U.S. v. Trost

• Decision Date: 17 August 1998
• Docket Number: No. 97-4204,97-4204
• Citation: 152 F.3d 715
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Richard A. TROST, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 715

152 F.3d 715

UNITED STATES of America, Plaintiff-Appellee, v. Richard A. TROST, Defendant-Appellant.

No. 97-4204.

United States Court of Appeals Seventh Circuit.

Argued May 29, 1998.

Decided Aug. 17, 1998.

Ranley R. Killian, Jr. (argued), W. Charles Grace, Office of the United States Attorney, Criminal Division, Fairview Heights, IL, for Plaintiff-Appellee.

Floyd E. Crowder, Timothy A. Gutknecht (argued), Crowder & Scoggins, Columbia, IL, Frederick J. Hess, Lewis, Rice & Fingersh, Belleville, IL, for Defendant-Appellant.

Before CUMMINGS, RIPPLE, and EVANS, Circuit Judges.

TERENCE T. EVANS, Circuit Judge.

Prior to being carted off to federal prison in December 1997, Richard A. Trost was the elected county clerk and recorder of Monroe County, Illinois, a post he held since 1966. In December of 1995 Trost was charged in a 17-count federal indictment with mail fraud in violation of 18 U.S.C. § 1341; money laundering in violation of 18 U.S.C. § 1956(a)(1)(B)(j); and theft from an entity receiving federal funds in violation of 18 U.S.C. § 666. The indictment also contained a forfeiture count pursuant to 18 U.S.C. § 982. In August 1997 District Judge William D. Stiehl heard the case without a jury and found Trost guilty of all but one of the charges. Trost was sentenced to 50 months imprisonment, to be followed by 3 years of supervised release. He was ordered to make restitution to Monroe County in the amount of $100,123.71. In addition, his assets were found forfeitable in the amount of $57,412 with his residence forfeitable up to the amount of $22,000. He appeals the conviction and the order of forfeiture. ¹

Trost's activities came to light when Eugene Schorb, an outside auditor of Monroe County, uncovered irregularities in the way the clerk's office was handling funds. What Schorb outlined in a report for the county board was a scheme in which, for instance, Trost made it look like various checks were written (and paid) to a computer supplier when in fact the checks were never delivered to that supplier. Rather, Trost made out identical checks to himself but with check numbers 100 higher than those allegedly written to the supplier. Amazingly, he then used a pen to alter the check numbers on the bank statements to make it look as if the checks to the computer supplier were the ones which were cashed when actually he cashed the ones made out to himself. At the time Schorb discovered and outlined the scheme, he thought the missing funds came to $14,000. When Trost was confronted with the report at a special meeting of the board, he admitted that he had no innocent explanation of the events. Immediately after the meeting Trost told the state's attorney that he would repay the money, which he did the next day.

However, as might be expected after this revelation--and almost certainly not just because the sheriff and he were of different political parties, as Trost would have us believe--an investigation was begun with the involvement of both the Monroe County state's attorney and the United States Attorney, under the supervision of an assistant United States attorney. As part of the investigation, two search warrants were executed, one for the clerk's office and one for Trost's home.

The investigation uncovered another scheme and other missing funds to the tune of $100,000. Under this scheme Trost allowed those patrons of the clerk's office who regularly made photocopies of documents to run up a tab and to be billed for their copies, usually on a monthly basis. Trost maintained control of this billing system. He gave each customer a control number; then on a routine basis he sent out bills. He instructed those who delivered the mail in the office to bring all of it to his desk. He then personally opened the mail and took out checks that were sent as payment for copies made on the clerk's office machine. The rest of the mail was then distributed to the appropriate deputy clerks. If Trost was absent from the office, the mail, with the exception of certain filings that the deputies could recognize, remained unopened until his return. If customers wished to pay at the time they made copies, or if the monthly bill was paid in person rather than by mail, a deputy clerk would deposit the payment into an official, legitimate county account.

But the official county account did not receive the payments which were mailed in. Those were deposited into an account at the State Bank of Waterloo--the Richard A. Trost "Special Account," account number 120456. Illinois law allowed clerks to set up special accounts, but this one, while bearing some trappings of official special accounts, also was significantly different from what one would expect of special accounts. The account bore the defendant's home address and his social security number, rather than the office address in the Monroe County Courthouse and the county's taxpayer identification number. Into this account went both checks payable to Trost in his official capacity for copies and unauthorized transfers from other county accounts as well as from payments from the state for election judges. Trost used the special account to pay personal debts. He often transferred funds from legitimate county accounts to the special account and from there to his joint account with his wife. For whatever reason, the bank did not become suspicious, and the county auditor knew nothing of the account.

Trost seems to acknowledge that there was something wrong with what he did, but he maintains in this appeal that whatever was wrong does not add up to mail fraud, money laundering, nor embezzlement from an entity receiving in excess of $10,000 in federal funds. He also attacks the forfeiture and contends that the evidence obtained from the search warrants should have been suppressed.

Relying on Parr v. United States, 363 U.S. 370, 80 S.Ct. 1171, 4 L.Ed.2d 1277 (1960), Trost argues that he is not guilty of mail fraud because the mailings were not for the purpose of executing the scheme and that the use of the mails was part of his duties as county clerk and recorder of deeds, performed in the ordinary course of business. He emphasizes that in Parr, the Court determined that the mail fraud statute did not apply to a situation in which school board members converted real estate tax payments received through the mails. Trost analogizes his situation to that in Parr and claims that he was "required and lawfully entitled to assess and collect the fees." He argues that the Court "has ruled that such mailing of legitimate bills for legitimate fees pursuant to the imperative of duty and then converting the checks received in the mail for payment of those bills does not constitute use of the mails under 18 U.S.C. § 1341."

His argument is based on an overly simplistic comparison of his situation to Parr and a failure to acknowledge later explications of the Parr holding. In the relevant portions of Parr, the Court considered whether the use of the mails to distribute tax bills and to receive payments of those bills--payments which were brazenly misappropriated by the seven members of the school board after they were received--constituted mail fraud. The Court determined that the mailings were not for the purpose of executing a scheme to defraud. The school board was under "an express constitutional mandate to levy and collect taxes for the acquisition of facilities for, and to maintain and operate, the schools of the District...." At 387, 80 S.Ct. 1171. It was required by statute "to issue statements for such taxes and to deliver receipts upon payment." At 387, 80 S.Ct. 1171. In addition, there was no evidence that the tax bills were inflated to cover the losses. Furthermore, the board was collecting taxes, in part, from nonresident property owners and thus was "required by the state law to use the mails." At 388, 80 S.Ct. 1171. In Parr, the government had argued, in fact, that the board could not collect the taxes "without the use of the United States Mails." Thus the question in the case was whether "the legally compelled mailings of the lawful ... letters, tax statements, checks and receipts, ... properly may be said to have been for the purpose of executing a scheme to defraud...." At 389, 80 S.Ct. 1171. In reaching its conclusion that they could not, the Court emphasized that it was deciding the issue based "on the particular circumstances" of the case. The money would come to the district coffers through the mail regardless of what the defendants did. Their crimes occurred after the money legitimately arrived in the district accounts. The crimes committed by the Parr defendants included embezzlement, misappropriation, and theft, but not mail fraud.

In a later case, Schmuck v. United States, 489 U.S. 705, 714-15, 109 S.Ct. 1443, 103 L.Ed.2d 734 (1989), the Court placed a limit on the Parr holding. It said:

To the extent that Schmuck would draw from these previous cases a general rule that routine mailings that are innocent in themselves cannot supply the mailing element of the mail fraud offense, he misapprehends this Court's precedents. In Parr the Court specifically acknowledged that "innocent" mailings--ones that contain no false information--may supply the mailing element. 363 U.S., at 390, 80 S.Ct. 1171. In other cases, the Court has found the elements of mail fraud to be satisfied where the mailings have been routine.

The relevant consideration is always "whether the mailing is part of the execution of the scheme as conceived by the perpetrator at the time...." At 715, 109 S.Ct. 1443.

In Trost's case, as to counts 1 through 4 (the fees for photocopies) the mailing was clearly part of the scheme--in fact, the scheme would not have worked without mailings. The use of the mails allowed Trost to circumvent the clerk's office accounts altogether and funnel the money to his "special account."

Trost's argument that the copy fees were legitimate fees which he was...