The opinion of the court was delivered by: J. Waldo Ackerman, Chief Judge.
Defendant Dan Arthalony was tried in this Court in November,
1982, for mail fraud and odometer disclosure violations. He was
acquitted by a jury of mail fraud but was convicted of the
misdemeanor of failing to give an odometer statement to RBM of
Atlanta, Inc., a company owned in part by John Ellis, its
President (hereinafter referred to as Ellis).
The background of this case is as follows: Dan Arthalony
operated a body shop where he repaired wrecked or salvaged
vehicles. Under Illinois law, once a vehicle has been declared a
total loss, it must contain an "S.V." designation on its
certificate of title, indicating to all concerned that the
vehicle is a salvaged vehicle. Neighboring states, like Missouri,
do not require any indication on the title of vehicles which
would reveal that a particular vehicle was once wrecked.
Consequently, Missouri owners, dealers and body shop owners can
obtain a higher price for such vehicles than an Illinois owner,
dealer or body shop owner. To circumvent this problem, some body
shop owners, including defendant Arthalony, began a practice of
laundering Illinois "S.V." titles. In
Arthalony's case, he would send his Illinois titles with an
"S.V." designation to John Ellis in Georgia, a state which does
not require any indication to be placed on a title to show that
a car was once wrecked. Ellis would obtain a clean Georgia title
(one without the "S.V." designation), and mail the clean title
back to Arthalony in Illinois. Arthalony would then exchange his
Georgia title for a new Illinois title without the "S.V." on it.
During this transaction, the vehicles in question never left
Arthalony's possession — it was a purely paper transaction.
Arthalony did not sell, give or bequeath these vehicles to Ellis.
He transferred legal title to Ellis, but retained a beneficial
interest in the vehicles. Arthalony did not provide an odometer
mileage statement to Ellis when he transferred title to him.
Likewise, Ellis did not provide an odometer statement to
Arthalony when he transferred title back to him. Arthalony was
convicted of failing to give an odometer statement to Ellis
disclosing the cumulative mileage on the vehicles at the time he
transferred the titles to him in Georgia.
In 1972, Congress adopted Subchapter IV of the Motor Vehicle
Information and Cost Savings Act (MVICS), 15 U.S.C. § 1981 et
seq. The Congressional findings and declaration of purpose of the
Act are contained in 15 U.S.C. § 1981. Congress found that
purchasers, when buying a motor vehicle, rely heavily on the
odometer reading as an index of condition and value of the
vehicle. Congress further found that purchasers are entitled to
rely on the odometer reading as an accurate reflection of the
mileage actually traveled by the vehicle and as an indicator of
the vehicle's safety and reliability. "It is therefore, the
purpose of this subchapter to prohibit tampering with odometers
on motor vehicles and to establish certain safeguards for the
protection of purchasers with respect to the sale of motor
vehicles having altered or reset odometers."
Section 1988 of the Act directs the Secretary of the Department
of Transportation to promulgate rules requiring a transferor to
give to a transferee in connection with the transfer of ownership
of a motor vehicle, a written disclosure of the cumulative
mileage registered on the odometer. If the odometer reading is
known to the transferor to be different from the number of miles
the vehicle has actually traveled, then the transferor must
disclose that the actual mileage is unknown.
15 U.S.C. § 1988(a)(1) and (2). Subsection (b) of Section 1988 provides that
no transferor shall violate any rule so prescribed.
Congress provided individuals with a private right of action to
enforce liability for violations of the odometer requirements.
15 U.S.C. § 1989. Under that provision, any person who, with intent
to defraud, violates the odometer requirements, is liable for a
minimum of $1,500. A person may recover triple his actual damages
if that amount exceeds $1,500, together with reasonable
attorney's fees and costs. In addition, the Attorney General of
the United States can bring an action to restrain violations of
the Act or its rules. 15 U.S.C. § 1990.
Because few consumers were utilizing the private enforcement
provisions and because the Attorney General was not vigorously
pursuing injunctive enforcement actions, Congress decided to
provide additional authority to enforce the odometer
anti-tampering provisions of the Act. S. Rep. No. 94-155, 94th
Cong., 2d Sess. 2, 6 reprinted in 1976 U.S.Code Cong. & Ad.News
1718, 1719, 1723. One of those additional provisions provides for
enforcement by criminal prosecution. Section 1990c states that
any person who knowingly and willfully commits any
act or causes to be done any act that violates any
provision of this subchapter or knowingly and
willfully omits to do any act or causes to be omitted
any act that is required by any such provision shall
be fined not more than $50,000 or imprisoned not more
than one year, or both.
It is undisputed that Arthalony did not intend to defraud Ellis
in any respect. The evidence also indicated that Arthalony did
not intend to defraud any potential purchasers with respect to
the mileage stated on the odometers of these vehicles. There was
no evidence presented of odometer tampering or of misstatements
on odometer disclosure forms at the time Arthalony actually sold
the vehicles. The fraud, if any, involved the clearing of the
"S.V." designation from the titles of these vehicles.
The question now before the Court is whether the failure to
give an odometer statement to a straw person, where there is no
intent to deceive that person or any subsequent owner of the car
with respect to the cumulative mileage traveled by the vehicle,
constitutes a crime within the scope of 15 U.S.C. § 1990c. The
Government contends that it does. The issue appears to be one of
It is obvious that if criminal liability is imposed in these
circumstances, the anomalous result is that a person would be
criminally liable in a situation where civil liability would not
attach. Clearly, Congress could have made the knowing failure to
give an odometer statement with every transfer of title,
regardless of the transferor's intent to defraud, a crime. The
question, though, is whether, in light of the civil statute, its
non-use and Congress' overall intent when it enacted Subchapter
IV, Congress intended to include intent to defraud in the meaning
of a "knowing and willful" violation of the Act.
Prior to determining the state of mind required to sustain a
conviction under the Act, this Court will examine whether
Arthalony was a "transferor" within the meaning of the
regulations, such that the Act would even apply to him.
"Transferor" is defined in 49 C.F.R. § 580.3 as any person who
transfers his ownership in a motor vehicle by sale, gift, or any
means other than by creation of a security interest. "Transfer,"
as defined in 15 U.S.C. § 1982, means to change ownership by
purchase, gift or any other means. Although legal title to the
vehicles was transferred by the Defendant, there was no intent to
transfer his ownership interest to Ellis. There was no sale, no
gift, no bequest. If Ellis had refused to retransfer title to
Arthalony, Arthalony undoubtedly could have recovered the same
through judicial process. As the Illinois Supreme Court
recognized in People v. Chicago Title and Trust Co., 75 Ill.2d 479,
27 Ill.Dec. 476, 389 N.E.2d 540 (1979), title to property
does not necessarily involve ownership of the property. Id. at
489, 27 Ill.Dec. 476, 389 N.E.2d 540. The ...