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United States v. Lebovitz

decided: January 21, 1982.

UNITED STATES OF AMERICA
v.
ROBERT A. LEBOVITZ, APPELLANT



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

Before Adams, Van Dusen and Sloviter, Circuit Judges.

Author: Sloviter

Opinion OF THE COURT

Robert Lebovitz was convicted of thirteen counts of mail fraud in violation of 18 U.S.C. § 1341 and one count of conspiracy to commit mail fraud in violation of 18 U.S.C. § 371. The indictment alleged a conspiracy between Lebovitz, a lawyer, and others to defraud insurance companies. The government evidence showed that Lebovitz and another lawyer in his firm, Lewis Kwall, conspired to submit inflated medical bills to insurance companies in connection with claims made on behalf of Lebovitz' clients for payment of their medical expenses and for compensation for their personal injuries. Fraudulent medical bills were provided by Dr. Jack H. Pincus. The jury convicted Lebovitz on all charges alleged in the indictment. He was sentenced to concurrent prison terms of one year and one day, and was fined a total of $14,000 plus costs of prosecution.

On appeal, he raises several issues including: (1) whether the mailings charged and proven in Counts 5, 10, 13 and 14 were sufficiently related to the fraudulent scheme to support the mail fraud convictions on those counts; and (2) whether the district court erred in admitting the testimony of a prosecution witness under Federal Rule of Evidence 404(b) without an express determination that its probative value outweighed its prejudicial effect. We affirm.

I.

Mail Fraud

The mail fraud statute prohibits the use of the mails "for the purpose of executing" a scheme to defraud.*fn1 18 U.S.C. § 1341. Whether a mailing is "for the purpose of executing a scheme" within the meaning of § 1341 depends upon whether it is "sufficiently closely related to respondent's scheme to bring his conduct within the statute." United States v. Maze, 414 U.S. 395, 399, 94 S. Ct. 645, 648, 38 L. Ed. 2d 603 (1974); United States v. Brown, 583 F.2d 659, 664 (3d Cir. 1978), cert. denied, 440 U.S. 909, 99 S. Ct. 1217, 59 L. Ed. 2d 456 (1979). The completion of the scheme must depend in some way on the mailings charged. United States v. Brown, 583 F.2d at 664; United States v. Tarnopol, 561 F.2d 466, 472 (3d Cir. 1977). However, "(i)t is not necessary that the scheme contemplate the use of the mails as an essential element." Pereira v. United States, 347 U.S. 1, 8, 74 S. Ct. 358, 362, 98 L. Ed. 435 (1954), quoted in United States v. Maze, 414 U.S. at 400, 94 S. Ct. at 648. Rather, it is sufficient if the mailing is "incident to an essential part of the scheme." Pereira v. United States, 347 U.S. at 8, 74 S. Ct. at 362. See United States v. Adamo, 534 F.2d 31, 36 (3d Cir.), cert. denied, 429 U.S. 841, 97 S. Ct. 116, 50 L. Ed. 2d 110 (1976) ("It is enough that the use of the mails merely furthers the scheme...."); United States v. Giovengo, 637 F.2d 941, 944-45 (3d Cir. 1980), cert. denied, 450 U.S. 1032, 101 S. Ct. 1743, 68 L. Ed. 2d 228 (1981) (applying Pereira test to wire fraud statute).

Use of the mails after the object of the scheme has been accomplished is not sufficiently closely related to the scheme to support a mail fraud conviction. United States v. Brown, 583 F.2d at 664. However, the object of a scheme is not necessarily accomplished at the moment when the perpetrator of the fraud receives the fruits of the scheme. Id. In some cases, subsequent mailings may still be "for the purpose of executing" the scheme because they are, for example, "designed to lull the victims into a false sense of security, postpone their ultimate complaint to the authorities, and therefore make the apprehension of the defendants less likely than if no mailings had taken place." United States v. Maze, 414 U.S. at 403, 94 S. Ct. at 650. See United States v. Sampson, 371 U.S. 75, 80-81, 83 S. Ct. 173, 175-76, 9 L. Ed. 2d 136 (1962).

In the counts which Lebovitz does not challenge as insufficient to support the mail fraud charges, the mailings generally related to the claims presented by Lebovitz on behalf of his clients for medical payments and personal injuries. In the four counts which are challenged, Counts 5, 10, 13 and 14, the mailings were related to third-party claims asserted by the original defendants against the plaintiff drivers alleging the drivers were totally or partially liable for the injuries to their own passengers. The plaintiffs' liability carrier, not Lebovitz, represented the plaintiff drivers as third party defendants.

Lebovitz contends that all of the claims involved in his scheme "were directed to either the medical payment carrier or the liability carrier representing the original defendant" and therefore the mailings in the four challenged counts were not closely enough related to the scheme to bring the conduct within the statute. Brief for Appellant at 20. Thus, we must decide whether the mailings in connection with the third-party complaints can support the mail fraud convictions on those counts. We must view the evidence in the light most favorable to the government. United States v. Brown, 583 F.2d 659, 661 (3d Cir. 1978), cert. denied, 440 U.S. 909, 99 S. Ct. 1217, 59 L. Ed. 2d 456 (1979). See Glasser v. United States, 315 U.S. 60, 80, 62 S. Ct. 457, 469, 86 L. Ed. 680 (1942).

Counts 10, 13 and 14.

These counts alleged three mailings arising out of an accident between John Sochacki, the driver of one car, and Michael Joyce, driver of the second car. Lebovitz represented Sochacki and his passenger, Joan Posa, in their medical payment claims against Sochacki's own insurer, J.C. Penney Insurance Company, and in their personal injury suit against the driver of the other car, Michael Joyce, who was represented by Allstate Insurance Company. The medical payment claims were based on the inflated medical bills from Dr. Pincus and the damages claimed in the personal injury suit also included those bills. Joyce, through his insurer, Allstate, joined Sochacki as an additional defendant on the Posa claim. Sochacki's insurer, J.C. Penney, defended this third-party claim. The evidence at trial showed that J.C. Penney paid Sochacki $985.20 and Posa $1,701.23 on their medical payment claims; that Allstate settled the personal injury claim of Sochacki for $1,000 and of Posa for $3,000; and that J.C. Penney paid Posa $1,000 on behalf of third-party defendant Sochacki.

The mailings used to support the mail fraud charges were letters between Lebovitz' law firm, representing Sochacki and Posa as the original plaintiffs, and the attorney for J.C. Penney, representing Sochacki as the additional defendant on the Posa claim. To support Count 10, the government relied on a letter from Kwall, of Lebovitz' law firm, to J.C. Penney's attorney enclosing Sochacki's and Posa's Pretrial Statement which consisted of a list of special damages including the inflated medical bills. Government Trial Exhibit XI(I). Count 13 was supported by a letter from Lebovitz to J.C. Penney's attorney in connection with the settlement, and included Posa's releases of Sochacki, defendant in the third-party claim, for the $1,000 settlement from J.C. Penney on behalf of Sochacki. Government Trial Exhibit XI(L). Count 14 was supported by a letter from J.C. Penney's attorney to Lebovitz enclosing the $1,000 settlement check. Government Trial Exhibit XI(M).

Lebovitz argues that there is no evidence that the joinder of the additional defendant or the recovery of money from an additional defendant was within his contemplation or part of the scheme or that the success of the scheme depended upon the mailings to or from the attorney for the additional defendant. However, the relationship between the personal injury claim filed by Lebovitz for his clients Posa and Sochacki and the third-party claim filed by defendant's insurer against Sochacki is apparent from the mailing which showed that Lebovitz negotiated and processed at the same time the settlement from Allstate for Posa and Sochacki as original plaintiffs and the settlement from J.C. Penney on behalf of Posa against Sochacki. Further, there was sufficient evidence for the jury to find that at the time of the settlement negotiations, Lebovitz' damages claims were still based upon, in part, Dr. Pincus' inflated bills. Thus, the jury could have concluded that at the time of the mailings charged in Counts 10, 13 and 14 Lebovitz was attempting to fraudulently obtain money from both the original defendant's insurer and the additional defendant's insurer, that the object of his scheme had not yet been fully accomplished, and that the mailings furthered the resolution of the third-party claims. The scheme "depended" in that way upon the mailings for its furtherance. See United States v. Brown, 583 F.2d at 664; United States v. Adamo, 534 F.2d at 36.

Lebovitz' contention that he never controlled or contemplated the joinder of additional defendants is also without merit. The law is clear that "one "causes' the mails to be used where he "does an act 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....' " United States v. Maze, 414 U.S. at 399, 94 S. Ct. at 648 (quoting Pereira v. United States, 347 U.S. at 8-9, 74 S. Ct. at 362-63). The evidence in the present case amply supports a finding that Lebovitz reasonably foresaw the ...


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