Tuesday, March 8, 2005

After-the-Fact Mailings for Mail Fraud Prosecution

An area fraught with contradictory opinions in mail fraud prosecutions concerns whether mailings that occur after the defendant gains the benefits of the fraudulent scheme are sufficiently "in furtherance" to bring the case within Section 1341.  A recent Fourth Circuit decision, United States v. Pierce (here), involves a 2-1 decision in which the majority found mailings reporting sales of bingo lottery tickets after they had been taken and cashed be sufficiently part of the scheme to meet the mailing element (I'm loath to call it the jurisdictional element because it is really more than that) for the federal prosecution.  The dissent argued that the sales reports were unrelated to the fraud.  A footnote in the majority opinion explained the different approaches:

The dissent argues that the mailings at issue here — the daily reports of bingo sales — did not further Pierce’s fraudulent scheme because "[t]he fraud was effectively concealed when Pierce and Hoss II made their oral reports to Linda Pierce each night but omitted their sales from the off-the-books games. The fact that Linda Pierce wrote the sales down and later mailed a report is unrelated to furthering the fraud because all that was necessary to further the fraud had already occurred." In fact, Linda Pierce’s reporting to Wright — an agent of the victim of the fraud — was necessary to conceal the fraud because it kept Wright from suspecting any misconduct in the bingo operation. These mailings "help[ed] cloak the scheme with an aura of legitimacy, thereby preventing its detection and allowing it to continue." Indeed, it was the use of the mails in this case — reasonably foreseen by Pierce — that allowed the fraudulent scheme to continue undetected for more than two years and allowed Pierce to retain the fruits of his fraud during that period.

Cases on the mailing element are so fact-specific, and test from Schmuck so vague ("incident to an essential part of the scheme"), that it is difficult to draw much guidance from them, with each side arguing that its facts are sufficiently similar to a previously decided case in its favor that should control the decision.(ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/03/afterthefact_ma.html

Fraud, Judicial Opinions | Permalink

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