United States v. Gray
405 F.3d 227 (2005)
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Rule of Law:
A fraudulent scheme to obtain insurance proceeds by murdering the insured constitutes a deprivation of the insurance company's 'money or property' under federal fraud statutes because it interferes with the company's right to control the disposition of its assets and accelerates its payment obligation.
Facts:
- Josephine Gray's first husband, Norman Stribbling, was found shot to death in 1974, after which Gray, as the beneficiary, collected $16,000 from his life insurance policy.
- Gray married her second husband, William 'Robert' Gray, who maintained life insurance policies through Minnesota Mutual and LINA that named Josephine Gray as a beneficiary.
- In August 1990, Robert Gray left his wife, telling relatives he feared she and her cousin, Clarence Goode, were trying to kill him, and he filed criminal assault charges against both.
- One week before the court date for his assault charges, Robert Gray was found shot to death in his apartment in November 1990.
- Clarence Goode, who was also insured with Gray as the beneficiary, was found shot to death in the trunk of his car in June 1996.
- Gray submitted claims for benefits to the insurance companies for Robert Gray's and Goode's deaths, consistently denying any involvement in their murders.
- Gray later confessed to a friend, Wilma Jean Wilson, that she had killed both of her husbands and Goode to collect their insurance money, stating she killed Goode because he was blackmailing her over Robert Gray's murder.
Procedural Posture:
- A grand jury indicted Josephine Gray on five counts of mail fraud and three counts of wire fraud in a federal district court.
- Following a trial, a jury convicted Gray on all counts.
- The district court sentenced Gray to 40 years' imprisonment and ordered restitution.
- Gray, as the appellant, appealed her conviction and sentence to the United States Court of Appeals for the Fourth Circuit, arguing insufficiency of evidence and improper admission of evidence.
- The United States was the appellee.
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Issue:
Does a fraudulent scheme to obtain life insurance benefits by murdering the insured deprive the insurance company of 'money or property' as required for a conviction under the federal mail and wire fraud statutes?
Opinions:
Majority - Shedd, Circuit Judge
Yes. A scheme to obtain insurance benefits by murdering the insured deprives the insurance company of money or property under the federal fraud statutes. The court reasoned that the federal fraud statutes protect property rights broadly, including an owner's intangible right to control the disposition of its assets. The money paid to Gray belonged to the insurance companies, and her fraudulent scheme deprived them of control over those assets by forcing them to pay out benefits. Gray's actions—murdering the insureds—wrongfully accelerated the companies' obligation to pay, depriving them of the use of their assets. Therefore, the insurance companies were not merely disinterested stakeholders but were direct victims who lost money and property because of Gray's fraud.
Analysis:
This decision solidifies a broad interpretation of 'property' for the purposes of federal fraud statutes, affirming that an entity's right to control its assets is a cognizable property interest. By holding that an insurance company is a direct victim when a beneficiary murders the insured to accelerate payment, the ruling prevents defendants from escaping fraud charges by claiming the insurer was a mere pass-through for funds. Furthermore, the court's expansive reading of the forfeiture-by-wrongdoing hearsay exception (Fed. R. Evid. 804(b)(6)) sets a significant precedent, allowing a murdered witness's statements to be used in any subsequent proceeding against the murderer, not just the specific one the witness was killed to avoid testifying in.
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