United States Court of Appeals, Eleventh Circuit.
No. 93-9319.
UNITED STATES of America, Plaintiff-Appellee,
v.
Robert W. WAYMER, Defendant-Appellant.
June 16, 1995.
Appeal from the United States District Court for the Northern
District of Georgia. (No. 1:92-CR-349), Robert H. Hall, Judge.
Before HATCHETT and COX, Circuit Judges, and JOHNSON, Senior
Circuit Judge.
JOHNSON, Senior Circuit Judge:
In this appeal from the Northern District of Georgia, Robert
W. Waymer seeks reversal of his convictions on twenty-two counts of
mail fraud and eleven counts of money laundering. For the reasons
stated below, we affirm.
I. STATEMENT OF THE CASE
A. Factual Background
Waymer was an elected member of the Atlanta Board of Education
("the Board"). Buddy Allen was the President and General Manager
of Allen Service Company, the parent to several companies,
including Peatross Service Company. John Assmar was a real estate
broker.
In 1986, Allen agreed to pay Assmar fifteen percent of the
gross proceeds of any service contracts Assmar obtained on behalf
of Allen's companies. In 1986, Assmar, acting on behalf of
Peatross, began a pilot sanitation and pest control program for two
Atlanta public schools. By the 1988-89 school year, Allen's
companies provided pest control and other services to all 113
Atlanta public schools.
In mid-1988, Assmar died. Shortly thereafter, Allen paid more
than $30,000 to Assmar's widow as Assmar's commission for the
remainder of 1988. Although this commission grew out of Assmar's
role in obtaining Allen's contracts with the school system, by the
time of Assmar's death, he was doing virtually nothing to assist in
the performance of the contracts.
After Assmar's death, but prior to the end of 1988, Waymer
approached Allen and told him that he and Assmar had been partners
and that he wanted to assume Assmar's role in Allen's school system
contracts. Allen responded that he had already paid Assmar's widow
the fifteen percent commission for 1988. Waymer approached Allen
again at the end of 1988. At that time, Allen agreed to pay Waymer
the fifteen percent if Waymer provided him with an assurance from
the school system that Waymer could do business with Allen at the
same time that he was a member of the Board.
Waymer told Dr. Woodrow Wilson, the Associate Superintendent
of the Atlanta school system, that he was considering doing
business with someone who did business with the school system and
asked his advice. Because Waymer was in the real estate business,
Wilson assumed Waymer was talking about real estate work. He
advised Waymer that it was allowable if the other party's business
with the school system was accomplished through a sealed bid
procedure. Wilson further advised Waymer to abstain if matters
came before the Board involving that business and to disclose the
relationship to the Board and Superintendent. Waymer then wrote
Wilson a letter stating that he was engaged in real estate and
marketing activities with Allen, that Waymer had done consulting
work for Allen since 1986, and that Waymer would make full
disclosure of his relationship with Allen. Waymer's letter did not
inform Wilson that Allen would be paying Waymer fifteen percent of
Allen's companies' proceeds from the contract with the school
system and that Waymer would be required to perform almost no
services for Allen in order to receive the payments. Neither
Waymer nor Wilson took the matter before the entire Board.
From the beginning of 1989 to the end of 1991, Allen paid
Waymer by checks made payable to Elloree Real Estate Company. All
of the checks were deposited into the Elloree business account.
Each time Waymer deposited a check from Allen's companies into the
Elloree account, he wrote one or more checks on that account to
himself and deposited the money in his personal account. In all,
Allen paid Waymer more than $200,000.
B. Procedural History
In April 1993, a superseding indictment charged Waymer with
twenty-four counts of mail fraud, in violation of 18 U.S.C.A. §§
1341 (West 1984 and Supp.1994) and 1346 (West Supp.1994), and
eleven counts of money laundering, in violation of 18 U.S.C.A. §
1956(a)(1)(B)(i) (West Supp.1994). The mail fraud counts alleged
(1) a scheme to defraud the citizens of Atlanta of Waymer's honest
services and (2) a scheme to defraud Allen of money and property.
The money laundering counts relied upon the mail fraud counts as
the specified unlawful activity constituting the source of the
laundered proceeds. Waymer pleaded not guilty.
At the trial, which commenced in July 1993, the court granted
a motion for judgment of acquittal on two of the mail fraud counts.
The jury returned guilty verdicts on all remaining mail fraud
counts based on the scheme to defraud the citizens of Atlanta of
Waymer's honest services.1 Waymer was also convicted on all money
laundering counts. He was sentenced to concurrent terms of
thirty-three months' imprisonment.
Waymer raises the following issues on appeal: (1) whether
section 1346 is unconstitutionally vague or overbroad; (2) whether
the school system's mailing of checks to Allen's companies
satisfies the mailing requirement of section 1341; (3) whether the
evidence was sufficient to establish mailing of the twenty-two
checks at issue; and (4) whether the fact that Waymer was being
paid fifteen percent of the proceeds of Allen's companies'
contracts with the Board was "material."2
II. DISCUSSION
A. Vagueness and overbreadth challenges to section 1346
Federal law prohibits the use of the mails in furtherance of
a scheme to defraud. 18 U.S.C.A. § 1341. To prove mail fraud, the
government must show that the accused (1) intentionally
participated in a scheme or artifice to defraud and (2) used the
United States mails to carry out that scheme or artifice. United
States v. Hooshmand, 931 F.2d 725, 731 (11th Cir.1991). The
1
The jury was deadlocked on Waymer's guilt regarding the
alleged scheme to defraud Allen of money and property.
2
In addition to those listed above, Waymer raises numerous
other issues. After careful review of the record, we conclude
that Waymer's contentions regarding those other issues are
without merit and do not warrant discussion. Accordingly, we
summarily affirm the district court as to all issues not herein
discussed.
"honest services amendment" to the mail fraud statute, 18 U.S.C.A.
§ 1346, allows the United States to predicate a mail fraud
prosecution on a "scheme or artifice to deprive another of the
intangible right of honest services."3 Waymer contends that
section 1346 is unconstitutionally vague and overbroad. Our review
is de novo.
1. Vagueness
Because "honest services" are not defined in the mail fraud
statute, Waymer contends that section 1346 is unconstitutionally
vague. A statute is not unconstitutionally vague if it "define[s]
the criminal offense with sufficient definiteness that ordinary
people can understand what conduct is prohibited and in a manner
that does not encourage arbitrary and discriminatory enforcement."
Kolender v. Lawson, 461 U.S. 352, 357, 103 S.Ct. 1855, 1858, 75
L.Ed.2d 903 (1983). Waymer's void-for-vagueness challenge to
section 1346 does not involve the First Amendment; therefore, we
review section 1346 only as applied in the instant case. United
States v. Awan, 966 F.2d 1415, 1424 (11th Cir.1992). In other
words, we need only examine the vagueness of the statute in light
of the particular facts of this case. Id.
The constitutionality of a vague statutory standard is
3
In 1988, Congress enacted section 1346, overriding the
Supreme Court's decision in McNally v. United States, 483 U.S.
350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987). McNally had held
that the mail fraud statute did not criminalize schemes to
defraud citizens of their rights to honest government. Id. at
359, 107 S.Ct. at 2881. Congress' purpose in enacting section
1346 was to restore the mail fraud statute to its pre-McNally
position by allowing mail fraud convictions to be predicated on
deprivations of honest services. United States v. Martinez, 905
F.2d 709, 715 (3rd Cir.1990).
closely related to whether the standard incorporates a requirement
of mens rea. Colautti v. Franklin, 439 U.S. 379, 395, 99 S.Ct.
675, 685, 58 L.Ed.2d 596 (1979). "A statutory requirement that an
act must be willful or purposeful may not render certain, for all
purposes, a statutory definition of the crime which is in some
respects uncertain. But it does relieve the statute of the
objection that it punishes without warning an offense of which the
accused was unaware." United States v. Conner, 752 F.2d 566, 574
(11th Cir.) (quoting Screws v. United States, 325 U.S. 91, 101-02,
65 S.Ct. 1031, 1035-36, 89 L.Ed. 1495 (1945) (Douglas, J.,
concurring)), cert. denied sub nom., Taylor v. United States, 474
U.S. 821, 106 S.Ct. 72, 88 L.Ed.2d 59 (1985); see also United
States v. Margiotta, 688 F.2d 108, 129 (2d Cir.1982) ("[t]he broad
language of [section 1341], intended by Congress to be sufficiently
flexible to cover the wide range of fraudulent schemes mankind is
capable of devising, is not unconstitutionally vague because
section 1341 contains the requirement that the defendant must have
acted willfully and with a specific intent to defraud."), cert.
denied, 461 U.S. 913, 103 S.Ct. 1891, 77 L.Ed.2d 282 (1983).
Applying that principle to this case, we note that to convict
a person of mail fraud, the government must prove specific intent
to defraud. 18 U.S.C.A. § 1341 (West Supp.1994). Hooshmand, 931
F.2d at 732. Here, the jury found that Waymer specifically
intended to commit a fraud on Atlanta's citizens. Waymer does not
maintain that the jury was improperly instructed as to specific
intent. Nor does he argue that the evidence was insufficient to
support the jury's conclusion that he specifically intended to
defraud the citizens of Atlanta of his honest services. Therefore,
his vagueness challenge must fail. Accordingly, we hold that the
term "honest services" in section 1346, as applied to Waymer, is
not unconstitutionally vague.
2. Overbreadth
Waymer contends that section 1346 could be used to prosecute
expression protected by the First Amendment and, thus, is facially
overbroad. Application of the overbreadth doctrine is employed as
a last resort and is not to be invoked when a limiting construction
has been or could be placed on the challenged statute. Broadrick
v. Oklahoma, 413 U.S. 601, 613, 93 S.Ct. 2908, 2916, 37 L.Ed.2d 830
(1973). In cases like this one, where the statute at issue
regulates conduct and not merely speech, the statute will not be
struck down unless its overbreadth is "not only real, but also
substantial in relation to the statute's plainly legitimate sweep."
Id. If a conduct-regulating statute reflects legitimate
governmental interests and is not substantially overbroad, whatever
overbreadth does exist should be cured on a case-by-case basis.
Id.
We see no basis for facial invalidation of section 1346 on
overbreadth grounds. Section 1346 effectuates the legitimate
governmental aim of punishing those who use the mails to carry out
fraudulent schemes to deprive others of their intangible rights to
honest services. Assuming arguendo that certain marginal
applications of section 1346 would impermissibly intrude on First
Amendment rights, we hold that such potential problems with section
1346 are insubstantial when judged in relation to the statute's
plainly legitimate sweep. Thus, defects in the honest services
amendment to the mail fraud statute can be effectively addressed on
a case-by-case basis. Accordingly, section 1346 is not facially
overbroad.
B. The Mailing Requirement
The federal mail fraud statute does not purport to reach all
frauds; rather, it aims at instances where the use of the mails is
"part of the execution of the fraud." Schmuck v. United States,
489 U.S. 705, 710, 109 S.Ct. 1443, 1447, 103 L.Ed.2d 734 (1989)
(quoting Kann v. United States, 323 U.S. 88, 95, 65 S.Ct. 148, 151,
89 L.Ed. 88 (1944)). Thus, "mailing" is a required element of the
crime of mail fraud. To satisfy the mailing requirement, however,
the use of the mails need not be an essential element of the
scheme. Schmuck, 489 U.S. at 710, 109 S.Ct. at 1447. It is
sufficient for the mailing to be "incident to an essential part of
the scheme" or "a step in the plot." Id. at 711, 109 S.Ct. at 1448
(quoting Badders v. United States, 240 U.S. 391, 394, 36 S.Ct. 367,
368, 60 L.Ed. 706 (1916)).
1. Payment of a Lawful Debt
In this case, the government met the mailing requirement by
showing that the Board's payments to Allen's companies were
accomplished by use of the mails. Waymer contends that because the
school system had a legal obligation to pay Allen, the mailing of
checks in payment of that legal debt cannot satisfy the mailing
requirement.
Waymer's contention is foreclosed by the Supreme Court's
decision in Schmuck, which expressly rejected the claim that a
routine or innocent mailing cannot supply the mailing element of
the mail fraud offense. 489 U.S. at 714-15, 109 S.Ct. at 1449-50
(1988). Schmuck involved a scheme whereby the defendant would
purchase used cars, roll back their odometers, and sell them to
dealers for inflated prices. The dealers, in turn, would sell the
cars to consumers for prices which reflected the earlier fraud. In
order to complete the resale transactions between the dealers and
the consumers, title had to be transferred to the consumers; this
was accomplished by mailing a title application form to the
Wisconsin Department of Transportation.
The Supreme Court held that although it was an innocent act in
itself, the mailing of the title applications supplied the mailing
element for the defendant's mail fraud conviction. The Court
wrote:
Under these circumstances, we believe that a rational jury
could have found that the title-registration mailings were
part of the execution of the fraudulent scheme, a scheme which
did not reach fruition until the retail dealers resold the
cars and effected transfers of title. Schmuck's scheme would
have come to an abrupt halt if the dealers either had lost
faith in Schmuck or had not been able to resell the cars
obtained from him. These resales and Schmuck's relationships
with the retail dealers naturally depended on the successful
passage of title among the various parties. Thus, although
the registration-form mailings may not have contributed
directly to the duping of either the retail dealers or the
customers, they were necessary to the passage of title, which
in turn was essential to the perpetuation of Schmuck's scheme.
Id. at 712, 109 S.Ct. at 1448.
This case presents an even stronger factual scenario for
finding mailing than did Schmuck. In Schmuck, despite the fact
that the mailing took place after the defendant had already
received the desired benefit from his fraud, the Supreme Court held
that the mailings were in furtherance of his overall fraudulent
scheme. Here, by contrast, the checks mailed to Allen were the
very source of the payments to Waymer. Unless and until Allen got
paid, Waymer could not get paid.4 In short, because the success of
Waymer's scheme to defraud Atlanta's citizens directly depended on
Allen's being paid, and because Allen was paid by mail, the
mailings in this case satisfy the mailing requirement of section
1341.
2. Sufficiency of the Evidence of Mailing
Waymer next contends that there was insufficient evidence to
conclude that the twenty-two checks at issue in this case were, in
fact, mailed from the school system to Allen. We review challenges
to the sufficiency of the evidence de novo. Hooshmand, 931 F.2d at
733. In so doing, we review the evidence, including all reasonable
inferences and credibility choices, in the light most favorable to
the government and decide whether a reasonable factfinder could
4
Cf. United States v. Maze, 414 U.S. 395, 402, 94 S.Ct. 645,
649, 38 L.Ed.2d 603 (1974) (no mail fraud despite foreseeable
mailing of bills to credit card owner, because defendant's
fraudulent scheme was complete when he used the stolen credit
card to receive the object of the fraud); Parr v. United States,
363 U.S. 370, 393, 80 S.Ct. 1171, 1184, 4 L.Ed.2d 1277 (1960)
(defendant who made unauthorized use of school district's credit
card did not commit mail fraud, despite the fact that the oil
company which issued the credit card mailed the invoices to the
school district for payment); Kann, 323 U.S. at 94, 65 S.Ct. at
150 (mailing requirement was not met where defendants cashed
fraudulently obtained checks at local bank and local bank then
mailed checks to drawee banks for collection; "it was immaterial
to [the defendants], or to any consummation of the scheme, how
the bank which paid or credited the check would collect from the
drawee bank"). As this Court has noted, "if a defendant has been
able to take possession of the object of the fraud and if the
fraud is then at an end, further mailings "involve[ ] little more
than post-fraud accounting among the potential victims of the
various schemes, and the long-term success of the fraud [does]
not turn on which of the potential victims [bears] the ultimate
loss.' " United States v. Smith, 934 F.2d 270, 272 (11th
Cir.1991) (quoting Schmuck, 489 U.S. at 714, 109 S.Ct. at 1449).
find guilt beyond a reasonable doubt. Id. We need not rule out
every hypothesis of innocence; a jury is free to choose among
reasonable constructions of the evidence. Id.
The Atlanta school system paid Allen's companies for his
services out of two accounts, the general fund and the cafeteria
account. Larry Washington and Mary Bright each supervised one of
these accounts. Both testified that the customary practice was for
the school system to mail checks to vendors. However, Washington
testified that on three or four occasions between 1986 and 1992,
checks drawn on the general fund were picked up personally by
someone from Allen's companies. Bright testified that 20% of the
time preceding the last year and 50% of the time in the last year,
checks from the cafeteria account were picked up rather than
mailed. Bright and Washington further testified that their
approval was required for checks to be picked up, but that they
kept no records of which checks were mailed and which were picked
up.
Mailing can be proved through circumstantial evidence.
United States v. Metallo, 908 F.2d 795, 798 (11th Cir.1990), cert.
denied, 503 U.S. 940, 112 S.Ct. 1483, 117 L.Ed.2d 625 (1992).
Proof of a routine practice of using the mail to accomplish a
business end is sufficient to support a jury's determination that
mailing occurred in a particular instance. Id. This Court has not
previously addressed the issue of whether significant deviations
from a claimed routine practice of mailing render the evidence
insufficient to support a finding of mailing in a particular
instance. However, the Fifth Circuit has written:
Where, for example, the usual business practice includes the
frequent use of private couriers ... the inference that the
... mails ... were employed in executing the fraud is cast
into serious doubt. Absent other probative evidence to show
that a mailing ... occurred ... a jury cannot reasonably
overcome the presumption of innocence.
United States v. Moody, 903 F.2d 321, 332 (5th Cir.1990).
In this case, we need not decide whether the testimony of
Bright and Washington, standing alone, would be sufficient to
establish that the checks at issue were mailed, because the
government presented additional evidence of mailing. Specifically,
the government offered proof of more than four days' delay between
the date that each of the twenty-two checks at issue was cut by the
school system and the date that the same check was deposited into
one of Allen's companies' accounts.5 The record contains evidence
which shows that the school system normally would write a check on
one day and then mail it on the next. Allen testified that his
customary practice was to deposit checks soon after they were
received because "we are a small company and our funds are needed
in other areas." The Fifth Circuit has held that time delay
evidence is probative of the method of transport and that three or
four days' time delay is in accordance with the ordinary degree of
postal efficiency. Moody, 903 F.2d at 332-33. We agree with the
Fifth Circuit. Such evidence supports an inference of mailing.
Viewed in the light most favorable to the government, the
evidence in this case was sufficient to support the finding of
mailing. Taken together, the following evidence supports the
5
The original indictment charged forty-six counts of mail
fraud, but the superseding indictment charged only twenty-four.
The charges that were dropped were for checks for which the delay
was four days or less.
jury's conclusion: (1) evidence of the school system's
sometimes-broken custom of mailing checks to Allen's companies;
(2) testimony regarding the school system's practice of cutting a
check on one day and mailing it on the next; (3) Allen's testimony
that his companies typically deposited checks as soon as they were
received; and (4) evidence that there were more than four days'
delay between the date of the school system's cutting and the date
of Allen's companies' depositing the twenty-two checks at issue in
this case. Accordingly, we hold that the evidence was sufficient
for the jury to decide beyond a reasonable doubt that the
twenty-two checks at issue in this case were mailed.
C. Materiality of the Undisclosed Information
A defendant's breach of a fiduciary duty may be a predicate
for a violation of the mail fraud statute where the breach entails
the violation of a duty to disclose material information.
Margiotta, 688 F.2d at 127-28. In other words, "[f]raud, for
purposes of a mail fraud conviction, may be proved through the
defendant's non-action or non-disclosure of material facts intended
to create a false and fraudulent representation." United States v.
O'Malley, 707 F.2d 1240, 1247 (11th Cir.1983). An affirmative duty
to disclose need not be explicitly imposed; it may instead be
implicit in the relationship between the parties. Margiotta, 688
F.2d at 128. See also United States v. Silvano, 812 F.2d 754, 759
(1st Cir.1987) ("[T]he affirmative duty to disclose material
information arises out of a government official's fiduciary
relationship to his or her employer, whether as a public or as a
private employee.").
Waymer contends that his general fiduciary duty to the
citizens of Atlanta did not require him to disclose that he was
receiving fifteen percent of the proceeds from Allen's companies'
contracts with the Atlanta school system and that he performed
virtually no services in exchange for those payments. In other
words, he maintains that the information he withheld was not
material. Waymer correctly asserts that this is not a case of a
fiduciary's complete failure to disclose. He also rightly points
out that when he consulted with Wilson about his plans to have a
"business relationship" with Allen, Wilson assumed that the
relationship would involve compensation of some sort. On the basis
of these facts, Waymer contends that what he failed to disclose
were minor details concerning how that compensation was to be
calculated. We cannot agree.
For a School Board member to be receiving a direct and
substantial cut from a vendor's contract with the school system in
exchange for the performance of virtually no services so obviously
smacks of impropriety that it can hardly be characterized as a
minor detail of which the Board need not be apprised. The fact
that Allen's companies could afford to pay Waymer—who did nothing
to help Allen procure or retain the school board contracts and
virtually nothing to help Allen perform on those contracts—fifteen
percent of the proceeds of the contracts strongly suggests that
there were at least fifteen percent of unnecessary expenses in
Allen's bids for the contracts. Had the Board known this, it
likely would have re-bid the contracts at a considerable savings to
the citizens of Atlanta. Accordingly, we find no merit in Waymer's
contention that as a fiduciary to the citizens of Atlanta, he had
no duty to disclose the fact that he was receiving fifteen percent
of what the school board was paying Allen's companies ostensibly
for pest control and other services.
III. CONCLUSION
For the foregoing reasons, Waymer's convictions and sentence
are AFFIRMED.