Not what you're
looking for? Try an advanced search.
Buy This Entire Record For
UNITED STATES v. GOTTLIEB
June 5, 1990
UNITED STATES OF AMERICA, Plaintiff,
IRVING L. GOTTLIEB, and J. HOWARD SEGAL, Defendants
James H. Alesia, United States District Judge.
The opinion of the court was delivered by: ALESIA
JAMES H. ALESIA, UNITED STATES DISTRICT JUDGE.
In the wake of the Supreme Court's decision in McNally v. United States, 483 U.S. 350, 97 L. Ed. 2d 292, 107 S. Ct. 2875 (1987), defendants Irving L. Gottlieb ("Gottlieb") and J. Howard Segal ("Segal") filed motions to vacate their respective convictions under the mail fraud statute, 18 U.S.C. § 1341. The mail fraud statute contains two elements: the existence of a scheme to defraud and the use of the mails in furtherance of that scheme. See 18 U.S.C. § 1341. In McNally, the Supreme Court held that the mail fraud statute applies only to alleged schemes to defraud the citizenry of property rights, and that schemes to defraud the citizenry of its intangible rights to the honest management of government affairs do not fall within the ambit of the mail fraud statute. McNally, 483 U.S. at 356.
Relying on McNally, Gottlieb and Segal now argue that because their mail fraud convictions were based on the "intangible rights" theory, they were convicted of conduct that does not constitute a violation of the mail fraud statute. Accordingly, Gottlieb and Segal request that this Court vacate their convictions and issue writs of error coram nobis pursuant to 28 U.S.C. § 1651(a). For the reasons set forth below, we deny Gottlieb and Segal the coram nobis relief that they now seek.
In late 1978, the grand jury returned an indictment charging Gottlieb and Segal, as well as others, with various violations of the mail fraud statute. The indictment arose out of the activities of Gottlieb and Segal in directing the Community Currency Exchange Association of Illinois, Inc. ("the Association"). According to the indictment, the Association claimed tax-exempt status while accumulating a secret cash fund which Gottlieb and Segal used illegally to influence public officials. In April, 1980, Gottlieb pleaded guilty to Counts IX and X of the indictment, and Segal pleaded guilty to Counts I and V.
Each count realleges and incorporates Count I, which describes the mail fraud scheme relevant to the motion before us.
Paragraph 7 of Count I of the indictment describes the fraudulent scheme according to two general objectives:
(1) To defraud the State of Illinois, its citizens, its public officers, including members of the Illinois General Assembly, its public employees, its departments, agencies and boards of their right to have the State's business and the State's legislation conducted honestly and impartially, and in accordance with the laws of Illinois, as the same should be conducted, free from deceit, fraud, corruption, misconduct, bribery, improper and undue influence, dishonesty, malfeasance and unlawful impairment and obstruction; and
(2) To defraud the Illinois Department of Revenue and the IRS of the full, honest and complete information as to the true nature, purposes and operations of the Association in the application for and maintenance of its tax-exempt status through the concealment of the collection, existence and expenditures of its secret cash fund.
Paragraph 6 of Count I describes the rules which regulate organizations claiming tax-exempt status:
(a) An organization recognized by the Internal Revenue Service (hereinafter, IRS) as tax-exempt is required to file an annual federal return (IRS Form 990 -- Return of Organization Exempt From Income Tax) which identifies gross income, receipts and disbursements.
(b) A tax-exempt organization is required by IRS regulations to maintain accurate permanent books and records showing specifically the items of gross income, receipts, and disbursements.
(c) By operation of Illinois law, an organization exempt from federal tax is automatically exempt from state tax, and is not required to file state tax returns.
(d) The defendant ASSOCIATION filed IRS Forms 990 annually as a tax-exempt organization.
The remaining paragraphs of Count I elaborate on the details of the fraudulent scheme. According to paragraph 12 of Count I, the Association received kickbacks from fees paid to its directors and collected funds from Association members to create a secret cash fund of over $ 100,000 per legislative session. Paragraphs 14 and 23 of Count I further allege that the secret cash fund was not recorded in the books and records of the Association and that Gottlieb and Segal concealed the fund from the IRS and the Illinois Department of Revenue ("IDR"). Finally, paragraph 8 of Count I asserts that the intent of the scheme ...
Buy This Entire Record For