his fiduciary capacity with respect to the funds he received on behalf of Dairyland; he opened a bank account under a name virtually identical to that of his employer; he set up a live operator telephone answering service which was answered with the greeting, "Good morning, Dairyland Power Conversion"; he endorsed the checks with an official endorsement stamp that read "Dairyland Power Co."; and he also sent smaller checks to his employer from his own account listing the purchaser of the equipment as the remitter. This pattern of deceit and use of false pretenses is clearly a "scheme to defraud."

Mr. Lack next submits that, even if he was engaged in a scheme to defraud, his conduct still does not fall under the ambit of the mail fraud statute because he did not use the mails to further his scheme. Specifically, Mr. Lack contends that the district court's determination that his scheme was furthered by the bank's mailing of the monthly bank statements is "simply wrong." In fact, Mr. Lack claims that each scheme reached...