U.S. v. Wolf

• Decision Date: 09 September 1977
• Docket Number: No. 76-1532,76-1532
• Parties: 2 Fed. R. Evid. Serv. 1145 UNITED STATES of America, Plaintiff-Appellee, v. Jack Lee WOLF, a/k/a Jack L. Wolf, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1376

561 F.2d 1376

2 Fed. R. Evid. Serv. 1145

UNITED STATES of America, Plaintiff-Appellee, v. Jack Lee WOLF, a/k/a Jack L. Wolf, Defendant-Appellant.

No. 76-1532.

United States Court of Appeals, Tenth Circuit.

Submitted May 16, 1977.

Decided Sept. 9, 1977.

John E. Green, First Asst. U. S. Atty., Oklahoma City, Okl. (David L. Russell, U. S. Atty., Oklahoma City, Okl., with him on the brief), for plaintiff-appellee.

Philip F. Horning of Bulla, Horning & Johnson, Oklahoma City, Okl., for defendant-appellant.

Before PICKETT, SETH and McWILLIAMS, Circuit Judges.

PICKETT, Circuit Judge.

Appellant Wolf appeals from a conviction on five counts of a six count indictment which charged him with using the United States Mails to execute a scheme to defraud in violation of 18 U.S.C. § 1341. It is contended that the evidence is insufficient to sustain the verdict and that there was prejudicial error in the cross-examination of the accused concerning former convictions.

The gist of the scheme to defraud alleged in the indictment was that Wolf, operating through two corporations, manufactured and sold to customers a product described as wooden pallets; ¹ that in order to finance his operations, Wolf, on behalf of the corporations, entered into contracts with Liberty-Heller Factors, Inc. whereby Liberty-Heller agreed to purchase outstanding customer accounts receivable due to the Wolf corporations; that Wolf fraudulently obtained large amounts of money from Liberty-Heller by presenting fictitious invoices of customer accounts and by receiving and retaining payments made by customers whose accounts had been previously assigned to Liberty-Heller.

The general legal principles applicable in mail fraud cases such as this are set out in United States v. Seasholtz, 435 F.2d 4 (10th Cir. 1970), as follows:

The basic elements of a violation of the Mail Fraud Statutes are (1) a scheme or artifice to defraud or obtain money or property by false pretenses, representations or promises, and (2) use of the United States Mails to further the scheme. Gusow v. United States, 347 F.2d 755 (10th Cir. 1965), cert. denied, 382 U.S. 906, 86 S.Ct. 243, 15 L.Ed.2d 159; Beck v. United States, 305 F.2d 595 (10th Cir. 1962), cert. denied, 371 U.S. 890, 83 S.Ct. 186, 9 L.Ed.2d 123. We have said that a scheme to defraud under the statute is one in which it is "reasonably calculated to deceive persons of ordinary prudence and comprehension." Gusow v. United States, supra, 347 F.2d at 756. Willful intent may be inferred from the statements and activities of the parties to the scheme. Elbel v. United States, 364 F.2d 127 (10th Cir. 1966), cert. denied, 385 U.S. 1014, 87 S.Ct. 726, 17 L.Ed.2d 550, reh. denied, 386 U.S. 939, 87 S.Ct. 959, 17 L.Ed.2d 812; Gusow v. United States, supra. In Crosby v. United States, 183 F.2d 373, 375 (10th Cir. 1950), cert. denied, 340 U.S. 906, 71 S.Ct. 274, 95 L.Ed. 656, this court said:

". . . Fraudulent intent is in many instances not susceptible of proof by direct evidence. In numerous cases it must be inferred from a series of acts and pertinent circumstances. (Citations omitted) One will not be heard to say that he did not intend the natural consequences of his conduct. 'If a man intentionally adopts certain conduct in certain circumstances known to him, and that conduct is forbidden by the law under those circumstances, he intentionally breaks the law in the only sense in which the law ever considers intent.' (Citations omitted)"

In determining the sufficiency of the evidence in a criminal case, appellate courts appraise the evidence, both direct and circumstantial, in the light most favorable to the prosecution, together with the reasonable inferences to be drawn therefrom, and will not weigh the evidence or test the credibility of the witnesses. Havelock v. United States, 427 F.2d 987 (10th Cir. 1970); Glazerman v. United States, 421 F.2d 547 (10th Cir. 1970), cert. denied, 398 U.S. 928, 90 S.Ct. 1817, 26 L.Ed.2d 90; Bailey v. United States, 410 F.2d 1209 (10th Cir. 1969), cert. denied, Freeman v. United States, 396 U.S. 933, 90 S.Ct. 276, 24 L.Ed.2d 232. . . .

See also United States v. Smith, 521 F.2d 374 (10th Cir. 1975), and United States v. Evans, No. 76-1479, an unpublished Tenth Circuit decision filed June 9, 1977.

The evidence shows that in 1973 Wolf owned and controlled two corporations which were engaged in the manufacture of pallets in Oklahoma City, Oklahoma, and Dallas, Texas. In March of 1973, Wolf, on behalf of the two corporations, entered into agreements with Liberty-Heller Factors, Inc. ² Liberty-Heller was engaged in a specialized method of financing wherein current accounts receivable were purchased from sellers of manufactured products. These purchases provided an immediate inflow of cash to the merchandiser. In substance, the contracts between Wolf and Liberty-Heller provided that upon assignment of accounts receivable to Liberty-Heller the Wolf corporations would be paid in cash ninety per cent of the face value of the account, less a three per cent service charge. The ten per cent retentions were to be held by Liberty-Heller to cover contingencies such as disputed claims. The Wolf customers were to receive invoices with printed endorsements thereon to the effect that such accounts had been assigned to Liberty-Heller and payments therefor were to be made directly to it. It was also understood that if payments were made to the Wolf corporations by any customer, such payments were to be delivered immediately to Liberty-Heller. There was evidence that early in the year 1974 Liberty-Heller's books indicated that many of the accounts which had been assigned to it were not being paid. An investigation developed through witnesses and an audit that in many instances assigned accounts had been paid directly to the Wolf corporations and retained by them. It was also found that in numerous instances there were assignments of invoices purporting to represent actual sales to customers which were fictitious. In March of 1974, these discrepancies totaled about $43,000, and by December, 1975, the total loss to Liberty-Heller was approximately $137,500.

With reference particularly to the first three counts of the indictment, it is argued that there is no evidence to show that Wolf intended to devise a scheme or artifice to defraud and that a fair interpretation of the record is that the so-called defalcations were not intentional, but only the result of bad judgment and overexpansion on the part of Wolf, together with pressure from Liberty-Heller. Each of the first three counts, however, charges that Wolf obtained from Liberty-Heller cash advances on fictitious accounts receivable, or received and retained payment directly from the customer which belonged to Liberty-Heller. The defalcations extended over the period set forth in the indictment. Large sums of money were involved which would affect the financial condition of the two corporations controlled and managed by Wolf, and permits an inference that Wolf knew of them. United States v. Curtis,537 F.2d 1091 (10th Cir.), cert. denied, 429 U.S. 962, 97 S.Ct. 389, 50 L.Ed.2d 330 (1976). The question of intent was one to be determined by the jury.

A scheme to defraud is an essential element of a violation of Section 1341, but statutory violation is not accomplished until there has been a use of the mails to further the scheme. United States v. Maze, 414 U.S. 395, 94 S.Ct. 645, 38 L.Ed.2d 603 (1974); Kann v. United States, 323 U.S. 88, 65 S.Ct. 148, 89 L.Ed. 88 (1944). Each use of the mails is a separate and distinct offense. Marvin v. United States, 279 F.2d 451 (10th Cir. 1960); Palmer v. United States, 229 F.2d 861 (10th Cir.), cert. denied, 350 U.S. 996, 76 S.Ct. 546, 100 L.Ed. 861 (1956). A person causes the use of mails where he does an act with knowledge that in the ordinary course of business the use of mails will follow. United States v. Maze, supra ; Pereira v. United States, 347 U.S. 1, 74 S.Ct. 358, 98 L.Ed. 435 (1954); United States v. Pisciotta, 469 F.2d 329 (10th Cir. 1972); Marvin v. United States, supra.

In Count 1, an invoice for goods purchased which had been assigned to Liberty-Heller was sent to Harter Concrete Products through the mails by a Wolf corporation, but the assignment was not indicated on the invoice and the amount due was paid to one of Wolf's corporations and retained by it. Counts 2 and 3 involve a sale of pallets to Horn Seed Company of Oklahoma City. The Oklahoma City Pallet Company mailed an invoice for the purchase to the seed company without indicating thereon that the account had been assigned to Liberty-Heller. Thereafter, the seed company mailed a check to the pallet company, which cashed the check and retained the money. These mailings were a natural and foreseeable result of the business transaction and played a significant part in Wolf's scheme to defraud and to obtain money to which he or his corporations were not entitled.

Counts 5 and 6 involve two invoices for the purported sales of heavy machinery by one of Wolf's corporations to Nor-Tex, Inc., a Dallas, Texas, corporation of which Wolf was an unknown part owner. The invoices representing these sales were in the sums of $8,640.00 and $7,940.00 when submitted to Liberty-Heller for assignment. The invoices were accepted and paid for. Pursuant to the practice then in effect, Liberty-Heller, after payment for the assignments, mailed them to Nor-Tex, which corporation received them through the mail in the regular course of business. Admittedly, these sales were not made and the delivery tickets submitted with the invoices were forged by Wolf. Wolf testified that these transactions were consummated with the consent and suggestion of Liberty-Heller. This was denied, which presented a factual question to be determined by the jury.

Relying on United States v. Maze, supra, and Kann v. United States, supra, it is contended that when the mailings were...