APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY D.C. Criminal No. 367-73.
Gibbons, Hastie and Rosenn, Circuit Judges. Hastie, Circuit Judge, concurring.
The rapidly growing use of credit as a lifestyle in this nation forms the backdrop for a fraudulent credit card scheme allegedly involving sixteen co-conspirators in this criminal case. Vincent D. Kearney, Jr., appellant, was tried to a jury in the United States District Court for the District of New Jersey. He was convicted on all three counts of an indictment which charged him and others with (I) conspiracy to violate the federal mail fraud statutes under 18 U.S.C. § 371 (1971);*fn1 (II) use of the mails to defraud in violation of 18 U.S.C. §§ 1341 and 1342 (1971);*fn2 (III) use of false names and addresses in violation of 18 U.S.C. § 1342.
After denial of his motion for a judgment of acquittal notwithstanding the verdict, or in the alternative, for a new trial, Kearney was sentenced to five years' imprisonment on each count, to run concurrently. His appeal to this court raises a number of grounds for reversal.
First, Kearney attacks the sufficiency of the indictment. Further, he contends that the Government failed to prove a violation of the federal mail fraud statutes, the existence of a single conspiracy as charged, or the execution of any of the overt acts contained in the conspiracy count of the indictment. Finally, Kearney claims that the Assistant United States Attorney commented impermissibly on his failure to testify. We have given these contentions careful consideration and find them without merit. We therefore affirm Kearney's conviction.
The evidence introduced by the Government established the existence of a credit card conspiracy lasting over two years and involving more than a dozen people. The ring operated out of the Alexander Hamilton Hotel in Paterson, New Jersey. Kearney not only used lost or stolen credit cards, but he also sold them to other co-conspirators along with false identification, such as drivers' licenses. Use of the credit cards was facilitated by semiweekly meetings at the hotel to exchange information regarding which stores to avoid and which cards had appeared on missing card lists issued by credit card companies and banks, and to pass on tips for continued safe use of the cards. Aside from frequent use of the cards to purchase food and drink at the hotel and at area restaurants, members of the group made a business of purchasing goods with the cards and selling the goods to Kearney and others at the hotel.
Particularly popular were women's shoes, purchased at a shoe store managed by Robert Largemann. Largemann also frequented the bar at the Alexander Hamilton Hotel, knew Kearney socially, and had met Adamo, a co-defendant. Largemann honored credit cards offered by Kearney and others over the course of the conspiracy, knowing that they were not the card owners. Largemann was charged with complicity in the conspiracy and pleaded guilty to Count I of the indictment.
Other unindicted merchants in the area, particularly restauranteurs, knew Adamo and Kearney by name but nevertheless repeatedly accepted the proffered credit cards issued in names of other persons. The conspirators patronized the business establishments of these merchants regularly.
Of the sixteen indicted co-conspirators, four were brought to trial: Peter Adamo, Richard Hoy, Vincent Kearney, and Paul Lachmann, owner of the Alexander Hamilton Hotel. Only Lachmann presented evidence in his behalf. The jury found Lachmann not guilty and found the other three defendants guilty on all counts. The court entered a judgment of acquittal notwithstanding the verdict as to defendant Hoy. Adamo and Kearney appealed their convictions to this court. Since his appeal, Adamo has died and we have vacated the judgment as to him and directed the district court to dismiss the indictment against him.
The Government proceeded under the federal mail fraud statutes, rather than under 15 U.S.C. § 1644 (1971), which deals specifically with credit card fraud.*fn3 Fraudulent schemes involving credit cards generally may be prosecuted under federal mail fraud statutes because, after a credit card is used, the sales invoice is mailed to the bank or credit card company, which in turn uses the mails to send a bill to the credit card owner and payment to the merchant. The use of the mails thus necessarily resulting from a purchase by credit card is "caused" by the purchaser. Pereira v. United States, 347 U.S. 1, 8-9, 74 S. Ct. 358, 98 L. Ed. 435 (1954).
Kearney claims that the indictment in the instant case is insufficient to charge a federal mail fraud offense, especially in light of the recent United States Supreme Court decision in United States v. Maze, 414 U.S. 395, 38 L. Ed. 2d 603, 94 S. Ct. 645 (1974). That decision had a substantial impact upon prosecutions for credit card fraud under the mail fraud statutes as the Maze Court strictly construed the statutory language that use of the mails be "for the purpose of executing such scheme or artifice."
Kearney's argument is that the indictment does not specify the connection between the alleged fraudulent plan and the use of the mails. The district court, ruling on Kearney's pre-trial motion to dismiss the indictment, held that Maze was inapplicable to this case. We agree that Maze does not require dismissal of this indictment.
In Maze, the defendant charged lodgings and food at motels on a stolen credit card over the course of two weeks. Since his fraudulent plan was complete upon the honoring of the card by unknowing motel operators, the use of the mails routinely resulting from his purchases was held incidental to and not "for the purpose of executing" his plan. In fact, it was immaterial to Maze whether the invoices were ever mailed.
The determination that the mailings were insufficiently linked to the execution of the scheme had earlier been applied to reverse convictions under the federal mail fraud statutes. Parr v. United States, 363 U.S. 370, 4 L. Ed. 2d 1277, 80 S. Ct. 1171 (1960); Kann v. United States, 323 U.S. 88, 89 L. Ed. 88, 65 S. Ct. 148 (1944). The inquiry in each case attempted to pinpoint at what time the scheme was executed, the fraud completed.
In the instant case, two merchants were also charged with participation in the fraudulent scheme. Hence, the point at which this plan reached fruition was not at presentation of the credit cards but rather after the bank or credit card company had made mail payment in response to the mailing of the invoices.
The indictment charges*fn4 that the conspirators formulated a plan whereby they would ascertain the rightful owners of credit cards, Kearney and two others would furnish the cards to eleven other conspirators, they would assume the names of the true card owners, and then Kearney and thirteen others:
would present said Diners Club, American Express, Bank Americard and Master Charge credit cards to defendants Robert D. Largemann and Paul Lachmann who would accept such cards for payment for merchandise knowing that the defendants presenting ...