United States v. Hubbard
96 F.3d 1223 (1996)
Rule of Law:
A mailing is sufficiently related to a fraudulent scheme to satisfy the mail fraud statute if it is incident to an essential part of the scheme or a foreseeable step in the plot, even if the mailing is conducted by a third party after the defendant has received the proceeds of the fraud.
Facts:
- Michael Hubbard, through his business Discount Rent-A-Car, purchased used vehicles with high mileage, typically between 50,000 and 80,000 miles.
- Hubbard rolled back the odometers on some of the vehicles to show a much lower mileage.
- Hubbard then applied for duplicate titles from the Departments of Motor Vehicles in California and Texas, claiming the originals were lost, in order to obtain titles with blank mileage fields.
- Hubbard and his employee, James Lyon, inserted the false, low-mileage figures onto the new duplicate titles.
- Hubbard and Lyon sold these cars with altered odometers and falsified titles to Arizona Checker Sales, representing the low mileage as accurate.
- Lyon communicated the fraudulent mileage figures to Arizona Checker Sales and maintained internal records showing both the true high mileage and the false low mileage.
- After purchasing the cars, Arizona Checker Sales applied to the Arizona Department of Transportation for new Arizona titles, which were necessary to operate the vehicles as taxicabs.
- The State of Arizona mailed the new titles back to Arizona Checker Sales via U.S. mail.
Procedural Posture:
- Michael Hubbard and James Lyon were tried in federal district court on charges of conspiracy to engage in odometer tampering and conspiracy to commit mail fraud.
- At the conclusion of the government's case, the defendants filed a Motion for Judgment of Acquittal.
- The district court granted the motion as to the charge of conspiracy to engage in odometer tampering.
- The district court denied the motion as to the charge of conspiracy to commit mail fraud.
- A jury subsequently convicted Hubbard and Lyon on the mail fraud conspiracy count.
- The district court sentenced both defendants to terms of imprisonment.
- Hubbard and Lyon (Appellants) appealed their convictions to the U.S. Court of Appeals for the Ninth Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the mailing of new vehicle titles by a state Department of Motor Vehicles to a purchaser, which occurs after the defendants have already sold the vehicles and received payment, constitute a use of the mails 'in furtherance of' a scheme to defraud under the mail fraud statute?
Opinions:
Majority - Trott, Circuit Judge
Yes. The mailing of new vehicle titles by a state agency to the purchaser is a use of the mails 'in furtherance of' a scheme to defraud when the mailing is essential to the ongoing success of the fraudulent venture. Citing Schmuck v. United States, the court reasoned that a mailing need not be an essential element of the scheme itself, but can be 'incident to an essential part of the scheme' or 'a step in the plot.' Here, the defendants were engaged in an ongoing fraudulent relationship with Arizona Checker Sales. The success of this venture depended on the buyer being able to obtain clear Arizona titles, which were necessary to operate the cars as taxicabs. Had the buyer been unable to obtain these titles, the scheme 'would have come to an abrupt halt.' Therefore, the scheme did not reach full fruition until the titles were successfully transferred, making the foreseeable mailing of those titles by the DMV a part of the execution of the fraud. Furthermore, specific intent to use the mails is not required; it is sufficient that the defendants could reasonably foresee that the mail would be used in the ordinary course of business to complete the vehicle registration process.
Analysis:
This case reinforces the broad scope of the federal mail fraud statute as interpreted by the Supreme Court in Schmuck v. United States. It affirms that the 'in furtherance of' element does not require the defendant to personally use the mail or for the mailing to occur before the fraudster receives payment. The decision solidifies the principle that a scheme's success is not always measured at the point of payment but can extend to subsequent, necessary steps for the fraud to remain concealed and for the criminal enterprise to continue. This precedent makes it significantly more difficult for defendants to evade mail fraud charges by structuring schemes where the necessary mailings are performed by innocent third parties after the core fraudulent transaction is completed.
Gunnerbot
AI-powered case assistant
Loaded: United States v. Hubbard (1996)
Try: "What was the holding?" or "Explain the dissent"