United States v. Pierce

ON REHEARING
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.  No. 03-4956
LARRY J. PIERCE, II,
Defendant-Appellant.

Appeal from the United States District Court
for the Western District of Virginia, at Abingdon.
Glen M. Williams, Senior District Judge.
(CR-03-40)
Argued: December 3, 2004
Decided: May 26, 2005
Before MOTZ, GREGORY, and SHEDD, Circuit Judges.
Affirmed in part, vacated in part, and remanded by published opinion.
Judge Shedd wrote the opinion, in which Judge Motz joined. Judge
Gregory wrote an opinion concurring in part and dissenting in part.
COUNSEL
ARGUED: Nancy Combs Dickenson, Lebanon, Virginia, for Appel-
lant. Rick A. Mountcastle, Assistant United States Attorney, OFFICE
OF THE UNITED STATES ATTORNEY, Abingdon, Virginia, for
Appellee. ON BRIEF: John L. Brownlee, United States Attorney,
Roanoke, Virginia, for Appellee.
2 UNITED STATES v. PIERCE
OPINION
SHEDD, Circuit Judge:
Defendant Larry J. ("Jimmy") Pierce, II was convicted of ten
counts of mail fraud and one count of conspiracy to commit mail
fraud in connection with a bingo operation in southwest Virginia.
Pierce challenges his conviction solely on the ground that he never
caused the United States mails to be used in furtherance of the fraudu-
lent scheme. He challenges his 33-month prison sentence on the
grounds that (1) the district court’s estimate of the loss resulting from
the fraud exceeded the figure stipulated to by the Government in his
coconspirators’ sentencing proceedings, (2) the evidence at trial did
not support the district court’s estimate of the loss, and (3) the dispar-
ity between his sentence and his coconspirators’ sentences violates
the Equal Protection Clause. In his petition for rehearing, Pierce
argues for the first time that his sentence must be vacated under
United States v. Booker, 125 S. Ct. 738 (2005). For the reasons that
follow, we affirm Pierce’s conviction but vacate the sentence and
remand this case for resentencing.
I.
Because Pierce challenges the sufficiency of the evidence support-
ing his conviction, we view the facts established at trial in the light
most favorable to the Government. Glasser v. United States, 315 U.S.
60, 80 (1942).
Bristol Regional Speech and Hearing Center, Inc. ("Bristol") is a
nonprofit charitable organization located in southwest Virginia. Bris-
tol was authorized by Virginia law to pay outside agents to conduct
bingo games to generate funds for its programs. Sue Wright, Bristol’s
director, testified that there was no authority or mechanism for the
individuals who carried out the bingo operation on behalf of Bristol
to share in any of the income derived from bingo sales. Bristol was
to receive all the proceeds from any bingo game sold during a session.
Wright hired Linda Pierce to manage Bristol’s bingo operation.
Linda Pierce then hired her son Jimmy and two other relatives, Bill
UNITED STATES v. PIERCE 3
Hoss and Bill Hoss II, to help her operate the bingo events. Bill Hoss
called out the numbers, while Jimmy Pierce and Bill Hoss II con-
ducted most of the sales activities. Linda Pierce had general supervi-
sory authority and kept the records for the bingo operation. Wright
rarely attended bingo sessions.
As early as 1997, the Hosses and Jimmy Pierce began purchasing
extra cases of instant bingo games from Bristol’s supplier, Woolwine
Specialty Sales ("Woolwine"). Bill Hoss would purchase a number of
cases on Bristol’s account and then would purchase additional cases
for cash. Jimmy Pierce and Bill Hoss II would sell these additional
instant games at the same time that they sold Bristol’s games. During
a typical evening session, they might sell six cases of instant games
for Bristol and four or five additional cases for themselves. As they
made sales, Jimmy Pierce and Bill Hoss II deposited the cash pro-
ceeds into Bristol’s cash drawer. At some point during or after the
session, they withdrew from the cash drawer $166 for each case of
instant games they sold for themselves. Jimmy Pierce and Bill Hoss
II would then report to Linda Pierce (for official recordkeeping pur-
poses) only the number of Bristol’s games they sold. Using this infor-
mation, Linda Pierce prepared a report for Bristol’s records and
mailed that report to Wright. Of course, the report understated the
total number of instant games sold during each session.
A grand jury indicted Linda Pierce, Jimmy Pierce, Bill Hoss, and
Bill Hoss II on eleven counts of mail fraud and one count of conspir-
acy to commit mail fraud. Bill Hoss and Bill Hoss II each pled guilty
to one count of conspiracy to commit mail fraud. In its plea agree-
ment with Bill Hoss, the Government stipulated that the loss resulting
from the conspiracy was more than $70,000 but less than $120,000
and further agreed that Bill Hoss would be considered a minor partici-
pant in the conspiracy. In its plea agreement with Bill Hoss II, the
Government stipulated that the loss was more than $120,000 but less
than $200,000. Pursuant to their plea agreements, the Hosses agreed
to testify against Linda Pierce and Jimmy Pierce.
During the trial of Linda Pierce and Jimmy Pierce, the Government
produced records showing the number of off-the-books instant bingo
games purchased from Woolwine by Jimmy Pierce and the Hosses
from June 2001 through February 2002. Although there were no
4 UNITED STATES v. PIERCE
records documenting purchases made before June 2001, Woolwine
employee Angela Bowery testified that the number of off-the-books
instant games purchased each month by Jimmy Pierce and the Hosses
remained roughly the same from 1997 to 2002. Based on this evi-
dence, Virginia Gaming Commission Agent Harrell Erwin calculated
the total loss resulting from the fraudulent scheme, going back only
to September 1999, to be $265,598.1
After a three-day trial, the jury acquitted Linda Pierce on all counts
of the indictment. The jury convicted Jimmy Pierce of mail fraud and
conspiracy to commit mail fraud, and the district court sentenced him
to 33 months in prison with three years of supervised release. This
appeal followed.
II.
A.
Pierce’s conviction must be upheld if "there is substantial evidence,
taking the view most favorable to the Government," to support it.
Glasser, 315 U.S. at 80. "[S]ubstantial evidence is evidence that a rea-
sonable finder of fact could accept as adequate and sufficient to sup-
port a conclusion of a defendant’s guilt beyond a reasonable doubt."
United States v. Burgos, 94 F.3d 849, 862 (4th Cir. 1996) (en banc).
In evaluating the sufficiency of the evidence to support a criminal
conviction, we assume that the jury resolved all contradictions in the
testimony in favor of the Government. United States v. Sun, 278 F.3d
302, 313 (4th Cir. 2002).
In order to prove mail fraud, the Government must prove that the
defendant (1) knowingly participated in a scheme to defraud and (2)
mailed, or caused to be mailed, anything "for the purpose of executing
such scheme." 18 U.S.C. § 1341. Both in the district court and on
appeal, Pierce has challenged his mail fraud conviction solely on the
1
Although Bowery testified that the off-the-books purchases began
shortly after she began working for Woolwine in 1997, other witnesses
tied the start of the conspiracy to an event that occurred in September
1999. Agent Erwin used the later date for purposes of his loss calcula-
tion.
UNITED STATES v. PIERCE 5
ground that he never caused the United States mails to be used in fur-
therance of the fraudulent scheme.
A person "causes" the mails to be used when he "does an act with
knowledge that the use of the mails will follow in the ordinary course
of business, or where such use can reasonably be foreseen, even
though not actually intended." Pereira v. United States, 347 U.S. 1,
8-9 (1954); see also United States v. Edwards, 188 F.3d 230, 235 (4th
Cir. 1999) (stating that "proof that the use of the mails was, objec-
tively, reasonably foreseeable is sufficient to support a conviction for
conspiracy to commit mail fraud"). The evidence established that
Linda Pierce mailed falsified reports of bingo game sales to Wright.
The evidence also established that Jimmy Pierce provided his mother
with information after each session so that she could prepare these
reports for Wright. Since Wright was very rarely present onsite during
bingo sessions, the jury could conclude — and it is not disputed on
appeal — that Jimmy Pierce reasonably foresaw the use of the mails
to deliver the daily bingo reports to Wright. Thus, Pierce "caused" the
mails to be used.
Pierce contends, however, that the mailing of these daily bingo
reports was not in furtherance of the fraudulent scheme because he
had already obtained his profits from Bristol’s cash drawer before the
reports were actually mailed. According to Pierce, he cannot be liable
under § 1341 because the mailing at issue was not necessary for his
receiving the proceeds of the fraud. This argument is meritless.
Although the statute "does not purport to reach all frauds, but only
those limited instances in which the use of the mails is a part of the
execution of the fraud," Kann v. United States, 323 U.S. 88, 95
(1944), it is enough that the mailing be "incident to an essential part
of the scheme, or a step in the plot," Schmuck v. United States, 489
U.S. 705, 711 (1989) (internal citations and quotations omitted).
Importantly, "the use of the mails need not [itself] be an essential ele-
ment of the scheme." Id. at 710; see also United States v. Maze, 414
U.S. 395, 400 (1974); Pereira, 347 U.S. at 8; Edwards, 188 F.3d at
235.
Moreover, the Supreme Court has stated that "[m]ailings occurring
after receipt of the goods obtained by fraud are within the statute if
6 UNITED STATES v. PIERCE
they were ‘designed to lull the victims into a false sense of security,
postpone their ultimate complaint to the authorities, and therefore
make the apprehension of the defendants less likely than if no mail-
ings had taken place.’" United States v. Lane, 474 U.S. 438, 451-52
(1986) (quoting Maze, 414 U.S. at 403). We have applied this doc-
trine to cases in which the mailings were made after the defendant
obtained the victims’ property. See Godwin, 272 F.3d at 668 (con-
cluding that a jury could find that the defendant wrote a "lulling let-
ter" to his victim "in an effort to placate her and to keep the fraud
scheme active and ongoing"); Morley v. Cohen, 888 F.2d 1006, 1009-
10 (4th Cir. 1989) (concluding that a jury could find that mailings
made by the defendant to an investor after the investment was made
lulled the investor into leaving his investment in the defendant’s con-
trol and thus were part of the defendant’s ongoing scheme to
defraud); United States v. Snowden, 770 F.2d 393, 398 (4th Cir. 1985)
(stating that "[l]ulling letters sent to innocent victims for the purpose
of advancing a fraudulent and criminal scheme are sufficient to
charge mail fraud, even where the letters follow the acquisition of the
money in question").
Wright testified that Linda Pierce provided her with weekly reports
for Bristol’s bingo operation and that she relied on Linda Pierce’s
reports to report accurately the amount of income generated for Bris-
tol. Wright further testified that she would have reported any off-the-
books bingo sales to state regulators had she been made aware of such
sales. Taken in the light most favorable to the Government, the evi-
dence proved that the falsified bingo reports lulled Bristol into a false
sense of security and effectively concealed Pierce’s fraud.2 In sum,
2
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." Post, at 15.
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 prevent-
UNITED STATES v. PIERCE 7
the evidence adduced at trial was sufficient to support Pierce’s con-
viction for mail fraud.
B.
Pierce also challenges the district court’s computation of his sen-
tence. The base offense level for mail fraud is six. See U.S.S.G.
§ 2B1.1(a) (2002).3 The district court added two levels because the
offense involved a misrepresentation that Pierce was acting on behalf
of a charitable organization, see U.S.S.G. § 2B1.1(b)(7)(A), and it
added another twelve levels because the loss resulting from the fraud
exceeded $200,000, see U.S.S.G. § 2B1.1(b)(1)(G). With an adjusted
offense level of twenty and a criminal history category I, Pierce was
sentenced to 33 months’ imprisonment, the most lenient sentence
available under the applicable Sentencing Guidelines range.
1.
Pierce contends that he could not be held liable for a loss exceeding
$200,000 because the Government stipulated, and the district court
found, in separate proceedings involving Pierce’s coconspirators, that
the loss was no greater than $200,000. In its plea agreement with Bill
Hoss, the Government stipulated that the loss resulting from the fraud
was more than $70,000 but less than $120,000. In its plea agreement
with Bill Hoss II, the Government stipulated that the loss was more
than $120,000 but less than $200,000. According to Pierce, the Gov-
ernment should be estopped from attributing to him an amount of loss
any greater than the amounts previously found by the district court in
his coconspirators’ cases. Pierce was not a party to those cases, how-
ever, and we agree with the Fifth and Ninth Circuits that the civil doc-
trine of nonmutual collateral estoppel has no application in criminal
ing its detection and allowing it to continue." United States v. Lack, 129
F.3d 403, 408 (7th Cir. 1997). 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.
3
Pierce was sentenced according to the 2002 version of the Sentencing
Guidelines.
8 UNITED STATES v. PIERCE
sentencing. See United States v. Montes, 976 F.2d 235, 239 (5th Cir.
1992); United States v. Valdez-Soto, 31 F.3d 1467, 1476 (9th Cir.
1994); cf. Standefer v. United States, 447 U.S. 10, 21-25 (1980)
(declining to apply nonmutual collateral estoppel in a criminal case).
The district court was free to estimate the loss resulting from the fraud
based on the information available to it in this case.
2.
Pierce next argues that the evidence presented at trial does not sup-
port the district court’s finding that the fraud caused a loss to Bristol
of $235,000. This finding resulted in a twelve-level enhancement to
Pierce’s base offense level. The Government must prove the amount
of loss by a preponderance of evidence, and the district court must
"make a reasonable estimate of the loss, given the available informa-
tion." United States v. Miller, 316 F.3d 495, 503 (4th Cir. 2003);
U.S.S.G. § 2B1.1, cmt. n. 2(C). The district court’s estimate of loss
presents a question of fact that we review for clear error. Miller, 316
F.3d at 503.
In arriving at the $235,000 figure, the district court began with
Agent Erwin’s estimate of the total loss — $265,598 — and deducted
$30,000 in accordance with Sue Wright’s estimate of the net loss to
Bristol.4 Agent Erwin computed the average monthly purchases of
off-the-books bingo games during the period from June 2001 through
February 2002 — the period for which records were available — and
applied that average to each month going back to September 1999.5
Agent Erwin’s extrapolation was based on Angela Bowery’s testi-
mony that the conspiracy maintained the same level of purchasing
activity throughout the duration of the conspiracy. To be sure, Bow-
4
The presentence report adopted Agent Erwin’s estimate and stated
that the total loss was $265,598. The basis for Wright’s lower estimate
is unclear from the record, but the Government did not challenge her cal-
culation. Either estimate would warrant the same enhancement under the
applicable guideline, which calls for a twelve-level enhancement for any
loss exceeding $200,000. See U.S.S.G. § 2B1.1(b)(1)(G).
5
Agent Erwin made a more conservative estimate of loss by assuming,
consistent with testimony from other witnesses, that the conspiracy
began in September 1999 rather than sometime in 1997.
UNITED STATES v. PIERCE 9
ery testified that she could only estimate the number of purchases
made before she began keeping records. Nevertheless, the district
court was only required to make a reasonable estimate of the loss,
and we cannot say that its finding, based on Agent Erwin’s calcula-
tions and Bowery’s testimony, was clearly erroneous.
3.
Finally, Pierce challenges his sentence on the ground that the dis-
parity between his sentence and his coconspirators’ sentences consti-
tutes an equal protection violation. A criminal sentence violates the
Equal Protection Clause only if it reflects disparate treatment of simi-
larly situated defendants lacking any rational basis. United States v.
Roberts, 915 F.2d 889, 891 (4th Cir. 1990). Pierce and his coconspira-
tors are not similarly situated: Pierce was sentenced based on all the
evidence adduced at trial, including Agent Erwin’s final estimate of
the loss resulting from the fraud, while the Hosses pled guilty and
were sentenced based on the Government’s stipulations and the infor-
mation available prior to trial. The district court was required to
"make a reasonable estimate of the loss, given the available informa-
tion," U.S.S.G. § 2B1.1, cmt. n. 2(C), and the quality of that informa-
tion changed over time. At the very least, this fact supplies a rational
basis for the differing amounts of loss attributed to Pierce and his
coconspirators.
A district court is not required to consider the sentences of code-
fendants, United States v. Foutz, 865 F.2d 617, 621 (4th Cir. 1989),
and it is well settled that codefendants and even coconspirators may
be sentenced differently for the same offense, United States v. Quinn,
359 F.3d 666, 682 (4th Cir. 2004); United States v. Davis, 98 F.3d
141, 145 (4th Cir. 1996). We have already concluded that the district
court’s estimate of the loss resulting from the fraud was appropriate
under the Sentencing Guidelines, and the fact that Pierce’s cocon-
spirators were sentenced less harshly does not change that conclusion.
C.
In his petition for rehearing, Pierce argues for the first time that his
sentence must be vacated and his case remanded for resentencing pur-
suant to United States v. Booker, 125 S. Ct. 738 (2005). In a supple-
10 UNITED STATES v. PIERCE
mental brief responding to Pierce’s argument, the Government
concedes that a remand is required in this case.
This case is similar to United States v. Hughes, 401 F.3d 540, (4th
Cir. 2005), where we vacated a criminal sentence and remanded for
resentencing in accordance with Booker. As in Hughes, the district
court here imposed the sentence mandated by the Sentencing Guide-
lines, based in part upon a fact that was not found by the jury, i.e.,
the amount of the loss resulting from Pierce’s fraud. See id. at 547-48(concluding that application of sentencing enhancements based on
judge-found facts was "error" that was "plain"). As in Hughes, the
defendant here was sentenced to a longer term of imprisonment than
the Sentencing Guidelines would have required had the district court
not considered that fact. See id. at 548-49 (concluding that imposition
of a sentence in excess of the maximum sentence permitted by the
jury’s verdict affected the defendant’s substantial rights). Consistent
with Hughes, we conclude that the district court committed an error
that was plain and that affects Pierce’s substantial rights, and we exer-
cise our discretion to notice the error.6 See id. at 555-56. Accordingly,
we remand this case for resentencing in accordance with Booker.7
6
Just as we noted in Hughes, "[w]e of course offer no criticism of the
district judge, who followed the law and procedure in effect at the time"
of Pierce’s sentencing. 401 F.3d at 545 n.4; see generally Johnson v.
United States, 520 U.S. 461, 468 (1997) (stating that an error is "plain"
if "the law at the time of trial was settled and clearly contrary to the law
at the time of appeal").
7
Although the Guidelines are no longer mandatory, Booker makes
clear that a sentencing court must still "consult [the] Guidelines and take
them into account when sentencing." 125 S. Ct. at 767. On remand, the
district court should first determine the appropriate sentencing range
under the Guidelines, making all factual findings appropriate for that
determination. Hughes, 401 F.3d at 546. The court should consider this
sentencing range along with the other factors described in 18 U.S.C.
§ 3553(a), and then impose a sentence. Id. If that sentence falls outside
the Guidelines range, the court should explain its reasons for the depar-
ture, as required by 18 U.S.C. § 3553(c)(2). Id. The sentence must be
"within the statutorily prescribed range and . . . reasonable." Hughes, 401
F.3d at 547.
UNITED STATES v. PIERCE 11
III.
Substantial evidence supports the jury’s finding that the mailings
of falsified bingo reports were at least reasonably foreseeable by
Pierce, and that finding is sufficient to uphold the conviction in this
case. The district court’s estimate of the loss resulting from the fraud
was not clearly erroneous, and we reject Pierce’s various challenges
to the calculation of his sentence under the Sentencing Guidelines.
Nevertheless, we vacate Pierce’s sentence and remand this case for
resentencing in accordance with Booker.
AFFIRMED IN PART, VACATED IN PART,
AND REMANDED
GREGORY, Circuit Judge, concurring in part and dissenting in part:
It is axiomatic that not all fraud is federal fraud. Rather, the federal
mail fraud statute reaches only "those limited instances in which the
use of the mails is a part of the execution of the fraud, leaving all
other cases to be dealt with by appropriate state law." Kann v. United
States, 323 U.S. 88, 95 (1960) (emphasis added). Because I believe
that this is such a case that should be left to state law, I respectfully
dissent as to the sufficiency of the evidence on Pierce’s conviction.
The majority’s attempt to fit the facts of this case into the federal mail
fraud statute goes beyond existing precedent and demonstrates the
dangers inherent in extending federal jurisdiction further than Con-
gress intended to go.
I.
The majority affirms Pierce’s mail fraud conviction under 18
U.S.C. § 1341. A jury found that Pierce had defrauded Bristol by sell-
ing "off-the-books" instant bingo games during sessions in which they
would also sell games for Bristol and then pocketing the profits. The
scheme, which began perhaps as early as 1997 and ended in early
2001, entailed purchases of the "off-the-books" instant bingo games
every few weeks and illegal sales at bingo sessions each weekend. At
the end of each session, Hoss II and Pierce would orally report to
Linda Pierce how many bingo games they had sold for Bristol but
12 UNITED STATES v. PIERCE
they did not report to her their sales of the "off-the-books" instant
bingo games.1 Linda Pierce, who was acquitted on all counts, sent
weekly bingo summary reports to Bristol, which included the tallies
of the bingo games sold, through the U.S. mail.
II.
Pierce’s conviction for mail fraud turns on whether the mailing of
the weekly reports were used to conceal the scheme or rather whether
the scheme had already come to fruition when the mailings occurred.
Whether a mailing is deemed to be for the purpose of executing a
scheme to defraud depends on "whether the mailings were sufficiently
closely related to (the defendant’s) scheme to bring his conduct within
the statute." United States v. Maze, 414 U.S. 395, 399 (1974). The
Supreme Court’s jurisprudence on the question of when a mailing acts
in furtherance of fraud has evolved from a narrow to a broad reading.
Yet, a review of the history of this jurisprudence demonstrates that
Pierce’s conduct does not fit even within the Court’s more recent
expansive reading of the statute.
In Kann v. United States,2 323 U.S. 88 (1944), and Parr v. United
States, 363 U.S. 370 (1960),3 the Court read the mail fraud statute
1
No allegation was made that Pierce sold games purchased on Bristol’s
account and kept the proceeds as his own.
2
In Kann, the defendants set up a dummy corporation through which
they diverted funds from another corporation for their own use. 323 U.S.
at 92-93. They deposited or cashed checks drawn on these diverted funds
at various banks which mailed the checks to the drawee bank. Id. at 93.
The Court set aside their convictions on the ground that the mailings
occurred after their scheme had come to fruition because the defendants
had already received the money they intended to receive and it was
immaterial to them how the bank which paid or credited the check would
collect from the drawee bank. Id. at 94.
3
In Parr, the defendants made unauthorized gasoline purchases using
their employer’s credit card. 363 U.S. at 383. The oil company mailed
invoices to the credit card holder, and in return, payment was sent
through the mail. Id. The Court reversed the defendants’ mail fraud con-
victions finding the mailings were not sufficiently connected to the
scheme because it was immaterial to defendants how the oil company
received payment for its services. Id. at 393.
UNITED STATES v. PIERCE 13
somewhat restrictively overturning mail fraud convictions on the
ground that the schemes had reached fruition before the mailings
occurred. In doing so, it looked at the individual transactions in each
case separately and found that once the proceeds for each transaction
were received, the schemes ended. The subsequent mailings, it noted,
were either merely incidental and collateral or immaterial to the
schemes in question. See Parr, 363 U.S. at 393; Kann, 323 U.S. at 95.
But in United States v. Sampson, 371 U.S. 75 (1962), the Court
seemingly shifted to a more expansive analysis by upholding a mail
fraud conviction in which the mailings were sent to the victims of the
fraud after the defendants had received the victims’ money. Id. at 78.
It distinguished its decisions in Kann and Parr stating that in those
cases the schemes had come to fruition before the mails were used.
Id. at 80. In contrast, in Sampson, the mailings were made for the pur-
pose of lulling the victims into believing that the defendants would
perform the promised services and were done as part of the "previ-
ously formulated plan." Id. at 81.
The Court went further still in Schmuck v. United States, 489 U.S.
705 (1989), holding that the defendant, who purchased used cars,
rolled back their odometers, and then sold them to unwitting car deal-
ers with artificially inflated prices, was properly convicted of mail
fraud based upon the car dealers’ subsequent mailing of documents
transferring title to their customers. Id. at 172. It found that these
mailings satisfied the mail fraud statute reasoning that "a rational jury
could have found that the title-registration mailings were part of the
execution of the fraudulent scheme, a scheme which did not reach fru-
ition until the retail dealers resold the cars and effected transfers of
title." Id.
The Court found it "sufficient for the mailing to be incident to an
essential part of the scheme or a step in the plot." Id. at 710-11 (inter-
nal citations and quotations omitted). It distinguished Kann and Parr
noting that the mailings in those cases "involved little more than post-
fraud accounting among the potential victims of the various schemes,
and the long-term success of the fraud did not turn on which of the
potential victims bore the ultimate loss." Id. at 714.4 Rather, it empha-
4
Justice Scalia wrote a strong dissent in which he found the majority’s
opinion to be "inconsistent" with the Court’s prior cases. Schmuck, 489
U.S. at 722 (Scalia, J., dissenting).
14 UNITED STATES v. PIERCE
sized that "[t]he relevant question at all times is whether the mailing
is part of the execution of the scheme as conceived by the perpetrator
at the time." Id. at 715.
While this line of cases suggests an ever-expanding view on when
a mailing is "for the purpose of executing such scheme," we should
be mindful that this latter element is not simply a jurisdictional hook.5
Not every mailing will have a sufficient relationship to the fraud in
question to make the fraud a federal crime. The Court’s holding in
Schmuck helps to focus this analysis. By stating, as noted above, that
the relevant question is whether the perpetrator conceived the mailing
as part of the scheme, the Court injected a subjective component into
the inquiry. Thus, in determining how the mailing interacts with the
fraud, we must focus on whether the scheme, as conceived by Pierce,
had come to fruition when the mailing occurred or whether the mail-
ing acted as part of the scheme by concealing it.6
5
Prior amendments to the mail fraud statute support this reading. Con-
gress amended the statute in 1909 to eliminate language requiring proof
that the scheme would be "effected by either opening or intending to
open correspondence or communication with any other person . . . by
means of the post-office establishment of the United States . . . ." See
Peter J. Henning, Maybe It Should Just Be Called Federal Fraud: The
Changing Nature of The Mail Fraud Statute, 36 B.C. L. Rev. 435, 447
(1995). It replaced it with the language at issue in this case, which
requires that the mails be used "for the purpose of executing such
scheme." Id. at 448. Thus, this "amended mail fraud statute did not com-
pletely eliminate the required nexus between the scheme to defraud and
the mailing element, nor did it explicitly reduce the use of the mails to
a mere predicate for federal jurisdiction." Id.
6
As the Fifth Circuit has aptly concluded:
Synthesizing the Supreme Court’s holding in Schmuck with these
other precedents — which the Court accepted — and in breaking
down Schmuck’s rationale, it is clear that the Court’s statement
that a mailing need merely be "incident to an essential part of the
scheme" to satisfy the mail fraud statute is cabined by the materi-
ality of the mailing, as well as its timing: A tangential mailing
occurring after the success of a fraud scheme is complete would
never qualify, even if the mailing is "incidental" to a part of the
scheme.
United States v. Strong, 371 F.3d 225, 229 (5th Cir. 2004).
UNITED STATES v. PIERCE 15
III.
The majority concludes that these "falsified bingo reports lulled
Bristol into a false sense of security and effectively concealed
Pierce’s fraud." Ante at 6. It reasons that Bristol would have discov-
ered the fraud if the weekly reports that Linda Pierce mailed to Bristol
showed both the revenue from the Bristol-purchased games and the
revenue from the "off-the-books" games. While I agree that this argu-
ment has initial appeal, it fails to consider that the preparation and
mailing of the weekly reports by Linda Pierce was a step once-
removed from the actual concealment of the fraud.
The 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 this respect, the mailings did not further the fraud or con-
ceal the fraud, the oral reports to Linda Pierce furthered and con-
cealed the fraud. Put another way, these mailings were "not part of the
execution of the scheme as conceived by the perpetrator at the time,"
Sampson, 489 U.S. at 715, because Pierce’s scheme involved selling
"off-the-books" games while only reporting to Linda the games he
sold for Bristol. Once he had done those acts, he had succeeded in
completing the current fraud as well as protecting the success of
future fraud.
The majority’s emphasis on cases in which defendants "lulled" vic-
tims into a false sense of security is inapposite. In each of those cases,
the "lulling" mailings were made after the defendant obtained the vic-
tim’s property but before the scheme had come to fruition. The mail-
ings were thus a part of the scheme. At the point that the mailings
were made in this case, the scheme was already both concealed and
complete. In addition, the mailings in this case were not "lulling" let-
ters full of false promises to victims, they were reports which accu-
rately stated the number of instant bingo games that Pierce sold on
behalf of Bristol.7
7
By this statement, I am only noting that these mailings did not contain
"lulling" statements. Mailings that are innocent in and of themselves can
be used to obtain a conviction under the federal mail fraud statute. Bad-
ders v. United States, 240 U.S. 391, 394 (1916).
16 UNITED STATES v. PIERCE
For these reasons, I believe that the majority’s analysis goes
beyond existing case law interpreting the scope of the mail fraud statute.8
To be sure, the mail fraud statute has been subject to an increasingly
broad reading. But if the majority’s interpretation of the mailing in
this case as one "for the purpose of executing such scheme," 18
U.S.C. § 1341, is correct, then I do not see how this element functions
as anything more than a jurisdictional requirement. As long as federal
prosecutors can find some mailing that they can point a jury to, no
matter how tangential that mailing is, then they will have at their dis-
posal the ability to make all fraud with any sort of mailing connected
to it, a federal case. If this is what Congress intended, then they would
have written the statute to state as much, instead, they limited it to
those cases in which the mailing’s purpose is for execution of the
scheme.
I recognize that the mail fraud statute has come to be used as a
"stopgap device to deal on a temporary basis with [a new fraud
scheme], until particularized legislation can be developed and passed
to deal directly with the evil." Maze, 414 U.S. at 405-06 (Burger, C.J.,
dissenting). However, the confusion in the jurisprudence surrounding
the mail fraud statute leaves the very real possibility that courts and
federal prosecutors will enforce the statute in arbitrary and unforesee-
able ways. Infusing even more uncertainty in the criminal justice sys-
tem, as the majority’s opinion does, is not (or should not be) in
keeping with our justice system. I thus respectfully dissent as to the
sufficiency of the evidence on Pierce’s conviction for mail fraud. I
concur with the majority in vacating Pierce’s sentence under United
States v. Booker, 125 S. Ct. 738 (2005), and remanding this case to
the district court for resentencing.
8
The conduct by Pierce in this case was egregious. He sold bingo
games for his own profit while he was selling games for a charitable
organization. Yet, the State of Virginia is fully capable of dealing with
Pierce’s crimes and punishing him accordingly.