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United States v. Regent Office Supply Co. - 421 F.2d 1174 (2d Cir. 1970)

Rule:

There are two elements to the offense of mail fraud: use of the mails and a scheme to defraud. Since only a "scheme to defraud" and not actual fraud is required for conviction, it is not essential that the government allege or prove that purchasers were in fact defrauded. But this does not mean that the government can escape the burden of showing that some actual harm or injury was contemplated by the schemer. Proof that someone was actually defrauded is unnecessary simply because the critical element in a "scheme to defraud" is fraudulent intent, and therefore the accused need not have succeeded in his scheme to be guilty of the crime. But the purpose of the scheme must be to injure, which doubtless may be inferred when the scheme has such effect as a necessary result of carrying it out. Of course, proof that someone was actually victimized by the fraud is good evidence of the schemer's intent. 

Facts:

Defendants Regent Office Supply Co., Inc., and Oxford Office Systems, Inc., were in the business of selling stationery supplies through salesmen, or "agents," who solicited orders for their merchandise by telephone. Defendants admitted the "sales pitches" employed by their agents used false pretenses and representations to customers, such as asserting that the agent had been referred to the customer by a friend of the customer. Defendants were indicted on mail fraud charges and tried in federal district court under a procedure whereby defendants agreed to be indicted and expeditiously tried upon certain admissions and stipulations of fact constituting the alleged crime. The government's case consisted entirely of defendants' stipulation. On the stipulation, the government rested its case. The district court found defendants guilty as charged, and they received minimal fines for their violations. Defendants then filed a post-verdict, pre-sentence motion to dismiss the indictment based on lack of jurisdiction. The district court denied the motion. Defendants appealed.

Issue:

Were defendants properly convicted of mail fraud?

Answer:

No.

Conclusion:

The court of appeals reversed defendants' convictions for mail fraud. The court ruled that the conduct described in defendants' admissions and stipulations of fact did not come within the prohibition of the mail fraud statute, and particularly the "scheme to defraud" prong. The court ruled that the solicitation of a purchase by means of false representations not directed to the quality, adequacy or price of goods to be sold, or otherwise to the nature of the bargain, did not constitute a "scheme to defraud" or "obtaining money by false pretenses" within the prohibition of 18 U.S.C.S. § 1341. The government did not contend that defendants' agents made any false representations regarding the quality or price of their nationally advertised merchandise. The government offered no direct proof that any customer was actually defrauded by defendants. Moreover, the agents did not attempt to deceive their prospective customers with respect to the bargain they were offering; rather, they gave a false reason for being able to offer the bargain.

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