Rehearing and Rehearing En Banc Denied February 14, 1977.
GODBOLD, Circuit Judge:
Defendant James C. Buchanan appeals from a jury conviction on seven counts of violating the federal mail fraud statute. 18 U.S.C. § 1341.
Buchanan's "scheme" involved the creation of Union Postal Systems, Inc., a franchise arrangement whereby interested parties each paid him $1,000 for the opportunity to deliver second, third, and fourth class mail under the Union banner. In return, the franchisees were promised 30% of all revenues resulting from their deliveries, the offering of certain "training and indoctrination courses," and other benefits. The indictment charged Buchanan and his corporate enterprises with making the following knowingly false representations accompanying the solicitations:
Buchanan asserts three bases for reversal of the decision below. The first concerns the prosecutor's reading from a transcript of a tape during his final argument. This tape had not been introduced into evidence, but was instead an amplified version of the tape introduced as the government's Exhibit 12. Buchanan's attorney did not object to this action at trial, and we cannot hold that it resulted in plain error. Second, Buchanan claims that the evidence was insufficient to prove the existence of a scheme to defraud. We also find this contention to be without merit.
Buchanan's third claim, that his use of the mails was not adequate to sustain a conviction under § 1341, merits a more extended discussion. Of the seven counts upon which Buchanan was convicted, the first three related to the sale of franchises through ads placed in three newspapers. The last four concerned the sale of Union stock to franchisees after they had already purchased their delivery routes. We consider first the use of the mails requirement under the newspaper counts.
Buchanan depended primarily upon advertisements in three local newspapers for soliciting Union franchisees. Each of these papers depended to some extent upon the mails for its circulation:
Newspaper Total Paid Circulation Mail Subscriptions (Avg. as of Oct. 1, 1974) Harlingen Valley Morning Star 20,412 691 Brownsville Herald 13,221 259 McAllen Monitor 18,803 2454
Buchanan asserts, however, that none of the government's witnesses who purchased franchises after reading the newspaper ads actually received their newspapers through the mails.
The question here raised, in statutory terms, is whether Buchanan's use of the mails to deliver his ads through the newspapers was "for the purpose of executing [his] scheme or artifice or attempting so to do." We hold that it was. This case parallels Atkinson v. U. S., 344 F.2d 97, 99 (C.A.8), cert. denied, 382 U.S. 867, 86 S.Ct. 141, 15 L.Ed.2d 106 (1965):
We agree with the holding in Atkinson.
U. S. v. Maze, 414 U.S. 395, 94 S.Ct. 645, 38 L.Ed.2d 603 (1974), involving the use of stolen credit cards, does not dictate reversal here. Maze concerned the quite different problem of "whether [the] mailings were sufficiently closely related to respondent's scheme." Id. at 399, 94 S.Ct. at 648, 38 L.Ed.2d at 608. See also U. S. v. Constant, 501 F.2d 1284 (C.A.5, 1974), cert. denied, 420 U.S. 910, 95 S.Ct. 830, 42 L.Ed.2d 840 (1975). Here, the problem is not the nexus between the mails and the fraud but rather the significance of a small number of mailings clearly made to attract franchisees.
As we have noted, Buchanan received concurrent sentences. Because we have upheld his conviction on the newspaper counts, we need not reach the validity of the convictions based upon mailings to franchisees after they had purchased delivery routes in order to sell them stock in the company. U. S. v. Easterly, 444 F.2d 1236, 1240 (C.A.5, 1971).
Buchanan's conviction is AFFIRMED.
JONES, Circuit Judge, dissenting:
The indictment charged the appellant with mail fraud. The scheme called for the sale by appellant's corporation of franchises.
On the question as to whether the newspapers carrying the advertisements of the franchises were "significant" the majority finds that this case parallels the Eighth Circuit case of Atkinson v. U. S., 344 F.2d 97. In Atkinson there were over 7,000 of the newspapers mailed. Here there were 1195. In Atkinson the sales were primarily promoted by newspaper advertising, although it does not appear that those who were defrauded received their newspapers through the mail. Here the fraudulent sales were promoted primarily by personal solicitation. It does not appear that any of those who were defrauded ever saw the advertising in a newspaper that was in the mail. In this case 97.2 per cent of the newspapers were delivered by carrier and only 2.8 per cent were mailed. This is insignificant; it is de minimis. Atkinson stands alone and is not binding on this Court.
The "lulling letters", so called, were sent in an effort to sell stock to those who had theretofore purchased franchises. The scheme to sell franchises was at an end. Here, and it needs repetition, the fraudulent
I think the convictions should be reversed with directions to enter a judgment of acquittal. There is ample evidence of fraud but mail fraud, in my opinion, is too short a peg on which to hang a conviction.
FootNotes
U. S. v. Ashdown, 509 F.2d 793 (C.A.5), cert. denied, 423 U.S. 829, 96 S.Ct. 48, 46 L.Ed.2d 47 (1975), only held that lulling letters may be used to satisfy the use of the mails requirement.
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