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UNITED STATES v. CASE

April 5, 1988

United States of America, Plaintiff,
v.
Herbert G. Case, Jr., Defendant



The opinion of the court was delivered by: DEBEVOISE

 This is a motion pursuant to 28 U.S.C. Section 2255 to vacate and set aside defendant Herbert G. Case, Jr.'s conviction on one count charging conspiracy to commit mail fraud, 18 U.S.C. Section 371 (Count 1) and 15 counts charging mail fraud, 18 U.S.C. Section 1341. Defendant also proceeds by way of application for a writ of coram nobis. Defendant contends that he was indicted, tried and convicted on the basis of a definition of mail fraud which the United States Supreme Court rejected in McNally v. United States, 483 U.S. 350, 97 L. Ed. 2d 292, 107 S. Ct. 2875 (1987).

 I. United States v. McNally

 In McNally the Supreme Court rejected an interpretation of the mail fraud statute previously applied in many circuits and held that "the mail fraud statute clearly protects property rights, but does not refer to the intangible right of citizenry to good government." 97 L. Ed. 2d at 299-300.

 In that case defendants, who were either state officials or acting in league with state officials, prevailed upon the state's insurance agent in return for continuation of its agency to share the commission it received with other insurance agencies specified by defendants. Defendants had an interest in the agencies receiving the share of commissions and thus personally profited from the arrangement. The state did not pay any more for its insurance under this scheme. The insurance agency placing the state's insurance simply agreed to pay some of the commissions to which it was entitled to other insurance agencies.

 The defendants were charged with, among other things, a scheme to defraud the citizens of the state to have the affairs of the state conducted honestly. The Court of Appeals affirmed judgments of conviction relying on cases holding that the mail fraud statute proscribes schemes to defraud citizens of their intangible right to honest and impartial government. It ruled that a public official has a fiduciary duty and that misuse of his office for private gain is a fraud.

 The Supreme Court rejected that interpretation of the mail fraud statute and held that it only proscribes fraud which is aimed at causing a deprivation of money or property.

 II. The Instant Case

 Defendant, two other individuals and their corporation, Scientific Chemical Processing, Inc. ("SCP") were indicted in 1982. The nub of the mail fraud conspiracy charge was:

 
[Defendants] did knowingly and wilfully . . . conspire . . . to devise and intend to devise a scheme and artifice to defraud the citizens of the State of New Jersey, the NJDEP and Passaic Valley [Sewerage Commissioners] . . . as well as generators of industrial chemical wastes by means of false and fraudulent pretenses, representations and promises regarding the transportation, treatment, recovery and disposal of industrial chemical wastes and to utilize the mail for the purpose of executing this scheme and artifice.

 Paragraphs 11-21 described in some detail the means by which the conspiracy was carried out. Representations were made to hazardous waste generators that defendants would dispose of their wastes in a lawful manner. Defendants obtained contracts and payments on the basis of such representations. Defendants received the generators' hazardous wastes and disposed of them unlawfully by dumping them into Hudson Bay through Passaic Valley's sewerage system and by dumping them into the Lone Pine Landfill which was not authorized to receive them. To conceal the illegal dumping into Hudson Bay defendants made false statements to Passaic Valley and to conceal the entire illegal dumping scheme and to prevent it from being stopped defendants submitted false reports to NJDEP and failed to issue the required Special Waste Manifests or submitted to NJDEP false Special Waste Manifests.

 Counts 2 through 21 set forth the substantive acts of mail fraud in furtherance of the fraudulent scheme in which defendants had engaged. These included SCP's sending of false manifests (either on a special or quarterly basis) to NJDEP and fake invoices charging payment for the lawful disposition of wastes or increasing the amount of payments to be due for SCP's providing of such services or other statements to private generators to assure them of proper disposition of their industrial waste products.

 The defendant moved with his co-defendants on October 14, 1982, to dismiss the indictment on the ground, among others, that the indictment did "not set forth what injury or deprivation or benefit was contemplated or occurred by reason of the purported artifice or scheme." (Defendants' Joint Brief, page 13). I denied the motion to dismiss the indictment for the reasons set forth in an oral opinion.

 I concluded that the object of the conspiracy was "clearly alleged, which is namely to make false statements to induce generators and public entities to believe the defendants were disposing of hazardous wastes legally, all so that defendants could continue their business and continue to charge generators. The object of the conspiracy is properly alleged." United States v. Case, No. 82-200, Tr. at 16 (D.N.J. Nov. 1, 1982).

 As to the conspiracy to defraud the "citizens of New Jersey for unspecified tangible rights" as well as to deceive Passaic Valley, NJDEP, and the private generators, I compared and contrasted the two situations:

 
There is a plain and direct nexus between defendants and the three categories of entities which are alleged to have been the victims of the fraud: namely, the generators with whom defendants contracted, the Passaic Valley Sewerage Commission whose facilities it used to dispose of industrial wastes, and the DEP (NJDEP) from which SCP received its permit, which regulated SCP's operation and to which SCP reported after the hazardous waste manifest system went into effect.

 I struck as "rhetorical surplusage," the government's allegations that the citizens of New Jersey were also defrauded. However, because the indictment charged two fraudulent schemes, I sustained the indictment as to the one which I did not strike.

 
. . . (I)f the indictment charged only the defendants conducted a fraudulent scheme, the object of which was to deprive the citizens of New Jersey of their right not to have the state water polluted in violation of the laws, the indictment might well be ...

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