U.S. v. Mandel

• Decision Date: 01 March 1989
• Docket Number: No. 88-7027,88-7027
• Citation: 862 F.2d 1067
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Marvin MANDEL, W. Dale Hess, Harry W. Rodgers, III, William A. Rodgers, Irvin Kovens, and Ernest N. Cory, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1067

862 F.2d 1067

UNITED STATES of America, Plaintiff-Appellant, v. Marvin MANDEL, W. Dale Hess, Harry W. Rodgers, III, William

A. Rodgers, Irvin Kovens, and Ernest N. Cory,

Defendants-Appellees.

No. 88-7027.

United States Court of Appeals,

Fourth Circuit.

Argued July 26, 1988.

Decided Dec. 7, 1988.

Rehearing and Rehearing En Banc Denied March 1, 1989.

Martin Stanley Himeles, Jr., Asst. U.S. Atty. (Breckinridge L. Willcox, U.S. Atty., Baltimore, Md., on brief), for plaintiff-appellant.

Arnold Murray Weiner (M. Albert Figinski, Stuart R. Berger, William F. Gately, H. Thomas Howell, Baltimore, Md., William G. Hundley, Thomas C. Green, Washington, D.C., Ernest N. Cory, Jr., Laurel, Md., on brief), for defendants-appellees.

Before RUSSELL, WIDENER, and HALL, Circuit Judges.

WIDENER, Circuit Judge:

The government appeals the granting of a writ of error coram nobis vacating the 10-year-old convictions of Marvin Mandel, former governor of Maryland, W. Dale Hess, Harry W. Rodgers, III, William A. Rodgers, Irvin Kovens and Ernest N. Cory (petitioners) for mail fraud and racketeering. We affirm the district court's decision which vacated the convictions and required the government to return to the petitioners all fines paid.

On November 24, 1975, a Special Grand Jury for the District of Maryland charged the petitioners in a 24-count indictment with mail fraud in violation of 18 U.S.C. Sec. 1341 and prohibited racketeering activity in violation of 18 U.S.C. Secs. 1961 et seq. ¹ The indictment, in essence, charged the petitioners with participating in a mail fraud scheme involving gifts of clothing, jewelry and interests in land to support legislation that would be beneficial to the Marlboro Race Track, which Mandel's codefendants either owned or were interested in. ²

Specifically, the 20 mail fraud counts of the indictment charged that, beginning between January 7, 1969 and the spring of 1971, and continuing until the filing of the indictment, petitioners devised and intended to devise a scheme and artifice:

(a) To defraud the citizens of the State of Maryland, and its governmental departments, agencies, officials and employees, both executive and legislative, of their right to the conscientious, loyal, faithful, disinterested and unbiased services, actions and performance of official duties of MARVIN MANDEL, in his official capacities as Governor of the State of Maryland, free from bribery, corruption, partiality, willful omission, bias, dishonesty, deceit, official misconduct and fraud;

(b) To defraud the citizens of the State of Maryland, and its governmental departments, agencies, officials and employees, both executive and legislative, of their right to have the state's business and its affairs conducted honestly, impartially, free from bribery, corruption, bias, dishonesty, deceit, official misconduct and fraud, and in accordance with the laws and Code of Ethics of the State of Maryland;

(c) To defraud the citizens of the State of Maryland, and its governmental departments, agencies, officials and employees, both executive and legislative, of their right to have available and to be made aware of all relevant and pertinent facts and circumstances when:

(1) drafting, considering and deliberating upon proposed legislation for the State of Maryland with respect to the Maryland horse racing industry and to other matters;

(2) administering the laws of the State of Maryland with respect to the Maryland horse racing industry and to other matters; and

(3) transacting business for and on behalf of the State of Maryland;

(d) To obtain, directly and indirectly, money, property and other things of value, by means of false and fraudulent pretenses, representations, and promises, and the concealment of material facts, relating to the Marlboro Race Track, the Bowie Race Track, the Security Investment Company, Ray's Point, Inc., and to other matters.

Count 21 of the indictment charged Mandel with acquiring and maintaining an interest in and control of the Security Investment Company through a pattern of racketeering activity that included mail fraud and bribery under Maryland law. ³ Count 23 charged Hess, Harry Rodgers and William Rodgers with conducting the affairs of the Security Investment Company through a pattern of racketeering activity that included bribery and mail fraud. The district court entered a judgment of acquittal on this count and it is not an issue here. Count 24 charged Hess, Harry Rodgers, William Rodgers, Kovens and Cory with conducting and participating in the conduct of the affairs of the Marlboro Race Track through a pattern of racketeering activity that included mail fraud.

Prior to trial, the petitioners moved to dismiss the indictment "arguing, inter alia, that the indictment fails to allege a cognizable scheme to defraud ...," United States v. Mandel, 415 F.Supp. 997, 1003 (D.Md.1976), in that "the intangible rights allegedly defrauded by the scheme do not constitute 'something of value' whose deprivation can be punished under the mail fraud statute." The motion was denied, and the matter proceeded to trial on June 1, 1977.

The district court instructed the jury on August 9, 1977. The pertinent part of the mail fraud instructions was as follows:

The words scheme or artifice, as used in the mail fraud statute, mean any plan or course of action intended to defraud others, or to obtain money or property by means of false or fraudulent pretenses, representations or promises.

A statement or representation is false or fraudulent within the meaning of this statute if known to be untrue or made with reckless indifference as to its truth or falsity, and made or caused to be made with the intent to deceive.

A false or fraudulent representation may be made by statements or half-truths, or the concealment of material facts, as well as by affirmative statements or acts.

The mail fraud statute prohibits any scheme utilizing the mails that is reasonably calculated to deceive persons of ordinary prudence and comprehension.

A scheme to defraud, within the meaning of the statute, may be defined as the intentional use of false or fraudulent representations for the purpose of gaining a valuable undue advantage or working some injury to something of value held by another.

A citizen's right to have his Government conducted honestly and impartially, and to the faithful and loyal services of public officials, are things of value whose fraudulent deprivation may fall within the meaning of scheme to defraud as used in the mail fraud statute.

Additionally, a scheme to defraud public officials of information material to a decision which they are required to make in their official capacity may also come within the meaning of scheme to defraud as used in the mail fraud statute. (Emphasis added)

The petitioners specifically requested, but, upon objection by the government, the court declined to give, an instruction requiring the jury to find a scheme to defraud the State of money or property in order to convict on the mail fraud counts. See United States v. Mandel, 672 F.Supp. 864, 870 (D.Md.1987).

The petitioners were each adjudged guilty of 15 counts of mail fraud under Sec. 1341 and one count of prohibited racketeering activity under Secs. 1961 et seq. ⁴ Mandel was sentenced to a four-year prison term; Hess, Harry Rodgers and Kovens were each sentenced to four years' imprisonment and fined $40,000; William Rodgers was sentenced to 20 months' imprisonment and fined $40,000; and Cory was sentenced to 18 months' imprisonment. Mandel, 591 F.2d at 1352-53. Additionally, pursuant to 18 U.S.C. Sec. 1963(a), Hess, Harry Rodgers, William Rodgers, Kovens and Cory were ordered to forfeit their ownership interest in the Southern Maryland Agriculture Association, Inc. (the holding corporation of the Marlboro Race Track), based on their convictions under count 24 of the indictment for racketeering. 591 F.2d at 1352, 1353.

Petitioners promptly appealed, claiming, among other things, that their convictions under the mail fraud statute constituted an unwarranted extension of the statute and an impermissible federal intrusion into the political affairs of the State of Maryland. Mandel, 672 F.Supp. at 870. Our panel decision found this claim without merit, ⁵ 591 F.2d at 1358, but held that there had been erroneous admission and exclusion of evidence and that the jury instructions on bribery were inadequate with regard to the mail fraud counts, 591 F.2d at 1365. We vacated the convictions and remanded for a new trial. 591 F.2d at 1376. On June 5, 1979, we reheard the matter en banc, and an equally divided court affirmed the district court's convictions. United States v. Mandel, 602 F.2d 653 (4th Cir.1979) (per curiam). ⁶ Mandel and his codefendants filed a petition for writ of certiorari to the Supreme Court, and it was denied. Mandel v. United States, 445 U.S. 961, 100 S.Ct. 1647, 64 L.Ed.2d 236 (1980).

All the petitioners have now served their sentences. Mandel served 19 months of his four-year sentence, the remainder being commuted. He also was disbarred because of his federal conviction. 672 F.Supp. at 871. Hess served 18 months of his three-year sentence, the remainder being commuted, and he paid a total of $40,000 in fines. Harry Rodgers and William Rodgers each served their prison terms, three years and a year and a day respectively, and they each paid $40,000 in fines. Kovens served his three-year term and paid a total of $40,000 in fines. Cory's 18-month term of imprisonment was suspended. 672 F.2d at 871.

Almost 10 years after petitioners were convicted and more than five years after they completed service of their sentences, the Supreme Court decided McNally v. United States, --- U.S. ----, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), holding that the mail fraud statute, 18 U.S.C. Sec. 1341, does not protect against schemes to defraud persons of their intangible rights such as the right to honest government....