United States v. Mills

UNITED STATES COURT OF APPEALS
For the Fifth Circuit

No. 98-11223

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

VERSUS

ROBERT GLENDON MILLS, JR,

Defendant - Appellant.

Appeal from the United States District Court
For the Northern District of Texas, Fort Worth Division
December 21, 1999

Before DUHÉ, BARKSDALE, and DENNIS, Circuit Judges.

PER CURIAM:

Robert Glendon Mills, Jr., defendant-appellant, appeals from

(1) the district court’s order denying his motion to dismiss, for

lack of jurisdiction, his indictment of two counts of wire fraud,

18 U.S.C. § 1343, and (2) his conditional guilty plea conviction

and sentence based on one count of wire fraud pursuant to Federal

Rule of Criminal Procedure 11(a)(2), reserving his right on appeal

to a review of the adverse determination of his motion to dismiss

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the indictment as to the wire fraud counts for lack of

jurisdiction. For the following reasons, we affirm the district

court’s judgment denying defendant’s motion to dismiss for lack of

jurisdiction and the defendant’s conviction and sentence.

I. Factual and Procedural Background

Robert Glendon Mills, Jr., was charged in a three count

indictment with one count of bank fraud, 18 U.S.C. § 1344; and two

counts of wire fraud, 18 U.S.C. § 1343. The indictment alleged, in

pertinent parts, the following: Mills committed the bank and wire

fraud offenses against the Colorado National Bank (CNB), a

financial institution having its principal office in Denver and

insured by the Federal Deposit Insurance Corporation (FDIC), and

Mills’s employer, AMR-Combs (AMR), a business comprised of a chain

of fixed base operators which provided general aviation services.

Mills was employed by AMR from November 1991 through March 1996.

From in or about the summer of 1994 through or in or about July of

1995, Mills was an AMR controller, having signature authority and

accounting responsibility over AMR’s controlled disbursement

accounts located at CNB. These included accounts used by AMR

headquarters in Fort Worth and by AMR operations in McAllen, Texas.

During June 1994 through July 1995 Mills wrote AMR business checks

drawn on CNB and fraudulently designated himself as the payee.

Mills deposited these fraudulent checks in his personal bank

accounts at NationsBank (NB) in Dallas and Bank One Texas, N.A. in

Bedford, Texas, both of which were insured by the FDIC. Mills

fraudulently deposited into his NB account about fifteen AMR checks

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totaling $35,861.84 and about nine such checks into his Bank One

account totaling $43,603.92. In furtherance of Mills’s scheme to

defraud AMR, he caused corresponding electronic interstate

transfers of funds between CNB and NB, as well as CNB and Bank One.

These wire transfers were necessary for Mills to fraudulently

divert AMR funds into his personal accounts at NB and Bank One.

Mills knew that the checks drawn on AMR’s account at CNB were

fraudulent because he prepared these checks without proper

authority in an effort to embezzle funds from AMR. He also knew

that he could not successfully execute the scheme unless he was

able to deceive CNB by misrepresenting that the fraudulent checks

were genuine.

Specifically, Count One of the indictment alleged that

beginning in May 1992 and continuing through March 1996 Mills

committed bank fraud upon CNB and NB, FDIC insured institutions, 18

U.S.C. §§ 1344 and 2; Count Two alleged that on or about January

18, 1995, Mills committed wire fraud, 18 U.S.C. §§ 1343 and 2, by

transmitting or causing to be transmitted by means of wire

communications in interstate commerce $4,315 in funds from AMR’s

account at CNB in Aspen, Colorado into his NB account following

the deposit of a fraudulent AMR check into his account at NB.

Count Three alleged that on or about May 30, 1995, Mills committed

wire fraud, 18 U.S.C. §§ 1343 and 2, by transmitting or causing to

be transmitted by wire communications in interstate commerce a wire

transmission of $9,613 in funds from AMR’s account at CNB in Aspen,

Colorado into his personal account at Bank One in Bedford, Texas

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following the deposit of a fraudulent AMR check into his Bank One

account.

Mills moved the district court to dismiss the indictment for

lack of federal jurisdiction. The district court granted Mills’s

motion with respect Count One (bank fraud) but denied his motion

with respect to Counts Two and Three (wire fraud). Mills and the

government entered into a plea agreement. Mills agreed to plead

guilty to Count Two, reserving his right to appeal the district

court’s denial of his motion to dismiss Counts Two and Three of the

indictment for lack of jurisdiction. In exchange, the government

agreed to dismiss Count Three of the indictment upon Mills’s plea

and sentence on Count Two.

On July 30, 1998, Mills pleaded guilty to wire fraud as

charged by Count Two.1 On October 15, 1998, the district court

sentenced Mills to a fifteen month term of imprisonment to be

followed by a three year term of supervised release. No fine was

imposed, but the district court ordered payment of $137,411.67 in

restitution and a $50 special assessment. Mills timely appealed

from the district court’s denial of his motion to dismiss the wire

1
Mills pleaded guilty to violating 18 U.S.C. § 1343, which
provides in relevant part that:
Whoever, having devised or intending to devise any
scheme or artifice to defraud, or for obtaining money or
property by means of false or fraudulent pretenses,
representations, or promises, transmits or causes to be
transmitted by means of wire, radio, or television
communication in interstate or foreign commerce, any
writings, signs, signals, pictures, or sounds for the
purpose of executing such scheme or artifice, shall be
fined under this title or imprisoned not more than five
years, or both. . . .
18 U.S.C.A. § 1343 (West Supp. 1999).

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fraud charges and judgment of conviction and sentence. On November

9, 1998, the district court granted the defendant’s motion for

release pending appeal from the judgment of conviction.

As part of the plea agreement the parties agreed to a resume

of stipulated facts. In the agreement Mills acknowledged that he

had personally reviewed the factual resume and understood that it

would be incorporated by reference into the plea agreement and

presented to the court as evidence. Mills and the government

clearly intended that the stipulation of facts were to be taken

into consideration by the appellate court in its review of the

district court’s denial of Mills’s motion to dismiss both Counts

Two and Three of the indictment.2

2
The factual resume stated:
11. The parties have entered into this plea agreement
whereby the defendant will enter a guilty plea to Count
2 of the indictment, which charges a violation of 18
U.S.C. § 1343 (wire fraud). As set forth in paragraph
10(d), this guilty plea is a conditional plea which
permits the defendant to challenge the application of the
wire fraud statute under the facts of this particular
case. As part of this agreement, the defendant will have
the right to appeal this Court’s denial of his motion to
dismiss the wire fraud charges for lack of jurisdiction.
As part of the defendant’s conditional plea, both the
government and the defendant understand and agree that on
appeal the government will contend that these stipulated
facts give rise to a violation of 18 U.S.C. 1343 (wire
fraud), and on appeal the defendant will contend on
appeal (sic) that these stipulated facts do not give rise
to a violation of 18 U.S.C. 1343 (wire fraud). The
defendant does not now, nor has he ever disputed his
guilt for the state offense of wrongfully taking his
employer’s funds.
. . . .
13. The defendant has personally reviewed the Factual
Resume in this case and does not dispute the accuracy of
the factual resume. The defendant further understands
that the factual resume will be submitted to the court as
evidence.

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 The factual resume, in pertinent parts, provided that Mills

was employed as a controller by AMR, a corporation headquartered in

the Dallas-Fort Worth area, and in that capacity Mills had check

writing authority over the accounts through which he had wrongfully

obtained funds -- AMR, Fort Worth and AMR, McAllen. From June 1994

through July 1995, while only empowered to issue business checks

for authorized purposes, Mills knowingly and willfully issued

numerous AMR checks to himself as the designated payee and thereby

knowingly took AMR moneys without its consent. As a result of

Mills’s wrongful conduct, AMR sustained monetary losses of at least

$125,000. These checks were drawn on CNB in Aspen, Colorado, and

deposited into Mills’s personal bank accounts at either NB in

Dallas, Texas, or Bank One in Bedford, Texas.

The $4,315 check at issue in Count Two of the indictment was

drawn on the AMR account at CNB and deposited on or about January

18, 1995, into Mills’s personal account at NB. This check,

together with all other checks deposited that day, was sent by NB

to the Federal Reserve Bank-Dallas (FRB-Dallas). FRB-Dallas

credited NB for all checks submitted that day, and FRB-Dallas also

informed the other federal reserve banks of the total amount of all

checks FRB-Dallas received that day from banks located in those FRB

regions. In so doing, FRB-Dallas informed Federal Reserve Bank-

Denver (FRB-Denver), via interstate wire transfer, of the total

dollar amount of all checks that FRB-Dallas had received that were

drawn on banks in the FRB-Denver region. That amount included the

$4,315 check specified in Count Two, and the government relied upon

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this interstate wire transmission to establish federal wire fraud

jurisdiction.

FRB-Denver, upon receipt of those checks, debited CNB for the

total of all checks (including the $4,315 check) received that day

that were drawn on CNB. CNB likewise debited the AMR account for

all checks drawn on its account, including the $4,315 check.

II. Analysis

We review questions of jurisdiction de novo. United States v.

Becerra, 155 F.3d 740, 756 (5th Cir. 1998).

The Supreme Court has said that because the mail and wire

fraud statutes share the same language in relevant part, the same

analysis applies to each. See Carpenter v. United States, 484 U.S.

19, 25 n.6 (1987); see also United States v. Brumley, 59 F.3d 517,

520 n.4 (5th Cir. 1995)(“cases construing the mail fraud statute

are applicable to wire fraud”), superseded on other grounds, 116

F.3d 728 (5th Cir. 1997)(en banc); United States v. Giovengo, 637

F.2d 941, 944 (3rd Cir. 1980)(same). The parties in their briefs,

and we in this opinion, accordingly rely upon both mail fraud and

wire fraud cases to inform our resolution of this appeal.

To establish wire fraud, the government must prove (1) that

the defendant knowingly participated in a scheme to defraud; (2)

that interstate wire communications were used to further the

scheme; and (3) that the defendant intended that some harm result

from the fraud. See United States v. Powers, 168 F.3d 741, 746

(5th Cir. 1999). For purposes of jurisdiction, the first and third

elements (knowingly participating in a harmful fraudulent scheme)

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were established by the allegations of the indictment as a whole,

the plea agreement, and the resume of stipulated facts.3 Whether

the second element (that interstate wire communications were used

to further the scheme) was established is a more complex question.

Interstate wire communications were used to further the

fraudulent scheme, and federal jurisdiction attaches, if the use of

the wires by the banks was incident to an essential part of the

scheme. See Pereira v. United States, 347 U.S. 1, 8 (1954)(mail

fraud is proven where it is established that (1) there was a scheme

to defraud; (2) that the bank mailed the check incident to an

essential part of the scheme; and (3) that the defendant caused the

mailing by acting with knowledge that the use of the mails will

follow in the ordinary course of business, or where such use can

reasonably be foreseen even though not actually intended).

Mills relies principally upon Kann v. United States, 323 U.S.

88 (1944), for the proposition that the clearing of checks is not

sufficient to confer federal jurisdiction under the wire fraud

statute. In essence, Mills argues that the interstate wire

communications between FRB-Dallas and FRB-Denver were not incident

to an essential part of the scheme because the embezzlement had

already been completed when he deposited the $4,315 check into his

3
The Supreme Court held in an early case: “Consent of the
parties cannot give the courts of the United States jurisdiction,
but the parties may admit the existence of facts which show
jurisdiction, and the courts may act judicially upon such an
admission.” Railway Co. v. Ramsey, 89 U.S. 322, 327 (1874); see
also United States v. Anderson, 503 F.2d 420, 422 (6th Cir.
1974)(per curiam) (applying Railway Co. v. Ramsey to a criminal
case).

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account at NB (Count Two) and when he deposited the $9,613 check

into his account at Bank One (Count Three), or, at the latest, when

the banks credited his accounts in those amounts. In Kann, the

Supreme Court held that where the mail fraud defendants cashed

fraudulently obtained checks and received the moneys contemplated

by the scheme such that the scheme reached fruition before the

checks were placed into the mails for collection, it was

“immaterial” to the defendants how the banks that paid or credited

the checks would collect from the drawee banks and “[i]t cannot be

said that the mailings in question were for the purpose of

executing the scheme, as the statute requires.” Id. at 94; see

also United States v. Maze, 414 U.S. 395, 402 (1974)(defendant’s

use of stolen credit card for food purchase and hotel stay was

complete prior to the use of the mails to communicate the charges

or payment and thus the mailings were not sufficiently related to

the scheme to confer federal jurisdiction); Parr v. United States,

363 U.S. 370, 393 (1960)(school employees’ mail fraud convictions

were reversed for lack of jurisdiction where unauthorized credit

card purchases of gasoline reached fruition at time of receipt of

gasoline such that mailed payments by school district to vendors

was not in furtherance of the scheme); United States v. Evans, 148

F.3d 477, 482-84 (5th Cir. 1998)(defendant consummated the

fraudulent scheme when supervisors approved falsified travel

vouchers and before same were mailed to another office for

reimbursement such that the mail fraud convictions were reversed);

United States v. Vontsteen, 872 F.2d 626, 628-29 (5th Cir. 1989),

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cert. denied, 498 U.S. 1074 (1991), superseded on other grounds,

950 F.2d 1086 (5th Cir.)(en banc), cert. denied, 505 U.S. 1223

(1992)(employee of pipe vendor who fraudulently pocketed profits

from sales of pipe while refusing to pay pipe supplier completed

the fraud prior to the mailing of invoices by the supplier to his

employer).

However, in Kann the Supreme Court indicated that it is

conceivable that “in some settings” the mere clearing of a check

would be enough to confer federal jurisdiction. 323 U.S. at 94-95.

The government argues, and we conclude, that the present case

presents such a setting. In Schmuck v. United States, the Supreme

Court held that where the interstate mailing is used to further and

perpetuate a scheme involving a series of continual frauds, rather

than a “one shot” deception, so that the perpetrator is not

indifferent to the fact of who discovers the scheme or bears the

loss, the jurisdictional element is satisfied. 489 U.S. 705, 714-

15 (1989).

Schmuck involved the conviction of a car dealer who had

manipulated twelve used car odometers and then sold the cars to at

least three different retail dealers. Finding that Schmuck’s was

not a “one-shot” operation, but rather an ongoing fraudulent

venture the success of which depended upon continued harmonious

relations with the dealers, and in turn requiring the smooth flow

of cars from the dealers to their customers, the Supreme Court

reasoned that because the sales were not complete until the dealer

submitted a title application form to the state on behalf of the

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retail customer and the state title was received, the mailing of

the forms containing fraudulent odometer readings was “‘incident to

an essential part of the scheme’ satisfying the mailing element of

the mail fraud offense.” Id. at 711-12 (citing Pereira v. United

States, 347 U.S. 1, 8 (1954)).

Similarly, in United States v. Davila, this court held that

where interstate wire transmissions are at the heart of and

essential to a fraudulent scheme and are of necessity interstate,

the jurisdictional element is met. 592 F.2d 1261, 1264 (5th Cir.

1979). In Davila, the defendant engaged in multiple fraudulent

interstate wire transfers of funds through Western Union to

establish a de facto line of credit kiting scheme wherein

subsequent Western Union money wires on credit were used by the

defendant to pay for previous money wires on credit during the ten

day grace periods allowed by Western Union for actual payment for

each wiring of money. 592 F.2d at 1262-63.

Under the factual allegations contained in the indictment and

under the express terms of the factual resume, Mills’s scheme to

defraud AMR was an ongoing venture and not a “one-shot” operation

as it involved numerous checks totaling at least $125,000 and

extended over at least thirteen months. Moreover, the $4,315 check

referenced in Count Two was issued in January 1995 – near the

temporal midpoint of the scheme that ran from June 1994 to July

1995; and the $9,613 check referenced in Count Three was issued in

May 1995 - at least one month prior to termination of the scheme.

Thus, success of the ongoing fraudulent venture depended upon

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continued harmonious relations among Mills’s personal banks, the

Federal Reserve Banks, CNB, and AMR. Otherwise future fraudulent

checks issued pursuant to the scheme would be dishonored and not

credited to Mills’s accounts. Additionally, Mills was not

indifferent as to when the scheme was discovered or who bore the

loss because the continuation of the scheme depended upon the

successful deception of the intermediate parties and upon AMR

bearing the losses that Mills, as AMR’s controller, could conceal

for an extended period. See Schmuck, 489 U.S. at 712. Therefore,

the interstate wire communications between FRB-Dallas and FRB-

Denver to facilitate the transfer of funds from CNB in Aspen,

Colorado to NB in Dallas, Texas ($4,315 per Count Two) and to Bank

One in Bedford, Texas ($9,613 per Count Three) were at the heart

the scheme and were of necessity interstate. See Davila, 592 F.2d

at 1264. Accordingly, we conclude that the indictment contained

sufficient allegations to support the district court’s denial of

Mills’s motion to dismiss the wire fraud counts for lack of federal

jurisdiction. We conclude likewise that the plea agreement

incorporating the factual resume provided a sufficient factual

basis for the district court to enter conviction and sentence upon

the guilty plea as required by Rule 11(f) of the Federal Rules of

Criminal Procedure.

III. Conclusion

For the foregoing reasons, the conviction and sentence of the

defendant-appellant are AFFIRMED; and the district court’s judgment

denying the defendant-appellant’s motion to dismiss the indictment

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for lack of jurisdiction is AFFIRMED.

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