U.S. v. McClelland

• Decision Date: 14 March 1989
• Docket Number: No. 87-1767,87-1767
• Citation: 868 F.2d 704
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Benjamin C. McCLELLAND, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 704

868 F.2d 704

UNITED STATES of America, Plaintiff-Appellee, v. Benjamin C. McCLELLAND, Defendant-Appellant.

No. 87-1767.

United States Court of Appeals Fifth Circuit.

March 14, 1989.

John W. Sweeney, Jr., Fort Worth, Tex., court appointed, for defendant-appellant.

Frederick M. Schattman, Asst. U.S. Atty., Marvin Collins, U.S. Atty., Fort Worth, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before BROWN, JOHNSON and DAVIS, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

Appellant, Benjamin Casey McClelland, appeals his conviction on a single count of bank fraud and three counts of mail fraud. ¹ We find no error and affirm.

I.

Appellant's conviction on one count of bank fraud and three counts of mail fraud stem from two events related to his operation of Casey's Restaurant, a business McClelland owned. The bank fraud conviction arises from a $3,800 loan McClelland obtained from Western National Bank of Fort Worth to buy a donut fryer for the restaurant. The government introduced evidence showing that McClelland submitted documents in support of his loan application that he represented to be true copies of quarterly sales tax returns from the restaurant. The documents turned out to be forgeries.

In December 1986 an explosion occurred at Casey's Restaurant which resulted in the destruction of the restaurant and other nearby buildings. The mail fraud counts arise out of McClelland's attempt to recover the proceeds of a fire policy issued by Western Lloyd's Insurance Company insuring Casey's Restaurant. The government proceeded against appellant on the theory that he intentionally destroyed Casey's Restaurant for the purpose of collecting on the fire policy.

The primary issues on appeal focus on McClelland's conviction on the mail fraud counts, Counts 3, 4 and 5, and more particularly on the character of the letters sent through the mails on which the convictions were predicated.

McClelland challenges the sufficiency of the evidence to support his conviction on all counts. We will now turn to a consideration of McClelland's specific arguments.

II. THE MAIL FRAUD COUNTS

The mail fraud statute declares it a federal crime to use the mail in furtherance of a scheme to defraud or to obtain money by false pretenses. ² Each separate use of the mails to further a scheme to defraud is a separate offense. To convict, the government must establish (1) a scheme to defraud (2) which involves a use of the mails (3) for the purpose of executing the scheme. United States v. Kent, 608 F.2d 542, 545 (5th Cir.1979). McClelland attacks the sufficiency of the government's evidence in two respects: (1) failure of the government to establish the existence of a scheme to defraud or obtain money by false pretenses and (2) failure of the government to establish that the mailings on which Counts 3, 4 and 5 are predicated, were "for the purpose of executing" such a scheme or artifice to defraud.

1.

The government's evidence of McClelland's scheme to defraud or obtain money by false pretenses was overwhelming.

Viewing the evidence as we must in the light most favorable to the verdict, Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942); United States v. Thompson, 811 F.2d 841, 844 (5th Cir.1987), the facts the jury was entitled to find are as follows:

McClelland opened Casey's Restaurant in leased premises in Fort Worth, Texas, in 1985. He insured the premises for $15,000 in October of 1985. But in October of 1986 the appellant, after cancelling his initial policy, insured the premises for a total of $53,000 through Western Lloyd's. Within a month after this insurance attached, McClelland told his sister of his plans to destroy Casey's Restaurant so that he could collect the proceeds of the insurance and repay money he had borrowed from his father. McClelland's sister testified that McClelland told her that he planned to disconnect a vent-a-hood and cause it to fall on a gas line and create an explosion in the neighboring restaurant--Santini's. McClelland then told his sister that he had determined that it was too difficult to create an explosion in this fashion and that he had decided to disconnect a gas line in Santini's so that gas would collect in that restaurant and cause an explosion that would destroy his restaurant as well as Santini's. The evidence revealed that the explosion occurred just as McClelland had told his sister it would.

After the explosion, McClelland contacted the insurance adjuster handling his claim and provided him with an inventory that was grossly inflated, both as to the value of the leasehold improvements and the value of the equipment destroyed in the explosion. The evidence is clearly sufficient to support the government's theory that McClelland executed a scheme to defraud his fire insurer.

2.

McClelland next challenges the sufficiency of the evidence to establish that the mailings on which Counts 3, 4 and 5 are predicated were "for the purpose of executing such [fraudulent] scheme or artifice."

By way of background, it is well established that an accused causes a letter to be delivered by mail if he does an act with knowledge that the use of the mails will follow in the ordinary course of business, or where he can reasonably foresee that use of the mails will result. United States v. Shaid, 730 F.2d 225, 229 (5th Cir.1984). The government need not prove that the accused used the mails himself or actually intended that the mail be used. United States v. Contenti, 735 F.2d 628 (1st Cir.1984); United States v. Moss, 591 F.2d 428 (8th Cir.1979).

But the government must prove that the mailing was "for the purpose" of executing the scheme. The Supreme Court in United States v. Maze, 414 U.S. 395, 94 S.Ct. 645, 38 L.Ed.2d 603 (1974), held that the government, to establish this element must demonstrate a "sufficiently [close]" relationship between the mailing and the scheme. The Court in Maze concluded that the mailings at issue in that case were not covered by the statute because they did not further the defendant's scheme. See United States v. LaFerriere, 546 F.2d 182 (5th Cir.1977). In United States v. Kent, 608 F.2d 542 (5th Cir.1979), we gave a more expansive explanation of the relationship the mail fraud statute requires between the mailing and the fraudulent scheme:

The requisite statutory purpose exists if the alleged scheme's completion could be found to have been dependent in some way upon the information and documents passed through the mails, ... and if the use of the mails was "an integral part of the scheme to defraud,".... This test of dependence does not demand that the use of the mails rather than of a private messenger or other means was itself essential to the fraudulent scheme or that "the success of the scheme actually depended on the mailings in a 'but for' sense." ... It instead requires that the thing mailed was an integral part of execution of the scheme so that the use of the mails was in this way "incident to an essential part of the scheme."

United States v. Kent, 608 F.2d 542, 546 (5th Cir.1979), cert. denied, 446 U.S. 936, 100 S.Ct. 2153, 64 L.Ed.2d 788 (1980) (citations omitted).

We now consider the individual mailings on which Counts 3, 4 and 5 were predicated.

Count 3 was predicated on a letter mailed by McClelland's insurance agent to Western Lloyd's general agent for the purpose of obtaining coverage. That letter enclosed McClelland's application for insurance on Casey's Restaurant. This is obviously an essential step to procure the insurance coverage. Consequently, the jury was entitled to find that this mailing furthered McClelland's scheme to make a fraudulent insurance claim.

The mailing in Count 4 is predicated on a letter from the field adjuster, Mr. Murrell, to McClelland. Before this letter was mailed, McClelland delivered a typed list of an inventory of the lost contents of Casey's Restaurant. Mr. Murrell testified that before he posted the letter on January 6, 1987, he told McClelland by telephone that he needed supporting documentation of the lost contents in the form of receipts, invoices and similar documents. Mr. Murrell's letter, which is reproduced in the margin, ³ confirmed his earlier telephone request for documentation to support McClelland's claim. A copy of McClelland's inventory was attached to the letter. The jury was entitled to conclude that Mr. Murrell's letter to McClelland was for the purpose of obtaining the proper documentation for McClelland's loss so that the claim could be processed. No one who makes a claim on a fire policy could reasonably expect an insurer to make payment without some documentation of what items were lost in the fire and the value of those items. We are satisfied that the jury was entitled to conclude that Murrell's request through the mails for this supporting documentation furthered an essential element of McClelland's scheme: to obtain payment on the claim. See United States v. Draiman, 784 F.2d 248, 253 (7th Cir.1986).

The mailing relied on by the government in Count 5 is a detailed interim report from Mr. Murrell, the field adjuster, to the claims department of Western Lloyd's Insurance Company. The report is obviously designed to give Western Lloyd's claims department the details of the field adjuster's findings relative to the insured's claim. Mr. Murrell attached a number of documents to the report, including photographs of the damaged area, newspaper articles about the explosion and the typed inventory of contents furnished by McClelland. The report also includes routine information Western needed to decide whether to pay the claim. In addition to the attachments described above, the report outlined the nature of the business, the likely value of the contents and improvements, the origin and cause of the explosion and whether the company has prospects for subrogation or salvage. Although...