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U.S. v. Frey

filed: December 13, 1994.


Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. Crim. No. 93-440-1 and 93-440-2).

Before: Hutchinson, Nygaard and Seitz, Circuit Judges.

Author: Seitz


SEITZ, Circuit Judge.

Fred Frey and Robert Demas ("defendants") appeal their sentences after convictions by a jury on four counts of wire fraud under 18 U.S.C. § 1343 and two counts of mail fraud under 18 U.S.C. § 1341.

The fraud arose from a scheme by defendants to purport to buy a non-existent boat. Defendants borrowed money to pay for the boat, they insured it and then they reported it missing. They planned to repay the loan with the insurance proceeds and intended to profit by retaining the loan money. Thus, they had proposed to make the insurance company the ultimate victim. The scheme was discovered and defendants were found guilty and sentenced. This appeal followed.

A. Defendants' Motion for Acquittal

The defendants first contend that because of the insufficiency of the government's proof the district court erred in denying their Rule 29 motion for acquittal on Counts 2, 4, 5, and 7. These counts were based on telephone calls and mailings between Anne Scarlata ("Scarlata") of Admiralty Documentation Services and the defendants.

The elements required to support a conviction under the mail fraud statute, 18 U.S.C. § 1341, are: 1) a scheme to defraud;*fn1 and 2) the use of the mails for the purpose of executing, or attempting to execute, the scheme. See 18 U.S.C. § 1341 (1988 & Supp. III 1993); United States v. Copple, 24 F.3d 535, 544 (3d Cir.), cert. denied, 115 S. Ct. 488, 130 L. Ed. 2d 400, 1994 WL 466503 (1994); United States v. Ruuska, 883 F.2d 262, 264 (3d Cir. 1989). The wire fraud statute, 18 U.S.C. § 1343, is identical to the mail fraud statute except it speaks of communications transmitted by wire. See 18 U.S.C. § 1343 (1988 & Supp. III 1993); United States v. Zauber, 857 F.2d 137, 142 (3d Cir. 1988), cert. denied, 489 U.S. 1066 (1989).*fn2

As defendants correctly point out, not every use of the mails or wires in connection with a scheme is punishable under sections 1341 or 1343. This court has held, "To support a mail fraud conviction, a mailing must further the scheme to defraud or be incident to an essential part of that scheme." Ruuska, 883 F.2d at 264; see United States v. Otto, 742 F.2d 104, 108 (3d Cir. 1984), cert. denied, 469 U.S. 1196, 83 L. Ed. 2d 980, 105 S. Ct. 978 (1985).

In financing the boat, General Motors Acceptance Corporation ("GMAC") had to secure a federal lien on the boat. In order to secure the federal lien, GMAC contacted Admiralty Documentation Services, operated by Scarlata, to perform a title search. In her efforts to properly search the boat's title, Scarlata exchanged numerous telephone calls and letters with defendants. These exchanges provided the mailings and wirings requirements in four counts of the indictment.

Defendants argue that the exchanges with Scarlata were not made in furtherance of the scheme to defraud because they 1) were made after the scheme had come to fruition; and 2) served to frustrate, not further, the scheme.

Defendants' argument that their scheme had come to fruition when the loan was granted misconstrues the nature of the indictment, which charged an overall scheme to defraud GMAC, General Sales, Hampton Roads Documentation Services, Admiralty Documentation Services, Guba and Associates, Hull and Company, and Lloyds of London. See Appendix at 503A (the federal indictment); see also United States v. Lane, 474 U.S. 438, 452, 88 L. Ed. 2d 814, 106 S. Ct. 725 (1986). In fact, defendants have agreed with the government's characterization of the scheme, see Defendants' Br. at 7-8, and have stated that the Scarlata communications occurred during the scheme. See id. at 17. The government charged one scheme, not a series of schemes. At the time of the Scarlata communications, the boat was not yet reported stolen or missing. Based on the evidence presented, we conclude that a reasonable jury could find that the scheme to defraud had not been concluded before the Scarlata communications took place.

Defendants next argue that their communications with Scarlata were routine business mailings and calls that contributed to the eventual unravelling of the scheme and ...

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