Home/Seventh Circuit/United States v. Britzman

United States v. Britzman

547 F.2d 380
CourtCourt of Appeals for the Seventh Circuit
DecidedJanuary 7, 1977
DocketNos. 76-1548, 76-1559
StatusPublished
Cited by8 cases

This text of 547 F.2d 380 (United States v. Britzman) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Britzman, 547 F.2d 380 (7th Cir. 1977).

Opinion

SWYGERT, Circuit Judge.

The defendants in this case were convicted of mail fraud in connection with a check-kiting scheme. They contend that their convictions must be vacated because the use of the mails was unrelated to the execution of the scheme. We agree, and reverse the district court’s denial of the defendants’ motion for acquittal.

I

Defendants William Britzman and Arthur J. Rubin were indicted on eight counts of mail fraud under 18 U.S.C. § 13411 because they allegedly utilized the mails in conducting a cheek-kiting scheme between September 28, 1974 and December 30, 1974. The indictment charged that the scheme revolved around two checking accounts, one opened by Rubin at the Dempster Plaza State Bank in DesPlaines, Illinois, in the name of “A & R Cards & Forms” and the other opened by Britzman at the Citizens Bank and Trust of Park Ridge, Illinois in the name of “Forms & Procedures.”

The theory behind the alleged scheme was that each man would draw checks on the account he had established payable to the business name used by the other man. They would then exchange checks and deposit them on the same day in their respective business accounts. Because the checks would take a certain amount of time to clear, the defendants would have the use of the money deposited during that time period even if the accounts on which the checks were drawn lacked sufficient funds to cover them. In addition, the indictment stated, Rubin began withdrawing cash from the A&R account and covering the shortage by promptly exchanging another pair of checks with Britzman. Once Rubin began withdrawing cash, it was necessary for the defendants to continually exchange checks in [382]*382order to avoid having the banks detect the fraud.2

The indictment further alleged that the defendants used three bank statements mailed to Britzman and two bank statements and three overdraft notices mailed to Rubin3 in furtherance of their scheme.

Britzman and Rubin were both convicted by a jury of all eight counts of mail fraud. During the trial, the judge indicated that although the evidence of fraud against the defendants was very strong, he had grave doubts as to whether there was a connection between their fraudulent conduct and the use of mails. However, he permitted the question of whether the use of mails was in furtherance of the fraudulent scheme to go to the jury. At sentencing, the judge stated;

I am still distressed with what I conceive to be a misuse of the mail fraud statute as represented by these state cases which are brought under the mail fraud statute even though there is no really material use of the mails.
I think given the present status of the 7th Circuit’s decisions, I cannot grant the motion for judgment of acquittal. If I were on the court of appeals I would reverse the conviction. . . . and if I were on the Supreme Court I would do the same.

The defendants now appeal their convictions on a number of grounds. Because we find that the mailings were unconnected with the execution of the check-kiting scheme, we do not reach the defendants’ other contentions.

II

The starting point for analysis in this case is the Supreme Court’s decision in United States v. Maze, 414 U.S. 395, 94 S.Ct. 645, 38 L.Ed.2d 603 (1974). In discussing the connection that must exist between a fraudulent scheme and the use of the mails to support a conviction under 18 U.S.C. § 1341, the Court stated that while it is unnecessary that the scheme contemplate the use of the mails as an essential element, “the mailing must be ‘for the purpose of executing the scheme, as the statute requires.’ ” 414 U.S. at 400, 94 S.Ct. at 648, citing Kann v. United States, 323 U.S. 88, 94, 65 S.Ct. 148, 89 L.Ed. 88 (1944). The Court noted that “Congress could have drafted the mail fraud statute so as to require only that the mails be in fact used as a result of the fraudulent scheme. But it did not do this.” 414 U.S. at 405, 94 S.Ct. at 651 (footnote omitted). Accordingly, we can sustain the defendants’ convictions only if at least one of the eight mailings at issue aided the execution of their cheek-kiting scheme.

The Government contends that the five bank statements and three overdraft notices aided the defendants because the statements and overdraft notices permitted [383]*383them to ascertain whether the time lag between the dates on which they exchanged checks was of the correct duration and to adjust the mechanics of their scheme upon learning that the time period between exchanges they were using was resulting in overdrafts in one of the accounts. Specifically, the Government argues that the statements for October mailed to both Rubin and Britzman showed that the scheme was substantially working, in that only one overdraft occurred in October. However, the November statement for A&R mailed to Rubin showed that the A&R account had been almost continually overdrawn during November. According to the Government’s theory, this statement, combined with the overdraft notice that was mailed to Rubin on December 6, made the defendants aware that the six to seven day time lag between check exchange dates they had been using was too long. Thus, the Government says, the defendants began to shorten that time lag throughout December.

A close examination of the defendants’ behavior, however, contradicts any inference of a connection between the time lag they used in December, on the one hand, and receipt of Rubin’s November bank statement or the December 6 overdraft notice, on the other hand. The November statement, received by Rubin shortly after it was mailed at the end of November, revealed that the A&R account had been overdrawn twelve times during that month.4 See Appendix C. Since the account was overdrawn once in late October, the defendants knew upon receiving the November statement that the six to seven day time lag they had been using had produced thirteen overdrafts in a little over a month. It strains credulity to assume that news of the fourteenth overdraft, mailed on December 6, would cause the defendants to change their strategy if news of the first thirteen overdrafts would not. If the Government’s theory is to stand up, we must assume that Britzman and Rubin would reduce the time lag upon receipt of the November statement.

But the defendants did not do so. On December 5, they exchanged checks for approximately $18,500. They then waited seven days, until December 12, to exchange checks again — this time for approximately $20,000. See Appendix A. Since they knew of the thirteen overdrafts in very early December,5 under the Government’s theory they should have performed the second exchange in December well before December 12.

Even if we assume that the notice of the fourteenth overdraft mailed on December 6 was “the straw that broke the camel’s back,” finally convincing the defendants that the time lag had to be shortened, the Government’s theory does not fit the defendants’ behavior. December 6 was a Friday.

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United States v. William Britzman and Arthur Rubin
547 F.2d 380 (Seventh Circuit, 1977)

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547 F.2d 380, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-britzman-ca7-1977.