U.S. v. Reid
| Citation | 533 F.2d 1255,175 U.S.App.D.C. 120 |
| Decision Date | 18 August 1972 |
| Docket Number | No. 75-1657,75-1657 |
| Parties | UNITED STATES of America v. Robert C. REID, Appellant. . Argued 15 Jan. 1976. Decided 14 April 1976. Plato Cacheris, Alexandria, Va., with whom Cary Mark Feldman, Washington, D.C., was on the brief for appellant. Mark H. Tuohey, III, Asst. U. S. Atty., Washington, D.C., with whom Earl J. Silbert, U. S. Atty., John A. Terry, William D. Pease, Richard N. Stuckey, Asst. U. S. Attys., Washington, D.C., were on the brief for appellee. Bernard J. Panetta, II, Asst. U. S. Atty., Washington, D.C., also entered an appearance for appellee. Before McGOWAN and WILKEY, Circuit Judges, and BRYAN, * United States District Judge for the Eastern District of Virginia. Opinion for the Court filed by Circuit Judge WILKEY. WILKEY, Circuit Judge: Defendant Reid appeals from a conviction on three counts of mail fraud 1 after a nonjury trial before Judge Richey of the United States District Court. Originally charged in an eleven-count indictment, appellant was acquitted on six mail fraud counts by the trial judge, and the two embezzlement counts 2 were ordered dismissed by the court during trial. 3 Principally pressed on this appeal is the argument that the evidence was insufficient to sustain the charge that defendant Reid devised a scheme and artifice to defraud by knowingly approving false and inflated billings. I. OPERATIVE FACTS From April 1972 until June 1973 Reid was employed as Credit Director of Woodward & Lothrop in Washington, D.C. During the period he was so employed, Reid was associated in some capacity, never fully defined by the evidence, with a collection agency known as Credit Shield in New York City. 4 What is more important and more clear is that the uncontradicted evidence, much of it stipulated, showed that during the period of the fraudulent scheme Reid received certain payments totalling $11,939.79 deposited in his own personal account and that of "Craig Roberts Associates" in the National Bank of Washington. "Craig Roberts Associates" was stipulated to be wholly own |
| Court | United States Courts of Appeals. United States Court of Appeals (District of Columbia) |
Plato Cacheris, Alexandria, Va., with whom Cary Mark Feldman, Washington, D.C., was on the brief for appellant.
Mark H. Tuohey, III, Asst. U. S. Atty., Washington, D.C., with whom Earl J. Silbert, U. S. Atty., John A. Terry, William D. Pease, Richard N. Stuckey, Asst. U. S. Attys., Washington, D.C., were on the brief for appellee. Bernard J. Panetta, II, Asst. U. S. Atty., Washington, D.C., also entered an appearance for appellee.
Before McGOWAN and WILKEY, Circuit Judges, and BRYAN, * United States District Judge for the Eastern District of Virginia.
Opinion for the Court filed by Circuit Judge WILKEY.
Defendant Reid appeals from a conviction on three counts of mail fraud 1 after a nonjury trial before Judge Richey of the United States District Court. Originally charged in an eleven-count indictment, appellant was acquitted on six mail fraud counts by the trial judge, and the two embezzlement counts 2 were ordered dismissed by the court during trial. 3 Principally pressed on this appeal is the argument that the evidence was insufficient to sustain the charge that defendant Reid devised a scheme and artifice to defraud by knowingly approving false and inflated billings.
From April 1972 until June 1973 Reid was employed as Credit Director of Woodward & Lothrop in Washington, D.C. During the period he was so employed, Reid was associated in some capacity, never fully defined by the evidence, with a collection agency known as Credit Shield in New York City. 4 What is more important and more clear is that the uncontradicted evidence, much of it stipulated, showed that during the period of the fraudulent scheme Reid received certain payments totalling $11,939.79 deposited in his own personal account and that of "Craig Roberts Associates" in the National Bank of Washington. "Craig Roberts Associates" was stipulated to be wholly owned, operated, and controlled by Reid. 5 These payments deposited were checks from Credit Shield and Harrington & Worth Services, Inc., 6 a business entity in New York City which was used as a conduit to pass money originally paid out by Woodward & Lothrop back to Reid. Several corresponded in amount and time sequence with Woodward & Lothrop payments to Credit Shield. It is not necessary to detail the various transfers among Credit Shield, Harrington & Worth Services, Inc., Craig Roberts Associates, and appellant's own accounts, which originated from and can be tracked to the payments from Woodward & Lothrop, as these were not made the basis of any mailing count. 7
What is important in understanding the scheme to defraud is the manner in which delinquent accounts for collection were referred by Woodward & Lothrop to Credit Shield, what Credit Shield did about them, how it invoiced Woodward & Lothrop, and what role appellant Reid and other employees played in the referrals and in making payment by Woodward & Lothrop to Credit Shield, for it was the mailing of three checks by Woodward & Lothrop from Washington to Credit Shield in New York on which Reid was convicted of three counts of mail fraud.
In autumn 1972 Woodward & Lothrop made arrangements with several collection agencies for the collection of delinquent accounts at a cost of $2.50 for each account serviced. This project was handled by appellant as Credit Director. The two principal agencies were Credit Shield and National Credit Records of America, both located in New York. On 27 November 1972 a memorandum from Mr. Cozzi, Credit Sales Manager, directed Mr. Saunders, Supervisor of the Collection Department, to send approximately half of the accounts to Credit Shield and half to NCRA. Cozzi's testimony was that, beginning in November 1972 through the period into June 1973, approximately every other account was sent to Credit Shield and the remainder to NCRA. 8
The mechanism of account selection was this: The individual collection cards kept by Woodward & Lothrop would be reviewed monthly, in nine cycles, each covering several letters of the alphabet. A list of accounts which were 90 days in arrears would be prepared by Saunders for each cycle, and sent, on alternate cycles, to Credit Shield and NCRA. Saunders retained a carbon copy of the list for updating purposes. Credit Shield then prepared the first of a series of three dunning letters to the delinquent customers, and sent back to Woodward & Lothrop individual account tickets and a computer printout stating the accounts thus serviced. 9 Saunders, Supervisor of the Collection Department, kept his copy of the original list updated as overdue payments were received, and sent notification of such "activity" to Credit Shield, on the individual account tickets. If no change in the status of the account had occurred, the account tickets were retained by Saunders.
One fact about which legal controversy swirled at the trial, and which assumes some importance on this appeal, is that the carbon copy of the lists prepared by Saunders for November 1972 through part of February 1973, were not retained after the third and final dunning letter had presumably been sent out. Saunders retained the computer printouts received from Credit Shield as the only record of the accounts sent. For the months of March (and the latter part of February) through June 1973, apparently no computer printouts were received and the original lists were retained.
While the original Saunders list and the Credit Shield computer printout contained the account number, name, address and amount due of each account, the information which Cozzi gave to defendant Reid was simply a notation on a small piece of paper as to the alphabetical cycle of the list sent, the number of accounts, and the total dollar amount. 10 It was Reid's responsibility to check the invoices received from Credit Shield for services allegedly rendered, and this information was sufficient to enable him to do this.
Reid's secretary gave all incoming invoices to him, which he approved for payment by a brief handwritten notation with date and signature. 11 Approved invoices were sent to the Accounts Payable Department. Two or three days after receipt of each invoice from Reid's office a person in the Accounts Payable Department typed a check, had it approved by the Accounts Payable supervisor, and after it was machine signed sent the check to the correspondence room for mailing. 12 Regularly at 4:00 p. m. each day the Accounts Payable Department took all checks addressed to out-of-state accounts to the correspondence room where the checks were placed in envelopes, run through a machine, and placed in a United States mailbag in which they were taken to the United States Post Office. 13
During the period of the mail fraud scheme November 1972 to June 1973 14 nine Woodward & Lothrop checks were processed and sent to Credit Shield in this fashion. 15 The three checks involved in the three counts on which Reid was found guilty of mail fraud were dated 5 March 1973 in the amount of $2,495, 3 April 1973 for $2,722.50, and 8 June 1973 for $1,166. The checks were deposited in one of several interrelated accounts at Bankers Trust Company in New York City.
The scheme to defraud was basically simple. Saunders at Woodward & Lothrop sent a list of delinquent accounts to Credit Shield for collection. Credit Shield presumably wrote the requisite one to three dunning letters in regard to those accounts referred. However, the invoices sent to Woodward & Lothrop, billing at $2.50 per account, over the months of the scheme could be found by the trier to total more than twice the number of accounts originally referred by the store. Reid, as Credit Director of Woodward & Lothrop, nonetheless approved payment of the invoices and sent them directly to the Accounts Payable Department for payment. These checks were typed and mailed in the normal course of business to Credit Shield in New York. Three such mailings were the mail fraud counts on which Reid was convicted. Credit Shield in turn remitted to Reid a substantial part of the money thus received, by checks drawn upon itself or upon its affiliate, Harrington & Worth Services.
Under the system used in the credit department of Woodward & Lothrop, Reid provided the only direct check on the correctness of the invoices sent by Credit Shield and the payments made by Woodward & Lothrop. He was to perform this function by comparing the invoices against the slips of paper provided to him by Cozzi, which set forth the number of accounts which had been referred for each cycle. 16 This Reid signally failed to do, as he was concurrently receiving back from Credit Shield part of the inflated payments he caused Woodward & Lothrop to make to Credit Shield.
The issue on this appeal is appellant Reid's contention that the evidence adduced by the Government, a large part by stipulation and otherwise by uncontradicted evidence, was insufficient to show either that any single invoice (and the check issued pursuant thereto) was inflated or that the total paid by Woodward & Lothrop during the period of the conspiracy, or any given portion thereof, was greater than the rightful amount which Woodward & Lothrop should have paid on the basis of the number of accounts referred by Woodward & Lothrop to Credit Shield. 17
We think the evidence clearly sufficient to show a scheme to defraud and that the scheme was intended to cause Woodward & Lothrop to pay during the period of the scheme far more to Credit Shield than the number of accounts referred by Woodward & Lothrop to Credit Shield would justify. There was ample evidence of such a scheme lasting for the entire period from ...
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