U.S. v. McNeive, 75-1889

Decision Date24 June 1976
Docket NumberNo. 75-1889,75-1889
PartiesUNITED STATES of America, Appellee, v. James T. McNEIVE, Appellant.
CourtU.S. Court of Appeals — Eighth Circuit

Charles A. Seigel, St. Louis, Mo.; Hyman G. Stein, St. Louis, Mo., on brief.

Terry I. Adelman, Asst. U. S. Atty., St. Louis, Mo.; Donal J. Stohr (former U. S. Atty.), Barry A. Short, U. S. Atty., effective May 15, 1976, and Terry I. Adelman, Asst. U. S. Atty., St. Louis, Mo., on brief.

Before GIBSON, Chief Judge, HEANEY and WEBSTER, Circuit Judges.

GIBSON, Chief Judge.

Defendant, James McNeive, was convicted in a jury trial on ten counts of violating the federal mail fraud statute, 18 U.S.C. § 1341 (1970). This appeal compels us to consider whether or not § 1341 can be extended to criminalize McNeive's receipt of gratuities as a public official.

A plenary consideration of the relevant facts in this case is necessary for a full understanding of the appeal. In reciting the facts, we are cognizant that the evidence must be viewed in the light most favorable to the Government as the prevailing party. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942).

McNeive served as the Chief Plumbing Inspector for the City of St. Louis from 1962 until June, 1974, when he retired. One of his duties was the issuance of plumbing permits to various contractors. The Preston Plumbing Company (Preston) had long indulged in the practice of sending its plumbing permit applications accompanied with two checks one payable to the City of St. Louis for the proper permit fee and a second one, payable to cash, for $5 for each permit application. The receipt of these $5 gratuities or tips by McNeive is the basis for the Government's contention that McNeive violated § 1341.

The Chief Plumbing Inspector exercises no discretion in the issuance of plumbing permits since, if the application is in proper order and conforms with the ordinance requirements, the issuance of the permit is required by law. The evidence unequivocally shows that all of Preston's plumbing permit applications conformed in all respects with the law. When McNeive assumed the duties of Chief Plumbing Inspector and received the first gratuity check from Preston, he apparently did not know the reason for the check as he sought an explanation from Preston, who told him, "I would appreciate him (McNeive) accepting the gratuity. It is a simple favor to myself to save me from running down to the City." There is no evidence whatever to indicate that these tips were demanded by McNeive, that he refused to process any applications without the tips or that he extended any special favors or preferences to Preston for the tips. There was no impropriety in submitting plumbing applications by mail as this was a common procedure and, of course, was a timesaver for all parties involved.

McNeive also received and processed some of Preston's applications for ancillary permits, such as water tap and excavation permits, which were obtainable from other city offices. There is nothing in the record to show that McNeive used any undue influence on or exacted any special favors from fellow city employees who issued these ancillary permits. In performing the task of obtaining these ancillary permits from Preston, McNeive was given a $5 gratuity for each application. McNeive's acceptance of the gratuities did violate an unwritten departmental policy against the receipt of gratuities. Also, the receipt was a possible violation of a city ordinance which prohibited the acceptance by city officials of "any payment or gift of money * * * for any service performed in his official capacity * * *." 1 McNeive received, over a four year period, $490 in gratuities from Preston.

The Government did not become aware of McNeive's receipt of gratuities until after his retirement in 1974. The Government, in investigating possible corruption in the higher echelons of city government in St. Louis, informally summoned McNeive to the F.B.I. office to find out what he knew about the activities of Kenneth Brown, a former Building Commissioner of St. Louis who was then under investigation. During that interview, these gratuities were voluntarily disclosed to the F.B.I. and inquiry was made of the F.B.I. by McNeive as to whether the practice was improper. The F.B.I. agents were unsure of its legality and sought the advice of the United States Attorney who subsequently obtained an indictment 2 against McNeive for ten counts of violating the federal mail fraud statute, 18 U.S.C. § 1341. The indictment in part characterized the defendant's receipt of these tips as a "scheme or artifice to defraud the City of St. Louis and its citizens of their right to the honest, faithful, and lawful decisions and actions in the performance of (McNeive's) official duties * * *, and of their right to have the City's business and its affairs conducted honestly * * * and in accordance with the laws of the state and of the City * * *."

For the Government to establish a violation of § 1341, it must prove "(1) a scheme to defraud, and (2) the mailing of a letter, etc., for the purpose of executing the scheme." Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 362, 98 L.Ed. 435 (1954); see United States v. Nance, 502 F.2d 615, 618 (8th Cir. 1974), cert. denied, 420 U.S. 926, 95 S.Ct. 1123, 43 L.Ed.2d 396 (1975). Since the term "scheme to defraud" connotes some degree of planning by the perpetrator, it is essential that the evidence show the defendant entertained an intent to defraud. United States v. Nance, supra, at 618. We do not think there was here involved any "scheme to defraud" as proscribed by § 1341.

Historically, § 1341 provides no foundation for the pervasive view the Government now accords it. The predecessor of the present § 1341 proscribed "any scheme or artifice to defraud" which was effected "by either opening or intending to open correspondence or communication with any person * * * by means of the post office establishment of the United States * * *." Act of June 8, 1872, ch. 335, § 301, 17 Stat. 323, as amended, Act of March 2, 1889, ch. 393, § 1, 25 Stat. 873. Interpreting this statute for the first time, the Supreme Court recognized that the definition of "scheme or artifice to defraud" is not to be limited to common law concepts of fraud and false pretenses. Durland v. United States, 161 U.S. 306, 312-13, 16 S.Ct. 508, 40 L.Ed. 709 (1896). The language is to be construed in light of the statute's manifest purpose to prohibit all attempts to defraud by any form of misrepresentation. 161 U.S. at 313, 16 S.Ct. 508. 3

This 1872 enactment was modified in certain respects by Congress in 1909. Act of March 4, 1909, ch. 321, § 215, 35 Stat. 1130. The Supreme Court, in interpreting this 1909 statute, noted that congressional modifications in the wording of the statute broadened its scope by permitting a violation to be established by proving a scheme to defraud which has been executed or intended to be executed by placing a letter in any post office. United States v. Young, 232 U.S. 155, 161, 34 S.Ct. 303, 58 L.Ed. 548 (1914).

The wording of the present mail fraud statute is derived from the Act of June 25, 1948, ch. 645, § 1341, 62 Stat. 763. 4 This 1948 enactment modified none of the operative provisions of the 1909 statute and merely deleted some superfluous language characterized as the "obsolete argot of the underworld." 18 U.S.C. § 1341 (1970), Reviser's Notes. Consequently, the somewhat liberalized proof requirements articulated in United States v. Young, supra, prevail under the present statute. See Pereira v. United States, supra, 347 U.S. at 8, 74 S.Ct. 358.

At no time throughout the evolutionary development of the mail fraud statute did Congress attempt to define or establish the precise parameters of the term "scheme to defraud." The legislative history, which may have given some insight into the congressional considerations underlying the statute, is sparse. Courts, therefore, have been required to discern the purpose 5 and reach of § 1341 from the broad, unqualified language of the statute itself. The relative lack of definite standards contained in § 1341 has permitted the courts to exercise wide latitude in determining what schemes are within the purview of that statute. In interpreting the language of the mail fraud statute, courts have identified numerous types of schemes which are violative of the statute. These various schemes fall broadly into two general categories.

The first category, which comprises the bulk of the mail fraud cases, includes the many deceptive schemes which are intended to defraud individuals of money or other tangible property interests. There can be little dispute that these schemes are within the scope of § 1341 since they involve calculated efforts to use misrepresentations or other deceptive practices to induce the innocent or unwary to give up some tangible interest. Included in this category are: (1) insurance fraud; 6 (2) "check kiting" schemes; 7 (3) "credit card" swindles in which the defendant either fraudulently secures or fraudulently uses a credit card; 8 (4) "referral plan" schemes in which the defendant persuades individuals to purchase goods and misrepresents the extent to which a purchaser can avoid paying all or part of the purchase price by referring new customers to the defendant; 9 and (5) any other type of nefarious scheme in which the defendant solicits funds or tangible property interests from innocent or misinformed investors by engaging in a deceptive course of action. 10 McNeive's alleged scheme to defraud cannot be appropriately classified in this category. The indictment does not allege, and no proof at trial established, that the allegedly defrauded party, the City of St. Louis, was deprived of any money or suffered the loss of any tangible property interest.

The second category of § 1341 deceptive schemes is...

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