United States District Court, Northern District of Illinois, E.D
November 15, 1985
UNITED STATES OF AMERICA, PLAINTIFF,
CYRUS YONAN, DEFENDANT.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
Cyrus Yonan ("Yonan") is charged in a ten-count second
superseding indictment*fn1 with:
1. violation of 18 U.S.C. § 1962(c),*fn2 one of
the provisions of the Racketeer Influenced and
Corrupt Organizations Act ("RICO"), Sections
1961-1968 (Count One);
2. violation of Section 1962(a), another RICO
provision (Count Two); and
3. eight violations of Section 1341, the mail
fraud statute (Counts Three through Ten).
Yonan has moved for dismissal of each count, asserting
different theories as to the different substantive charges.
For the reasons stated in this memorandum opinion and order,
Yonan's motion is granted in part and denied in part.
Count One: Section 1962(c)
Lawyer Yonan is that rarest of rarae aves: a sole
practitioner. To bring him
within the reach of Section 1962(c), the government has
embraced the strained reading that first saw the light of day
in our Court of Appeals' civil RICO decision in McCullough v.
Suter, 757 F.2d 142 (7th Cir. 1985) — the notion that a sole
practitioner can, in some metaphysical sense, be "employed by"
or "associated with" himself or herself.*fn3 After all, the
only conduct Section 1962(c) makes unlawful is defined this
It shall be unlawful for any person employed by
or associated with any enterprise engaged in, or
the activities of which affect, interstate or
foreign commerce, to conduct or participate,
directly or indirectly, in the conduct of such
enterprise's affairs through a pattern of
racketeering activity or collection of unlawful
McCullough certainly does violence to the normal use of that
language. Though Judge Posner's opinion does not (of course)
acknowledge just how much it bends RICO out of shape, the
opinion reaches its result in these terms (757 F.2d at 144):
There would be a problem if the sole
proprietorship were strictly a one-man show. If
Suter had no employees or other associates and
simply did business under the name of the
National Investment Publishing Company, it could
hardly be said that he was associating with an
enterprise called the National Investment
Publishing Company; you cannot associate with
yourself, any more than you can conspire with
yourself, just by giving yourself a nom de guerre.
We therefore held in Haroco, Inc. v. American
National Bank & Trust Co., 747 F.2d 384, 399-402
(7th Cir. 1984), cert. granted, ___ U.S. ___, 105
S.Ct. 902, 83 L.Ed.2d 917 (1985), that an
enterprise (a national banking association in that
case) could not associate with itself for purposes
of section 1962(c). But Suter had several people
working for him; this made his company an
enterprise, and not just a one-man band; and all
section 1962(c) requires, as we said in Haroco, is
"some separate and distinct existence for the
person [Suter] and the enterprise [National
Investment Publishing Company]," 747 F.2d at 402.
Even on the government's own terms, McCullough does not
necessarily keep Count One in court. Two months ago our Court
of Appeals looked at McCullough in a criminal (rather than
civil) RICO context in United States v. DiCaro, 772 F.2d 1314
(7th Cir. 1985). DiCaro's counsel did not argue, and therefore
the Court of Appeals had no occasion to consider whether, the
McCullough doctrine could be applied retrospectively without
violating due process*fn4
— a subject hereafter dealt with in
this opinion. What the Court of Appeals did do was to reverse
DiCaro's RICO conviction because Haroco rather than McCullough
governed his situation (id. at 1319-20):
Based on our analysis of both the statutory
language and the underlying policies of section
1962(c), we held in Haroco that an individual
corporation could not be held liable as a "person"
that conducted its own affairs through a pattern of
racketeering activity under that section. Id. We
began by noting that the terms "person" and
"enterprise" are both defined in section 1961 of
RICO to include "any corporation," id., just as
both are defined to include "any individual."
Nevertheless, section 1962(c) provides that the
person who is charged with conducting the
enterprise's affairs through a pattern of
racketeering activity must also be "employed by or
associated with" the enterprise. Id. Thus, if we
construed section 1962(c) to permit the same entity
to be both the person and the enterprise,
we would reach the anomalous result that the
entity was employed by or associated with itself.
After considering the language of section
1962(c), we therefore concluded that Congress did
not intend to allow the same entity to be both
the person and the enterprise under section
We recently reaffirmed this interpretation of
section 1962(c) in McCullough v. Suter,
757 F.2d 142 (7th Cir. 1985). In McCullough, we held that
the defendant-proprietor of a sole proprietorship
could be held liable under section 1962(c) on the
theory that he conducted the affairs of the
proprietorship through a pattern of racketeering
activity. Id. at 143. We emphasized, however, that
the sole proprietorship at issue in McCullough was
a business with an identity distinct and separate
from that of the defendant himself. Id. at 144. The
defendant "had several people working for him; this
made his company an enterprise, and not just a
one-man band." Id. "[I]f the sole proprietorship
were strictly a one-man show," on the other hand,
we noted that Haroco would preclude liability for
the defendant under section 1962(c). Id.
Our holding in Haroco governs the present case.
There is a serious question whether even the
McCullough view of Section 1962(c) would sustain Count One.
Yonan is a sole practitioner with only a secretary to assist
him. What the government argues is that a lawyer who is
undisputedly a "one-man show" or "one-man band," practicing in
his own name (not as a professional corporation) and using no
assumed name (the latter factor was present in McCullough), is
magically transformed, by the act of hiring a secretary, into
an "enterprise" by which he in turn becomes "employed" or with
which he in turn becomes "associated." Any such notion would
seem to stretch McCullough's already attenuated extension of
Section 1962(c) beyond the breaking point. There is a
meaningful difference — one of kind rather than degree —
between a law practice, in which only the sole practitioner
lawyer may render services directly to clients (so the
secretary's clerical services do not create "a business with an
identity distinct and separate from that of the defendant
himself," McCullough, 757 F.2d at 144), and a business in which
others too may and do carry on the business activity, though
the entrepreneur has chosen a sole proprietorship form of
organization (the situation McCullough, id. found sufficient
for Section 1962(c) liability). Though it is always risky to
predict what a Court of Appeals is likely to do, the most
rational answer would seem that Yonan (like DiCaro) would be
controlled by Haroco and not by McCullough.
But even were that not the case, Count One must fall. Were
the 1985 McCullough reading of the statute extended to sweep up
Yonan's 1980 conduct, what would be most significant for
current purposes is not whether the surprising McCullough
holding is right or wrong, but rather the very fact that it is
American jurisprudence has long distinguished between
criminal and civil liability in the extent to which the law
insists on predictability as a condition of such liability.
That distinction may perhaps not commend itself to those to
whom no logical distinction exists between property interests
(the money at stake in a civil action) and liberty interests
(the potential of imprisonment in a criminal prosecution), but
it exists nonetheless. It is one thing for a court to announce
a defendant may be muleted in damages by a novel and
surprising reading of RICO, but it is quite another to render
the same defendant vulnerable to a prison term.
As a Due Process Clause restriction on Congress, United
States v. Harriss, 347 U.S. 612, 617, 74 S.Ct. 808, 812, 98
L.Ed. 989 (1954) put the proposition this way:
The constitutional requirement of definiteness is
violated by a criminal statute that fails to give
a person of ordinary intelligence fair notice
that his contemplated conduct is forbidden by the
The underlying principle is that no man shall be
held criminally responsible for conduct which he
could not reasonably understand to be proscribed.
And as a like restraint on judicial inventiveness, Bouie v.
City of Columbia, 378 U.S. 347
, 352-54, 84 S.Ct. 1697, 1701-03,
12 L.Ed.2d 894 (1964) announced:
There can be no doubt that a deprivation of the
right of fair warning can result not only from
vague statutory language but also from an
unforeseeable and retroactive judicial expansion
of narrow and precise statutory language. As the
Court recognized in Pierce v. United States,
314 U.S. 306, 311, [62 S.Ct. 237, 240, 86 L.Ed. 226],
"judicial enlargement of a criminal Act by
interpretation is at war with a fundamental concept
of the common law that crimes must be defined with
appropriate definiteness." Even where vague
statutes are concerned, it has been pointed out
that the vice in such an enactment cannot "be cured
in a given case by a construction in that very case
placing valid limits on the statute," for
"the objection of vagueness is twofold:
inadequate guidance to the individual whose
conduct is regulated, and inadequate guidance
to the triers of fact. The former objection
could not be cured retrospectively by a ruling
either of the trial court or the appellate
court, though it might be cured for the future
by an authoritative judicial gloss. . . ."
Freund, The Supreme Court and Civil Liberties,
4 Vand.L. Rev. 533, 541 (1951).
See Amsterdam, Note, 109 U.Pa.L.Rev. 67, 73-74,
n. 34. If this view is valid in the case of a
judicial construction which adds a "clarifying
gloss" to a vague statute, id., at 73, making it
narrower or more definite than its language
indicates, it must be a fortiori so where the
construction unexpectedly broadens a statute which
on its face had been definite and precise. Indeed,
an unforeseeable judicial enlargement of a criminal
statute, applied retroactively, operates precisely
like an ex post facto law, such as Art. I, § 10, of
the Constitution forbids. An ex post facto law has
been defined by this Court as one "that makes an
action done before the passing of the law, and
which was innocent when done, criminal; and
punishes such action," or "that aggravates a crime,
or makes it greater than it was, when committed."
Calder v. Bull, 3 Dall. (3 U.S.) 386, 390, 1 L.Ed.
648. If a state legislature is barred by the Ex
Post Facto Clause from passing such a law, it must
follow that a State Supreme Court is barred by the
Due Process Clause from achieving precisely the
same result by judicial construction. Cf. Smith v.
Cahoon, 283 U.S. 553, 565, 51 S.Ct. 582, 586, 75
L.Ed. 1264. The fundamental principle that "the
required criminal law must have existed when the
conduct in issue occurred," Hall, General
Principles of Criminal Law (2d ed. 1960), at 58-59,
must apply to bar retroactive criminal prohibitions
emanating from courts as well as from legislatures.
If a judicial construction of a criminal statute is
"unexpected and indefensible by reference to the
law which had been expressed prior to the conduct
in issue," it must not be given retroactive effect.
Id., at 61.
No reasoned distinction may be made between a state supreme
court that so enlarges a state criminal statute and a federal
Court of Appeals (or even the United States Supreme Court)
that does the same to a federal criminal statute. Marks v.
United States, 430 U.S. 188, 191-92, 97 S.Ct. 990, 992-93, 51
L.Ed.2d 260 (1977) (citing to the state-statute-invalidating
decisions in Bouie and in Rabe v. Washington, 405 U.S. 313
S.Ct. 993, 31 L.Ed.2d 258 (1972) (per curiam)) confirmed that
The Ex Post Facto Clause is a limitation upon the
powers of the Legislature, see Calder v. Bull, 3
Dall. [(3 U.S.)] 386 [1 L.Ed. 648] (1798), and does
not of its own force apply to the Judicial Branch
of government. Frank v. Mangum, 237 U.S. 309, 344
[35 S.Ct. 582, 594, 59 L.Ed. 969] (1915). But the
principle on which the Clause is based — the
notion that persons
have a right to fair warning of that conduct
which will give rise to criminal penalties
— is fundamental to our concept of constitutional
liberty. See United States v. Harriss,
347 U.S. 612, 617 [74 S.Ct. 808, 811-12, 98 L.Ed. 989]
(1954); Lanzetta v. New Jersey, 306 U.S. 451, 453
[59 S.Ct. 618, 619, 83 L.Ed 888] (1939). As such,
that right is protected against judicial action by
the Due Process Clause of the Fifth Amendment.
Much the same point was made by this Court in United States
ex rel. Reed v. Lane, 571 F. Supp. 530
, 532 (N.D.Ill. 1983)
(emphasis in original, quotation from Harriss omitted) in the
context of a statute rather than of an unexpected judicial
Essentially Reed relies on the principle that due
process requires a person to be fairly apprised
of criminal consequences at the time he acts. . . .
If such notice is not fairly given by a statute,
that statute is deemed unconstitutionally vague
under the standard of United States v. Harriss,
347 U.S. 612, 617, 74 S.Ct. 808, 812, 98 L.Ed. 989
(1954). . . .
Of course every such argument relies on a
fiction: the notion that a person bent on
criminal activity is indeed aware of what the law
provides, as though the potential murderer
carries a copy of the Illinois Criminal Code with
him (or has it committed to memory). But it is a
necessary fiction if the concept of mens rea is not
to be subverted. This Court then must look at what
Reed was fairly apprised of at the time he was
confronted with the decision of how to act in the
face of Hall's menace to his own life.
That decision was affirmed by our Court of Appeals on
precisely that ground, 759 F.2d 618
, 621-22 (7th Cir. 1985).
There is no gainsaying McCullough was unforeseeable in any
rational sense.*fn5 It cited no authority at all for its
freewheeling analysis.*fn6 Before McCullough the established
(and sensible) judicial construction of RICO was that the
"person" and the "enterprise" in Section 1962(c) could not be
the same. Haroco, 747 F.2d at 399-402 (approving this Court's
reading of the statute in Parnes v. Heinold Commodities, Inc.,
548 F. Supp. 20, 23-24 (N.D.Ill. 1982)), aff'd per curiam, ___
U.S. ___, 105 S.Ct. 3291, 87 L.Ed.2d 437 (1985). There is no
reasonable way in which Yonan, acting in 1980, could have
anticipated the conduct charged in Count One would be criminal
under Section 1962(c) — no reasonable way in which he could
have had the mens rea proscribed by the statute's literal
meaning or by its reasonable meaning without the McCullough
In sum, Count One cannot be sustained either (1) because it
does not charge an offense under Section 1962(c) even with the
McCullough gloss or (2) if it does, because it is fatally
deficient in due process terms. Yonan's motion for its
dismissal is granted.
Count Two: Section 1962(a)
Count Two poses a different problem and (perhaps not
surprisingly) comes to a different end. It charges Yonan with
having received income derived from a "pattern of racketeering
activity" (the triggering device for all RICO responsibility)
and having "used and invested"*fn8 that income and its
proceeds "in the establishment and operation" of Yonan's same
sole proprietorship — again charged to be an "enterprise."
That is said to bring into play Section 1962(a):
It shall be unlawful for any person who has
received any income derived, directly or
indirectly, from a pattern of racketeering
activity . . . to use or invest, directly or
indirectly, any part of such income, or the
proceeds of such income, in acquisition of any
interest in, or the establishment or operation
of, any enterprise which is engaged in, or the
activities of which affect, interstate or foreign
At the same time Haroco, 747 F.2d at 400-01 subscribed to
this Court's Parnes reading of Section 1962(c), our Court of
Appeals announced in dictum a different view of Section 1962(a)
(id. at 402):
However, a corporation-enterprise may be held
liable under subsection (a) when the corporation
is also a perpetrator. As we parse subsection
(a), a "person" (such as a
corporation-enterprise) acts unlawfully if it
receives income derived directly or indirectly
from a pattern of racketeering activity in which
the person has participated as a principal within
the meaning of 18 U.S.C. § 2, and if the person
uses the income in the establishment or operation
of an enterprise affecting commerce. Subsection (a)
does not contain any of the language in subsection
(c) which suggests that the liable person and the
enterprise must be separate. Under subsection (a),
therefore, the liable person may be a corporation
using the proceeds of a pattern of racketeering
activity in its operations. This approach to
subsection (a) thus makes the
corporation-enterprise liable under RICO when the
corporation is actually the direct or indirect
beneficiary of the pattern of racketeering
activity, but not when it is merely the victim,
prize, or passive instrument of racketeering. This
result is in accord with the primary purpose of
RICO, which, after all, is to reach those who
ultimately profit from racketeering, not those who
are victimized by it.
Haroco (like McCullough after it) cited no authority for that
reading, and neither the government's memorandum nor this
Court's own research has uncovered any prior case — and
certainly none before 1980 — announcing or supporting such a
As the Count One discussion in this opinion reflects,
however, that absence of prior precedent is not controlling.
Though it might be odd to speak of an individual's
"invest[ing]" in himself,*fn9 the terms "invest" and "use"
appear in Section 1962(a) in the disjunctive (see n. 8). And
there is nothing unreasonable or surprising (remembering that
an individual doing business in sole proprietorship form can
by definition be an "enterprise" for RICO purposes) in a
literal reading of the alternative language drawn directly
from Section 1962(a):
It shall be unlawful for any person who has
received any income derived . . . from a pattern
of racketeering activity . . . to use . . . any
part of such income, or the proceeds of such
income, in . . .
the . . . operation of, any enterprise [his sole
proprietorship] which is engaged in, or the
activities of which affect, interstate . . .
Certainly Congress could rationally have decided an
individual who engages in a "pattern of racketeering activity"
and puts his or her ill-gotten gains to work in his or her
interstate-commerce-affecting business (a sole proprietorship)
should be criminally responsible under federal law, while the
same person who puts the same dollars into flashy sportscars
should not. That concept does not require any notion of the
individual's being "employed by" or "associated with" the
business. It does not war with the normal meaning of the words
used, and the portion of the statute quoted in the preceding
paragraph could rationally have been expected in 1980 to
embrace the conduct charged to Yonan in Count Two. That is
enough for due process purposes.
As to Count Two, that leaves only the "pattern of
racketeering activity" question, as to which Yonan Mem. 16-17
seeks to rely on this Court's opinion in Northern Trust
Bank/O'Hare, N.A. v. Inryco, Inc., 615 F. Supp. 828 (N.D.Ill.
1985). But Count Two incorporates the substantive allegations
of Count One, and paragraph 4 of the latter count charges Yonan
with these multiple acts of bribery:
(1) On or about September 22, 1980 defendant
CYRUS YONAN, JR. gave $100 to James Costello to
give to Terrence Hake to influence the handling
and disposition of People v. Constance Warr.
(2) On or about October 14, 1980, defendant
CYRUS YONAN, JR. gave $300 to Terrence Hake to
influence the handling and disposition of
People v. Willie Balls, People v. Constance Warr
and People v. John Gilbert.
(3) On or about November 7, 1980, defendant
CYRUS YONAN, JR. gave $50 to Terrence Hake to
influence the release of a car seized in
connection with the arrest of Roosevelt Mitchell.
(4) On or about November 10, 1980, defendant
CYRUS YONAN, JR. gave $100 to Terrence Hake to
influence the handling and disposition of
People v. Willie Booker.
(5) On or about November 13, 1980, defendant
CYRUS YONAN, JR. gave $100 to Terrence Hake to
influence the handling and disposition of
People v. Henry Talbert.
(6) On or about November 26, 1980, defendant
CYRUS YONAN, JR. gave Terrence Hake $100 to
influence the handling and disposition of
People v. James Jones, People v. Thomas McCreary
and People v. Willie Blue.
(7) On or about December 1, 1980, defendant
CYRUS YONAN, JR. offered money to Terrance [sic]
Hake to influence the handling and disposition of
People v. Alan Wyman.
True enough, Yonan is alleged to have made all his payments
to one person — Terrence Hake, who proved to be an undercover
agent. But the payments were assertedly made to fix a whole
series of criminal cases in the Cook County Circuit Court.
Those separate acts of bribery to fix ten separate cases,
involving as many different criminal defendants, contrast
sharply with the mailing of more than one letter to implement a
single kickback scheme (the situation in Inryco). Surely what
Yonan is charged with can fairly be read as a "pattern" within
the very language of Inryco, 615 F. Supp. at 831 (emphasis in
original) quoted by Yonan Mem. 16:
True enough, "pattern" connotes similarity, hence
the cases' proper emphasis on relatedness of the
constituent acts. But "pattern" also connotes a
multiplicity of events: Surely the continuity
inherent in the term presumes repeated criminal
activity, not merely repeated acts to carry out the
same criminal activity. It places a real strain on
the language to speak of a single fraudulent
effort, implemented by several fraudulent acts, as
a "pattern of racketeering activity."
Count Two thus stands in a very different posture from Count
One. Yonan's motion to dismiss Count Two is denied.
Counts Three through Ten: Section 1341
Finally, Yonan is charged in Counts Three through Ten with
eight violations of Section 1341, the federal mail fraud
statute. Those charges are couched in what has become the
all-too-familiar "intangible rights" theory: an alleged scheme
(a) Cook County and its citizens, its public
officials, and its public employees of their
right to have the business of the Cook County
Circuit Court conducted honestly, fairly,
impartially, free form [sic] corruption,
collusion, partiality, dishonesty, conflict of
interest, bribery and fraud, and in accordance
with the laws of the State of Illinois.
(b) Cook County and its citizens of their right
to have criminal cases prosecuted and decided
free from the influence of corruption, collusion,
partiality, dishonesty, conflict of interest,
bribery and fraud in accordance with the laws of
the State of Illinois.
(c) The Cook County Circuit Court and the
citizens of Cook County and of Chicago of their
right to the loyal, faithful and honest services
of certain public officials in the performance of
acts related to their public employment.
Yonan's scheme is charged to have embraced the payment of
bribes to prosecutor Terrence Hake ("Hake"), assigned to
Circuit Court Branch 57, to fix cases involving Yonan's
clients. Federal jurisdiction hinges on Yonan's, on the eight
occasions specified in the mail fraud counts, having caused
the Circuit Court to mail him bail bond refund checks (the
"Refunds") for the cases involved in the fix efforts.*fn10
Yonan launches two attacks on the Section 1341 counts:
1. He says he cannot be liable under the
"intangible rights" doctrine because he is not a
fiduciary of the public and the asserted scheme
involved no such fiduciary.
2. He argues the mailing of the Refunds was not
"for the purpose of executing" the claimed
Both onslaughts are unsuccessful, leaving the mail fraud
portion of the indictment intact.
1. "Intangible Rights" Doctrine
Yonan is not charged with defrauding anyone of tangible
property. Instead the indictment asserts he schemed to deprive
the public of what has been called its "intangible right" to
fair and honest government. See, e.g., United States v.
Alexander, 741 F.2d 962, 964 (7th Cir. 1984); United States v.
Margiotta, 688 F.2d 108, 121 (2d Cir. 1982), cert. denied,
461 U.S. 913, 103 S.Ct. 1891, 77 L.Ed.2d 282 (1983).
Yonan seeks to focus on an essential aspect of the
"intangible rights" concept exemplified by Alexander, 741 F.2d
A scheme to obtain tangible property is
cognizable under the mail fraud statute
regardless of the relationship between the
defendant and his victim. In contrast, an
intangible rights scheme is only cognizable when
at least one of the schemers has a fiduciary
relationship with the defrauded person or entity.
Because Hake (unknown to Yonan) was an undercover agent, only
pretending to be a corrupt prosecutor (Government Mem. 4),
Yonan urges Hake could not be a "schemer" in the real sense.
And because Hake was the only one involved in the alleged
scheme who might be characterized as having a "fiduciary
relationship" with the defrauded public, Yonan says the
just-quoted Alexander test has not been met as a matter of law.
To evaluate that argument, it is profitable to engage in a
brief review of the fact patterns in relevant "intangible
In United States v. Freedman, 568 F. Supp. 450 (N.D.Ill. 1983)
this Court dismissed Section 1341 counts against private
attorneys who had allegedly taken money from their clients on
the representation they would use the money to bribe the judge
handling the clients' cases. But the lawyers were actually
engaged in their own "ripoff" for their own benefit: There was
no allegation they had in fact bribed or attempted to bribe any
judge. This Court held (id. at 452-56):
1. Private attorneys are not, by virtue of
their ethical obligations or status as "officers
of the court," fiduciaries of the public.
2. Persons who are not actual participants in
the operations of government (though that is a
functional test and not one of mere definition)
are not public fiduciaries.
Consequently attorneys Freedman and Moore (his codefendant)
were not fiduciaries of the public and were not indictable
under an intangible rights application of Section 1341.
Alexander (also involving a private attorney) approved the
Freedman line of analysis in the language quoted on page 730 of
this opinion. But Alexander then made it clear the mere fact of
the defendant lawyer's non-public-fiduciary status would not
insulate him from intangible rights mail fraud conviction if
his scheme included someone who was a public fiduciary.
Alexander was in fact alleged and proved to have schemed with
three employees of the Cook County Board of [Tax] Appeals to
obtain fraudulent reductions of his clients' assessments. While
confirming Alexander was not himself a fiduciary of the public,
the court said (741 F.2d at 964)(citation omitted):
There can be no doubt that a non-fiduciary who
schemes with a fiduciary to deprive the victim of
intangible rights is subject to prosecution under
the mail fraud statute. . . . More recently, the
court in Freedman observed that, "there is no doubt
a private attorney who uses the mails to carry out
a scheme to defraud involving the actual bribery of
public officials is indictable under Section 1341
on an `intangible rights' theory." 568 F. Supp. at
Alexander's indictment characterized the Board of Appeals
employees as his "co-schemers" who in fact "fraudulently
reduced assessments" (741 F.2d at 965). Those facts were
adequate to support private attorney Alexander's mail fraud
indictment and conviction (id.).
United States v. Kaye, 586 F. Supp. 1395 (N.D.Ill. 1984)
("Kaye I") and 593 F. Supp. 193 (N.D. Ill. 1984) ("Kaye II")
presented this Court with a fact pattern that mixed elements of
Freedman and Alexander. Though Yonan seeks to rely heavily on
Kaye II in attacking his own mail fraud counts, an analysis of
Kaye I and Kaye II affords Yonan no comfort.
Kaye was a part-time deputy sheriff whose duties included
attendance at court proceedings. Kaye I, 586 F. Supp. at 1403.
One of Kaye's schemes was to take money from litigants while
falsely representing he would use the money to bribe judges —
what this Court described as "a cottage industry of his own."
Kaye II, 593 F. Supp. at 196.
Without doubt Kaye was a public fiduciary. But his Section
1341 indictment had two flaws, the first apparent from the
indictment itself and the second emerging after trial:
1. Absent any showing Kaye actually attempted
to pass the money to the judges, he "could not
have deprived the public of its right to honest
judges." Kaye I, 586 F. Supp. at 1403.
2. Absent proof Kaye used his position as
deputy sheriff to solicit the bribes, his
acceptance of money from litigants was not a
breach of his fiduciary duty as a deputy sheriff.
Kaye II, 593 F. Supp. at 196.
That first defect plainly concerned the nature of Kaye's
scheme, while the second concerned the scope of Kaye's own
fiduciary obligations to the public. It is with that
distinction in mind that this Court's
Kaye II opinion must be read to determine its impact on Yonan.
While Counts Three through Ten of Yonan's indictment refer
only to "a prosecutor in Branch 57," the government's
memorandum acknowledges that was Hake, the Assistant State's
Attorney referred to in Counts One and Two. As already said,
Hake was an undercover agent rather than a venal prosecutor.
When he took the money from Yonan, Hake did not breach any
fiduciary duty to the public. Instead he was helping to catch
Under Alexander (and Freedman), private attorney Yonan is not
himself a public fiduciary. If the earlier-quoted language from
Alexander were to be taken literally as a limitation on Section
1341, that would mean Yonan must have "schemed" with a public
fiduciary to come within intangible right mail fraud. And in
that respect Yonan accurately says this case, unlike Alexander,
involved no scheming fiduciary: Hake clearly did not have any
intent to defraud the public.
In the same vein, Yonan cites a sentence from Kaye II in
support of his argument the fiduciary must himself be corrupt.
There, after this Court had quoted the Alexander language that
an intangible rights scheme "is only cognizable when at least
one of the schemers has a fiduciary relationship with the
defrauded person or entity," it added (593 F. Supp. at
196)(emphasis in original):
And that necessarily means the schemer must have
been shown to have breached that fiduciary
But as should be clear from the prior discussion of Kaye I
and Kaye II, that language spoke only of whether Kaye had
breached his own fiduciary duty as a deputy sheriff by taking
bribes. If a public official has violated no fiduciary duty, he
or she has committed no intangible-rights fraud cognizable
under Section 1341 — that much is elementary. But Section 1341
speaks of an individual's devising a scheme, not of two or more
persons entering into a conspiracy — and nothing in Alexander
or Kaye II can be read as somehow amending the statute to
require a conspiracy between a non-fiduciary and a fiduciary
before the scheming non-fiduciary may be held criminally
That distinction is made even more plain by an examination
of the scheme charged here. It involved the giving and offering
of money to a prosecutor with a corrupt intention on the
giver's (Yonan's) part. Nothing in Section 1341 (or the
indictment) also requires the connivance of the public
official, just as the Illinois bribery statute (Ill.Rev.Stat.
ch. 38, § 33-1) charged in Counts One and Two looks only to the
intent of the briber and not of the recipient:
A person commits bribery when:
(b) With intent to influence the performance of
any act related to the employment or function of
any public officer, public employee, juror or
witness, he promises or tenders to one whom he
believes to be a public officer, public employee,
juror or witness, any property or personal
advantage which a public officer, public
employee, juror or witness would not be
authorized by law to accept
From the perspective of the bribe giver (or in this case, the
non-fiduciary schemer), the crime is complete when the bribe is
whether (in the case of either the bribe or the
scheme) it is then rejected, or accepted with a like fraudulent
intent, or "accepted" by an undercover agent lacking the mens
rea of a bribe-taker or a coschemer. By contrast, Kaye II
involved the criminal responsibility of a bribe taker, who
could breach his fiduciary duty to the public only if he or she
had the requisite mens rea. Neither the quoted sentence from
Kaye II nor that quoted earlier from Alexander can carry the
baggage Yonan tries to load onto the language. There is
no need for the government to charge or prove Yonan had a
coschemer who breached his fiduciary duty to the public.
For essentially the same reason, Yonan's citations of cases
dealing with principles of conspiracy and of aiding and
abetting are off the mark. Each of those subjects requires
only brief discussion.
As for the first of those topics, it is true a few cases
have said "conspiracy principles apply" in multiparty mail
fraud schemes, even absent a conspiracy count. See, e.g.,
United States v. Dick, 744 F.2d 546, 552 (7th Cir. 1984);
United States v. Wormick, 709 F.2d 454, 461 (7th Cir. 1983).
And by definition "conspiracy" requires an agreement to violate
the law. But that language too must be read in context. In each
of Dick and Wormick a co-schemer who did not actually mail
anything was held accountable for the mailings of others
because there was an agreement among the co-schemers. Neither
case modifies Section 1341 to hold such an agreement is
required before a "scheme" can even come into being.
Nor is the aiding-and-abetting analogy proposed by Yonan
apposite. Hake was not the "principal" of this alleged scheme
— Yonan was. Intangible rights convictions do not require the
public fiduciary to be the principal, because the scheme (like
bribery) may originate with the corrupt offeror. If it does (as
charged here), the offeror does not "aid and abet" the offeree.
Yonan simply reads Freedman and Alexander incorrectly on this
score. Neither case addressed the degree of culpability
required of the public fiduciary, because no fiduciary was
present in Freedman and those involved in Alexander were
concededly culpable. Neither case requires the public fiduciary
to occupy the role of a principal.
In sum, Yonan's first challenge to Counts Three through Ten
fails. Analyzed in terms of the issues they actually spoke to,
neither Alexander nor Kaye II (much less Freedman or Kaye I)
requires an intangible rights scheme to include actual bribery
of a corrupt public fiduciary. Yonan is charged with having
devised the scheme to defraud. Nothing more (besides the
mailings themselves) is required to support the indictment.
2. Mailing "for the Purpose of Executing Such
Yonan also attacks the other element of a Section 1341
charge — that the mailing be "for the purpose of executing
such scheme." That language requires more than a merely
incidental connection. As United States v. Maze, 414 U.S. 395
405, 94 S.Ct. 645, 651, 38 L.Ed.2d 603 (1974) (footnote
Congress could have drafted the mail fraud
statute so as to require only that the mails be
in fact used as a result of the fraudulent
scheme. But it did not do this; instead, it
required that the use of the mails be "for the
purpose of executing such scheme or
artifice. . . ."
United States v. Cina, 699 F.2d 853
, 861 (7th Cir.), cert.
denied, 464 U.S. 991
, 104 S.Ct. 481
, 78 L.Ed.2d 679 (1983) put
the same thought this way (quoting United States v. Brown,
583 F.2d 659, 664 (3d Cir. 1978)):
The completion of the scheme must depend in some
way upon the mailings charged.
Yonan would have it the mailing of the Refunds did not bear
that relationship to the alleged scheme. But though he seeks
to distinguish United States v. Murphy, 768 F.2d 1518
1985), that case controls here. Murphy also premised federal
mail fraud jurisdiction on the mailing of bail bond refunds to
lawyers (in that case they had paid bribes to Judge Murphy). It
is worth quoting the opinion at some length (id. at 1529-30):
The mail fraud counts were based on the mailings
of the [Refunds]. Murphy says that these mailings
were not part of any fraud committed against the
people of Cook County. The [Refunds] were matters
between the clients and the lawyers; he had
nothing to do with them. He relies on United States
v. Maze, 414 U.S. 395, 94 S.Ct. 645, 38 L.Ed.2d 603
(1974), and Parr v. United States, 363 U.S. 370,
80 S.Ct. 1171, 4 L.Ed.2d 1277 (1960). In each of
these cases the Court held that mailings that
merely settle accounts among the victims after
the fraud had taken place do not bring the fraud
within the mail fraud statute.
The jury was entitled to conclude, however, that
the mailings of the [Refunds] were integral to
the offense. Murphy received payoffs. Lawyers
paid the bribes in order to secure their own
profits, and those profits came by way of the
[Refunds]. In the morning the lawyers would fix
cases (or hustle clients), and Murphy would
release the [Refunds] to the lawyers. In the
afternoon the lawyers would pay the judge for
services rendered. The next day the process would
be repeated. In Pereira v. United States,
347 U.S. 1, 74 S.Ct. 358, 98 L.Ed. 435 (1954), a scheme
under which the defendant induced his spouse to
send money through the mail, the defendant
absconded with the loot, which the Court held
violated the mail fraud statute. The mails carried
the money to be used in the offense. Here it was
the anticipation of receiving the [Refunds] in a
given case (and future cases) that both financed
the bribes and made the scheme profitable. It may
be that Murphy did not care whether the lawyers
picked up checks in person or whether the court
sent them out by messenger instead of mail. But the
statute does not demand that the mail (as opposed
to some other form of delivery) be essential to the
offense. It is enough if use of the mail is an
ordinary or expectable event in the course of the
scheme and the mailings further the scheme. United
States v. Lea, 618 F.2d 426, 430 (7th Cir.), cert.
denied, 449 U.S. 823, 101 S.Ct. 82, 66 L.Ed.2d 25
Murphy teaches the mailing of Refunds to the attorney — a
normal practice in the Circuit Court as a means of securing the
attorney's fee — need not itself be fraudulent. Judge Murphy's
scheme required payments to him, for the Refunds "financed the
bribes." In Yonan's alleged scheme the connection was even more
direct, for the Refunds were the very goal of the scheme. Thus
Count Three ¶ 5 alleges:
It was further a part of the scheme to defraud
that CYRUS YONAN, JR., did obtain money and other
benefits for himself in the form of Cash Bond
Refund . . . checks and additional fees by
corruptly disposing of criminal cases pending
against his clients.
And whether or not that allegation is made,*fn12
would be sustainable so long as the proof at trial were to
establish such a link (see Murphy, 768 F.2d at 1529).
Indeed, the case against Yonan (if proved, of course) is a
stronger one than Judge Murphy's. In Murphy the jury was
required to find Judge Murphy authorized payment of Refunds
(involving no direct benefit to him) as a means of funding the
bribes he expected to receive. By contrast, the receipt of the
Refunds directly completed Yonan's alleged scheme to profit
from corruption. Cina, 699 F.2d at 861. Indeed, an even shorter
answer is found in Murphy's holding, 768 F.2d at 1530:
[T]he statute does not demand that the mail . . .
be essential to the offense. It is enough if use
of the mail is an ordinary or expectable event in
the course of the scheme and the mailings further
On the indictment's allegations the mailing of Refunds was
"knowingly caused" by Yonan "for the purpose of executing the
scheme to defraud."
Nor is Yonan assisted by his attempted reliance on
Maze, 414 U.S. at 401-02, 94 S.Ct. at 649-50 (a credit-card
fraud case) and Parr, 363 U.S. at 390-91, 80 S.Ct. at 1183-84
(a real-estate-tax fraud case). Each was critically different
from the present situation.
Thus, as Maze, 414 U.S. at 402, 94 S.Ct. at 649-50 explained,
the charged mailings there were "directed to the end of
adjusting accounts" among the victims of the scheme and
provided no benefit to the defendant:
[T]here is no indication that the success of his
scheme depended in any way on which of his
victims ultimately bore the loss.
In contrast, success for Yonan was the very receipt of the
Similarly Parr, 363 U.S. at 391, 80 S.Ct. at 1183-84, said
this of the mailings charged there (tax statements and receipts
the defendants were required by state law to mail):
[I]t cannot be said that mailings made or caused
to be made under the imperative command of duty
imposed by state law are criminal under the
federal mail fraud statute, even though some of
those who are so required to do the mailing . . .
plan to steal, when or after received, some
indefinite part of [the money].
There is no suggestion here that any law required the mailings
to Yonan; but even if it were otherwise, it must be remembered
it was Yonan's own asserted scheme that was intended to put
into motion the fraudulent case dispositions that triggered
the Refunds. That is enough for criminal responsibility.*fn14
In sum, Yonan reads the Section 1341 mailing requirement too
narrowly. There is no doubt the charged mailings were "for the
purpose of executing" the scheme. And on the indictment's
allegations, Yonan "caused" the mailings in the sense defined
by United States v. McManigal, 708 F.2d 276, 281 (7th Cir.
To use the mails in furtherance of a scheme
requires only that a defendant commit an act with
knowledge that the use of the mails will follow
in the ordinary course of business, or commit an
act when the use of the mails can reasonably be
Yonan's second line of attack on the mail fraud counts, like
his first, is unsuccessful.
For the reasons this opinion has reflected, Count One of the
indictment is dismissed, but all the other counts survive. On
or before November 20, 1985 Yonan's counsel is directed to
file a statement as to which (if any) other motions,
previously filed before Judge McMillen and not yet ruled upon,
still require disposition in light of these rulings.