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>> Warren E. Burger: We will resume in United States against Maze.
Mrs. Lafontant. >> Jewel S. Lafontant: Mr. Chief Justice,
may it please the Court. First, I would like to develop a little more,
the theory expressed yesterday afternoon that this case involves the substantial use of
the mails or the use of the mails is as stated in Pereira incident to an essential part of
the scheme. It is significant to the respondent when on
a cross country frolic representing himself as one Meredith to obtain goods and services,
well knowing that the issuer of the card would not learn of the fraudulent scheme until the
purchase invoices which within the use of business practices would be mailed from the
merchant to the card issuer. And according to the testimony, one hotel
owner as a delay of two or three weeks and often longer before the merchants learned
that the particular credit card is being used fraudulently.
There is no doubt from the record that this respondent used the mails in that fashion.
Theres no doubt that upon receipt of the invoices through the mails, discovery of respondents
fraud would be uncovered. However, if the card issuer was present with
the merchant when the respondent presented the credit card, he would have been discovered
immediately, and -- >> Warren E. Burger: On the other hand, if
hypothetically, none of the motels or stores ever sent the vouchers in, the discovery would
be indefinitely delayed would it not? >> Jewel S. Lafontant: Thats true.
>> Warren E. Burger: Is it your point that since this is an indispensable, that is the
use of the mail, the routine process of bringing this to the notice of the credit company is
an indispensable, integrated part of the whole thing and its --
>> Jewel S. Lafontant: Its inherent in the credit card system and without it he would
not have been able to perpetrate this kind of fraud.
>> Warren E. Burger: Even though he didnt -- even he though didnt select the mail that
is the right process? >> Jewel S. Lafontant: Thats right the fact
that he selected it isnt too important practice that has caused his activity created the cause
of action which included the use of the mails which was a pertinent part, an essential part
in and of credit card scheme. And as youve indicated Mr. Chief Justice,
the fact the mails were used delayed his detection. >> Warren E. Burger: Did he justify in this
case? I dont recall from the record.
Did he testify? >> Jewel S. Lafontant: Yes, he did testify
Your Honor and he admitted the use of the credit card.
He admitted that BankAmericard belonged to Meredith and that he had taken it but he said
that he had permission to use the credit card, as well as permission to use the automobile.
But with all the evidence that was adduced, the jury did not believe him and found otherwise.
In fact, Judge McCree of the Sixth Circuit said that the evidence was overwhelming.
The evidence that was submitted by the Government was overwhelming to show that this was a fraud
and that he actually did not have permission to use the credit card.
Now, this case -- >> Potter Stewart: Who ultimately was the
victim of the fraud? Who was defrauded?
I suppose these innkeepers and tradesmen were paid, werent they?
>> Jewel S. Lafontant: I would assume that they were paid.
>> Potter Stewart: Did they suffer an ultimate loss?
>> Jewel S. Lafontant: No, I believe the ultimate loss would have been with the Citizens National
Bank in Louisville, Kentucky who issued the card.
The merchants initially were out of their merchandise but the BankAmericard has to reimbursed
them. So, the ultimate true victim would have been
the card issuer who does not get paid because even the cardholder is only obligated up to
$50 and in some instances its not bad if he has dutifully notified the card issuer that
his card has been stolen. >> Potter Stewart: So --
>> Jewel S. Lafontant: In this case, he didnt do that.
>> Potter Stewart: So the loss was suffered by the Louisville Bank.
>> Jewel S. Lafontant: Certainly. Yes, Your Honor.
>> Potter Stewart: Although the victim of the fraud -- victims of the fraud were the
four people covered by these four counts innkeepers and others, who were through misrepresentation
caused apart with their rooms or their services. >> Jewel S. Lafontant: Thats correct Mr. Justice
-- >> Potter Stewart: And that there was no -- the
fraud was perpetrated therefore against the tradesman and innkeepers, wasnt it?
>> Jewel S. Lafontant: Thats true. >> Potter Stewart: And the loss of the Louisville
Bank was hardly -- the Louisville Bank was not defrauded, was it because no misrepresentations
were made to it? >> Jewel S. Lafontant: Well, I interpret this
fraudulent scheme as beginning with the idea of perpetrating a fraudulent scheme and initially,
the innkeepers were defrauded. All the other things were steps in following
that including a cardholder taking -- >> Potter Stewart: Taking the card in the
first place? >> Jewel S. Lafontant: Taking the cards from
him and misrepresentation in the first place. >> Potter Stewart: In the first place but
the -- >> Jewel S. Lafontant: The cardholder himself
was not actually defrauded but was all part of one fraudulent scheme.
>> Potter Stewart: The fraud, the actual misrepresentation was made to the innkeepers.
>> Jewel S. Lafontant: Certainly. >> Potter Stewart: And with respect to the
first count at least, that fraud would have been wholly effective with or without any
use of the mails, wouldn't it because as soon as the person walked --
>> Jewel S. Lafontant: Thats true, Your Honor. >> Potter Stewart: -- as soon as this man
walked out of the motel -- >> Jewel S. Lafontant: He had defrauded --
>> Potter Stewart: -- had he defrauded that innkeeper and therefore no use of the mails
was involved or at all at that point, was it?
>> Jewel S. Lafontant: Up to that point, thats right.
>> Potter Stewart: Now, your point is that he perhaps could not have continued to commit
the other three offenses -- >> Jewel S. Lafontant: Without having --
>> Potter Stewart: With the exception of the delay occasion by the delay in the mails and
incidentally your argument is not a very good advertisement for the Post Office Department.
>> Jewel S. Lafontant: [Laughter Attempt] I think, Mr. Justice Rehnquist will agree
with that. >> Potter Stewart: Since you emphasize the
great delay. But as to anyone of these counts, the fraud
could have been complete without any use of the mail at all, is that right, certainly,
as to the first count? >> Jewel S. Lafontant: Yes, especially as
to the first count if he turned in the card and got the credit --
>> Potter Stewart: Showed him the card and signed it whatever you do and so the bill
was paid. >> Jewel S. Lafontant: And there was no use
of the mails. It would have ended right there.
>> Potter Stewart: Ended right then and there without any use of the mail.
>> Jewel S. Lafontant: Right. But that is not our case in that --
>> Potter Stewart: Well, your case -- but these are four separate counts.
If it had been one count and you could have said at one count or covering this long, this
fairly extended frolic, as you call it, through interstate journey, and your argument were
that he could not have continued his fraudulent, has continued his defrauding of these innkeepers
except by the delay occasioned by the mails, that would be one thing but each one of these
is a separate count. >> Jewel S. Lafontant: Well, I would be willing
to even go further -- >> Potter Stewart: And this was (Voice Overlap)
to any one count the fraud was complete, was it not when the innkeeper extended the credit?
>> Jewel S. Lafontant: If the use of the mails were not involved I would agree with that.
But if the use of the mails were involved even with the one transaction, I would go
so far as to say that it would be violative of the mail fraud statute but thats not our
case. Our argument here too is although there are
four separate counts, we consider this as one unitary scheme developed from all of the
evidence that was -- >> Potter Stewart: But you indicted as well
up to four separate defenses? >> Jewel S. Lafontant: Yes.
>> Potter Stewart: But did he get one -- did he get apparent --
>> Jewel S. Lafontant: Yes, five years each. >> Warren E. Burger: Now going back to the
hypothetical -- going back to the hypothetical I put to you, if for one reason or another
the tradesman had not sent the vouchers into the bank, then the bank could never have been
defrauded, could it, unless they made personal delivery by some other method than the mail?
>> Jewel S. Lafontant: Hand-delivery. I agree with you.
Right, that if the -- >> Warren E. Burger: So that the mail was
an indispensable part of the fraud on the Louisville Bank, that is your point, is it?
>> Jewel S. Lafontant: Thats correct. Very definitely.
>> Lewis F. Powell: Mrs. Lafontant -- >> Jewel S. Lafontant: Yes, Mr. Justice Powell?
>> Lewis F. Powell: Do you think the bank, as the ultimate loser here could have brought
a civil action against the party who perpetrated the fraud?
The bank was the only body that did lose money in this transaction.
>> Jewel S. Lafontant: Yes, I would say that he could have brought -- the bank could have
brought a civil action against Maze, the respondent here.
>> Lewis F. Powell: The bank that pays a forgery or the bank which is a victim of forgery may
bring a civil action against the party who commits a forgery here.
>> Jewel S. Lafontant: Thats right and I think that this is an analogous situation.
I believe that the bank could have brought a civil action against the respondent.
>> Lewis F. Powell: It may have been a total effort --
>> Jewel S. Lafontant: In fact, it may have been -- it would have been a few left for
them, Im afraid, because he -- one reason he was living with Meredith in the first instance
was that he had no job and suppose he was looking for employment.
But the answer to your question is very definitely the bank could have brought a civil action
against him. This case --
>> Unknown Speaker: I gather, Mrs. Lafontant, that this new 70 legislation and the Truth
in Lending Act -- >> Jewel S. Lafontant: Yes.
>> Unknown Speaker: -- that makes crime of fraudulent use of credit cards but that applies
only where the amount involved was over $5,000? >> Jewel S. Lafontant: Thats right.
In the 1970 Amendment, the law states that credit card, the misuse or unauthorized use
of credit cards in excess of $5,000 is punishable. >> Unknown Speaker: Well, I noticed in your
footnote at page 37 of your brief, you suggest that as a matter of policy, just as it has
been following something like this, that doesnt include the $5,000.
>> Jewel S. Lafontant: No, and -- no, it doesnt. Its just that the Department of Justice in
many of these cases has not prosecuted under the mail fraud statute as such but even where
they do it has to be one of interstate commerce as this case.
>> Unknown Speaker: You say important credit frauds.
The policy prosecutes under the mail statute only important.
Whats important? >> Jewel S. Lafontant: Well, I dont know the
real interpretation of that but I would interpret important as an ongoing scheme more than one
little act of a felon that might go and forge --
>> Unknown Speaker: But in any event, I gather that its not the policy, so will I only in
the Truth in Lending Act of these cases? >> Jewel S. Lafontant: No, not at all and
of course its been well-settled that one act can violate two statutes and these statutes
are not conflicting in any way. >> Byron R. White: What was the necessity
for the new statute? If this statute governed, why did you need
some more federal presence in that? >> Jewel S. Lafontant: From reading the congressional
record, Mr. Justice White, I gather that because as credit card business had just mushroomed
so quickly and banks were sending cards out all over the country even without people requesting
them and that there was beginning to be such a problem.
The Congress addressed itself to the problem to make sure that anyone who misused a card
would be punished. They made it for $5,000.
I think Senator Proxmire had said that he talked with the Justice Department and they
had suggested using the figure $5,000 because it would be very expensive to oversee all
of the credit card cases under this section. It doesnt rule out the mail fraud section
because you could be guilty of the 1970 Amendment Act and also mail fraud if it exceeded $5,000.
But the people under $5,000, we contend, are still covered by mail fraud because even though
they passed this new law, theres nothing in conflict.
Theres no talk of repealing the earlier law and I dont think we can repeal the law by
inference or implication or what we think went on in the minds of the lawmakers at that
time. >> William H. Rehnquist: You could have some
coverage under the Truth in Lending section where you didnt have it under the mail fraud
section too, couldnt you be because all the Truth in Lending section requires is affecting
interstate commerce? >> Jewel S. Lafontant: Yes, thats true and
then just the unauthorized use is efficient. So its broader in the sense although its limited
because of the $5,000 figure. >> Unknown Speaker: Do you think the new Act
was prompted at all by decisions such as the one in here in this case?
>> Jewel S. Lafontant: No, I dont. All I can say is theres nothing in the congressional
record to indicate that they knew that there are any cases thought.
Weve had at least 13 cases involving the mail fraud statute, most of them before 1970.
So that they should have been aware of it but there was no mention of it and the --
>> Unknown Speaker: And were those cases where the mail fraud statute was set to cover the
transaction? >> Jewel S. Lafontant: Yes.
We have them in six of the jurisdictions, the second, third, fourth, fifth, seventh,
and ninth. All say that the mail fraud scheme embraces
the credit card. I mean the mail fraud statute embraces the
credit card scheme. The last case was -- it just came down October
I want to respond directly to several points and contentions raised by Mrs. Lafontant,
but with the Courts indulgence I would like to do within the context of presenting two
major considerations which I feel are important and are before the Court this morning in this
case. Now the first is the, what we consider to
be other failure of the Governments proof upon the issue of knowing use of the mails
including the so called delay issue. The second point is the reasonableness, propriety,
and or the necessity of extending federal criminal jurisdiction to this case and other
cases similar to it. Now, I think it should be pointed out --
>> Warren E. Burger: Well, would it not be true, Mr. Warner, that if you left this local
prosecution, there would be prosecutions in four states or three states, is it?
>> Warren E. Burger: Well, there were, assuming that the fact proof is the same here, it would
be potentially one suit with respect to each act of defrauding was it alleged in the indictment,
am I correct? >> William T. Warner: In this case, Mr. Chief
Justice, I submit that it would to the extent that as Mrs. Lafontant pointed out the ultimate
loser in terms of who ended up with the paying the bill in this case was the Citizens Fidelity
Bank in Louisville, Kentucky. They took the responsibility.
They had to pay these invoices. Maze was caught in Kentucky.
He was caught 30 miles from Louisville and presumably as we cover in our brief and as
a matter of record, the Kentucky statutes are more than adequate to cover every aspect
of the so called scheme from the misappropriation or theft to the credit card right on through
to the defrauding of the bank. Now, the Sixth Circuit Court of Appeals opinion
in this case, I think should be pointed out was not as broadly drawn as the Government
contends. It said that a very carefully drawn opinion
and it said essentially that the Government did not prove in this case by the evidence
of record that Maze could have foreseen or knew that mails would be used or that the
mails were inescapably direct incident between the defrauding of the innkeepers and the defrauding
of the bank. Now, I think its significant to --
>> Warren E. Burger: How else, Mr. Warner, would the vouchers reach the bank in Louisville
in the normal course of credit transaction? >> William T. Warner: Well sir, in this case,
there were four vendors who testified. Two stated that they customarily used them
in the mails. They dropped them in the mails and they were
sent in. One said -- testified that they went through
bank channels, that was the extent of this testimony and one vendor I believe was indefinite
>> Warren E. Burger: Would the banks not use the mail?
>> William T. Warner: Well, this is a question in this case that some of the Circuits have
raised with respect to charging a defendant such as Maze with a detailed knowledge of
the very complex and intricate commercial scheme.
I assume that the mails were used. I would.
But there may be other ways. I dont know how the banks transmit matters
of this type and maybe like they do checks through the mail.
Now, Mr. Chief Justice, in response on this proof issue, I think its significant in response
partially to a question that you addressed to Mrs. Lafontant.
Maze did testify in this case. In other way testified, in his own behalf,
but he gave a statement to the Postal Inspector. Now, neither the Postal Inspectors or the
Assistant United States Attorney who tried the case addressed one single question to
Maze on the knowing use of the mails or did he know or did he contemplate or could you
know. In order the Government introduced any other
witness as on this issue as to how the mails are necessary incident of this type of fraud.
Now, also, I want to point out that at this point, that the Government contends that there
are six circuits which support this so called per se doctrine that the fraudulent use of
a credit card is per se the use of the mails. Now, if my reading of the cases does not support
this view, there are at least two Circuits, the Fifth certainly in the Adams case which
was the fundamental case on the per se doctrine supports this view.
The Seventh Circuit does and perhaps, I am sorry, the Second Circuit in the Kellerman
series of cases and most recently the Third Circuit in the Ciotti case.
Now, the other cases involved varying kinds of fraud. And as the Eighth Circuit Court
of Appeals in the Isaacs case in 1968 that the forms of fraud which are possible under
the mail fraud statute are multifarious as human ingenuity can device, and I think that
this should be kept in mind. Now, the Government case on the knowing use
of the mails issue, we submit is built on a series of presuppositions and assumptions.
Now, its long been the rule under our system of jurisprudence that we dont convict people
upon presuppositions and assumptions, and that this as were partially at least where
the Government case failed. Now, as I stated earlier in response to Chief
Justices question, the trouble with the per se doctrine, that is the doctrine that the
fraudulent presentation and/or use of the credit card per se involves the mail is that
this imposes on the defendant a detailed knowledge of a very complex commercial mechanism.
And again, there is no proof in this record in this case.
Now, the Sixth Circuit in this case stated specifically that they were not holding that
credit card abuse could never constitute mail fraud.
They stated in this case, in this case that the Governments proof had failed.
Now, with regard to the alleged scheme, I think the facts are significant here.
The card was misappropriated stolen on April 10, 1971.
Now, Maze was arrested and in jail on May 9, 1971.
Now, there was no extensive long range scheme such as the one in the Chason case which is
cards and was engaged in procuring airline tickets or in the Ciotti case, Kellerman where
you had long range extensive schemes where one credit card after another was used.
Now, also, the other cases that upheld use of the mails as part of the or as covered
under mail fraud statute have involved other types of people, businessmen who submitted
fraudulent statements for the purpose of getting credit.
The Pereira case, a very sophisticated person who as the Court knows had had frauded a widow
over a long period of time. Now, it is possible.
Now, I want to point out to the Court that I am not saying or arguing this morning that
Maze didnt know that the mails would be used. The point is that the Government didnt prove
it. Now, as long as were dealing as the Government
is in presuppositions and assumptions, I think there are some other assumptions that could
just as recently be made. That Maze presumably could have counted on.
One, Mr. Justice Rehnquist, I think alluded to yesterday and that is the Chief Justice,
the fact that the vendors themselves might for some reason delay a week or ten days sending
in their invoices. Its possible that Maze could have known and
counted on the fact that credit card issuer such as the banks customarily collects statements
over a 30-day period. Now, Maze first went to California, that invoice
was sent in. The bank didnt bill him Meredith right away.
They waited until the end of the month, collected all his invoices, and sent them out.
Another presupposition which could be indulged in this case is that Maze could have counted
on the fact of a possible breakdown in the Citizens Fidelity Banks lost card or stolen
card procedure. Obviously, it may take ten days to two weeks
for the vendors themselves to be notified and in this case, one vendor did testify that
it took three weeks. >> Warren E. Burger: Your challenged to the
Governments position is, I take it, that the per se rule approach impinges on the presumptions
of innocence by creating a presumption of some kind.
rule that possession of recently stolen property gives rise to an inference which the jury
se rule to develop the rule that the possession and use of the stolen credit card creates
Mr. Chief Justice and I would point in that regard, dealing with such a presumption to
charged with a violation of the Travel Act and the basis of that prosecution was that
They stated that this so called foreseeability doctrine which is present in the Maze case
I think correctly in that case, that the person who is running that establishment --
be unreasonable for a common law type of rule saying from at that point, the unexplained
>> William T. Warner: I think Your Honor, on the -- on the presentation of some evidence
>> Warren E. Burger: -- it would mean that there would have to be an instruction along
and I think its got to be taken on a case-by-case basis.
which I want to get to shortly, that it may be unnecessary.
which was clearly a criminal act, and the jury so found that is not contested, but because
is we feel applicable here is what we consider to be an unwarranted, unnecessary extension
or the Justice Department in any way from a reasonable construction of a criminal statute,
case of the United States versus Bass which was also a 1971 case, the Court enunciated
dealing with, but the Court there, in those cases stated that federal jurisdiction should
that there has been such a clear statement by Congress and that is in the form of Title
17 of our brief, but I think its clear from that legislative history as recited in the
regard to the enactment of this legislation. The original Senate Bill as was passed was
want a $5,000 jurisdictional limitation in this because of the administrative problems
which was decided a little less than a year ago, Erlenbaugh against United States, that
of all previous statutes in the same general area.
upon the Congress expressed almost the same concern.
up with the payment in this case, Kentucky has probably one of the most detailed tough
or having a felon escape punishment, this is not the case.
any difficulty in getting evidence from all across the country?
Thats where the invoices were and thats where all the evidence was.
>> William T. Warner: Well, sir Im sure they would have been, but I think that even absent
card gives its witnesses? >> William T. Warner: Im sorry, I didnt understand
They were from other states, thats right. This was done not infrequently in my experience
Fort Lauderdale, if youre talking about a federal prosecution, the FBI agent in Miami
Lauderdale and talk to him or else youll never see the guy before you put him to stand?
alone is not enough to warrant federal intrusion into this kind of case.
the per se rule is approved or expressed as policy that every type of commercial fraud
>> William J. Brennan: -- for interrupting. You mentioned Erlenbaugh, thats the one of
>> William J. Brennan: Its alright. >> William T. Warner: -- it was decided December
of the United States versus Jasper J. Mirabile under an indictment brought in the United
return and mailed it into the State Treasury of the State of Missouri, and the defrauded
and that may or may not be dismissed, but I cited as an example of the kinds of things
of a federal reach for a court to consider and I suppose thats why youre urging among
And again, I would -- >> William J. Brennan: No, are you suggesting,
Now, I just dont know. Im not prepared to respond to that.
>> Potter Stewart: It would still be in high probate except for the $5,000 limitation.
is what the Justice Department asked for was jurisdiction only in cases over $5,000.
any use of the mails at all under 1644? >> William T. Warner: No, they could be carried
>> Potter Stewart: Or Western Union or -- >> William T. Warner: Thats right, in fact
>> Thurgood Marshall: And theres nothing in this record that Maze used the mails at all?
proof that that he caused or had reason to think that he defrauded people with use of
>> William T. Warner: If he doesnt deposit the letter himself, the statute requires that
He knew that his boss was going to mail that application to the home office because hed
used -- >> William T. Warner: I said, I thought so,
of proof, Mr. Chief Justice and -- >> Warren E. Burger: I take it all of the
knew that that vendor would mail that invoice back to the bank.
about this business of concurrent sentences as I point out in our footnote in our brief,
Court for reduction of sentence. A five-year sentence in the District Court
issue of unless the Court overturns the Sixth Circuit decision that the entire credit card
you came here at our request to argue this case.
Thank you, sir.