United States v. Shotts
145 F.3d 1289 (1998)
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Rule of Law:
Whether a government-issued business license constitutes 'property' for the purposes of the federal mail fraud statute is determined by state law. Additionally, a statement before a grand jury that is literally true, even if intentionally misleading or evasive, cannot support a perjury conviction.
Facts:
- Jesse Woodrow Shotts, a criminal defense attorney, previously ran a bail bond business in Alabama.
- After a new Alabama Supreme Court rule prohibited attorneys from having an interest in a bail bond business, Shotts arranged for a new corporation, JC Bail Bonds, Inc. ('JC'), to be formed with his wife, and later others, as the nominal shareholders, while he effectively controlled it.
- Shotts directed his secretary to mail applications and certifications to various municipalities for business licenses, falsely stating that a nominee was the owner and that no lawyer had an interest in the company.
- Shotts obtained pre-signed, blank appearance bonds ('Jack bonds') from a state judge, Jack Montgomery, which were used by JC to operate without liability.
- The FBI began investigating Judge Montgomery, and in an intercepted phone call, Shotts offered Montgomery '5,000 reasons' to sign a particular bond.
- After the FBI searched Judge Montgomery's house, Shotts instructed his employee, Larry Eddy, to destroy the 'Jack bonds'.
- Shotts also told his secretary, Kandy Kennedy, regarding the FBI investigation, to 'just not say anything and [she] wasn't going to be bothered'.
- When called to testify before a grand jury investigating Montgomery, Shotts stated that he did not 'own' a bail bonds business.
Procedural Posture:
- Jesse Woodrow Shotts was indicted in the United States District Court for the Northern District of Alabama on multiple counts, including conspiracy to commit mail fraud, mail fraud, bribery, and obstruction of justice.
- The jury acquitted Shotts of the bribery charges (Counts 17-21).
- The jury convicted Shotts on the conspiracy and mail fraud counts (Counts 1-16) and on three counts of obstruction of justice (Counts 22, 24, and 26).
- The district court sentenced Shotts to a term of imprisonment.
- Shotts, as the appellant, appealed his convictions and sentences to the United States Court of Appeals for the Eleventh Circuit, challenging the legal sufficiency and constitutionality of the charges.
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Issue:
Does a scheme to fraudulently obtain municipal bail bond licenses by mail constitute a scheme to deprive the government of 'property' under the federal mail fraud statute, 18 U.S.C. § 1341, where state law does not recognize such licenses as government property?
Opinions:
Majority - Hill, Senior Circuit Judge
No, a scheme to fraudulently obtain municipal bail bond licenses by mail does not constitute a scheme to deprive the government of 'property' under the federal mail fraud statute where state law does not recognize such licenses as government property. The court reversed the mail fraud convictions, holding that the mail fraud statute's protection of 'property' is defined by state law. Under Alabama law, a business license is not considered government property but rather a form of regulation. Because the municipalities were not deprived of property, the convictions on Counts 1-17 could not stand. The court also reversed the perjury conviction (Count 26), applying the 'literal truth' defense from Bronston v. United States. Since Shotts did not own any stock in the corporation, his statement that he did not 'own' the business was literally true under corporate law, even if it was misleading. The burden is on the questioner to ask precise questions. However, the court affirmed the obstruction of justice convictions (Counts 22 and 24), holding that the term 'corruptly persuade' in 18 U.S.C. § 1512(b) is not unconstitutionally vague. It means to act with an 'improper purpose,' which provides adequate notice of the proscribed conduct. The testimony regarding Shotts' instructions to destroy bonds and to 'not say anything' was sufficient for a jury to find he acted with such an improper purpose.
Analysis:
This decision significantly impacts federal mail fraud prosecutions involving government-issued licenses and permits by tethering the definition of 'property' to state law. This creates a patchwork of federal criminal liability, where identical conduct may constitute mail fraud in one state but not in another, depending on how that state's law characterizes a license. The ruling also strongly reaffirms the 'literal truth' defense to perjury, reminding prosecutors that they bear the burden of asking precise and unambiguous questions to secure a conviction. The decision underscores that artful, evasive, but technically true answers are a matter for skilled cross-examination, not a federal perjury prosecution.
