United States v. DeFries

43 F.3d 707, 310 U.S. App. D.C. 56, 1995 WL 10371
CourtCourt of Appeals for the D.C. Circuit
DecidedJanuary 13, 1995
DocketNo. 94-3110
StatusPublished
Cited by11 cases

This text of 43 F.3d 707 (United States v. DeFries) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. 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. DeFries, 43 F.3d 707, 310 U.S. App. D.C. 56, 1995 WL 10371 (D.C. Cir. 1995).

Opinion

Opinion for the Court filed by Circuit Judge STEPHEN F. WILLIAMS.

STEPHEN F. WILLIAMS, Circuit Judge.

The defendants in this ease are union officials indicted for crimes relating to their manipulation of union elections and misuse of union offices. Counts three and four of the [708]*708indictment charged them with mail fraud under 18 U.S.C. § 1341 for their alleged theft, alteration, and destruction of ballots in a 1988 union merger referendum. The district court dismissed those counts on the grounds that the theft of ballots, and the resulting interference with union members’ rights to the honest conduct of union affairs, did not constitute significant deprivations of union property, and thus, under McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), were not cognizable under § 1341, 858 F.Supp. 1. Because we find that the referendum ballots and the information that they embodied indeed constitute “property” within the meaning of § 1341, we reinstate those counts of the indictment and remand for trial.

I.

The fifteen defendants are former national, regional, and local officials of the District No. 1-Pacific Coast Division, Marine Engineers Beneficial Association, a formerly independent labor organization that was merged into the National Maritime Union in March 1988. In June 1993, a federal grand jury returned a ten-count indictment alleging that from September 1984 through December 1991 the defendants had fraudulently procured their election and re-election to union offices and had managed the affairs of the union so as to enrich themselves at union expense, negotiating for themselves roughly two million dollars’ worth of severance payments following the union merger. The indictment specifically charged the defendants with one count of racketeering, one of embezzlement, two of conspiracy, two of extortion, and four of mail fraud.

The two mail fraud counts at issue here relate to the defendants’ alleged interference with an internal referendum on the proposed union merger conducted through the mails in early 1988. The indictment alleged that various of the defendants collected unmarked ballots from union members and voted them in favor of the merger, opened sealed ballots and replaced anti-merger votes with ones favoring the merger, and obtained and voted duplicate ballots, all in violation of the union’s by-laws. Other defendants were accused of supervising and directing the operation. The indictment charged that the mailing of false referendum ballots constituted an illegal scheme to defraud the union and its members of two separate property interests, specified in indictment paragraphs 88(a) and (b): actual property in the form of the referendum ballots (¶ 88(a)), and “property rights guaranteed by [the] union Constitution, Bylaws and election procedures ... and by [federal labor law] to vote in secret and to participate in a fair and honest election regarding the 1988 merger referendum” (¶ 88(b)). The indictment stated that the two unions (and later their pension trusts) did actually merge as a result of the referendum’s apparent approval of the proposed merger agreement.

In district court, defendants challenged these mail fraud counts on the grounds that neither of the union’s two interests identified in the indictment constituted property protected against deprivation by the mail fraud statute as interpreted by the Supreme Court in McNally. The district court agreed. It held that the union members’ asserted right to fair elections was analogous to (if less nebulous than) the general public’s right to honest government, an interest found in McNally to be insufficiently like property for it to be protected by 18 U.S.C. § 1341. Although the court did not specifically address the question of whether or not the ballots themselves constituted property, it clearly implied that their only value was to effect the union members’ rights to a democratic organization and that the ballots thus had no value cognizable under the mail fraud statute. The district court dismissed the two counts, and the government now appeals.

II.

The federal mail fraud statute makes it unlawful to use the mails in furtherance of “any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises,” 18 U.S.C. § 1341. In McNally, 483 U.S. at 358-60, 107 S.Ct. at 2880-82, the Court held that the phrases “to defraud” and “for obtaining money or property” are not wholly disjunctive; rather, the [709]*709concept of “fraud” has historically entailed some deprivation of money or property, and the statute therefore reaches only those schemes designed to interfere with another’s property rights. The McNally Court accordingly overturned a conviction for mail fraud that was based on the defendants’ having deprived the citizens and government of Kentucky only of their “right to have the Commonwealth’s affairs conducted honestly,” id. at 352, 107 S.Ct. at 2878, and not of any property right, traditionally considered.1

We do not address the government’s claim that rights to honest union governance (the basis of ¶ 88(b) of the indictment) are so different from political rights as to render McNally inapplicable, but turn directly to the character of the allegedly stolen ballots, the focus of ¶ 88(a). Defendants concede, as they must, that these ballots were indeed the tangible property of the union: the election procedures detailed in the union’s constitution make clear that the union is solely responsible for the preparation and distribution of official ballots, that union members may not transfer these ballots freely, and that the ballots must be returned to the union and secured in a depository to which no other parties have access. Rather, the defendants argue that these ballots are of de minimis value — that they are worth no more than the paper and ink with which they are printed— and therefore fail to meet some threshold standard of significance implicit in the mail fraud statute.

It is difficult to see where the defendants find this de minimis exception. The mail fraud statute speaks only of “money or property” generally, not of property above a certain value. McNally incidentally quotes language from a 1924 case suggesting that the words “ ‘to defraud’ ... usually signify the deprivation of something of value by trick, deceit, chicane or overreaching,” 483 U.S. at 358, 107 S.Ct. at 2881 (emphasis added) (quoting Hammerschmidt v. United States, 265 U.S. 182, 188, 44 S.Ct. 511, 512, 68 L.Ed. 968 (1924)), but it does so simply to demonstrate that the mail fraud statute protects only traditional forms of property; there is no suggestion that once the subject of a . fraud is determined to be property, it must additionally meet some threshold of value.

Given the absence of any statutory hint of a threshold minimum, it is hardly surprising that several courts have found § 1341 applicable to what at first glance appear to be exceedingly small. property interests.

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UNITED STATES v. DeFRIES
43 F.3d 707 (D.C. Circuit, 1995)

Cite This Page — Counsel Stack

Bluebook (online)
43 F.3d 707, 310 U.S. App. D.C. 56, 1995 WL 10371, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-defries-cadc-1995.