U.S. v. Massey

• Decision Date: 03 September 1987
• Docket Number: No. 86-4719,86-4719
• Citation: 827 F.2d 995
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Billy L. MASSEY and Larry P. Wages, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 995

827 F.2d 995

UNITED STATES of America, Plaintiff-Appellee, v. Billy L. MASSEY and Larry P. Wages, Defendants-Appellants.

No. 86-4719.

United States Court of Appeals Fifth Circuit.

Sept. 3, 1987.

Dan P. Self, Jr., Meridian, Miss., Alvin M. Binder, Jackson, Miss., for Massey.

James M. Colette, Jackson, Miss., for Wages.

Nicholas B. Phillips, George Phillips, U.S. Atty., Jackson, Miss., for U.S.

Appeals from the United States District Court for the Southern District of Mississippi.

Before RANDALL, WILLIAMS and GARWOOD, Circuit Judges.

JERRE S. WILLIAMS, Circuit Judge:

Appellants Billy Massey and Larry Wages appeal their convictions for conspiracy to commit mail fraud, in violation of 18 U.S.C. Sec. 371, and for committing mail fraud, in violation of 18 U.S.C. Sec. 1341. Having reviewed the record, we find that it was reasonably foreseeable that the mails would be used in furtherance of appellants' scheme to defraud, but that the government never demonstrated beyond a reasonable doubt that the mails were, in fact, used. Therefore, we affirm appellants' convictions for conspiracy to commit mail fraud, and we reverse their convictions for committing mail fraud.

I.

Billy Massey and Larry Wages conspired with three other individuals to obtain two loans fraudulently from United Companies Mortgage of Mississippi (UCMM). UCMM is a subsidiary of United Companies Financial Corporation (UCFC) of Baton Rouge, Louisiana. Massey and co-conspirators Danny Baker and Tommy Molpus were principals in the Massey-Baker-Molpus Insurance Company (MBM). Wages was manager of the Meridien, Mississippi, branch of UCMM. The fifth co-conspirator, Harry McMain, was an attorney in Meridien. The conspiracy involved a scheme to obtain two loans from UCMM, one in the name of MBM in the amount of $61,425.00, and another in the name of James Clark for approximately $11,000.00.

The application for the MBM loan stated that the purpose of the loan was to enable MBM to purchase computer equipment from M-P Duplicating Systems. An accountant was hired to prepare false financial statements in support of the loan, and McMain reported an incorrect number of liens on a certificate of title for property put up by MBM as collateral for the loan. The Clark loan was ostensibly for the purpose of purchasing logging equipment. Co-conspirator Baker signed Clark's name to the loan documents. False financial statements were prepared for this loan as well, and McMain prepared a certificate of title for collateralized property that falsely stated that the property was owned by James Clark. In fact, Larry Wages owned the property. A false real estate appraisal was submitted to UCMM, indicating that the property contained a house, when, in fact, the house had already burned down.

On October 28, 1980, at the direction of appellant Wages, UCMM issued a check in the amount of $61,425.00 jointly payable to MBM and M-P Duplicating Systems. M-P Duplicating Systems never received any of the proceeds of this check. On December 1, 1980, also at Wages' direction, UCMM issued a check in the amount of $10,740.00 to James Clark. Clark testified that he never applied for the loan, nor did he receive any of the proceeds of this check. Both checks were prepared and delivered to UCMM in Meridien, and were drawn on UCFC's bank account in Baton Rouge.

It was customary office procedure for UCMM to send certain loan documents to UCFC's home office in Baton Rouge, Louisiana. Not all documents were sent, however; some loans were processed and approved entirely in Mississippi. Conflicting testimony was presented at trial concerning whether any of the documents for either of the MBM loan or the Clark loan were sent to Baton Rouge. Moreover, the evidence at trial established that documents were normally transported from office to office via several methods of transmission, including the United States Postal Service, the United Parcel Service, Federal Express, and hand delivery. Apart from conflicting testimony about the "standard office procedure," there was no evidence to establish whether the United States mails had been used to send MBM loan documents or Clark loan documents from Mississippi to Louisiana.

On October 2, 1985, Massey and Wages were indicted and charged with conspiring to commit mail fraud, in violation of 18 U.S.C. Sec. 371 (Count 1), and with committing mail fraud, in violation of 18 U.S.C. Sec. 1341 (Count 2). On October 17, 1985, Massey moved to sever the trial of his case from that of Wages. The district court denied the motion.

On the eve of the trial, the government located a typewritten version of one of the loan documents. A handwritten copy had been furnished to opposing counsel during the discovery process. After the trial began, appellee notified appellant Massey's counsel of the existence of the typewritten copy. Massey's counsel indicated that he would object to its introduction at trial, and the government decided not to introduce the document. At trial, appellant Wages' counsel began to cross-examine a government witness concerning the handwritten document. At that time, the government undertook to introduce the typewritten document. The district court allowed its introduction over appellants' objections and allowed Wages' counsel to reopen his cross-examination of the government witness.

Massey and Wages were found guilty on both Counts 1 and 2. The United States moved to assess costs of prosecution against appellants, and a hearing was scheduled. Before the hearing, the district court sentenced Massey and Wages to three years imprisonment on Count 1 and probation on Count 2. The government then moved to correct the sentences in light of the pending motion to assess appellants for the costs of their prosecution. Appellants objected, but the motion was granted. Appellants were assessed $1,600.00 each, and their sentences were appropriately amended.

Appellants appeal their convictions, claiming that their convictions must be reversed because (1) the evidence presented at trial on the substantive mail fraud count was insufficient to prove that anything was mailed by or on behalf of any of the conspirators; (2) the trial court improperly instructed the jury regarding the necessity of proving use of the mails as an overt act in furtherance of the conspiracy, and the evidence does not establish beyond a reasonable doubt that they intended or otherwise contemplated the use of the United States mails in furtherance of their conspiracy to defraud; (3) a fatal variance exists between the indictment and the proof at trial regarding United Companies; (4) the trial court erred in denying Massey's motion to sever his trial from that of his co-conspirator Wages; (5) the trial court committed reversible error in admitting a partially-disclosed typewritten document into evidence; and (6) the trial court erred in allowing the government to assess costs against appellants. We will address these contentions in turn.

II.

Appellants claim that their convictions for committing mail fraud must be reversed because the evidence presented at trial was insufficient to prove that anything was mailed by or on behalf of any of the conspirators. The crime of mail fraud has three elements, each of which the government was required to prove beyond a reasonable doubt: (1) that the defendant participated in some scheme or artifice to defraud; (2) that the defendant or someone associated with the scheme or artifice either used the mails or caused the mails to be used; and (3) that the use of the mails was for the purpose of executing the scheme. Armco Industrial Credit Corp. v. SLT Warehouse Co., 782 F.2d 475, 481-82 (5th Cir.1986). The record demonstrates that the government failed to prove beyond a reasonable doubt the second of the three elements.

There is no direct evidence of mailing by appellants or their co-conspirators. Rather, the government's proof consists entirely of circumstantial evidence concerning the "usual" office procedure. Proof of mailing can be established by circumstantial evidence. See United States v. Bowman, 783 F.2d 1192, 1197 (5th Cir.1986); United States v. Ledesma, 632 F.2d 670, 675 (7th Cir.) ("[T]estimony as to office practice is sufficient proof of mailing."), cert. denied, 449 U.S. 998, 101 S.Ct. 539, 66 L.Ed.2d 296 (1980). But the use of circumstantial evidence does not relieve the government of its burden of establishing use of the mails "beyond a mere likelihood or probability," United States v. Srulowitz, 785 F.2d 382, 387 (2nd Cir.1986), or by more than mere speculation. United States v. Scott, 730 F.2d 143, 147 (4th Cir.), cert. denied, 469 U.S. 1075, 105 S.Ct. 572, 83 L.Ed.2d 512 (1984). Circumstantial evidence "such as testimony regarding office practice" is sufficient only "so long as the circumstances proven directly support the inference and exclude all reasonable doubt to the extent of overcoming the presumption of innocence." United States v. Brooks, 748 F.2d 1199, 1203 (7th Cir.1984).

The evidence does not exclude all reasonable doubt as to whether any of the co-conspirators used the mails in furtherance of their scheme to defraud. The proof offered by the government included testimony by appellant Wages' secretary, Jo Ann Cole, that the usual office procedure was to mail all loan documents to UCFC's Baton Rouge office for approval via the United States mail. On cross-examination, however, Cole admitted that many documents were never sent to the Baton Rouge office. She testified that loans were "frequently" approved by UCFC by telephone, so that transmission to Baton Rouge was not necessary. Neither loan package contained a cover letter, which Cole normally attached to the files that were transmitted to Baton Rouge. Finally, the face of one of the documents relating to the Clark loan had been inscribed in red pencil with the words, "Who approved?", raising the inference that it had never been approved in Baton...