US v. Granberry, 89-110CR(1).

• Decision Date: 15 November 1989
• Docket Number: No. 89-110CR(1).,89-110CR(1).
• Citation: 725 F. Supp. 446
• Parties: UNITED STATES of America, Plaintiff, v. Darryl S. GRANBERRY, Defendant.
• Court: U.S. District Court — Eastern District of Missouri

725 F. Supp. 446

UNITED STATES of America, Plaintiff, v. Darryl S. GRANBERRY, Defendant.

No. 89-110CR(1).

United States District Court, E.D. Missouri, E.D.

November 15, 1989.

Timothy Wilson, Asst. U.S. Atty., St. Louis, Mo., for plaintiff.

David Rosen, Federal Public Defender, St. Louis, Mo., for defendant.

MEMORANDUM

NANGLE, Chief Judge.

Defendant Darryl S. Granberry has been charged in a two-count indictment with violations of the mail fraud statute, 18 U.S.C. § 1341, in connection with his application for a Missouri School Bus Operator's Permit. Defendant was first charged with violations of the mail fraud statute with respect to his application for a Missouri School Bus Operator's Permit in United States v. Granberry, No. 89-28Cr(1) (E.D. Mo.1989) ("Granberry I"). The indictment in Granberry I alleged that defendant used the United States Mail to obtain a bus operator's permit by means of fraudulent representations. This Court dismissed the indictment against defendant in Granberry I because it found that the State of Missouri was deprived of no property interest within the meaning of McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), and that the indictment, therefore, failed to allege a violation of 18 U.S.C. § 1341. United States v. Granberry, No. 89-28Cr(1) (E.D.Mo. April 25, 1989).

Subsequently, the Grand Jury reindicted defendant, and the instant action was filed. The acts alleged in the instant indictment and the acts alleged in Granberry I do not differ. The instant indictment, however, sets forth the factual underpinnings of the alleged crime with greater specificity and enumerates the alleged property deprivations that resulted from defendant's actions. The Court sets forth below the underlying facts and the property deprivations as alleged in the indictment.

To obtain a bus operator's permit, defendant had to pass a medical examination, a special driver's examination and complete and submit an application along with a $3.00 fee to the Driver's License Bureau of the Missouri Department of Revenue. The government alleges that defendant applied for employment with the Normandy School District as a school bus driver and that he denied in his employment application that he had any prior felony convictions when, in fact, defendant had been convicted of First Degree Murder on March 12, 1971, in the Circuit Court of St. Louis County. The government further claims that defendant stated in his June 27, 1989, application for a bus operator's permit that he had never been convicted of murder and that he certified that said representation was true by signing the application. On August 8, 1988, the Normandy School District mailed defendant's application for an operator's permit to the Department of Revenue. On August 27, 1988, the Department of Revenue mailed defendant's bus operator's permit to the Normandy School District. The school district then hired defendant as a school bus driver, which the government claims would not have been the case had the school district known of defendant's prior murder conviction.

Count I of the indictment focuses on the August 8, 1988, mailing of defendant's application by the school district to the Department of Revenue. Count II of the indictment focuses on the August 27, 1988 mailing of a bus operator's permit by the Department of Revenue to Normandy School District. Both counts allege that defendant's actions constitute a scheme and artifice to defraud and obtain money and property from Normandy School District and the State of Missouri by means of false and fraudulent pretenses and representations, in violation of 18 U.S.C. § 1341. The indictment sets forth the property that defendant "did defraud and obtain" from the school district and the State of Missouri as follows:

(A) Money and Property of the Normandy School District:

(1) Money from the Normandy School District in the form of wages paid,

(2) Property of the Normandy School District being the exclusive control of the distribution of a limited number of school bus driving jobs,

(3) Property of the Normandy School District being the exclusive control of how its money is spent,

(4) Property of the Normandy School District being the exclusive control of who it hires to drive its children to and from school,

(5) Property of the Normandy School District being its control of its tortious liability as a result of the hiring of a First Degree Murderer to drive its children to and from school,

(6) Property of the Normandy School District, said property being its exclusive control over the persons and type of persons with whom it decided to enter employment agreements and contracts.

(B) Money and property of the State of Missouri:

(1) Property of the State of Missouri being the control of how its Department of Revenue spends its resources processing school bus operator permit applications,

(2) Money of the State of Missouri in the form of expenses and costs of processing a fraudulent school bus operator permit application,

(3) Property of the State of Missouri being the exclusive control of distribution of school bus operator permits,

(4) Property of the State of Missouri being the physical piece of paper namely, the School Bus Operator Permit.

(Indictment p. 5)

Defendant has filed a motion to dismiss the indictment wherein defendant claims that the indictment should be dismissed because it fails to allege a scheme to obtain "money or property" as required by United States v. McNally, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). Defendant also suggests that the Missouri statute that prohibits individuals convicted of certain felonies and misdemeanors from obtaining a bus operator's permit is unconstitutional and that the mail fraud statute may not be employed "to vindicate an unconstitutional state law". The Court will only address defendant's "money or property" argument because, for the reasons set forth below, the Court concludes that the indictment fails to allege a violation of the mail fraud statute under McNally.

THE "MONEY OR PROPERTY" REQUIREMENT UNDER McNally

Section 1341 of Title 18 of the United States Code provides in pertinent part:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, ... for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail according to the direction thereon, ... shall be fined not more than $1,000 or imprisoned not more than five years, or both.

In McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), the United States Supreme Court held that the mail fraud statute is limited to the protection of property rights and that the statute does not reach alleged deprivations of the citizenry's intangible right to "good government". Id. at 359-60, 107 S.Ct. at 2881-82.¹ In McNally, Gray, a former public official of the Commonwealth of Kentucky, McNally, a private individual, and Hunt, the former chairman of Kentucky's Democratic Party, were charged with violations of § 1341 under the good government theory. Hunt gained "de facto" control over choosing from whom the Commonwealth would purchase its insurance policies when a Democrat was elected Governor of Kentucky in 1974. Id. at 352-53, 107 S.Ct. at 2877-78. Hunt agreed with one Wombwell Insurance Company ("Wombwell") that it could act as Kentucky's agent for securing insurance policies if Wombwell would share commissions exceeding $50,000 with other agencies that Hunt specified. One such "other" insurance agency was controlled by Hunt and Gray and operated by McNally. Hunt, Gray and McNally were charged with mail fraud, and Hunt pled guilty. Id. at 353, 107 S.Ct. at 2878. At trial, the government proceeded against Gray and McNally on the basis of a mail fraud count concerning a commission check that one of the "other" insurance companies had mailed to Wombwell. Id. This count alleged that Gray and McNally had deprived the citizens and government of Kentucky to their right of good government and that they had devised a scheme to obtain money and valuable property by means of false pretenses. Id. The district court, however, instructed the jury only with regard to the "good government" theory because the court found that the "scheme to obtain money and property" theory was subsumed in the good government theory. Id. at 354 note 3, 107 S.Ct. at 2878 note 3. Gray and McNally were convicted of mail fraud, and the Sixth Circuit confirmed their convictions on appeal.

Writing for the majority, Justice White observed that although the mail fraud statute clearly protects property rights, it is silent with respect to the intangible right of good government. Id. at 356, 107 S.Ct. at 2879. The Court noted that "the original impetus behind the mail fraud statute was to protect the people from schemes to deprive them of their money or property." Id. Justice White focused on the phrase "any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses" in an effort to determine whether amendments to the original statute were meant to depart from this original impetus. He observed that the phrase "or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises" had been added by Congress in 1909 after the Supreme Court's decision in Durland v. United States, 161 U.S. 306, 16 S.Ct. 508, 40 L.Ed. 709 (1896). In Durland, the Supreme Court held that the mail fraud statute encompassed "everything designed to defraud by representations as to the past or present, or suggestions and promises as to the future." Durland, 161 U.S. at 313,...