U.S. v. Louderman

Decision Date16 June 1978
Docket NumberNos. 77-1129,77-1128,s. 77-1129
Citation576 F.2d 1383
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Charles Edward LOUDERMAN, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Jacquelyn Mary LOUDERMAN, aka Jackie Williams, Defendant-Appellant.
CourtU.S. Court of Appeals — Ninth Circuit

Ron Rain, Jo Ann S. Curtis, Los Angeles, Cal., for defendant-appellant.

Paul J. Brysh, Washington, D. C., for plaintiff-appellee.

Appeal from the United States District Court For the Central District of California.

Before BROWNING and DUNIWAY, Circuit Judges, and EAST, Senior District Judge. *

EAST, Senior District Judge:

The Appeal

The appellant Charles Louderman appeals from his judgment of conviction and suspended sentence under probation entered by the District Court on January 10, 1977 for violating 18 U.S.C. § 1343 (wire fraud). 1 The appellant Jacquelyn Louderman appeals from her judgment of conviction and sentence to custody followed by probation entered by the District Court on the same date for violating 18 U.S.C. § 1343 (wire fraud), 18 U.S.C. § 2 (aiding and abetting), and 18 U.S.C. § 912 (impersonating an officer or employee of the United States). Each of the mentioned judgments of conviction and sentence was based upon jury verdicts of guilty. The appellant Jacquelyn Louderman is at liberty on bail pending appeal.

We note jurisdiction and affirm each of the judgments of conviction and sentence.

Facts

The appellants operated a Los Angeles based corporation called "Sources Unlimited" which engaged in "skip-tracing"; i. e., the process of locating debtors who have "skipped-out" on unpaid bills. Its customers included major corporations, banks and, in one instance, the Los Angeles Police Department. In an attempt to locate a particular individual, Sources Unlimited would call telephone company offices and/or United States post office branches, representing themselves as telephone or postal employees, and request confidential internal information concerning telephone customers or post office box holders.

In August, 1972, Pacific Telephone & Telegraph Co. began investigating Sources Unlimited, and in April, 1975, connected a pen register to record the numbers dialed from two telephones used by Sources Unlimited. Eventually the telephone company began to check certain of the numbers called by calling the numbers themselves to inquire about the substance of the conversations. Testimony indicated that the calls were placed by Sources Unlimited to various telephone company business offices and post office branches across the country in an attempt to gain confidential internal information.

In January, 1973, the FBI began investigating Charles Louderman for suspected bookmaking activity, and in 1974, in the course of its investigation, learned of the telephone company's independent investigation of Sources Unlimited. The two investigating officers kept in contact, and in December, 1974 and January, 1975, the FBI subpoenaed the toll call records of Sources Unlimited. The FBI was informed of the pen register on May 12, 1975, one week after its installation by the telephone company. On June 3, 1975, the FBI was advised that the telephone company had evidence of wire fraud, and on the same day, subpoenaed the results of the pen register. Ten days later, the FBI obtained a search warrant for the seizure of certain telephones, materials containing telephone numbers of company business offices, confidential internal company telephone numbers, materials pertaining to procedures used to obtain such confidential information, and materials pertaining to the efforts of Sources Unlimited to obtain confidential telephone company information about certain individuals. In the course of the search, similar records concerning other individuals were discovered, so a second warrant authorizing seizure of all such records was obtained. Charles Louderman's motion to suppress was denied.

Issues on Review

We consider the dispositive issues to be:

1. Whether obtaining confidential information from telephone companies and the United States post office by means of misrepresentation constitutes wire fraud;

2. Whether 18 U.S.C. § 1343 is unconstitutionally vague;

3. Whether use of a pen register in this case by the telephone company is subject to the Fourth Amendment; and

4. Whether the search warrant was invalid either as a general warrant or because it was not based on probable cause.

Discussion

Issue 1. Appellants initially contend that obtaining confidential information from the telephone company and United States post office by misrepresentations is not a "scheme or artifice to defraud" within the meaning of 18 U.S.C. § 1343. 2 While admitting the use of false pretenses, they contend that the relevant question must be whether any "property" was obtained by false pretenses. They note that the crime of false pretenses, as defined by state law, applies only to tangible property, or that which is the subject of larceny, while the information sought by them here, in contrast, is not susceptible to a "taking and asportation" because it does not have tangible characteristics. Additionally, appellants maintain that the sole purpose for their false representations was to carry out a legitimate business enterprise of tracking down debtors. We reject the argument.

It is well established that:

"(I)n a prosecution under 18 U.S.C. § 1343, i. e., use of interstate communications to further a preconceived scheme to defraud, the prosecution need not prove that the scheme was successful or that the intended victim suffered a loss or that the defendant secured a gain. The gist of the offense is a scheme to defraud and the use of interstate communications to further that scheme." United States v. O'Malley, 535 F.2d 589, 592 (10th Cir.), cert. denied, 429 U.S. 960, 97 S.Ct. 383, 50 L.Ed.2d 326 (1976). (Citations omitted).

Furthermore, state law is irrelevant in determining whether a certain course of conduct is violative of the wire fraud statute. United States v. Scallion, 533 F.2d 903, 910 (5th Cir. 1976), cert. denied, 429 U.S. 1079, 97 S.Ct. 824, 50 L.Ed.2d 799 (1977).

The District Court instructed the jury that it should find appellants guilty if it determined that there was either "a scheme or artifice to 'defraud' or 'a scheme or artifice . . . for obtaining money or property by means of false or fraudulent pretense.' " The Court also instructed the jury regarding the term "property" and stated that it encompasses "confidential and nonpublic commercial information such as customer lists, customer credit data, lists of services provided customers, and accounting data, as well as services of employees and customers goodwill."

Admittedly, in most wire fraud cases, the scheme to defraud has been an underlying scheme to obtain tangible property which is furthered by the use of wire communications, as for example, defrauding victims of various sums of money or the use of a "blue-box" in a scheme to defraud a telephone company of money due for long distance calls. The object of the scheme to defraud here was, in contrast, to obtain intangible, commercial information which the telephone company and post office chose to keep confidential and which its customers expected would remain confidential. There was a loss to the subscribers of their right to privacy, and telephone subscribers and post office box holders were being deprived of part of the service for which they were paying.

For guidance in construing the scope and reach of § 1343, we look to the mail fraud statute, 18 U.S.C. § 1341. 3 This section " . . . makes unlawful the use of the mails in execution of 'any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.' 18 U.S.C. § 1341 (emphasis added). A logical interpretation of that language is that Congress, by expressly limiting the second clause to money or property, did not limit 'any scheme or artifice to defraud' to those which contemplated the gaining of money or property, and courts have so construed it." United States v. Mandel, 415 F.Supp. 997, 1010 (D.Md.1976). (Citations omitted).

The predecessor of the present § 1341, containing similar language and proscribing "any scheme or artifice to defraud," was first interpreted in Durland v. United States, 161 U.S. 306, 16 S.Ct. 508, 40 L.Ed. 709 (1896), and the Supreme Court ruled that the statute was not to be limited to the common law definition of false pretenses. See United States v. McNeive, 536 F.2d 1245, 1247 (8th Cir. 1976). Several schemes involving intangible rights have been successfully prosecuted under the "scheme to defraud" clause of § 1341. Illustrative of these are cases involving vote fraud (United States v. States, 488 F.2d 761 (8th Cir. 1973), cert. denied, 417 U.S. 909 and 950, 94 S.Ct. 2605, 41 L.Ed.2d 212 (1974)), and cases involving the faithful services-breach of fiduciary duty rationale (United States v. Isaacs, 493 F.2d 1124 (7th Cir.), cert. denied, 417 U.S. 976, 94 S.Ct. 3183, 41 L.Ed.2d 1146 (1974), where a state governor involved in an illegal kickback scheme was held to have deprived citizens of their right to his "honest and faithful services.") As such, "(t)he statute includes a broad proscription of behavior for the purpose of protecting society." United States v. Keane, 522 F.2d 534, 544 (7th Cir. 1975), cert. denied, 424 U.S. 976, 96 S.Ct. 1481, 47 L.Ed.2d 746 (1976).

In determining the character of a particular representation:

"A jury may find a representation to be false or fraudulent if it finds that the representation was known to be untrue when made . . . and made or caused to be made with the intent to deceive. . . . A representation is deceptive if the reasonably probable effect of the representation would be to deceive or mislead a person of ordinary prudence." Mandel, 415 F.Supp. at 1006. (Citations omitted).

We...

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