U.S. v. Mikelberg, 74-2518
| Decision Date | 11 August 1975 |
| Docket Number | No. 74-2518,74-2518 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Herbert MIKELBERG and Anthony F. Caterine, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Fifth Circuit |
John H. Marks, Jr., Dallas, Tex. (Court appointed), for Herbert mikelberg.
Arthur Mitchell, Austin, Tex., for Anthony F. Caterine.
Frank D. McCown, U. S. Atty., Roger J. Allen, Asst. U. S. Atty., Ft. Worth, Tex., Charles D. Cabaniss, Wm. F. Sanderson, Jr., Asst. U. S. Attys., Dallas, Tex., for plaintiff-appellee.
Appeals from the United States District Court for the Northern District of Texas.
Before THORNBERRY, COLEMAN and ROSENN, * Circuit Judges.
In 1970, as a part of an extensive Act dealing with federal deposit insurance, the maintenance of bank records, the report of certain currency transactions, "and for other purposes", the Congress legislated with reference to credit cards, now 15 U.S.C., § 1644, as follows:
It will be noted that the statute uses both words, "transaction" and "card", in the singular.
The sparse legislative history is found in a six line portion of the conference report, U.S.Code Congressional and Administrative News 1970, 91st Congress, Second Session, II, p. 4414:
The conference report thus emphasizes that criminal penalties for the unauthorized use of credit cards are limited "to cases (emphasis ours) involving amounts of $5,000 or more".
The legislation is so new that we have been unable to find a single appellate decision defining the meaning of "a transaction" as used in the Act. 1
The appellants presently before us were indicted and convicted under the terms of the original statute. In 1974, Congress extensively amended § 1644. 2
The alleged conduct of the appellants clearly falls within the terms of the amended statute, but we confront the question of whether it was covered by the 1970 Act since no single interstate transaction of theirs involved as much as five thousand dollars.
I
On February 12, 1974, along with Lester Ray Henderson and William Allen Davis who are not involved in this appeal, Caterine and Mikelberg were indicted in the United States District Court for the Northern District of Texas in a nine page, four count indictment. The first count was for conspiracy to violate § 1644, the remaining three counts for substantive violations of the statute. Count II disappeared from the case. The defendants were convicted on Counts I, III, and IV.
We state the substantive counts first.
This count charged that from September 1, 1971 to May 1, 1972, Caterine, Mikelberg, Henderson, William A. Davis, and unindicted co-conspirators Rita Kenner and Richard Payne, committed a highly detailed conspiracy (thirty overt acts) to use fraudulently obtained credit cards issued by American Express and other companies. The various overt acts all involved airline tickets. No averment appeared in the count as to the value of any airline ticket but obviously none of them individually amounted to as much as five thousand dollars.
III
The record clearly reveals an organized scheme to make fraudulent applications for and thereafter to use credit cards for the purchase of goods which could be sold for cash.
The proof for the government depended primarily on the testimony of the co-defendants William A. Davis 3 and Lester Ray Henderson. 4
The evidence showed that these two, along with the appellants, conspired with Richard William Payne, 5 Richard Green, 6 and Rita Carpenter Green 7 to make the fraudulent credit card applications. Davis, Henderson, and Payne made the applications. They operated a bartending school, would give the school as a reference, thereby verifying employment and credit information for each other.
Using both real and assumed names, applications were made to American Express, Diner's Club, Carte Blanche, TWA, American Airlines, and others. Frequently, several cards were obtained from the same company.
Occasionally, the group bought and sold automobile tires, but they specialized in airplane tickets, which they resold for half price. Henderson testified that another use of the cards was the making of a "split ticket", such as, for example, a charge for a three dollar cocktail at Caterine's club would be accompanied by a ninety-seven dollar tip. He and Caterine would then divide the ninety-seven. The aggregate amount of the charges accomplished by this scheme reaches into the hundreds of thousands of dollars.
During the period in question, Caterine owned and operated a nightclub in Dallas known as the Losers Club. He also owned and operated T. C. Management Corporation, a booking agency for entertainers. Because transportation is frequently included in an engagement, Caterine gave many of the airline tickets (traceable to him) to entertainers whom he had booked all over the country.
Mikelberg apparently worked for Caterine, and at one point managed a clothing store for him.
Mrs. Kathleen Parish, a former bartender at the Losers Club, testified that in August, 1971, she overheard a conversation in the Losers Club between Lester Ray Henderson, Richard Payne, and both appellants. The group was discussing the use of credit cards, and how they could be used to acquire merchandise without paying for it. More specifically, they were discussing buying large quantities of tires.
She further testified to hearing Mikelberg tell this same group of a plan to obtain ten American Express, ten Carte Blanche, and ten Diner's Club credit cards. He would then charge $10,000 worth of airline tickets on each card. Thereafter, he would take one card and its accompanying vouchers to each of the three issuing companies. By showing the companies a computer program which would prevent similar multiple charges in one day's time he hoped they would pay him to install the system. This plan was known to the participants as the "Mikelberg Special".
The record is replete with examples of each appellant giving tickets away and buying them at half price from one of the other co-conspirators. Martin Pinchinson, a former employee of Caterine's booking agency, once asked Caterine the source of a ticket Caterine gave him. Caterine replied that it was legal, that someone owed him money. On a similar occasion, Barbara Braswell, a former cashier at the Losers Club, asked Caterine why the amount on a credit card charge (she couldn't remember if it was for Payne or Henderson) was left blank. Caterine replied that it involved "a loan or some money". Lester Ray Henderson testified that he bought several tickets for Caterine at Caterine's request. He charged them on various credit cards, and was paid half their face value by Caterine. In addition, Henderson testified that Caterine allowed him to list his businesses as references when applying for credit cards. According to Henderson, Caterine made his "black list" of suspended credit cards, issued by the respective companies, available to him on request.
W. D. Gillham, a former bartender at the Losers Club, testified that Caterine once told him he had airline tickets available, and to let him know if he ever needed any. Frank Joiner, a talent agent, testified that Mikelberg told him he could get tickets at half price, and that he subsequently got tickets from Mikelberg for half their face value.
IV
The respective appeals on behalf of Caterine and Mikelberg closely parallel each other.
1. Did the evidence show a transaction within the terms of 15 U.S.C., § 1644, that is, a transaction wherein fraudulently obtained credit cards were used to obtain goods or services having a retail value aggregating $5,000 or more?
The District Court instructed the jury:
The correctness of this instruction is the critical issue in the case, particularly that part of it which told the jury that "numerous purchases or charges" might be linked to constitute "a transaction" (emphasis ours).
Congress must have known that very few charges amounting to five thousand dollars or more were likely to be made at one time or place, i. e., in a single transaction, against a credit card. Nevertheless, it chose to use "transaction" in the singular, rather than the plural. Having done this, it also used "credit card" in the singular, followed by goods and services in the same manner but it concluded by allowing the requisite sum to be reached by aggregation.
Due process dictates that men of common intelligence cannot be required to guess at the meaning of a penal enactment. The decisions of the Supreme Court have never left...
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