U.S. V. Billmyer

Opinion

U.S. V. Billmyer CR-94-29-JD 02/03/95 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

United States of America

v. Criminal Nos. 94-29-01, 03, 04-JD

John W. Billmyer, Stanley J. Cardiges, and Dennis M. Joslevn

O R D E R

John W. Billmyer, Stanley James Cardiges and Dennis R.

Josleyn were indicted pursuant to a second superseding

indictment. Count I charges Cardiges and Josleyn with a

violation of the Racketeer Influenced and Corrupt Organizations

Act ("RICO")a 18 U.S.C. § 1962(c); Count II charges Billmyer,

Cardiges and Josleyn with conspiracy to defraud American Honda,

certain Honda dealers, the United States, the United States

Treasury and the Internal Revenue Service in violation of 18

U.S.C. § 371; Count III charges Cardiges and Josleyn with

conspiracy to defraud American Honda and certain Honda dealers in

violation of 18 U.S.C. § 317; Count IV charges Cardiges and

Josleyn with mail fraud in violation of 18 U.S.C. § 1341; and

Count V charges Cardiges with witness tampering in violation of

18 U.S.C. § 1512(b)(3). Currently before the court are defendant

Cardiges's motion to dismiss Count II and III of the indictment

(document no. 146); defendant Billmyer's renewed motion to dismiss and alternative motion for severance (document no. 150)

and defendant Josleyn's motion to dismiss for misjoinder

(document no 154). The court has also agreed to reconsider

defendant Josleyn's original "Motion to Quash" (document no. 86)

in light of the new indictment. See document no. 153.

Discussion

The grand jury returned a second superseding indictment

January 19, 1995, against the defendants, all former employees of

the American Honda Company. The indictment charges that the

defendants participated in a scheme to defraud American Honda and

others by accepting "kickbacks" from dealers in exchange for

dealership awards and favorable car allocations. The defendants

have filed motions on several grounds seeking to dismiss Counts

II and III of the indictment.

A. Objections to Count II

Defendant Cardiges argues that Count II fails to charge a

single conspiracy but rather, on its face, charges at least two

separate conspiracies. Motion to Dismiss Counts II and III at 5

3, 4; Cardiges's Incorporated Motion to Dismiss at 2. According

to Cardiges, Count II should be dismissed because it fails to

allege any single unifying plan or scheme, fails to allege an

2 agreement or mutual understanding between the defendants, and is

lacking in the reguisite specificity necessary for Cardiges to

prepare an effective defense. Cardiges's Incorporated Motion to

Dismiss at 2, 5, 8. In effect, Cardiges argues that Count II is

defective because it alleges an improper "'wheel' conspiracy,"

contending that although the indictment may charge a series of

individual conspiracies, the government will not be able to show

an overall, connecting conspiracy, the "rim" of the wheel, as

reguired under Kotteakos v. United States, 328 U.S. 750 (1946).

See id. at 6-7, 10. Defendant Billmyer also objects to Count II

on grounds that it charges multiple conspiracies. See

Consolidated Brief of John Billmyer at 1-14. Defendant Josleyn

has joined in Cardiges's motions. See document no. 167.

An indictment is constitutionally sufficient if it contains

the elements of the offense charged, fairly informs the defendant

of the charge against which he must defend, and enables the

defendant to plea without fear of future prosecutions for the

same offense. United States v. Yefsky, 994 F.2d 885, 893 (1st

Cir. 1993); United States v. Sedlak, 720 F.2d 715, 719 (1st Cir.

1983) (citing Hamlinq v. United States, 418 U.S. 87, 117 (1974)),

cert, denied, 465 U.S. 1037 (1984); see Fed. R. Crim. P. 7 (c)(1).

The defendant is entitled to a statement of facts and

circumstances explaining the specific offence with which he is

3 charged. Hamlinq, 418 U.S. at 117-118 (citing United States v.

Hess, 124 U.S. 483, 487 (1888)). "It is generally sufficient

that an indictment set forth the offense in the words of the

statute itself, as long as 'those words of themselves fully,

directly, and expressly, without any uncertainty or ambiguity,

set forth all the elements necessary to constitute the offence

[sic] intended to be punished.1" Id. (guoting United States v.

Carll, 105 U.S. 611, 612 (1882)). "An indictment for conspiracy,

however, need not allege the predicate offense with the same

precision as the substantive count." Yefsky, 994 F.2d at 893

(citing Wong Tai v. United States, 273 U.S. 77, 81 (1927)).

Count II of the indictment charges a violation of 18 U.S.C.

§ 371, which provides in part:

If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined not more than $10,000 or imprisoned not more than five years, or both.

The essence of the charge is that the defendants engaged in a

scheme to defraud American Honda, the United States, the United

States Department of Treasury and the Internal Revenue Service.

The charge is brought under the ambit of § 371 through an alleged

4 use of the mails in furtherance of the scheme. See Second

Superseding Indictment, 5 86.1

The indictment lists the goals and the manner and means of

the conspiracy. The indictment continues on to set forth overt

acts in furtherance of the conspiracy, including a Honda dealer

from Maryland causing "approximately $9,500 in Neiman-Marcus gift

certificates for BILLMYER and CARDIGES to be delivered by the

United States Postal Service to the home of CARDIGES, in return

for favorable treatment from American Honda." Id. at I 96(g)

The indictment is sufficient. Under the applicable

standards, it fairly informs the defendants of the charge against

■ ‘ ■Paragraph 86 states:

Beginning in or about 1979 and continuing thereafter until or about June 1992, in the District of New Hampshire and elsewhere, JOHN W. BILLMYER STANLEY JAMES CARDIGES and DENNIS R. JOSLEYN

did knowingly and willfully conspire with and agree among each other, and with others known and unknown to the Grand Jury, to engage in a scheme to defraud American Honda, the United States, the United States Department of Treasury and the Internal Revenue Service in violation of Title 18, United States Code, Section 1341, as more particularly set forth in paragraphs 87 to 96 of this Indictment.

Section 1341 of Title 18 is the mail fraud statute. See 18

U.S.C. § 1341.

5 them so that they may plead an acquittal or conviction in bar of

future prosecutions. Count II cannot be dismissed for lack of

specificity, although it certainly cannot be regarded as a model

of draftsmanship.

Nonetheless, all three defendants maintain that Count II

should be dismissed because it fails to allege a unifying plan or

scheme and therefore charges multiple conspiracies.

An indictment that is duplicitous on its face is defective

because it "carries the potential harm that a defendant will be

unable to determine on a verdict form if he has been found guilty

of all those conspiracies, or some combination of a few, or only

one." United States v. Alexander, 736 F. Supp. 968, 995 (D.

Minn. 1990) (citing Kotteakos, 328 U.S. 750). To demonstrate the

duplicitous nature of the indictment, Cardiges outlines what he

claims are the various separate conspiracies alleged in Count II.

See Cardiges's Incorporated Motion to Dismiss at 2-4, 8-9. He

argues that Count II of the indictment describes one scheme

wherein all three defendants received payments from individuals

seeking Honda and Acura dealerships and a second separate scheme

wherein the defendants received gifts in violation of company

policy. Id. at 2-3; Motion to Dismiss Counts II and III, 5 4.

In response the government proffers its explanation of how the

allegations support a single conspiracy under First Circuit law.

6 See Government's Incorporated Objection to Motion to Dismiss

Count II at 5-6 (citing United States v. Bovlan, 898 F.2d 230,

242 (1st Cir.),. cert, denied, 498 U.S. 849 (1990)). The

government notes that

[t]he Superseding Indictment sets forth the following allegations . . . . Each of the defendants in the instant case worked for the Auto Field sales Division of American Honda Motor Company. Each defendant used similar means to obtain kickbacks, in direct contravention of their employer's policy, from automobile dealers that were financially vulnerable to the defendants' sales management decisions. The payers of cash and other items of value were all dealers or prospective dealers of American Honda automobiles.

Id. at 6. The government contends that "[a] jury may reasonably

infer from these facts, as well as other evidence the government

will submit, that the defendants were part of a single conspiracy

to defraud American Honda and the United States." Id.

"[QJuestions anent the number and structure of conspiracies

present matters of fact suitable for resolution by a jury."

United States v. Sepulveda, 15 F.3d 1161, 1190 (1st Cir. 1993),

cert, denied, 114 S. C t . 2714 (1994); see United States v. David,

940 F.2d 722, 732 (1st Cir.), cert, denied, 112 S.Ct. 605 (1991),

cert, denied, 112 S. C t . 908 (1992), cert, denied, 112 S. C t .

1298 (1992), cert, denied, 112 S. C t . 2301 (1992). Opposing

interpretations of the allegations will need to be resolved at

trial and therefore it is not appropriate for the court to

address the nature of the conspiracy charge in response to a

7 pretrial motion. "As is clear from much of the precedent on this

question of duplicitously pleaded conspiracies, the question most

often is incapable of full resolution until after the jury

verdict when the jury has been instructed reqardinq the sinqular

objective requirement and has decided whether or not it has been

sustained." Alexander, 736 F. Supp. at 995. (citinq United

States v. Bledsoe, 674 F.2d 647 (8th Cir. 1982); United States v.

Coward, 630 F.2d 299 (4th Cir. 1980)).

Cardiqes also asserts that the indictment should be

dismissed because it fails to alleqe an aqreement or mutual

understandinq between the defendants. Cardiqes arques that the

indictment merely contains "alleqations of multiple acts and

aqreements all lumped toqether into a sinqle charqe." Cardiqes's

Incorporated Motion to Dismiss at 10. The qovernment responds

that the indictment alleqes many acts from which a sinqle

aqreement may be inferred. Government's Incorporated Objection

to Motion to Dismiss at 8 (referencinq alleqations that Billmyer

and Cardiqes received payments from dealers in exchanqe for

favorable treatment; that Billmyer and Cardiqes received qift

certificates from dealers in exchanqe for favorable treatment;

that Josleyn and Cardiqes received payments from dealers in

exchanqe for favorable treatment from Josleyn). An indictment must allege the essential elements of the

offense charged. See Wong Tai, 273 U.S. at 80-81 (1927). Thus,

the indictment must charge a conspiracy (an agreement and some

object), the defendants' knowledge of it, and their voluntary

participation in it. United States v. David, 940 F.2d 722, 735

(1st Cir. 1991); United States v. Latham, 874 U.S. F.2d 852, 863

(1st Cir. 1989). A single conspiracy is alleged so long as the

indictment charges the defendants with agreeing to participate in

one or more criminal ventures. See United States v. Alessi, 638

F.2d 466, 473 (2d Cir. 1980). The agreement, express or tacit,

may be shown through the actions or the words of the defendants.

United States v. Glenn, 828 F.2d 855, 858 (1st Cir. 1987). The

conspiracy is the crime, no matter how diverse its objects.

Braverman v. United States, 317 U.S. 49, 54 (1942). In a mail

fraud conspiracy, the underlying fraud also must be specified in

the applicable count. Yefsky, 994 F.2d at 893.

In determining the sufficiency of the indictment, the court

may not look to alleged insufficiencies in the evidence, but

rather may look only to whether the indictment properly alleges

the necessary elements. See United States v. Habicht, 766 F.

Supp. 22, 25-27 (D. Mass. 1991), modified sub nom., United States

v. Melvin, 27 F.3d 710 (1st Cir. 1994). By charging the

defendants with an agreement to violate 18 U.S.C. § 371, Count II alleges a single conspiracy with multiple objects. The goal of

the conspiracy was to defraud American Honda of tangible and

intangible property and salary and benefit, and to enrich

themselves and others. The nature of the scheme is set forth in

eight separate paragraphs. Nineteen overt acts in furtherance of

the conspiracy are listed.

As the court has previously stated, whether the evidence

adduced at trial supports the conspiracy alleged is a guestion

that must be resolved at trial. It is not proper for the court

to consider objections which go to the sufficiency of the

evidence at this stage in the proceeding. See id. (citing Bovce

Motor Lines, Inc. v. United States, 342 U.S. 337, 343 & n.16

(1952) ("[I]he defendant['s] thesis hinges on an erroneous

eguation of what the Government must charge in the indictment

with what the Government must prove at trial. The allegations of

an indictment are presumed to be true for the purposes of

assessing sufficiency, and inguiry into whether the Government

can prove its case is inappropriate at this stage."))•

Therefore, Count II cannot be dismissed for failure to state a

common plan or scheme.

Defendant Billmyer raises several additional challenges to

Count II. First, he argues that once broken down into individual

conspiracies, the charged conspiracies involving him are barred

10 by the statute of limitations. Because the court rejects the

defendants' assertion that Count II must be dismissed due to the

existence of multiple conspiracies, it must also reject

Billmyer's claim that the statute of limitations requires the

court to dismiss Count II as to him. It is only necessary that

the indictment charge one overt act in furtherance of the

conspiracy occurring within the statute of limitations. See

Grunewald v. United States, 353 U.S. 391, 396-97 (1957). It is

not necessary for the government to allege that each named

defendant committed an overt act within the applicable period.

See id. The indictment alleges several overt acts occurring

within the statute of limitations, in this case five years. See

Second Superseding Indictment, 5 9 6 (j), (k), (r) , (s) .

Second, Billmyer argues that he withdrew from the conspiracy

more than five years prior to the indictment and therefore

prosecution is barred by the statute of limitations. Billmyer's

Incorporated Motion to Dismiss at 10. Withdrawal is an

affirmative defense. Whether or not Billmyer withdrew is a

question of fact that must be decided by the jury. See United

States v. Young & Rubicam, Inc., 741 F. Supp. 334, 345 (D. Conn.

1990) .

Third, Billmyer argues that the McNally doctrine requires

that Count II be dismissed because no victim was deprived of any

11 property right or interest. Billmyer's Incorporated Motion to

Dismiss at 15.

In McNally, the Supreme Court attempted to clarify the

reach of the mail and wire fraud statutes. The indictment at

issue charged that the defendants devised a scheme to defraud the

citizens and government of Kentucky of their right to have the

Commonwealth's affairs conducted honestly. The court held that

the mail fraud statute does not reach "schemes to defraud

citizens of their intangible rights to honest and impartial

government.'" Carpenter v. United States, 484 U.S. 19, 25 (1987)

(guoting McNally, 483 U.S. at 355). The court emphasized that

the mail fraud statute is "limited in scope to the protection of

property rights." Id. (guoting McNally, 483 U.S. at 360).

Following the Supreme Court's decision in McNally, Congress

amended the statute so that the term scheme or artifice to

defraud would include "a scheme or artifice to deprive another of

the intangible right of honest services." 18 U.S.C. § 1346.

However, the amendment cannot be applied retroactively and

alleged conduct occurring prior to November 18, 1988, must be

reviewed under the standard articulated in McNally. See McEvov

Travel Bureau, Inc. v. Heritage Travel, Inc., 904 F.2d 786, 791

(1st Cir.), cert, denied, 498 U.S. 992 (1990).

12 The First Circuit has held that

[a]n indictment may charge a crime by claiming that the defendant violated a statute in several different ways. See United States v. Miller, 471 U.S. 130, 134, 105 S. Ct. 1811, 1814, 85 L.Ed.2d 99 (1985) (indictment properly charged violations of § 1341 by setting forth "a number of ways in which the acts alleged constituted violations"). A jury need not believe that the defendant did evervthing the indictment charges; it may convict if it believes he did some of the things the indictment charges and if those things, by themselves, amount to a violation of the statute. Id. (conviction proper because the facts proved at trial conformed to "one of the theories of the offense" contained in the indictment).

United States v. Doherty, 867 F.2d 47, 55 (1st Cir.), cert.

denied, 492 U.S. 918 (1989). Because "[a] part of the indictment

unnecessary to and independent of the allegations of the offense

proved may normally be treated as a 'useless averment1 that 'may

be ignored,1" the fact that an indictment charges a violation of

the mail fraud statute by depriving a victim of a non-property

right does not automatically invalidate the indictment. Id.

(guoting Miller, 471 U.S. at 134; Ford v. United States, 273 U.S.

593 (1927)). Only that part of the indictment is considered

invalid. Id. So long as the remaining portions of the

indictment describe the offense with sufficient clarity to show a

violation of law and permit the defendant to plead without fear

of double jeopardy, the indictment is sufficient. Id.

The indictment at issue does not rely on any impairment of

the right to honest government. Instead, it charges that the

13 defendants devised a scheme to "defraud American Honda of

valuable tangible and intangible property for the benefit of the

conspirators and others," "to defraud American Honda of the

salary and other employment benefits paid by American Honda to

BILLMYER, CARDIGES, JOSLEYN and other American Honda employees

who joined the conspiracy," and to enrich the conspirators and

others "through the receipt of substantial money payments" from

persons seeking to do business with American Honda. Second

Superseding Indictment, 5 8 7 (a), (b), (c). The indictment

alleges that the defendants received kickback payments in return

for providing Letters of Intent to dealers in violation of Honda

policy; converted, or stole American Honda property (contract

rights); sold converted property for their own gain and to the

detriment of American Honda and its shareholders; and solicited

and accepted money and gifts in violation of American Honda's

conflict of interest policy, thereby defrauding American Honda of

its right to the salary paid to the defendants. Id. at 55 89-94.

In its order dated January 5, 1995, (document no. 131), the

court considered similar allegations contained in Count I of the

indictment and ruled that American Honda was deprived of its

right to determine the ultimate destination of the Letters of

Intent and that this right is not too ephemeral to constitute a

violation of the mail fraud statute. The court noted that, "[i]n

14 its broadest sense, a 'property' interest resides in the holder

of any of the elements comprising the 'bundle of rights'

essential to the use or disposition of tangible property or to

the exercise or alienation of an intangible right." United

States v. Bucuvalas, 970 F.2d 937, 945 (1st Cir. 1992) ("The

concept of 'property' in the law is extremely broad and abstract.

The legal definition of 'property' most often refers not to a

particular object, but rather to the . . . bundle of rights

recognized in that object . . . [including] the rights to

possess, to use, to exclude, to profit, and to dispose."), cert.

denied, 113 S. C t . 1382 (1993); Brotherton v. Cleveland, 923 F.2d

477, 481 (6th Cir. 1991).

Ownership of a tangible object . . . includes the right to retain that object and to refuse to transfer it to others. The right persists even if others are willing to pay a fair market value for the object. Were it otherwise, everyone would have a private right of condemnation over the property of others; everyone could simply take another's property at will as long as fair market value was paid.2

United States v. Bruchhausen, 977 F.2d 464, 469 (9thCir. 1992)

(Fernandez, J., concurring). "The strictures an owner puts on

his willingness to sell an item are not mere ephemera." Id. An

owner has the right to select to whom he will sell and "[f]raud

may be predicated upon misrepresentations as to the identity of

2This principal resonates with egual force when appliedto intangible property.

15 the purchaser." Id. (citing Walker v. Galt, 171 F.2d 613, 614

(5th Cir. 1948)); see 37 Am. Jur. 2d Fraud and Deceit § 284

(1968) ("If one obtains from an owner, by false representation of

a fact which he deems material, property that he would not

otherwise have parted with . . . there is such an injury as will

be redressed by equity."). The property requirement of the mail

fraud statute has been deemed satisfied where the victim lost

control over property without suffering any pecuniary loss. See

Ranke v. United States, 873 F.2d 1033, 1040 (7th Cir. 1989)

(general contractor defrauded of its property because it was

induced to part with property on the basis of false premise,

thereby losing control over its disposition).

Count II states that the defendants, by accepting kickbacks

in return for Letters of Intent, converted, or stole the valuable

contract rights conferred by the Letters of Intent, and sold the

converted property for their own gain to the detriment of

American Honda and its shareholders and in violation of its

conflict of interest policy. The indictment adequately alleges

that American Honda was defrauded of its right to award the

Letters of Intent in conformity with the "strictures" it placed

on its willingness to make its awards. The "defendants' conduct

deprived [American Honda] of the right to define the terms for

the sale of its property . . . . The fact that [American Honda]

16 never suffered -- and that defendants never intended it -- any

pecuniary harm does not make the fraud statutes inapplicable."

United States v. Schwartz, 924 F.2d 410, 421 (2d. Cir. 1991) .

Accordingly, the government has advanced a viable theory of

conspiracy to commit fraud.

However, Billmyer has also raised an objection to the

references to salary payments contained in Count II. Billmyer

argues that charges that the defendant defrauded an employer of

salary paid to him have been held not to constitute a sufficient

property loss for purposes of the mail fraud statute. The

government responds that the allegations in the indictment are

valid under McNally and support the indictment. Because the

court must excise that portion of the indictment relating to

salary payment if fraudulent obtainment of salary does not

constitute a deprivation of property under McNally, the court

also considers this aspect of Billmyer's McNally objection.

Billmyer bases his objection on the First Circuit's opinion

in United States v. Ochs, 842 F.2d 515 (1st Cir. 1988) . In Ochs,

the First Circuit criticized a Fifth Circuit opinion. United

States v. Richerson, which the Ochs court interpreted as holding

that "whenever an employee conceals material information from his

employer, he causes a property harm to his employer because the

employer does not receive the services for which he paid." 842

17 F.2d at 523, 525-527 (1st Cir. 1988) (citing United States v.

Richerson, 833 F.2d 1147, 1157 (5th Cir. 1987)). Billmyer argues

that the allegations concerning salary payments contained in the

indictment raise identical issues to those considered by the

Richerson Court and held insufficient to constitute property loss

by the First Circuit.

In Ochs, the First Circuit commented upon several decisions

that followed Justice Stevens' dissent in McNally. Justice

Stevens stated in a footnote that

[w]hen a person is being paid a salary for his loyal services, any breach of that loyalty would appear to carry with it some loss of money to the employer -- who is not getting what he paid for. Additionally, "[i]f an agent receives anything as a result of his violation of a duty of loyalty to the principal, he is subject to liability to deliver it, its value or its proceeds to the principal." This duty may fulfillthe Court's "money or property" reguirement in most kickback schemes.

McNally v. United States, 483 U.S. 350, 377 n.10 (1987)

(Stevens, J., dissenting) (guoting Restatement (Second) of

Agency, § 403 (1958)). The principle that the failure of an

agent to provide to the principal anything obtained in violation

of a duty of loyalty may fulfill the "money or property"

reguirement in most kickback schemes came to be known as the

"secret profits theory." See Ochs, 842 F.2d at 525.

In Ochs, the First Circuit noted that several other circuits

had adopted Justice Stevens' footnote, using it as a basis to

18 hold, for example, that an agent's failure to turn over bribe

payments to a principal constitutes a property loss for purposes

of McNally, see United States v. Runnels, 833 F.2d 1183, 1186-92

(6th Cir. 1987), rev'd , en banc, 877 F.2d 481 (6th Cir. 1989),

and that the concealment of material information from a principal

is a sufficient property loss to satisfy the mail fraud statute.

Richerson, 833 F.2d at 1157. The court, citing to Runnels and

Richerson, concluded that Justice Stevens' footnote did not

provide a proper basis for determining what is a property loss as

it appeared inconsistent with the majority opinion. Id. at 527.

The Ochs court never directly considered whether a disloyal

employee's receipt of salary constitutes a loss of the employer's

property. See generally, id. The circumstances considered in

Ochs involved the defendants' obtaining building permits from the

city of Boston for a fraudulently low fee. Part of the scheme

involved receipt of a bribe payment from a city employee. The

court held that the city's "loss" of the bribe was insufficient

to satisfy the mail fraud statute, id. at 527, rejecting the

secret profits theory as viable under McNally. 842 F.2d at 525-

526 (mere fact that a fiduciary profits from breach of duty is

not sufficient property deprivation to satisfy reguirements of

the mail fraud statute). While the court explicitly rejected

19 Richerson's reliance on Justice Stevens' footnote, it never

considered Richerson's ultimate conclusion.

The government argues that the Ochs decision is limited to a

disavowal of the secret profit theory and should not be used as a

basis for finding that fraudulent obtainment of salary does not

result in a property loss. The government asserts that this

circuit has already held that fraudulent obtainment of salary

satisfies McNally, citing to United States v. Allard, 864 F.2d

248, 251 (1st Cir. 1989) and Doherty, 867 F.2d at 56. In Allard,

the court held that the fraudulent procurement of a medical

license and subseguent renumerated medical practice resulted in

the loss of a property right. 846 F.2d at 251. In Doherty, the

court held that an indictment validly charged a loss of property,

which stated that an

objective of the conspiracy [was] for the conspirators to illegally assist relatives, friends and associates in obtaining appointment to or promotion within police departments in the Commonwealth of Massachusetts so that those relatives, friends or associates would receive the benefits of such appointment or promotion; which benefits included the salary or increased salary by reason of appointment or promotion within the police department and whatever pension benefits would accrue by reason of the appointment to or promotion within the police department.

867 F.2d at 56. The court also upheld those portions of the

indictment that charged individual defendants with conspiring to

obtain promotions to receive increased salary and pension

20 benefits. Id. In Doherty, there was no allegation that any of

the defendants or the persons for whom they conspired to obtain

employment were unqualified for their positions or caused any

material loss to the defendant other than salary and benefits.

The indictment before the court charges a set of

circumstances that falls somewhere in between the Allard and

Doherty cases and the Richerson case. In both Allard and Doherty

the alleged scheme was undertaken for purposes of obtaining the

salaried positions. In other words, the defendants were directly

charged with fraudulently procuring their positions for purposes

of defrauding their employers of salary payments. There are no

similar allegations against these defendants. The instant case

is not identical to that considered in Richerson. In Richerson,

the 5th Circuit ultimately rested its decision on the defendant's

failure provide material information to his employer. In this

case, the indictment charges that the defendants defrauded their

employer of salary and employment benefits not because they

failed to provide material information, but because they

continued to accrue of salary even though they knowingly acted

outside American Honda's conflict of interest policy.

Allard and Doherty are distinguishable and do not provide a

sufficient basis for allowing the inclusion of salary loss in the

indictment. As the court has already discussed supra, the Ochs

21 decision does not address the issue before the court. The court

recognizes that although the mail fraud statute is limited to the

protection of property rights, "the concept of property 'is to be

interpreted broadly.1" United States v. Drav, 901 F.2d 1132,

1142 (1st Cir. 1990) (citing McNally, 483 U.S. at 356). However,

the Ochs court did explicitly warn that the court should not take

a view so expansive as to include abstract property losses. 842

F.2d at 525-26. Based on the current state of decisional law in

this circuit, the court finds no firm basis to extend Allard and

Doherty any further. Defendant Billmyer's objections to the loss

of salary allegations are well taken. To the extent that Count

II alleges fraudulent procurement of salary and benefits prior to

November 18, 1988, those allegations are to be excised.

B. Objections to Count III

Defendant Cardiges also objects to Count III on the same

grounds as those raised against Count II. Defendant Josleyn has

joined in Cardiges's motion to dismiss (document no. 167).

Like Count II, Count III charges a violation of 18 U.S.C. §

371. The crux of the charge is that the defendants engaged in a

scheme to defraud American Honda and certain Honda dealers.

Section 371 is implicated through an alleged use of the mails in

22 furtherance of the scheme. See Second Superseding Indictment, 5

98 .

the conspiracy. The indictment continues on to set forth overt

acts in furtherance of the conspiracy and acts constituting the

underlying mail fraud, including the act of causing an "American

Honda sales representative to deposit letters in a post office

and authorized depository for mail matter, to be delivered by the

United States Postal Service, [to various new Hampshire towns,]

urging the dealers to enroll their sales person in a sales

training seminar . . . ." Id. at 5 108(b)

The indictment is sufficient. It fairly informs the

defendants of the charge against them so they may plead an

acguittal or conviction in bar of future prosecutions. Count III

cannot be dismissed for lack of specificity. Furthermore, Count

III adeguately charges all the elements of conspiracy and

specifically identifies the underlying fraud. Thus, any

additional objections to this count are denied for the same

reasons outlined in the discussion of Count II, supra.

C. Misjoinder

Defendants Billmyer and Josleyn have also reguested that the

conspiracy counts be dismissed due to misjoinder. Defendant

23 Cardiges has joined Josleyn's motion. Criminal defendants are

properly joined under Rule 8(b) of the Federal Rules of Criminal

Procedure only if they are "alleged to have participated in the

same act or transaction or in the same series of acts or

transactions constituting an offense or offenses." Fed. R. Crim

P. 8(b) .3 Because the court finds that the indictment adeguately

charges a single conspiracy, the motions to dismiss on the basis

of misjoinder are denied.

D. Severance

Defendant Billmyer has moved for an order severing his case

from the other co-defendants. The decision to grant or deny a

motion for severance is a matter committed to the sound

discretion of the trial court. United States v. Martinez, 922

F.2d 914, 922 (1st Cir. 1991). Defendants seeking severance

maintain the burden of showing that a "substantial prejudice,

amounting to a miscarriage of justice, would result from a joint

3Rule 8(b) provides: Two or more defendants may be charged in the same indictment or information if they are alleged to have participated in the same act or transaction or in the same series of acts or transactions constituting an offense or offenses. Such may be charged in one or more counts together or defendants separately and all of the defendants need not be charged in each count. Id.

24 trial." United States v. Sabatino, 943 F.2d 94, 96 (1st Cir.

1991) (citing United States v. Perkins, 926 F.2d 1271, 1280 (1st

Cir. 1991)). The term "prejudice means more than just a better

chance of acquittal at a separate trial," United States v.

Martinez, 479 F.2d 824, 828 (1st Cir. 1973), and "[1]ncidental

prejudice," such as that which necessarily inheres whenever

multiple defendants are tried together, "will not suffice."

Martinez, 922 F.2d at 922.

In the instant case, the court finds that Billmyer has

failed to meet this exacting burden. The Second Superseding

Indictment is limited to three defendants and five counts, one of

which the government has stated it will dismiss. Although named

in only one count, Billmyer is allegedly at the center of the

formation of the conspiracy and the government represents that a

"very substantial portion of the consolidated trial will involve

evidence relating directly to Billmyer." See Government's

Incorporated Surreply Memorandum, at 9-10. Any possible

prejudicial "spillover" caused by the joinder of offenses and

defendants may be minimized by appropriate limiting instructions.

C f . United States v. Natanel, 938 F.2d 302, 308 (1st Cir. 1991);

United States v. Mazza, 792 F.2d 1210, 1224 (1st Cir. 1986),

cert. denied, 479 U.S. 1086 (1987). Accordingly, the motion for

severance is denied.

25 E. Venue

Finally, Defendant Billmyer argues that venue in New

Hampshire is improper because the alleged conspiracies involving

Billmyer did not occur in or relate to New Hampshire. Because

this argument is premised upon a finding that the indictment

charges multiple conspiracies, the motion for dismissal based on

improper venue is denied without prejudice to renew at the close

of the government's case.

E. Reconsideration of Defendant Joslevn's "Motion to Quash"

The court once again denies defendant Josleyn's "Motion to

Quash" for the reasons cited in the court's original denial of

his motion (document no. 125) as well as the reasons outlined

above.

Conclusion

Defendant Cardiges's "Motion to Dismiss Counts II and III of

the Second Superseding Indictment" (document no. 146) and

defendant Josleyn's Motion to Dismiss for Misjoinder" (document

no. 154) are denied. Defendant Billmyer's "Renewed Motions to

Dismiss and Alternative Motion for Severance" (document no. 150)

is granted in part and denied in part. Count II of the

indictment is to excised of all references to schemes to defraud

26 Honda of salary prior to November 18, 1988. The relief requested

in defendant Josleyn's motions to reconsider (document no. 153)

is denied. Defendant Billmyer's original "Motions to Dismiss and

Alternative Motion for Severance" (document no. 94) is moot.

SO ORDERED.

Joseph A. DiClerico, Jr, Chief Judge February 3, 1995

cc: Michael J. Connolly, Esquire David W. Long, Esquire Kevin E. Sharkey, Esquire Stephen Lyons, Esquire Paul J. Twomey, Esquire Philip Israels, Esquire