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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 03-10725 July 19, 2004
________________________ THOMAS K. KAHN
CLERK
D.C. Docket No. 01-00251-CR-J-25-TEM
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
GEORGE CHANDLER, JEROME PEARL,
KEVIN J. WHITFIELD, JOHN HENDERSON,
Defendants-Appellants.
________________________
Appeals from the United States District Court
for the Middle District of Florida
_________________________
(July 19, 2004)
Before DUBINA and HILL, Circuit Judges, and OWENS*, District Judge.
*
Honorable Wilbur D. Owens, Jr., United States District Judge for the Middle District of
Georgia, sitting by designation.
HILL, Circuit Judge:
The government charged defendants in the Middle District of Florida with
conspiring to commit mail fraud, in violation of 18 U.S.C. § 371. Defendants
herein proceeded to trial and were found guilty. Each filed a motion for a
judgment of acquittal, which the district court denied. Each appeals that denial.
I.
This trial clearly demonstrates the inherent danger in a multi-defendant
conspiracy prosecution â that individuals who are not actually members of the
group will be swept into the conspiratorial net. Because the government is
permitted broad prosecutorial discretion to prove the conspiracy, the likelihood
exists that those who associate with conspirators will be found guilty of a crime
that they have not intended to commit, and part of a group that they never joined.
See Dennis v. United States, 384 U.S. 855, 860 (1966).
This danger is compounded when the grand jury indicts on one theory of the
illegal conduct, but the government prosecutes the case on an entirely different
theory. This roaming theory of the prosecution can produce trial error of
constitutional proportions. See Russell v. United States, 369 U.S. 749, 768 (1962)
(ill-defined charges leave âthe prosecution free to roam at large â to shift its theory
2
of criminality so as to take advantage of each passing vicissitude of the trial and
appealâ).
We have seen such conspiracy prosecutions before. In United States v.
Adkinson, 135 F.3d 1363 (11th Cir. 1998), we reversed convictions obtained by the
government upon an indictment that alleged conduct not a crime under the
prevailing law. In that case, the district court was persuaded to permit the
government to proceed upon the assumption that the controlling law of mail fraud
would change prior to the end of trial. Id. at 1369. At the close of the
governmentâs case, with the law unchanged, the court attempted to cure the defect
by redacting the indictment of the allegations not stating a crime, and instructing
the jury as to the correct law. Id. at 1376. But the damage had been done. The
jury had listened to months of testimony from numerous witnesses whose
testimony, as it turned out, was both irrelevant and highly prejudicial. Id. at 1372.
Under these circumstances, we held that fundamental due process was denied the
defendants and vacated their convictions. Id. at 1374.
Unfortunately, the government in this case once more engaged in this
regrettable and unconstitutional series of events.
I. Indictment and Pre-Trial Proceedings
3
On December 6, 2001, a grand jury empaneled by the United States District
Court for the Middle District of Florida, Jacksonville Division, returned a 62 page
indictment charging 43 defendants with conspiracy to commit mail fraud, in
violation of 18 U.S.C. § 371.1 The defendants were alleged to have used the
United States mails in furtherance of a scheme and artifice to defraud McDonaldâs
Corporation (McDonaldâs). During the relevant time period, McDonaldâs
conducted âMonopolyâ style and âHatch, Match and Winâ promotional games to
attract customers to McDonaldâs restaurants. Over twenty different games were
played during this time. The games were played by visiting the restaurant,
purchasing food, and collecting the game stamps that were attached to the various
food products sold by McDonaldâs.2 Certain game stamps were âwinners,â worth
substantial sums of money. McDonaldâs employed Simon Marketing, Inc.
(âSimonâ) to develop, manage, and advertise the games. Jerome Jacobson was the
Director of Security for Simon, with responsibility for disseminating the high-
value game stamps.
1
The indictment superceded an earlier one. Some defendants, but not appellants, were
also charged with the substantive offense of mail fraud, 18 U.S.C. § 1341.
2
Game stamps were also available upon written request to McDonaldâs or in newspaper
advertisements.
4
The indictment alleged that Jacobson would embezzle these game stamps
and conspire with friends, relatives, and others to act as ârecruiters,â who would in
turn solicit other friends and relatives to submit the stolen winning game stamps to
McDonaldâs and collect the prize money. Appellants George Chandler, John
Henderson, Jerome Pearl and Kevin J. Whitfield were alleged to have recruited
winners or redeemed stolen game stamps. Prize money, it was alleged, was shared
by Jacobson and the other conspirators. The scope of the alleged conspiracy was
substantial, as evidenced by both the number of defendants and the fact that game
stamps were distributed nation-wide and so the âwinnersâ were located across the
country.3
Very early in the pre-trial proceedings,4 the defendants focused on whether
the allegations of the indictment were sufficient to state a crime.5 Under federal
3
Chandler is from Walhalla, South Carolina, Pearl from Miami, Florida, Whitfield from
Savannah, Georgia, and Henderson from Las Vegas, Nevada. The defendants challenged venue
and raise the issue again on appeal, but we need not address it as we decide the case on other
grounds.
4
The five defendants filed numerous pre-trial pleadings to which the government
responded, but which do not always correspond chronologically to each other. In addition, the
parties learned a significant amount of information about each othersâ cases informally in
conversation and by letter. Therefore, to convey a sense of the chronology of the pre-trial
developments in the case, we have resorted to synthesizing the various pleadings and responses
and summarizing the partiesâ positions.
5
Chandler and Pearl filed motions to dismiss. Pearl also filed a motion for particulars,
adopted by Chandler.
5
conspiracy law, the government must allege and prove that the defendants
knowingly entered into an agreement to commit an unlawful act. United States v.
Parker, 839 F.2d 1473 (11th Cir. 1988). The indictment did allege an unlawful act
in the embezzlement of the game stamps. Nowhere, however, did the indictment
allege that any of these defendants knew that the game stamps they redeemed had
been stolen. The defendants moved to dismiss the indictment, alleging that it was
fatally defective in its failure to allege an essential element of the crime of
conspiracy â knowing agreement to commit the illegal act.
The government responded by conceding that the defendants did not know
of Jacobson or the underlying theft, but maintained that such knowledge was
irrelevant to the defendantsâ culpability. Articulating its theory of the case, to
which it adhered until the final moments of trial, the government asserted that the
fraud in this case was the defendantsâ representation of themselves to McDonaldâs
as âlegitimate winners.â Since the indictment repeatedly alleges that the
defendants âknewâ they were not âlegitimateâ winners of the McDonaldâs game
stamps, the government argued that the indictment was not defective, concluding:
Therefore, as the fraud in this case was when the âwinnerâ stated that
they obtained the game piece legitimately, it is absolutely irrelevant
whether the fraudulent âwinnerâ knew that the game piece(s) was
embezzled from McDonaldâs/Simon. (emphasis added)
6
In fact, the government represented to the court that it would not make a
difference to its case if the defendants had found their winning game stamps on the
street.6 So counseled, the court denied the motions to dismiss.
Defendants then filed a motion for a bill of particulars, asking the
government to define the terms âlegitimateâ and âillegitimateâ winner as used in
the indictment. The defendants asserted that nowhere in the indictment was this
term defined so that they had notice why their claims to be legitimate winners
were fraudulent.
The government responded that its indictment âclearly and unambiguouslyâ
used the terms âlegitimateâ and âillegitimateâ in the context of the McDonaldâs
game rules. These game rules, an example of which was attached to the response
as an exhibit, required a winner to state that he had âobtained my potential
winning game stamp(s) through authorized, legitimate channelsâ (emphasis
added).
In the governmentâs view, there were only three ways to obtain a game
stamp through âauthorized, legitimate channelsâ â by purchasing a food item with
a winning game stamp attached, by writing to McDonaldâs and requesting a game
6
The government made this statement in another defendantâs plea colloquy before the
magistrate judge.
7
stamp, or by cutting a game stamp out of a magazine or newspaper. Although
conceding that no rule specifically prohibited the transfer of a game stamp from
one person to another, the government contended that the acquisition of a game in
this way would not be through an âauthorized, legitimate channel,â and, therefore,
any subsequent claim to be a âlegitimateâ winner would be criminally fraudulent.7
The defendants responded by arguing that this theory of the fraud on
McDonaldâs was flawed in two respects. First, it was based upon a problematic
interpretation of the McDonaldâs game rules, since those rules do not prohibit
someone from receiving a game stamp from another person prior to application to
McDonaldâs for the prize. Second, the governmentâs position that defendantsâ
claims to be legitimate winners constituted the underlying fraud in this case
appeared to charge the defendants with a non-crime â violating the rules of
McDonaldâs games.
The defendants filed motions in limine arguing that since the indictment
charged a scheme to embezzle and then fraudulently redeem the game stamps, the
government was required to prove that the defendants knew about the underlying
7
The court, in granting defendantsâ motion for a bill of particulars, noted the importance
of defining the term âlegitimateâ in a criminal prosecution and held that the governmentâs
definition was binding upon them.
8
embezzlement. They asked the court to exclude all argument that defendants
could be convicted if they did not know of the embezzlement.
The defendants also asked the court to exclude the argument that a transfer
of a game stamp was not permitted by the rules, since there was no such
prohibition in the published rules. They pointed out that the game stamps were
both publically and widely traded on the internet in general and on McDonaldâs
own website. Nonetheless, the court denied the motion.
During the ensuing months and in filed pleadings, the defendants argued
that under the law, even if acquisition of a game stamp by transfer from another
person violated McDonaldâs game rules, which they did not concede, it was
certainly no crime. The magistrate judge agreed, adopting the well-settled rule
that the rules of a private contest are mere offers for a unilateral contract, violation
of which either voids or breaches the contract. Waible v. McDonaldâs Corp., 935
F.2d 924 (8th Cir. 1991).
The government countered that defendants were not charged with violating
the rules of McDonaldâs game. Nevertheless, the government continued to
maintain that defendantsâ representations to McDonaldâs that they were
âlegitimateâ winners were sufficient to permit conviction for the conspiracy
charged in the indictment.
9
Three weeks prior to trial, the government filed its own motion in limine
asking the court to prohibit the defendants from arguing at trial that they could not
be convicted of the charged conspiracy unless they had knowledge of Jacobsonâs
theft of the game stamps. The government also sought a ruling that the
defendantsâ alleged misrepresentations to McDonaldâs constituted a fraud
sufficient to support their conviction for conspiracy to commit mail fraud.
Specifically, the government argued the following:
It is irrelevant that a conspirator âwinnerâ did not know that the
promotional game piece(s) from McDonaldâs had been embezzled
from Simon Marketing, Inc. (Simon) or McDonaldâs by Jerome
Jacobson. The indictment alleges that the defendants conspired to
defraud McDonaldâs by having conspirators falsely claim that they
legitimately obtained the winning game piece(s), that is, that they
personally obtained the game piece from a food products wrapper,
such as a fry box or drink cup from a newspaper insert or periodical,
or by requesting a game piece from McDonaldâs through the mail.
The fact is, that all of the âwinnersâ knowingly falsely and
fraudulently claimed that they received their winning game piece
from one of the three (3) authorized means. Therefore, as the fraud in
this case was when the âwinnerâ stated that they obtained the game
piece legitimately, it is absolutely irrelevant whether the fraudulent
âwinnerâ knew that the game piece(s) was embezzled from
McDonaldâs/Simon.
The government also argued, without citation to law, that â[i]t is an
incorrect statement of the law for a defendant to argue that if the violation or
breach of the contest rules of a private game is not a state, local or federal crime,
10
than (sic) the defendants in this case cannot be found guilty of conspiracy to
commit mail fraud.â Thus counseled, the district court granted the motion in
limine precluding the defendants from arguing that knowledge of Jacobsonâs theft
was essential to convict them of the conspiracy.
II. The Trial
The trial commenced on August 12, 2002, and lasted over three weeks.
Some 23 witnesses testified, including 14 co-defendants who had already pled
guilty to the alleged conspiracy.8 These co-defendants were asked if they âknewâ
they were âdoing something wrongâ and had subsequently plead guilty to the
charged conspiracy. Nine of these co-defendants testified that they pled guilty
despite the fact that they did not know that the game stamps they redeemed had
been embezzled.
Three witnesses from McDonaldâs and Simon were extensively questioned,
over defendantsâ objection, about the ârules of the game.â These witnesses were
permitted to testify that, under the rules, there were only three âauthorized,
legitimateâ ways to obtain a game stamp. Since there were over twenty different
games9 played during the relevant time period, over twenty different sets of game
8
One of these co-defendants was Whitfieldâs aunt, to whom he gave a winning game
stamp, given to him by a Jacobson recruiter.
9
The evidence was that over 50 games were played from 1979 to the time of indictment.
11
rules were admitted into evidence. An audio-visual âblow-upâ of one set of rules
was published to the jury, over objection. Over two hundred other exhibits were
admitted, many regarding these rules. At one point, the court commented that the
policy behind the rules was unimportant because â[t]he rules is whatâs going to
control, if anything is going to control.â
Defendants continually objected to this testimony, questioning its relevance
in the face of the governmentâs assurances that they were not charged with
violating the rules of McDonaldâs games. Defendants argued that, despite these
assurances, the trial was proceeding on the theory that violations of the game rules
could supply the âillegal activityâ at the core of the conspiracy. This, they argued,
was the only logical conclusion to be drawn from the governmentâs repeated
assertions that defendantsâ knowledge of the underlying illegal embezzlement was
legally irrelevant to their culpability. The court, however, continued to permit the
government to proceed in this vein.10
10
During these proceedings, the court expressed serious doubt about the charges and the
proof on more than one occasion. Midway through Jacobsonâs testimony, in response to the
governmentâs elicitation of co-conspirator hearsay, the court remarked that:
Well, let me say this. Iâm sure that, I am positive that there is not enough
evidence of a conspiracy involving these defendants; in fact, there is no evidence
of a conspiracy at this point involving these defendants.
12
Then, at the conclusion of the governmentâs case, defendants moved for
judgments of acquittal. They asserted that the government had failed to prove that
they agreed to the charged conspiracy â to redeem embezzled game stamps.
The government reiterated its theory of the case â that misrepresentations to
McDonaldâs constituted defendantsâ criminal fraud in this case, and that
defendants conspired with Jacobson to commit this fraud. The government
argued:
And the agreement, and I asked that of these individual winners,
when a recruiter gave the game piece to the winner, what was your
agreement? Well, with all of those defendants, the agreement is, one,
if Iâm the winner, I will agree to represent myself as that I have won
this. . . . [T]his is a conspiracy. . . . By just their making that
agreement . . . thatâs it. Thatâs all that was necessary in this case.
The court took the motions under advisement overnight, and moved on to the
charge conference.
The defendants requested several jury instructions. First, they asked the
court to instruct the jury that mere violation of a contract is not a criminal offense.
The government agreed that breach of contract does not support a mail fraud
conviction. The court agreed to give the instruction.
Next, the defendants requested an instruction that they could not be
convicted if they did not know of Jacobsonâs theft of the game stamps. The
13
government objected, reminding the court of its prior ruling excluding this defense
and the court denied the instruction.
Finally, the defendants requested an instruction that receipt of a game stamp
from another person, rather than acquiring it in some particular way mentioned in
the McDonaldâs game rules, is not proof of fraud or fraudulent intent. The
government agreed this was true, and the court granted the request.11
The next morning, five minutes prior to instructing the jury,12 the court
announced that it had âquestionsâ about the governmentâs proof of a single
conspiracy. The court stated that it had decided, based upon the evidence and
argument, that unless the defendants knew their game stamps had been
âembezzled, stolen, or otherwise unlawfully acquiredâ that they could not be
convicted of the conspiracy alleged in the indictment.13 In an apparent effort to
prevent such convictions, the court announced that it had reconsidered and would
grant the defendantsâ requested jury instruction regarding the necessity of proof of
11
The government continued to maintain, however, that defendantsâ representations to
McDonaldâs that they received their game stamps through authorized, legitimate channels were
criminally fraudulent.
12
The court instructed the jury prior to closing argument.
13
The court said that without knowledge that the game stamps had been âimproperlyâ
acquired that âthe issue of a bunch of conspiracies looms more prevalent.â We agree. See
discussion below at II. B.
14
the defendantsâ knowledge of Jacobsonâs embezzlement. The court fashioned the
following instruction:
If you should find that a reasonable doubt exists as to whether a
defendant had knowledge that the game stamp he obtained had been
embezzled, stolen or otherwise unlawfully acquired, then you must
find that defendant not guilty.
The government, having its theory of the case â that such knowledge was
irrelevant â totally undone by this instruction, sought a recess. The defendants
represent, without government contradiction, that government counsel sought the
recess to telephone his office to request permission to dismiss the case.
Unfortunately for all, the court refused the recess.
We turn now to our evaluation of these events in the context of defendantsâ
allegations of error.
II.
The mail fraud statute makes it a crime to âdevise any scheme or
artifice to defraud, or for obtaining money or property by means of false or
fraudulent pretenses, representations or promises . . . .â 18 U.S.C. §1341. The
phrasing of the statute in the disjunctive prohibits two separate unlawful acts, each
constituting an independent ground for prosecution. United States v. Scott, 701
15
F.2d 1340, 1343 (11th Cir. 1983). In this case, the government charged a
conspiracy to commit both unlawful acts.
First, the indictment charged that defendants conspired to defraud
McDonaldâs. The indictment alleged that Jacobson and the various defendants
participated in a scheme in which Jacobson would steal game stamps from
McDonaldâs and the defendants would redeem them and share the prize money
with Jacobson. Defendants, then, were charged with having conspired with
Jacobson to defraud McDonaldâs by redeeming stolen game stamps. Since a
conspiracy is an agreement to commit an illegal act, it appeared the government
would have to prove that the defendants knowingly agreed to redeem stolen game
stamps.
The government also charged that defendants conspired to obtain money by
false and fraudulent pretenses and representations. The indictment alleged that the
defendants falsely represented themselves to McDonaldâs as âlegitimateâ winners
in order to obtain the prize money.
Thus, the government charged a single conspiracy with two unlawful objects
â to steal the game stamps, and to redeem them by misrepresentations amounting
to criminal fraud. Defendantsâ first allegation of error is that the second of these
two objects â the allegedly fraudulent redemptions â either were not unlawful at
16
all, or did not amount to criminal fraud and, therefore, cannot support their
conviction.
A. The Sufficiency of the Indictment
1. Transfer of Game Stamp as a Violation of the Game Rules
The indictment charges that the defendantsâ conspired to represent
themselves fraudulently as âlegitimate winnersâ when they checked the box on
McDonaldâs prize redemption form to indicate that they obtained their game
stamps through âauthorized, legitimate channels.â Although conceding, that there
was no rule that explicitly prohibited the transfer of the game stamps,14 it was the
governmentâs position that the rules affirmatively demanded acquisition of the
game stamps through âauthorized channelsâ and that this meant in one of the three
ways McDonaldâs disseminated the game stamps. Since the defendants obtained
their game stamps by transfer from others, the government repeatedly referred to
the âliesâ the defendants told McDonaldâs by representing themselves as
âlegitimateâ winners.
In fact, however, the evidence was, from the governmentâs own witnesses,
that game stamps were publically traded, including on E-bay and on McDonaldâs
14
Although there were several different games and numerous versions of rules, there was
no rule anywhere that affirmatively prohibited a transfer of a game stamp prior to verification as
a winner.
17
own website. A McDonaldâs representative testified that game players could
transfer stamps to anyone â including the stranger in the next booth â prior to
sending the piece to McDonaldâs. Under these circumstances, defendants argue, it
cannot be said that the rules unequivocally prohibited defendants from
representing themselves as âlegitimateâ winners when they acquired their game
stamps by transfer from someone else.
We agree. In the absence of any explicit prohibition of transfer, and in view
of the evidence that such transfers were publically tolerated by McDonaldâs, only
if defendants redeemed game stamps that they knew were stolen could it be said
unequivocally that they knew that they were not âlegitimateâ winners, since it is a
crime to receive stolen property. Absent such proof, we do not think that
representations to McDonaldâs that may have violated the rules of its games could
form the basis for a criminal prosecution. Defendantsâ conduct was not âplainly
and unmistakablyâ proscribed by 18 U.S.C. § 371. See United States v. Porter,
591 F.2d 1048, 1057 (5th Cir. 1979).
The rule of lenity requires that a criminal conviction not be predicated upon
a problematic interpretation and retroactive application of the rules of a private
game. Ladner v. United States, 358 U.S. 169, 178 (1958). If there is doubt
18
whether the defendantsâ conduct is criminal, the rule of lenity requires that the
doubt be resolved in favor of the accused. Id.
2. Violation of the Game Rules as Unlawful Act
Even if the transfers had been unequivocally against the rules of
McDonaldâs games, however, defendantsâ alleged misrepresentations would still
not constitute criminal fraud. Under the prevailing law, as well as the law of this
case,15 a violation of McDonaldâs game rules is not a crime. See Waible, 935 F.2d
at 926 (interpreting rule stating that â[g]ame materials are null and void and will
be rejected if not obtained through authorized, legitimate channels . . . â). The
game stamps constitute an offer for a unilateral contract that can be accepted by
performing all the terms and conditions of the game. Id. A violation of these
rules, therefore, is, at most, a breach of contract. It is not a crime. Id.16 See also
Barnes v. McDonaldâs Corp., 72 F. Supp. 2d 1038, 1042 (E.D. Ark. 1999) (rules
15
The magistrate judge ruled that a violation of the McDonaldâs rules was a mere
contract breach, without objection from the government. The government conceded this point at
the charge conference and the jury was instructed that a violation of the rules of McDonaldâs
games is not a crime.
16
Nor were defendants under any legal duty to tell McDonaldâs the truth. See Johnson,
602 So. 2d at 889 (contest winner had no legal duty to disclose information regarding how he
obtained the winning game piece). Despite the governmentâs repeated references to the
âaffidavitâ that the defendants completed stating they had obtained their game stamps through
âauthorized channels,â the contest form was neither sworn nor attested to in any way. Nor were
defendants in any fiduciary relationship with McDonaldâs. Even if they lied on their prize
redemption forms, the lies represented, at most, under the prevailing law and the law of the case,
only a breach of the unilateral contract offered by the rules of the game, not a crime.
19
are offer of contract, which are accepted by performance of the contractâs terms);
Johnson v. BP Oil Co., 602 So.2d 885, 888 (Ala. 1992) (same).
The indictment alleges, however, that the defendantsâ claims to be
legitimate winners were illegal. Although belatedly conceding at the charge
conference that violation of McDonaldâs game rules was not a crime,17 the
governmentâs position throughout the trial was that the defendantsâ
representations that they had complied with the rules was a crime.
The governmentâs theory was that the defendantsâ âfalseâ statements
constituted an event totally separate from the violation of the rules that made the
statements false. This theory is clearly reflected in the governmentâs response to a
proposed defense instruction that it is not a crime to give a false statement to a
company or person to whom you have no legal duty to tell the truth:
It certainly can be. It can be if you end up using the mail and youâre
trying to defraud them. (emphasis added)
The governmentâs position, then, is that conduct not illegal, but, perhaps,
âillegitimateâ may, if the mails are used, be prosecuted as mail fraud.
17
The government finally conceded this point during a charge conference discussion of a
proposed defense instruction that a violation of McDonaldâs game rules would not be a crime,
saying, âThe horse is dead. Iâm not going to ride that horse.â
20
This is exactly the position rejected by the Second Circuit in United States
v. Handakas, 286 F.3d 92 (2nd Cir. 2002). In that case, the government charged
Handakas with a mail fraud conspiracy for failing to pay his construction workers
the prevailing rate of wage as provided by his contract with New York City, but
misrepresenting to the City that he had done so in order to receive contract
payments from the City.18 At trial, according to the Second Circuit:
[T]he government thought it sufficient to argue that Handakas was
guilty of conspiracy to commit mail fraud simply by violating his
non-fiduciary contractual obligation to pay his workers the prevailing
rate of wages. That is what the prosecutor argued to the jury:
[S]ometimes you care about how things are done, and if
you spell that out in contract and you make it clear to the
people you are dealing with, as the [City] did here, that
not only do you want something but you want it done a
certain way, you have a right to that, and thatâs whatâs at
issue here. The [City] had a right to determine how its
contracts would be fulfilled.
Id. at 108 (emphasis added).19
18
Handakas submitted certified payroll records that reflected compliance with the
prevailing rate of wage requirement. Handakas, in fact, paid his workers substantially less than
half the prevailing rate of wage. 286 F. 3d at 96.
19
The contract at issue in Handakas was with a governmental agency so the government
argued that Handakas owed a duty of honest services to the City, thereby creating a fiduciary
relationship recognized by federal law. The Second Circuit rejected this argument as well. The
defendants herein, of course, are alleged to have breached a contract with McDonaldâs, not the
government, thereby eliminating the possibility that they owed a duty of âhonest servicesâ to
McDonaldâs which they breached, even if the Second Circuit had not already rejected this
argument. 286 F.3d at 109.
21
In rejecting this argument, the Second Circuit said, âIf we were to affirm
Handakasâs mail fraud conviction on [these] grounds . . . we would effect a
breathtaking expansion of mail fraud. Every breach of a contract . . . would
become punishable as a felony in federal court.â Id. at 107. Such an application
of the mail fraud statue violates the fundamental guarantee of due process because
it fails to provide notice of what conduct is criminal. Id. It permits âpolicemen,
prosecutors, and juries to pursue their personal predilections.â Id. (citing Smith v.
Goguen, 415 U.S. 566 (1974)).
Here too the government sought to prove conduct not otherwise a crime as
the underlying illegal activity supporting the charged mail fraud conspiracy. The
governmentâs theory of the charged conspiracy is that, just as did Handakas, the
defendants falsely represented that they had performed as required by the terms of
a contract â the rules of McDonaldâs game â and that they are guilty of a mail
fraud conspiracy for having used the United States mails to do so.
As did the Second Circuit, we find the implications of such a theory very
troubling. The federal conspiracy statute proscribes an agreement to violate the
law. 18 U.S.C. § 371; United States v. Toler, 144 F.3d 1423, 1426 (11th Cir. 1998)
(â[T]he essential element of a conspiracy [is] that the object of the agreement must
be illegalâ) (emphasis added). Breach of contract, however, even fraudulent
22
breach of contract, is not a crime. Nor does use of the mails, as the government
apparently believes, make it a crime.
Although the indictment alleges unlawful conduct â a scheme to defraud
McDonaldâs by stealing game stamps and redeeming them for money â the
governmentâs theory all along and the proof adduced at trial, at most, proved only
that defendants illegitimately, not unlawfully, redeemed the game stamps.20 The
redemptions were illegitimate in the governmentâs view because they violated the
rules of McDonaldâs game.21
Illegitimate conduct, however, is not the same thing as unlawful conduct.
Not all conduct that strikes a court as sharp dealing or unethical conduct is a
âscheme or artifice to defraud.â United States v. Holzer, 816 F.2d 304, 309 (7th
Cir. 1987). âSuch a broad meaning of fraud for the mail and wire fraud statutes
âwould put federal judges in the business of creating what in effect would be
common law crimes, i.e., crimes not defined by statute.ââ Reynolds v. East Dyer
Dev. Co., 545, 882 F.2d 1249, 1252 (7th Cir. 1989) (quoting United States v.
Holzer, 816 F.2d 304, 309 (7th Cir. 1987)); see also Porter, 591 F.2d at 1057
20
The real unlawful activity â the theft of the game stamps â was abandoned as
irrelevant to the defendantsâ culpability. See discussion below at II.B.2.
21
Again, we note that this interpretation of the rules is, itself, problematic.
23
(reversing conspiracy conviction predicated upon conduct not prohibited by a
statue or regulation).
If we were to hold allegations of an agreement to participate in
âillegitimateâ conduct â a fraudulent breach of contract â sufficient to convict
under the federal conspiracy statute, then we would permit a âbreathtakingâ
expansion of a statute that already is âharnessed into serviceâ by the government
when other prohibitions will not serve.â Id. at 108. The mail fraud conspiracy
statute applies broadly enough as it is. We shall not extend its reach even further.
The allegations that defendantsâ claims to be legitimate winners of McDonaldâs
games violated the mail fraud statute should have been stricken from the
indictment.
B. Single or Multiple Conspiracies?
Despite having charged a single conspiracy with two criminal objects, the
governmentâs prosecution of the case severed the connection between Jacobsonâs
illegal act of embezzlement and the defendantsâ âfraudulentâ redemptions. The
governmentâs position was that it did not matter how the defendants obtained the
game stamps. The government asserted on numerous occasions that Jacobsonâs
theft of the stamps was legally irrelevant to the culpability of the defendants for
their redemptions. The government even argued that the game stamps could have
24
been legitimately obtained by someone other than the individual that redeemed the
game stamp,22 or even been found on the street, and the defendants representations
would still have been fraudulent. In the governmentâs view, it was the defendantsâ
âmisrepresentationsâ to McDonaldâs that they were âlegitimateâ winners that
constituted the underlying illegal activity to which the defendants agreed.
The question now is what impact this view of the conspiracy had on
defendantsâ convictions. The defendants argue that it resulted in a fatal variance
between the conspiracy charged in the indictment and that proved at trial.
Defendants claim that the under the governmentâs theory of the prosecution, not
only was Jacobsonâs embezzlement irrelevant to proof of the conspiracy, but
Jacobson, himself, became irrelevant. The result was that the most the
government may have proved was a series of conspiracies, not a single conspiracy.
We turn now to this issue.
1. The Conspiratorial Agreement
A conspiracy is an agreement between two or more persons to
accomplish an unlawful plan. 18 U.S.C. § 371; Parker, 839 F.2d at 1477. The
essence of the conspiracy is this agreement to commit an unlawful act. Toler, 144
22
The government stated in opening remarks, â[i]n fact, some of the âwinnersâ believed
that the game stamp(s) that they redeemed had actually been legitimately won by someone.â
25
F.3d at 1425. What distinguishes the offense of conspiracy from a substantive
offense, is that âagreement is the essential evil at which the crime of conspiracy is
directed.â Iannelli v. United States, 420 U.S. 770, 777 n. 10 (1975). The
agreement itself âremains the essential element of the crime.â Id. Thus the
government must prove the existence of an agreement to achieve an unlawful
objective and the defendantâs knowing participation in that agreement.23 United
States v. Adkinson, 158 F.3d 1147, 1155 (11th Cir. 1998).
Because the essential nature of conspiracy is secrecy, a conspiracy
conviction may be proved by circumstantial evidence. Glasser v. United States,
315 U.S. 60, 80 (1942). The government must, however, show circumstances
from which a jury could infer beyond a reasonable doubt that there was a âmeeting
of the minds to commit an unlawful act.â Adkinson, 158 F.3d at 1154 (quoting
Parker, 839 F.2d at 1478).
Since no one can be said to have agreed to a conspiracy that they do not
know exists, proof of knowledge of the overall scheme is critical to a finding of
conspiratorial intent. âNobody is liable in conspiracy except for the fair import of
the concerted purpose or agreement as he understands it.â United States v. Peoni,
23
The final requirement for conviction is proof of the commission of an act in
furtherance of the conspiracy. 18 U.S.C. § 371.
26
100 F.2d 401, 403 (2nd Cir. 1938). The government, therefore, must prove beyond
a reasonable doubt that the conspiracy existed, that the defendant knew about it
and that he voluntarily agreed to join it. United States v. Hernandez, 896 F.2d
513, 519 (11th Cir. 1990).
We have reversed conspiracy convictions where there was no direct proof of
an agreement, and the circumstantial evidence of agreement was insufficient to
support such an inference. Adkinson, 158 F.3d at 1159 (reversing conspiracy
convictions where government failed to prove defendants knowingly agreed to
unlawful act); United States v. Awan, 966 F.2d 1415, 1434-35 (11th Cir. 1992)
(insufficient evidence to support finding of unlawful agreement); Parker, 839 F.2d
at 1478 (insufficient evidence of common agreement). Proof of a true agreement
is the only way to prevent individuals who are not actually members of the group
from being swept into the conspiratorial net.
In this case, the indictment charged a single conspiracy in which Jacobson
was the âkey manâ who stole the game stamps and then constructed a vast network
of co-conspirators who would both redeem the game stamps and recruit others to
do so. To convict the defendants of this conspiracy, the government had to prove
that the defendants knew of the âessential nature of the planâ and agreed to it. See
27
Blumenthal v. United States, 332 U.S. 539, 557 (1947); Adkinson, 158 F.3d at
1155.
2. What the Government Proved about the Agreement
There are no allegations in the indictment that any of these defendants knew
of Jacobsonâs plan to steal the game stamps and distribute them to a vast array of
recruiters and winners. There are none because Jacobson deliberately set out to
keep the fact that there was any overall scheme secret from the defendants. In
fact, the government conceded in its opening remarks, â[e]vidence will establish,
which will be uncontroverted by the defense, that many of the winners did not
know that the winning game stamps(s) that they redeemed had originally been
embezzled or stolen.â24
At trial, Jacobson testified that he had ten different recruiters to whom he
gave game stamps. These recruiters in turn found âwinnersâ to redeem the game
stamps. Jacobson testified that not one of his recruiters knew any of the others, or
even about his theft of the stamps. Nor did any of the winners know of Jacobson,
or his embezzlement of the game stamps. It was part of Jacobsonâs scheme
24
The defendants did not controvert this evidence because lack of knowledge, and
therefore, lack of agreement, formed the core of their defense.
28
deliberately to keep each recruiter and the winners developed by each recruiter
separate from and ignorant of the existence of the others.
Jacobsonâs scheme was a classic âhub-and-spokeâ conspiracy, in which a
central core of conspirators recruits separate groups of co-conspirators to carry out
the various functions of the illegal enterprise. See Kotteakos v. United States, 328
U.S. 750, 755 (1946); United States v. Perez, 489 F.2d 51, 58 (5th Cir. 1973). In
such a conspiracy, the core conspirators are the hub and each group of co-
conspirators form a spoke leading out from the center in different directions.
Kotteakos, 328 U.S. at 755. The core conspirators move from spoke to spoke,
directing the functions of the conspiracy. Id.
Jacobsonâs conspiracy also had a hub and spokes. He was the hub and his
recruiters and winners formed the various spokes. Unlike the classic hub-and-
spoke conspiracy, however, Jacobson was the only conspirator in the hub, and
when he moved from spoke to spoke, he moved alone. There was no time at
which he and another conspirator moved from spoke to spoke.
The Supreme Court has characterized such a conspiracy as a ârimless
wheelâ because there is no rim to connect the spokes into a single scheme.
Kotteakos, 328 U.S. at 755. In Kotteakos, several different defendants
fraudulently obtained loans through the central key man, Brown. There was,
29
however, no connection between the defendants. They were connected only to
Brown. The trial court had upheld the juryâs convictions of these defendants on
the theory that âit was possible on the evidence for the jury to conclude that all
were in a common adventure because of [each defendantâs connection to Brown in
one or more transactions] and the similarity of purpose presented in the various
applications for loans.â Id. at 768-69.
The Supreme Court, however, reversed the convictions, holding that the
trial court âconfuse[d] the common purpose of a single enterprise with the several,
though similar, purposes of numerous separate adventures of like character.â Id.
at 769. As the Court put it:
[T]he pattern was âthat of separate spokes meeting at a common
center,â though we may add without the rim of the wheel to enclose
the spokes. The proof therefore admittedly made out a case, not of a
single conspiracy, but of several, notwithstanding only one was
charged in the indictment.
Id. at 755. Thus, where the âspokesâ of a conspiracy have no knowledge of or
connection with any other, dealing independently with the hub conspirator, there is
not a single conspiracy, but rather as many conspiracies as there are spokes. Id. at
754-55.
Recently, the Fourth Circuit applied Kotteakos to affirm the dismissal of an
indictment charging a similar rimless wheel conspiracy. Dickson v. Microsoft
30
Corp., 309 F.3d 193, 203 (4th Cir. 2002). The court noted that Kotteakos made
clear that a rimless wheel conspiracy is not a single, general conspiracy but instead
is a series of multiple conspiracies between the common defendant and each of the
other defendants. Id. âA rimless wheel conspiracy is one in which various
defendants enter into separate agreements with a common defendant, but where the
defendants have no connection with one another, other than the common
defendantâs involvement in each transaction.â Id.
We too have noted â[t]he importance in a wheel type conspiracy of such
knowledge by individual spokes of the existence of other spokes.â Perez, 489 F.2d
at 60 n. 11 (citing Federal Treatment of Multiple Conspiracies, 57 Columbia Law
Review 387). â[F]or a wheel conspiracy to exist, those people who form the
wheelâs spokes must have been aware and must do something in furtherance of
some single, illegal enterprise. If not, there is no rim to enclose the spokes.â
United States v. Levine, 546 F.2d 658, 663 (5th Cir. 1977) (emphasis added). See
also United States v. Abraham, 541 F.2d 1234, 1238 (7th Cir. 1976) (the parties to
an agreement must know of each otherâs existence).
We have reversed convictions where such knowledge was lacking, finding
no agreement to the overall conspiracy, and holding that the individual spokes
constituted separate conspiracies. United States v. Ellis, 709 F.2d 688, 690 (11th
31
Cir. 1983); United States v. Nettles, 570 F.2d 547, 551 (5th Cir. 1978); Levine, 546
F.2d at 663. We have never upheld a conspiracy conviction where a single key
man moved alone from spoke to spoke, agreeing with no one else common to more
than one spoke.
In this case, there was no connection whatsoever between the various spokes
of Jacobsonâs scheme. Just as with Brown in Kotteakos, Jacobson was the only
person common to the ten otherwise completely separate undertakings, no other
person moving with him from spoke to spoke. The government conceded early on
and at trial that the spokes knew nothing about each other or, indeed, about
Jacobsonâs theft of the game stamps and his overall scheme. Jacobson, himself, so
testified. In the face of this fact, the government took the only position it could â
that such knowledge was irrelevant to proof of the charged conspiracy.
This was error of constitutional proportions. In order to prove the charged
conspiracy, the government had to show that the defendants knew and agreed to
some scheme larger than their own spoke, involving only receipt of a game stamp
from their immediate recruiter and its âillegitimateâ redemption. Iannelli, 420 U.S.
at 777; Toler, 144 F.3d at 1425. Without evidence of an agreement to participate in
the larger scheme charged in the indictment, the government proved only that there
may have been multiple conspiracies, each with Jacobson as the unknown key man,
32
the recruiter and, had they known of Jacobsonâs thefts, the redeemers. See Barnard
v. United States, 342 F.2d 309, 312-13 (9th Cir. 1965) (without some evidence that
individual spokes knew about others, there was not a conspiracy for a succession of
fraudulent collisions, but rather a succession of separate collision conspiracies);
United States v. Varelli, 407 F.2d 735 (7th Cir. 1969) (reversing conviction where
insufficient evidence that similar hijackings part of one overall conspiracy).
The shift of focus from Jacobsonâs scheme to embezzle and redeem game
stamps to multiple schemes to make false statements to McDonaldâs represented
the governmentsâ acknowledgment that it could not prove that the defendants knew
of and joined Jacobsonâs scheme. In the absence of any proof to connect the
spokes of the conspiratorial wheel, both Jacobson and his embezzlement were
abandoned as central to the prosecutionâs case.25
This will not do. Although the defendantsâ alleged misrepresentations to
McDonaldâs might have constituted acts in furtherance of the charged conspiracy,
proof of such misrepresentations alone does not prove they joined the conspiracy
indicted by the grand jury to embezzle and fraudulently redeem the game stamps.
25
The government employed a similar tactic in Parker. Unable to prove that the
defendants knew of the overall scheme, the government argued âeven if appellants truly were
unaware of the [overall fraudulent scheme], it does not follow that their representations to
investors were not fraudulent.â 839 F.2d at 1480. In that case, we decided that the appellantsâ
representations were not âwholly unfoundedâ and âcertainly not criminal.â Id. at 1481. We
reached a similar conclusion above.
33
While a single conspiracy may have two illegal objects, without proof of some
connection between these objects, it is not a single conspiracy.
The Third Circuit reached a similar conclusion in United States v. Pearlstein,
576 F.2d 531, 544 (3d Cir. 1978). In that case, a jury convicted salesmen of mail
fraud based on their alleged participation in a conspiracy to defraud investors in a
writing pen distributorship. While conceding the existence of an overall scheme to
defraud, the salesmen maintained that they were ignorant it. In the absence of any
direct proof that they did know of the scheme, the government sought to convict
the defendants based on certain false or misleading statements made by them in
their sales pitches, arguing that these statements established the necessary link
between them and the overall scheme to defraud.
The Third Circuit rejected this argument and reversed their convictions,
noting that:
[A]lthough the defendants might have made fraudulent
misrepresentations during the course of their individual sales
presentations, the jury could not reasonably infer that the salesmen
knew of the fraudulent purpose of the overall . . . scheme.
Id. At 545.
Furthermore, the court rejected the idea that these misrepresentations could
form the some sort of independent basis for their conspiracy convictions because
34
â[a]lthough . . . a separate scheme to defraud could have been hatched by these
salesmen within the overall scheme, such individual schemes were neither alleged
nor proved by the government in this case.â Id. The court noted that:
Even if the evidence established independent schemes of the salesmen,
such evidence could not properly convict the defendants here since the
only scheme alleged in the indictment was that of the . . . principals,
and it was incumbent upon the Government to prove that scheme
substantially as it was alleged.
Id. n. 7 (emphasis added); see also Toler, 144 F.3d at 1426 (â[T]he government
must prove the conspiracy it charged in the indictment rather than some other
conspiracyâ).
In United States v. Simon, 839 F.2d 1461, 1468 (11th Cir. 1988), we
acknowledged the persuasiveness of the Pearlstein rule that individual and
independent misrepresentations do not permit an inference of knowledge of and
agreement to join the overall scheme. If the defendants have no knowledge of the
overall conspiracy, their independent, even fraudulent, misrepresentations do not
supply that link. Id.
In this case, it was the governmentâs position from the beginning that the
defendantsâ alleged misrepresentations were totally independent of Jacobsonâs
underlying scheme. The government consistently maintained, and argued to the
jury, that the defendantsâ claims to be âlegitimateâ winners were false totally
35
irrespective of Jacobsonâs embezzlement.26 The defendantsâ claims were
criminally fraudulent, the government insisted, solely because they received the
stamps by transfer, rather than by buying food items at McDonaldâs. Defendantsâ
misrepresentations, then, were made âon their own,â without any knowledge of
Jacobsonâs embezzlement and scheme. As such they were utterly incapable of
permitting any inference that defendants knew of and agreed to the charged
conspiracy. See Pearlstein, 576 F.2d at 545; Simon, 839 F.2d at 1468.
Without some evidence that defendants knew the essential nature of
Jacobsonâs conspiracy, they could not be convicted of agreeing to it. The trial
judge belatedly realized this fundamental fact when, five minutes before instructing
the jury, he decided to give the defense instruction previously rejected, requiring
the jury to find that the defendants knew of Jacobsonâs scheme before convicting
them. In so doing he said:
26
The governmentâs claim that Jacobsonâs theft of the game stamps was legally
irrelevant to defendantsâ culpability for the overall conspiracy charged in the indictment really
turned the case on its head. In fact, it was defendantsâ alleged misrepresentations to McDonaldâs
that were, in fact, legally irrelevant to their culpability for the charged conspiracy. Defendantsâ
redemptions would have been criminally fraudulent even without any misrepresentations had
they known that the game stamps were stolen. Without such knowledge, no amount of
representations violating McDonaldâs rules could make defendants liable for the conspiracy
charged by the government to fraudulently redeem stolen game stamps. See United States v.
Christo, 614 F.2d 486, 492 (5th Cir. 1980) (evidence of violations of civil banking regulation
legally irrelevant to defendantâs guilt for criminal bank fraud).
36
And Iâll point out that I think one of the major issues is whether or not
weâre dealing with a single conspiracy or multiple conspiracies. . . . I
am going to instruct the jury in this case that if you should find that a
reasonable doubt exists as to whether a defendant had knowledge that
the game stamp he obtained had been embezzled, stolen or otherwise
unlawfully acquired, then you must find that defendant not guilty. I
think other â otherwise, then you â the issue of a bunch of
conspiracies looms more prevalent.
Thus, the court recognized and attempted to cure the variance between the
conspiracy charged in the indictment, and the several conspiracies the government
sought to prove at trial by requiring the jury to find that the defendants had
knowledge of Jacobsonâs embezzlement. Only in this way could the jury find that
37
the defendants knowingly agreed to participate in the overall scheme.27 As we said
in Adkinson:
The government may not rest upon proof that a defendant acted in a
way that would have furthered the goals of the conspiracy if there had
been one. Without some independent evidence that these defendants
knew there was a [ ] conspiracy in progress and that they voluntarily
and knowingly joined this conspiracy, the proof of the requisite
agreement to [commit the offense] is insufficient.
158 F.3d at 1155.
The absence of any evidence of a common goal, overlapping membership
among the various spokes of the conspiracy, or interdependence of the spokes
reinforces our conclusion that the government failed to prove a single conspiracy.
27
Unfortunately, the courtâs attempt to cure the problem only aggravated it. The courtâs
new instruction permitted the jury to find the defendants guilty if they knew the game stamps
were âembezzled, stolen, or otherwise unlawfully acquired.â This language is not found in the
indictment. Although the government argues that it narrowed rather than broadened the
indictment, thus rendering the error harmless, we disagree.
The governmentâs theory throughout the case, reflected in the extensive testimony and
numerous exhibits about the rules of McDonaldâs games, was that the defendants had
âillegitimatelyâ redeemed these game stamps by virtue of the fact that they did not personally
acquire them from McDonaldâs. The government interpreted the rules of McDonaldâs games to
prohibit acquisition of the game stamps by transfer from another person. In closing argument,
the government argued that acquisition of the game stamp by transfer made the winner
âillegitimate,â thereby implying that acquisition in this way was âunlawful.â Thus the
governmentâs argument tied the courtâs unwitting addition of âunlawfully acquiredâ language
into the governmentâs theory that transfer of the game stamps made the winners âillegitimate.â
Furthermore, in rebuttal, the government argued that one defendant knew his game stamp
was âunlawfully acquiredâ because he was asked to redeem it for someone who wanted to avoid
splitting the proceeds with his soon-to-be divorced wife. This argument could not have been
made if the courtâs instruction had required the jury to find defendants knew the game stamps
were embezzled or stolen.
38
First, although each of these alleged spoke conspiracies had the same goal, there
was no evidence that this was a common goal. Although each spoke directed its
efforts toward the goal of redeeming game stamps for money, there was no
evidence, indeed the government conceded, that no spoke was aware that it was
participating in anything larger than its own redemptions. See Barnard, 342 F.2d
at 313 (reversing convictions for single conspiracy where no evidence showed that
the individual planning of five separate accidents contemplated more than that
particular one). There was certainly no evidence that they agreed to do so. Each
spoke represented a separate scheme, joined by no overall objective to be achieved
by multiple actions. See Perez, 489 F.2d at 62.
In order to prove a single, unified conspiracy as opposed to a series of
smaller, uncoordinated conspiracies, the government must show an
interdependence among the alleged co-conspirators. Toler, 144 F.3d at 1426.
Separate transactions are not necessarily separate conspiracies, so long as the
conspirators act in concert to further a common goal. United States v. Powell, 982
F.2d 1422 (10th Cir. 1992). If there is one overall agreement among the various
parties to perform different functions in order to carry out the objectives of the
conspiracy, then those performing the functions are engaged in one conspiracy.
39
â[I]f a defendantâs actions facilitated the endeavors of other coconspirators or
facilitated the venture as a whole,â then a single conspiracy is shown. Id. at 1429.
In this case, there was no such interdependence of the spokes. The combined
efforts of the spokes were not required to insure the success of the venture. No
spoke depended upon, was aided by, or had any interest in the success of the
others. Each spoke acted independently and was an end unto itself.28 The actions
of one spoke did not facilitate the endeavors of other coconspirators or the venture
as a whole. We have reversed conspiracy convictions where no interdependence
was shown. See Ellis, 709 F.2d at 690 (no evidence permitting inference that
spokes knew of each other or interacted in any way); Nettles, 570 F.2d at
551(same).
Nor was there any evidence of an overlap of membership between the
spokes. There was none. The only member common to each separate spoke was
Jacobson. The governmentâs argument in its brief notwithstanding, a single
conspiracy is not shown if Jacobson was the only overlapping member. Adkinson,
158 F.3d at 1153 (âThe government must prove an agreement between at least two
28
In a drug conspiracy, in which the object of the conspiracy is clearly illegal and there
are various clandestine functions to perform, the conspirators can be charged with knowledge
that others are performing these different functions. See United States v. Bruno, 105 F.2d 921
(2d Cir. 1938). In this case, however, such knowledge may not be imputed to defendants since
each of their redemptions was complete unto itself.
40
conspirators to pursue jointly an illegal objectiveâ); Parker, 839 F.2d at 1478 (âThe
law is well settled that existence of a coconspirator is not only an element of the
crime, but the very essence of the crimeâ).
All the evidence, especially that from the governmentâs own witnesses, was
that every effort was made not to put a rim on the wheel of Jacobsonâs conspiracy.
Not only was there no connection between the spokes, but the spokes had no
knowledge of the hub. This is not a single conspiracy. Kotteakos, 328 U.S. at 769.
If conspiratorial, it is a series of uncharged separate conspiracies. See Pearlstein,
576 F.2d at 545.
The government argues that this variance between the conspiracy charged
and the proof at trial is harmless error. Kotteakos, 328 U.S. at 725. The remaining
question is whether the variance in the proof prejudiced the defendants. There can
be no doubt that it did.
As in Adkinson, the government alleged conduct not a crime, spent hours
eliciting testimony regarding that âcrime,â only to concede to the court at the end
of trial that the law was to the contrary. As then, â[d]efendants were forced to
defend themselves against charges which were not offenses under the prevailing
law.â 135 F.3d at 1373. Defendants herein were forced to decide whether to
41
defend against or not defend against the charge that they violated the rules â
precisely what the right to indictment was meant to prevent. Id.
Then, at the conclusion of a trial filled with evidence of these rules, the
district court decided that this was not what the trial had been about, and that the
only unlawful conduct upon which convictions lawfully could have been based all
along was the charged conspiracy to redeem stolen game stamps. The court
decided it must give the previously rejected proposed defense instruction to this
effect. Thus, the court announced it would instruct the jury that they could convict
only if they found that the defendants redeemed game stamps that they knew were
âembezzled, stolen, or unlawfully acquired.â This instruction, announced by the
court five minutes prior to charging the jury, completely reversed the courtâs prior
position that such knowledge was unnecessary for conviction,29 rendered totally
irrelevant most of the governmentâs case, and left totally exposed the utter absence
of any such proof in the record.30
Despite the courtâs instructions to the jury that they could not convict absent
proof that defendants knowingly agreed to the charged conspiracy, that they could
29
Induced, of course, by the governmentâs motion in limine requesting such a ruling, and
counseled by the government that such knowledge was irrelevant under the governmentâs theory.
30
Indeed, as we noted above, the government sought a recess to call the Justice
Department for permission to dismiss the case.
42
not find the defendants guilty of violating the rules of McDonaldâs games, and that
transfer of a game stamp from another person was not proof of fraud, the
defendants were convicted. It appears that the jury convicted these defendants of
violating the rules of McDonaldâs games. In the utter absence of any proof,31 plus
the governmentâs avowed concession that these defendants did not know that the
game stamps had been embezzled or stolen (or even âunlawfully acquiredâ), there
is no other explanation for the juryâs verdict. Thus, we do not believe that the
courtâs last minute attempts to cure the problems inherent in the governmentâs
31
The governmentâs only theory of culpability capable of withstanding the test for
relevance imposed by the courtâs ultimate jury instructions was that the defendants showed a
âreckless disregardâ for the truth by failing to ask the right questions regarding the origin of the
game stamps. Sufficient evidence of such a reckless disregard would support a jury inference
that the defendants should have known of the unlawful origin of their game stamps, thus
permitting conviction. Parker, 839 F.2d 1479; United States v. Sawyer, 799 F.2d 1494, 1401-02
(11th Cir. 1986). Although the government propounded this argument, it offered little but
speculation to support it. We find nothing in the evidence that would permit an inference beyond
a reasonable doubt that the defendants recklessly disregarded strong indications that their
redemptions were unlawful. On the contrary, the evidence was that the defendants were
repeatedly told there was nothing unlawful about their redemptions. They were told various
stories regarding the need for their redemptions, ranging from hiding the proceeds from divorced
or divorcing wives, to aiding McDonaldâs in maximizing the geographical diversity of winners,
to avoiding taxes by finding winners in lower income tax brackets. Whatever the illegitimacy of
these reasons for agreeing to redeem game stamps, none was illegal. The most the government
was able to show was that one defendant was told the game was âfixed.â In view of the record
evidence that McDonaldâs itself could be viewed as having âfixedâ the game â by deliberately
excluding Canada from receiving any high-value winning game pieces â we cannot hold that it
established beyond a reasonable doubt that defendants had a reckless disregard for the truth.
There was no proof whatsoever that any defendant recklessly disregarded the truth about the
unlawful activity underlying the criminal conspiracy charged â the embezzlement of the game
stamps.
43
theory of the case (and to salvage something of the time and effort devoted to the
case) adequately protected the defendants from the prejudice that resulted.
Not only were defendants convicted of conspiracies not charged in the
indictment, but the government has conceded that there is no proof to support
defendantsâ membership in the indicted conspiracy â Jacobsonâs conspiracy. Thus,
there is a complete failure of proof as to the charged conspiracy. The motions for
judgments of acquittal should have been granted.
III.
This case involved an unfortunate series of events, resulting in convictions
that cannot be sustained. Federal conspiracies are not proved by evidence of
illegitimate conduct. Nor does the unlawful conduct of one person become a
conspiracy because many people commit acts which would further the conspiracy,
if one existed. Because the convictions in this case were predicated upon both of
these trial errors, we must reverse.
Accordingly, the denials of the motions for judgment of acquittal are
REVERSED, the convictions are VACATED, and the case is remanded for the
entry of judgments of acquittal for each of the defendants.
44