U.S. v. Vontsteen

• Decision Date: 28 April 1989
• Docket Number: No. 88-2331,88-2331
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Gerald VONTSTEEN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 626

872 F.2d 626

UNITED STATES of America, Plaintiff-Appellee, v. Gerald VONTSTEEN, Defendant-Appellant.

No. 88-2331.

United States Court of Appeals, Fifth Circuit.

April 28, 1989.

H. Michael Sokolow, Asst. Federal Public Defender, Roland E. Dahlin, Fed. Public Defender, Houston, Tex., for defendant-appellant.

Paula M. Offenhauser, Asst. U.S. Atty., Henry Oncken, U.S. Atty., Houston, Tex., for plaintiff-appellee.

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

Before GARWOOD, JONES, and SMITH, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

In this case, we must determine whether invoices mailed by defrauded sellers to the perpetrator of a fraud can constitute a sufficient jurisdictional basis for a federal mail fraud prosecution without additional, specific proof of how the invoices advanced, or were integral to, the scheme to defraud. Concluding that under the specific facts of this case there is no such jurisdictional basis, we reverse defendant's conviction for mail fraud but affirm his conviction for interstate transportation of stolen property.

I. Facts.

Defendant Gerald Vontsteen was convicted on twenty-one counts of aiding and abetting mail fraud in violation of 18 U.S.C. Secs. 1341 and 2 and on one count of transporting stolen property in interstate commerce in violation of 18 U.S.C. Sec. 2314. This criminal conduct occurred over several months (late fall 1982 through summer 1983), during which Vontsteen ran operations buying and selling oilfield pipe for AMRO, Inc. ("AMRO"), a company owned by Leslie Ross Malden. ¹ The scheme operated by means of AMRO's buying pipe on credit during a down period in the market, short-selling it, presumably pocketing the profits, and then refusing to pay the suppliers. The jurisdictional basis for the mail fraud convictions was the mailing of invoices to AMRO by the defrauded pipe suppliers. None of the invoices so charged in the indictment was ever paid.

On appeal, as to the mail fraud convictions, defendant maintains that these mailings were not in furtherance of the fraud as is required as a matter of law; that the evidence was insufficient to convict; that he was denied his sixth amendment right to confront a hostile witness; and that the jury charge impermissibly amended the indictment. As to the conviction for interstate transportation of stolen property, he argues the same confrontation clause point as well as the insufficiency of the evidence. He also asserts that the trial judge considered improper information in sentencing him. We now reverse the mail fraud conviction, affirm the stolen property conviction, and remand for resentencing based upon our reversal of 21 of the 22 counts. Because we base our reversal of the mail fraud convictions upon our conclusion that the invoices did not constitute an adequate jurisdictional basis, we do not address the other issues raised by defendant with respect to these convictions.

II. Mail Fraud.

In order to convict for mail fraud under 18 U.S.C. Sec. 1341, the government must prove, inter alia, that the mails were used in furtherance of the scheme to defraud. That is, the United States must establish that the mailing was " 'for the purpose' of executing the scheme." United States v. McClelland, 868 F.2d 704, 707 (5th Cir.1989). This element of mail fraud is the basis for federal criminal jurisdiction. ² In the instant case, defendant was convicted on twenty-two counts of aiding or abetting mail fraud based upon his taking or receiving, or causing to be taken or received, from the mail the invoices for the fraudulently-obtained pipe. He argues that, as a matter of law, the mailing of these invoices did not advance any scheme to defraud, were not "integral" to any such scheme, and consequently could not support his mail fraud convictions. We agree with this analysis; accordingly, we reverse the convictions on the mail fraud counts.

In Parr v. United States, 363 U.S. 370, 392-93, 80 S.Ct. 1171, 1184-85, 4 L.Ed.2d 1277 (1960), the Supreme Court held that the scheme to defraud underlying school board officials' personal use of the school district's credit card came to fruition upon the officials' receipt of the individual goods and services purchased with this credit. The subsequent billing of the school district via the mail occurred after the scheme was completed and was immaterial to the fraud.

Similarly, in United States v. Maze, 414 U.S. 395, 402-05, 94 S.Ct. 645, 649-51, 38 L.Ed.2d 603 (1974), the Court held that the fraudulent use of a stolen credit card to pay a hotel bill ended when the defendant checked out. Therefore, the subsequent mailings of invoices by the hotel owners and the credit card company could not support a mail fraud prosecution. ³

Although the facts of the instant case do not fall squarely under Parr or Maze because of the existence of a broader scheme to defraud, we nevertheless conclude that they cannot be meaningfully distinguished to the extent of justifying a different result. Here, as in those cases, the defendant used credit to obtain goods or services fraudulently. The mailing of invoices to AMRO by defrauded sellers of pipe in each case occurred after the pipe was already shipped and the credit and payment terms were fixed. The details of the scheme would have been exactly the same even without the mailings. It may be true that the extensions of credit were integral to the scheme, but the credit terms were finalized independent of, and prior to, the mailing of the invoices.

The government argues that Schmuck is to the contrary. There, the Court held that the mailing of automobile title application forms by defrauded car dealers was in furtherance of a scheme to defraud because the success of "Schmuck's venture depended upon his continued harmonious relations with and good reputation among retail dealers, which in turn required the smooth flow of cars from the dealers to their ... customers" facilitated by the mailings of the title applications. The government emphasizes that in Schmuck the Court gave special consideration to the broad scope of the scheme to defraud, and argues that the overall scheme in this case, involving multiple suppliers of pipe, is analogous.

This argument has some logical appeal; however, there is no evidentiary basis upon which it can be sustained. If the government had proved that the invoices were legally operative documents, embodying the terms of the sales, and the mailings of which sealed the extensions of credit upon which defendant's scheme depended, a different result might be required. Unfortunately for its case, however, the government offered no such proof.

Likewise, if it could be shown that certain invoices were paid so that AMRO could develop a deceptively good credit history and procure more pipe on this basis, then perhaps the mailing of those particular invoices would have satisfied the jurisdictional requirement. However, none of the invoices charged in the indictment was ever paid, so such an argument cannot be made.

Given the state of the evidence, we are forced to conclude that this case fits squarely within Schmuck 's reading of Parr and Maze, i.e., that the invoice mailings here "involved little more than post-fraud accounting among the potential victims of the ... scheme[ ]...." Schmuck, --- U.S. at ----, 109 S.Ct. at 1449. Accordingly, defendant's convictions on the twenty-one counts of mail fraud must be reversed.

We emphasize that our holding today does not preclude the possibility that the mailing of invoices by a defrauded seller can in some cases provide an adequate jurisdictional basis for a mail fraud conviction. We do, however, require that the government convincingly demonstrate how such mailings advanced or were integral to the fraud. The jurisdictional component of a federal criminal offense is an important element of the government's case in any such prosecution that should not be assumed by the courts; the same is not established in the case of mail fraud simply because a victim of the fraud (or a third party) has mailed a related document after the fact. ⁴

III. Interstate Transportation of Stolen Property.

Defendant was convicted under count 22 for violating the National Stolen Property Act, 18 U.S.C. Sec. 2314. In order to convict under this statute, the government must prove (1) the interstate transportation of (2) goods valued at $5,000 or more (3) with the knowledge that such goods have been stolen, converted, or taken by fraud. Dowling v. United States, 473 U.S. 207, 214, 105 S.Ct. 3127, 3131, 87 L.Ed.2d 152 (1985); United States v. Lennon, 814 F.2d 185, 187 (5th Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 295, 98 L.Ed.2d 254 (1987). In cases of fraudulently-obtained goods, such as the instant case, the government must establish defendant's knowledge that the goods were procured by fraud, although it need not prove the knowledge or foreseeability that such goods crossed state lines. United States v. Graves, 669 F.2d 964, 971 (5th Cir.1982). Defendant contends that the evidence was insufficient to convict him under this statute. We reject this argument.

In reviewing sufficiency-of-the-evidence claims, we determine whether a reasonable juror could have found the evidence, viewed in the light most favorable to the prosecution, sufficient beyond a reasonable doubt to support conviction. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942); United States v. Rico Indus., Inc., 854 F.2d 710, 712 (5th Cir.1988). Applying this standard to the facts before us, we have little trouble concluding that a juror so could have found.

Defendant's conviction under section 2314 was based upon the shipment of three truckloads of pipe obtained from Mustang Supply Company ("Mustang") from Houston, Texas, to Oil City, Louisiana, via Ranger Trucklines. There is no question that the government directly proved that pipe exceeding $5,000 in value was...