U.S. v. Melvin

• Decision Date: 03 January 1977
• Docket Number: No. 75-3330,75-3330
• Citation: 544 F.2d 767
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. James D. MELVIN, Gregory Allan Conner, Robert Pierce, and Carson RobertYeager, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 767

544 F.2d 767

UNITED STATES of America, Plaintiff-Appellee, v. James D. MELVIN, Gregory Allan Conner, Robert Pierce, and Carson RobertYeager, Defendants-Appellants.

No. 75-3330.

United States Court of Appeals, Fifth Circuit.

Jan. 3, 1977.

Edward J. David, Fayetteville, N. C., for defendants-appellants.

Robert W. Rust, U. S. Atty., William R. Northcutt, Asst. U. S. Atty., Miami, Fla., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before BROWN, Chief Judge, and TUTTLE and GEE, Circuit Judges.

JOHN R. BROWN, Chief Judge:

Defendants Melvin, Conner, Pierce and Yeager appeal from their convictions for conspiracy to violate, and violation of, the mail fraud statute, 18 U.S.C.A. §§ 371, ¹ 1341, ² which makes unlawful any scheme to defraud in which the mails are employed in some significant way in carrying out the scheme. Violation is a felony. These convictions were based on defendants' use of the mails to ship cigarettes interstate into states imposing a cigarette sales or use tax without complying with the Jenkins Act, 15 U.S.C.A. § 376 et seq. ³ The Jenkins Act requires the seller of cigarettes in interstate commerce to register with the tax officials of states where he advertises or into which he ships cigarettes and to furnish copies of invoices disclosing the purchasers' names and addresses. Violation is a misdemeanor.

Defendants argue that the District Court erred (i) in upholding the sufficiency of the indictment; (ii) in failing to instruct the jury on the Jenkins Act as a lesser included offense; (iii) in failing to instruct the jury on an allegedly pertinent state law; (iv) in failing to direct a judgment of acquittal on the ground that the evidence did not support a conviction for violation of the mail fraud statute, even though it might support a conviction for violation of the Jenkins Act; (v) in admitting certain hearsay evidence (the Negative Jenkins Act Reports); ⁴ (vi) in committing errors in sentencing; (vii) in failing to strike down the Jenkins Act as unconstitutional; (viii) in allowing certain allegedly improper remarks to be made by the prosecutor; and (ix) in supposedly misleading the defendant by making certain comments regarding the Court's doubts as to the applicability of the mail fraud statute. We hold that the activities of the defendants suffice to sustain a conviction for mail fraud. In addition, we reject the attack on the sufficiency of the evidence to support the mail fraud conviction, and hold that criminal liability is not limited to the misdemeanor offense of the Jenkins Act. We also hold that the admission of the so-called Negative Jenkins Act Reports was, at most, harmless error. Finally, we find that the rest of the assignments of error in defendants' blunderbuss attack are completely lacking in merit. We affirm.

The Indictment

The four defendants, Melvin, Conner, Pierce and Yeager were indicted on seventeen counts. ⁵ Count I charged the four defendants with conspiracy to violate the mail fraud statute, 18 U.S.C.A. § 371. Counts II through XVII charged them, in various combinations, with violations of the mail fraud statute, 18 U.S.C.A. § 1341.

The Trial

Defendant Melvin rented Post Office Box 62, at Fayetteville, North Carolina on July 2, 1969, giving his retail address as the Sunoco Service Center (Sunoco). ⁶ Within three years, defendant Conner, a part-time General Manager ⁷ for Melvin between 1969 and 1975, rented Box 62 in his name, giving Cigarette Sales as the retail address.

The main enterprise of Sunoco was selling gasoline and cigarettes. When customers, some from Florida, would come into the station to purchase gasoline or cigarettes, the employees were instructed to give the customers a cigarette mail order form ⁸ which would be mailed back to Post Office Box 62. These order blanks stated at the top that all Federal and North Carolina taxes had been paid. The forms were later mailed by the out-of-state purchasers with a check.

In response to these orders, Melvin, Pierce and Yeager would collect the cigarettes necessary to fill the orders and would then transport them ⁹ to another location in North Carolina for further wrapping, packaging and processing. After this further processing, they would then be mailed to the out-of-state customers, including those in Florida.

At the trial, seven witnesses who lived in Florida testified that they had purchased cigarettes in this manner and their checks were introduced into evidence. Each of the witnesses said he was not a licensed distributor, ¹⁰ and had purchased the cigarettes using order forms provided by the company or friends. Each stated in effect that with respect to such purchases they did not know there was a Florida tax and if they had known of the tax they would not have purchased the cigarettes. ¹¹

None of these witnesses were reported by defendants on any Jenkins Act report. As a part of its showing that defendants were not making an honest effort to comply with the Jenkins Act, the government put on one witness who testified that he was reported by Cigarette Sales on a Jenkins Act list as a purchaser of cigarettes by mail, although he does not smoke and never had ordered any cigarettes from this company.

The Government also introduced some Negative Jenkins Act responses. These were letters from individuals to the Florida Department of Beverages stating that they had been reported by Cigarette Sales as purchasers under the Jenkins Act, even though they had never ordered or purchased the cigarettes and therefore owed no tax.

The testimony revealed that from 1969 until 1974, the defendants almost totally failed to report under the Jenkins Act. Melvin, confronted by an FBI investigator in 1972 and asked whether he was aware of the Jenkins Act, replied in the affirmative. The FBI agent was also allowed to testify (for the limited purpose of showing knowledge and intent) that Melvin and Pierce had been convicted for Jenkins Act violations in other states in 1973.

In late 1974, after much prodding by Florida authorities, Sunoco began to report the names of its customers as required by the Jenkins Act. However, only some of the customers were reported in fact, and other names given were sometimes fictitious.

The defendants moved for a Judgment of Acquittal after the prosecution rested, but that motion was denied ¹² and the case went to the jury, which subsequently convicted the defendants. ¹³

The Jenkins Act: Exclusive?

The first question we address is whether the conduct charged and proved in connection with the interstate shipment of cigarettes through the United States mails in violation of the provisions of the Jenkins Act can constitute a violation of the Mail Fraud Statute.

The essential elements of an offense under the mail fraud statute are "(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). The statute does not define a scheme to defraud, and it contains no restrictive language excluding any type of fraudulent conduct in which use of the mails plays an essential role. On the contrary, the plain language of the statute condemns any scheme to defraud in which the mails are employed, Parr v. United States, 363 U.S. 370, 389, 80 S.Ct. 1171, 4 L.Ed.2d 1277 (1960), including the evasion of sales and use taxes. United States v. Mirabile, 503 F.2d 1065, 1066 (8th Cir. 1974). It leaves "the matter of what conduct may constitute such a scheme for determination under other laws." Parr, 363 U.S. at 389, 80 S.Ct. at 1182.

The Jenkins Act requires the seller of cigarettes in interstate commerce to register with the tax officials of states where he advertises or into which he ships cigarettes and to furnish copies of invoices disclosing the purchasers' names and addresses. Violation is a misdemeanor. Florida imposes seventeen cents' tax on the sale or use of a pack of cigarettes. When cigarettes are shipped from outside the state, the recipient is responsible for paying the tax.

Almost the identical question we face was confronted by the Fourth Circuit in United States v. Brewer, supra. In that case, defendant, the operator of a cigarette mail order business, appealed from a judgment convicting her of mail fraud in violation of 18 U.S.C.A. § 1341. The District Court had ruled that she had defrauded Florida of taxes by using the mails without reporting the transactions to state tax officials as required by the Jenkins Act, 15 U.S.C.A. § 375 et seq. Defendant Brewer raised many of the same arguments that defendants raise in this case that her use of the mails was not for the purpose of executing a scheme to defraud and that her failure to file the reports required by the Jenkins Act was not sufficient to sustain her conviction for mail fraud. The indictment in the Brewer case is almost identical to the indictment in this case. The only major difference between the two cases is that, in Brewer, the facts were stipulated that (i) Brewer used the mails for her interstate sales (ii) she sold the cigarettes for a stated amount without making any representation about taxes (iii) she paid all North Carolina taxes, but the purchasers did not pay the Florida use taxes they owed (iv) and Brewer was aware of the Jenkins Act but did not comply with it.

Under these facts, the Court of Appeals held that "the evidence (is) sufficient to show that Brewer used the mails to execute a scheme to defraud and that the government could choose to prosecute her under the mail fraud statute." Id., at 498. The facts as proved in this case are extremely close to those in Brewer and the indictments are almost identical. Under these circumstances, we are persuaded by Judge Butzner's fine opinion that the evidence in this case is also sufficient to show that defendants used the mails to execute a scheme to defraud and...