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United States v. Zeidman

decided: August 20, 1976.


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division - No. 75 Cr 95 HUBERT L. WILL, Judge.

Cummings, Pell and Tone, Circuit Judges.

Author: Cummings

CUMMINGS, Circuit Judge.

In February 1975, a 13-count mail fraud indictment under 18 U.S.C. § 1341 was returned against J.O.M. Account Services International, Inc. (JOM) and Marshall Zeidman, its president, chief operating officer and controlling shareholder. Count 13 was dismissed on the Government's motion at the close of its case, and the court directed a verdict of acquittal on Count 10. The jury returned a guilty verdict against the defendants on Counts 1, 5, 6, 8 and 12. In effect, Zeidman received concurrent sentences of only six months in a jail-type or treatment institution.*fn1 JOM was fined $100 on each of the five counts.

The indictment alleged that JOM's principal business was the collection of debts for its clients. The scheme to defraud was said to have commenced in January 1972 and continued until February 1975. Paragraph 3 of the indictment alleged that defendants devised "a scheme and artifice to defraud certain persons of money and property (1) by collecting money from debtors and failing to remit the pre-arranged percentage of the money collected to the defendants' clients and (2) by falsely and fraudulently inflating the indebtedness of debtors through various devices, including but not limited to the addition of fictitious bank service charges, and converting the additional amounts collected from debtors to the defendants' own use and benefit." Each of the 13 counts specified a mailing used in furtherance of the fraud.

Duplicity of Indictment

Defendants contend that the indictment is partially defective as duplicitous on the ground that Counts 5, 6 and 12 each allege two separate and distinct schemes to defraud two separate and distinct classes of victims. In response, the Government argues that each of these Counts discloses one scheme to defraud two classes of victims -- debtors and creditors -- and that the proof thereunder showed that defendants engaged in a single collection scheme to defraud both their creditor-clients and their clients' debtors. Although an indictment is faulty when more than one offense is charged in a single count (United States v. Starks, 515 F.2d 112, 116 (3d Cir. 1975); United States v. Aldridge, 484 F.2d 655, 660-661 (7th Cir. 1973), certiorari denied, 415 U.S. 922, 94 S. Ct. 1423, 39 L. Ed. 2d 477), it does not suffer from duplicity where only one offense is alleged even if several different acts are specified. United States v. Astolas, 487 F.2d 275, 280 (2d Cir. 1973), certiorari denied, 416 U.S. 955, 94 S. Ct. 1968, 40 L. Ed. 2d 305; United States v. Amick, 439 F.2d 351, 358-359 (7th Cir. 1971), certiorari denied, 404 U.S. 823, 30 L. Ed. 2d 51, 92 S. Ct. 48.

With a duplicitous indictment there is a possibility of offending the command of the Sixth Amendment that the accused be "informed of the nature and cause of the accusation" and of the Fifth that he not "be twice put in jeopardy." United States v. Tanner, 471 F.2d 128, 139 (7th Cir. 1971), certiorari denied, 409 U.S. 949, 34 L. Ed. 2d 220, 93 S. Ct. 269. Additional rationale behind the duplicity rule was well stated by Judge Taylor in United States v. Isaacs, 347 F. Supp. 743, 755 (N.D. Ill. 1972), affirmed, 493 F.2d 1124 (7th Cir. 1974), certiorari denied, 417 U.S. 976, 94 S. Ct. 3183, 41 L. Ed. 2d 1146, as follows:

"The law forbids the charging of more than one offense in one count of an indictment for two reasons. First, the accused is denied the clear concurrence of all the jurors as to each offense charged as the basis of a conviction. Second, it is impossible for the jury to find him guilty of some offenses charged in the duplicitous count and not guilty as to others".

On this basis, defendants assert that Counts 5, 6 and 12 are duplicitous because each separate act charged -- defrauding the creditor and defrauding the debtor -- constitutes a separate offense. We disagree. Any analysis of whether the acts alleged in an indictment charge more than one offense must start with the statute. To convict under the mail fraud statute (18 U.S.C. § 1341)*fn2 the Government must prove the existence of a fraud and at least one use of the mails to further the scheme. United States v. Bush, 522 F.2d 641, 646 (7th Cir. 1975), certiorari denied, 424 U.S. 977, 44 LW 3532, 47 L. Ed. 2d 748, 96 S. Ct. 1484; United States v. Green, 494 F.2d 820, 823 (5th Cir. 1974), certiorari denied, 419 U.S. 1004, 42 L. Ed. 2d 280, 95 S. Ct. 325. Each of Counts 5, 6 and 12 charges only one mailing and therefore only one offense. It is true that each of the frauds on the debtors and creditors could constitute a separate offense. However, that is not determinative. Rather, the two acts originate from one transaction, a debt assigned for collection. The frauds were performed by the same parties and have a sufficiently close nexus with one another that they are fairly characterized as one scheme. United States v. Palladino, 475 F.2d 65, 74-75 (1st Cir. 1973), vacated on other grounds, 413 U.S. 916, 93 S. Ct. 3066, 37 L. Ed. 2d 1038; Cohen v. United States, 378 F.2d 751, 754 (9th Cir. 1967), certiorari denied, 389 U.S. 897, 19 L. Ed. 2d 215, 88 S. Ct. 217.

Counts 5 and 6 charge that defendants defrauded both Mary Lewis Newman, a debtor, and Aldens Inc.'s credit union, her creditor. The Government's proof showed that Mrs. Newman only owed the credit union $96.42 in September 1972, whereas defendants requested her to pay $136.42 to them to extinguish her indebtedness. She made payments of $66.42 and $20. The proof also showed that defendants never forwarded any portion of Mrs. Newman's payments to the credit union.

With respect to Count 12, Douglas Hanvey was the debtor victim and Karnes Music Co. was the creditor victim. Count 12 describes defendants as the sender of a June 13, 1974, letter to Hanvey. The proof showed that Hanvey owed Karnes Music Co. $187.82, but defendants demanded and received $284 from Hanvey. About a year later, Karnes received a check from defendants for the collection of the Hanvey account but the check was returned by the bank for insufficient funds.

The defendants were clearly informed of the nature of the charges against them. Further, as the Government concedes, because the acts are specified, the double jeopardy clause of the Fifth Amendment protects the defendants from being subjected to later mail fraud charges based upon the mailings in these Counts (Br. 10). Nor can the defendants claim prejudice because they are uncertain whether the jury convicted them of defrauding the creditor or debtor. As in the case of a statute which can be violated in different ways, it is sufficient to convict if the jury believes that at least one of the acts of fraud was committed. United States v. Smith, 484 F.2d 8, 10 (10th Cir. 1973), certiorari denied, 415 U.S. 978, 39 L. Ed. 2d 874, 94 S. Ct. 1566; United States v. Amick, supra, 439 F.2d at 358-359. Finally, the indictment cannot be attacked because it would permit a conviction by less than a unanimous jury. The trial judge clearly instructed the jury that they must not return a guilty verdict unless they all agreed that the defendants had devised a scheme to defraud at least the creditor or the debtor (Tr. 347-349). In view of the substantial evidence showing that both classes were victims, we will not presume that the jury disregarded this instruction.

United States v. Tanner, supra, is of no avail to defendants. There Count III of the indictment charged interstate transportation of explosives over a 3-year period in violation of 18 U.S.C. § 837. The Government's bill of particulars under Count III listed a number of separate interstate trips on different dates by different defendants. Consequently, the protection of the Fifth Amendment's double jeopardy clause caused this Court to require a dismissal of that Count as duplicitous. Each of the separate acts of interstate transportation constituted a separate violation of the statute. Finally, in Tanner the separate acts were not sufficiently interrelated for the Court to characterize them as part of one scheme. In contrast, ...

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